Social Impact Fund: Meet Shane Butcher, Chair of the Social Finance Committee
Social Impact Fund: Meet Shane Butcher, Chair of the Social Finance Committee
Shane Butcher, Chair of London Community Foundation’s Social Finance Committee
London Community Foundation’s Social Impact Fund unlocks the Foundation’s assets to provide loans to affordable housing projects and social enterprises that are making positive changes in the community. Between 2014 and 2023, the Social Impact Fund provided more than $41 million in loans for 23 affordable housing projects and 11 social enterprises.
The Foundation’s Social Finance Committee oversees the Social Impact Fund, providing expert recommendations to the Board of Directors which makes the final decisions on all loans.
Shane Butcher was appointed Chair of the Social Finance Committee in 2024. Shane recently spoke with Rachelle Lamarche, our Finance and Operations Specialist, about the role of the Social Finance Committee and the vision for the Foundation’s Social Impact Fund.
Listen to their conversation through the audio link, or read the interview transcript.
Rachelle: What brought you to volunteer on the social finance committee at London Community Foundation?
Shane: It's a great question. The work that I was doing with Libro as a regional manager for the London Elgin Oxford region — I just seem to be crossing paths with the work being done by the social finance committee, and so a connection with Vijay Venkatesan [London Community Foundation’s VP of Finance and Operations]. And, it just made sense for me to move in as a volunteer on the committee. The work we were doing with Verge, London Community Foundation, Libro and Verge, and the granting work that we do in the community or we did in the community, from Libro— like I said, it just kept crossing paths so it made sense to further my connections into the community and supporting the London Community Foundation, social finance committee, and social finance investment and I think that was almost four years ago. It’s been incredibly rewarding for me and hopefully, I've given back a little bit to the community as well.
Rachelle: That's awesome. I didn't know the background. So that's really nice to know. What have been some of the greatest learnings about social finance or impact investing since joining the committee?
Shane: We have a lot of amazing people and organizations doing incredible work. And it's not new, but it was certainly reinforced. And I've certainly learned a lot more about the incredible work that London Community Foundation does, and a whole additional space in a lot of other spaces. And I think I would sum it up in that there is an incredible opportunity for organizations to not just focus on the bottom line and change the focus to a triple bottom line. So, doing things that are good for the community, good for the planet, and those that can be sustainable and make a profit and a return. We've proven that through times of low interest. We've proven it through COVID. And, you know, it is possible to focus on all three things and still be true to your mission, be true to your roots. And I don't see that stopping. I, in fact, believe it has to be a way forward for the rest of society. We can't keep making a financial profit at the expense of people, community or the planet.
Rachelle: Social return on investments is just as important as the ROI. Why is the Social Impact Fund important? And what do you see as the role of social finance and the Foundation's mission?
Shane: I think it goes back to what I just talked about. There are so many incredible organizations doing wonderful work out there. And the challenge with some of the work is getting it started because they're not bankable under traditional banking guidelines. They need support to get off the ground; they need seed money, and they need bridge financing until different levels of government financing can come in or their own bank financing can come in. You know, there are so many examples of that. Projects just would never get off the ground. And social finance, you know, those companies that are doing amazing things for our community and in our community, until they get really established — in the infancy stages, they're just not bankable through traditional sources of financing or equity. And so, the Social Impact Fund, social financing closes those gaps and allows these companies to get going and get started until they're able to access other forms of capital and lending tools.
There are so many wonderful, wonderful examples and one we actually just spoke with today. A startup company that's doing incredible things in the apparel industry and they just wouldn't qualify for traditional financing. And yes, it's on the outside of our risk purview but we were going to look at it. We're going to find a way to help this company move to the next steps and without a social finance element available to these businesses, they're going to die before they start. So, it's incredibly timely and needed. And then you flip the page, and you look over at the affordable housing. There's tons of government money available, and it's not available until the project is half-built. And so those projects wouldn't get off the ground either. So, I would say that now and into the distant future, social finance arms like ours are going to be needed. In fact, without it, the community is going to struggle.
Rachelle: You can't build a shelter with the best of intentions, that's for sure. As the new committee chair, what is your focus for 2024?
