How to define social enterprise and when to define it? Local perspective in the Baltic states. Before definition we need awareness, advocacy and more of social innovation and social initiatives everywhere. The presentation delivered in Riga, November: www.sefriga.lv

1. JUNGLES OF THE
DEFINITION
SEF Riga 2013
Mindaugas Danys
Ministry of Economy, Lithuania

2. Social Enterprise Mark UK
Your company must:
•
•
•
•
•
•
have social and/or environmental aims
have its own constitution and governance
earn at least 50% of revenue from trading (or as a
new start, you pledge to reach this within 18
months)
spend at least 50% of profits on
social/environmental aims
distribute residual assets to social/environmental
aims if dissolved
demonstrate SOCIAL VALUE

4. EU Definition
According to the definition of the European
Commission a social enterprise “operates by
providing goods and services for the market in an
entrepreneurial and sometimes innovative fashion
and uses its profits primarily to achieve social
objectives. It is managed in an open and
responsible manner and, in particular, involve
employees, consumers and stakeholders affected
by its commercial activities” (COM(2011) 682;
Brussels, 25.10.2011)

5. How are social enterprises
regulated across Europe?
•
•
Social enterprises can be regulated in one or more
of the following ways:
o Existing legal forms
o Adaptation of existing legal forms
o Introduction of social enterprise legal brands
o Introduction of specific types of non-profit
organizations (e.g. non-profit institute in
Slovenia)
A few countries have introduced a general
legislation on Social Economy

6. Lithuania and soc ents
•
•
•
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Experience with Social firms
Few social enterprises
Lots of NGO social business initiatives
Legal status – private non profit

16. Other examples

17. 17

18. 18

19. 19
www.SocialinisVerslas.lt

20. 20

21. Challenges
Awareness
Flexibili
-ty
Challen
ges
Social
Firms
Impact
assessment

22. Why & when do you need a definition?
• For promotion?
• % of procurement?
•
•
•
•
•
•
public and corporate
More volunteers?
Access to markets? –
service monopoly
Access to capital?
Set a new legal form?
Boost social
innovations?
Use public/EU
subsidies?

23. Evolution
Definition
Access to
market
Social initiatives
Impact measurement
Awareness, promotion

24. 24
Connecting EU support to reality
on the ground
• What are the unmet needs?
• What kind of funds, intermediaries and other types
of support could help with these needs?
• What examples exist of investment support in
different contexts?
• What are the some of the key issues for Lithuania?

25. Opportunities for Soc Ent Support
through ESF
Options for programming
An integrated and strategic support package to
promote social entrepreneurship
• Schemes and actions that use social enterprises to
deliver specific thematic objectives and investment
priorities:
•
• Promoting employment (access to employment for job-seekers
and inactive people):  work integration SE
• Investing in education, skills and LLL (Reducing early schoolleaving):  SE providing providing early childhood education
and care
• Promoting social inclusion and combating poverty (Enhancing
access to affordable, sustainable and high-quality services)  SE
providing health care and social services

26. Thanks
Mindaugas Danys
mindaugas.danys@gmail.com

27. 27
Needs, types and sources of
finance for social entrepreneurship
Types
Needs
•Start
up – feasibility, innovation
•Grants
•Start
up - capital for assets
•Debt
•Working
•Quasi
capital
•Expansion,
equity
•Equity
growth
Sources
Investors
•Own
•
resources
•Charitable
bodies
•Government
•Financial
(at different levels)
institutions
SEs themselves
•Foundations
•Public
bodies
•Banks
(private and social)
& specialist intermediaries
•Private
investors seeking impact
•
Individuals (HNW, & community)

28. 28
Some Examples
•
Unlimited – foundation supporting social
entrepreneurs
•The
•
Key Fund – specialist intermediary
Bridges Ventures - specialist fund manager
•Finlombarda
- Italy ESF scheme to capitalise
social co-operatives

29. 29
Unlimited
•Established
to support social entrepreneurs with
£100m endowment – uses revenue for grant
programme linked to intensive support working
with partners. Different stages of support:
TRY IT
£500
Develop
confidence
and skill
DO IT
Up to £5000
Start
entrepreneurial
journey
BUILD IT
FAST GROWTH
Up to £15,000
UP TO £20,000
`for existing
for rapid growth
ventures to grow

30. 30
Key Fund
•Specialist
social finance intermediary in Yorkshire, UK
•Established
in 1998, now UKs largest regional community
development finance organisation
•Offer
loans, grants and equity £1000-£150,000
•Focus
on entrepreneurial community based organisations
•Average
•It
loan £34,200
has supported 2000 organisations, of which 175 were
start ups
•Financed
from public sources including ESF and ERDF

31. 31
Bridges Ventures
•
“Bridges Ventures is a specialist fund
manager, dedicated to using an impactdriven investment approach to create
superior returns for both investors and
society at-large.
•Manages
•Social
a number of funds including:
entrepreneurship Fund

32. 32
The Bridges SE Fund
•Addresses
the funding gap often faced by
fast growing social enterprises looking to
scale.
•Launched
•£12m
in August 2009
- from UK Government, Foundations,
private donations and innovation
endowment
•investments
in scalable social enterprises
delivering high social impacts and operating
sustainable business models.

33. 33
Bridges Criteria
• based in England
• a clear social mission (protected in their legal
structure)
• a robust business model
• the ability to grow to scale and increase their social
impact
• a financially sustainable model
• the ability to generate surpluses to repay financing
• a strong management team
• Each investment made by the fund will be:
• up to £1.5m structured as a flexible and tailored
investment, usually in the form of quasi-equity
repayable, with an appropriate return, through the
social enterprise's trading activities
• Made 10 investments

34. 34
Finlombarda ESF Jeremie Scheme
•
Intermediary owned buy regional government
•€20m
of ESF matched with private bank finance (Banca
Etica,, Banca Populare de Bergamo & Banco Populare di
Sondrio)
•Loans
made to individuals to buy shares in the co-
operatives in which they work
•4000
loans of €4000 made to workers in about 400 co-
operatives
•Significant
enterprises
boost to capitalisation of the cooperative

35. 35
Good practice in promoting social
economy and social entrepreneurship
Guiding principles
An integrated strategic framework
 combining support to social entrepreneurs, provision of
business development support, access to financial instruments
with awareness raising and recognition of the sector
 Ensuring synergies between actions of different governmental
departments and levels involved
Seamless support along the whole process of social
enterprise creation, development and scaling-up
Support not restricted to specific legal forms of
enterprises, nor selected sectors
Support requires linkages with civil society and community
organisations

36. 36
Some questions
•What
is the current situation/plans for the use of the
European Structural funds in Lithuania? €10m + How
to achieve best impact
•What
scope is there for creating new kinds of funds
and using EU funds along side other public and
private sources of finance?
•How
to use public support to engage private
investment?
•How
does this fit with development of a wider eco-
system?