NBFSE Financial instruments and mechanisms of fund allocation to social economy

1. NBFSEFinancial instruments and mechanisms of fund allocation to social economy Common meeting 5-6th December, Milano

2. Financial instruments and mechanisms of fund allocation to social economy Agenda: • Objectives of the Working Group • Achieved outputs and the other planned outputs • Examples of support mechanism focused on social enterprises and possibility of their use in other countries, relation to EU funds • Mainstreaming

3. The expected results of strand: - the application of more efficient and more complex mechanisms of financial support in the next programming period 2014+ or - streamline existing support, increasing the impact of support from public sources and - greater expertise of staff involved in the implementation of support from the ESF.

4. Financial instruments and mechanisms of fund allocation to social economy Funding needs of SE, reasons of support • Lack of capital to start a business • Lack of investment capital • Working capital • Unavailability of commercial tools (history of entrepreneurship, liability for the loan) • Underdevelopment of mutual financial institutions in some countries

5. Objectives and activities of working group 1) Identification of financial instruments and mechanisms of financing, particularly in countries NBFSE partners; 2) Analysis of financial instruments, their preparation, aim, conditions for the recipient, ensuring personal capacities and in terms of systems assessment (evaluation); 3) Assessment of strengths and weaknesses, transferable elements and 4) Evaluation of the legal framework for the implementation of financial instruments.

6. So far were carried out: - analysis and evaluation based on the baseline study, country reports (preparatory phase 2009-2010 of the project NBFSE –all strands), - questionnaire survey among partners – autumn 2010 to spring 2011, • meetings of working group, i.e. seminar on 15-16th March2011 in Warsaw, Poland (discussion of findings), • peer review, i.e. seminar on 8-9th October 2011 in Prague, the CR (presentation examples of SE funding – JEREMIE, micro-credits, grant schemes).

7. Financial instrument strand products: • Overview of financial support to SE in participating countries and regions; • Good practise guide; • Manual for financial instruments implementation(potentially co-funded by ESF or ERDF).

8. Practical results – products of the financial strand Overview of financial support to SE in participating countries and regions • characteristics of the situation in individual countries - the position of social economy, social enterprise, institutional and regulatory environment, support tools (tax incentives, subsidies), • financial instruments and mechanisms used for development of social enterprises.

9. Practical results – products of the financial strand Good practise guide - case studies, • deep analyses of selected practises, • reflection of approaches .

10. Financial instrument strand products: Manual for financial instrumentsimplementation • practical information and recommendations for ESF/ERDF MAs and IBs, • what instrument is suitable to use (financial schemes, grants, national coordination role), • way of implementation,access to target groups, training programme, • way of using EU funds (cohesion policy - ESF and other tools).

11. Aims of products • support mechanisms that will strengthen the social enterprise priorities in national policies (employment, inclusion), • improve the effectiveness of mechanisms designed to promote social entrepreneurship, • responds to the new EU initiative - Social Business Initiative, • streamline the activities of the MA of the OP of ESF in supporting social entrepreneurship.

12. Target groups At the EU level – DG Employment, DG Enterprise, potentially DG Regio, • the EIB, the EIF, • Economic and Social Committee, Committee of the Regions, • International organizations - FEBEA, international networks focusing on social entrepreneurship and SMEs.

13. Target groups At the national level • MA, and IB of the ESF and ERDF OP,Ministries, regional authorities; • Other stakeholders - social economy platforms (networks), - association of cooperatives, banks, financial intermediaries, chambers of commerce, association of social enterprises.

14. Relates to the wider policy context (at local/regional/national and EU level) We have already analysed several different examples of funding (JEREMIE in., grant mechanism, microcredits schemes): • analysed tools are targeted specifically at supporting social enterprises or SMEs; • examples affect the local economy, employment, social inclusion; • the examples are implemented at national or regional level.

