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150128 sen final conf v4
This document outlines 15 key recommendations for supporting social enterprises from SEN's 18 good practices report. The recommendations are organized into those that apply inside government and those that apply on the ground. Inside government, they focus on areas like policy coordination, stakeholder partnerships, visibility, impact measurement, and using legal and fiscal frameworks and public procurement to support social enterprises. On the ground recommendations center around entrepreneurship education, braided support, tailored startup and growth support, leadership training, consortia and social franchising, social innovation, and mixed finance approaches. Specific examples from different countries are provided to illustrate each recommendation.
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150128 sen final conf v4
- 1. Toby Johnson, AEIDL,28 January 2015
- 2. SEN’s 18 goodpractices recommendations Trento, September 2013
- 3. SEN’s 18 goodpractices recommendations
- 4.
- 5. Inside government • Policyco-ordination • Vertical coherence • Stakeholder partnerships • Visibility • Impact measurement • Legal and fiscal frameworks • Public procurement • Research
- 6. On the ground •Entrepreneurship education • Braided support • Tailored support for start-up and growth • Leadership training • Consortia and social franchising • Social innovation • Finance
- 7. 1st lesson –strategic partnership and policy co-ordination
- 8. Policy co-ordination Social enterpriseshave an impact that transcends conventional policy pillars (economic, social, local development). Ensure policy coherence by establishing a cross-departmental co-ordinating body. Working Group for Systemic Solutions (PL) Social enterprise strategy (SC)
- 9. Stakeholder partnership Develop andimplement policy for social enterprise through stakeholder partnerships with the representative organisations of social enterprises and with the ecosystem of support. Intervento 18 (Trento, IT) Low Moss Public Social Partnership (SC)
- 10. ESIFs – Partnershipis not optional Code of conduct: • partners should be representative • transparent selection • involved in the preparation and implementation of the Partnership Agreement and programmes • on monitoring committees • capacity building, exchange of experience and mutual learning • subject to assessment
- 11. 2nd lesson –visibility and identity
- 12. 3rd lesson – Consortia& social franchising
- 13. 4th lesson –mixed finance
- 14. Finance • Combine differenttypes of tools (grant, loan, guarantee etc.) • Multiple sources (public, ESF, ERDF) • Growing emphasis on private and social economy financial institutions • Accompanied by business support Global grants (CZ) ESFund/TISE (PL) Mikrofonden Väst (SE) Social impact bond (EN)
- 15. 5th lesson – braidedsupport 2 levels: •mainstream business advisers •a specialist support infrastructure, well linked to existing federal and support bodies of the social economy Enterprising Together! (FI)
- 16. 6th lesson – Procurementfor quality Socially responsible public procurement: •smaller contract size •social clauses Guidance and training: •for procurement officials •tender-readiness for social enterprises Guidelines for Social Clauses (BE) Social Value Act (EN) Steps to Success (EN)
- 17. ESIFs – specificpriorities ESF investment priority b(v): Promoting social entrepreneurship and vocational integration in social enterprises and the social and solidarity economy in order to facilitate access to employment ERDF investment priority 9(c): Providing support for social enterprises
- 18. ESF d(1) –institutional capacity governance & policy co-ordination partnerships, pacts social impact measurement socially responsible public procurement ESF d(ii) – capacity building for stakeholders, sectoral pacts consortium-building tender-readiness
- 19. ESF a(iii) –self-employment, entrepreneurship & business creation ESF c(iii) & (iv) – access to lifelong learning, labour market relevance of education & training systems etc. support infrastructure training mentoring peer learning tender readiness
- 20. ERDF 1(a &b) – RTD & innovation partnerships, pacts impact measurement ERDF 8(d) – infrastructure for public employment services partnerships, pacts consortia
- 21. ESF art. 9– social innovation ESF art. 10 – transnationality evidence base research impact measurement pacts
- 22.
Editor's Notes
- #3 The aim of the network was twofold: to learn how to build a comprehensive ecosystem of support for social enterprises to build working relationships between the governments – the ESF managing authorities – and the social enterprise movements, so that implementation of ESF operational programmes would go smoothly This is the group at our first peer review meeting in Trento in September 2013. Altogether we personally involved 98 people from 14 countries.
- #4 We looked at 18 cases of good practice, from 9 countries, divided into 5 clusters. We don’t have time to look at them all today, so I’ll try to illustrate the main recommendations.
- #5 In the preceding examples, I have tried to show the great results that can be got out of various component parts of a comprehensive ecosystem for social enterprise support. However you will probably have noticed that the examples are not water-tight. They depend for their success on being part of an integrated strategy. They depend in the first place on their being part of government that has the overview and ensures that different ministries and agencies work in the same direction. For instance opening up access to finance will have much better outcomes – the businesses will be more viable and sustainable – if you also provide advice to the borrowing businesses. We have put together the recommendations coming out of our 18 cases to produce 15 key recommendations – which are printed on page 5 of the SEN booklet.
