Question Period Note: GOVERNMENT OF CANADA REACTS TO THE PUBLICATION OF BUY SOCIAL CANADA’S REPORT ON CANADA’S SOCIAL ENTERPRISE SECTOR

On September 19, 2023, Buy Social Canada released a report on Canada’s Social Enterprise sector, titled “Sell with Impact: Stories and Research from the Canadian Social Enterprise Sector”.

The Government is committed to supporting social enterprises as vital partners in building an inclusive and sustainable economy, and as key drivers for social innovation.

The Government commends Buy Social Canada on releasing this report. It provides useful insights into the operations of social enterprises across the country, their amazing impact, and the challenges they face.

The Government is proud to have supported this research through the Investment Readiness Program. These findings will help to inform our work moving forward on the Social Innovation and Social Finance Strategy.

Buy Social Canada (BSC) is a leader in the development of Canada’s social enterprise and social procurement ecosystems, and a trusted community partner for ESDC. BSC has been actively engaged in social procurement research, policy development and implementation for over 15 years; designing, analyzing, and applying best practices in multiple jurisdictions.

ESDC has a long history of working with BSC to support social enterprises and advance social procurement, including joint engagement and collaborations with other federal departments, such as, Public Services and Procurement Canada.

ESDC funded a project with BSC, through the Investment Readiness Program (IRP), under the Social Innovation and Social Finance (SI/SF) Strategy. The research presented in the report was funded, in part, through this IRP project.

The objectives of the IRP project with BSC were to: increase the capacity and market opportunities for social purpose organizations and social enterprise suppliers; increase the social value purchasing policies and decisions of purchasers across governments, anchor institutions, private companies, and non-profits; and, increase the inclusion and opportunities for equity-deserving organizations, intermediaries, and enterprises through social procurement activities.

This report shares data from a survey of 132 Buy Social Canada Certified Social Enterprises operating across Canada, along with stories of innovation and impact.

Although data can be difficult to collect, there are likely over 20,000 social enterprises in Canada based on Canada Revenue Agency data on non-profits reporting income sources. The sample size is understood to be relatively small, but with limited social enterprise data available, the findings present useful insight for the Government of Canada, particularly for current and future initiatives of the SI/SF Strategy.

Definitions:

Social enterprise: A social enterprise is a business that sells goods and services, embeds a social, cultural or environmental purpose into the business, and reinvests the majority of profits into their social mission. At their core, social enterprises are mission driven. Rather than starting with profits and shareholders at the centre of their endeavours, social enterprises put purpose first. The social, cultural or environmental mission they want to address through their work is the reason social enterprises are created. They sell many different things such as consulting services, landscaping, clothing, healthcare, IT support, digital media services and more.

Social Procurement: Every purchase has a social, environmental, cultural, and economic impact, whether intended or not. Social procurement is about using existing purchasing to capture economic, social, environmental, and cultural impacts. By adding positive intention to those impacts, purchasers can contribute to institutional, governmental, or individual goals that help shape inclusive, vibrant, and healthy communities.

KEY FINDINGS

Social enterprises in Canada are solidly embedded in communities, work across business models, and deliver a vast array of goods and services. They create significant revenues, employment, and social impact. They compete with traditional for-profit businesses in the market, but they use their earnings to help create vibrant, healthy communities instead of shareholder wealth.

This research shows that social enterprises are taking on many social and systemic challenges simultaneously, while also running successful businesses and creating positive financial outcomes for their employees and communities. The report provides an economic snapshot of the social enterprise sector, highlights the impact that successful social enterprises are having across the country, and identifies some of the key barriers for social enterprise development and growth.

A survey snapshot based on 132 Buy Social Canada certified social enterprises found that:

Purpose: The most common primary purpose for social enterprises were: employment and skills training (35%), social development (33%), income generation for charitable or non-profit organization (22%), environmental (8%), and cultural (2%).

Impact areas: Social enterprises are working to address complex and often interconnected systemic issues. The top 10 categories for social value creation that were identified are: skills training (65%), employment opportunities (60%), social inclusion (46%), community development (34%), poverty reduction (34%), mental health and well being (33%), persons with disabilities (31%), supporting other social enterprises (26%), and food security (26%).

Type of business: Some of the most common and successful types of social enterprises provided food services, offered various forms of building maintenance, or worked on construction projects. The top 5 categories of goods or services provided by social enterprises responding to the survey, were food and catering (27%), employment services (26%), education (23%), consulting (21%), and cleaning (13%).

Geographic scope: 4% operated internationally, 14% nationally, 20% provincially, 55% operate in one city or town, and 7% only operate in their local neighbourhood.

Revenue: Respondents generated a total of $237.2M in gross revenue and $185M of gross sales income in 2022. This total does not include GreenShield Canada, a national health service social enterprise, which had an annual revenue of $3.9 billion in 2022.

Profitability: 70% of respondents indicated that they were at least breaking even. 11% were profitable, 26% marginally profitable, 33% breaking even, 21% marginally unprofitable, and 9% unprofitable.

Size of enterprise: 1-9 employees (40%), 10-99 employees (48%), 100-499 employees (7%), and 499+ employees (5%). While many social enterprises are small, not all are. Four respondents to the survey had over 1,000 employees - GreenShield Canada, EMBERS, Commissionaires, and Just Like Family Home Care.

