High-level Capacity Building Seminar: Building enabling ecosystems for social enterprises - 22-23 April 2015, Brussels, Belgium

1. DEVELOPMENT OF
SOCIAL FINANCE
INSTRUMENTS IN
CROATIA
Goran Jeras
EC/OECD Capacity Building Seminar
Brussels, 23rd April 2015

2. Proposed structure of the
financial instrument
Municipalities
(1M EUR)
EUSEF fund
ebank
(syndications and
guarantees)
Ministry of labor /
Ministry of
entrepreneurship
(7M EUR)
Private
investors?
(1M EUR)
2015-2016
2017
EUSEF fund
manager
EIF (SIA
programme)
(7,5M EUR)
HAMAG (guarantees)
e.g. 50% downside

3. 3
• Project financed by EC (VP/2013/017)
• Fund for investments in social economy
• Loan and equity based – covering investment
gap (100k-250k €)
• Possible financial instrument for the
implementation of Croatian Strategy for
development of social entrepreneurship
• Possibility to expand it to a regional fund
(interest from Slovenia and Greece)
• Combination with non-financial support
services (obligatory use of mentoring and
extensive reporting for risk mitigation)
EUSEF FUND

4. EUSEF fund SWAT
Strengths
- structured and focused type of investment
- transparent financial performance
- sustainability of investments
- integrated monitoring
- recognizable on the EU level
Weaknesses
- higher operational costs
- complex legislative framework
- possible mismatch in expectations among investors
- lack of best-practices
Opportunities
- scalability and flexibility
- possible regional and EU-wide collaboration
- possibility of combining with other financial
instruments (ebank & others)
- introduction of good practices to business and
financial industry
Threats
- vulnerability to systemic financial risks
- lack of capacity for social impact measurement
- pressure to accept standard profit-oriented practices
- risk of regulatory framework hindering social
entrepreneurship projects
EUSEF FUND

5. 5
• Bank is service to community - not-for-profit
entity
• Proactive risk mitigation – non-financial support!
• Capacity matching – mutual support of
cooperative members to projects
• Individual approach – loans follow business cycle
• Deposits interest rate = 0% (ability to invest in
SE)
• Loans interest rate ≤ 4%
• Participation in profit – transfer to social benefits
• Min. 90% of profit reinvested
• Cooperative members serve as branches
• Closed economic system (majority of
EBANK MODEL & VALUES

6. 6
• Integration of various types of financial
instruments (bank, fund, crowdfunding)
• Own open-source IT solutions for project
monitoring
• Proactive risk mitigation
• Statistical link between social impact and cost
of risk (probability of default)
• Smart combination of physical and virtual
social networks
• Replicability of the system
INNOVATIONS

7. 7
• Lack of funding for the development of the
whole system
• Legislative & taxation barriers for
cooperatives
• Lack of clear definition of social enterprises
• Higher operational costs for social enterprises
• EUSEF funding structure dependent on
political decisions of (local) government
• Regulatory framework for banks is not
suitable for ethical and cooperative banks
RISKS / ISSUES

8. 8
• Need for investments with more than financial
return – clear social mission
• Fair measurement of impact needed
• Long-term planning and support mechanisms
• Use of technology to create more efficient
systems and boost physical social networks
• Thinking in terms of complete value chains
• Support to large number of small entities is
more robust than small number of large
• Risk of detachment through growth
CONCLUSIONS

9. 9
Thank you for your attention!
Goran Jeras
gjeras@ebanka.eu
+385 95 9065108
QUESTIONS?