EU support to social economy
& social enterprise
Lukáš Veselý
Member of Cabinet of László Andor,
EU Commissioner for Employment, Social Affairs and Inclusion
FEBEA General Assembly
Palma de Mallorca, 22 April 2013
Outline
• Social economy & social enterprise: pillar of EU social
market economy
• How does the EU concretely support it?
• Market building through EU-wide regulation
European Social Entrepreneurship Fund (EuSEF)
• Budgetary instruments
Progress Microfinance 2010->
Programme for Social Change & Innovation 2014-20
Structural Funds 2014-20! (ESF, ERDF)
• How can ethical & alternative banks & financiers
engage in the coming months?
Recognition of social economy &
social enterprise in EU policies
• Treaty on EU: highly competitive social market economy…
aiming at full employment
• Pluralism of business models, economic democracy,
innovation, social responsibility, inclusive labour market
• Europe 2020 Strategy (2010)
• CSR + Social Business Initiative (2011)
• Employment Package (2012)
• Social Investment Package (2013)
Market building through EU-wide regulation:
European Social Entrepreneurship Fund (EuSEF) (1)
•
Regulation adopted by EP & Council in March 2013 (http://bit.ly/Yiyzyl)
•
EU-wide passport (EuSEF as investment vehicle brand): uniform rules for fund
marketing, portfolio composition, eligible investment instruments, conduct &
transparency
•
70% of fund volume invested in social enterprises (“eligible undertakings”)
•
Primary, statutory objective: achievement of measurable, positive social
impacts
•
Using profits primarily to achieve its primary social objective, and having
predefined procedures and rules, which determine the circumstances in which
profits are distributed to shareholders and owners to ensure that any such
distribution of profits does not undermine its primary objective
•
Managed in an accountable and transparent way, in particular by involving
workers, customers & stakeholders affected by its business activities
EU definition of social enterprise
social mission
shareholders
profit
entrepreneurial behaviour
responsibility, transparency, participatory governance
Market building through EU-wide regulation:
European Social Entrepreneurship Fund (EuSEF) (2)
•
EuSEF may invest through equity, quasi-equity, debt, loans, any other
type of participation
•
EuSEF exposure limited to level of committed capital
•
EuSEF must have clear & transparent impact measurement procedure
•
(menu of possible aspects of impact to be measured, e.g. employment &
job quality, social inclusion, equal opportunities, public health)
European Progress Microfinance Facility
2010
EU
budget
+
EIB
Guarantees
investment
€ 203m
Funded
investments
Microcredit
providers at
national /
regional level
managed
by EIF
To be invested until 2016,
with possibility to "recycle"
funds till then
Complemented by technical assistance
(JASMINE) and capacity-building
support for microfinance intermediaries
Programme for Social Change and
Innovation (PSCI) 2014-20
• 3 axes, 1 of which Microfinance & Social Entrepreneurship
• Like today's Progress Microfinance, relatively small-scale
programme, implemented directly at EU level
Budget proposed by Commission
Access to microfinance:
€83.92m
Capacity building for microfinance intermediaries: €8.52m
Support to social enterprise development:
€92.28m
•
_______________
•
€ 184.72 million
PSCI Microfinance 2014-20:
likely similar architecture
EU
budget
(~ €83m)
+
EIB
investment
(under
discussion)
Guarantees
Funded
investments
Technical assistance
Capacity-building
(e.g. grant or equity)
Microcredit
providers at
national /
regional level
PSCI Social Entrepreneurship 2014-20
EU
budget
(~ €92m)
+
EIB/EIF
investment
(under
discussion)
+
possibly
other
investors
Guarantees
Funded
investments
Capacity-building
(e.g. grant or equity)
Social
enterprise
investors
at national /
regional level
Investments of up
to € 500,000
Social enterprises
(non-listed, with
turnover and balance
sheet of max. €30m)
+ Technical assistance to prospective intermediaries starting already in 2013
EU Structural Funds (ERDF, ESF)
•
Much larger source of support: together, ERDF and ESF will likely amount to
~€250 billion for EU28 in 2014-20
•
European Regional Development Fund: energy efficiency, transport, R&D&I,
SMEs…
•
European Social Fund: employment, education, social inclusion (human capital)
•
Both ERDF and ESF regulations foresee an "investment priority" on promoting
the social economy and social enterprise
+ social enterprises help achieve many other objectives (youth employment…)
•
This could obviously be delivered not just through grants but also through
revolving financial instruments (equity/ mezzanine/ loans/ guarantees)
•
Investment decisions taken nationally/regionally, based on 7-year Operational
Programmes agreed with European Commission
•
Preparation of these Operational Programmes underway now
Revolving financial instruments in
Structural Funds programmes
Managing Authority of an ERDF/ESF Operational Programme
(e.g. national Ministry of Labour; regional government)
contribution
Revolving fund with a mission, e.g. social enterprise investment,
managed by a bank, fund manager etc.
loans, equity, guarantees…
repayments/exits
Investment projects, e.g. social enterprises
•
Experience from 2007-13 with such instruments for SME financing, urban
development and energy efficiency investments (JEREMIE, JESSICA)
How can you engage in the coming months?
• EuSEF: consider if forming a fund under this new EU-wide label
could help you attract investors
• Progress Microfinance: financing available, take contact with EIF
• PSCI 2014-20: Commission will launch technical assistance for
social enterprise investors in autumn 2013, seeking to help build
pipeline for financial instruments to be launched in 2014; "stay
tuned"
• ESF, ERDF: Approach national/regional "Managing Authorities" in
charge of preparing Operational Programmes for 2014-20 
explain the value for money that social enterprises can create,
and how public contribution to funds supporting them could help