Social Capital Partners: Investing in Social Enterprise St. Michaels College October 21, 2005

1. Social Capital Partners: Investing in Social EnterpriseSt. Michaels CollegeOctober 21, 2005

2. Agenda • About Social Capital Partners • The Context for Our Work • Our Work in Action • Roles You Can Play • Questions

3. About SCP Our Mission Investin social enterprises that employ people from economically marginalized communities Enable these organizations to grow and succeed financially Support these organizations to create improved social and financial outcomesfor employees Catalyze other innovative financing models for social initiatives

4. How We Got Started About SCP 2000Bill Young leaves the private sector after 20 years as a successful executive and a successful liquidity event 2001Bill approaches The Monitor Group to help him develop a strategy to “give back” while still using his business skills 2001 Non-profits and thought leaders from across North America are interviewed to identify areas where SCP can add value 2001 Key tenets of the social enterprise strategy are developed and SCP is “born” 2002 SCP runs a national business plan competition to find its first social enterprise investment – Inner City Renovations

5. About SCP What We Bring to the Table • 30 years of combined experience in the private sector as entrepreneurs, consultants, and senior managers • Strategic partnerships (Monitor Group, RBC Capital Markets) • Business Experience / Expertise • Extensive social enterprise research in Canada and the US • Hands-on social enterprise experience • Hands-on experience with Social Return on Investment • Social Enterprise Expertise • One of the few Canadian sources of risk capital • Backed by C$10MM in initial funding by the founder • Relationships with regional co-funders • Appropriate Capital

6. About SCP Our Investment Approach Using the principles of venture capital To invest in high potential social enterprises And create a network of successful enterprises across Canada That ultimately employ thousands of people • Risk capital • Deep engagement • Management support • Growth oriented • Profitable • Strong job creation per dollar invested • Cross pollinate ideas and best practices • Engage communities • Make the concept “mainstream” • Provide a positive alternative to social assistance • Make long lasting changes in communities

7. About SCP Results From Our Portfolio Companies Portfolio Company Revenue Non-Target Employees Portfolio Company Profits Target Employees Individual Portfolio Companies Target Employees: 260 Total Employees: 400 Portfolio Company Revenue: 10.6M Portfolio Company Profit: 600k

8. Context: Traditional Investment Lenses We tend to think of investment through traditional sector-based lenses . . . Wealth Creation Private Investment ? Blended Outcomes Government Funding Charitable Donations Civil Society Social Safety Net

9. Context: The Need for Multiple Lenses . . . but innovative solutions to social and economic challenges may exist between these silos E.g. • Sustainability and Conservation Private Investment • Inner-city economic development • First Nations economic development Government Funding Charitable Donations • Affordable housing

10. . . . and some ground breaking organizations already defy these traditional views Context: Blended Returns Example • Joint venture of nonprofit housing corporations in Winnipeg • Renovates run-down housing in the inner city • Employs 10-15 low-income inner city residents, mostly Aboriginal Canadians • Has revitalized dozens of homes and commercial buildings across the Winnipeg inner-city • Generated nearly C$1.5M in business revenue in 2004 / 2005 but is struggling for profitability

11. However, these organizations often fall between the cracks of traditional financing programs . . . Context: Blended Returns Example Investment Outcomes Policy Outcomes Charitable Outcomes • Business generates revenue, strives for profitability and services loans However, • Profitability and returns do not meet typical private investment hurdles • Jobs are provided for those who might otherwise rely on social assistance However, • Government is reluctant to support an organization that competes within the private sector • Affordable housing is constructed and at-risk individuals receive job training However, • ICR does not fit the traditional definition of a charity and cannot receive philanthropic gifts

12. Context: The Social Capital Market In these cases we must set aside traditional lenses and create hybridfinancing mechanisms . . . Traditional Businesses Social Enterprises Traditional Charities Blended Outcomes Pure Social Outcomes Pure Financial Outcomes Hybrid Financing Vehicles are Required

13. Our Work in Action: Renaissance Description Hybrid Investment Results • Chain of second hand stores in Montréal • Operate under the Fripe-Prix name • Mission to integrate difficult to employ into the workforce • C$150k in 5 year subordinated debt at competitive rates • C$150k in equity capital • Payback linked to performance • Seventh store opened in fiscal 2004 with eight planned for fiscal 2005 • Expect C$5M in store revenue and 700k in profit for fiscal 2005 • 200 employees (120 target)

14. Our Work in Action: Franchising Description Hybrid Investment Results • SCP provides unencumbered capital and business support for franchisee • Franchisor provides its system and expertise • Franchisee hires employees through YMCA job training programs and provides social support programs • Unencumbered capital provided to franchisee who might not otherwise qualify • Payback is linked to business cash flow • Investment covenants include both financial and social requirements • Actively developing partnerships with • Two Men and a Truck • Active Green & Ross • ServiceMaster Clean

15. Our Work in Action: Creating a Positive Cycle And attracts new . . . Social Investors Develop . . . Greater social returns New Risk Capital Vehicles Which creates. . . Which encourage . . . Risk taking and Innovation • Entrepreneurial Solutions to Social Problems And allow . . .

16. What Role Can You Play? Sponsorships and donations will always be important but there are other creative ways to make a difference . . . • Can your CSR strategy include not only charitable giving but also investment in community projects? • Affordable housing, sustainability projects, etc. • Are there unique ways for your company to connect with community partners? • Employment or training for those facing employment barriers? • Are there opportunities to procure goods and services from community-based businesses? • Turnaround Couriers (www.turnaroundcouriers.com) • Social Purchasing Portal