The Social Finance Fund and Common Approach Come Together to Drive Change in Canada

A prominent pioneer in the world of impact measurement, Associate Professor of Accounting Kate Ruff is on a mission to ensure that the power to decide who and what matters most resides with social purpose organizations (SPOs) and those they serve, rather than with the investors and donors who fund them. The Government of Canada’s $755M Social Finance Fund will help advance this mission, as it will rely on Kate’s research to empower SPOs to make their own impact-reporting decisions.

Put simply, the Social Finance Fund will furnish the finance investment ecosystem with an influx of capital, getting it to the businesses and business leaders who focus on such issues as climate, the environment, social equity, gender equity, and the overall well-being of Canadians. Government investment, which will primarily comprise (repayable) debt and equity investments, will be matched by large institutional investors.

Altogether, the program will place hundreds of millions of dollars of flexible financing into the hands of social entrepreneurs and innovators – many of whom have long been ready to scale their local operations – including those based in underserved populations, sectors, and regions of Canada.

Throughout the process, investors and SPOs will employ the Common Approach standards, the impact measurement framework at the heart of Kate’s research program. Historically, funders or investors would tell SPOs what they wanted to achieve and require the SPOs to collect funder-determined metrics.

This kind of impact measurement was burdensome to SPOs, but the alternative – whereby SPOs would furnish funders with the data they were collecting to run their organizations effectively – was also inadequate since it failed to meet funders’ needs. What Common Approach recognized early on was that the way around this impasse was not to change what SPOs measure, or to deny investors the information they require, but to build a bridge between SPO and investor datasets. By creating and serving as this bridge, Common Approach is resolving longstanding problems around impact measurement by allowing SPOs to collect the data that is meaningful to them while providing a framework for making that data equally useful to funders.

How do the Common Approach standards bridge the divide between SPO and funder?

First, the “common foundations” ensure that SPOs are following best practices in terms of self-assessment. Then, the “common impact data standard” translates data from SPO computer systems into terms that the funders’ computer systems can understand, making it easier for all players to share, aggregate, and analyze the data. The “common form” collates basic organizational information (e.g., SPO name, address, mission statement) within a single form that can be shared among all players in the social purpose ecosystem. Finally, the “common framework” allows SPOs to align their discrete datasets with such frameworks as the United Nations Social Development Goals.

Its centrality to the Social Finance Fund is a clear coup for Common Approach, but Kate’s research in this area has long been a success story in the making, garnering support from such organizations as the Social Sciences and Humanities Research Council of Canada, Employment and Social Development Canada, and the Ontario Ministry of Development and Economic Growth. This is also a success story whose origins lie deep within Carleton’s research culture.

From the strong Carleton contingent on the Social Enterprise Measurement Task Force that engendered the Common Approach standards to Kate’s stewardship of the resulting non-profit spin-off, Carleton is ubiquitous in the story of Common Approach.

Moreover, “the fact that Common Approach grew out of a university, and particularly Carleton University, has been really important to giving it legitimacy and trust. Our track record with community economic development and social business engenders trust, and the research would not have been possible without that.”

Although the Common Approach standards emerged from a provincial task force, Kate hopes that their implementation on the national scale will not mark a culmination point.