4 minute read
Manitoba activist suggests using business concepts to solve social problems
By John Longhurst
Shaun Loney is looking for an army — an army of problem solvers who can help solve the priciest problems facing governments in Canada and the US today.
Among those problems are things like incarceration and home- lessness. So far, efforts to address those issues have gone mostly nowhere, eating large parts of federal, provincial and state budgets.
But Loney believes they can be solved through a social enterprise model that mixes “compassion with business smarts.”
For him, it’s about moving from a system that thinks the only way forward is to spend more money towards a system where outcomes are valued.
For this to work, though, non-profits need to become more entrepreneurial and value those outcomes they want to deliver.
It all starts with a change in way of thinking about the role of government and non-profits, he says.
“I used to think governments were in the problem-solving business,” says Loney, who once worked as a senior public servant in Manitoba.
The Winnipeg-based social entrepreneur has co-founded and mentored 11 social enterprises, including BUILD Inc, a social enter- prise that provides training and job skills to inner city residents, offering energy and water efficiency upgrades in low income housing.
He is also co-founder of Aki Energy, a non-profit social enter- prise that employs First Nations communities in green energy and health food initiatives. Currently, his goal is to engage governments in order to help those most vulnerable to unemployment by supporting them to solve pressing community problems through green energy.
This win-win strategy is saving energy, bringing jobs and prosperity to the disadvantaged areas, and empowering the Aboriginal community to become experts in the most cutting-edge, energy-saving technologies.
Over time Loney has come to see that governments actually are “more focused on managing problems, not solving them.”
For government, that often means focusing on spending money; if it goes out the door, government has done its job.
Non-profits are complicit in this arrangement since they have become dependent on government money to run their programs.
According to Loney, if we want to solve intractable societal prob- lems, non-profits need to change their approach to governments.
“We need to stop asking them to spend more, and instead demand they spend less by focusing on solutions that work,” he says.
By way of example, Loney notes that in his province of Manitoba there are 10,000 Indigenous children in government care.
“The system absorbs $80,000 per year in taxpayer dollars for every child in care,” he says, noting agencies are paid on a per-child basis.
But research shows Indigenous non-profits have an 80 percent success rate at keeping families together and keeping children out of care — at a fraction of the cost.
“And yet there are very few resources available to support parents to keep families together,” he says. “That’s nuts.”
“What if governments paid child welfare agencies to keep families together?” he asks.
Focusing on the money saved by doing that, he says, would catch the attention of government officials.
“Governments right now are focused on ways to deliver programs more efficiently. They want to know how they can reduce the amount of money it takes to incarcerate someone for a year. But they should be focused on keeping people out of the criminal justice system. That would be more effective.”
For inspiration, Loney looks at how the business world sell goods and services to governments.
“When governments want something like a bridge built, a private business bids on the contract, gets a loan from a bank, builds the bridge and then they get paid,” he says. “It’s an outcomes-based relationship.”
“But with non-profits, governments give groups money up front and the spending becomes the outcome.”
The key to making it work — for governments to treat social problems like building a bridge — is (getting)them to want to pay for the value of the outcome, things like fewer children in care or fewer people in jail.
But what would it look like if non-profits acted that way? Where would they go to get money to do their work? The answer, says Loney, is foundations.
In Canada, he says, there are 10,000 foundations with $73 billion in assets. That’s a lot of money, but only five percent is available in grants to address problems.
“The other 95 per cent is in investments,” he says. “What I want is for them to invest from their endowments in non-profits so they can solve a problem. Then the government can pay them back from the money they save.”
For him, it’s a “virtuous circle. Everyone wins and we can solve these very stubborn problems.”
In Loney’s vision, this new way of operating “turns governments from a funder to a customer. It puts them in the problem-solving business and saves them money at the same time.”
His term for this is “the beautiful bailout,” a way for social innovation “to solve the country’s priciest problems.”
This is “an opportune time to re-think things,” Loney says. “There is so much pressure on the system. But it will take courage, vision, and leadership. I think people are ready for it. With confidence and courage, we can do this, go from managing problems to solving them.”
Loney’s latest book is The Beautiful Bailout: How Social Innovation will Solve Government’s Priciest Problems. .
