Established in 2008, the Social Enterprise Fund (SEF) is an initiative of the Edmonton Community Foundation. SEF manages several different impact investment funds each with its own shareholders, board, and investment priorities. All funds prioritize investments in the Edmonton region, expect a financial return (we don’t do grants), and require annual reporting on social metrics.
Any profits that we generate are normally reinvested into new initiatives that create social impact. Sometimes a portion of the funds are returned to our shareholders who then use it to provide grants to the charitable sector. Regardless of the option, proceeds from our operations are used to create more social impact for our community.
We work with any Canadian registered organization (nonprofit or for-profit) that can demonstrate their ability to achieve significant social impact while also running in a financially sustainable way. We will not invest in anything that cannot demonstrate both social and financial returns.
While we do entertain any opportunity, we do have priority areas that we prefer to focus our investments on. More specifically, we first explore proposals from Edmonton and surrounding region. After that, we look throughout Alberta and then to the rest of Canada. We currently are not exploring opportunities outside of Canada.
From a social lens, each of our funds has areas that it focuses on. At the current moment, anything related to housing is top priority. Following that, we see child health & wellness, arts & culture, environmental impacts, and downtown vibrancy as other key areas. If your proposal is outside of these priority areas, please still contact us as we still consider investments in other areas.
Most of our investments are loans but we also consider equity investments. For all investments, the key thing is that there is a clear exit strategy. We want our portfolio to be revolving so that we can continue to invest in new initiatives which means that we do not lock in our investments for long periods of time. As a general rule, most of our investments are in the 5-7 year range.
Each investment is unique. However, the following table will provide a general framework for our expectations in our investments.
Placement within the interest rate range is based on a number of factors including amount of securities/collateral and SEF’s position on them. Additionally, SEF may be willing to take a lower financial return if the social impact from the investment is significant and aligned with our priority areas.
We are a small organization and do not operate as quickly as mainstream lenders. We take time to evaluate our investments because we want to ensure that we create the greatest social impact while also ensuring that our funds are secure. While we try to review things quickly, it can take up to 3 months to secure funding from us since investments are approved quarterly.
Here are the steps to obtain funding:
Each investment is different so expectations change. At a minimum, all investments are required to provide annual reporting on the following:
SEF also requires annual third-party prepared financial statements from our clients, usually at the Review Engagement level. We will consider a Notice to Reader level, but this should be requested during completion of the Financing Agreement.
It’s not a requirement by SEF, but it is a good idea. You will be considering a substantive legal agreement, perhaps more complicated than any you have encountered before, and you may be committing your enterprise to live with for years to come. Our experience is things go much more smoothly for our clients if they have their own legal counsel.
SEF uses a lawyer for all of our investments. We try to keep these costs as low as possible but there is a cost which is passed on to our clients (about $1,500 – 3,000 per loan). Because of this charge, we try to avoid loans less than $50,000 to make the process financially viable.
We work with our clients and their resource needs on a case-by-case basis to determine what works best to ensure the success of their enterprise. While we can offer greater flexibility than most traditional lenders, we fully expect you to follow the plan that you agree to. The long-term viability of SEF depends on our loans being repaid – with interest.
SEF does not charge change fees or penalties if our clients want to repay some or all of their loan before the end of the term. Contact SEF’s executive director for details.
No. We are only involved in investment-related activities.
No. There are many excellent training opportunities available across the country. Find out more in our Resources section.
SEF loves when our clients recognize our contribution — it helps spread the word so others learn about a tool that could help them too. You can find our logo here.
