Chapter 1. Main trends in social enterprise development

This part underlines the importance of creating an enabling ecosystem that can effectively support social enterprises, and briefly presents the policy areas in which policy makers can act to this end. It discusses eight key lessons emerging from the policies, programmes, and initiatives analysed, and examines the challenges faced along with the policy approaches used to address them successfully. Finally, it includes an overview grid presenting the main features of each case, such as, the funding sources, the policy area and approach, and the key success factors and challenges. Finally, it features a one-page summary of each case.

  

Social enterprises in Europe: towards a shared understanding

The policy and public debate is increasingly highlighting the contribution of social enterprises to tackling socio-economic challenges- such as rampant unemployment and increased inequalities- often in innovative and sustainable ways at the local, regional and global levels. More precisely, social enterprises provide the opportunity to disadvantaged individuals to integrate or re-integrate into the labour market while contributing more generally to building cohesive and creative societies (OECD, 1999; Noya and Clarence, 2007). A survey conducted in 2015 on more than 1000 social enterprises in 9 countries (the SEFORÏS project in which the OECD LEED participated as well) showed registered revenues of more than EUR 6.06 billion, provision of services and products to 871 million beneficiaries, job creation - particularly for people with disabilities or migrant backgrounds - upwards of about half a million people, and job placement for approximately 5.5 million people (SEFORÏS, 2016).

A wide range of stakeholders, including policy makers, entrepreneurs, citizens and investors, have become more interested in social enterprises and social entrepreneurship as a result of this positive dynamic. “Millennials” in particular are showing great willingness to participate actively in addressing societal issues, through social entrepreneurship (UNICEF, 2007). Higher education institutions attempt to address this new interest and aspirations through a growing array of new courses and chairs in social entrepreneurship. Social entrepreneurship programmes remain scarce at the primary and secondary education levels however.

Consumers are also increasingly attuned to the importance of ethical and environmentally friendly aspects, as illustrated by the fair-trade and “buy-social” phenomenon, which advocates the human being’s centrality in the economic undertaking. Their desire to provide direct support to social projects in different activity sectors is also illustrated by the new participative financing models, such as crowdfunding and crowdlending platforms. At the same time, new financial actors and intermediaries are entering the field: social impact investors, ethical banks and venture philanthropists provide new sources of funding for social enterprises, but also call for more rigorous social impact assessments, promoting a culture of measurement and evaluation (OECD/European Commission, 2015).

In this context, the European Commission adopted in 2011 the Social Business Initiative (SBI), which aims to support the development of social enterprises by improving their access to funding, raising their visibility and fostering a friendlier legal environment.

Box 1. What is a social enterprise?

Building on the academic work done by the EMES research network1 and in line with the OECD analysis,2 the SBI identifies a social enterprise as “an operator in the social economy whose main objective is to have a social impact rather than make a profit for their owners or shareholders. It operates by providing goods and services for the market in an entrepreneurial and innovative fashion and uses its profits primarily to achieve social objectives. It is managed in an open and responsible manner and, in particular, involves employees, consumers and stakeholders affected by its commercial activities” (European Commission, 2011). This definition is increasingly driving a shared understanding of what a social enterprise is across European countries. This is particularly important in the existing European landscape, characterised by a multiplicity of social economy organisations with different legal forms and statuses.3

1. EMES is a research network of established university research centres and individual researchers whose goal has been so far to gradually build up a theoretical and empirical knowledge around social enterprises, social entrepreneurship, social economy, solidarity economy and social innovation.

2. The OECD identifies a social enterprise as “any private activity conducted in the public interest, organised with an entrepreneurial strategy, but whose main purpose is not the maximisation of profit but the attainment of certain economic and social goals and which has the capacity for bringing innovative solutions to the problems of social exclusion and unemployment” (OECD, 1999).

3. Not all social economy organisations, however, are social enterprises; only those that adopt the features described in the SBI concept are social enterprises. Many of these are “traditional” social enterprises aligned with the SBI concept; many others are transforming into social enterprises by adopting the Initiative’s key features. A growing number of “new” social enterprises – i.e. social enterprises originating neither from the third sector nor from the social economy – are also emerging.

Against this backdrop, policy makers at different government levels are called to act and to build an enabling policy environment that will empower, support and help social enterprises to maximise their impact.

Building conducive policy ecosystems

Social enterprises can be important partners for governments, helping them meet major policy objectives (e.g. reducing unemployment and poverty, and increasing social cohesion). However, they often face a number of barriers (e.g. a lack of legal recognition, and difficult access to markets and finance) that can limit their impact and prevent them from reaching their full potential. The recent report of the Expert Group on Social Entrepreneurship of the European Commission (European Union, 2016) stresses that favourable policy ecosystems are essential to helping social enterprises overcome these barriers. To build tailored policy ecosystems, policy makers first need to develop a sound understanding of the features, mission and needs of social enterprises before translating into policy actions supporting their development.

These policy actions need to be conceived using a holistic approach: any ecosystem is likely to be better tailored and structured when its different elements are coherent, inter-connected, and transversal (i.e. not designed and implemented in silos). This means, for instance, that designing a legal framework for social enterprises without simultaneously seeking to facilitate market access, support skills development and foster a varied financial landscape will yield a limited – if not counterproductive – impact on social-enterprise development. Likewise, an ecosystem’s policy outcomes and actions are just as important as the process that leads to them: not only should each policy area within the ecosystem be part of an integrated systemic vision, it should also be co-constructed with the relevant stakeholders and co-ordinated among the different (national and territorial) policy levels.

A number of policy areas – including legal frameworks, access to markets, access to finance, support structures, and education and skills – seem particularly relevant to social-enterprise development.

Legal frameworks

Legal frameworks bring clarity by defining the nature, mission and activities of social enterprises. By granting them recognition and visibility, they help policy makers support social enterprises through different levers (including fiscal measures), and they help funders and investors understand the benefits of providing funds to social enterprises. Inaccurate, unclear or excessively narrow legal frameworks can harm social enterprises, by causing confusion or failing to capture the array of entities that may qualify as social enterprises in a given context. Legislators can create a dedicated and appropriate legal framework by adapting existing legislation on specific legal forms – for instance co-operatives – or passing new laws. However, less rigid normative tools should also be considered, as they may be easier to adapt to new developments in the field.

Access to finance

Access to finance is key throughout social enterprises’ life cycle. Depending on their development stage, social enterprises derive financing from a combination of resources, ranging from subsidies and debt instruments to equity, patient capital and impact investments (OECD/European Union, 2016). Private donations are another (although less common) source of funding. Simultaneously, new actors – such as financial intermediaries, whose role is essential in assisting social enterprises to become more investment-ready, and connecting them with potential funders – are emerging. Still, policy support is vital to improve access to funding. Policy makers need to encourage capacity-building, along with efforts to unlock and attract funds that are better suited to social enterprises. Moreover, while they rightfully advocate mobilising private funds, they should keep in mind that public support remains an important element of the financial landscape that can help leverage and guarantee private resources for social enterprises. In fact, public support may remain the principal (if not the only) source of funding for some social enterprises facing particularly intractable challenges.

Access to markets

To be sustainable, social enterprises require access to public and private markets. Policy makers could support various instruments to this end, such as: 1) encouraging the use of social clauses in public procurement, both at the national and local levels; 2) supporting socially responsible procurement by private companies and facilitating their relations with social enterprises; 3) levelling the playing field, by allowing social enterprises to access the same enabling policy measures provided to small and medium-sized enterprises (SMEs), as well as tailoring support to their specific features; and 4) encouraging and supporting managerial training for social entrepreneurs (possibly by developing university-level taught courses on social enterprise management).

Support structures

Social enterprises require business support throughout their developmental phase. Targeted public support for structures such as hubs, accelerators or incubators is essential to ensure their sustainable development across territories and activity sectors. Training, coaching or consultancy services play a critical role in building social entrepreneurs’ skills (e.g. in developing business plans, accessing diverse funding sources and becoming financially self-sustainable); at a later stage, investment-readiness support can help them expand. However, social enterprises do not require the same services as commercial enterprises: because of their double bottom line, they need to balance financial sustainability with maximising social impact. Hence, policy makers may wish to promote “braided support” both for general business skills and social enterprises’ specific needs. (OECD/European Union, 2013).

Education and skills

Policy ecosystems need to foster social entrepreneurship not only in the short term, but also in the long run. To this aim, they need to develop education and skills that breed entrepreneurial behaviours. Educational programmes on social entrepreneurship provide students with opportunities to develop new solutions to unresolved social challenges, and learn about business creation processes and planning at the secondary and higher education levels. Partnerships between the social enterprise community and research institutions are a promising approach to develop the evidence base, improve understanding and raise visibility of the field.

Key lessons

This section presents and discusses eight key lessons on establishing an enabling policy ecosystem for social enterprises. These lessons emerge from the comparative analysis of the initiatives described in this Compendium. They demonstrate the importance of co-constructing and looking at ecosystems holistically. They also illustrate that similar challenges can be addressed by using different approaches within the same policy area, allowing for tailored and context-sensitive policy actions.

