Movements across the globe are calling for systems change to build a world that is sustainable, equitable, and prosperous for all. But what will that world look like, specifically? It’s easy to get lost in the jargon or talk vaguely about broad topics. What tangible policies, models, and actions will create the world we want to see?
Next Economy Conversations, our monthly tête-à-tête with industry leaders, brings the people building systems-level solutions to the table to break down their approaches, provide key insights, and learn from their successes and failures. Building the Next Economy takes all of us. Welcome to the conversation.
In our inaugural event, Bill Young, Founder of Social Capital Partners, joined us from his home over Zoom. A former accountant, his move from the private sector to social impact was driven by a desire to use his experience in a way where he could do good.
As over 50 Canadians tuned in on this sunny May morning, Bill spoke to our CEO, Tonya Surman, about structural inequalities, the difficulties of risk-averse governments and funders, and creating systems-level solutions. Over the last two decades, Bill has learned a lot about systems change. He tried, and succeeded, and failed, and tried again. Despite the early morning, he was animated and his passion for these challenges shone through.
His interview with Tonya was one of those events that you didn’t want to miss! But in case you did, we summarized his key lessons in this blog post.
Humble Beginnings
Back in 2001, Bill explained, we divided the world into silos: “Here’s what business does, here’s what nonprofits do, here’s what the government does — as if there was no intersection. Everybody was in their own sector and doing their own thing. And yet, it seemed like the most creative solutions would be at the intersection.”
Using that logic, he asked: “Could we find more sustainable ways to solve structural social challenges? Could we combine market forces and ‘doing good’ in a model? And why don’t we pick a particular structural social challenge and see if we can’t find more sustainable ways to do that?”
The answers were yes, yes, and let’s do it. So in 2001, the challenge Bill decided to tackle was meaningful employment for people facing employment barriers.
Today, Social Capital Partners looks a little different. But that’s not to say its past iterations were a waste of time. In fact, it was very much the opposite.
“What we learned from [our first phase] was two things,” said Bill. “One, you can make double bottom line companies work. They can work both financially — they can be both profitable and sustainable — and they can work socially — they can transform lives.”
“But the challenge is,” he continued, “what we think we are is an interesting magazine article. People like to write about it, they like to pat us on the head and tell us to keep up the good work. But at the end of the day they’re reading about us on a Saturday and going to work on Monday and doing things exactly the same way as they were doing before.”
Bill and his team realized they weren’t going to change the economic landscape unless they involved the mainstream engines of commerce. Where Phase 1 was a social enterprise, Phases 2, 3, and 4 sought to connect the economic and social impact sectors.
Making it Easy
If you’re asking someone to do something, make it as painless as possible and they’ll be more likely to do it. It’s a tried-and-true tactic. So how do you make social impact “easy” for private sector companies?
Enter the franchisees. In this phase, Social Capital Partners offered franchise owners attractive financing on the condition that they implement a community hiring program.
None of the 80 franchisees Social Capital Partners worked with ever opted out of the program. Surprise, surprise: employers will implement a social hiring program if you make it easy for them.
The problem, though, was that it wasn’t easy. Employment agencies didn’t try to understand the needs of the employers. The system is completely led by the supply (employment agencies), not demand (employers). And it never understood that we must treat the employer as important a customer as the employee.
So, for a while, Social Capital Partners was acting as a go-between, a translator of sorts. They were acting as a bandaid. But bandaids only cover up a bigger issue. They don’t actually fix it.
The Eureka Moment
Meaningful employment, universal basic income, taxing the rich: just about all the solutions to inequality are on the income side, not wealth.
And they’re all good solutions. There’s nothing wrong with them!
The challenge, though, is the first unexpected event that comes into the lives of the beneficiaries of the income solutions — like a pandemic — puts them back at square one. They have no wealth resilience.
“We said to ourselves: we’ve gotta solve the wealth side,” said Bill. “Nobody is really working on the wealth side.”
In their research, they came across Employee Stock Ownership Plans (ESOPs), a type of organizational structure. They’re meant to transition traditional businesses into 100% employee-owned businesses, and have two huge incentives: eliminating capital gains tax and income tax.
Compared to traditional for-profits, ESOPs grow faster, are more profitable, default less, and are powerful wealth-generating vehicles for employees.
Eureka! That’s a wealth resilience solution.
Now, Social Capital Partners is trying to build a case to popularize ESOPs up north. How can we get older business owners to turn their businesses into ESOPs instead of selling to private equity firms? What does a made-in-Canada solution look like?
The Centre of the Maze
The thing about systems change is: it’s risky.
“Most funders don’t like funding things that aren’t working,” said Bill. “So the tendency is ‘let’s do things that will work.’”
Social Capital Partners is lucky to have independent funding. It means they have the freedom to experiment, to push boundaries, to do things that are inherently really, really hard. “We flipped the script and said ‘no, we aren’t succeeding unless we are failing,’” Bill explained. “We will fail because we are trying stuff that nobody else is going to try. And that’s our role.”
They’re always aiming for the greatest impact they can have.
“How do we transform this economic landscape in the most powerful, equal way? How do we solve inequality? If we saw that what we were doing wasn’t going to get us there, whether it was branded a success or failure, it didn’t matter to us.
“To us, it’s kind of like a maze. In the centre of the maze is the magic of the biggest impact you could possibly have. To get to the centre, you hit a lot of dead ends. You need to hit those to get to the centre. So we never look at failure or success as either failure or success. We look upon it as part of the road map on the way to have the most impact we possibly can have. ‘Is this the route to get there?’ If it isn’t, we change. Success and failure has nothing to do with it.”
Quotes don’t do Bill justice. He’s sharp, passionate, and funny — even in the early hours of the morning. If you want the full scoop, you can watch a recording of our first ever Next Economy Conversations on YouTube. Stay tuned for our next event in June!
