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EU support to social economy & social enterprise

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.

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EU support to social economy & social enterprise

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  1. 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

  2. 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?

  3. 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)

  4. 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

  5. EU definition of social enterprise social mission shareholders profit entrepreneurial behaviour responsibility, transparency, participatory governance

  6. 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)

  7. European Progress Microfinance Facility 2010 Microcredit providers at national / regionallevel EU budget + EIB investment € 203m managed by EIF Microloans Guarantees Fundedinvestments Microloans To be invested until 2016, with possibility to "recycle" funds till then Complemented by technical assistance (JASMINE) and capacity-building support for microfinance intermediaries

  8. 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

  9. PSCI Microfinance 2014-20:likely similar architecture EU budget (~€83m) + EIB investment (under discussion) Microcredit providers at national / regionallevel Guarantees Microloans Fundedinvestments Microloans Technical assistance Capacity-building(e.g. grant or equity)

  10. PSCI Social Entrepreneurship 2014-20 EU budget (~€92m) + EIB/EIF investment (under discussion) + possiblyotherinvestors Social enterpriseinvestors at national / regionallevel Guarantees Investments of up to € 500,000 Fundedinvestments Social enterprises (non-listed, with turnover and balance sheet of max. €30m) Capacity-building(e.g. grant or equity) + Technical assistance to prospective intermediaries starting already in 2013

  11. 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

  12. Revolving financial instruments in Structural Funds programmes Managing Authority of an ERDF/ESF Operational Programme (e.g. national Ministry of Labour; regional government) • Experience from 2007-13 with such instruments for SME financing, urban development and energy efficiency investments (JEREMIE, JESSICA) 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

  13. 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

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