Jungles of the definition - Social Enterprise

JUNGLES OF THE DEFINITIONSEF Riga 2013Mindaugas DanysMinistry of Economy, Lithuania

Social Enterprise Mark UKYour company must:

• have social and/or environmental aims• have its own constitution and governance• earn at least 50% of revenue from trading (or as a new start, you pledge to reach this within 18 months)

• spend at least 50% of profits on social/environmental aims

• distribute residual assets to social/environmental aims if dissolved

• demonstrate SOCIAL VALUE

EU Definition

According to the definition of the European Commission a social enterprise “operates by providing goods and services for the market in an entrepreneurial and sometimes innovative fashion and uses its profits primarily to achieve social objectives. It is managed in an open and responsible manner and, in particular, involve employees, consumers and stakeholders affected by its commercial activities” (COM(2011) 682; Brussels, 25.10.2011)

How are social enterprises regulated across Europe?

• Social enterprises can be regulated in one or more of the following ways:

o Existing legal forms o Adaptation of existing legal forms o Introduction of social enterprise legal brands o Introduction of specific types of non-profit

organizations (e.g. non-profit institute in Slovenia)

• A few countries have introduced a general legislation on Social Economy

Lithuania and soc ents

• Experience with Social firms• Few social enterprises• Lots of NGO social business initiatives• Legal status – private non profit

Other examples

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www.SocialinisVerslas.lt

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Challenges

Challenges

Aware-ness

Impact assess-ment

Social Firms

Flexibili-ty

Why & when do you need a definition?

• For promotion?• % of procurement? public and corporate

• More volunteers?• Access to markets? – service monopoly

• Access to capital? • Set a new legal form?• Boost social innovations?

• Use public/EU subsidies?

EvolutionDefi-nition

Access to market

Social initiatives

Impact measurement

Awareness, promotion

Connecting EU support to reality on the ground

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• What are the unmet needs?

• What kind of funds, intermediaries and other types of support could help with these needs?

• What examples exist of investment support in different contexts?

• What are the some of the key issues for Lithuania?

Opportunities for Soc Ent Support through ESF

Options for programming• An integrated and strategic support package to

promote social entrepreneurship• Schemes and actions that use social enterprises

to deliver specific thematic objectives and investment priorities:• Promoting employment (access to employment for job-seekers

and inactive people): work integration SE• Investing in education, skills and LLL (Reducing early school-

leaving): SE providing providing early childhood education and care

• Promoting social inclusion and combating poverty (Enhancing access to affordable, sustainable and high-quality services) SE providing health care and social services

Thanks

Mindaugas Danysmindaugas.danys@gmail.com

Needs, types and sources of finance for social entrepreneurship

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Needs

• Start up – feasibility, innovation

• Start up - capital for assets

• Working capital

• Expansion, growth

Types

• Grants

• Debt

• Quasi equity

• Equity

Sources

• Own resources

• Charitable bodies

• Government (at different levels)

• Financial institutions

• Private investors seeking impact

Investors

• SEs themselves

• Foundations

• Public bodies

• Banks (private and social)

& specialist intermediaries

• Individuals (HNW, & community)

Some Examples

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• Unlimited – foundation supporting social

entrepreneurs

• The Key Fund – specialist intermediary

• Bridges Ventures - specialist fund manager

• Finlombarda - Italy ESF scheme to capitalise

social co-operatives

Unlimited

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• Established to support social entrepreneurs with

£100m endowment – uses revenue for grant

programme linked to intensive support working

with partners. Different stages of support:

TRY IT£500Develop confidence and skill

DO ITUp to £5000Start entrepreneurial journey

BUILD ITUp to £15,000`for existing ventures to grow

FAST GROWTHUP TO £20,000 for rapid growth

Key Fund

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• Specialist social finance intermediary in Yorkshire, UK

• Established in 1998, now UKs largest regional community

development finance organisation

• Offer loans, grants and equity £1000-£150,000

• Focus on entrepreneurial community based organisations

• Average loan £34,200

• It has supported 2000 organisations, of which 175 were

start ups

• Financed from public sources including ESF and ERDF

Bridges Ventures

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• “Bridges Ventures is a specialist fund

manager, dedicated to using an impact-

driven investment approach to create

superior returns for both investors and

society at-large.

• Manages a number of funds including:

• Social entrepreneurship Fund

The Bridges SE Fund

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• Addresses the funding gap often faced by

fast growing social enterprises looking to

scale.

• Launched in August 2009

• £12m - from UK Government, Foundations,

private donations and innovation

endowment

• investments in scalable social enterprises

delivering high social impacts and

operating sustainable business models.

Bridges Criteria

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• based in England • a clear social mission (protected in their legal structure)• a robust business model• the ability to grow to scale and increase their social impact• a financially sustainable model• the ability to generate surpluses to repay financing • a strong management team

• Each investment made by the fund will be:• up to £1.5m structured as a flexible and tailored investment, usually in the form of quasi-equity repayable, with an appropriate return, through the social enterprise's trading activities

• Made 10 investments

Finlombarda ESF Jeremie Scheme

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• Intermediary owned buy regional government

• €20m of ESF matched with private bank finance (Banca

Etica,, Banca Populare de Bergamo & Banco Populare di

Sondrio)

• Loans made to individuals to buy shares in the co-

operatives in which they work

• 4000 loans of €4000 made to workers in about 400 co-

operatives

• Significant boost to capitalisation of the cooperative

enterprises

Good practice in promoting social economy and social entrepreneurship

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Guiding principles An integrated strategic framework

combining support to social entrepreneurs, provision of business development support, access to financial instruments with awareness raising and recognition of the sector

Ensuring synergies between actions of different governmental departments and levels involved

Seamless support along the whole process of social enterprise creation, development and scaling-upSupport not restricted to specific legal forms of enterprises, nor selected sectors Support requires linkages with civil society and community organisations

Some questions

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• What is the current situation/plans for the use of the

European Structural funds in Lithuania? €10m + How

to achieve best impact

• What scope is there for creating new kinds of funds

and using EU funds along side other public and

private sources of finance?

• How to use public support to engage private

investment?

• How does this fit with development of a wider eco-

system?