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Will Canada Lead in Fostering Social Entrepreneurship?

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In this era of chronically tight government budgets, consider this: every year while Canadians spend billions of dollars on jails, courts, and police to prevent criminal inmates from re-offending -- with mixed results at best -- a prison outside London, England, has a strategic program to prevent recidivism that costs government almost nothing.

And the seared duck breast with carrot and coriander risotto is decidedly more scrumptious.

You see, the Clink Restaurant in Surrey is run by convicts -- or rather, staffed by the recently and currently incarcerated. It's the training centre for a social enterprise that provides inmates at High Down prison with training, certification, and links to full-time, post-release employment in the culinary and hospitality industries.

It was one of hundreds of social enterprises represented at the 2013 Skoll World Forum, where the growing movement of businesses making a profit and a difference was recently celebrated, and best practices were exchanged.

These so-called social entrepreneurs are unburdening governments and charities by tackling local and global issues from peace in the Middle East and clean water, to education and sustainable fisheries.

But not so much in Canada. Although the forum and the pioneering foundation behind it were started by Canadian Jeff Skoll, there were noticeably very few Canadian social entrepreneurs among the delegates two weeks ago.

That's because Canada trails the U.K. and other countries in taking full advantage of this burgeoning, win-win movement that merges smart business sense and the pursuit of a better world. The ideas and the people are ready to go, but our governments hold us back.

In 2005, the United Kingdom created the legal structure for Community Interest Companies (CICs) to use business models for social objectives. CICs can raise capital and are taxed like regular businesses, but their assets and surpluses must be dedicated to their social purpose instead of maximizing profit.

In the United States, nine states have similar legislation allowing Low-Profit Limited Liability Companies (L3Cs), but only two Canadian provinces -- British Columbia and Nova Scotia -- are developing regulatory process to support social enterprises, expected to come into effect this year.

The main advantage of the CIC and L3C is the public recognition that these businesses must operate for a social purpose. Consumers increasingly seek to make a difference outside traditional charitable giving, namely through their everyday consumer choices. Setting up clear regulations tells consumers which companies are providing products or services -- or investing a portion of their profits -- toward solving societal problems.

Some companies make such claims -- think "greenwashing" so common on alleged environmentally-friendly products -- without having to provide any proof that they are providing a benefit. But businesses legally required to provide a social benefit -- and clearly identified or branded as such -- help consumers make ethical spending choices to maximize the greater good.

Social enterprise is not an unfamiliar concept in Canada. Institutions like the MaRS Discovery District in downtown Toronto, the Social Enterprise Council of Canada, and the B.C. Centre for Social Enterprise link and support social entrepreneurs across the country. Businesses like Groupe Convex outside Ottawa and Winnipeg's BUILD train and hire people with barriers to employment, and Vancouver's Atira Property Management Inc. donates all its profit to its partner organization that works to end violence against women.

But the potential is much greater. There are 7,000 CICs in the UK, and 700 L3Cs in the US. In addition to setting up a similar regulatory structure to those jurisdictions, the Canadian government could also give preferential treatment for social enterprises that are tackling social ills, such as preferred bidding for government contracts or easier access to start-up capital or loans.

Our personal story is a telling tale. When we decided to start Me to We, a social enterprise in support of our charitable work, we found the absence of any credible guidelines.

So we cobbled together a structure that would enshrine a social benefit into our founding principles, creating a system of governance, and giving consumers the certainty they need that the social enterprise's products go toward a social good. Half of Me to We's annual profits are donated to Free The Children and the other half are re-invested in the social enterprise to grow its mission.

Creating the structure for a social enterprise took the generosity of two of Canada's best law firms and a retired Supreme Court justice to help us -- one an Oxford University-trained lawyer, the other an MBA grad. But not every youngster with a good idea has such help. A simple process such as the UK model and those under consideration in B.C. and Nova Scotia would make it easier for aspiring social entrepreneurs to get their projects started.

Canada can quickly become a world leader in the emerging social economy by making it possible to do good and do well at the same time.

Craig and Marc Kielburger are co-founders of international charity and educational partner, Free The Children. Its youth empowerment event, We Day, is in 11 cities across North America this year, inspiring more than 160,000 attendees from over 4,000 schools. For more information, visit www.weday.com.

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