26 th June , 201 2 Brussels Marek Jetmar , Linda Maršíková

1. Social economy at Ministry of Labour and Social AffairsSupport of the SE co-funded from EU funds 26thJune, 2012 Brussels MarekJetmar, Linda Maršíková

2. Context • This example presents challenges that support provider (policy maker, ESF MAS) encountered in a situation where trying to promote still weak, undeveloped social entrepreneurship.

3. Context • This example became subject of screening by Financial instrument strand of the NBFSE • The aim of the Financial instruments strand, which was led by the Czech Ministry of Labour and Social Affairs (ESF HRE OP MA), was to contribute to implementation of more efficient and complex mechanisms of financial support in the new EU programming period 2014+

4. Context andto streamline existing support, to increase the impact of support from public sources and to contribute to better expertise of staff involved in the implementation of support from the ESF or ERDF.

5. Agenda • Recommendations by FI Strand • Support of the SE in the Czech republic • Support from EU funds • Examples of a good practice • Next challenges

6. Recommendations by FI Strand • Increase of co-operation between the financial sector, NGOs and the public sector in providing funding for social enterprises is necessary (both investment and working capital, common products, guarantees etc.); • Mobilization of local financial intermediaries (credit unions,ethical banks etc.); • Set up of integrated support schemes allowing the use of various types of financial instruments and their combination (grant mechanisms, loans using financial engineering instruments); • To make funds available for the different stages of development of social enterprises.

7. Recommendations by FI Strand • It is efficient to couple the investmentin social enterprises with investmentin human capital. The ESF should besignificantly focused on strengtheningthe capacity of social entrepreneurs andtheir employees, using already existingor developing new business supportservices for coaching and mentoringof social enterprises. • Ensuring accessto capital without the correspondingbusiness services (advice, coaching,mentoring) only partly helps thedevelopment of social enterprises. • It would be appropriate to continueto strengthen the ability and capacity of MA and other policymakersto create integrated financialmechanisms co-funded by the ESF orERDF.

8. Support of the SE in the Czech Republic

9. Socialeconomy in the Czech RepublicState of play • Very small number of social enterprises in the CR • Slow development of social economy • Reasons? • Interrupted tradition of a social entrepreneurship; • Discredited cooperative movement; • Weakness of NGOs, limited ability to carry the business risk; • Conservative positions ofpolitical representations.

10. Support of social entrepreneurship in the Czech Republic is limited – 2 pilots • The Czech Savings Bank provides micro loans for social enterprises as a private initiative (pilot project) – related to CSR. • Ministry of Labour and Social Affairs (MoLSA) distributes the European funds for the establishment or development of social enterprises.

11. Support to the Social economy, activities of the MoLSA

12. Needs • growing population at risk in the labour market - the disabled or handicapped, young and graduates, older 55+ • efforts of future entrepreneurs and non-profit sector managers to start social business • enthusiasm of social entrepreneurs but lack of business experience • financial weakness of the NGO sector - impossibility of direct support to emerging social enterprises • insufficient assets of SE to guarantee loans

13. Needs Oligopolisticfinancial system - absence of credit unions, small banks, ethical banks No available funds for social business Use of the ESF (ERDF) resources in the form of grants can address this situation: • investment funds (technology, technical equipment, production facilities, licenses etc) • working capital (management, marketing activities, contribution to wages, social and health insurance etc)

14. Support to the Social economy at MoLSA (3.1 HRE OP to 3.1c IOP) • Support is provided by two calls for proposals • Each call is from another OP • Very close link between 2 OPs was created to promote the social economy • Similar projects can be submitted simultaneously to both calls

15. Global grant (HRE OP, ESF) – call N.30 • Grant for social enterprises, provided from the Human Resources and Employment Operational Programme (HRE OP, ESF); • Non investment call, focused on the support of the creation and development of new business activities dealing with social entrepreneurship.

16. Global grant “Investment support of social economy”(IOP - ERDF) – main characteristics • Grant for SE - same conditions, target groups („mirror“ – conditions like ESF Global grant). • Supports creation and development of new business activities of SE, but Investment activities • Minimal rate of private financial participation is 20%;

17. Supported activities • I. The new business activity / capacity expansion of the SE • II. New business activities of self-employed (without employees) • which are also the persons referred in the target groups • their businesses in local community has social, environmental and economic benefits

18. Applicant has to meet the following criteria • min. 40% of employees come from the disadvantaged group, • employees are involved in a decision making about the SE, • SE has an inovative project and a realistic business plan

19. And how about the social economy? • profits are used for development of social enterprise (min. 51% re-invested in SE) and / or fulfilment of public benefit purposes, • According to the general social economy principles (defined in a Call).

20. State of play Call N. 30 Calls N. 1 and 8 Completely assessed 200 projects, supported 36 projects – cca18% success rate; Currently 12projectsimplemented • In these days approved amount EUR6,6mill. (65% of allocation) for the projects; • Completely assessed 272 projects -48 supported, i.e. 17% success rate; • 5 projects have been finished • 225 supported persons

21. Preliminaryevaluation of outputs • Predominance of target group - people with disabilities. • Legal status of applicants - most Ltd., further generally beneficial companies, cooperatives, self-employed. • Type of busineses – hospitality (restaurants, cafes, guest houses), services (technical/ cleaning services, construction, laundry, printing center), machinery manufacturing.

22. Good practises • The first two projects were succesfully finished and enterprises still exist • The third projekt is still in implementation phase • All were supported by call N. 30

23. Examples of SE supported by the OP HRE - Institute for Monuments and Culture • Company operates web portal www.propamatky.info • employed 3 persons with disabilities

24. Examples of SE supported by the OP HRE – Pracovní Sobota Ltd. • providing horticultural and cleaning services in the Pilsen region • employs 14 persons with disabilities.

25. Examples of SE supported by the OP HRE – Project „AC AERO - cultivation of countryside of the Odry region” • offers gardening services, cultivation of green vegetation • maintenance and reparation of smaller buildings • key project activityisalso individual consultancyfor Roma employees

26. Next challenges • Increase of institutional support for the development of social entrepreneurship, set up of close links between SME policy and social business support, • Increase availability of capital (both investment, working) by mobilizing financial providers), • Together with partners to develop new financial tools (loans, guarantees, venture capital), • Create a favorable social business climate, • To provide pre-fund and follow-up care.

27. Social economy at Ministry of Labour and Social Affairs Thank you for your attention Marek Jetmar, Linda Maršíková If any questions, please email me at linda.marsikova@mpsv.cz