Fotolia/Africa Studio
Social innovation — innovation whose ultimate goal is social change — is gaining momentum worldwide and in Europe as one of the promising approaches to overcoming the financial crisis.
Social enterprises are considered to be key driving forces behind social innovation, operating on the basis of viable business models and generating jobs through activities that meet important social needs. They are considered to be critical to the EU’s socio-economic strategy for the EUROPE 2020 Agenda, which aims to create a fairer, inclusive and more sustainable society. However, social enterprises often encounter barriers in accessing finance, risk capital and scaling up. Their work is also often hampered by the lack of adequate skills within the enterprises.
The European Commission launched a call for projects to develop, promote and disseminate new and more effective solutions to reduce barriers encountered in accessing social enterprise finance in both the demand and supply sides of the market. Following the call for proposals, a total of 21 pilot projects in 15 EU countries were chosen for funding.
RAND Europe and Ecorys worked with the EU Directorate-General for Employment on the evaluation of the pilot projects. RAND’s work also supported the exchange of experiences and mutual learning activities between the projects through a series of interactive workshops. The experiences of the pilot projects have been documented in the final publication.
There were some knowledge gaps that resulted in challenges for the pilot projects. These included issues related to regulatory frameworks; promising examples of financial instruments, tools and programmes; as well as project design and management techniques.
The pilots faced several implementation challenges. The main implementation challenges reported by the pilot projects related to the delayed start of their work, insufficient intelligence on the social finance market and difficulties in engaging hard-to-reach groups.
The pilot projects produced a wide range of types of outputs. This included: analytical reports, meetings with (potential) collaborators, documentation necessary for setting up new instruments and financing models, guides and resources on social finance for social enterprises and investors, training sessions delivered and a number of events organised to bring together social enterprises and investors.
There is no-one-size-fits-all type of investment or intervention strategy to address the limitations of the social finance market. There was broad agreement among the pilot projects and the findings from recent research that, in order to be effective, investment readiness support has to be flexible and tailored to the needs of social enterprises, needs to be able to largely depend on the quality of trainers and the training they offer, needs to attract and maintain committed participants and should facilitate access to finance.
The EU has also made available A recipe book for social finance (PDF). Authored by Eva Varga and Malcolm Hayday for RAND Europe/Ecorys as part of this project, the book provides step by step guidance through the process of designing and implementing initiatives to develop social finance instruments and markets. It is aimed at practitioners such as social enterprises, investors, social finance intermediaries, market builders and social enterprise support organisations.
Joanna Hofman
Chris van Stolk
Daniel Schweppenstedde
Stijn Hoorens
Emma Harte
