Through institution and capacity building with committed actors to boost the supply of social finance, and
By facilitating and preparing access to finance for social enterprises through capacity building that generates effective demand for social finance by developing their “investment readiness”.
Strand A: Establishment of social finance partnerships
This strand is particularly relevant for actions in countries in which the social finance market is not developed yet. It aims at addressing situations in which no suitable social finance instrument is in place, with a lack of investors prepared to launch or participate in a financial instrument. Although there is little experience in specifying a sustainable investment strategy and risk/return profile of a social finance instrument, there is some openness amongst potential investors and/or public bodies to contribute to establishing a suitable finance instrument.
In order to explore options to close the gap in supply of social finance for innovative social enterprises and to mobilise and commit potential investors and stakeholders to cooperate, the grant aims at reducing the risk of engaging in the first steps towards a social finance instrument by facilitating the development of a consortium and commitment to act. It is also meant to encourage learning from good practice examples and expertise that can guide the formation of this partnership.
Strand B: Establishment of social finance instruments and mechanisms
This strand is particularly relevant for actions in countries with a relatively low level of development of the social finance market. It aims at addressing situations in which there is no suitable social finance instrument in place and potential investors and intermediaries lack expertise that can guide the drafting of contractual agreements needed for setting up a financial instrument.
In order to mobilise and commit potential investors and stakeholders to act and to cooperate with a view to setting up a financial instrument, the grant is meant to reduce the risk of innovation in the social finance market by facilitating the acquisition of specific expertise in this field.
Strand C: Establishment of collaborative funding models for social enterprises
This strand is particularly relevant for actions in countries in which different types of actors are already operating in the social finance market, but in isolation. As a result, these different types of social finance providers (foundations, social investors, public authorities, notably ESF managing authorities) apply a broad range of incoherent and unrelated eligibility criteria return expectations, conditions for repayment, requirements for accounting and reporting etc. In addition, there is a lack of transparency which makes it difficult for social entrepreneurs to develop an efficient mix of funding sources. The absence of suitable platforms, market facilitators (such as qualified intermediaries and market places) or business angels has prevented cooperation between investors, donors and public authorities.
In order to improve the availability and effectiveness of suitable and needs-oriented financial instruments for social enterprises, this strand aims at mobilising and committing potential investors, donors and providers of business development services to co-operate with a view to finding innovative approaches to providing finance to social enterprises.
Strand D: Development of investment readiness support for social enterprises
This strand addresses the insufficient investment-readiness of social enterprises. Even in countries where there is a large pool of capital willing to invest in social enterprises, investments often remain complicated as social enterprises are not "investment ready". This can be explained sometimes by their low interest in repayable financial instruments due to an orientation towards the so-called grant economy, but also by a lack of necessary documents such as impact reports or business plans and insufficient experience in making proposals for external financing, or for combining different sources and types of finance (e.g. grants/loans). In many countries, the quality and quantity of start-up and business development services for social enterprises (incubators etc.) is unsatisfactory.
In order to generate a pipeline of social enterprises prepared to access social finance, including under the EaSI programme and the future structural funds, this strand aims at improving the offer of specialised, experienced quality assistance and advice that help address social enterprises' weak capacity in acquiring external financing or for combining different types of finance.
DURATION: max 12 months
FINANCING:
total budget available: 1M€. Financing 80% of eligible costs.
- for strand A: EUR 75 000
- for strand B: EUR 125 000
- for strand C: EUR 125 000
- for strand D: EUR 100 000
