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Social Investment Exchange (SIX)

WHAT IS A SOCIAL INVESTMENT EXCHANGE?
The concept of a social investment exchange is so new that there is no commonly accepted definition.  There are a number of exchanges or exchange-type entities operating or in development around the world, from South Africa and Brazil to London and Singapore.  These models have adopted some of the common principles and practices of existing traditional exchanges (ie. New York Stock Exchange or London Stock Exchange) with a focus on firms (non profit and for profit) that can demonstrate a social return.

A social investment exchange can be described as a platform that provides investors with opportunities to make financial investments in social firms (non-profit and for profit) that meet accepted benchmarks or standards and can generate a social return.  In addition, these firms may also be able to generate a financial return.  For example, a non-profit firm such as A-Way Couriers in Toronto (a transit-based courier service founded and staffed by survivors of mental health challenges) may choose to list on the exchange in order to attract financing for its operations or growth strategies.  If it is a share with equity and dividends, that investor would own a portion of the enterprise or firm, and receive financial and social dividends on an annual basis.

MISSION
The aim of our project is to develop and pilot a social investment exchange that will provide a platform to assess and attract sustainable financing for firms with a social mission, from enterprising non-profits to social businesses.

PARTNERS
In partnership with the Toronto Stock Exchange (TSX) and Social Innovation Generation (SiG) at MaRS, the Ontario Association of Food Banks (OAFB) is working on the development of a social investment exchange that will be based in Toronto.

RATIONALE
We can help reduce poverty.
The OAFB is committed to a hunger-free Ontario.  This project provides us with an opportunity to help drive the development of an improved non-profit social sector, as well as the development of enterprises that will not only create opportunity, but have a positive social impact in our communities. Research by the OAFB continues to demonstrate the high costs of not acting on poverty reduction. See The Cost of Poverty: An Analysis of the Economic Cost of Poverty in Ontario.

There is a global movement towards impact investing.
The past few years have seen the creation of a new focus on impact investing. The idea that investors can actively put capital to work for good beyond financial return has evolved from a fringe movement of activists and pioneers to an emerging industry – one that is increasingly gathering mainstream participants and influence. Investors and entrepreneurs have launched dedicated impact investing banks, raised impact investing funds, made multimillion dollar impact investments and created impact investing units in established institutions. But despite this momentum, real barriers stand between the promise and the reality for impact investors.

There is a global movement of developing exchanges.
The rationale for a SIX has been described by the Global Social Investment Exchange (GSIX) as follows:

"It is increasingly accepted today that development aid and philanthropic giving is not sufficient to achieve sustainable solutions to the problem of poverty. This, in light of the vast sums of aid and philanthropic money that has gone into social and economic development in developing countries over the last decade, with little substantial improvement in the lives of the poor or in the major challenges we face globally. Without fundamentally changing our thinking about the nature of capital markets, finance and social investment – as individuals, as companies and as communities – we will not achieve real and lasting change or stimulate economic development that addresses the social and environmental challenges we face. Ultimately, we need to develop a new investment industry that places capital efficiently and effectively into investments generating both social and environmental value as well as financial return."

Our provincial government is committed to the cause.
The government of Ontario released a poverty reduction strategy for the province, which included support for the feasibility study for the social investment exchange.

MODELS
SOUTH AFRICA: SOUTH AFRICAN SOCIAL INVESTMENT EXCHANGE (SASIX)
http://www.sasix.co.za

South Africa’s Social Investment Exchange (SASIX) launched in June 2006, as the second social stock market in the world. It is an initiative of the Greater Good South Africa Trust with support from Noah Financial Innovation’s Broking for Good Foundation.

It has been described as, “…an initiative that builds on current trends and the growing global practice of performance-based philanthropy and social investment.” It creates a similar regulatory environment as a stock exchange in order to connect non-profit organizations needing funds for specific time-bound development and poverty eradication projects with investors. Similar to the Brazilian model, SASIX has a listing of social investment projects allowing investors to select a single project, or to build an investment portfolio. Shares can be purchased online, through Greater Good SA, or through associated brokers.

TIMELINE
The feasibility study for the social investment exchange will begin in spring 2009, and be completed by the end of the year.  A pilot exchange will be established in early 2010.

MORE INFORMATION
If you would like more information on the OAFB’s Social Investment Exchange initiative and feasibility study, please contact Executive Diretor, Adam Spence at (416) 656-4100.

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