SOLUTIONS FINANCE is an integrated approach to deploying financial capital and adapting financial models to catalyze, sustain and scale systems transformation. Approaches of solutions finance include responsible investing, granting, impact investing, and financial innovation.
Successful systems innovation requires adequate resourcing and calls for new forms of capital allocation across the multiple stages of design and implementation. In many cases, systems innovation models mature from needing philanthropic dollars to developing solid business models that would allow them to partner with large mainstream investors. However, as we know, market and social system inefficiencies continue to prevent taking innovative models to scale to fulfill their full potential.
This is why the Foundation is shifting its focus to Solutions Finance, an integrated approach to deploying financial capital and adapting financial models to catalyze, sustain and scale systems transformation.
This includes, but is more than, continuing to grow an investment portfolio with the expectation of blended returns. It is about investing in financial innovation, and identifying or adapting financial models to involve stakeholders who would otherwise remain at the margins or work in isolation.
It is also about fostering new forms of collaboration, e.g. between foundations and banks, and leveraging more resources for larger systemic impact, while ensuring community ownership and empowerment of different stakeholders along the way.
Solutions finance is also about converging with trends in the capital markets that are moving towards greater sustainability, and about recognizing the relative role we can all play in driving systems change. It invites every sector and every stakeholder including entrepreneurs, social enterprises, foundations, governments, financial institutions, small businesses, and corporations, to participate in large scale transformation that will help us move the needle on some of the challenges we face, while remaining loyal to their core mandates.
For us as a private foundation, solutions finance is also about the strategies that allow us to better integrate our various financial assets — grants, impact investments, and more traditional investments — to have a greater impact.
The Foundation is embracing solutions finance after a decade of supporting the development of social finance and the impact investing marketplace in Canada, learning from various successes and failures in managing impact investments.Download PDF