Written Submission for the Pre-Budget Consultations in Advance of the 2024 Budget
Recommendations
Recommendation 1: Mandate the collection of disaggregated sociodemographic data related to the leadership and ownership of all contractors and organizations receiving federal funding, including through flow-through funding administrators, to ensure the government is tapping into the economic potential of all communities across Canada.
Recommendation 2: Allocate $5 million across ten years to implement a shared data platform to collect and report on self-reported sociodemographic data of recipient organizations of the $755M Social Finance Fund to ensure that the Government of Canada’s established equity objectives at met.
Recommendation 3: That the Government of Canada, through the CRA, include questions on both the T3010 (for registered charities) and the T1044 (for federally incorporated not-for-profit corporations) on diversity representation on boards of directors. To further advance this work, leverage the Social Data Linkage Environment (SDLE) at Statistics Canada to link existing administrative and survey data with T3010 and T1044 to inform a published annual report on the diversity of boards across charities and non-profit organizations.
Recommendation 4: Establish a nationwide, cross-sectoral committee dedicated to guiding the collection, utilization, and disclosure of self-reported sociodemographic data, ensuring Canada achieves its equity goals across all industries.
About New Power Labs
New Power Labs (NPL) is an action-oriented think tank dedicated to expanding access to capital for underfunded and overlooked communities. We are the first national, collaborative platform for investors, educators, financial institutions, asset managers, social justice organizations, philanthropists, and governments to work together to build an equitable and inclusive financial sector. We work in partnership across the capital spectrum, from philanthropy to impact investing to venture capital and bank financing. Our work spans the rich diversity and intersectionality of Canada. These include gender identity, ethnicity, abilities, sexual orientation, language minorities, geography, age, neurodiversity, socioeconomic status and others. NPL focuses its attention on Canadian organizations that influence capital flow.
NPL aggregates and synthesizes knowledge and resources and leads research to uncover and share actionable tools and best practices to transform how practitioners apply equity, diversity and inclusion. Our organization rests on five pillars: research, practices, benchmarking, education, and platform.
There is limited access to capital for underrepresented and overlooked leaders, founders and organizations in Canada.
Capital is more than just an economic force—it is a manifestation of power and opportunity that shapes our society. Enabling access to capital for underfunded and overlooked leaders and communities is more than just a social issue; it's an economic challenge that affects our country's ability to innovate, compete, and prosper. While data on who has access to capital in Canada are incomplete and limited, what we know suggests that we fall short of this imperative. Capital flows are highly concentrated and exclusive. Here are a few examples:
More than half of all Indigenous-led businesses report difficulties securing capital, while fewer than 1% of all charitable funds in Canada are granted to Indigenous-led groups.
At most, 30 cents out of every $100 in grants by major foundations go towards Black-led charities, and only 70 cents out of every $100 go to explicitly Black-serving charities.
Women entrepreneurs receive less than 5% of all venture capital funding, and women are under-represented among equity investors, representing only 15% of Canadian VC partners and around 17% of Canadian angel investors.
As a result, various important economic actors across Canada remain underfunded, overlooked, and excluded, leaving too many people unable to grow their ventures, realize economic opportunities, solve social challenges, and address the needs of their communities. Together, this limits our country’s innovation, competitiveness, and prosperity.
To unlock the full economic potential of Canada, we must understand how capital flows, who holds power, and what policies and practices can help shift these capital flows and power dynamics to become more equitable.
The starting point is to collect high-quality data on capital flows and the sociodemographics of the leaders, founders and shareholders of capital recipients. Linked together, one can map who receives capital and areas of opportunity where communities are excluded. However, collecting high-quality, reliable diversity data is difficult on at least two fronts.
First, without an external organization facilitating the data collection process, there may be limited accountability and transparency in how the data is handled, analyzed, and reported. This lack of transparency can raise concerns about the credibility and reliability of the data, especially when it comes to stakeholders who may question the impartiality of the funder's findings.
Second, in the absence of established data collection protocols and rigorous quality control measures, there is a higher likelihood of invalid or incomplete data. For example, data should be self-reported wherever possible since many facets of identity are not readily visible, such as invisible disabilities, sexual orientation, or neurodiversity. Relying on others to report their team’s diversity based on visual attributes alone can miss these aspects of diversity or make wrong assumptions. Even when self-reported, respondents may feel unwilling to share sensitive information about themselves when they don’t trust the data collection process. Poor data quality can undermine the validity and reliability of any conclusions or actions based on the data, limiting its usefulness in promoting equitable outcomes.
High-quality sociodemographic data is critical to systematically observing, understanding, and correcting barriers to the equitable flow of capital. New Power Labs’ recommendations for Budget 2024 focus on addressing these data gaps and building an infrastructure that can help equitably fuel prosperity across Canada. Implementing these recommendations sets Canada on a path to unlocking the economic potential of historically overlooked communities.
Recommendation 1:
Mandate the collection of disaggregated sociodemographic data related to the leadership and ownership of all contractors and organizations receiving federal funding, including through flow-through funding administrators, to ensure the government is tapping into the economic potential of all communities across Canada.