- #6 8 of the recommendations are mainly the preserve of national governments
- #7 … while 7 are largely a matter of implementation on the ground.
- #8 Social enterprises can be baffling for government to deal with, because they don’t operate according to a mechanistic economic model. They have values and ideals, and they are founded and grow through networking. Governments need to do two things if they want to bring out the contribution to social problems which SEs can bring: establish a dedicated unit – a ‘brain’ which can take a holistic overview work in partnership with the existing movements Poland, who led the network, set up a Working Group on Systemic Solutions in the Social Economy to advise the prime minister. It involved representatives of different ministries as well as experts from the sector. it has drawn up a national development programme, KPRES, which is to be implemented in this programming period up till 2020. Worth €684 million, it contains among other things a national committee for social economy development, regional support services, a law act on social enterprises, and a performance monitoring tool. It was set up in 2008 following the Social Economy Conference in 2008 in Gdańsk, where the Social Economy Manifesto was launched. It was a context where the social economy was fragmented and had no single interlocutor to negotiate with the government. This made leadership – the building of coalitions and the building of good personal relations – a very important factor. Shortly afterwards, the prime minister launched the Working Group, which had four teams: legal, financial, educational and strategic. Thereafter, progress was erratic owing to changes of policy and personnel. Nevertheless the group laid the foundations for the systemic integration of the social economy into public policy. The development of the national strategy went through four phases: Illumination: the idea was conceived based on the heritage of the Polish social economy, the strength and creativeness of NGOs and ideas imported from abroad; Promotion: attracting stakeholders and identifying leaders Coalition-building Drafting of the pact and strategy The group took care to operate in an open way and communicated the results of its work publicly through the internet. At one point, the group’s work was disrupted by a change of government, but it was relaunched in 2012 when the civic members of the group drafted a position paper for the government, which resulted in a broader more democratic group. Scotland’s social enterprise strategy provides for a holistic programme of support for social enterprise and wider third sector, which contributes to the National Purpose. it includes not only leadership training, the subject of the good practice we reviewed, but intra-governmental alignment, procurement, investment, business support, infrastructure, impact measurement and networking.
- #9 SEN formulated what it learnt from the 18 cases into 15 key recommendations. I’ll mention the 6 most important of these. Firstly establishing a coherent policy across government.
- #10 Secondly working in partnership with the stakeholders in the social economy – these are the people who, using their networks, can make structural funds implementation on the ground work
- #11 It is good to remember that in the structural funds, partnership is not optional, as the code of conduct sets out.
- #12 Social enterprises have a very simple proposition – to use business methods to achieve social objectives – but it is quite abstract. Because it mixes values with pragmatism it requires some subtlety to understand. In the past the main way the social economy has been defined has be by translating the values into organisational rules about democracy – involving stakeholders like workers and users – and non-speculation – limiting the degree to which profits can be distributed to investors of financial capital. Today’s definitions of social enterprise are more permissive, and focused on outcomes. There is an interesting story in Finland. In 2003 it passed a Social Enterprise Act which defined social enterprises as work integration enterprises, employing at least 30% of disabled or long-term unemployed people, which were then able to claim wage subsidies. So it had recognised one of the major fields of activity of social enterprises, that is creating an inclusive labour market. But this left out in the cold all those other organisations – estimated at between 5,000 and 12,000 – which were doing things like providing social or environmental services. In 2011 it remedied this by launching the Social Enterprise Mark. Again this was the outcome of a strategy worked out by a High Level Working Group set up within the Ministry of Employment and the Economy (MEE). As the ‘diamond’ diagram shows, this focuses on 3 key values – creating social good, limited profit distribution and transparency – and 3 subsidiary values – serving communities, benefitting the environment, and employee wellbeing. The government gave a small grant to launch the mark, but it is run by a nationally respected standards institution – the Association for Finnish Work – and will be supported by fees from enterprises that register. By last September the mark has been granted to 49 enterprises, only about half of those who applied. A further step in identity-building was taken with the launch of a new association for social enterprises, Arvo-liitto ry. A second initiative to build the identity of social enterprises comes from France, where public authorities are encouraged to use their purchasing power responsibly. The government supported the national advice agency AVISE to set up a website through which ministries and local authorities can find social enterprises to supply goods and services. This was part of a larger €6 million ESF programme run by AVISE in 2011-2013 to network and professionalise social inclusion stakeholders. The Socialement Responsable website lists over 4,000 social enterprises, which can be looked up by region and by the sort of services they offer. It is the public face of a socially responsible public purchasing policy that has been effective: owing largely to changes in practice at local level, the share of public contracts valued at over €90,000 which include a social clause trebled from 1.5% in 2008 to 4.3% in 2012. The number of WISEs accessing public markets increased from 39% in 2010 to 42% in 2011. Most of the turnover going through the site is at regional level, and since 2011 the ESF has supported the creation of 11 similar but more detailed regional websites.
