07 July 2014

Reves financial programme – Gothenburg Initiative

The case of financial support for social enterprises in Gothenburg (Sweden)

Authors and organizational affiliations:

Luigi Martignetti, REVES; Sven Bartilsson, Coompanion Gothenburg

1. Background: the need of tailor-made financial instruments for social economy enterprises

Since the very creation of REVES (European Network of Cities and Regions for the Social Economy), back in 1996, the shortage of appropriate financial instruments for social economy enterprises at the regional and local level has been an outstanding issue in all discussions.

Different ways to cope with the need of resources for these kind of enterprises have been experimented along the decades, primarily based on funds of public origins, often characterised by a low level of technical sophistication. Such an approach, while useful in order to back the development of the system as such, engendered a low capacity of the sector to properly use financial tools, on the one hand, and a scarce interest from the side of financial institutions to understand the specificity of the sector and develop appropriate instruments, on the other.

This combination has started to put some serious problems since 2008-9. Indeed, face to a constant reduction of public funding availability, both social enterprises and financial institutions, with few exceptions, showed little readiness to react by shaping a new system of relationships between social production and financial providers.

Anyhow, as said, exceptions exist. Large part of these exceptions is grouped under the definition of Ethical and Alternative Financing, which represents to date an important hard-core of resilient financing for social enterprises.

In the REVES view, there is at least another “exception” that can be mobilised in order to improve the financial capacity of local communities in favour of social economy enterprises, that is the one represented by local unused capitals and potential ethical and community investors.

Starting from 2011, REVES decided to set up a programme aimed at a) attracting ethical financers to the most promising local contexts, in terms of social economy development; b) triggering local unused or under-used resources; c) generating a stable system of matching of public funding for social economy and social enterprise, of local or EU origins. This last aspect sounds very promising in view of the prescriptions in the ESF regulation 2014-2020 and in the new EaSI programme.

The specific context of Gothenburg provided a very good test bed for the concrete application of the REVES approach.

Gothenburg and West Sweden have had a thrilling development of social enterprises the last decade. The region Västra Götaland have 1,5 million inhabitants.

6% of all companies in Västra Götaland are social economy organisations. 4,2 % of the region’s employees are employed within that sector. The number of cooperatives increases every year. In 2013 25% more cooperatives then 2012 were started in Gothenburg.  Gothenburg Coompanion has supported more start-ups than the other two big urban areas in Sweden together. The region has also been the leading region in the development of work integration social enterprises.

In 2001 the umbrella organizations in Göteborg created the association Göteborgs Regionens Social Economy (GSE) which had an important role for the development as a negotiating body for the sector.

The early steps of the development were in spite of political support. But the Region did already in 2004 understand the potential of the social economy for the regional development and created a council together with the sector to monitor and develop, on a dialogue basis, an “action plan” for the Region for their support to the development of the social economy. The members of the council are MPs of the regional parliament and representatives from the networks of the social economy.

After discussions between the organized social economy and the City of Göteborg a council for dialogue with two politicians, civil servants from different administrations in the City and eight representatives from the social economy was set up in 2010 and in 2012 the City and the sector made an agreement (compact). This agreement between the City of Gothenburg and social economy aims to strengthen opportunities for collaboration between the city and the social economy as well as for individual citizens to participate in the democratic process and to find concrete expression to their social engagement. A common vision is: “Gothenburg is a city where residents get involved and where the commitment is utilized.”

The City government has developed an action plan, in close collaboration with the sector, on how to implement the commitments the city has made in the agreement.

In 2005 the social enterprise sector started a Mutual Guarantee Association (Kreditgarantiföreningen Social Ekonomi), which in 2013 was rebranded Mikrofonden Väst. It operates in the whole region and has mostly guaranteed loans among its members.

As a result of one of the commitments, to cooperate in the creation of new ways for the financing of social economy, in the Agreement, and with the support of the REVES financial programme, Göteborg City decided in February 2014 to make it more easy for social enterprises to find financial resources by providing the sector with 1,1 MEUR, most of which will be invested in a common programme and managed by Mikrofonden Väst.