Raise awareness and visibility of social enterprises, and tackle misconceptions

Despite growing interest in social enterprises (and the different actions undertaken to increase their visibility and recognition by policy makers, potential funders, users and consumers), there is still limited understanding of their specificities. This breeds misconceptions that hamper them from effectively meeting social enterprises’ needs and setting enabling conditions for them to thrive. Yet policy makers can take an active role in supporting their visibility. For example, the French Law on the Social and Solidarity Economy, adopted in 2014, grants legal recognition to the institutions representing the social and solidarity economy (SSE) at the national level and strengthens the network of regional SSE chambers. Although the Law has a broad scope beyond social enterprises, it explicitly mentions them and creates favourable conditions for their development. It also foresees the use of a specific certification for those entities, within its purview, which place social impact first, helping public agencies and funders recognise and support them. Another interesting example is the initiative of the Minister of Innovation in Flanders (Belgium), which provided subsidies to the Social Innovation Factory (a local support structure) for activities aiming to raise awareness of social entrepreneurship and social enterprises.

Policy makers can also support efforts to raise funders’ awareness of social enterprises, aided by social finance intermediaries, who help funders design appropriate financing schemes. Supported by the Portuguese government, Portugal Innovação Social acts as a market catalyst and helps social enterprises access finance. Its creation stemmed from the awareness-raising and lobbying efforts of Social Investment Lab to promote social enterprises and social investment as priorities in the policy agenda. To this end, it produced papers on the relevance and applicability of social investment in Portugal, and conducted feasibility studies of social investment deals, fostering discussions with investors and local authorities. The German organisation FASE, for its part, uses a “deal-by-deal” approach to design a tailored financing scheme matching the needs of social enterprises and impact investors.

Support structures can also help raise the visibility of social enterprises. In Spain, El Hueco actively supports the creation of social enterprises and highlights their contribution to regenerating the sparsely populated area of Soria. This multidimensional support structure organises regular local events and an annual meeting bringing together social entrepreneurs, investors and public-sector representatives; designs creative communication campaigns about social enterprises; and has a strong media and social network presence. It also collaborates intensively with Soria’s provincial council (which finances the social enterprise competition “El Hueco Starter” award), as well as public administrations at the local, regional, national and European levels.

Joint efforts and partnerships among organisations that support social enterprises can strengthen and amplify awareness-raising. In Scotland, the Partnership for Supporting the Social Enterprise Strategy comprising three national social enterprise intermediary organisations (Scottish Social Enterprise Coalition, Senscot and Social Firms Scotland) increases the visibility of social enterprises through a range of activities; e.g. organising study visits to social enterprises by parliamentarians from all political parties and sending them monthly e-bulletins; submitting responses to government consultations and motions; and promoting social enterprises’ added value to the media and local communities through national and local events, awards and press activities.

Establish strategic and multi-stakeholder partnerships

Strategic partnerships constitute a win-win-win for a range of diverse stakeholders, such as social enterprises, public agencies and private sector entities. When policy makers adopt a multi-stakeholder approach and establish strategic partnerships, they create the conditions for helping social enterprises enter public and private markets; build or participate in value chains; and gain access to complementary resources, skills and networks. Partnerships between social enterprises and private companies are an interesting and less explored avenue. For example, the Social Impact Factory, a support structure aiming to spur social enterprise creation and inspire traditional enterprises to add a social or environmental component, resulted from a partnership between the municipality of Utrecht (Netherlands) and the Kirkman Company, a private enterprise. The Social Impact Factory uses an online platform connecting social enterprises both with private companies seeking to purchase social services or products and with the municipality, which advertises its calls for public contracts or suppliers. In Denmark, the partnership between the social enterprise Specialisterne and the multinational software corporation SAP integrates people with autism into the job market by leveraging their unique skills. Specialisterne is now part of the SAP value chain, allowing it to expand its operations – and therefore its impact – to 12 countries and establish new partnerships not only with other large corporations, but also local authorities.

Strategic partnerships enable stakeholders to leverage complementary strengths, expertise, skills and funds, as well as enhance knowledge-sharing. In Belgium’s Walloon region, SAW-B brings together social enterprises facing similar challenges and organises group discussions where they can share their experiences. It has also established a federation connecting social enterprises with complementary needs and skills. By joining forces and resources, some have already developed new services or products, while others have expanded their original regional scope to the trans-regional, national or even European scale.

Engaging and consulting with potential stakeholders is essential for public agencies to establish support frameworks for social enterprises. When an institutional development process is inclusive, the final output can more accurately reflect the needs of stakeholders, who will then take ownership of the process. The resulting institutional changes are more likely to be implemented effectively, and to endure through time and government changes. The Barcelona City Council Decree for Socially Responsible Public Procurement was the result of a consultation process among 50 representatives from 40 different entities (including experts, social partners, non-state actors, private-sector representatives, various municipal areas and political parties). A key success factor was the establishment six months before the adoption of the Decree of the Mixed Commission for Socially Responsible Procurement. The Commission regularly brought together all the stakeholders, who managed to reach common ground and drafted the legal text in a fully collaborative mode. Through this process, each side identified the benefits of the Decree and the potential risks if they failed to reach an agreement.

In Croatia, the Ministry of Labour and Pension Systems followed a similar path while developing the National Strategy for the Development of Social Entrepreneurship. It established a working group (comprising representatives from other government authorities, social partners, vocational and educational institutions, and an umbrella organisation representing social enterprises’ interests) that met regularly over a period of two years to produce a draft Strategy. The final draft Strategy became available for public consultation on an online platform, where citizens could add their suggestions.

Foster viable and sustainable social enterprises

One of the most effective ways of helping social enterprises become viable and sustainable is to foster social entrepreneurs’ business skills and know-how. To this end, support structures (e.g. incubators) and networks rely on professionals who understand both traditional businesses and social enterprises, and build social entrepreneurs’ capacity become sustainable without diluting their social mission. In Denmark, the Copenhagen Project House (KPH) incubator supports social enterprises from the early stage to scaling by providing mentoring and peer-to-peer activities in a large co-working space. KPH has a network of private partners who help entrepreneurs interact with corporate social responsibility managers at events and mini-conferences; identify the skills necessary to collaborate with them; and generate social and business value. Meeting and working closely with established companies and large organisations can help social enterprises test their ideas and create new business opportunities that may also attract investors.

Policy makers should identify social enterprises’ financial needs and design appropriate financial support tools. For instance, the United Kingdom’s three-year funding programme Big Potential offers grants to help social enterprises progressively take on repayable investments. The grant amount depends on the enterprise’s stage of development; it is coupled with one-to-one support sessions to discuss its business model and an online diagnostic tool that helps it identify its needs. Policy makers should also consider supporting initiatives that help social enterprises aiming to consolidate their business model shift from a grant-funding mindset to taking on credit and micro-loans. ESFund TISE, a pilot repayable instrument in Poland, offers social enterprises a combination of loans and 30 hours of free expert advisory services on a wide array of subjects.

Finally, financial intermediaries can facilitate this changing paradigm and help social enterprises identify the right tool for reaching financial sustainability. However, social enterprises – especially small ones – often struggle to pay for intermediaries’ services. To overcome this challenge, Portugal Inovação Social provides grants and vouchers to facilitate social enterprises’ access to tailored support by specialist providers in areas such as financial management, business modelling, impact measurement, leadership and governance. Public financial instruments can also provide useful support in this regard.

Support risk-sharing mechanisms for finance providers

While public support (predominantly through grants and subsidies) is a major financial source for many social enterprises, an increasing number now seek to access financing provided by mainstream or new funders (e.g. commercial banks or impact investors). However, social enterprises may not always be investment ready, or have sustainable business models. Germany’s FASE focuses on creating impact-investment pipelines that bring together impact investors and investment-ready social enterprises, and support them throughout the transaction process, clearly demonstrating that both public support and philanthropic funds are equally crucial to early-stage social enterprises and intermediaries aiming to provide them with sufficient capital to survive and thrive.

Another challenge is that mainstream funders or impact investors perceive social enterprises – especially in the early stages – as high-risk clients, and are therefore reluctant to invest in them. Commercial banks share this view, considering that social enterprises may not have the capacity to sustain the loan costs or present the necessary financial guarantees. One effective response to this challenge is guarantee schemes, which are widely known for sharing or amortising risk with mainstream funders, impact investors and commercial banks. JEREMIE Sicily, a financial instrument in Italy, has established a dedicated guarantee fund that helps social enterprises and SMEs access credit. Portugal Inovação Social and its Social Innovation Fund provide guarantees to co-investors, thereby improving social enterprises’ risk profile and allowing banks to lend them on more favourable terms. In Ireland, the social finance provider Clann Credo takes a slightly different approach, providing retail loans to social enterprises based on their size, repayment capacity and expected social benefits. In the event of a loan default, Clann Credo shares 50% of the loss with the Social Finance Foundation, a wholesale social-finance provider. Still, its operations emphasise prudent lending practices in social finance and capacity-building for assessing risk.