- #13 Because they involve and empower people, social enterprises don’t always want to grow into large businesses – although of course there are very large ones like the Mondragón group with 74,000 employees (turnover €12 billion) or Groupe SOS with 12,000 (turnover €800 million). Two favourite growth mechanisms rely instead on social enterprises capacity to network. The first of these is social franchising – a process in which an existing successful social enterprise codifies its business model, creates a handbook and quality standards, and then helps groups in other places to set up new enterprises on the same model. In Växjö in Sweden, the Macken social enterprise operates a series of business which integrate migrants into the workforce. Migrants make up 14% of Växjö’s population, and half of them are unemployed. Macken started life in 2004 as a recycling business, and faced with workers who could not speak Swedish, wanted to offer them practice-oriented language training. It contacted the National Centre for Swedish as a Second Language, which referred them to a Danish model of practice-based language learning. The municipal council agreed to purchase trainee places in its ‘language workshops’. To provide jobs for its trainees, Macken first opened a bicycle workshop, and has since expanded into furniture, electronics, textiles and building services. It has its own shops, a café, an enterprise centre, a business school and an agricultural college. With support from Explosion, an ESF project managed by Coompanion in Göteborg, it developed a social franchising model. The first franchise opened in Högsby in August 2013 and the second, in Karlskrona, is under development. It is of particular interest to municipalities whose population is declining and who wish to encourage immigration in order to maintain services. In Högsby, the municipality is realising an expenditure saving of some €12,000 in respect of each new job created in the Macken social franchise. The second growth mechanism is consortia – co-operatives of other co-operatives (although the technique is used by conventional businesses too). They are very big in Italy. Italy has 72,000 co-operatives employing 1.1 million people. There are 300 consortia across the country, but they are particularly thick on the ground in the more highly-developed north of the country. In Lombardy particularly, their number is growing fast: from 22 to 70 between 1998 and 2012. They enable co-operatives with complementary specialisations to pool their strengths and create synergies, and they take on the work of bidding for and managing large contracts. Their key characteristic is that they can bid as one unit, and then divide up the tasks among their members. There are around 12,000 social co-operatives in Italy, and between 2001 and 2011, they grew by 98%. The biggest grouping of social co-operatives is the Gruppo CGM, which is an umbrella for 70 consortia across Italy, which in turn have 1,000 member co-operatives, which in turn have 45,000 workers (70% of whom are women), who deliver services to 700,000 families. Group turnover is €1.1 billion. But they are taking off elsewhere. They are particularly relevant when social enterprises want to bid for large public procurement contracts. Steps to Success, an ESF project to develop social enterprises in Merseyside in North West England, ran from 2009-2012 with a budget of €2.3 million. Out of its 636 beneficiaries, 18% found work. 41 social enterprises were created, and 217 existing social enterprises were supported to explore opportunities for diversification and growth. The project laid great emphasis on building a sustainable support structure for social enterprises, by creating a consortium (Big Enterprise in Communities – BEiC) whose members provide complementary services and refer clients between them so that their needs are met most appropriately. This consortium went on to gain follow-up funding. A network of mentors was also set up. In order to increase social enterprises’ capacity to bid for larger contract, the project also worked on financial diversification, and has since set up a €2.5m Local Impact Fund. It will make unsecured, affordable loans of £50,000 to £250,000 for up to five years. it is funded half from the ERDF and half from the Social Investment Business (SIB). The ESF in England is also supporting the National Consortium of Social Enterprises (NCSE) , which now has 650 members whom it helps to win public contracts. As in France with Socialement Responsable, national policy can help on the side of the purchaser too. In 2012 England passed the Public Services (Social Value) Act, which obliges public purchasers to take the economic, social and environmental well-being of the area they serve into account. An example would be from the London Borough of Waltham Forest, which was tendering transport services and gave 10% weighting to social value. The contract went to the HCT Group, a social enterprise which undertook to reinvest profits in a learning centre to train long-term unemployed people in the borough.
