In theory and practice, labour-sponsored investment funds provide a mechanism by which Canadian unions and union members can become involved and positively influence matters of investment and financing at the highest levels. This, argues American economist Michael Porter, is valuable in itself considering the necessary realignments of decision-making that must occur in a national economy to manage prosperous change. The Porter thesis is that critical investment decisions, and those related to capital allocation to investment, cannot be left in future to a handful of individuals. Instead, they must be extended to other socio-economic stakeholders, especially labour given its role in production.Endnote 25
As such CLMPC research has concluded that a crucial feature of labour-sponsored funds is the degree to which genuine control is exercised by the sponsor. Indeed, this imperative is enshrined in government legislation in all jurisdictions which stipulates that a bona fide union body be a fund's parent institution.
While different jurisdictions use different definitions, usually this involves a union body that is organized centrally, such as national or provincial labour federation (e.g., the CFL, in the case of Working Ventures, and the FTQ, in the case of the Fonds de solidarité) or union/unions (such as the multi-union groups sponsoring the First Ontario Fund and the Integrated Growth Fund). Sometimes sponsor organizations have taken completely new forms, such as the eight unions owning the financial institution Working Enterprises, Ltd., the sponsor of Working Opportunity.
Along with officially creating a fund, the sponsor must provide clear and continuous guidance, ensured through union control over major decision-making structures, such as boards of directors and committees, though the sponsor may also delegate this authority in certain circumstances.
As suppliers of capital, the Canadian labour movement has assumed an important new role and set of responsibilities whereby it can knowledgeably and constructively facilitate economic change. Participating union leaders and representatives seem to appreciate the nature of this challenge by giving priority to development of their expertise in investment and financing issues and systems.
This occurs formally and informally. Working Ventures, for instance, invites regular interaction between its labour directors and expert practitioners in the national venture capital market. Also, the economic and financial training program of Working Opportunity as much targets union leaders as it does rank-and-file union members (e.g., the fund has conducted courses at the leadership school of the Canadian Labour Congress at Harrison, British Columbia). Finally, the comprehensive activity of the Fonds de solidarité dictates that FTQ representatives be experienced enough to sit on investment bodies, such as local and regional funds.