Democracy Gone Astray

Democracy, being a human construct, needs to be thought of as directionality rather than an object. As such, to understand it requires not so much a description of existing structures and/or other related phenomena but a declaration of intentionality.
This blog aims at creating labeled lists of published infringements of such intentionality, of points in time where democracy strays from its intended directionality. In addition to outright infringements, this blog also collects important contemporary information and/or discussions that impact our socio-political landscape.

All the posts here were published in the electronic media – main-stream as well as fringe, and maintain links to the original texts.

[NOTE: Due to changes I haven't caught on time in the blogging software, all of the 'Original Article' links were nullified between September 11, 2012 and December 11, 2012. My apologies.]

Friday, May 10, 2013

Diane Finley seeks market solution to deeply-rooted social problems

The private sector will supply the cash. The non-profit sector will provide the ideas and deliver the programs. The government will “harness the power of social finance.”

That, in a nutshell, is Human Resources Minister Diane Finley’s formula for tackling Canada’s most deeply entrenched social challenges: chronic poverty youth unemployment, homelessness, aboriginal despair.

“We must look at new ways to unlock innovation in local communities,” she told 200 female business executives and non-profit leaders at the inaugural Women in Social Business Forum this week. “We need continued partnership from public, private and not-for-profit sectors to improve results and maximize our investments.”

She is confident Canadians are ready for a new approach. Last November she put out a call to non-profit organizations, businesses, charities and citizens for concepts “that could help our government address some of our social challenges in new and different ways.” Within three months, she received 154 submissions. “The response exceeded our expectations,” she told her audience.

What wasn’t clear in Finley’s speech or her department’s background documents was the role she and her government would play.

She was explicit that Ottawa would not be a financial contributor — quite the opposite. The aim of the initiative is to “mobilize private capital” to do what the government has always done or paid social agencies to do.

She said nothing about changing the tax code to reward investors who commit money to social projects. That is what proponents of social financing want. They believe investors who provide upfront cash for social projects should qualify for the same tax credits as philanthropists who give money to hospitals, art galleries and universities.

Finley was manifestly right about one thing: there is no shortage of creative ideas bubbling up at the local level. Visit almost any Toronto neighbourhood and you’ll find pioneering business-charity hybrids. Visit the Centre for Social Innovation and you’ll see people turning their passion for a fairer, greener, more inclusive city into socially motivated businesses. Visit the MaRS Centre for Impact Investing and you’ll find policy-makers, community leaders and corporate types putting their heads together.

What’s holding things back is an acute shortage of funding. Without an angel investor, many social ventures can’t get off the ground. Canada has a handful of these investors: community-spirited individuals, enlightened businesses and large pension funds. But most financiers regard social enterprise as a high-risk, low-return proposition.

Although Finley did not address this dilemma directly, her report, Harnessing the Power of Social Finance, provided a couple of clues about her government’s intentions:
It highlighted pay-for-performance agreements. These are pacts between the government and a social agency in which the government identifies the result it wants and undertakes to pay the social agency only if that result is achieved.
It also shone a favourable light on social impact bonds. These are three-way arrangements in which a social agency pairs up with a private investor willing to underwrite its project and the government specifies the desired outcome. If it is achieved, Ottawa returns the investor’s principal and pays a predetermined profit. “This allows the government to use funds otherwise spent on services like counselling, health care or detention to reward investors,” according to the report.

It is easy to see why the government likes these schemes. They produce quantifiable gains. They give Ottawa control without requiring a financial commitment. And they allow federal politicians to cut payroll costs while maintaining — perhaps improving — public services.

It is harder to see the appeal for private investors. They would be taking a big risk for a modest payback.

It is also hard to fathom why a non-profit social agency would want to make profits for a private investor.

Taking a positive view, the minister’s approach could stimulate fresh thinking, strengthen cross-sectoral bonds and tap into the good will and resources of retiring baby boomers.

Taking a less sanguine view, her quest to impose market discipline on the social sector could undercut churches and charities, stifle true altruism and blur the lines of responsibility.

It is a question of balance. Finley hasn’t got it quite right.

Original Article
Source: thestar.com
Author: Carol Goar 

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