Foster social-entrepreneurship skills in the education system

Uptake of entrepreneurship education is still low in most OECD countries, particularly at the primary and secondary education levels. And yet entrepreneurship education can nurture an entrepreneurial mindset while enhancing students’ creativity, collaborative skills and ethical thinking – all of which are particularly important in social entrepreneurship. By providing related programmes to students throughout the education system, organisations help fill this gap. However, teachers rarely have the opportunity to undergo initial training and continuous professional development in social entrepreneurship. They are often unfamiliar with the concept, and hesitate to adopt new, project-based pedagogical methods. As highlighted by JA Europe, raising awareness on the benefits of entrepreneurship (including social entrepreneurship) education, and providing relevant training to teachers and head teachers – who are critical to their success – is key when implementing these programmes.

Policy makers can play a critical role in designing and implementing strategies fostering entrepreneurship education, and seeking to develop students’ ability to recognise and act upon opportunities to create social value. For example, the French Law on the Social and Solidary Economy created the Higher Council for the Social and Solidarity Economy (Conseil supérieur de l’ESS) which aims (among other things) to promote social entrepreneurship among young people through the public education system. Another example worth mentioning is the Croatian Strategy for the Development of Social Entrepreneurship (adopted in 2015), which allocates 28% of its total budget to educational activities (e.g. replicating innovative educational programmes, and supporting institutions providing formal and informal programmes on social entrepreneurship).

Supporting public-private partnerships between schools and third-sector organisations – including social enterprises, which are specialised in providing social entrepreneurship education programmes – is another promising strategy that does not require additional government spending. JA Europe, which is almost completely independent from public funding, is a good case in point: in 2015, only 14% of its total annual budget stemmed from public funding, and 82% from private sources.

Promote impact measurement and evaluation

While public and private funders increasingly ask social enterprises to measure their impact (OECD/European Commission, 2015), most social enterprises have a limited impact measurement and evaluation culture. First, over-emphasis on measuring their impact can divert social enterprises’ attention from actually producing social change, and lead them to change their organisational structure. The financial intermediary PHINEO has reached out to more than 200 opinion leaders across Germany, describing social enterprises’ mission and organisation structure, and explaining how they should be taken into account when designing impact measurement requirements. PHINEO also strives to raise awareness within social enterprises, by explaining that measuring impact has a useful function in substantiating and improving non-profit activity. In this process, it conducts issue-related impact assessment studies in which social enterprises are invited to participate free of charge and without risk. After undergoing a selection assessment process, social enterprises that meet certain criteria (regarding their organisational and financial structure, vision, potential impact and capacity to yield results) are publicly profiled and awarded PHINEO’s “Wirkt!” impact label. PHINEO publishes guides, such as the Social Impact Navigator, which gather and analyse social enterprises’ impact measurement experiences, as well as offer hands-on advice, checklists and step-by-step activities.

Second, measuring impact requires skills, financial resources and time. Social enterprises often lack team members with appropriate skills, and cannot afford to recruit new ones and/or pay for relevant training. Policy makers can support structures that help social enterprises learn how to measure their impact. NESsT provides (and teaches social enterprises how to use) a performance-management tool that sets goals and targets, and regularly monitors performance (based on tailor-made indicators on the social enterprise’s organisational capacity, enterprise performance, social impact and financial sustainability).

Finally, policy makers could encourage partnerships among higher education institutions, social enterprises and support structures. In France, the regional incubator Alter’Incub, in partnership with the Occitanie region,1 and Aix-Marseille and Montpellier universities, has convened an interdisciplinary group of researchers in the social sciences, economics and management to develop cutting-edge research on impact evaluation and measurement methods. Social enterprises incubated at Alter’Incub learn to implement these methods in their own context.

Establish user-friendly administrative processes

Like SMEs, social enterprises often face complex and time-consuming bureaucratic procedures. Portugal Inovação Social stresses the difficulty of navigating through EU structural fund procedures. In Croatia, the heavy bureaucracy and requirements for obtaining the “social enterprise” status are a major bottleneck in implementing the National Strategy for the Development of Social Entrepreneurship. Moreover, the public-procurement bidding process is one of the most challenging – yet essential – exercises for social enterprises. NESsT notes the procedures are often not user-friendly and require specific skills, which can prove discouraging for social enterprises that are not tender-ready. Public administrations find implementing social clauses equally challenging. In Barcelona, many public officials did not have the relevant skills to implement the City Council Decree for Socially Responsible Procurement and evaluate tender offers.

Policy makers can streamline the administrative procedures for social enterprises and reduce the red tape. In Poland, ESFund TISE has suggested that government agencies relax some of the longstanding, rigid procedures in public procurement and financial schemes, which may no longer be suitable for social enterprises. Finally, policy makers could showcase the activities and tools used by support structures that help social enterprises navigate administrative procedures. For example, both SAW-B in Wallonia and the Social Impact Factory in Utrecht prepare guides that help social enterprises respond to calls for tender.

Ensure institutional continuity and political support for social enterprises

Sustained policy support is essential to establish an enabling ecosystem allowing social enterprises to thrive over the long term. Political impetus can act as a catalyst for both nascent and/or well-established ecosystems, fostering and accelerating favourable conditions for social enterprises. However, challenges may emerge when political support fluctuates owing to government changes. In Croatia, strong political commitment would probably have accelerated the design and adoption of the National Strategy for the Development of Social Entrepreneurship. Although the political fluctuation may have slowed implementation of the Strategy, the multi-stakeholder engagement in its development and steadfast commitment of some elements of the public administration ensured its continuity. Portugal experienced strong political endorsement at the ministerial level in 2013, which transcended partisan affiliations and ensured a smooth transition through the government change, leading to the creation of Portugal Inovação Social. So far, the changes in the ministers responsible for innovation have not affected the agenda for establishing a social-investment market.

Table 1.1. Overview of featured policies and programmes

picture

▴ = Primary focus, • = Secondary focus

References

Defourny, J. (2001), “From Third Sector to Social Enterprise”, in Borzaga, C. and J. Defourny (eds.), The Emergence of Social Enterprise, pp. 1-28, Routledge, London and New York.

European Commission (2012), Entrepreneurship in the EU and beyond, Flash Eurobarometer 354, European Commission, Brussels, http://ec.europa.eu/public_opinion/flash/fl_354_en.pdf.

European Commission (2011), Social Business Initiative – Creating a favourable climate for social enterprises, key stakeholders in the social economy and innovation, Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions (682 final), http://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52011DC0682&from=EN.

European Union (2016), General Report of the Commission of Experts on Social Entrepreneurship (GECES), http://ec.europa.eu/growth/sectors/social-economy/enterprises/expert-groups_en.

Noya, A. and E. Clarence (eds.) (2007), The Social Economy: Building Inclusive Economies, OECD Publishing, Paris, http://dx.doi.org/10.1787/9789264039889-en.

OECD/European Union (2016), Policy Brief on Scaling the Impact of Social Enterprises: Policies for Social Entrepreneurship, OECD/European Commission, Publications Office of the European Union, Luxembourg, https://www.oecd.org/employment/leed/Policy-brief-Scaling-up-social-enterprises-EN.pdf

OECD/European Union (2015), Policy Brief on Social Impact Measurement for Social Enterprises: Policies for Social Entrepreneurship, OECD/European Commission, Publications Office of the European Union, Luxembourg, http://www.oecd.org/industry/Policy-Brief-social-impact.pdf

OECD/European Union (2013), Policy Brief on Social Entrepreneurship: Entrepreneurial Activities in Europe, OECD/European Commission, Publications Office of the European Union, Luxembourg, https://www.oecd.org/cfe/leed/Social%20entrepreneurship%20policy%20brief%20EN_FINAL.pdf

OECD (1999), Social Enterprises, OECD Publishing, Paris, http://dx.doi.org/10.1787/9789264182332-en.

OECD (2014), Job Creation and Local Economic Development, OECD Publishing, Paris, http://dx.doi.org/10.1787/9789264215009-en.

SEFORÏS (2016), Cross-country report: First Cross-Country Analysis and Profiling of Social Enterprises, http://www.seforis.eu/news/2016/10/20/first-seforis-cross-country-results-available

UNICEF (2007), Adolescents and Civil Engagement: Social Entrepreneurship and Young People, United Nations Children’s Fund, New York, http://www.unicef.org/adolescence/files/Learning_Series_3_Social_Entrepreneurship_24dec2007.pdf.

Annex: Summary tables
Belgium (Flanders)
Social Innovation Factory: An early-stage business support structure

Main actor(s)

Social Innovation Factory; Agency for Innovation and Entrepreneurship (regional government).

Level of implementation

Regional.

Implementation date

Launched in 2013; on-going.

Policy area

Business development support.

Policy approach

Business counselling; networking; research; awareness-raising.

Objectives

1. Raising awareness about social innovation and social entrepreneurship.

2. Enabling actors to tackle challenges in a socially innovative and entrepreneurial manner.

Rationale

In Flanders, subsidy cuts have made the need for social innovation and social entrepreneurship more acute. Private companies have also shown a growing interest in contributing to a better society through “corporate social responsibility” initiatives and networks that bring together civil-society actors and companies.

Key activities

– Business development services, such as face-to-face assistance by process managers, enrichment sessions with experienced innovators, workshops and “boot camps” to aspiring social entrepreneurs and innovators.

– Communication activities, awareness campaigns and networking events.

