1. Strategy for Civic Economy in Portugal
Executive Summary – Draft for discussion
Lisbon, 25 September 2014
“Europe today accounts for just over 7% of the world’s population, produces around
25% of global GDP and has to finance 50% of global social spending”.
Angela Merkel keeps repeating this sentence at every presidential gathering to
summarize that Europe cannot afford its social bill anymore. Its shrinking share of
global wealth cannot sustain its current budget for social services. Costs have to be
cut. This is the rationale behind the last seven years of austerity.
At first sight this makes sense. Merkel wants to defend the financial sustainability of
Europe. Her logic responds to the same that built the Welfare State after WW2: the
economy generates the surplus that the State taxes to fund those public services
that build the capabilities of people who contribute to economic growth. So the
system is self-sustaining as long as the economy does its job.
However there might be an alternative that the German Chancellor hasn’t
considered yet.
Why doesn’t Europe turn its social spending into investments for a new type
of economic growth?
This is the challenge that Portugal has taken exploring a new frontier for societal
development.
Has Portugal gone mad? Not really. Many others have called for the same change
including original economists such the Nobel Prize laureate Elinor Ostrom, and a
few have taken the same path. The UK has initiated the transformation of its social
sector into a new engine for economic growth already with the New Labour
Government. The Coalition Government raised the challenge turning into a popular
movement with the Big Society Campaign.
The UK created funds like Future Builders to help charities becoming more
entrepreneurial and win contracts for public service provision. It invented a new
legal form for social enterprise and supported professional associations like Social
Enterprise UK to promote a new type of entrepreneurship and build the skills of
young people. An entire new set of institutions have been built over fifteen years to
build the market and empower new generations of innovators and economic
players.
The UK is not an exception. As President Obama took office in 2008 he set up the
Office of Social Innovation and Civic Participation at the White House. The same
year President Barroso – inspired by organization like the Young Foundation -
brought the social innovation agenda in the European Commission and, in 2010,
social innovation became part of the European strategy for innovation to support
solutions to societal challenges developed by citizens, charities and social
enterprises.
Even the Holy Father recently went public in favor of a new type of finance – called
impact finance – that reconcile financial with social and environmental returns.
Don’t be surprised. This is in line with previous encyclicals and evokes an
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2. economic theory which is unknown to the most but is rooted in the civic economy
flourished in the monasteries and free cities since the Middle Age.
But Portugal has make a step further. The only one amongst the European
countries crippled by the crisis Portugal undoubtedly deserved the title of leading
laboratory for experimenting with alternatives to austerity. This is a legitimate badge
of honour because here – despite or because of the crisis - we witness a
convergence between top down and bottom up strategies to respond to the crisis.
Here are the details although this is a working in progress that all of Europe is
observing with great attention. It’s a blue print for post austerity agenda. It’s a silent
revolution!
In July Government announced a €150m Social Innovation Fund. The details of the
fund haven’t been published yet but it’s the first fund of this kind capitalized with
European structural funds.
In accordance with Minister Poiares-Maduro government wants the fund to
stimulate the transformation of social services provision from a sector relying on
government subsidies and payments for actions, into a new economy driven by
social innovators, entrepreneurs and rewarding results.
Government is giving up its power to control and turns capital into a tool for
empowerment. The fund will unleash the potential to innovate of entrepreneurs,
non-profit organizations and potentially every citizen. The center is giving back
power to society as a whole. It’s the first crack into the monopoly of public good
provision. It’s the rebirth of the civic economy.
However government on its own would not do the job. The fund requires a match
coming from society. It requires a movement engaging all stakeholders and
citizens. This is the bottom up strategy that Maria do Carmo Marques Pinto has
built in the last two years with the Social Innovation Bank (BIS).
Started at the Santa Casa do Misericordia de Lisboa BIS was a simple programme
for entrepreneurship. Ms Marques-Pinto turned into the embryo of a movement
gathering a coalition of 27 partners amongst the main actors in the social and
financial sectors to respond to the employment crisis pooling their different
resources. This was the first platform in the country to give a coordinated and large
scale answer to the crisis overcoming the divisions and fragmentation which have
hindered Portugal to scale its answer to the crisis.
The concept of the civic economy was not completely. Individual initiatives like
TESE, IES, ESLIDER and Bolsa Social have emerged in the last fifteen years to fill
the gap. BIS was the first one to try building a platform engaging the main social
and economic players to scale in knowledge, resources, and ultimately impact a
build a new economy for public good creation. However BIS as well had its
limitations – first of all being limited to Lisbon. It’s time to move into the next phase
and build an enabling ecosystem for the civic economy.
Here we try to summarize the essential elements of the ecosystem. We have
identified 4 pillars from a macro perspective (fig1):
1. Knowledge cluster
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3. • Academic research on data analysis and social outcomes (a new university
department)
• Action research engaging practitioners
• Teaching the future workforce
• Accelerator for start-ups connecting students to the market
2. Financial cluster
• Federated bank to take citizens savings and invest in social innovation
(democracy of capital)
• Network of City based impact funds to partner with government’s Social
Innovation Fund to invest across the country responding to local
opportunities
3. Capacity accelerator cluster
• University accelerators (see point 1)
• Network of City based accelerators with 2 main foci: to transition existing
social products and services; and for system change tackling wicked
societal issues such as addiction, reoffending and school drop-outs
4. Cluster for a Civic Movement
• Organising principle and Narrative for the 3 clusters
• Collaborative Platform of Citizens
• Network of cities
The macro is hosted in every city – the ideal target is one for city in the 159 cities of
Portugal – as a “Town-hall for change”. The Town-hall for change is the hub
where clusters physically converge in their action on the ground (fig 1):
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4. "
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5. This is a call for action. We need every Portuguese to take part in the
transformation. Are you up for the challenge?
“Civic entrepreneurs are achieving change by using collaborative and open-ended
approaches to solving some of our most complex societal problems, seeding new
ideas and attracting diverse collaborators to shape their propositions. They make
innovative use of new technology, innovative finance and wider social networks.
They enable better use of undervalued resources whether physical or social. Most
importantly, the ventures they create are deeply multi-faceted ventures,
demonstrating a range of linked social, economic and environmental outcomes. If
their approach were adopted on a wider scale, the outcome would be an economy
that is more democratic; locally rooted yet globally networked; richer in
opportunities not just for economic growth but also for social development; and
pluralist, as it invites multiple forms of investment and widens the scope of players
in local economies”.
Compendium for the Civic Economy 2012
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