Global grants in the Czech Republic
In the 2007-2013 Structural Funds programming period, the Czech Republic established two global grant schemes:
- The Social economy global grant, funded by the ESF, supported the creation and growth of social enterprises which would integrate disadvantaged people into the labour market;
- The Investment support for the social economy global grant, funded by the ERDF, supported investment in new businesses that would create an income for their founders as well as local employment.
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Their objectives were at three logically related levels: to include disadvantaged people in the labour, by establishing and developing social enterprises – and also to find a suitable social enterprise model for the Czech Republic. While the first two objectives were achieved, the third was not since the scheme financed only work integration social enterprises.
The schemes ran from 2009 until 2013. €15.8 was disbursed under the ESF programme and €5.6m under the ERDF programme. The impact was that 157 work integration social enterprises and 827 jobs for disadvantaged people were created, at a cost per job of €22,447. The estimated saving to the public purse is €6.5 million. Three-quarters of the enterprises supported are sustainable after the end of the grant support.
The administration of the two schemes was not without its problems. The original idea had been to operate a global grant with an integrated approach and a different application procedure. However in the event two parallel calls for proposals were issued, and each was administered separately, according to different rules, though with some coordination between the two ministries involved, and with consultation with social enterprises.
The rate of applications was slow at first, but slowly grew after the rules were amended (some were relaxed, some were strengthened). A particular problem was that the standard ESF evaluation form did not allow for business plans to be properly evaluated. The success rate of applications was quite low (around 16%) even after amendment and resubmission.
Lessons of global grants
- Financial support for new social enterprises should be accompanied by business support. This would best be provided through a support structure with regional branches.
- The conventional ESF evaluation procedures need to be adapted when supporting social enterprise. For instance rules that disincentivise profit-making (for instance by clawing back any profits made) should be amended, and evaluation procedures should be adapted to enable business plans to be properly assessed. The key success factors are experience of entrepreneurship and a good business plan Future schemes should place more stress on evaluating economic viability and less on social impact.
- Inappropriate types of support can damage the reputation of social enterprise, by supporting weak and unsustainable projects
- Two factors impeding state support for social enterprise development are a lack of cooperation within and between ministries and the lack of a definition of social enterprise which would justify state support. A department with specific responsibility for social enterprise policy should be established.