15. Relates to the wider policy context (at local/regional/national and EU level) • target group are especially disadvantaged (according to EU definitions of x closer or wider national definition); • the final beneficiary are social enterprises, social entrepreneurs, employers or self-employers x financial intermediaries; • they implement the European, national or local strategy.

16. Examples of support, JEREMIE initiative Examples of support - JEREMIE initiative • potential instrument for SE development; • non-grant financial scheme; • implement the European, national or local strategy; • different types of products – loans(investment, operational, bridging), micro-credit, guarantees, equities? • the possibility of coordination with grant schemes (initial grant);

17. Examples of support, JEREMIE initiative - possibility to use the ESF (Lombardy) or ERDF (Poland);- possibility to link with activities reinforcing the capacity of applicants (training, education, consulting); -high degree of regulation; -regulated by European law, compatible with the regulations of the cohesion policy; possible difficulties to be in line with national law; -

18. Examples of support, JEREMIE initiative - uncertainties regarding the state aid; - high demands on administration (specialization); - the possibility of regionalization, including the involvement of regional actors in the management; - support for local financial intermediaries.

19. Examples of support Grant schemes ESF - ability to create different types of products;- the possibility to connect different types of activities (funding of social entrepreneurship, education of applicants, institutional support for development centers, support services for social enterprises); -linking to non-grant (post-grant) funding schemes;- strengthening the capacity of non-grant funds providers;

20. Examples of support Grant schemes ESF - the possibility of focusing on specific target groups; - the possibility of regionalization, the possibility of transfer to the local (municipal) level? (local development – question of efficiency); - strengthening the capacity of local actors?; - the possibility to use the resources of ESF (and ERDF);- supporting the social economy - a direct link to the thematic priorities of ESTC and the investment priorities of ESF.

21. Mainstreaming • examples discussed in the platform are transferable to other Member States, either completely or at least the basic structure; • examples are financeable from the ESF, or from by the ERDF (guarantees); • ESF can create better conditions to meet the financial needs of social enterprises:- commitment of resources to strengthen the capacity of the business (education, business skills, creating business plans, financial management needs), - to promote the offer of consulting services supporting SE in time of their creation, but also in the business,

22. Mainstreaming -Improve access to capital / investment, operating) - loans, equity, - To encourage local financial intermediaries - increase of resources - Strengthen the capacity of financial intermediaries - their ability to work with SE

23. Mainstreaming - problem is the complexity of the creation of financial mechanisms (rules of combination resources, funds - affects the ability to create complex products (financial tools, services);- poor experience of some countries and regions with non-grant financial mechanisms;

24. Mainstreaming - uncertainties regarding the application of state aid - in many cases solved only by de mimimis rule; - low ability of holistic view - addresses the consequences, but not the causes of problems;

25. Mainstreaming We identified cases of: - low willingness to provide service to applicants - strengthening entrepreneurial skills, increasing the capacity of social entrepreneurs;- low willingness of financial intermediaries to use additional resources to the creation of products for social enterprises (oligopoly at market of financial services).

26. Mainstreaming The findings may become an input for discussions on setting up support mechanisms at the national level.Individual examples and findings became or become subject to national debates and can affect the attitude of administrators in the preparation of future goals and priorities of the ESF Operational Programmes.

27. Mainstreaming Social enterprises must be supported by different types of tools in order to influence their development, functioning in various stages of development.The idea is to create an environment that will enable effective and sustainable functioning of social enterprises (social and economic criteria).

28. Mainstreaming Supporting tools have to combine grant and non-grant incentives.But you cannot rely on public resources only, it is necessary to activate funds of the financial sector, third sector, citizens, etc.

29. Mainstreaming Access to money is only one element in the promotion of social economy and social entrepreneurship. There are also important activities in increasing capacity, entrepreneurial skills for social entrepreneurs - before and during their business, awareness of the importance of social economy among local actors (including politicians).

30. Mainstreaming Preliminary results and findings is necessary to verify and aligned with other groups.

31. Financial instruments andmechanisms of fund allocation to social economy Thank you for your attention Marek Jetmar