Six Big Ideas for the Next Economy – Centre for Social Innovation

Jeff Cyr of Raven Indigenous Capital Partners joined us in June to discuss what Community-Driven Outcomes Contract (CDOC) are and how they are serving the Indigenous community. This innovative new investment vehicle is changing the game in Canada — connecting social finance with deep-rooted respect for community.

The idea of an Indigenous intermediary came to Jeff a few months after the inaugural Indigenous Innovation Summit. His conversations with Indigenous entrepreneurs leading up to, during, and after the summit revealed massive barriers in access to capital.

“What didn’t exist was Indigenous investment vehicles. That’s the problem. We said: ‘We need Indigenous equity. I wonder if we can raise capital from the non-Indigenous world to invest in Indigenous enterprise and prove that this can be done.’”

They did! Raven Capital completed their sixth investment in June 2020. All of their ventures so far are promising — and one in particular sparked the development of a new social finance model for community-based solutions.

In a CDOC, the community in question determines its priorities and how they’re going to get there before they look for capital. It places control into the hands of the beneficiaries, rather than external parties that don’t fully understand the problems they’re trying to solve.

The CDOC itself is basically a pay-for-performance model: private investors upfront the investment and tag a rate of return based on success. The Indigenous social enterprise will work with the band to implement the solution. Once they hit success, the outcomes buyer (the government) pays the private investors back with a rate of return. Raven Capital acts as an intermediary between all three parties.

It’s an intentionally slow, deeply collaborative process.

“We will often say ‘we are now going to be in relationship with each other,’” explained Jeff. “At the end of the day, when things get tough you rely on relationships to see you through. So we spend an inordinate amount of time building relationships and trust.”

We often face silos when trying to address systemic inequities: “Nonprofits and governments are creating these policies on one side to do good, and then businesses are doing the work they want to do and donating money toward causes. But they were kind of seen as separate.”

Essentially, these are for-profit organizations that want to use their influence for good.

A B Corp (not to be confused with a Benefit Corporation, which is a legal structure) embraces the idea of stakeholder capitalism. They define what’s in the best interest of a company not solely by profit, but by thinking about different stakeholders.

“We work with these companies to help them achieve greater impact through the assessment process,” Kasha explained. It’s a lengthy, stringent evaluation that asks businesses to consider all their stakeholders in their operations, and must be completed once every few years to stay certified.

“[The assessment helps you] understand how you’re doing across these areas, and gives you a road map for improvement.”

We spoke with Buy Social Canada Managing Director David LePage in August about social procurement and the Marketplace Revolution.

In the early 2000s, David realized that while there were lots of employment social enterprises doing great work, there was a stark lack of demand for social enterprises and the people they hire.

“The companies that were saying ‘we want to help’ were [also] like ‘we don’t hire these people,’” David recalled. “But they buy the products and services that hire people into entry-level jobs. So how do we […] create the demand side that says ‘I’m going to buy from the companies that will hire these people’?”

This is the foundation of social procurement theory, which proposes that the purpose of a marketplace is not to create economic value, but to create healthy communities. This means taking into account human, social, physical, and cultural capital along with economic capital – something Buy Social Canada calls “community capital.”

“When we start to measure success in community capital, we start to change the very activity of business,” said David. “So if you aren’t paying a living wage and beyond, if you aren’t environmentally sound, then you aren’t fulfilling your capitals.”

Social procurement is about looking past financial reward as a sole measure of success, and making intentional purchasing decisions that have a positive impact across all capitals.

Government support is imperative to driving this change in how we do business, and can support social enterprise through its procurement decisions.

“The whole policy system is set up to reward big business and financial gain. We need to make accessible the same supports for social enterprises that are available to private businesses,” said David. “We have to shift how we value. It’s not the lowest price, it’s the best value. And the best value is about community capital.”

In December, SolarShare General Manager Chris Caners sat down for a conversation about democratic control, community-financed projects, and the importance of government support for systems change.

“Fundamentally, the thing I’m excited about is the participation and role of community in our day-to-day lives, and in SolarShare’s case, the infrastructure,” said Chris. “The co-op model is a great model. It speaks to me about democratic control.”

“It gets a lot better when we have resilience within the community, and are able to [supplement] it with external sources,” said Chris. “For me, democratic control of infrastructure is one path to a better, more equitable future for all of us.”

“Fundamentally, we need to change the way we operate. If we want a better and more equitable future, we need to design it into how our organizations and our laws work,” he said. “There are lots of people doing lots of excellent work, like SolarShare, TREC, and CSI. But in order to make it scale, we need our governments to help.”