The clash between non-profit purists and innovators is blocking progress of the European Commission's Social Business Intiative, warns Filippo Addarii.

In French you say "On ne change pas l'attelage au milieu du gué!". Once you are in the middle of the river you don’t change course or you might be washed away by the flow. This is the risk the European social enterprise agenda is facing if it doesn’t stick to the course set at the beginning.

On 27 November 2012 the European Commission reunited for the second time the members of GECES (group of experts on social entrepreneurship) in Brussels. The meeting followed the launch of the Single Market Act 2 (SMA2) in October, a year after the launch of the Social Business Initiative (SBI). As the minutes of the GECES meeting have been published I can report on the main outcomes.

After starting with a sprint in 2011 SBI is losing steam. None of the recommendations provided by GECES members were included in SMA2. The Commission has reverted to its usual mode of engaging with stakeholders which looks more like a briefing to the media rather than a genuine discussion with peers. Finally, the clash between the purists of non-profit and innovators has become more intense and is blocking substantial progress.

The only relevant achievement has been made with social impact measurement. SMA2 lists it as a priority and a subgroup of experts has been established. This choice makes sense. The Commission needs to show the added value of social entrepreneurship to Member States, investors, and consumers, before making any other commitment. It is funding two projects moving towards the same goal: the first one is mapping social enterprise across Europe, and the second one is collecting related national statistics.

So what’s the problem?

This strategy doesn’t solve the fundamental problem at the core of SBI that surfaced again in the November meeting. That is the clash between the purists of non-profit who look for incremental benefits under a new tag and the innovators who see SBI as a third way between competitiveness and social inclusion policies.

The stumbling blocks are the usual ones: the role of private investments and their profitability, special protection from competition rules, privileged access to public funding, and aversion to using the transformational power of the web and new technologies for public engagement.

The Commission initially developed its policy agenda engaging with an informal group of experts selected on their track-record. It was a bold approach that paid off. But lobbyists and vested interests have regained ground as the new policy started taking off. They rebranded themselves as social innovators and entrepreneurs because these are the new tags to get the ears and funding of Brussels. The Commission ended up opening the floor to every stakeholder claiming a place at the table.

Such a consciously inclusive approach has not only slowed down the pace but has already had an impact in the selection of the experts on impact assessment. If the Commission doesn’t take a bold stance and dare to explore new avenues what’s the point of European policy?

Achievements

This is not a requiem but rather a wake-up call. The Commission has already scored some points and still have cards left to play.

The legislation on the label for social investments (EUSEF) has been approved by the Parliament after months of negotiations and the Council has given its informal OK. We expect it to come into force in the next months. This achievement should give the green light to the European Investment Fund to finally launch its pilot fund on social investments after more than a year of delays. It will also have an impact on the implementation of €90m fund part of the Programme for Social Change and Innovation still in negotiation and to be active from 2014.

The Commission has confirmed social enterprise as a funding priority in the next programme of structural funds 2014 – 20. But every member state must select it as a priority in national programmes for spending the money before social entrepreneurs can take advantage. Improvements have been made in public procurement to address quality as selection criteria, and state aid rules have been simplified.

Progress has been made with the digital platform to connect practitioners and share good practice. DG Connect has taken the lead and is expected to fund the platform building on what has already been developed with Social Innovation Europe (SIE) as we advocated. The Commission is also looking into other innovative uses of new technologies such as crowd-funding.

Finally, even Commissioner Tajani in charge of industry and entrepreneurship has actively joined the group of supporters including, for the first time, social entrepreneurship in the new strategy of the Commission (Entrepreneurship 2020) launched this year.

Major challenges and untapped opportunities

On the other hand, some of the major challenges faced by Europeans are still not centre stage when success here would prove the value of the new policy.

For the second time the case of Greece was presented at the November meeting but no progress has been recorded, despite the availability of €70m and a dedicated taskforce. The even greater issue of youth unemployment across Europe has barely entered the conversation. It is a social time bomb and social enterprise is well positioned to deactivate it.

The Commission keeps ignoring the requests of GECES members - to look into the barriers to cross border trading within the Single Market, and the extension of SBI to enlargement and development policies. The potential is massive but officials don’t dare to step on the toes of reluctant colleagues.

National differences have to be addressed more forcefully. A ‘one size fits all’ approach cannot work. Look at the gap between Western and Eastern Europe. Specific regional interests will not undermine the European spirit if they can find their right place in the agenda and are not left lingering in the dark and trying to hijack a piece of SBI.

Euclid engagement

Euclid will continue its engagement with the Commission, members and partners within the GECES and beyond to promote knowledge sharing, facilitate cross boundary partnerships and foster innovation.
Next actions: 

1. Launch of a news alert service on European policy related to SBI and SIE together with the Intesa SanPaolo Eurodesk- the service will be open and accessible for free;
2.  Advocacy to get the Index for social investments included in the work on social impact measurement and in the new subgroup on finance promoted by Hugues Sibille (Credit Cooperatif);
3. Emphasis on experiments and action on the ground such as Naples 2.0, Progress Programme and Diogo Vasconcelos Social Innovation Prize - have courage and take risks;
4. Further collaboration with DG Connect and the other partners of SIE to lead on the digital platform and make it one-stop shop for SBI and all related initiatives;
5. Request the establishment of a subgroup looking into barriers to cross border trading in the Single Market. The International Conference Impact2 that Nicolas Hazard (Groupe SOS and Comptoir de l’Innovation) is organising in Paris on 3rd April with Euclid’s help could be the right start;
6. Advocacy for the extension SBI to enlargement and development policies as a sustainable and long-term strategy for building civil society in Europe and beyond.

To regain momentum the Commission should start changing how the group is managed. As already suggested by Jan Olson, a Brussels veteran, the Commission needs to move to a co-designed agenda. I would add that the use of new technology is necessary for a lively debate beyond the two annual meetings. We should not leave room for old-fashion manoeuvres behind the scenes cherished by Brussels lobbyists.