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canada competes

"Oh, East is East, and West is West, and never the twain shall meet."

Rudyard Kipling was, of course, referring to geographical and cultural divides in his oft-quoted poem The Ballad of East and West. However, the sentiment could just as easily apply to the divide between non-profit do-gooders, and capitalist businesspeople. Long have the two sides looked askance at each other. Social activists decry corporate greed and suspect ulterior motives when business gets involved in social projects. People in the business world lament economic resources wasted on unsustainable development projects and what they see as activists' naive failure to grasp the importance of building strong economies.

Despite the mutual hostility, over the past decade we've witnessed the two come together to produce a hybrid that applies business models to the practice of doing good: the social enterprise.

Paintbox is a good example. Located in Toronto's Regent Park district, where the majority of residents are low-income families living in social housing, Paintbox Catering and Bistro is a young but booming restaurant and catering service. In just one week in early September, it pulled in more than $100,000 in catering business. And in the one year it's been in operation, Paintbox has also helped 36 people begin well-paying careers that mean they are no longer reliant on Toronto and Ontario's welfare rolls.

As part of its corporate mandate, Paintbox not only hires individuals from Regent Park at a living wage, but invests some of its profits back into providing them with skills training for careers in the restaurant industry (and that doesn't mean counter jobs serving fast food). Recently, with grants from various local and provincial agencies, Paintbox sent 12 of its employees for apprenticeship training at the George Brown College Chef School, one of Canada's top culinary schools. Paintbox is now also putting some of its profits into a business incubator to support other entrepreneurial start-ups in Regent Park.

The end result: more people lifting themselves out of near-poverty, which lowers the burden on our social safety nets, through a program that relies on significantly less government or donor funding to operate than a government job agency or donation-funded non-profit, and a successful small business contributing to Toronto's local economy. It's a win whether you're standing on the left or right of the political-economic spectrum.

As well, Paintbox president Chris Klugman tells us his company attracts a new kind of investor: venture capitalists who want to invest in successful businesses that also provide a social good.

Despite the value to Canada, our country lags in competitiveness in the global social economy. This year at the Skoll World Forum – which recognizes outstanding global social enterprises – there were noticeably few Canadian social entrepreneurs among delegates.

Britain and the United States have made significantly greater progress in establishing government policies to encourage the growth of their social economies. In 2005, Britain created a new class of business: the Community Interest Company (CIC). A British company that provides a social good, such as a business like Paintbox, can apply to the government to be registered as a CIC. In so doing, it gains additional flexibility in tax status and legal liability. The CIC designation also makes it easy for donors, and socially conscious investors and consumers, to identify businesses they want to support. Similarly, since 2008, nine U.S. States have passed laws allowing social enterprises to register as Low-profit Limited Liability Companies (L3C). Britain now has more than 6,000 CICs and the U.S. about 800 L3Cs. Only late last year did the Government of Canada begin a consultation process to see what it could do to boost Canada's social enterprise sector.

Some U.S. business schools such as Harvard have offered elective courses and even full MBAs in social entrepreneurship for up to a decade. Canada's first Social Enterprise Leadership MBA was just announced this May at the University of Fredericton's Sandermoen School of Business.

On October 2, Calgary will host the Social Enterprise World Forum – featuring speakers from around the world – to share ideas on how we can use markets and enterprise innovations to solve the most complex global social, economic, and environmental challenges.

We would love to see Canadian federal and provincial governments establish a new business entity class like the CIC or L3C for social enterprises. Our governments should also offer tax incentives to entice more entrepreneurs into the social economy, and encourage foundations and impact investors to put their capital into social enterprises. And why not a policy at all levels of government giving preferential treatment for social enterprise vendors in government procurement? Another good idea would be a national labelling system backed by a broad public awareness campaign to help consumers identify and choose social enterprises. We'd also love to see every business school in Canada offering full degree programs, undergrad and graduate, in social enterprise.

With the lean economic times that Canada, like all nations, has experienced in recent years, our government investments in both domestic and international social and development programs has generally decreased. In business terms, our social productivity as a nation is in decline. While governments are not off the hook, the charity world needs to innovate and find new ways to attract outside investment to boost our social productivity. The answer is social entrepreneurship – where charity and business can meet in the middle to create both social and economic good.

Craig Kielburger is co-founder of the charity Free the Children and the social enterprise Me to We.

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