Since seven years, due to the establishment of Mikrofonden Väst, there exist a collaboration on financing social enterprises between Gothenburg City, the Region, Almi Företagspartner AB which is owned by the Swedish government and provide SME with loans, established social enterprises, and cooperatives. This collaboration is a good ground for taking the next step, to formalise the financial support structure in this project.

2. Summary of main characteristics of good practice approach

The REVES Financial Programme is set in order to (1) promote the development of social economy organisastions by (2) improving the availability of targeted financial products and (3) the capacity of social economy initiatives to access and properly use them. In order to achieve these objectives, the REVES Financial Programme seeks (1) to make available previously untapped resources both of exogenous (2) and endogenous origins, together. This is achieved by mobilising a partnership made of EU level ethical and alternative (or in any case social economy-based) financial facilities and local public and private facilities. In facts, the role of the exogenous facilities is also to act as a trigger for local additional funding.

Concretely, the programme follows a basic path, to be adapted to any specific situation:

  1. a REVES member identifies a need in its territory, in terms of financial products devoted to the social economy; on that basis, makes a call  to REVES to activate the REVES Financial programme. Besides being a REVES member, a pre-condition to activate is a clear and substantial will supported by a concrete possibility (in terms of available resources) to devote local resources to a programme aimed at developing social economy. In order to back its request, a member should ideally state from where it foresees to get the needed match-funding available.
  2. following the analysis carried out by the its member, REVES identifies the most suitable external partners interested to provide the most adapted financial products to the specific territory (products might be equity, debt products, guarantee products, microcredit products or any specific mix of them. In exceptional cases, a part of grant-based products can be also selected). The external financial partners enter first of all in a relationship with the REVES financial programme, that is to say with the REVES. The role of REVES is not in this phase a mere advisory one, being REVES a part in the partnership and in the (potentially) following agreement. In this sense, REVES provides a role of “political” guarantee for all the parties.
  3. the so created partnership identifies a local facility to support the carrying out of a sort of “territorial due diligence”. In particular, the due diligence will have to focus on the existence of preconditions to activate the REVES financial programme. The main focuses will be on a) the availability of public funds and other local funds to match the proposed financial products; b) the existence of a real need for financial products
  4. the partnership will then check the competences of the proposed local intermediary body, identify possible shortcomings (if any) and the need for integrative competencies to be provided
  5. once points 3 and 4 are accomplished, and once the availability of match funding of local origins is confirmed, the partnership elaborates a Memorandum of understanding defining a) the kind of products to be made available; b) the management system of the programme; c) the relationships among the partners - be they providers or managers - and among the funds.
  6. The next step is the operational programme, defining the rules and procedures for a) distribution of risks among the different providers; b) definition of (main) criteria for funding.
  7. The REVES programme is ready to start providing financial products.

As said, these 7 steps have to be adapted to the local context and might follow a non-linear process, with frequent returns.

The case of the activation of the experience in Gothenburg is a good example of how the Financial Programme concretely works.


The Mikrofonden Väst is a response from the sector on the insufficient supply of capital for social enterprises. Initiated by Coompanion to fill this gap in the market and to demonstrate the opportunities for social economy to be less grant dependant Mikrofonden today have nearly 50 members.

Mikrofonden Väst has throughout the years been financially involved in thirty businesses, mainly cooperatives. Twice as many have received advice and guidelines from Mikrofonden Väst. Thereby making a great impact on the growth of social economy in Västra Götaland.

The thirty businesses that have been funded are mainly cooperatives, and a lot of them have been work integration social enterprises. A number of these have been fairly new and the support has facilitated the development and growth. A large segment has been cooperatives with sustainable objectives (with product or services in the green economy). The businesses have had 3-30 employees, a yearly turnover ranging from 21 000 € to 1 million € , the average number of employees being approximately 5 and the average turnover being approximately 320000€. Between 2006-2013 only three involvements have made a minor loss. All others have complied with their commitments, which shows a sustainable business for both Mikrofonden Väst and for the clients. The biggest obstacle for further growth has been the available capital invested by the members, 130 000€. With more capital it would have been able to commit in even more investments with larger needs. Bringing in more capital to Mikrofonden is vital in order to meet the needs.

