21 January 2015
Policy lessons in finance
- Financial instruments to support social enterprises should combine different types of financing, so that they are appropriate for all stages of the business life cycle. They should combine grants (or start-ups) with loans for established businesses. they might include equity and guarantee instruments
- The size of the funds can be increased by matching Structural Fund contributions with money from cooperative or ethical banks, impact investors, philanthropic trusts and corporate social responsibility funds.
- Instruments implemented cannot just be reproduced or copied from previous experiences. A tailor-made approach is required;
- The operational management of funds should be organised and located as close as possible to the field. Public authorities that are not confident to manage loans should seek out social finance institutions as partners;
- However it is not necessary to set up a separate fund in each local area. So long as there is a partner with local knowledge, a fund can be based elsewhere. National funds should have regional access points;
- During the test phase of a new financial programme, the administrative and structural processes should be flexible and adjustable;
- Capacity building should be promoted for all stakeholders (managing authorities, local authorities, financial institutions and intermediaries, social enterprises);
- There is significant scope for transnational collaboration in social finance – perhaps supported by the new EaSI programme;
- Social enterprises should not be afraid of social impact measurement, so long as it is well-designed, proportionate and uses qualitative criteria;
- An often overlooked source of finance is local citizens, who are often keen to invest in social and environmental projects through crowdfunding.