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Group D Inge de Graaf Sepehr Keyvanshokouhi Bianca Pestalozzi Albert Vellvé

Think Big – Win Bigger!!. Group D Inge de Graaf Sepehr Keyvanshokouhi Bianca Pestalozzi Albert Vellvé. Inspiration.

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Group D Inge de Graaf Sepehr Keyvanshokouhi Bianca Pestalozzi Albert Vellvé

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  1. Think Big – Win Bigger!! Group D Inge de Graaf Sepehr Keyvanshokouhi Bianca Pestalozzi Albert Vellvé

  2. Inspiration Comparing Sostre Civic with peer organisations abroad and looking at modes of financing and partner organisations that cooperative housing associations have access to internationally, inspired our ideas for funding, as well as certain changes we could imagine for SC’s way of doing business. NCB offers competitive mortgage loans to housing cooperatives nationwide. In Canada there is a General Federation of Housing Cooperatives that provides services and assistance to individual Coops. • KAB Copenhagen • 50’000 homes, 300 properties • 150’000 residents / 100’000 on the waiting list • Tenant Democracy • 20% of Danes live in Cooperative Housing Housing Cooperatives in the UK have copied the concept of an external financing society from CHF Canada. For Housing Cooperatives in Minnesota there is a construction loan for refurbishment, followed by individual loans to the member, the proceeds of which are used to pay back the construction loan.

  3. Timeline / Overview The sources of funding we propose to obtain the €350’000 needed and funding beyond that “tipping point”, should be accompanied by measures on the business side to increase public awareness and later on financial sustainability of the model. 4 2 3 Crowd Funding Venture Philanthropy Grants Funding Donations Loans Investment 5 10.02.2012 Future Tipping Point (350’000) Increasing the Sustainability of the Business Model Increasing Awareness in order to gain access to funds 1 6 Business Involving Members to refurbish homes The Aravind Idea & Rating System Simplify the model Campaign Fund raising

  4. 1. Increasing Awareness In order to make the Sostre Civic model more comprehensible, an animated sketch format could be used (Similar to KAB in Denmark). This design could be used for a Tshirt with One Tribe, which would provide additional funds. It could serve as the basis for a viral campaign dissemination on social networks. Explanimation SOSTRE CIVIC Social Networks – Viral effect T-Shirts (Sevenly)

  5. 1. Increasing Awareness In addition to generating awareness by an online & offline campaign, CS could conduct “guerrilla fundraising”, using the house as a piggy bank – both in real terms in malls and streets as well as in a symbolic way online on their crowdfunding sites. “Guerrilla Marketing / Fundraising” • Offline: Toy house as a piggy bank (people throw in Euros, maximum capacity = amount needed to refurbish the house). • Online: Use the image of the house as a barometer of funds gained.

  6. 2. Crowdfunding - Sites We believe that SC can get a maximum of €27’000 from various international and Spanish crowdfunding sites (including sites to access anonymous donors), sites like BBVA Friends & Family to access the SC community and sites that will help SC design their own fundraising site. Funds from an anonymous community • www.kreandu.com is a crowd funding platform for creative projects. Kreandu enables you to find the necessary funding for your creative ideas or projects. (Will start working in the coming months) (amount comparable to verkami: €3000). • Buzzbnk.org. Buzzbnk is an online marketplace that connects social ventures from all walks of life with backers, supporters and fans. (Transaction cost 8%) (max £7,653) (average 5000 £). • Give.fm. Whether you’re a nonprofit, a school, or a social entrepreneur, Give.fm makes it easy to launch and promote successful fundraising campaigns. Give.fm allows individuals to support a set of causes through recurring micro-donations. (Transaction cost 8%)(Estimated Amount: €1000). • www.verkami.com Verkami is a crowdfunding website that was founded by Joan Adrià and Jonàs Sala. Here, users can create their profile and launch their project with the sole intention of developing online trust that stimulates patrons to fund their projects. If the funding goal is reached then the backers credit card is charged--if not then no amounts are issued to carry out the project. (With a 40 days deadline and Transaction cost 5%) (Estimated return: €3000). • Peerbackers.com (5% success fee, international projects, reward required) – (Estimated Amount: €1000). • www.indiegogo.com Community projects, international site, relatively high amounts of between approximately 2’000-10’000, one time fee of 25$ and 4% fee on the money you raise, choice to have all or nothing. (Transaction cost 8%) (Estimated Amount: €6000 (3*2000)). • www.bbvaff.es BBVA Friends and Family is a platform that enables BBVA customers (personal banking) to set up a goal or a cause and encourage their friends and family to contribute. The goals could be anything from paying a restaurant bill to contributing to a community project. (Estimated Amount: €1500). • CauseVox. CauseVox is a crowdfunding site for both nonprofit organizations and for-profit causes. It provides you with a nice set of tools and templates to design your campaign, rally your supports on your website or through social media, track your progress, and utilize your data. ($77000 for clean water in Africa) (Transaction cost 7.5%). Funds from your own community Creating of own Fundraising Site (5000 Euros)