– Use of an alternative barter currency (“SIF”) in order to monitor Social Innovation Factory’s financial and non-financial transactions.

Impact

Social Innovation Factory has helped more than 300 innovators develop their business model, find business partners, evaluate their impact, scale-up, and analyse their target group.

Key challenges

– Initial reluctance from stakeholders: policy makers feared that the non-thematic approach of the initiative would drive away funding initially dedicated to specific policy domains; civil society organisations worried that the inclusion of actors primarily driven by financial gain would jeopardise social innovations that would never generate market revenues; for-profit actors were concerned about the decrease in innovation budgets initially intended for companies.

– Defining when to stop providing support.

– Building stronger relationships with bigger “established” actors.

– Unstable funding situation.

Success factors

– Focusing on a brokering role in a well-established and diversified network of actors.

– Lean organisational model, where relatively modest operational costs generate substantial output.

– Demand for Social Innovation Factory came from different actors in society.

Financial source(s)

Public source (80%); EU funding and self-generated revenue from services provision (20%).

Budget

EUR 800 000 (2016).

Belgium (Wallonia-Brussels)
SAW-B: A training and advisory services federation

Main actor(s)

SAW-B.

Level of implementation

Regional.

Implementation date

Launched in 1981; on-going.

Policy area

Business development support; skills and education; visibility

Policy approach

Networking; lobbying; education and training; raising awareness; knowledge sharing; business counselling.

Objectives

The federation aims to bring together social economy actors, from all sectors of activity, to exchange practices and highlight their concerns at the political level.

Rationale

SAW-B was initially founded in response to the lack of political support for the growing number of producer co-operatives and work integration enterprises. Over time, and in order to professionalise and legitimise the sector, SAW-B became also active in education and training.

Key activities

– Federation: representing social enterprises in the political arena and influencing the institutional framework by engaging in lobbying; counselling publics bodies; organising awareness raising activities on social entrepreneurship for citizens and students.

– Training and research: trainings and practice-sharing for social enterprise managers, entrepreneurs; and SAW-B workers; conducting research to develop practical tools.

– Advisory agency: consultancy including legal, financial, communication, human resource-related services and governance advice, as well as support to draft business plans, and to obtain agreements from public authorities.

Impact

The advocacy work of SAW-B has contributed to: the establishment of a consultative body on social economy; the adoption of a legal definition of the social economy, thanks to close contacts with members of parliament; the creation of the social-purpose company; and the formulation of public agreements or labels. At a micro-level, an estimated 50 social enterprises benefited from its advisory services in 2014.

Key challenges

– Overcoming resistance to change (mainly from public authorities) in the face of the initiatives’ innovative and alternative character.

– Emergence of new actors (e.g. collaborative or sharing economy platforms) that only partially endorse the values of social economy; the challenge lies in taking into account these evolutions, without diluting the principles of economic democracy and limited surplus redistribution.

– Lack of specialisation (causing potential loss of legitimacy) and in-depth knowledge.

Success factors

– Limiting the initiative’s geographical scope and factoring in the subsidiarity principle, both to keep the federation close to its advisory and training activities, and to determine the most influential political level.

– Transversal character to embrace the overall social economy and maintain awareness about innovations.

– Engage with a wide variety of actors.

– Complementary activities.

Financial source(s)

National public sources (87%); EU (3.9%); sales and donations (approximately 9%).

Budget

Approximately EUR 1 300 000 (2014).

Croatia
The National Strategy for the Development of Social Entrepreneurship

Main actor(s)

Government of Croatia.

Level of implementation

National.

Implementation date

Launched in 2015; on going.

Policy area

Institutional/legal framework.

Policy approach

Integrated approach.

Objectives

1. Boost social enterprise creation and growth by establishing a more supportive institutional and financial environment.

2. Decrease regional disparities, increase employment and ensure fair distribution of wealth.

Rationale

Prior to the Strategy, the policy discourse recognised social entrepreneurship only as a component of civil society, and social enterprises struggled to adjust to unsuitable and sometimes contradictory regulations. The Strategy was developed to acknowledge their unique specificities and meet their needs.

Key activities

– The Strategy has four main measures, whose activities include:

– Develop and improve the legislative and institutional framework: setting up a dedicated institutional unit and an official register of social enterprises; harmonising legislation; providing unused public spaces and buildings for use by social enterprises; developing partnerships between public bodies; developing a social-impact measurement methodology.

– Establish an adequate financial framework: developing a unique guarantee mechanism/fund, providing systematic financial support (grant schemes) linked to EU funds and national budget co-financing.

– Promote social entrepreneurship through education: supporting social entrepreneurship educational programmes and lifelong learning projects; producing informational publications; encouraging further education about social entrepreneurship for teachers, adults and public servants.

– Increase visibility and information channels: producing promotional materials and highlighting examples of good practices; developing social-enterprise market labels.

Impact

Considering the relatively recent implementation, no data are available.

Key challenges

– Lack of institutional recognition and high level political will.

– Need to reconcile opposing approaches to social enterprise.

– The social enterprise landscape is still small with limited capacity: many social enterprises may struggle to meet the requirements to receive the “social enterprise” status.

Success factors

– Adopting a bottom-up approach, developing a network or an umbrella organisation that represents social enterprises’ interests and needs.

– Creating a partnership with the government (as a process owner).

– Creating a transparent and participative model of preparation and implementation, including stakeholders from multiple sectors and a public consultation.

– Closely connecting the strategy with EU documents and policies to ensure coherence with EU strategic priorities and enhance access to EU financial resources.

Financial source(s)

Public funding.

Budget

Approximately EUR 37 million (of which EUR 32 million from the ESF) (2015-2020).

Denmark
Copenhagen Project House (KPH): An incubator for social start-ups

Main actor(s)

KPH, City of Copenhagen.

Level of implementation

Local.

Implementation date

Launched in 2009; on-going.

Policy area

Business development support; education and skills.

Policy approach

Co-working space; incubation; business counselling; mentoring; networking.

Objectives

1. Create value for society by supporting cultural and social enterprises during the early and scaling stages.

2. Strengthen inter-sectorial partnerships by actively linking the public, private and voluntary sectors.

3. Focus on market failure areas where the municipality is not active and there is a need for new services.

Rationale

Denmark currently faces major challenges in maintaining its social welfare. Municipal procurement to social enterprises could alleviate this problem and incubators, such as KPH, are instrumental in strengthening their role.

Key activities

KPH operates as:

– an incubator and accelerator for social start-ups;

– a co-location space for more mature social enterprises;

– a multi-functional event space.

The underlying business model of the KPH incubator rests on a multi-partner mentoring scheme and strong partnerships. KPH entrepreneurs have to mentor their peers for three hours per month. Experts both from the public and private sectors also provide mentoring on a case-by-case basis. KPH facilitates the collaboration between the Municipality and social enterprises. Its secretariat sits at the Municipality board and acts as both the initiator and the broker of relationships between public bodies and social entrepreneurs.

Impact

The KPH network of private partners has helped to meet entrepreneurs’ small practical needs and brokered substantial partnerships, creating opportunities for social entrepreneurs to test ideas in co-operation with experienced entrepreneurs, organisations and businesses, as well as develop new business and investment prospects. KPH now houses over 300 social entrepreneurs, more than 60 companies and organisations, and hosts around 20 permanent cultural events.

Key challenges

– Diversifying financial sources and decreasing dependency on municipal funding, while keeping strong relations with the public sector.

– Changing political priorities that create instability in municipal funding.

– Facing increased competition among co-working spaces.

– Adapting its business model to maintain the quality of services provided.

– Assessing the organisation’s social impact.

Success factors

– Adopting a broad definition of social enterprise and collaborating with a wide start-up ecosystem.

– Implementing specific governance conditions that allow the incubator to attract further income streams and diversify its service portfolio.

– Working across and within city departments.

Financial source(s)

Public (subsidies), income-generated activities (membership and rental fees, commercial activities), EU funding.

Budget

EUR 400 000 (DKK 2.9 million) annually (2009-2012); EUR 320 000 (DKK 2.4 million) annually in direct funding, as well as EUR 80 000 (DKK 500 000) as a “growth package” for rent and utilities (2013-2016) from the Culture and Leisure Department of the City of Copenhagen.

France
Alter’Incub: A regional incubator

Main actor(s)

Alter’Incub, Languedoc-Roussillon Region, the European Regional Development Fund (ERDF), the Caisse des Dépôts et Consignations.

Level of implementation

Regional.

Implementation date

Launched in 2007; on-going.

Policy area

Business development support; education and skills.

Policy approach

Business incubation; consultancy services; coaching and mentoring; networking.

Objectives

1. To develop a multi-stakeholder response to unmet local needs.

2. To drive the creation of social enterprises that enhance economic, social, and local development, and create jobs.

Rationale

Despite national interest in social entrepreneurship in the early 2000s, barely any support existed in France for social innovation and business creation. Alter’Incub was a pioneer in helping projects take advantage of existing instruments in the conventional economic system.

Key activities

Alter’Incub creates synergies between entrepreneurs, research centres in humanities and social sciences and territories. Its incubation programme lasts 12 months and includes:

– Individual support: helping entrepreneurs with networking, market studies, financial and business planning, choice of legal status and management.

