Social bankers and alternative financiers gathered in Krakow on 7-8 September 2011 for the second Active Europe conference, they called for a European Social Investment Facility (ESIF) to finance social business.
Raymond Maes, European Commission, representing the Social Business Initiative jointly supported by Commissioners Barnier, Andor and Tajani openly backed ESIF at the conference by saying that the Commission would like to be involved with the establishment of this vehicle. He said 'there is a political momentum for the social economy and social enterprise in Brussels' and added 'the Commission recognizes the need for additional financial support'.
David Dana, European Investment Fund (EIF), confirmed that the EIF has already €50m committed from the European Investment Bank (EIB) for this purpose and the EIF is willing to work with social bankers and alternative financiers on the ESIF model.
There was widespread support for ESIF in the conclusions of the conference and, in a side event organised by Euclid Network with FEBEA, the guiding principles for its establishment were debated and finalized in a communiqué. This will be submitted to the European Commission as part of the public consultation launched by Commissioner Barnier to explore how private investment funds can support the Social Business Initiative (deadline 14 September).
The communiqué is available here for comments and subscription.
The guiding principles have been widely discussed for more than a year with practitioners from across Europe, the consultation due on 14th September has brought a sense of urgency to this work. The objective has been to formulate a bottom up solution based on their respective experience of what works in their different territories.
A task force is being established to coordinate the next steps in developing the guiding principles into a working model for ESIF. The task force plans to present this work at the launch of the Social Business Initiative in Brussels on 18 November.
The task force is grateful for the contributions of conference participants. Some are captured below together with quotes from the ESIF side event.
Janusz Lewandowksi, European Commissioner responsible for Financial Programming and Budget: 'We do not need more regulation in finance but we do need more ethics and values.
Michal Boni, Minister and Chief Advisor to the Prime Minister of Poland:'In tackling public indebtedness, we need to build a financial equilibrium which focuses on pro-development spending instead of just cutting public spending'.
Karol Sachs, Active Europe: 'We have in the network experts with over 20 years of experience in successfully financing the social economy - we are well placed and willing to help the European Commission to realize its ambitions'.
Jennifer Rowe, good.bee Holding / Erste Group: 'The facility should pay particular attention to the need to help develop the market for social enterprises by funding training and development for very early stage ventures, and when establishing the eligibility criteria to access funding, we ought to be especially cautious that the definitions used are sufficiently broad and not prescriptive so they don't stifle innovation.'
Sir Stephen Bubb, Chairman of Social Investment Business:'We are asking for investment capital, not subvention. If the European Commission allocated 1% of its 7 year budget (€870bn) then we would have €8.7bn for ESIF'
Nick O'Donohoe, Big Society Capital:'In developing ESIF to a practical level we will need to work with the European Commission in more clearly defining concepts such as social investment and social business'.
John Low, Charity Aid Foundation: 'To achieve the greatest social impact it is often necessary to take high levels of investment risk. There is a danger that the ESIF, if it is not structured to take appropriate levels of risk, will become anodyne and miss the opportunity for truly transformational social investment.'
André Laude, International Finance Corporation -World Bank Group:'ESIF aims to be a big, bold initiative... In essence, ESIF can promote a new asset class benefiting both from EU resources and institutional investors, like what European Fund for South Eastern Europe (EFSE)has achieved for microfinance and sustainable energy finance. The ultimate aim is to create a sustainable investment instrument backed by blended funding.'
Hugues Sibille, Credit Cooperatif: 'ESIF model is exciting because it uses European level funding to leverage in national level funding, and public capital to leverage in private capital - we call this "double leverage"
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