- #14 The overall trend and one of the underlying principles behind social enterprise is they are businesses and therefore can use business methods of finance – not grant, but loan, equity and guarantee. However they are hybrid animals, with social outputs as well as economic ones, and therefore need hybrid financing. 1. The Czech Republic used the ESF along with the ERDF to combine both these types of financing under its Social Economy Global Grants programme between 2009 and 2013. €15.8m was disbursed under the ESF programme and €5.6m under the ERDF programme. The impact was that 157 work integration social enterprises and 827 jobs for disadvantaged people were created, at a cost per job of €22,447. The estimated saving to the public purse is €6.5 million. Three-quarters of the enterprises supported are sustainable after the end of the grant support. The lessons that emerge from this case are: simplify as much as you can the criteria used by the different funds develop ways to assess business plans as well as social value created the results would have been even better if the loans had been accompanied by business support 2. In Poland, the government has set up the ES-Fund, a €7.5 million ESF pilot fund to provide loans to social enterprises until 2020. Its management was won by TISE, a subsidiary of Crédit Cooperatif in France. It will make loans of up to €25,000 for up to five years, at a very low interest rate of 0.69%. It started lending in 2013 and aims to make 250 loans by the end of this year. In its first 10 months it made 83 loans totalling €1.8m, which have supported or created 114 jobs. An important point about this scheme is that along with the loan enterprises receive free advice – and two-thirds of clients intend to take up this offer. The scheme has an important capacity-building effect for organisations that are unused to borrowing from banks. 3. As part of the REVES Financial Programme, Göteborg in Sweden has invested €1.1 million in local loan fund, Mikrofonden Väst, which grew out of an existing mutual guarantee association. REVES’s connections gave Göteborg access to European ethical investment funds. Business support is provided by Coompanion.
- #16 Thirdly setting up a braded support structure, so that all business advisers now about social enteprises, but there are also specialist support organisations which are well-linked to the organisations of the sector. Finland’s Enterprising together! project set up a national support service for mainstream business advisers The ESF project (http://www.yhteistoiminta.fi/taustaa/inenglish) ran from 2008 to 2013 with a budget of €1.28 million. It was managed by the Tampere Region Cooperative Centre, and was targeted at business advisers, not at social entrepreneurs themselves, so as to build up long-lasting and effective provision of cooperative advice in the mainstream business advice service. A comprehensive service was offered, comprising a website and knowledge bank, a counselling model, a telephone support service, training material and events. It was accompanied by widespread publicity on the radio, on paper and online. The project reached 831 business start-up advisers all over the country, working for 325 different state, municipal and private organisations. Its legacy is that 146 of these advisers have become members of a cooperative advice network.
- #17 Fifthly ensuring that public procurers have the legal possibility – via the transposition of the new EU procurement directive adopted last February (they should do this by April 2016) – and the skills to incorporate quality criteria into their calls for tenders
- #18 Just about all elements of the comprehensive support ecosystem van be supported using the specific priorities in the ESF and ERDF. But many Managing Authorities have allocated their budgets to more general priorities. Nevertheless of those ESF operational programmes adopted by 27 January 2015, social enterprise is mentioned in those of nine countries: Bulgaria, Flanders, 3 French regions (Alsace, Aquitaine, Picardie), the Greek regional OPs, Italy’s national inclusion OP, Croatia, Slovenia, Slovakia and Scotland. In addition quite a few mention entrepreneurship and community-based activities.
- #19 But you can also use a number of other priorities: ESF investment priority d can be used to build the capacity of public institutions and external stakeholders, for instance by building partnerships, pacts, impact measurement tools, reforming procurement to be more qulaity-focused and encouraging the formation of consortia
- #20 ESF priorities a(iii) entrepreneurship and c(iii) and (iv) lifelong learning can be used for business support and training.
- #21 The ERDF investment priorities on research, innovation and infrastructure for the public employment services might be used in areas like partnerships, pacts, impact measurement and consortia.
- #22 And the ESF articles on social innovation and transationality will also be relevant. Later in 2015 a thematic network on the social economy will be established and supported by EC technical assistance.
- #23 I have flown over the recommendations on: vertical co-ordination, legal and fiscal frameworks, social innovation, impact measurement, education, research but they can be found in the SEN booklet On a personal note I’d like to finish by praising and thanking my colleague in the network. Everyone participated, by suggesting good practices, making detailed comments and posing interesting questions during the review meetings. It’s been an honour to be involved. But holding it all together owes everything to its leader Małgorzata Lublinska and its administrator Aleksandra Kowalska from Poland’s Ministry of Infrastructure and Development, to its co-coordinator Dorotea Daniele from DIESIS, to Roger Spear from the Open University in Britain who led two of the peer reviews and to its evaluator Samuel Barco from Seville. And its impact will owe everything to you, who will be implementing the structural funds over the next 5 years. Thank you.