– Collective support: collective training sessions leading to positive group dynamics; better communication between project initiators; acquisition of strategic, marketing and management skills.

– External support: mobilising partnerships with local experts in order to meet the needs of innovative projects in particular when entrepreneurs need specific resources (e.g. specific legal advice, detailed market studies) that would not be available otherwise.

Impact

In less than ten years, Alter’Incub created 250 jobs and 41 social enterprises in the region. It has contributed to defining social innovation and social enterprise in France and has helped define regional and national policies supporting social innovation. It now heads a network of five incubators in three regions of France.

Key challenges

– Establishing broad partnerships takes time: researchers specialising in social innovation are not used to interacting with social enterprises.

– Financing higher cost of incubation of socially innovative projects that require longer-term and more complex mentoring than regular projects.

– Scaling up the incubator network requires reinforcing the spin-off strategy to increase the number of incubated projects, as well as taking time to promote and co-ordinate the network and its community.

Success factors

– Network of local partners: Alter’Incub has relied on the skills of local actors taking advantage of existing resources.

– Skilled mentoring: a project’s success depends on the quality of brainstorming amongst entrepreneurs and mentors.

– Time, listening skills and strong partnerships are key to determining the strengths and weaknesses of a project, team and/or environment.

Financial source(s)

90-95% from the Occitanie region and the European Regional Development Fund (ERDF); 5-10% from the co-operative movement (URScop or CGScop).

Budget

Approximately EUR 500 000 annually.

France
The Law on the Social and Solidarity Economy (SSE)

Main actor(s)

Ministry of the Economy and Finance.

Level of implementation

National.

Implementation date

Entry into force in July 2014.

Policy area

Legal/ Institutional framework.

Policy approach

Integrated approach.

Objectives

The SSE Law aims to meet the need for recognition of SSE actors; to recognise SSE as a specific model of entrepreneurship; and to complete or reform a range of tools aiming to foster the development of SSE actors.

Rationale

Studies have demonstrated the resilience of social enterprises in the wake of the economic crisis and the SSE potential to respond to economic issues. An integrated and better enabling policy framework was needed to reverse policymakers’ tendency to “underestimate” the SSE.

Key activities

Main measures adopted by the SSE Law include:

– Structure the network and grant legal recognition to representative SSE institutions, such as the Higher Council for the Social and Solidarity Economy, the French Chamber of SSE and the regional SSE chambers.

– Recognise SSE as a specific entrepreneurship model by: proposing a clear definition of the structures included in the SSE; setting precise criteria defining “social innovation” and introducing a “social and solidarity-based enterprises” accreditation for SSE enterprises

– Facilitate access to financing and public procurement by: creating tailored financing tools (e.g. solidarity-based participatory loans and dedicated equity capital direct investment); clarifying the legal regime for subsidies to better differentiate it from public procurement; including social clauses in public procurement.

– Strengthen the local sustainable development policies and the network approach by: establishing regional ESS conferences; participating in regional chambers in the design of the regional plans for sustainable development and territorial equality; allowing SSE enterprises to constitute their own regional network through a regional economic co-operation hub (called PTCE), in co-operation with all relevant economic and institutional stakeholders.

– Facilitate salaried employees to take over an enterprise as a SCOP to preserve or re-establish jobs by: creating a transitional status for seed co-operative and participative companies; introducing mechanisms to inform employees of an upcoming ownership transfer.

– Modernise the status of co-operatives by authorising the creation of SCOP groups.

Impact

n/a.

Key challenges

– Network egocentrism.

– Limited public financing dedicated to SSE.

Success factors

– Multiple stakeholders approach used in the design phase of the Law.

– Adoption of an inclusive definition recognising the specificities of the different SSE “families” (traditional organisations and new social enterprises) and providing them with tailored and innovative tools.

Financial source(s)

Public funding.

Budget

n/a.

Germany
Financing Agency for Social Entrepreneurship (FASE): An intermediary for hybrid financing

Main actor(s)

FASE; fully owned by Ashoka Germany.

Level of implementation

National (and in selected European countries).

Implementation date

Launched in 2013; on-going.

Policy area

Access to finance.

Policy approach

Provision of funding; financial intermediation; investment-readiness support.

Objectives

1. Mobilise growth capital for early-stage social enterprises, to enable them to scale their impact.

2. Develop innovative financing strategies, securing more impact-minded investors, and build a pipeline of investment-ready social enterprises.

Rationale

Early-stage social enterprises face a strategic financing gap when the required investment amounts tend to be too large for private donations or philanthropist organisations, and too small and risky for institutional social investors. This market failure is often termed “the valley of death”: many social enterprises risk failing prematurely due to sheer lack of funding.

Key activities

– Offers transaction and investment-readiness support to social enterprises.

– Develops new hybrid financing models.

– Builds a network of potential impact investors.

– Initiates collaborations between different market players to advance the social finance ecosystem.

– Participates in policy initiative.

– Disseminates knowledge through best-practice examples, events and case studies.

Impact

FASE has successfully closed 20 transactions, channelling around EUR 8 million (as of December 2016) into the social finance sector and advising approximately 200 social enterprises on the nature, process and requirements of raising growth capital. It has added over 250 current and potential impact investors as part of their network and has published over 30 articles, interviews, and papers.

Key challenges

– Developing a viable, sustainable business model that allows scaling the impact to a higher number of target groups and geographic regions.

– Human resource-intensive business.

– Limited budgets of social enterprises to pay for external services.

– Significant barriers between the mental models of philanthropists and impact investors.

Success factors

– Deal-by-deal matching approach.

– Investor coalitions comprising two to investors from different financing “planets”.

– A customised “hybrid” approach to financial instruments.

– Stringent process management.

– Open-source method: sharing blueprints and experiences for replication

Financial source(s)

Income generated from transaction support to social enterprises (45%); project and infrastructure support from the European Commission and private organisations (55%).

Budget

Approximately EUR 200 000 (2015)

Germany
PHINEO: A financial intermediary

Main actor(s)

PHINEO.

Level of implementation

Local, regional and national.

Implementation date

Launched in 2010; on-going.

Policy area

Access to finance; business development support; access to market; visibility.

Policy approach

Financial intermediation; networking; label; raising awareness ; knowledge sharing.

Objectives

To strengthen civil society while improving the impact of non-profit organisations (NPOs) and social-enterprises activity; building bridges among and between donors, social investors, NPOs and social enterprises.

Rationale

PHINEO was established in response to the non-profit and social enterprise sector’s lack of transparency and impact assessment, its high transaction costs (e.g. for research and due diligence) and the widely varying degrees of professionalism.

Key activities

– Accreditation and publications: analysing social challenges, examining the NPOs and social enterprises active in these areas, awarding a label to those that have aligned operations with impact objectives, and creating a compendium for social investors to encourage them to invest, partner or implement corporate citizenship activities.

– Corporate citizenship: developing and disseminating knowledge on corporate citizenship methods, tools and trends through workshops, studies, guidebooks and market intelligence.

– Consulting: offering social investors a range of consultancy services focusing on strategy development; advising NPOs and social enterprises on how to develop sustainable engagement strategies and improve social impact; introducing the Social Reporting Standard (SRS) to NPOs and social enterprises in Germany;

– Impact investing: providing impact analyses for specific organisations or issues; access to the tri-sectoral network needed for successful impact investment; helping interested entities develop the ecosystems needed for impact investing.

Impact

PHINEO has succeeded in drawing broad attention to the need to heighten the impact of the social sector, thereby improving the visibility and credibility of NPOs and social enterprises. It has expanded its tri-sectoral network of private, public and civil-society stakeholders from 10 to more than 100 active partners. It has analysed more than 800 NPOs and social enterprises, and awarded the impact label to 200 of them.

Key challenges faced

– First mover in many areas, facing high development costs.

– Few strategic donors and partners are willing to invest in intermediaries providing market intelligence: need to proactively demonstrate the value of both its market intelligence and its role in mediating this information.

– Divergent ideological views within the non-profit sector itself.

Success factors

– Legitimacy from its multi-sectoral partner group and strong relationships with stakeholders in each sector.

– Highly qualified staff.

– Collaborative work and knowledge sharing.

Financial source(s)

Shareholders and key partners; project work and consultancy income.

Budget

EUR 2.6 million (2015).

Ireland
Clann Credo: A social finance provider

Main actor(s)

Clann Credo, Social Finance Foundation.

Level of implementation

Local, regional, national.

Implementation date

Launched in 1996; on-going.

Policy area

Access to finance.

Policy approach

Provision of funding; market support; raising awareness; lobbying; research; knowledge sharing

Objective

1. Provide loans with affordable conditions to community, voluntary and social enterprises (CVSEs).

2. Strengthen the regional social investment market.

Rationale

Prior to 2000, Ireland’s growing social enterprise sector was not well understood and consequently struggled to obtain capital. Many Irish community organisations, particularly in disadvantaged areas, had no access to mainstream bank finance. Clann Credo was created as a response to these identified market failures.

Key activities

– Providing social finance to CVSEs with favourable conditions: no personal guarantees from project promoters or voluntary board members, no penalties for early repayment, flexible loan-terms to address any difficulties appearing throughout the lifetime of the loan.

