REVES financial programme: Mikrofonden Väst, Gothenburg
REVES, the European Network of Cities and Regions for the Social Economy, is a network of public authorities and social economy representative bodies in some 50 regions of Europe. It conceived the REVES Financial Programme in 2011, in response to its members’ long-standing need for better access to finance for social enterprises.
The programme is based on a partnership with the European-level ethical investors SEFEA (Société Européenne de Finance Ethique et Alternative) and SOFICATRA. It aims to:
- attract ethical financiers to the most promising territories, in terms of social economy development
- trigger local unused or underused resources
- generate a stable system of matching for public funding for social economy and social enterprise, of local or EU origins
REVES has developed a seven-step methodology for setting up local social economy funds:
- A REVES member identifies a need in its territory
- REVES identifies the most appropriate financial partners and products
- Territorial due diligence is carried out
- The competences of the local intermediary body are verified
- A memorandum of understanding is prepared detailing the products, the management system and the relationships between the partners
- An operational programme is drawn up, defining funding criteria and risk allocation
- The fund is launched
A single loan fund designed for and adapted to the needs of the social economy acts as a one-stop-shop and makes it easier for social enterprises to find a source of finance. It also facilitates the private matching of public funds such as those released under the ESF and EaSI. The REVES Financial Programme could have a function of ready-to-use match funding for any revolving instrument built in the framework of an ESF national programme. This would make it easier to create and manage such funds.
The first European region to make use of REVES Financial programme is Västra Götaland in Sweden, which includes the city of Gothenburg. Here, a strong partnership between the county and city authorities and the social economy exists in the form of a consultative council which developed an action plan for the sector’s development. Following the rapid growth of the social economy locally, in 2012 the City of Gothenburg and the sector agreed a compact, which led to the City investing €1.1 million to support the social economy.
The bulk of the investment is managed by Mikrofonden Väst, which grew out of a mutual guarantee association that had been established in 2005, and has grown to comprise 48 members and a capital of €143,000. The REVES Financial Programme enables this to be geared up through access to European ethical investment funds.
The programme ensures that clients of the fund also have access to business support, provided by the regional branches of the support network Coompanion.
There are plans to start similar funds in five other Swedish regions.
Lessons of regional financial instruments
- Historically support for social enterprises has come largely from public sources, using relatively unsophisticated financial instruments. This has led to a low capacity among social enterprises to access private finance, and a low level of interest from financial institutions in developing appropriate products;
- Partnerships between local authorities, social economy organisations and ethical finance providers are a win-win game, from which all partners gain: the financial partners gain easy access to potential clients, and local territories gain more resources and a better partnership between public and private funders. The initiative is also a showcase to EU and national authorities for the more efficient use of public funding;
- The partners make complementary contributions: local authorities provide finance, EU-level ethical and alternative banks gear up this finance and provide know-how, REVES makes connections and provides a political guarantee, and local social economy support organisations provide business support;
- The design of a joint fund must include safeguards to preserve each partner’s control over the use of its funds;
- It is important to work on both the supply and demand sides, by both making suitably designed financial products available, and by building the capacity of social enterprises to use them. This capacity can be built into a financial institution through partnership with local social economy support organisations.