As a significant funder and investor in Canada, the federal government distributes capital through channels like grants, contracts, and federal programs. Despite these flows, there's little publicly available data on the sociodemographic characteristics of recipients, and the collected data lacks standardization hindering comparison and aggregation.
Canada has inclusive economic growth and transition targets, but the current data scarcity may impede progress. The government can lead in data collection, providing insight into funding distribution.
Mandating disaggregated sociodemographic data collection will enhance understanding of funding across Canada, reveal gaps, and allow for more equitable capital direction. This initiative aligns funding with inclusive growth goals, enabling all communities to contribute to a resilient, inclusive economy that reflects Canada's diverse talent.
Recommendation 2:
Allocate $5 million across ten years to implement a shared data platform to collect and report on self-reported sociodemographic data of recipient organizations of the $755M Social Finance Fund to ensure that the Government of Canada’s established equity objectives are met.
The Government of Canada's Social Finance Fund (SFF) aims to expand social finance to underresourced communities. Still, insufficient funding for collecting self-reported sociodemographic data hinders progress toward a more inclusive social finance sector. This data is necessary to evaluate success in meeting equity objectives.
Investing in this data collection will offer valuable insights to capital deployers, enhance accountability and transparency, foster inclusivity, and guide positive change by aligning capital flows with the diverse needs of communities across Canada.
The lack of data on participation in social finance in Canada, combined with growing societal inequality and systemic discrimination, disproportionately affects underresourced communities. While the social finance sector can help address these issues, current data limitations make it challenging to track progress over time. Our recent work shows that Canada has no standardized, comparable sociodemographic data on the leadership teams at foundations, impact investment funds, social impact accelerators, and social ventures, for example. With high-quality data, it becomes much easier to understand and measure diversity across these organizations and to track progress on initiatives that seek to advance capital to underfunded communities across Canada.
The current allocation of funding through the SFF for data collection to execute this objective is limited and delayed. Securing this data post the deployment period of the SFF fund will not enable fund managers to understand diversity across their portfolio with accuracy or depth nor allow them to adjust approaches to flow capital to underresourced communities. An investment of $5 million, less than 1% of the government's investment in the Social Finance Fund, is crucial for ensuring the equity objective is met.
Recommendation 3:
That the Government of Canada, through the CRA, include questions on both the T3010 (for registered charities) and the T1044 (for federally incorporated not-for-profit corporations) on diversity representation on boards of directors. To further advance this work, leverage the Social Data Linkage Environment (SDLE) at Statistics Canada to link existing administrative and survey data with T3010 and T1044 to inform a published annual report on the diversity of boards across charities and non-profit organizations.
Diversity in the leadership and boards of the charitable or social sector is essential, as it ensures that decision-making processes are informed by a wide array of experiences and perspectives. This diversity not only reflects the multifaceted nature of the communities served but also fosters greater innovation, inclusivity, and accountability, leading to more robust and responsive strategies to meet the complex challenges faced by society.
As noted by Senator Ratna Omidvar, “It is important that governance boards reflect the diversity of the communities they serve because the decisions they make affect many Canadians. Board members chart the course of their organizations, work to influence policy and decide how funds are spent.”
Homogenous leadership within social purpose organizations cannot provide the necessary perspectives to building a more equitable and prosperous society. Our ability to shift the diversity in our leadership and boards is connected to our ability to measure our current baseline and progress over time.
There is an opportunity to build on the Statistics Canada voluntary, crowdsourced survey launched on December 4, 2020, in a targeted attempt to measure diversity on governing boards in the charitable and non-profit sector through the above recommendations.
Recommendation 4:
Establish a nationwide, cross-sectoral committee dedicated to guiding the collection, utilization, and disclosure of self-reported sociodemographic data, ensuring Canada achieves its equity goals across all industries.
The data we collect and present greatly influences what receives attention and resources on policy and program levels. The federal government is uniquely positioned to set standards concerning equity data through an expert committee. This committee would take a holistic approach across multiple diversity lenses, including gender identity, ethnicity, abilities, sexual orientation, language minorities, geography, age, neurodiversity, socioeconomic status and more.
Similar committees have already been established on a provincial level. This year, British Columbia’s provincial government created an anti-racism data committee to inform the collection and use of demographic data. Their responsibilities include developing data standards, providing direction to the provincial government on demographic data, highlighting research priorities, and ensuring that statistics released don’t cause community harm.
At a federal level, this committee would advance the Government of Canada’s Anti-Racism Strategy and build on the existing duties of the federal Anti-Racism Secretariat. Corresponding to the anti-racism data committee in BC, this committee can have a similar function nationally of sharing best practices on collecting, using, and reporting on self-reported sociodemographic data. The committee should consist of individuals from diverse sectors and backgrounds, encompassing experts in data and research and representatives from or those working with underresourced communities. Serving as a national, cross-sectoral platform, this committee will establish data standards and protocols, enhancing transparency and reliability in demographic data collection.
