June 6, 2016


Many newcomers to Canada face immediate needs that range from stable long-term housing, child-care, health services, education, training and employment, among several others. But even as these needs are met, newcomers will continue to need support in the medium- and long-term, such as assistance with securing meaningful employment or starting a business, and more broadly, with becoming fully integrated into Canadian society.


A key theme from this research is that government has an important role to play in social finance. Across all of the profiled models, government involvement was identified as a strong determinant of success.

What is different about a social finance approach in comparison to the traditional role of government in supporting the social sector is the nature of this role. With a traditional approach, the role of government is to make granting and contribution decisions for programs, and to monitor performance across activities or outputs. In contrast, the role of government in the context of a social finance approach shifts in several ways.

A social finance approach focuses on blending different forms of capital, each with its own specific intent. In this case, government can provide funding that can reduce the risk profile of an approach or strategy, deepen the commitment to social outcomes or public good benefits, or leverage new partnerships to foster innovation. We have highlighted several examples of this role for government in this report. In some cases, government can use existing mechanisms in similar or adapted conditions for settlement and integration, while in other cases, new mechanisms and approaches may need to be established.

One important role for government that is highlighted in this research is de-risking investment opportunities. A common mechanism for de-risking is the provision of first loss capital (e.g., grants for first loss reserves and guarantees).

Moreover, government must continue to provide grant support for settlement agencies to provide much needed services to Canadian newcomers. While many applaud the government’s willingness to look at new social finance models in the sector, many services required by newcomers will not be met through these models, and government must be aware of any unintended consequences in the adoption of these models going forward.


Given the diversity of needs across the S&I sector, it is recommended that a combination of models be used to address policy objectives in this area.

These models include micro-loans to address early settlement needs and labour-market entry objectives, small and medium enterprise (SME) loans for newcomer entrepreneurs and social investment funds to support service provider organizations, among several others. Each of the models reviewed in this research have different strengths and weaknesses.

Moreover, meeting the needs of some migrants and refugees will continue to require traditional government funding and supports. Throughout the research it is emphasized that social finance is not a replacement for government funding for the sector.


Partnerships in social finance are critical to deliver non-financial supports.

Social finance models must work closely with partners, particularly settlement agencies in Canada. These partnerships are key to delivering services to newcomers beyond simply access to capital. While access to capital and financial inclusion are essential, without the additional support and assistance offered by partners the objectives of the social finance model would not be met.

Most social finance models measure success in terms of the growth and sustainability of their program. For many, this means their ability to grow their investment pool, combined with the results of their investments and their ability to achieve their stated mission. Ability to scale is a key success indicator for many social finance models.


As to be expected, several challenges exists for social finance funds and programs as these innovative models develop and grow in Canada. This means considerable room for experimentation is required. In particular:

Most social investment funds find a lack of investment-ready opportunities in their early stages. These include both investment in individuals and in social enterprises. As a result, significant resources must go to technical assistance for both newcomers and enterprises as they move to investment readiness. The UK’s Investment and Contract Readiness Fund is a direct result of responding to the identified needs in the sector to build capacity on the demand side. The Social Enterprise Fund (Alberta) also identified and responded to the technical requirements of enterprises to become investment ready and in recent years has significantly grown their loan portfolio. The longer the track record of the model, the greater the availability of investment ready opportunities.

Newcomers themselves face a number of challenges including financial literacy, lack of credit history, lack of assets, lack of employment, and in some cases, distrust of financial institutions. Character-based lending with a strong referral system from partner agencies addresses these challenges. But character-based lending itself poses challenges for financial institutions and many currently do not have systems that can handle this type of lending.


As with most financial models, social investment funds, micro-loan programs and funds and SME loan programs keep close record on their financial data, tracking loans out, clients served, and repayment rates. Many investment funds also track the employment outcomes, qualifications gained, employment in own field, ability to pay back loan, and asset building, that are a result of the loan or investment. Several enterprise funds ask their investee enterprises to track longer-term outcomes and impacts.

A few organizations are using random control groups, particularly for pay-for-performance and social impact bond models. A few mentioned using social return on investment (SROI) methodologies, but said this was time consuming and expensive. Several used external evaluators to measure their impact (Social Enterprise Fund, SEED), while others have embraced measurement technologies in the S&I sector and are offering their methods and services to others in the sector, sometimes as a way to access a new revenue stream themselves.


*The content on this page summarizes information presented in the Social Finance for the Settlement and Integration Sector in Canada Market Assessment Report (April 2016), produced by Purpose Capital and the Carleton Centre for Community Innovation. Please consult the full report before making any attributions or references to this work.