Social economy at Ministry of Labour and Social Affairs

Support of the SE co-funded from EU funds

26th June, 2012

Brussels

Marek Jetmar, Linda Maršíková

Context• This example presents challenges that

support provider (policy maker, ESF MAS) encountered in a situation where trying to promote still weak, undeveloped social entrepreneurship.

Context• This example became subject of screening by

Financial instrument strand of the NBFSE• The aim of the Financial instruments strand,

which was led by the Czech Ministry of Labour and Social Affairs (ESF HRE OP MA), was to contribute to implementation of more efficient and complex mechanisms of financial support in the new EU programming period 2014+

Context

and to streamline existing support, to increase the impact of support from public sources and to contribute to better expertise of staff involved in the implementation of support from the ESF or ERDF.

Agenda • Recommendations by FI Strand

• Support of the SE in the Czech republic

• Support from EU funds

• Examples of a good practice

• Next challenges

Recommendations by FI Strand• Increase of co-operation between the financial sector, NGOs

and the public sector in providing funding for social enterprises is necessary (both investment and working capital, common products, guarantees etc.);

• Mobilization of local financial intermediaries (credit unions, ethical banks etc.);

• Set up of integrated support schemes allowing the use of various types of financial instruments and their combination (grant mechanisms, loans using financial engineering instruments);

• To make funds available for the different stages of development of social enterprises.

Recommendations by FI Strand• It is efficient to couple the investment in social enterprises with

investment in human capital. The ESF should be significantly focused on strengthening the capacity of social entrepreneurs and their employees, using already existing or developing new business support services for coaching and mentoring of social enterprises.

• Ensuring access to capital without the corresponding business services (advice, coaching, mentoring) only partly helps the development of social enterprises.

• It would be appropriate to continue to strengthen the ability and capacity of MA and other policymakers to create integrated financial mechanisms co-funded by the ESF or ERDF.

Support of the SE in the Czech Republic

Social economy in the Czech Republic STATE OF PLAY

• Very small number of social enterprises in the CR• Slow development of social economy• Reasons?

– Interrupted tradition of a social entrepreneurship;– Discredited cooperative movement;– Weakness of NGOs, limited ability to carry the business

risk;– Conservative positions of political representations.

Support of social entrepreneurship in the Czech Republic is limited – 2 pilots

• The Czech Savings Bank provides micro loans for social enterprises as a private initiative (pilot project) – related to CSR.

• Ministry of Labour and Social Affairs (MoLSA) distributes the European funds for the establishment or development of social enterprises.

Support to the Social economy, activities of the MoLSA

Needs• growing population at risk in the labour market - the

disabled or handicapped, young and graduates, older 55+ • efforts of future entrepreneurs and non-profit sector

managers to start social business• enthusiasm of social entrepreneurs but lack of business

experience• financial weakness of the NGO sector - impossibility of

direct support to emerging social enterprises• insufficient assets of SE to guarantee loans

NeedsOligopolistic financial system - absence of credit unions, small banks, ethical banks

No available funds for social business

Use of the ESF (ERDF) resources in the form of grants can address this situation:

– investment funds (technology, technical equipment, production facilities, licenses etc)

– working capital (management, marketing activities, contribution to wages, social and health insurance etc)

Support to the Social economy at MoLSA (3.1 HRE OP to 3.1c IOP)

• Support is provided by two calls for proposals• Each call is from another OP• Very close link between 2 OPs was created to

promote the social economy• Similar projects can be submitted simultaneously

to both calls

Global grant (HRE OP, ESF) – call N.30

• Grant for social enterprises, provided from the Human Resources and Employment Operational Programme (HRE OP, ESF);

• Non investment call, focused on the support of the creation and development of new business activities dealing with social entrepreneurship.

Global grant “Investment support of social economy”(IOP - ERDF) – main characteristics

• Grant for SE - same conditions, target groups („mirror“ – conditions like ESF Global grant).

• Supports creation and development of new business activities of SE, but Investment activities

• Minimal rate of private financial participation is 20%;

Supported activities• I. The new business activity / capacity expansion

of the SE• II. New business activities of self-employed

(without employees) – which are also the persons referred in the target

groups – their businesses in local community has social,

environmental and economic benefits

Applicant has to meet the following criteria• min. 40% of employees come from the

disadvantaged group,

• employees are involved in a decision making about the SE,

• SE has an inovative project and a realistic business plan

And how about the social economy?

• profits are used for development of social enterprise (min. 51% re-invested in SE) and / or fulfilment of public benefit purposes,

• According to the general social economy principles (defined in a Call).

State of playCall N. 30• In these days approved

amount EUR 6,6 mill. (65% of allocation) for the projects;

• Completely assessed 272 projects - 48 supported, i.e. 17% success rate;

• 5 projects have been finished• 225 supported persons

Calls N. 1 and 8• Completely assessed 200

projects, supported 36 projects – cca 18% success rate;

• Currently 12 projects implemented

Preliminary evaluation of outputs• Predominance of target group - people with

disabilities.

• Legal status of applicants - most Ltd., further generally beneficial companies, cooperatives, self-employed.

• Type of busineses – hospitality (restaurants, cafes, guest houses), services (technical/ cleaning services, construction, laundry, printing center), machinery manufacturing.

Good practises

• The first two projects were succesfully finished and enterprises still exist

• The third projekt is still in implementation phase

• All were supported by call N. 30

Examples of SE supported by the OP HRE - Institute for Monuments and Culture• Company operates web portal www.propamatky.info • employed 3 persons with disabilities

Examples of SE supported by the OP HRE – Pracovní Sobota Ltd.

• providing horticultural and cleaning services in the Pilsen region

• employs 14 persons with disabilities.

Examples of SE supported by the OP HRE – Project „AC AERO - cultivation of countryside of the Odry region” • offers gardening services,

cultivation of green vegetation

• maintenance and reparation of smaller buildings

• key project activity is also individual consultancy for Roma employees

Next challenges• Increase of institutional support for the development of

social entrepreneurship, set up of close links between SME policy and social business support,

• Increase availability of capital (both investment, working) by mobilizing financial providers),

• Together with partners to develop new financial tools (loans, guarantees, venture capital),

• Create a favorable social business climate, • To provide pre-fund and follow-up care.

Social economy at Ministry of Labour and Social Affairs

Thank you for your attention

Marek Jetmar, Linda Maršíková

If any questions, please email me at

linda.marsikova@mpsv.cz