Financing Co-ops and Social
Enterprise in New Brunswick
The New Brunswick Economic and Social Inclusion
Corporation defines social enterprise as:
Non profits, for profits, co-operatives and other
organizations that earn some, or most, of their
revenues from the sale of goods and services and
reinvests the majority of its profits back into
social, cultural or environmental goals.
Nonprofit
Social Enterprise Small Business
Community
Needs
Customer
Wants

Reduce Poverty and Unemployment: jobs, training

Provide Accessible Services: housing, health care,
daycare, recreation, culture

Address Environmental Issues: recycling, alternative
transportation, energy, innovation, ecotourism

Integrate Marginalized Populations into the economic,
cultural and social fabric of the community

Stimulate Economic Revitalization by creating locallyowned and operated businesses and keeping Investment
and profits in the community
 Depending
upon your structure and capacity:
Revenues, surplus
 Donations, foundations
 Grants, fundraising
 Owner/member equity/loans
 Investors, SBITC, CEDIF
 Crowdfunding (donation, reward, equity)
 Social Impact Bonds
 Loans, loan guarantees

Foundations, donations, grants,
donation/reward crowdfunding,
loans, guarantees
Some foundations,
grants, donation/reward
crowdfunding, loans
A few foundations, grants,
owner equity/loans, investors,
SBITC, CEDIF, reward/equity
crowdfunding, SIBs, loans
Charity, non profit, for profit
As above plus member
equity, member loans,
reserve funds
In addition to traditional banks, credit unions and financing
companies, the following organizations can provide loans or
loan guarantees to co-ops and social enterprises:
•CBDCs Social Enterprise Loan up to $150,000
•Agriculture/Fisheries – variety of loans and guarantees
•ACOA and FAIP – Financial Assistance to Industry
(manufacturing, processing, tourism, IT)
•Small Business Loan Guarantee Program (Industry
Canada)
•Canadian Worker Co-op Federation (Tenacity Works)
•Saint John Community Loan Fund
•Cndn Youth Business Foundation, Youth Social Innovation
• Venture Capital, Angel Investors
• SBITC
• CEDIF
• Crowdfunding
• Social Impact Bonds
Venture Capitalists are investors who provide capital to startups or
small companies wishing to expand. IT companies are the most
common targets. VCs goal is to earn a large return on their
investments and they generally require a significant share in the
ownership and control of the company. Examples are Dragon’s Den
and BDC Venture Capital.
Angel Investors provide financial backing for small startups and are
often an entrepreneur's family and friends. The capital they provide can
be a one-time injection of seed money or ongoing support to carry the
company through difficult times. They may give more favorable terms
than other lenders and are more focused on helping the business
succeed, rather than just profit.
Other than angel investors who are family/friends, there are those that
are quasi-angels, i.e. Atlantic Angel Investors, NB Innovation Fund,
Canadian Worker Co-op Federation
The SBITC provides a 30% non-refundable income tax credit of up
to $75000 (for investments of up to $250,000 per year) to residents
who invest in small businesses in the province. Effective 2014, the
SBITC now also allows corporations and trusts to be eligible for a
15% tax credit on investments up to $500,000.
Must be an existing business in NB, have a comprehensive
business plan and investment plan, and at least 75% of employees
must reside in NB.
The investor must leave their money in for 5 years minimum at
which time they can choose to redeem their shares or leave them
in. Many businesses offer an additional return on investment, i.e
prime plus 1%.
Coming to NB by Jan 2015: A CEDIF is a pool of capital, formed
through the sale of shares to investors within a defined community
(geographical, economic, cultural or industrial), and created to
operate or invest in local businesses. CEDIFs provide access to
capital for social enterprises and co-ops and can focus on
developing many businesses in a community (blind pool), such
food producers, or on a larger specific investment, such as a
processing facility for local products.
Like the SBITC, individual investors receive a 30% tax credit (up to
$75000) and corporations at 15% credit (up to $75000). Both
must leave their investment in for at least 5 years.
May offer additional ROI
Must have at least six directors elected from the community.
May be eligible for an individual’s self-directed RRSP.
Donation-based Crowdfunding: supporters essentially donate
money to support a cause and may receive in exchange a "thank
you", a special mention, or even a gadget, but in any case the
pledge is essentially a gratuity. (KIVA)
Reward-based Crowdfunding, in which the backer receives a
reward with a clear monetary value in exchange of the pledge.
The reward is often a product or a pre-series item that the backer
helped produce by pledging money. In this case the money
pledged is similar to paying for a pre-order of a product or service.
(Indego)
Equity-based Crowdfunding, in which the backer receives
shares of a company in exchange of the money pledged. In this
case the money is pledged in the form of risk capital. Legislation
for this is currently being developed for NB. Ceiling being
considered is up to $1.5 million with a cap of $2500 per investor.
A social impact bond (SIB) is a “pay-for-success” contract where
a commissioning body – typically the government – commits to
pay for the achievement of a particular desired social outcome,
i.e. reduction in incarceration/hospitalization.
Through a SIB, private investment is used to finance social
interventions. Provided that agreed upon social outcomes and
savings to government are achieved, financial returns to
investors are paid by government.
Need to establish objective, measurable metrics to quantify
outcomes and mitigate external factors.
Investors risk not receiving their money back let alone an ROI.
NB’s first potential SIB is being planned. NS, Alberta and
Ontario are also in the planning process.
Projects currently happening in other parts of the world. Obama
administration has committed $500 million in the US
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