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MaRS to launch Centre for Impact Investing

One of the research facilities in Toronto's MaRS Discovery District

Tibor Kolley/The Globe and Mail

Proponents of social-impact investing have scored a victory, with Toronto's MaRS Discovery District set to announce the creation of a centre that will promote the concept in Canada.

The Centre for Impact Investing will be designed as a national hub for social finance initiatives, which are much further developed in the U.K. and the U.S. than they are in this country.

A number of high-profile Canadians, including former prime minister Paul Martin and Macquarie Capital Markets Canada chairman Stanley Hartt, have been working to change that, and to push the concept in this country.

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Social finance means using traditional financing tools in a way that generates not only financial gains, but also social ones.

It includes innovative ideas such as social impact bonds, where private investors help fund not-for-profit projects and the investors are paid a return that comes from the money the projects save government.

For example, last year the U.K. Ministry of Justice teamed with Social Finance, a British organization similar to what the Canadian Centre for Impact Investing hopes to become, to launch the world's first social-impact bond. The bond issue, of about $8-million, raised money for a pilot program at England's Peterborough Prison to rehabilitate prisoners. If reoffending drops by more than 7.5 per cent within six years, investors will receive a portion of the money saved by keeping people out of jail, to a maximum return of 13 per cent.

The Centre for Impact Investing that is being announced Thursday in Toronto will be launched with $1.3-million of financing from the Rockefeller Foundation and the J.W. McConnell Family Foundation.

The total Canadian impact-investing market is currently $2-billion, according to MaRS, but is expected to grow to $30-billion in 10 years. Proponents, such as the Canadian Task Force on Social Finance, say governments must make a number of regulatory changes and buy into the concept before it can take off.

A report by J.P. Morgan and the Rockefeller Foundation deemed impact investing to be a new global asset class with the potential to reach $1-trillion globally.

The new centre comes as a number of partners including the MaRS District innovation hub, the Ontario government and TMX Group Inc., are creating a Social Venture Exchange, which will act as an online match-maker for social finance projects and investors.

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