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Creating social impact through innovative financing tools for an intelligent, sustainable and inclusive growth

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Spain

Policy areas

Digital GovernmentFinancial literacyInvestment management, public-private partnerships and state-owned enterprises

Organisation name Biscay's Provincial Council

Contact person: Oscar Ugarte

oscar.ugarte@bizkaia.eus

The Provincial Council of Bizkaia (Biscay) strongly believes that rather than being just a mere spectator of changes and evolutions (reactive contributors), one of the main goals of public administrations should be creating opportunities to cause new and different positive things to happen. Thus, the aim is to reinforce the position as proactive contributors in the generation of growth and prosperity opportunities in this region. This applies to all social layers, especially to those more vulnerable to economic cycles and increasing rates of unemployment.

The intention of the Provincial Council of Bizkaia was to boost the opportunities that entrepreneurs, micro-businesses and in particular, social innovation companies offer to tackle many of the current economic and social challenges. The purpose was to become a dynamic financing facilitator for those who want to turn difficulties into opportunities for sustainable and social growth.

The last recession has shown how important it is for economic dynamism to count with alternative financing sources to those commonly available in the conventional markets. This is particularly relevant for entrepreneurs, citizens and micro or small companies in all sectors. In light of this clear need, the Provincial Council of Bizkaia decided to launch a global strategy. The aim was to become a dynamic financing facilitator for those who want to turn difficulties into opportunities for social growth, while mobilising private investment to ensure long-term involvement and sustainability. For this purpose, three public funding instruments have been designed and launched:

  • Microfinance Fund: A solution towards alleviating credit difficulties that has provided already 100 micro-loan operations with a total expenditure over EUR 2 million distributed along different economic sectors;
  • Entrepreneurship and Social Innovation Fund (FEIS): Supporting the creation and consolidation of socially innovative business initiatives currently with EUR 1 650 000 being used for social inclusion projects, health, welfare initiatives, and culture and education projects;
  • Crowdfunding Platform: The very first and unique public initiative for equity crowdfunding in Europe and the world’s first public crowdfunding platform, which has already mobilised EUR 400 000 worth of investment.

This project represents one of the Bizkaia Provincial Council’s main tools to fight against structural unemployment and to foster social inclusion through economic growth based on innovation. It is also a powerful instrument to attract private investments into social layers, which otherwise will encounter difficulties in accessing fund resources different from the conventional means offered in the finance markets.

Having said that, the way this project has been designed and implemented (its founding philosophy and well-timed, framed steps) will make it easy for future initiatives to add new building blocks into the existing programme. Due to its interrelation with other directorates of the Department for Economic and Territorial development of the Provincial Council, it will not be difficult to find future eventual synergies. These could complement and perhaps create new advance models for economic development in the province. In addition, a scenario can easily be imagined in which this project is incorporated into a bigger initiative, launched at regional or national level.

Furthermore, the financial sustainability of the project is something that lay at the very core of its main initial objectives when it was designed and launched. A public–private partnerships is considered to be the best way to ensure success in this type of initiative, which is why the private sector was counted on from the very beginning. As already described in this application:

  • The overall approach includes a gradual share transfer from the public to the private stakeholders involved in all three instruments that are part of the project.
  • Everything has been designed in a way that either private individuals or business organisations will encounter an open door to further involvement, while at the same time making profits.

This project represents one of the Bizkaia Provincial Council’s main tools to fight against structural unemployment and to foster social inclusion through economic growth based on innovation. It is also a powerful instrument to attract private investments into social layers which otherwise will encounter difficulties to access fund resources that are different from the conventional offered in the finance markets.

This project was planned in line with the European Strategy 2020, which indicates that social innovation must be a priority action leverage to achieve the common objectives of intelligent, sustainable and inclusive growth.

This project has been conducted by the Department for Economic and Territorial Development of the Bizkaia Provincial Council. In particular, it has been helped by Seed Capital Bizkaia, a public company attached to it that was created under a European Commission Programme devoted to promoting Seed Capital Funds in Europe. Seed Capital Bizkaia has been building up the backbone of the initiative since the beginning of the economic recession, and particularly over the last few years. It started off with a very small management team and gradually increased resources (human and material) and based its work on the following four main points:

  1. connecting and networking with international institutions promoting microfinance, social innovation funds and crowdfunding;
  2. initiating negotiations with private investors;
  3. allowing internal arrangements at provincial level to find the most suitable legal structure and operational procedures;
  4. creating and adapting the internal staff and physical structure (premises, equipment, external providers, human resources, etc.).

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