Social Innovation and Social Investment: A View from Europe

Yesterday, I attended the European Economic and Social Committee’s (EESC) conference in Milan on how the European Union can support social innovation and social investment.

EESC brings together governments, businesses, trade unions, foundations, co-operatives, social enterprises and voluntary organisations and has a key role in informing the policy of the European Union towards our sector.

Recently, the EESC produced an opinion (a document which feeds into the European Commission’s decision making) on social investment, which NCVO contributed towards titled ‘Social Impact Investing‘.

This opinion focused on the need for social investment to meet the demand of voluntary organisations and projects and that support needs to be given to build the capacity of organisations to take on investment. It also raised the important point that grants should also be considered as part of the mix for supporting social outcomes – not everything needs to be about loans. Finally, the opinion also called for better public sector commissioning and how improvement is essential if social investment is to be successful. All this provides a welcome balance to the recent G8 Social Impact Investment Taskforce report.

The conference touched on these issues, and others, but here are few things I have taken away from the discussions that took place in Italy’s second city.

Money, money, money…

There are many excellent initiatives taking place across Europe to get people back into work, build social housing or provide long term social care. However, the challenge with all these projects is finding the resources to carry them out.

One of the paradoxes of social innovation at present is that while the squeeze on funding for the sector has created an additional drive for organisations to be innovative, the lack of funding to support good projects means that many cannot be effectively implemented. Depending on your location in Europe, the idea is either to get more private money to support these initiatives due to a lack of public funds (e.g. Italy, Spain or France) or to change the way that public money is spent to support innovation by the voluntary sector (e.g. Northern Europe).

Britain is an interesting middle ground between these two approaches with private philanthropy having played a historically (and continuing) important role in funding the sector but with increasing emphasis in the past decade on public spending. No matter where you are, however, everyone is grappling with how good voluntary sector-led projects can be funded in a period of austerity.

Take a chance on me…

There was a number of points raised about the risk adverse culture of the public sector across Europe. One speaker termed it a ‘zero-failure culture’ where public bodies are not prepared to support sector initiatives for fear that they will fail and this will subsequently lead to bad press coverage. This is a problem which voluntary organisations in Britain have learnt about through years of experience and it is a difficult to solve, although initiatives such as the Social Value Act are helping to create a culture change amongst public sector commissioners.

All over Europe, however, there is a desire for better commissioning and for the public sector to be able to take risks, provided that they are properly understood and mitigated against.

However rather than reforming public sector commissioning, some organisations in Europe are going back to tried and tested methods. Charitable foundations, community cooperatives and old fashioned fundraising. Despite all the focus on ‘new’ forms of social investment or funding, it seems that the old ways of grant funding and grass roots organisation are often the most effective to support innovation.

Knowing Me, Knowing You

Finally, independence and the dividing line between the voluntary sector and public sector was a topic of interest.

Many voluntary organisations want to engage with public bodies, but they are cautious about losing their voice. This is particularly important in those countries where democracy has either come under threat in the past or has only (relatively) recently been established. The solution, in most cases, appears to be to bring together a plethora of actors together to fund initiatives by the sector so that influence via funding is diluted.

Charities want to work with trade unions, banks, foundations, private businesses and government, so that the potential for undue influence by government is diminished. There is safety in numbers and perhaps this is something that the UK can learn more about.

What next?

A great deal of the regulations around commissioning and procurement are set in Europe. So it is important that voluntary organisations continue to make their voices heard in Brussels to encourage reforms  that make social innovation and investment easier. The latest EU Directive on procurement has a number of changes that could potentially help particularly around ‘Innovation Partnerships’ (something I am sure my colleague, Paul Winyard will write about in more depth!). NCVO will be tracking the implementation of this directive and its impact.

There is also a need to ensure that European funding flows into with the voluntary sector. NCVO has led the way by brokering the matching of European Structural Funds with the Big Lottery Fund, which will support many excellent projects across the sector. But we need to do more so that the tens of billions that comes from Europe every year goes where it is needed most.

Finally, there is a lot of learning and experiences to be shared across Europe. A continent with over 700m people and containing the world’s most developed economies is always likely to be home to a great deal of innovation. The European Commission and EESC have a key role to play in sharing that learning so that good ideas, not just money, flows across borders.

PS. ABBA references have definitely not been plugged in this blog post because it is about Europe.