Mikrofonden is present all over the region with strong regional and local roots.

It gather businesses of all sizes and from all areas of social economy business and has 48 partners, primarily established and new cooperatives, regional development councils and banks.

The organisation is a cooperative (one vote per member) and several partners have contributed with institutional capital in addition to member share capital.

Today the Board of Mikrofonden Väst consists of six members and two alternate members. The members of the Board of Directors have a wide range of competence and have deep roots in the region and in its social economy sector. The members have banking and funding experience and have experience of starting and establishing cooperatives as well as knowledge in economics and business development. The Board elects a business manager who is responsible for the everyday running of the business.

Thanks to the co-operation with four local cooperative development centres, (Coompanions) present in the region, Coompanion Skaraborg, Sjuhärad, Fyrbodal and Göteborg local roots and understanding are established. This results in good knowledge about the applicants leading to a decreased risk of loss. It also gives a way to provide business advice to the enterprises.

Mikrofonden operates very often in close collaboration with other financial actors. A number of small funding cases  has been funded by Mikrofonden Väst in co-operation with Almi Företagspartner (governmental fund for SMEs) and Stiftelsen Kooperativt Nyföretagande (Fund administrated by Göteborg City for cooperatives). It is an efficient way for the client and reduces the risk for Mikrofonden. There exists also a close co-operation with Ekobanken with regards to bank loans and group savings.

The organisation has developed during these years; administrative routines as been established, the work of Board of Directors has been specified, the assessment method for funding cases has evolved and become more professional.

Region Västra Götaland has since the beginning co-funded the business and the Swedish Agency For Economic and Regional Growth has been a co-funder for several years. This has allowed for marketing and information campaigns, the handling of cases, funding and follow-ups of those granted credit guarantees and financial cases.

Mikrofonden Väst has built a stable platform and is prepared to take next step.


REVES have three members in West Sweden. Coompanion has been member for a decade. The Region Västra Götaland became member as a part of the launch of the first action programme for development of social economy and Göteborg City became member after setting up the Council for dialogue between social economy and the City.

There is a commitment in Göteborg from both the City Council and the social economy actors to develop new alternative models for financing social enterprises. Being a member of REVES is seen as a way to create relations and network with social economy actors in Europe. REVES was able to help Göteborg to find partners as Sefea and Soficatra and create a cooperation between the partners themselves.

3. Evidence/Justification for Good Practice

Although still in its beginning experiences, the practice should be considered a good one under several aspects.

In the first place, it seeks to improve and rationalize the provision of financial products in favour of social economy. A single programme, designed and adapted to the needs of social economy, is clearly a more easy-to-access tool for social economy players. The fact then that such a programme is able to deliver different kinds of products, in the same place (like a kind of one-stop-shop), makes it more efficient and effective the research for products from the beneficiary.

Another (probably the most) interesting evidence of good practice relates to the fact that the programme foresees a match of funding and products. This would maximize the impact of both private and public funding. Keeping an eye on the provisions within the general regulation for the ESF 2014-2020 (and the EaSI programme), the potential of such a good practice is of evidence, as it would allow public body to easily find the required match funding for any financial product aimed at supporting the development of social enterprises.

In Gothenburg there already exists a close network and cooperation, and therefore it will be quite efficient to implement a program

3.1 hard evidence:

The most important hard evidence relates to the availability of fresh financial resources for local social economy players. Using the Gothenburg’s experience as a term of reference, the availability of products managed by Mikrofonden will have a 1:10 ratio.

Mikrofonden Väst has showed the need for an actor with apprpriate skills to provide financial products for social enterprises. 30 investments, mainly guarantees, but also direct investments, have helped the growth of 30 social enterprises. And these cases could be used as reference in this initiative.

Today there is a project to start or restart regional Mikrofond in at least five more regions in Sweden. They are interested to learn of this experience.

3.2 soft evidence:

Although a complete evaluation was not carried out yet, one may identify different soft evidences showing that this is a best practice.

