Introducing the Catalyst: Community Finance Initiative

11 min readNov 24, 2021

A cross-sectoral group of community finance stakeholders in Ontario is embarking upon a new collaborative effort called the Catalyst: Community Finance Initiative. This work is the result of longstanding efforts, including the most recent ecosystem convening in fall 2020. This post provides an introductory primer on the project including background on community finance, why it’s important, it’s current state in Ontario, target goals, outputs and outcomes, process and approach, and background on how individuals and institutions can get involved in this exciting initiative.

What is the Catalyst: Community Finance Initiative?

The Catalyst: Community Finance Initiative is a multi-year project to develop enhanced ecosystem and policy infrastructure to support the start-up and scale up community finance organizations in urban, rural and Northern communities in Ontario and across the country. A growing, wide range of networks, intermediaries and funders are supporting this initiative including: Pillar Nonprofit Network, SVX, Upper Canada Equity Fund, DUCA Impact Lab, United Church of Canada, Vancity Community Investment Bank (VCIB), SETSI, CapitalW, 10C, the Centre for Social Innovation (CSI), Community Foundations of Canada (CFC), and SI Canada.

Collectively, these organizations have identified both a need and an opportunity to catalyze the local community finance movement in Ontario and through partnerships across the country. It is clear that there is an open window to move this work forward, but it will take a concerted and collective effort to achieve progress.

This effort builds upon the recent work of Impact Response and Scaling Impact, including convening of community capital stakeholders in Ontario in fall 2020, as well as the longstanding efforts of individuals and institutions across Ontario that have been engaged in this work for decades.

King Street in downtown Dundas, Ontario.

What is community finance?

Community finance, also known as place-based impact investing, refers to the local deployment of impact capital, meaning that investments are made with the intention of generating both financial returns and community benefit to address the needs of particular communities, regions, or ecosystems. Specifically, community finance uses repayable financing and equity investment to support the startup or growth of enterprises, organizations or projects that look to achieve specific community outcomes. The movement is growing rapidly, as capital moves into the impact investing sector at unprecedented rates seeking local impact.

Around the world, this approach to investing primarily occurs through funds and credit unions that aggregate local capital to finance local organizations, enterprises and projects. Because community needs vary, place-based funds typically invest in a variety of sectors, business types, and impact areas. These funds also leverage local capital from a variety of investor types, including high-net worth individuals, local foundations, corporations, governments, and the general public. This form of impact investing provides funds with the unique ability to bring private capital, public resources, and philanthropic assets together to build a stronger and more resilient community.

There are many examples of community financial institutions in Ontario, from VERGE Capital to DUCA Credit Union to Community Futures of Prince Edward Lennox Addington. These organizations provide critical financing to a range of entities from lending to small businesses on Main Street to providing debt financing for affordable housing projects.

Guelph, Ontario Downtown Farmers’ Market. Source: Guelph Today.

Why is community finance important?

Community finance is responsive to local community needs and can address specific social, environmental and economic issues. Simply put, local capital is highly responsive to local needs. The proximity and connection to community allows for a greater capacity to understand the issues and to mobilize resources to address complex community issues. This presents a great opportunity for investors, governments, and others to invest in community capital intermediaries who can act as effective disbursement agents for investments that achieve local economic, social, and environmental objectives

Community finance can support a more regenerative, equitable and resilient recovery. The COVID-19 pandemic has had devastating economic, health, and social implications for all Ontarians, and particularly marginalized groups including women, members of the LGBTQ2S+ community, BIPOC and racialized individuals, and newcomer and refugee women. As communities consider how to rebuild their local economies and social fabric in a post-COVID era, it is critical to ensure that we are reversing longstanding structural challenges and catalyzing growth that champions equity, innovation, and prosperity for all. By its very purpose, community finance seeks to invest in organizations, enterprises and projects that target a balanced range of positive economic, social and environmental impacts, from advancing equity to supporting job creation.

Community finance has been a driver for job creation and attracting further investment. Community futures organizations are highly illustrative of this point. CFDCs have had tremendous success in the past, and since 1995, CFDCs have invested $2.13B in 27,196 businesses influencing 138,479 jobs. They have also provided capacity support to 69,631 businesses and leveraged an additional $2.09B in equity and third-party financing. There is also great evidence out of New Brunswick that shows the economic impact of Community Economic Development Corporations (CEDCs) and related tax incentives. A modest government investment of less than $1 million helped create and maintain 1,200 jobs and added over $100M to the provincial GDP.