– Helping organisations build their capacity and skills in project/business planning and management; managing and accessing funds; and identifying areas of social impact.

– Researching on social investment with the potential to strengthen the CVSE sector and explore new financial tools.

– Informing political institutions about the importance and growth potential of the CVSE sector, including sector financing (e.g. key role in lobbying the Irish Government to introduce a social finance initiative; member of the Social Enterprise Task Force).

Impact

Since its creation, Clann Credo has lent over EUR 82 million to over 800 projects. It currently has a retail loan book of EUR 18.5 million.In 2011, an economic audit found that every euro injected into the economy by a Clann Credo client benefitted the economy by a further 32% (e.g. through wages or purchases of goods and services).

Key challenges

– Difficulty in supporting social enterprises through repayable funding because of their high risk profile.

– CVSEs are insufficiently aware of the opportunities provided by social finance or averse to taking on loans.

– Clann Credo has limited capacity to fund capital-intensive projects undertaken by CVSEs.

Success factors

– Loan terms and conditions tailored to recipient organisations’ needs and capacity.

– Provision of non-financial support to customers.

– Regionally based staff, accessible to prospective customers.

– Funded entirely by private capital, not dependent on government funding.

– Strong links and good working relationships within the sector.

Financial source(s)

Private funding (religious charities, mainly the Presentation Sisters; since 2007 Social Finance Foundation).

Budget

n/a.

Italy
JEREMIE Sicily ESF Social Finance: A microfinance scheme

Main actor(s)

Banca Popolare Etica (BPE), European Investment Fund (EIF).

Level of implementation

Regional.

Implementation date

2013-2016.

Policy area

Access to finance; business development support.

Policy approach

Provision of funding; financial intermediation; business consultancy; coaching and mentoring; education and training.

Objectives

Support the creation and development of SMEs and social enterprises dedicated to promote the economic empowerment of vulnerable workers by facilitating access to the labour market through a microfinance scheme.

Rationale

Following the economic crisis, unemployment has increased in Sicily, while SMEs and social enterprises have faced difficulties to access traditional banking loans.

Key activities

– Providing financial services: creation of a portfolio of loans to foster both the consolidation and start-up of SMEs and social enterprises.

– Providing business support services (in partnership with a consortium of organisations): orientation to credit and financial services; pre-feasibility analysis, selection and evaluation of business proposals; elaboration and evaluation of business plans; coaching and support services to develop entrepreneurs’ skills.

– Promoting the programme: communication through newspapers, leaflets, mailing lists; organisation of workshops and promotional events; promotion of the initiative within local and regional networks of enterprises, industries and professional associations.

– Monitoring interventions and evaluation, including on the social impact of the financed projects.

Impact

By July 2016, 82 enterprises – 8.14% of applicants– had received individual loans averaging EUR 56 423. Applications that passed the non-financial partners’ preliminary appraisal had a higher (73.5%) success rate, proving the partners’ ability to generate value and define an innovative business model for the microfinance sector. Each enterprise that received a loan created two jobs on average.

Key challenges

– Insufficient resources to cover the costs of non-financial services, mainly covered by the beneficiaries.

– Rigid assessment procedures, resulting in slow evaluation processes.

– ESF procedures too complex and bureaucratic for entrepreneurs.

– Lack of communication between financial and non-financial partners.

– Weak monitoring system.

Success factors

– Strong beneficial impact of non-financial service providers, acting as “filters” and “trust agencies” for the financial intermediary.

– Targeting a wide range of entities (from SMEs with a social purpose to social enterprises as such).

– Peer-to-peer coaching, as well as networking and the creation of a community of practice among beneficiaries are identified as some of the strengths of the scheme.

Financial source(s)

European Social Fund and Banca Populare Etica.

Budget

EUR 5 million (2013-2016).

Netherlands (the)
Social Impact Factory: A business-support structure

Main actor(s)

The Social Impact Factory; initiated by the municipality of Utrecht and Kirkman Company.

Level of implementation

Local.

Implementation date

Launched in 2014; on-going.

Policy area

Access to market; business development support.

Policy approach

Public-private partnership; networking; raising awareness.

Objectives

1. Inspire, connect and spur businesses to adopt socially responsible behaviours.

2. Create an enabling environment for social enterprises.

Rationale

While conventional companies are increasingly redefining their role to create more value for society, the role of local governments is also evolving towards adopting an increasingly participatory approach. In order to support this process, the Factory aims to tackle miscommunication among sectors (profit, non-profit, public) that have different rationales and languages.

Key activities

1. Social procurement: the Factory developed an online marketplace, called Social Impact Market, for traditional companies willing to purchase social products or services from social enterprises.

2. Impact Challenges: a six-month programme connecting diverse stakeholders around a specific social challenge, submitted by the municipality, to design solutions in an entrepreneurial way.

3. Change-making: communication, research and lobbying efforts to accelerate change towards a society, where doing business fairly, sustainably and inclusively is the standard.

Impact

In 2015, the Factory’s network comprised 90 social entrepreneurs, 7 large traditional businesses and 15 municipalities. In the six first months of its existence, the Social Impact Market has led to 21 matches, totalling EUR 75 000 in revenue. In 2015, 10 “complex problems” submitted by the local government were addressed: 75 organisations were involved and the total budget invested amounted to EUR 130 000.

Key challenges

– Balancing a self-sustaining organisation with social goals is difficult.

– Despite a shared ambition to foster social entrepreneurship, the distinct nature and specificities of the founding organisations – a public actor and a private company –led to resistance in partnering with some organisations.

– The Factory struggled to understand what was possible or prohibited within the current legal framework, particularly for tendering processes.

Success factors

– Foster a culture of inclusiveness and collaboration that welcomes participation from organisations with a shared ambition.

– Clarify stakeholders’ visions and interests from the beginning to avoid conflicts and work on an equal basis.

– Ensure the independent feature of the platform by having its own revenue model.

Financial source(s)

Public source (grants); private contributions (founder contributions); self-generated revenues (services, product provision).

Budget

EUR 45 000 from the founding partners (2015); EUR 200 000 from the Utrecht municipality (2015-2016).

Poland
ES Fund TISE: A loan fund for social enterprises

Main actor(s)

Ministry of Economic Development; Ministry of Family, Labour and Social Policy; BGK; TISE.

Level of implementation

National.

Implementation date

2013; on-going.

Policy areas

Access to finance; business development support.

Policy approach

Provision of funding (loans); business counselling.

Objectives

The programme aims to provide existing social enterprises with repayable financing to foster the investment and job creation necessary to the expansion of their activity.

Rationale

Mainstream finance providers are reluctant to invest in social enterprises and do not offer capital at adequate terms and conditions, while social enterprises lack business skills and struggle to obtain external financing.

Key activities

– Communication and partnerships: for the promotion of the project, TISE initiated 40 partnerships with large umbrella non-governmental organisations, social-economy support centres (OWES), foundations and associations, and individuals, for which it organises trainings and workshops.

– Provision of preferential loans: below-market loans (with a maximum individual loan amount of EUR 25 000) at one-half or one-quarter the rediscount rate, with no upfront or administration fee, and no extra charges. The financial intermediary, TISE, is responsible for the entire lending process.

– Advisory services: every borrower is eligible to receive up to 30 hours of free advisory services provided by in-house experts or external advisors.

Impact

As of May 2016, TISE had granted 431 loans to 371 social enterprises. The loans appeared to be an effective tool to combat unemployment with the capacity to create (436 new jobs) and preserve workplaces. The post-investment counselling that was provided to 241 enterprises improved the performance of the borrowers and overall effectiveness of the project.

Key challenges

– Difficulty in mobilising the social economy’s existing support structures to help beneficiaries participate in the project.

– Public stakeholders’ lack of experience in implementing financial instruments in social affairs.

– Longstanding public procurement regime, which does not leave much room for flexibility to engage with social enterprises.

Success factors

– Suitability to the target group’s expectations, particularly in terms of low-cost financing.

– Recognition of the programme and equal access throughout the country with a regional allocation and distribution of funds.

– Free advisory services to improve the professional skills of social entrepreneurs and increase the probability of loan repayment.

Financial source(s)

Public funding: 85% from European Social Fund (ESF), 15% from national public sources.

Budget

EUR 9.3 million (2013-2016).

Portugal
Portugal Inovação Social: An integrated approach for social innovation

Main actor(s)

Portugal Inovação Social, Government of Portugal, Calouste Gulbenkian Foundation, Laboratório de Investimento Social.

Level of implementation

National.

Status

Launched in 2015; programme fund period 2016-2020.

Policy area

Access to finance; visibility.

Policy approach

Provision of funding; capacity-building; market support; raising awareness.

Objectives

Establish and promote an investment market for social enterprises to catalyse and mobilise EU structural funds.

Rationale

After much advocacy and lobbying efforts (including diverse research papers, feasibility studies and an action plan issued by the Portuguese Social Investment Taskforce) the national government initiated the creation of Portugal Inovação Social to tackle the financing mismatch between supply and demand in the social sector.

Key activities

The EU funding is allocated to four funding programmes expected to be in place from 2016 to 2020:

1. “Capacity-building for social investment” enables social enterprises to access support from specialist providers in areas such as financial management, business modelling, impact measurement, leadership and governance.