  1. The partnership built around the initiative, both at the EU level and in the specific territorial case (Gothenburg). Indeed, since the beginning, REVES managed to get the interest and the expression of intent from two major companies for ethical and alternative financing (SEFEA and SOFICATRA), as well as to attract the interest of some key Foundations (members either in EFC or EVPA). Such a core partnership, that can be improved according to the specific needs, was not evident to achieve. The Programme shows a typical example of win-win game, where all the organisations will get some benefit from the initiative (indeed, the financial partners have an easy access to potential client organisations, while, at the same time, from the point of REVES, this initiative allows to a) provide more efficient resources into the local contexts; b) improve the partnership between public and private funding; c) provide a showcase to EU and National authorities for a more efficient use of public funding.
  2. Mikrofonden will get knowhow and experience from the European partners and experiences from other regions. This will improve the quality of the service and help to develop a better risk’s management.
  3. A third soft evidence comes from the concrete example of Gothenburg, where the initiative from REVES probably was something that helped the City to decide to put most of the 1,1 MEUR for helping social enterprise finance under the administration of Mikrofonden Väst
  4. A fourth evidence can be seen in the engineering itself of the Gothenburg local financial partnership, that could be seen also as a test for future similar experiences, also concerning the ESF funding. Indeed, in order to keep the independence of the funds, and the final mastering by the local and international partners, an appropriate system of relationships was built, with a clear distribution of tasks and competences, where a) the international partners keep their investment under control, by either participating in the managing board or in the selection committee and by making their products available either according to a retail scheme or by directly supporting a common fund. B) the local public bodies keep their funds under control by using the existing financial bodies and establishing a conventions with the other partners. All this needs are traduced into a memorandum of understanding and prelude to an appropriate management’s regulation.
  5. Today there is a project to start or restart regional Mikrofond in at least five more regions in Sweden. They are interested to learn of this experience and are encouraged to develop their services in the way it is done in West Sweden.

4. Context and history of how it developed

As stated in the introduction, the experience is very much based on a) the REVES Network heritage (18 years of activity), b) the inner analysis of REVES’ territories needs in terms of financing for social economy, and c) the external network REVES was able to establish along the years, namely with ethical and alternative financing bodies.

The Financial Programme was first conceived in 2011, to respond to a need expressed by REVES members during the annual general meeting.

The years 2011-2012 were devoted to the building up of a basic (political) partnership between REVES and the two ethical and alternative financial companies SEFEA and SOFICATRA. During these two years, a series of questions had to be solved:

  1. why it would have been interesting for EU-level financial companies to participate in such a programme
  2. what should have been the role for EU-level financing and how these resources should have work together with local resources. The problem here was a) not to substitute or overcome local bodies and local partners; b) how to make the programme to work without infringement of any EU or national rule (namely concerning competition). This second point required the definition of main fields of analysis at the EU level (namely State aids rules), but could not be solved once and for all, as specific national rules have to be taken into consideration as well. In any case, the experience of REVES proved to be essential in order to develop a background of knowledge to support such partnerships
  3. how the relationship between EU-level funds, public funds and other local potential financial stakeholders should have been dealt with, in order not to risk unfair competition with existing local programmes to support social economy. In order to solve this point, it was decided that the first step in the (territorial) diligence should be to identify and contact potential local financial partners.

Starting from 2012, REVES launched a call among its members to identify those who were interested/in need of using the Financial programme. The membership in REVES is not a marginal point: indeed, the fact that these territories are members means that there is already a rather good knowledge of the local conditions (and of each other), a track-record of initiatives and of successes and shortfalls in local financial programmes. This shorten in some way the preparatory phase, on the one hand, and allows to work with reliable partners (not to be neglected), on the other.

The first two local partnerships reacting to the call were the partnership of the Province of Ravenna and the partnership from the Gothenburg area. After a first series of meeting, it became clear that the partnership from Gothenburg was in the pipeline to start to the process.


Coompanion Göteborg did some research in 2002, which showed the need for better financial tools and opportunities for the social enterprises. But the research also showed that many of the social enterprises didn’t seek investment or loans for development. The mindset of the sector was on seeking grants, and if you didn’t get any grants there was no development.