  7. 2. Crowdfunding – Pros & Cons Crowdfunding presents the opportunity of starting to collect funds right away and linking the crowdfunding site to SC’s online campaign, however the problem of the low funds volume and the uncertainty of success in each campaign remains. • Own page, own project description and future outlook • Link to social media platforms: viral potential • Potentially starts right now • Low average returns from the sites • No guarantee whether and when we will get the funds (time limit for fund raising) • Target Market Problem: websites are directed at the general public, therefore we do not target individuals particularly sensitive to the Sostre Civic issue • Trust • Charges: 2-10 % of the funds you receive • Normally crowdfunding funds projects at Initiator level not at Sostre Civic’s advanced stage of development

  8. 3. Grants – Repayable Grants Different repayable grants are available in Spain. The repayable grants have better terms than normal loans and are issued by government initiatives, both national and regional. We believe that SC can best apply for the PCCP grant, with an expected amount of €250’000. • Plan de Consolidación y Competitividad de la Pyme. • Different programmes for financing SMEs. • For social enterprises there is a loan to be repaid in 9 years. • Amount of the loan varies from €100,000 to €1.5 mln. • Initiative of the Ministerio de Industria, Energía y Turismo (Empresas de Economía Social, 2012). • Ayudas para la rehabilitación energética de la envolvente térmica de edificios de uso residencial y de viviendas. • A maximum of €4000 is given for restructuring of electricity in houses. • It is a repayable grant of the Generalitat Catalunya (Rehabilitación, 2012). • InnoEmpresa: €20’000 (closed now) • Agencia de Soporte a la Competitividad de la Empresa Catalana. • More focused towards commercial than social businesses (InnoEmpresa, 2011). €250’000 €4’000 €20’000

  9. 3. Grants – European Social Fund The European Social Fund has different objectives, but one of the main points for Spain is ‘to foster entrepreneurship’. Most funds are directed to SMEs and projects are funded for different periods of time. The funds are non-repayable, which would make it a more interesting option than the repayable grants. If SC applies successfully, they could obtain the full amount of €350’000. • Since 2007 ESF has set up over 10,000 SMEs. • Want to avoid exclusion and poverty (ESF in Spain, 2006). • €84 billion to spend from 2014-2020 in the EU. • More than 50% of the recipients of the ESF are SMEs and NGOs (ESF 2014-2020, 2011). • Catalonia eligible under regional competitiveness and employment objective (one of the richest regions of Spain, so less funding available), but Sostre Cívic wants to expand business in Spain in general. Thus can have access to funding of more regions. • Objectives: • Priority 1 : To foster entrepreneurshipand improve the adaptability of workers, employers and enterprises (€70mln available for 2007-2013). • Priority 2 : To enhance employability, social inclusion and equal opportunities for men and women (€140mln available for 2007-2013) (Decisión, 2007). • Application takes time and it is uncertain whether you can obtain the fund. • Fixed programme for 2007-2013 (Programa Operativo Cataluña, 2007). €350’000 = whole sum

  10. 3. Grants – European Social Fund ESF focuses on employment mostly, so might be difficult to get. However, for the new period some changes in the policies have been made to put more focus on social innovation and social inclusion. Application for the ESF goes via Unidad Administradora del Fondo Social Europeo. ESF in Spain 2007-2013 (ESF in Spain, 2006) ESF 2014-2020; some important changes for Sostre Civic • Greater support will be provided to social innovation, i.e. testing and scaling up innovative solutions to address social needs, for instance to support social inclusion • A minimum share of 20% of the ESF will be dedicated to social inclusion actions. • Equipment linked to investments in social and human capital will become eligible for support from the ESF (ESF 2014-2020, 2011).

  11. 3. Grants – Grant Loans There also exists grants in the forms of loans, they differ from repayable grants in that the interest rates are higher. ICO Directo offers a special programme for the construction of houses for protected rental agreements. If considered eligible, SC could obtain the full amount of €350’000 for the refurbishment. • ICO Directo – VPO Alquiler • Financing plan for the construction of houses that are to be rented under protected agreements (VPO Alquiler). • Amortisation plan between 10 to 25 years. • Low interest rate, but higher than the ones offered by the repayable grants. • Amount of the grant decided by ICO, can range to amounts covering the entire project. • Registration via the ICO Directo website (ICO Directo, 2012).