We have an opportunity to mobilize billions in local capital to tackle local challenges. In Nova Scotia alone, the Community Economic Development Investment Fund (CEDIF) model has mobilized approximately $100M in local capital to be invested in local enterprises. According to StatsCan, Nova Scotians collectively had approximately $166.3B in financial assets in 2019 while Ontarians had over $3T in financial assets. If we could mobilize just 0.1% of this, we would unlock over $30B in private capital for place-based impact investing.

Rural Canada in particular is faced with challenges retaining and starting businesses, an exodus of young people, and underinvestment. The Center for Strategic and International Studies wrote a report around impact investing and its ability to strengthen rural economies in a COVID-19 context, saying, “Impact investments can fill the financing gap while addressing pervasive problems like connectivity and access to finance, creating a more sustainable economic model for rural economies going forward.”

Community finance in practice: Parkdale Neighbourhood Land Trust acquired 22 Maynard Avenue, converting it to community ownership. Learn more.

What is the current state of community finance?

It is vital that we have a vibrant array of new and scaled up intermediaries in Ontario and across the country that can capitalize and support a range of high impact enterprises, organizations, and projects, from sustainable food processors in Eastern Ontario to affordable housing projects in London. These organizations represent critical long-term infrastructure that can build capacity in urban, rural, and remote regions and provide access to capital to women or BIPOC-led or BIPOC-serving enterprises.

Fortunately, there is an active community finance ecosystem in Ontario with solid institutions and base infrastructure to build upon. The province is home to dozens of community finance and capacity building organizations from community loan funds and place-based equity funds to credit unions and community futures organizations.


We do have a strong foundation that allows us to scale-up, but there are many gaps:

  • Resourcing: Many community finance institutions in Canada are under-resourced and undercapitalized. Moreover, many of these organizations have revenue opportunities and pathways to sustainability, but there are significant start-up and scale-up costs to design, market, and operate these kinds of intermediaries.
  • Geographic and equity gaps: There are significant geographic gaps in capital and capacity support for organizations, enterprises and projects in Ontario and across the country, in urban, rural and Northern regions, and significant equity gaps in support for women and BIPOC communities. Beyond access to capital, there is also a clear need and opportunity to engage equity seeking groups in the design and governance of community capital institutions.
  • Capacity-building and technical infrastructure: We do not provide technical assistance or support to help small and emerging funds start or scale their efforts to help fill the geographic and equity gaps that exist. Moreover, back office infrastructure of funds is ad-hoc and insufficient to support current operations or the effective scale-up of community finance intermediaries.
  • Policy infrastructure: There is almost no provincial policy infrastructure and limited federal infrastructure for intermediaries, except community futures organizations and the emergent federal social finance strategy.
  • Mainstream institutional prioritization: Community finance is not a stated priority of financial institutions and foundations in terms of funding and investment.
  • System connection: As with many emergent ecosystems, there is a significant degree of market fragmentation. Community finance institutions and stakeholders are not effectively connected in a coherent system. Across Canada, there are few provincial networks that support these kinds of institutions, particularly outside Quebec.

It is also important to recognize the capital gap that exists for impact enterprises and organizations, which can be filled by the effective development of community capital infrastructure in Ontario and across the country.

Sault Ste. Marie, Ontario. Source: Northern Ontario Travel.

What does Catalyst want to achieve?

We have established a clear set of goals and deliverables that we believe will help us advance towards an ideal future state for the community finance system in Ontario. Overall, we are seeking to develop enhanced ecosystem infrastructure to help start-up and scale-up community finance organizations. Specifically, through Catalyst, we seek to:

  • Collectively design relevant ecosystem and provincial public policy infrastructure to ensure that community finance institutions can successfully and sustainably start-up and scale their impact;
  • Facilitate knowledge sharing amongst place-based finance and capacity organizations; and
  • Engage existing and new community finance organizations that can serve organizations, projects, and enterprises in selected urban, rural and Northern communities, alongside mainstream leaders in philanthropy, public policy, and financial institutions.

We will achieve these goals by building upon our existing infrastructure and networks, and widening our engagement with stakeholders in Ontario as well as our engagement with other national and regional networks across Canada.