2. “Partnerships for impact” promotes venture philanthropy in Portugal through a match-funding system.

3. “Financing instrument of social impact bonds” (SIBs) promotes the importance of an outcome-based focus among public entities.

4. “Social Innovation Fund” is a wholesale fund co-investing in Portuguese social enterprises and social investment products with a demonstrated potential to generate social and financial returns.

Impact

Limited evidence of impact given the very recent launch of the programmes

Key challenges

– Social enterprises marked by a predominantly weak social impact measurement culture, hampering both initial selection and continuous performance management.

– Under-developed markets of specialist providers and evaluators, particularly important for the capacity-building and the financing instrument for SIBs programmes.

– Relatively short period of time to extract lessons from the market and adapt programmes if necessary.

Success factors

– Diverse funding programmes, meeting the needs of social enterprises at all stages of development.

– Strong political endorsement regardless of the partisan structure in place.

Financial source(s)

EU structural funds.

Total cost

EUR 150 million (2016-2020).

Spain
Barcelona City Council Decree for Socially Responsible Public Procurement

Main actor(s)

Barcelona City Council.

Level of implementation

Local.

Implementation date

Launched in 2013; on-going.

Policy area

Regulatory framework; access to market.

Policy approach

Public procurement.

Objectives

Use public procurement to create work opportunities for the most vulnerable members of society and thus improve social cohesion; foster collaboration among different sectors and develop the social sector (employment centres; WISEs; NPOs).

Rationale

The Decree focuses on facilitating employment among vulnerable sectors, specifically unemployed people receiving no form of income (half of all unemployed), unemployed youth (43.6% ) and the population below the poverty line (18.3% ).

Key activities

The social clauses for public procurement contracts were adopted through a participatory process and include:

– Reserved contracts for special employment centres and WISEs, amounting to EUR 8 million per year and allocated through the Barcelona social reserve fund.

– Bidding organisations (with 50 or more employees) must prove that at least 2% of their workers experience at least 33% disability; that at least 5% of the awarded companies’ staff connected with the contract are people struggling to enter the job market; that at least 5% of the awarded company’s contract budget is used to subcontract the services of special employment centres and WISEs. The companies that exceed these targets are awarded higher scores.

– Establishment of environmental criteria for all aspects of bidding organisations’ operations and purchasing.

Impact

– In its first year of implementation, 75% of all published contracts incorporated the stipulated social clauses and 770 people in situations of social exclusion, or at risk of social exclusion, benefited from the Decree.

– The Decree has not yet reached its full impact in particular because many multi-annual city administration contracts will only incorporate the social criteria when they come up for renewal. – Many municipalities in the country replicated the methodology, text and structure applied in Barcelona.

Key challenges

During the design phase of the Decree:

– Administrative inertia and resistance to change.

– Suspected ideological interests by some political groups, believing that the Decree violated free-market principles.

– A corporate sector worried about non-voluntary social commitments, added costs and reduced entrepreneurial freedoms.

During the implementation phase of the Decree:

– Establishing a uniform system to verify compliance with social clauses.

– Perfecting the impact-measurement system.

– Including other social criteria (e.g. gender equality, fair trade, labour rights, ethics and fiscal transparency) in responsible public procurement.

Success factors

– Creating a specific forum (the Mixed Commission) to discuss issues and ensure that all stakeholders are equally heard.

– Developing shared language and terminology.

– Strong leadership and support from the mayor.

Financial source(s)

Public.

Budget

n/a.

Spain
El Hueco: A local incubator

Main actor(s)

El Hueco founded by Cives Mundi (NGO).

Level of implementation

Regional.

Implementation date

2012, Brussels office opened in 2014; on-going.

Policy area

Business development support; access to finance; visibility.

Policy approach

Incubation; mentoring; networking; communication; knowledge sharing; funding; lobbying; raising awareness.

Objectives

Create a favourable environment for the creation and development of social enterprises in Sparsely Populated Areas (SPAs), such as the region of Soria in Spain.

Rationale

The region of Soria is the most depopulated geographical area in Spain. There is a need to retain and attract entrepreneurial talents to develop sustainable economic, social and environmental initiatives generating development and quality jobs.

Key activities

El Hueco’s core is a co-working space that offers a wide range of services and activities to stimulate interaction among social entrepreneurs and other stakeholders:

– Spanish Social Entrepreneurship Immersion Programme (SEIP): a social enterprise incubator with tailored training and mentoring.

– IMPUL/SO: a six-month accelerator programme providing mentoring and funding in the seed phase.

– “El Hueco Starter”: an annual competition to attract and train potential social entrepreneurs.

– Spring meetings: large international events gathering social entrepreneurs, investors and institutions in order to engage in networking and knowledge sharing.

– Social Entrepreneurship in Sparsely Populated Areas- (SOCENT SPAs Interreg) Improve the implementation of regional development policies and programmes, in particular programmes for Investment for Growth and Jobs and, where relevant, ETC programmes, supporting SMEs in all stages of their life cycle to develop and achieve growth and engage in innovation.

Impact

In 2015, El Hueco helped to create 22 organisations and 120 jobs, and attracted 115 business advisors. Its co-working space hosted 30 organisations. Through its various events, networking, communication campaigns and media presence, El Hueco has raised awareness of social enterprises and the challenges they face.

Key challenges

– Lack of resources (mainly financial) to carry out activities.

– Obtaining support from the public administration and leading private institutions, while establishing its legitimacy in the region and beyond. – Developing and sustaining its activities to support social entrepreneurship through collaborations and partnerships in a region where no other actors provide the same services.

Success factors

– Access to know-how from an established third-sector organisation.

– Actively working and communicating with public and private partners.

Financial source(s)

Public and private funding on a project basis; self-generated revenue (rental of co-working space, services to entrepreneurs and private donations) covers operating costs and/or infrastructure investment.

Budget

EUR 349 200 (2015).

United Kingdom
Big Potential: An investment readiness support programme

Main actor(s)

Big Lottery Fund, Social Investment Business (SIB).

Level of implementation

Territorial.

Implementation date

2014-2017.

Policy area

Access to finance; business development support; visibility.

Policy approach

Provision of funding; business counselling; raising awareness; knowledge sharing.

Objectives

1. Help voluntary, community and social enterprises (VCSEs) get ready for investment or win public contracts.

2. Raise awareness of investment approaches for VCSEs.

Rationale

VCSEs at the UK often face barriers that hinder them from accessing investments. Some of these barriers are the lack of suitable financial skills and understanding of social investment, the absence of filtering systems, the poor co-ordination of support providers and the complexity of deals for the amount of finance involved.

Key activities

The Big Potential is a grant programme funded by the Big Lottery Fund and delivered by a partnership led by the Social Investment Business (SIB). It is divided into two strands based on the recipient’s level of investment-readiness and the desired investment amount: a. The Breakthrough strand funds specialists help VCSEs embarking on the first stages of social investment undertake in-depth investment-readiness work.

b. The Advanced strand supports organisations that are further along on the social investment journey and are seeking investments totalling over EUR 595 000 (GBP 500 000).

Impact

– As of March 2016, Big Potential approved 128 Breakthrough grants (out of 246 applications received) and 23 Advanced grants (58 applications received).

– It has gathered and accredited 39 Breakthrough support providers and 24 Advanced ones.

– As of June 2015, the Breakthrough programme yielded four successful investments in VCSEs, raising a total EUR 1.2 million in finance.

Key challenges

– Placing charities and social enterprises in the same category, even though they have different cultures and support needs.

– Tensions between panel members and support providers over the monetary value of the work to be performed.

– Support providers not aligned with VCSEs values.

Success factors

– Appointing an evaluation partner right from the onset, allowing it to introduce changes and improve operations during the course of the programme.

– Sharing insights beyond successful applicants by featuring information resources on the website and establishing an online provider marketplace.

– Undertaking prior research into the needs of the organisations requiring support and tailoring the programme to the different needs of social enterprises and more traditional charities.

Financial source(s)

Public funding.

Budget

EUR 23.8 million (GBP 20 million) (2014-2015).

United Kingdom (Scotland)
A Partnership for Supporting the Social Enterprise Strategy

Main actor(s)

Scottish Government, Social Enterprise Scotland, Senscot, Social Firms Scotland.

Level of implementation

Territorial.

Date of implementation

Launched in 2011; on-going.

Policy area

Policy framework; business development support; access to markets and to finance.

Policy approach

Integrated approach; networking events; knowledge sharing.

Objectives

1. Inform, encourage and support social enterprises at the grassroots level to raise their profile through policy engagement and communication; recognise and acknowledge the value they bring to local communities and to meeting government objectives at both the local and national levels.

2. Enhance the sector’s collective influence and contribution to policy development, both nationally and locally; and strengthen the capacity, membership base and sustainability of the partner organisations.

Rationale

Scotland’s many support bodies for social enterprise often have overlapping constituencies, with the result that social enterprises are often confused about selecting the best organisation to turn to for advice and/or support. The Strategy encouraged these bodies to work together to provide clarity and coherence to both the sector and the government.

