Fiscal consolidation within the European Union means that a stronger social economy is required to deliver what the state can no longer do. A stronger and better integrated Europe-wide social investment market is needed to attract more private capital. Euclid Network and FEBEA (Fédération Européenne de Finances et Banques Ethiques et Alternatives) have therefore assembled a task force for a European Social Investment Facility (ESIF) to explore how the European Commission can most effectively use its limited financial resources to support social investment.

Launched at the Active Europe Conference in September, the task force has prepared a communiqué comprising 12 guiding principles on how private investment funds can support the Commission’s Social Business Initiative and create a financial mechanism to support social investment – and importantly a mechanism that responds to bottom-up requirements.

The communiqué has received a favourable reception in Brussels at a time when the Commission is outlining its own measures to support the Social Business Initiative. The Commission has confirmed that €90 million will be made available from 2014 to improve social businesses’ access to funding. Moreover, it will introduce an ‘investment priority for social enterprises’ in the regulations for the European Regional Development Fund and the European Social Fund for 2014-20. This means that social businesses and social enterprises across Europe could potentially gain access to hundreds of billions of euros via social investment through these channels.

The task force for ESIF, in consultation with the European Commission and the European Investment Fund, is now developing the 12 principles of the communiqué into a technically robust and financially sustainable model that can be adopted by the Commission. An initial budget for pilot investments is being finalized with the European Investment Fund. €50 million seed capital has been committed by the European Investment Bank provided that equivalent private match funding can be secured, increasing the fund to €100 million. The European Investment Fund will oversee deployment of the fund and options are being considered to leverage it further. It is likely that the new fund will carry out investment across the EU in a similar manner to Big Society Capital in the UK, investing in intermediaries that will in turn invest in social ventures.

The task force for ESIF is an open platform and seeks to create a representative and authoritative voice for social investment practitioners across Europe. All those interested in social investment are invited to join and support the task force, to strengthen the experience it can draw on, and to participate in the pilot projects.

For more information
Contact Karl Richter, Social Impact Investment Adviser, Euclid Network at karl.richter@euclidnetwork.eu