Why social entrepreneurship will be booming in 2016

Earning money is not the primary goal of social enterprises – finding innovative solutions to the challenges of today’s society comes first. Yet, they certainly make money – and quickly at that: between 2013 and 2015 they achieved much faster growth than mainstream SMEs did. These impressive results were not restricted to popular companies such as Snappcar (car sharing), Tony Chocolonely (slave-free chocolate), Fairphone (‘ethical’ phones) and Peerby (sharing things). Projects designed to combat youth unemployment or to support informal carers also performed well. The crux is that social enterprises offer solutions to real problems while at the same time developing healthy business models. 

Three reasons why social entrepreneurship is set to show further growth in 2016

There appears to be fair weather ahead for social entrepreneurs in 2016. The following signs bode well.

1. Governments are changing tackSocial entrepreneurs have placed themselves on the administrative map. At the request of the Minister of Social Affairs and Employment, the Social and Economic Council of the Netherlands issued a recommendation in mid-2015 underlining the role municipalities can play in promoting social entrepreneurship. A great many cities will take up this challenge in 2016. Amsterdam aspires officially to blaze the trail (article in Dutch). And in May 2015, Utrecht saw the opening of the Social Impact Factory in which social entrepreneurs, local government and corporate partners team up to develop solutions to social challenges. In future, municipal procurement programmes will be closely involved in social entrepreneurship.

2. Legal barriers are disappearingSocial entrepreneurs are making widespread use of crowdfunding because people are eager to invest in a social cause. April 2016 will see the introduction of a law in the Netherlands making crowdfunding easier. The new law is expected to generate more funds. The small Christian party ChristenUnie is even in favour of investigating whether government funding adequately addresses the needs of social entrepreneurs. In another development, recommendations put forward by SocialEnterpriseNL (article in Dutch) have been included in the new Dutch Tendering Act, which will regulate procurement by all government bodies in the future.

3. More funding availableAs the Dutch economy is expected to grow by more than two per cent in the coming year, more money will flow into the market. And social entrepreneurs are set to benefit. But money will also become available from other sources, such as from the growing number of investment funds for  social entrepreneurs. Willemijn Verloop, for example, social entrepreneur and founder of War Child, set up a new fund with 30 million euros available for investment.

Five ways in which ABN AMRO is contributing to this

ABN AMRO has been investing in social entrepreneurship for some years now. In 2016 the entire bank will contribute: from Large Corporates to Private Banking and Retail Banking. Our overall objective is to help entrepreneurs move forward in an economy that is beneficial to all. Here’s what we have to offer social entrepreneurs:

1. ABN AMRO Social Impact FundABN AMRO has earmarked a total of 10 million euros for social entrepreneurs through this fund. The money is not only invested in Social Impact Bonds, but also directly in businesses. Like Beebox, pictured in the header, which delivers biological food boxes to consumers’ homes. ABN AMRO has invested its own capital in this fund, with the aim of building up a pool of knowledge and experience in social enterprise investments.

2. Social Impact BondsWe launched the first Dutch Social Impact Bond (SIB) in 2013, thereby financing a social cause with private capital. The second SIB, totalling 2.1 million euros, was launched in November 2015 to support Buzinezzclub, an organisation in the city of Utrecht, which aims to help 540 youngsters find a job, enrol in school or set up a business in 2016. We hope to launch another three Social Impact Bonds in 2016.

3. Informal investorsOur network covers a wide range of informal investors interested in social impact. We proactively link them to social entrepreneurs, for example at the ‘Social Impact Pitch Day’ at this year’s ABN AMRO World Tennis Tournament. At last year’s Pitch Day, Marcel van Heist of Rural Spark successfully collected capital for his energy ambitions in India.

4. Coaching programmesAlongside capital, we also provide knowledge for social entrepreneurs by offering them coaching sessions. In recent years, dozens of experts from ABN AMRO were mobilised to coach social entrepreneurs via the platform of Social Enterprise NL (of which we are a partner).

5. Designated bank accountIn 2016, ABN AMRO will offer social entrepreneurs the option of opening a designated bank account.  This approach underlines the special status of this group of entrepreneurs and makes it easier for the bank to contact these entrepreneurs to discuss any specific needs they may have or to connect them with informal investors and the Social Impact Fund.

Click here for an overview of Sustainability news articles for the January Newsletter 2016.