Investment in the social sector is a key priority for the EU. A wide range of sustainable investment projects are being supported the Investment Plan. These include the construction, expansion or refurbishment of buildings for education, such as schools and universities; for healthcare, such clinics and hospitals; and for affordable, social housing projects in the community. As well as physical infrastructure and equipment, the European Fund for Strategic Investments (EFSI) supports strategic investments in social enterprises. These entrepreneurial and innovative organisations focus on achieving wider social, environmental or community objectives rather than make a profit for their owners or shareholders.
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Social impact investments
The EFSI supports social entrepreneurship and the development of the European social impact ecosystem more broadly through innovative mechanisms developed under the new EFSI Equity Instrument. The EFSI impact investing pilots engage and support social impact investors in providing risk capital financing to social enterprises in their early, growth or expansion stage, and include:
- Social Incubators/Accelerators Facility, comprising investments in or alongside financial intermediaries, typically social impact funds, linked to incubators or accelerators, which provide an array of business support resources and services to help accelerate the growth and success of early stage social enterprises. A supplementary transaction cost support mechanism is being developed to help intermediaries targeting the market segment with small ticket sizes for social enterprises.
- Social Business Angels Co-Investment Facility, comprising investments alongside business angels or in business angel funds, including private individuals or non-institutional investors who invest into social enterprises at seed, early stage as well as expansion and growth stage that at the core of their business model pursue social impact.
- Thepilot Payment-by-Results Instrument supporting the development of social impact market in Europe and the scale- up of social service provision by the private sector through innovative outcomes-based financing mechanisms, complementing public sector provision of essential social services.
EFSI in combination with other EU funds
EFSI social impact pilots are complementary to the range of financial instruments for social entrepreneurship and microfinance under the EaSI Programme (Employment and Social Innovation), whose capacity EFSI is also reinforcing. These instruments are mutually complementary and cover a large spectrum of financial intermediaries, final recipients and market segments.
Technical support and visibility for projects
The Investment Plan, or so-called Juncker Plan, encompasses far more than the provision of a guarantee to unlock additional investments through the EFSI. The social sector can also benefit from the other elements of the Plan.
As for all sectors, project promoters in the social sector can seek technical assistance through the European Investment Advisory Hub (EIAH). The Hub offers a single access point for advisory and technical assistance services to allow promoters get their projects off the ground.
Examples of advisory services for social investment provided by the Hub include:
- Social Enterprises (FR), developing the business model and investment readiness of a consortium of social enterprises in France.
- Swedish Social Impact Bond (SIB) Assessment Study, preparing a feasibility study for the implementation of a Social Impact Bond scheme for occupational wellness aiming to improve mental health and reduce absenteeism from work.
- Health infrastructure projects (RO), providing both expertise and funding to support the preparation of three health infrastructure projects in underserved areas in Romania.
The European Investment Project Portal – the #InvestEU Portal – is a platform to boost the visibility of investment opportunities, including those in the social sector, across Europe. The aim of the Portal is to bring together project promoters seeking investment with investors seeking projects.
Examples of EFSI projects in the social sector
Epiqus: Job-training for migrants and refugees in Finland
The EIF is investing €10 million into a social impact bond scheme that will support the integration of between 2,500 and 3,700 migrants and refugees into the Finnish labour market by providing training and job-matching assistance. The scheme is with Epiqus, a Finnish fund manager that specialises in social impact investments, and the Finnish Ministry of Economic Affairs.
Social and affordable housing programme, Poland
The EIB is setting up an Investment Platform together with Bank Gospodarstwa Krajowego (“BGK”), the national promotional bank of Poland, to formulate and propose a joint financial product specifically aimed at social and affordable housing promoters in Poland. The proposed programme loan is aimed at co-financing investments in social and affordable housing by municipal authorities and registered social and affordable housing providers throughout Poland in the period 2016-2021.
The EIB is helping to finance the design, construction and operation of a new hospital in Treviso, a small town and industrial hub in the North East of Italy. The Public Private Partnership (PPP) for the new hospital of Treviso. As the main hospital in the province offering specialist services, it serves approximately 1m people. The Treviso PPP project is the first EFSI project where financial benefits deriving from EIB’s lower cost of funding compared to other financial institutions have been allocated in favour of social impact investments in innovative solutions for research, health, employment and social services benefiting the local community.