In terms of target outputs, we will seek to complete the following deliverables over the next year:

  • Research including case studies, map, data, and comparative analysis of Canadian (federal and provincial), and other jurisdictional policies that support community finance institutions;
  • Action Plan including potential policy interventions to scale up community finance institutions in Ontario as well as potential ecosystem infrastructure interventions with an appropriately phased plan to scale up community finance institutions in Ontario and across Canada;
  • Learning Community of current and interested place-based community finance stakeholders, including capacity-building and training opportunities for intermediaries; and
  • Tools and templates for community finance institutions, including technology and other resources.


In terms of target outcomes, we hope to support the development of an ideal future state for community finance with the following features:

  • Fully functioning, robust and connected community finance system of credit unions, community loan funds and futures organizations, community venture capital with geographic and equity gaps filled.
  • New capital mobilized to tackle our most pressing challenges in urban, rural and Northern Ontario, from inequality to climate change from a greater range of connected funders and investors interested in community capital.
  • Well-resourced, capitalized new and scaled community finance intermediaries in Ontario and across Canada with equity-deserving groups fully participating in design and governance.
  • Growth in knowledge, capacity and connections amongst new and current community finance institutions in Ontario, including embedding equity into community capital institutions and infrastructure.
  • Stable and connected regional networks for community finance in Canada.
  • New policy infrastructure to support the start and scale up of place-based financial organizations including funding and incentives.
  • Community finance established as a mainstream priority of the provincial and federal government, foundations, investors, and financial institutions. Community finance and community ownership would also be normalized, accessible, and seen as a standard approach in Ontario.
  • Accessible capital to help enterprises, organizations and projects start and scale their impact, particularly in urban, rural and Northern regions, and for women and BIPOC communities.
County Food Hub in Prince Edward County, Ontario. Source.

How will we seek to build policy and ecosystem infrastructure for community finance?

From Fall 2021 to Summer 2022, this project will engage in a community development process including:

  • Discovery: Building understanding of market conditions, trends, barriers, and opportunities and directly engage stakeholders in community finance;
  • Design: Design, test and refine actions for ecosystem development through a Learning Community and an Action Plan for the ecosystem, government, investors, and intermediaries; and
  • Deployment: Advance and implement solutions and actions for the ecosystem to take the next step in its evolution.

This process is being coordinated by a growing set of cross-sectoral collaborators, and it is being facilitated by the teams at SETSI and CapitalW.


We are drawing insight and lessons from a range of models and approaches including:

  • US CDFI System and CDFI Fund. Network of US institutions that provide credit and financial services to people and communities underserved by mainstream commercial banks and lenders, including communities of colour, rural regions, urban centres hit by economic decline, and Indigenous communities.
  • Canadian Task Force on Social Finance. Field-building initiative led by Social Innovation Generation (SiG) in 2009–2010 to provide collective direction to financial institutions, foundations, and governments to build the impact investing market with 7 key recommended actions for Canada.
  • Collective Impact. An approach based on the theory that large-scale social change comes from better cross-sector coordination rather than from the isolated intervention of individual organizations.
  • Latin American Impact Investing Ecosystems. Catalyst collaborators including SVX have participated in multi-year research and engagement efforts on impact investing ecosystem building in Colombia and Peru including the development of Impact Investing Action Plans.

What’s next and how can you get involved?

We’re (finally) just getting officially started with a collective effort. We are actively seeking collaborators and contributors to provide input and insight on how we can collectively build ecosystem and policy infrastructure for community capital to thrive, including financing and capacity intermediaries, governments, emergent initiatives, networks, investors and funders.

  • Participate in the ecosystem mapping survey: We’ll have many opportunities for you to participate, but you can start to join the conversation by participating in our stakeholder survey. Whether you are a credit union, community futures organization, municipal government, foundation, or another active or emerging community finance stakeholder in Ontario interested in this work, we want to hear from you.
  • Join us for a sector convening: We will be hosting a community finance sector convening in February 2022 to bring together stakeholders to share updates and insights, and to explore how we can continue to build this ecosystem together.
  • Check out the interim report (coming soon): We’re looking to share an interim report with preliminary policy recommendations by early next year in order to provide solutions in advance of the Ontario provincial election in 2022.
  • Visit our website and sign-up for updates: You can also learn more and stay in touch at:




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