Scan of the Community Investment Sector in Canada Coro Strandberg Strandberg Consulting Brenda Plant Brenda Plant Consulting September 2004

Glossary of Terms

Blended Return on Investment (Blended ROI)—Originating from return on investment (ROI), this term describes the integrated and aggregated social and financial returns of a business operation.

Community Investment (CI)—Investment for the purposes of financing deep-seated needs of local communities not addressed by mainstream finance, including poverty alleviation, community and cooperative development, and environmental regeneration.

Capital Gap—Refers to the lack of traditional and charitable financing available to support the growth of social and environmental enterprises—because traditional financing focuses entirely on financial returns while charitable financing seeks social returns. As the sector between these two traditional approaches (the social economy) generates both social and financial returns, financing is relatively scarce.

Double Bottom Line (DBL) Investing—Investing that strives to achieve measurable financial and social or environmental outcomes.

Economically Targeted Investment (ETI)—ETI is defined as institutional asset allocations that obtain both market-grade returns commensurate with risk and collateral (social) benefits by addressing perceived financing gaps and underinvestment.

Micro-credit—Refers to loans under $25,000 made to entrepreneurs who typically cannot access traditional forms of commercial financing for their businesses. These loans are generally paired with business training and technical assistance.

Social Capital Markets—Capital markets specifically for community and social investment, which generate both financial and social returns, typically considered to include the range of capital instruments from outright grants to below-market or concessionary capital to risk-adjusted rates of return. Often further considered to include certain human capital (e.g., volunteering, pro bono services, network capital).

Social Economy—Enterprises that fulfill the following objectives: (1) financial viability; (2) capacity to create stable employment; (3) respond to social needs; (4) produce goods and services that correspond to unmet needs; and (5) contribute to improving the quality of life of workers in local communities. (Quebec government definition. The federal government defines the social economy as organizations producing goods and services on a not-for-profit basis with surpluses going to social or community goals.)

Social Return on Investment (SROI)—In the broadest sense, social return on investment (SROI) is an attempt to quantify the social value being generated by an organization as a result of an investment made in that organization. SROI is proposed as an evaluation strategy to determine what organizations and programs are delivering the “best” social returns. It is defined as a “return” because it is a result of resources (financial and human) invested. SROI's distinguishing feature compared with the more traditional return on investment (ROI) is that the units being measured encompass social and/or environmental impact. SROI also includes the measurement of social value creation using proxies to measure the broader ripple effects or outcomes. See www.redf.org for industry leadership in this area.

Sustainable Venture Capital (SVC)—Refers to the sub-sector within the venture capital industry that proactively invests in social and environmental technologies, processes and enterprises within professionally managed venture capital portfolios.

Triple Bottom Line (TBL)—Investing that strives to achieve measurable social, environmental and financial outcomes.

Underserved Populations/Disinvested Communities—A business opportunity overlooked by traditional financial institutions and other profit-oriented businesses, typically including economically depressed areas such as rural and inner-city locales, racial and ethnic minorities, recent immigrants and low- and moderate-income households.