During the Equal program Coompanion developed 10 social enterprises, mainly based on the need and ideas from immigrant communities in the disadvantaged districts of the city. The financial exclusion of these groups and enterprises made it obvious that there was a need to develop new financial solutions and the initiative to create what today is known as Mikrofonden.

Due to the history of collaboration among Mikrofonden Väst, Region of Västra Götaland, City of Gothenburg, and Coompanion, it has during the years evolving the needs of gaining more capital to the social economy sector, the shortage of capital is the limit to engage in larger cases. The Region of West Sweden has a genuine interest, policy and strategy to improve the expansion of social economy, the City of Gothenburg have needs of more ways of solving the problem of exclusion in the suburbs, all these are signs of the need of more financial products to the sector.

5. Policy framework, including funding

The policy framework is the one that was previously described.

As for the funding, it is relevant to recall the origins of different parts, in the specific case of Gothenburg initiative:

  1. Public funds from the City of Gothenburg
  2. Financial products from SEFEA and SOFICATRA
  3. Financial products from Microfonden, generated by the organizations in the social economy.

Each initiative is clearly open to any additional fund that could join. These might be EuSEF, ESF or any other kind of funds that might be of use (and interested).

Once again, it is worth to underline that the REVES financial programme could have a function of ready-to-use match funding for any revolving instrument built in the framework of the ESF national programme. This would allow to make it easier to create and manage such  funds.

6. Outcomes (for different stakeholders)

Main outcomes could be summarised as follows:

  • For local social enterprises: improved availability of tailor-made products
  • For the local system of social enterprises’ support: an independent financial instrument to back any strategy for SE development
  • For local authorities: an appropriate instrument to attract exogenous capitals for SE and to make more effective the use of own funds
  • For the local socio-economic system: a financial partnership gathering public, SE and financial partners
  • For local politics, new instrument to solve social dilemmas
  • For the citizens, ways of mobilising local capital, directed to cope with local needs.

7. Strengths and Weaknesses

The major strength of the REVES Financial programmes is in the capacity to mobilize exogenous financial instruments in favour of local SEs, that might not be available otherwise.

A second strength is in the rule about match fundings, that allows, on the one hand, to mobilize untapped public resources and to make better use of them on the other.

A third strength is in the flexibility of the instrument to adapt to different contexts and provide tailor-made anwers.

A fourth, is the sharing of risks and competences, and thus rising in the quality in due diligence and in practical financing.

A fifth, is that finance strengthen the sector itself and empowers the sector, due to the possibility to engage in memberships in Mikrofonden Väst.


The members of the association and Board are the most important tools for a successful business. Mikrofonden Väst has a small formal organisation that operates in an environment with many players. A collaboration is implemented with the four local cooperatives’ development centres, Coompanion in Västra Götaland, for advice and business development.


The major weaknesses relate to a) the capacity of local territories to gather in partnerships able to use (or even to demand) the programme and b) the sometimes complex engineering of local programmes from a financial point of view, due to the necessity to respect EU competition laws and the sometimes not linear application of EU rules at the national level. This means that each case has to be treated in a different way, under this point of view, thus creating sometimes delays.

Another weakness is that the sharing of risks and returns on investments needs to be dealt with, as some capital can be too expensive for the sector and, from the other point of view, some initiatives could be too risky.

An important obstacle is the cultural differences between countries in the different sectors. The strongest incentive of all partners is to reduce the risk.

8. Comparisons with other experiences (alternatives or complementary - in same territory or elsewhere)

There are obviously several experiences of financial programmes having an international background and devoted to the development of social economy enterprises. One could quote the well known example of COOPEST.

The specificity of the REVES financial programme lies in the use of the partnership between public and SE players (as one may argue, coming from REVES!). Indeed, the partnership is at the same time the basis (a political partnership shall exist in order to ask for the a local programme) and the objective (a financial partnership has to be created in order to make use of the programme).

Examples of public-private partnership can obviously be quoted as well, also going through the track-record of the ESF 2007-2013, and some of them proved to be quite effective (while some others proved to be very bad!). But, as far as we know, this is the only case in which the partnership is backed by a EU Network of public authorities and a network of (ethical and alternative) financial partners..

