Tuesday, August 21, 2012

Senior Communications Officer Ontario Trillium Foundation

icrocredit and microfinance in developing countries garnered much publicity in 2006, when Muhammad Yunus, a banker and economist from Bangladesh, won a Nobel Peace Prize for developing the concept of making small loans that are critical to lifting people out of poverty.

To this day, few Ontarians know that this powerful form of financial assistance and other forms of support are available in their own province for people living on low incomes, for entrepreneurs and for youth. For thousands of young people, the transition from school to employment is difficult. Coping with a 16.4 percent unemployment rate, Ontario youth are of special interest to the Ontario Trillium Foundation. Unlike most age groups since the recession, the 15-to-24 age group has not yet seen any significant employment gains. The role microloans to youth can play in the economic development of Ontario is increasing. OTF grantees, not-for-profit and for-profit organizations are coming together in innovative partnerships to make sure fewer and fewer young people are left behind by providing funding and access to mentors and networks of experts. Microcredit to end youth poverty With few assets and little education, Ontarians with limited chances of overcoming poverty struggle and need a hand to break the cycle of poverty. According to Susan Henry, Manager of Corporate Social Responsibility for Alterna Savings, micro-finance is about financial inclusion for the underserved. This credit union has seen first-hand the positive impact its program can have on youth, families and the community at large. Alterna has its own micro-finance program and training series but it also works jointly with not-for-profit community organizations such as microloan provider ACCESS Community Capital, an OTF grantee. The economic benefits of microfinance are wide-ranging. Many recipients aged 18 to 35 who start their own business are able to leave social assistance. Some go on to buy houses, pay more taxes, develop job skills and employ others. Microloans and guidance to start social enterprises Microloans and guidance can give wings to social ideas and the innovators who harbour them. Here are some examples :

Ottawa Community Loan Fund, an OTF grantee and a partner of Alterna, provides financing to social enterprises that do not have access to credit from traditional financial institutions.

The Centre for Social Innovation (CSI), an OTF grantee, is home to more than 350 active small businesses, not-for-profit organizations and social enterprises. This successful hub has now opened its third location in Toronto. CSI tenants are emerging enterprises that benefit from community workspaces, training and an environment that fosters collaboration, innovation and access to networks. For example, Youth Social Innovation Capital Fund, a new incubator for youth-led projects, provides microloans and non-financial support. TechSoup Canada, a 2012 OTF Great Grant Award recipient, partners with the private sector to help NFP organizations access information, products, services and IT support to make their work more effective.

Young social entrepreneurs will soon have a formal context in which to learn their trade. The School for Social Entrepreneurs was launched in Toronto’s Regent Park neighbourhood in June. The School, a first in North America, was awarded $500,000 in seed funding from OTF. If successful, this collaborative, led by Housing Services Corp., will open affiliates in Ottawa and Windsor.

Youth can also turn to crowdfunding to get financing from a large number of Internet users who each provides a small amount of money.

In Canada, with less than 1 percent of charitable donations going to grassroots groups, the Small Change Fund and Kickstarter for example provide a useful funding platform to help support projects.

Microcredit and innovation: part of a wider strategy supporting youth It takes a village to raise a child — and it takes a network to build a business owner. While some may argue that one is born an entrepreneur, the reality is that in addition to capital, most people who start a business need support to prepare and implement a solid business plan. They must also learn to become savvy managers through coaching and mentoring. Tenants at the CSI already benefit from the nurturing hub they belong and contribute to. Microloan applicants with Alterna Savings and ACCESS have a chance to train with and be mentored by George Brown College’s Institute of Entrepreneurship and Community Innovation in Toronto. Students at the School for Social Entrepreneurs will benefit from the contribution of the other members of the collaborative, namely the MaRS Discovery District, Regent Park’s Centre for Community Learning and Development, and ACCESS Community Capital. With innovative crowdfunding, the global village will one day be able to lend a hand to Ontario’s low-income youth and young entrepreneurs. The networks and partnerships in place recognize the value of supporting youth. This is how you keep young people’s dream alive and strengthen Ontario communities.

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