Shane: I think there are lots of things that we're working on and focused on. But I think primarily, we have focused on certain groups within our community, that we haven't built strong enough relationships with, that we haven't established trust. And as a result, we're not getting those kinds of opportunities from those groups. Indigenous groups come to mind. We know there's incredible work being done by some wonderful organizations, and we don't have our finger on the pulse of those. And so, we need to continue to find ways and avenues to build and strengthen our relationships in those areas within the community. Affordable housing organizations are finding us and we have no shortage of those projects. What we need to do is to continue to build stronger relationships in certain parts of our community so that we can go deeper in some of our social finance supports. We're talking now about whether it is just a loan or is it a loan and a grant and how we can go even further and deeper. But until we build and strengthen those relationships and the trust factor, it's going to be hard for us, to build a pipeline of those opportunities.
Rachelle: Right now, definitely learning how we can best support those diverse groups, that's for sure. What excites you about the opportunities for the Social Impact Fund and the committee moving forward?
Shane: I think some of the forward-looking conversations that we're having, about what we could look like? Can we build an entirely separate entity where we don't have to worry about capped funding? I think we're currently hitting the ceiling again. And so, are there ways that we can structure the committee or the organization where we have access to different forms of capital, that's not putting the Foundation sort of in the middle of that risk, you know, return? I think that's something that’s extremely exciting. And as I was talking about, building stronger and deeper relationships and trust with parts of the community that we currently are not fully engaged with. Very exciting, working with the committee, I mean, these are really engaged people.
It takes a lot of time and energy to go through some of these proposals, to be able to ask the right questions. And so, working with those people, the committee members each and every day, is itself exciting. And just seeing the results of the work. I mean, just at today's meeting, for example, we had feedback on two projects. And you could just see committee members faces light up. Because it's not immediate, but three months, six months, two years, you see the impact of the work that's being done at the committee level. That in itself, if that doesn't get you engaged, I'm not sure what will?
Rachelle: Yeah, I'd love to see that and the results. Are there any projects since you joined the committee that especially stand out?
Shane: There’s been a lot and it tends to be the ones that you're working on right now or that you've just worked on that are never going to come to mind. And, so as I mentioned it earlier, a transitional housing space in an underserved area, showing immediate returns.14 people in a year with a waiting list, still, and individuals that have been able to stay closer to where they lived and, and their support networks. If you think about the affordable housing space, and the work at the Foundation, and the social finance committee is doing for the Vision SoHo project, a network of a number of developers all coming together with a common goal to increase the space of affordable housing units within the City of London. I mean, those are some pretty powerful things. And the seed money that has been able to be put forward is allowing these organizations to move forward at a pace that they would not have been able to move forward. And then lastly, a community centre that supports seniors being able to expand its delivery and the services that it offers and the impact that has on the community. Those tools are incredible things. That’s just a small piece of what the committee and what the Foundation has been able to do over the last few months.
Rachelle: It is really dynamic. The whole Vision Soho Alliance that these developers were able to come together to create something. What are some of the risks or challenges when allocating funds and how do you mitigate the risk?
Shane: Whenever you're lending money, there's a risk whether you're lending it to a Triple-A borrower or a social enterprise. And so, I think I'll start with social enterprises. I mean, you do have to do your due diligence; you have to see if they have some skin in the game. Have they really thought out their plan? And will the social impact justify the potential financial loss because there's always going to be a potential financial loss? And I think we are doing a good job of balancing that risk. And I also think, as we continue to expand the various parts of the community that we are lending and granting to, we can diversify risk by diversifying the portfolio.
Right now, the portfolio is fairly heavy in affordable housing, and that's also relatively little risk because it’s generally supported with mortgages and everything else. But as we continue to push forward on the social finance aspect, we need to continue to measure what's that triple bottom line, right? What good is it going to bring to the community? Is it good for the planet? And what's the potential for us, preserving capital and then generating a return? And so, that will take due diligence from all community members, and it may necessitate altering the ask of some of the groups. They may come in for $1 amount and an expectation on what they're going to use that for, and by engaging in conversation with that group, the dollar amount might change in the scope of the project, might get scaled back, or might get adjusted so that we can sit back and assess and determine a level of risk that we're comfortable with. At the end of the day, we do have to have a preservation of capital mindset, balanced with the social good that we are and that our mission says that we want to be doing. So, I don't think there's an easy answer to it. I think it's going to be elbow grease. I think it's going to be relying on the strength of our partners and learners and the work that's done at the Foundation to assess these projects. At the end of the day, a lot of it's going to come down to the management of the organizations asking for the funds and how committed they are, how strong they are, and how dedicated they are to making it work. And there will always need to be an acceptance that we may write off money. It's how do we manage that within the risk tolerance that we have?
Rachelle: That was a really interesting conversation today. And it made me think about what our risk tolerance is and bringing these social enterprises for it and working with them. Thanks, Shane