On national level there are some initiative, which can be of use for this initiative, for example the projects towards social innovation, which is mastered by Tillväxtverket.

During this year 2014, about 5 new Mikrofonden will start in other regions of Sweden, and this can be used as reference to our work.

9. Assessment

The application of the REVES financial programme in Gothenburg was based on some already quoted pre-conditions that need to be recalled here, as they were also mentioned in the discussions within the SEN network:

  • in the first place, there is in Gothenburg a well–structured and strong social economy movement, rooted in the local context and in the socio-economic (recent) history of the area
  • this social economy movement has developed common bodies to support and further develop. Coompanion Gothenburg is indeed a very good example of development agency created by the sector itself. Mikofonden (formerly KGF) is, on its side, a good basis on which to built new financial tools; it confirme at the same time the existing interest of the sector for this dimension of social economy (and social enterprises) development.
  • the public sector has been supporting social economy development since a while now, both at City and at regional level, notwithstanding changing of political balances (namely at the regional level). This surely represented a fertile ground on which to seed the idea of the REVES financial programme and it led to the growth of the programme itself, with the decision to provide matching resources out of the local budget.
  • last but not least, Coompanion, City of Gothenburg and Västra Götaland Region are all members in the REVES network.

This might lead someone to argue that the experience cannot possibly be replicated in different contexts, where all these pre-conditions are not met.

In facts, although the Gothenburg’s one might be considered as an ideal situation[1], in terms of pre-conditions, there is no counter evidence showing that these pre-conditions need to be all met in order to start such an experience. Taking the key factors of success one by one might help clearing this point.

  • a well structured social economy movement was in Gothenburg a pre-condition, but it is also an objective of the programme. Indeed, the basic idea was not to help a social economy movement to survive, but rather helping it to explore new instruments to improve its capability, by providing not only the financial tools, but also capacity building to learn how to deal with such financial tools. One could therefore say that the existence of some social economy tissue is a condition; even more than this, one could say that the existence of someone (a social economy initiative) willing to steer the programme at the local level is enough to start with the experience. Indeed, the REVES programme is flexible enough to adapt to different contexts, this is why a feasibility analysis (diligence)  is foreseen at an early stage.
  • The existence of common representative/technical bodies related to social economy, for sure boosted the development of the programme in Gothenburg. But also in this case, the structuring of appropriate technical bodies can be considered as a first step of the programme. Some similar experiences, as the one of COOPEST (but where local authorities are not directly involved) show that these kind of programmes might be able to generate appropriate structures, in the local context. The same use of ESF provisions might lead to this, if used according to a common programme, maybe under thematic objective 9 of the new ESIF regulation.  
  • Support from the public sector was, in the considered application of the REVES programme, a basic condition, provided that the match funding came from the local authority (City of Gothenburg) budget. This is totally coherent with the REVES approach, that is to promote partnership initiatives involving social economy and local authorities on equal footing. But this key feature of REVES is also one of the objectives of REVES (to support the development of partnerships at local and regional level). This means that REVES might enter in common programmes having among their aims to support the development of social economy and social economy-based partnerships even without the involvement of all the players since the beginning. Taking again the ESF (2014-2020) regulation as a starting point, the REVES programme might match local implementations of operational programmes aimed at developing the financial capacity of social economy. 
  • Last pre-condition was the membership of local partnership in REVES. This is a condition enshrined into the REVES programme, as it is at present. But this does not mean that the same structure of the REVES programme might not be replicated by other programmes…simply not counting on REVES’ experience, competence and network.


Finally, the programme that was presented here as a model should be built around a series of keywords (will, flexibility, adaptability, sustainability, networking, capacity building…) and keeping in mind the need to collect different competences - from home or from abroad - in order to make it work (relational capacities, programming capacities, financial capacities). The architecture to be built around these pillars depends very much on local culture[2] and context.

[1] but in other ideal situations, characterized by very similar conditions, the programme did not even start, eg. Ravenna area in Italy

[2] coherently with the REVES-TSR approach…but this is another story