Employment: Together, respondents employed over 9000 Canadians, accounting for $141.3M in employee wages paid in 2022, with a near even split between part-time and full-time employees (52% and 48% respectively). The real employment contribution is likely much higher, as some social enterprises did not include their contract workers or day labourers in their employment numbers.

Employee supports: Social enterprises recognize the importance of removing barriers and creating accommodating and supportive work environments across the spectrum of needs. 85% of the social enterprises surveyed provide wraparound supports for employees facing barriers to traditional employment, including members of equity deserving groups.

Most common types of support offered: professional development (77%), flexible work schedules (45%), mental health support (25%), physical health/wellness support (22%), meals/meal planning (20%), housing support (17%), cultural/spiritual wellness (16%), transportation (14%).

Corporate structure: Social enterprises are most often incorporated as non-profit organizations (88%), which generate income from the sale of goods or services. Other social enterprises have a hybrid incorporation model (8%) or are co-operatives (4%).

Hybrid social enterprises are most often incorporated as Community Contribution Companies (CCC) in British Columbia or Community Investment Corporations (CIC) in Nova Scotia, the only jurisdictions with hybrid corporate structures. Hybrid social enterprises may only be able to incorporate in two provinces, but they can register to operate anywhere in Canada. By legislation, they must have a social purpose and their profit distribution to shareholders cannot exceed 40%, with the balance going to community purposes.

Another small niche of social enterprises are for-profit social purpose businesses. These businesses are only social enterprises when they update their articles of incorporation to have the same profit redistribution and asset lock as hybrid social enterprises. Examples include Infiniguard in Toronto and Soul Bite Food in Vancouver.

Key challenges identified: When asked about the challenges they face, social enterprises put access to markets at the top of the list (59%). Business capacity (51%) and access to finance (48%) were not far behind, with business development also being identified as a key challenge (22%). Many social enterprises have capacity to take on more work but lack either finances or access to customers.

Priority policy areas identified by respondents:

Social Procurement - A key theme in survey responses about what helps social enterprises to thrive and grow, was social procurement. For example, Choices for Youth emphasized that “social procurement policy with real targets and incentives” would help immensely, along with ongoing education for all sectors on the value of working with social enterprises. Compost Winnipeg added that more education is needed on the value “that can't be measured in dollars” which social procurement delivers for communities.

Awareness of social enterprises - Other social enterprises emphasized the importance of raising awareness about social enterprises and the value they provide. Part of this includes changing the narrative and perception of social enterprises so they are seen as viable businesses rather than charitable organizations. 90% of respondents said they had capacity to take on larger contracts than they currently had. 29 survey respondents said they could take on contracts over $1 million.

With time to grow, they indicated they could take on contracts up to $50 million in the next three years. But social enterprises are often perceived as small and low-capacity organizations.

Inclusion in the Business Development Bank of Canada - Along with other social enterprises, Gateway Navigation CCC emphasized that a meaningful way to improve access to finance would be an “amended lending policy” of the Business Development Bank of Canada and other Government funding to include hybrid social enterprises and non-profits. The Social Finance Fund was not mentioned in the report, likely because the surveys took place before the fund was publicly launched.

In addition to providing survey results, the report also highlights a wide variety of successful social enterprise operating across Canada, working to address a range of complex social and environmental challenges. Some examples are provided below.

Furniture Bank, a leading social enterprise in furniture reuse and poverty relief, is Canada's largest furniture reuse network, diverting over 3 million pounds from landfills annually. Founded in 1998, Furniture Bank operates charitable programs alongside social enterprises, funding 80% of costs through earned revenues. Their Homing Program redistributes used furniture to those experiencing furniture poverty. Since 2019, they have fostered an impactful partnership with large multi-national corporation IKEA to advance social and environmental good.

Purpose Construction is a construction social enterprise in Winnipeg, MB. They take on construction contracts and clients while providing trades training to employees. They serve a broad population, with target audiences for employment including Indigenous people, people transitioning out of the criminal justice and child welfare systems, newcomers to Canada, and members of the 2SLGBTQIA+ community. As of Summer 2023, Purpose Construction has 40 employees, most of which face barriers to traditional employment.

The Raw Carrot is a social enterprise operating in several towns in Ontario which primarily sells soups. For their social impact, they provide meaningful employment and livelihood security to individuals on social assistance who want to work, including people with disabilities and other barriers to employment. The Raw Carrot model centres on a supported work environment, where volunteers support paid staff (barriered individuals) in their roles for short-term or permanent part-time work. Just a few years after opening the first location, another community expressed interested in replicating their success. The Raw Carrot has since agreed to start a pilot franchise locations and share their business model and lessons learned. The Raw Carrot has a headquarters in Paris, Ontario which generates revenue through the franchise model. The headquarters supports the franchise locations with bulk buying, shared learnings, best practices, consulting, and other custom supports.

Untapped Accessibility is a BC-based social enterprise that boasts a team of accessibility experts, with a majority also possessing lived experience of accessibility barriers. They support organizations to “deliver accessibility that reaches beyond compliance to create truly inclusive organizations for all”.

Untapped Accessibility focuses on disabled professionals with extensive resumes who are uniquely positioned to advise on high-level consulting contracts. Since opening in Fall 2022, Untapped Accessibility has seen a huge demand for their services which include hands-on consulting, external project management, strategy development, and training. Unlike other consultants, Untapped Accessibility brings a diverse team with lived experiences of disability to every contract and project.

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