CFPs: Actions to Boost the Development of Finance Markets for Social Enterprises

The call is launched in accordance with the 2023 Work Programme and will be managed by the European Commission, Directorate-General for Employment, Social Affairs and Inclusion (DG EMPL).

This call for proposals is financed under the Employment and Social Innovation (“EaSI”) strand of the ESF+ which is a European-level financing instrument managed directly by the European Commission. It provides financial support to achieve high employment levels, fair social protection, a skilled and resilient workforce ready for the future world of work, as well as inclusive and cohesive societies aiming to eradicate poverty. Article 25 (g) of the ESF+ regulation on the EaSI operational objectives provides for support to develop social enterprises and the emergence of a social investment market, facilitating public and private interactions and the participation of foundations and philanthropic actors in that market.

Moreover, in the 2021 Communication from the Commission ‘Building an economy that works for people: an action plan for the social economy’, the Commission announced its intention to complement financial instruments with grant support for building social enterprise finance markets in Europe by supporting the setting up of new financial instruments and investment readiness programmes.

This action plan seeks to enhance social innovation, support the development of the social economy, and boost its social and economic transformative power. Enhanced support to the social economy not only creates jobs, but also allows organisations to increase their social impact across the EU and social enterprises.

According to the 2023 Work Programme, this call is expected to contribute to the development of feasible, suitable, and reliable schemes or funds providing finance to social enterprises as well as support structures providing business development services and networking facilities to improve social enterprises’ investment readiness.

Objectives

• The objective of the call is to develop social enterprise finance markets by bringing together the supply and demand side actors to facilitate the creation of financial instruments and to prepare social enterprises for investments.
• The call is particularly relevant for actions in countries/territories with young social finance markets. It addresses situations in which:
  • No suitable financial instrument for social enterprises is in place or existing instruments do not adequately cover the needs of social enterprises.
  • While there is already a basic understanding of market needs, funding gaps and potential investors, different actors operate in isolation and are not yet prepared to participate in a financial instrument for social enterprises.
  • Potential investors, intermediaries and banks lack the expertise that can guide the drafting of contractual agreements needed for setting up a financial instrument. There might also be a lack of capacities and tools to assess the viability of business plans, design investment strategies and evaluate social impact.
  • Even if business development and investment readiness support structures/programmes that cater to the needs of social enterprises are in place, there is either an unmatched pipeline of investees or potential investees lack business development and investment readiness/follow-up support. Although there is little experience in specifying a sustainable investment strategy and risk/return profile of a social finance instrument, there is openness amongst potential investors, intermediaries and/or public bodies to contribute to establishing a suitable financial instrument and related business support services.

Themes and Priorities

• The grant is aimed at the actors entering into the early stages of collaboration towards the creation of a financial instrument to support social enterprises. Actions must be fully carried out in ESF+ eligible countries and must focus on supporting social enterprises that are in need of smaller investments (< EUR 500 000).
• In line with the ESF+ Regulation, a social enterprise is an undertaking, regardless of its legal form, including social economy enterprises, or a natural person which:
  • in accordance with its articles of association, statutes or with any other legal document that may result in liability under the rules of the Member State where a social enterprise is located, has the achievement of measurable, positive social impacts, which may include environmental impacts, as its primary social objective rather than the generation of profit for other purposes, and which provides services or goods that generate a social return or employs methods of production of goods or services that embody social objectives;
  • uses its profits first and foremost to achieve its primary social objective, and has predefined procedures and rules that ensure that the distribution of profits does not undermine the primary social objective;
  • is managed in an entrepreneurial, participatory, accountable and transparent manner, in particular by involving workers, customers and stakeholders on whom its business activities have an impact.
• The social enterprises must be established/in the process of being established in one or more of the ESF+ eligible countries.

Funding Information

• The available call budget is EUR 3 400 000.
• They expect to fund between 8 to 10 projects.
• Project budgets (maximum grant amount) are expected to range between EUR 300 000 and EUR 400 000 per project. This does not however preclude the submission/selection of proposals requesting other amounts. The grant awarded may be lower than the amount requested.
• Projects should normally range between 24 and 36 months. Extensions are possible, if duly justified and through an amendment.

Eligibility Criteria

• In order to be eligible, the applicants (beneficiaries and affiliated entities) must:
  • be legal entities (public or private bodies)
  • be established in one of the eligible countries, i.e.:
    • EU Member States (including overseas countries and territories (OCTs))
    • non-EU countries:
      • listed EEA countries and countries associated to the ESF+ or countries which are in ongoing negotiations for an association agreement and where the agreement enters into force before grant signature.

For more information, visit European Commission.