  12. 3. Grants – Pros & Cons A grant by the European Social Fund or the Spanish government could be used by SC to start the business, however eventually the cooperative will not be grant dependent. The problem with grants is that they are often directed towards a specific operational focus and that they are not a sustainable basis of funds. • Sostre Civíc only needs grants to start the business; not grant-dependent organisation. • Grant givers do not want large financial reserves; Sostre Civíc does not have any. • Creates a network of interested supporters and practitioners. • Strategies: •  Grant as equity substitute •  Grants in relevant sector to gain more experience (Murray, et al, 2009) • Lack of stable and sustainable funds. • Short-term focus and directed away from operational focus (project funding). • Securing funds requires a high commitment from top management, having less time to actually manage the organisation. • Costly to apply for (Murray, et al, 2009).

  13. 4. Venture Philanthropy EVPA and most of other global venture philanthropy, mostly support projects and entrepreneurs in developing countries with the aim to solve social or environmental challenges while generating financial returns. The main important point of global VPs is about ability of give high loans. • European Venture Philanthropy Association (EVPA, 2012) • Support members in carrying out their venture philanthropy activities. • Apply as a member and the organisation decides whether you are able to join the EVPA. • Global Impact Investing Network • www.thegiin.org • http://www.gatesfoundation.org • Investors' Circle: Investors' Circle is a network of angels, VCs, and foundations devoted to funding social enterprises. The group has helped direct more than $130 million in investments to 200 companies since 1992. Investors' Circle also aims to widen the network of patient capital investors.

  14. 4. Venture Philantropy – Pros & Cons There are some reasons that Sostre Civic cannot use venture philanthropy as a source of funding as listed below. In addition, the advantages and disadvantages of working with VPs are listed. • Why would be difficult for Sostre Civic to be eligible for Venture Philanthropist: • Mainly US-based initiatives • Social value creation in developing countries • Funds available to competition winners; e.g. Skoll Awards which are highly competitive • Often need to have a proof of success • Promote start-ups, growth and risk-taking social ventures • Different forms of VP, grant, or loan • Support usually for 3-5 years to make the business sustainable and scale up • Access to other resources (e.g. management skills) • VPs often highly involved in the business and have some sort of control • Need measurable results to present as returns • High involvement and taking positions on the boards of the non-profits by some of VPs

  15. 5. Tipping Point After having analysed the sources of funding available, we have come up with a tipping point on the different solutions proposed. Plan de Consolidación y Competitividad €250’000 Other Grants €20’000 €27’000 €30’000 Crowd Funding Venture Philanthropy Grants Investment Donations Loans Current Members’ Loans €20’000 10.02.2012 Future Tipping Point (€350’000) ESF Grant €350’000 – €2’000’000

  16. 6. Sustainability

  17. 6. Sustainability – Involving Members EMPTY EMPTY Refurbishment!! Housing?! Housing? …Work? Today Future

  18. 6. Sustainability – Involving Members Objectives: • Reduce overall refurbishment cost (-50% in five years) • Create employment (i.e. making Sostre Civic more eligible for grants that target employability) • Benefitting social inclusion (by strengthening the community of members) Idea: • Cooperative members with extra capacities (unemployed or underemployed) would be involved in the refurbishment of the properties.

  19. 6. Sustainability – The Aravind Idea • Aravind Eye Clinic in India has a business model by which they offer basic cataract eye surgery to patients free of charge or subsidized (65%) – sustaining the business by collecting revenue from patients paying for a premium service (35%) • This model exists in commercial business, where it is termed “Freemium” (i.e. offering a basic service for free and at the same time offering a more premium version at a cost) and is often found in software businesses (Skype, Linkedin etc.) • Apart from Aravind there are a few examples of non-software businesses based on the freemium model, among them Bloorx (www.bloorx.com), a platform that provides young Nigerians with access to scholarships and Livemocha language learning (www.livemocha.com)

  20. 6. Sustainability – A potential SC Model Monthly Rent = ♯m2 * quota (per housing project) • IDEA • Discriminate quotas for different segments of cooperative members • Segments can be defined according to a specified and codified rating system (see next slide) • In line with the Freemium model: offer superior services and appliances for the apartments with premium quota

  21. 6. Sustainability – Rating System • Members will be rated according to various criteria (Income, employment, household size etc.). • These criteria are weighted, and adding the weighted score for all criteria you get the Total Score for one potential homeowner. • Because social exclusion or social hardship has hence far not been included in the rating, Sostre Civic should have the opportunity to add to the final score a maximum of 15 % for experience of social hardship by the applicant. • The final total score ranks the applicants: highest score members being poorest or most in need, lowest score members being wealthiest or least in need.