Key activities

– Advises its members on funding streams and initiatives, and supports the Social Enterprise Exchange event programme, which fosters dialogue, knowledge-sharing.

– Contributes to policy development by organising policy round tables featuring practitioners and policy makers, and submitting responses to government consultations, parliamentary questions and motions, monthly e-bulletins to member organisations and parliamentarians.

– Showcases and promotes the value of social enterprises to the media and local communities by co-ordinating a national calendar of events and press and public relation activities, and delivering on a communication strategy to raise the profile of social enterprise to a broad range of Scottish and British stakeholders.

– Informing, advising and supporting social enterprises at the grassroots level by facilitating social enterprise networks meetings, providing advice face-to-face and electronically (websites, newsletter, study visits, etc.), developing public-private partnerships to boost investment opportunities and social-enterprise engagement.

Impact

The Partnership supporting the Strategy has increased collaborative working, both through intermediaries and across individual social enterprises, at both local and national levels. The “synergy-led business culture” developed through the Strategy has attracted much attention from other business areas and regions. In Scotland, the design of a new strategy is in progress.

Key challenges

– Build trust among participants considering their overlapping member ‘constituencies’.

– Fractious relationships between local authorities and Scottish Government, leading to inconsistencies across the country.

– Maintain strong leadership.

Success factors

– A systemic and holistic approach covering all parts of the social enterprise ecosystem, encouraging connections between stakeholders within and outside the sector.

– The close relationships between the principal organising units and the sector facilitators have contributed to the success of the initiative.

– The recognition that a range of non-financial resources – social capital, legitimacy and expertise – are vital, and that all partners bring something unique to the table.

Financial source(s)

Public.

Total cost

Approximately EUR 405 000 annually.

Multiple countries, Denmark
Specialisterne & SAP: A partnership for access to markets

Main actor(s)

Specialisterne, Specialisterne Foundation (SPF), SAP.

Level of implementation

Local, national, global.

Implementation date

Specialisterne: 2004; on-going - SPF: 2008; on-going. “Autism at Word Programme” 2013; on-going.

Policy area

Access to market; skills and education.

Policy approach

Multi-stakeholder partnership; coaching and mentoring; education and training; knowledge-sharing; raising awareness.

Objectives

1. Pioneer new ways of harnessing skills of people with Autism Spectrum Disorder (ASD) and empower them by matching them with businesses in need of IT experts.

2. Achieve sustainable procedures and operations, by implementing the SAP mission of thought leadership on global innovation and establishing a learning programme for all stakeholders involved.

3. Re-design and re-orient the SAP human resource policies and processes to fully incorporate neuro-diversity (so that the programme’s parallel on-boarding process would no longer be necessary to access the talents of people with ASD).

Rationale

While people with ASD have unique skills (e.g. an outstanding memory, a remarkable eye for detail, a structured way of working), they struggle with social interaction and personal communication. This hinders them from accessing the labour market.

Key activities

SAP (a multinational software corporation) has partnered with SPF to implement the “Autism at Work Programme”. Two key activities are undertaken at local level:

– Pre-screening process and pre-employment training: together with local partners, local SAP managers identify potential positions to be filled within SAP and develop a pool of candidates. Selected candidates undergo a week of training in “soft skills” to acquaint themselves with a professional workplace’ social norms and a six-week pre-employment training to learn about SAP methodologies. SAP also provides extensive awareness and autism-sensitivity training to their teams. – Job matching: local SAP programme managers collect information about candidates’ capabilities and match them with available jobs or future opportunities.

Impact

By mid-2016, the SAP’s “Autism at Work Programme” operated in 12 SAP offices in 8 countries (Germany, India, Canada, Brazil, the Czech Republic, Ireland, the United States and Australia) and provided work opportunities to more than 100 people.

Key challenges

– Changing mind-sets of decision-makers regarding the skills of people with ASD.

– Convincing stakeholders to collaborate in long-term partnerships.

– Accessing public subsidies to fund the costs of tailor-made training courses and gaining access to social-impact investors that provide grants or patient capital.

Success factors

– Convergence of objectives, pooling of resources, and strong commitment from both sides.

– Collaboration with public and non-profit organisations that help to navigate through public programmes, policies and regulations specific to each location; was instrumental in mobilising funding (public grants, subsidies, donations); enabled the identification of candidates.

Financial source(s)

Private; income-generating activities; (public funds depending on the country).

Budget

Not available.

Multiple Countries
Junior Achievement Europe: An education network

Main actor(s)

Junior Achievement Europe (JA Europe).

Level of implementation

National; European network of 40 national not-for-profit Junior Achievement organisations.

Implementation date

Launched in 2001; on-going.

Policy area

Skills and education; visibility.

Policy approach

Education and training; coaching and mentoring; public-private partnerships; networking; knowledge-sharing; raising awareness.

Objectives

Teaching young people as early as possible about the world of enterprise and entrepreneurship, including social entrepreneurship, by bringing together the public and private sectors into education; to foster innovative thinking and the improvement of work and life skills among young people.

Rationale

The skyrocketing youth unemployment, low uptake of entrepreneurship education and low start-up rates in many European countries encourage JA Europe’s activities. Research has shown that investing in entrepreneurship education at school results in higher levels of entrepreneurship activities later in life.

Key activities

JA Europe develops programmes and activities in close co-operation with its national member organisations, which adapt the content to the specific national curricula and conditions. They focus on developing competences such as teamwork, problem solving, leadership, initiative and creativity. They build students’ skills in turning ideas into action, analysing information, managing projects or business ventures, budgeting, financial management, marketing and sales.

Two main programmes dedicated to social entrepreneurship education are:

– Social Enterprise 360 (SE360): year-long activities where students create mini social enterprises, and participate in various competitions organised by JA at the national, European and global levels.

– Social Innovation Relay (SIR): Using a dedicated “match-making” platform, JA Europe pairs up teacher-led student teams from several countries with corporate volunteers from NN Group, who help them translate their concepts addressing social needs into viable business concepts.

Impact

In 2014/15, JA organisations reached 3.5 million students in Europe, supported by 117 000 teachers and 164 000 business volunteers. A study on the SIR programme revealed that 78% participating students were more confident in their ability to start a social enterprise; 86% were more aware of the social issues in their own community; 84% were more aware that social and business objectives could be complementary.

Key challenges

– Scaling up the initiative and attracting more volunteer advisors to maximise its impact.

– Initiatives are dependent on teachers’ motivation and willingness.

– Need for more evaluation, assessment tools and research on impact as well as teachers practices.

Success factors

– Low implementation costs.

– Raising awareness about the benefits of (social) entrepreneurship education.

– Providing relevant training to teachers and head-teachers.

Financial source(s)

82% private funding; 14% public funding; 4% from other revenue sources. Project-based EU funding.

Budget

EUR 8 million (2015).

Multiple countries
NESsT: A multipronged support structure

Main actor(s)

NESsT.

Level of implementation

National (multiple countries).

Implementation date

Founded in 1997; on-going.

Policy area

Access to finance; business development support; education & training.

Policy approach

Provision of funding; business counselling; knowledge-sharing; mentoring.

Objectives

Develop and invest in enterprises from multiple countries that use market-based solutions to create opportunities for viable employment and income generation.

Rationale

In the late 1990s, CSOs in Central Europe were suffering from the consequences of diminishing foreign funding and from an underdeveloped local philanthropy, reluctant to fund organisational development. Moreover, there was an appetite for new and market-oriented approaches; this turned to be a propitious time for social enterprise development.

Key activities

– Capacity building: workshops, portfolio events, conferences, seminars and one-on-one consultations on business planning, financial skills, investment readiness; Business Advisory Network of local and international professionals, who offer expertise and networks on a pro bono basis.

– Financial support: 1) financing instruments including recoverable grants for growth plans, patient loans for infrastructure investments, working capital and loan guarantees to help leverage third-party investment sources; 2) blended capital; 3) identification of other financiers who could offer the missing capital as co-financiers.

– Impact measurement and management: performance management tool, which sets goals and targets, measures baseline and monitors performance regularly, based on agreed indicators tailor-made to each social enterprise

Impact

By 2015:

– Supported 167 social enterprises.

– Invested EUR 10 million in financial support and capacity-building.

– Provided training in social entrepreneurship and business planning to 12 000 leaders from 5 300 organisations.

– NESsT enterprises achieve a 25% revenue growth on average.

Key challenges

During the design phase:

– Lack of awareness of social enterprise concepts and scarce partners.

– Lack of financial and human resources for social enterprise development.

Currently:

– Reaching financial sustainability.

– Raising funds to invest in the scaling portfolio: limited patient capital on offer in the EUR 25 000-EUR 250 000 range.

Success factors

– Strong leadership and highly skilled, innovative, and committed staff.

– Involvement of corporations and foundations being part of an extensive professional network.

– Robust methodology in social enterprise development and social impact.

Financial source(s)

Foundations (47%), earned income from consultancy services (32%), corporate contributions (12%), grants from governments and multilateral organisations (5%) and donations from private individuals (4%).

Budget

EUR 2.3 million (2014).

Note

← 1. When Alter’Incub was created the name of the region was Languedoc-Roussillon, but it changed to Occitanie in January 2016, after the territorial reform.