  22. 6. Sustainability – Rating System • According to the Total Score (previous slide) members will be distributed into 4 categories • Every category is assigned a different price (quota) per m2 • In line with the discrimination in price, different member categories will get different types of housing (from basic to “premium” • Members assigned to a certain category (say 3-4) can always choose to rise to to a higher category (say 1-2) if they would like more features / housing quality. • Within one category, members with a higher total score (more in need) will be first to get a home assigned.

  23. Conclusion By accessing donations from crowdfunding, grants and loans from public sources and venture capital from impact investors, SC should be able to cover their initial funding need of €350’000. Improvements to Sostre Civic’s marketing and a potential movement towards an Aravind styl product and pric offer could increase SC’s awareness and sustainability. Crowd Funding Grants Venture Philanthropy = €357’000 €250’000 €27’000 €30’000 Funding PCC de la Pyme €20’000 Other Grants Increasing Awareness in order to gain access to funds Increasing the Sustainability of the Business Model = Greater Awareness & Increased Sustainability Operational Improvement Simplified Model / Campaign / Guerilla Fundraising Members Employability + “Freemium” Housing Prices

  24. Sources • Anders Sundelin: Aravind uses FREEmium Business Model to enable FREE eye surgery for the poorhttp://tbmdb.blogspot.com/2009/04/aravind-uses-freemium-business-model.html • http://business.financialpost.com/2011/08/31/freemium-business-model-gets-noticed-as-profit-grows/ • http://techcrunch.com/2011/09/04/complete-guide-freemium/ • http://techcrunch.com/2009/10/24/startup-school-wired-editor-chris-anderson-on-freemium-business-models/ • Decisión (2007), ‘Decisión de la Comisión’, Comisión de las Comunidades Europeas, accessed 9 February 2012, <http://www.meyss.es/uafse/es/programando/programasOperativos/pdf/Cataluxa_Decisixn_6726_x18-XII-2007x.pdf>. • Empresas de Economía Social (2012), ‘Programa de financiación de empresas de Economía Social´, accessed 9 February 2012, <http://www.enisa.es/Financiacion_Enisa.aspx?tipo=S&id=41&categoria=Programa-de-financiación-de-empresas-de-Economía-Social>. • ESF 2014-2020 (2011), ‘ESF 2014-2020’, European Commission, accessed 9 February 2012, <http://ec.europa.eu/esf/main.jsp?catId=62&langId=en>. • ESF in Spain (2006), ‘The European Social Fund in Spain, 2007-2013’, European Community, link at <http://ec.europa.eu/esf/main.jsp?catId=378&langId=en>. • EVPA (2012), ‘European Venture Philanthropy Association’, European Venture Philanthropy Association, accessed 9 Febryary 2012, <http://evpa.eu.com/>. • ICO Directo (2012), ‘VPO Alquiler’, ICO Directo, accessed 9 February 2012, <http://www.icodirecto.es/webcomercial/export/sites/ico/productos/adjuntos/VPO_ALQUILER.pdf>. • InnoEmpresa (2011), ‘Ayudas Innoempresa. Programa de Soporte a la Innovación de las Pequeñas y las Medianas Empresas (PYME)’ , Generalitat Catalunya, accessed 9 February 2012, <http://www20.gencat.cat/portal/site/OVTE/menuitem.a2d16f71d01ae7dc6e4a83bdb0c0e1a0/?vgnextoid=892bf5d0454c4210VgnVCM1000008d0c1e0aRCRD&vgnextchannel=892bf5d0454c4210VgnVCM1000008d0c1e0aRCRD&vgnextfmt=detall&contentid=06a8ba2cd622c110VgnVCM1000008d0c1e0aRCRD&newLang=es_ES>. • Murray, R., Caulier-Grice, J. and Mulgan, G. (2009), ‘Social Venturing Social Innovators Series: Ways to Design, Develop and Grow Social Innovation’, The Young Foundation, pp. 119-126. • Programa Operativa Catalunya (2007), ‘Programa Operative FSE Catalunya 2007-2013’, Servei d’Ocupació de Catalunya, accessed 9 February 2012, <http://www.meyss.es/uafse/es/programando/programasOperativos/pdf/Catalunya.pdf> • Rehabilitación (2012), ‘Ayudas para la rehabilitación energética de la envolvente térmica de edificios de uso residencial y de viviendas’, accessed 9 February 2012, <http://www.ayudas.net/Ayudas_rehabilitacion_energetica_envolvente_termica-13412BT1E8000RPO1PQ.htm>.

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