Portugal Social Innovation Initiative is a pioneering initiative in Europe whose mission is to promote social innovation and social entrepreneurship in Portugal by supporting innovative projects using EU funds. It has already proven to be a decisive factor in recent boosting of Portuguese’s social investment market, by supporting more than one hundred initiatives of social innovation and entrepreneurship and creating the right vibe to foster networking among all actors of the Portuguese Social Innovation Ecosystem.
Created in 2014, under the direct supervision of the Portuguese Government, Portuguese Social Innovation Mission Structure (EMPIS) is responsible for the implementation of the Portugal Social Innovation Initiative.
Impressive first results
So far, eight calls for proposals opened, with a budget of around 37 million euros, in which 366 applications were received. The first 137 projects were approved, with 12 million euros of financing, in three of the four instruments managed by Portugal Social Innovation: 99 in the scope of the Capacity Building for Social Investment; 35 within Partnerships for Impact; and three under the Social Impact Bonds.
And definitely those are impressive results, as EMPIS is more about bringing public and private investors closer to the organizations and entrepreneurs who implement entrepreneurship and social innovation initiatives than just financial instruments’ management.
Filipe Almeida, President of EMPIS, in a recent balance of the initiative, stated that very positive results were achieved. He highlighted the role of social entrepreneurs, which he considers
“some of the best social entrepreneurs in the world, with ideas and an extraordinary mobilizing capacity that daily put their creativity, their empathy and their work at the service of solidarity, a more fair collective life, the future of the most vulnerable”, and the increased investors ‘awareness for the importance of investing in innovative projects with a positive social impact.
EMPIS Activation Team created to facilitate stakeholders contacts with Portugal Social Innovation Initiative, is a permanent link to the market that allows mapping of ongoing and potential projects, which is one of the keys to the success of Portugal, in this area.
Village of Social Innovation
With the goal of bringing together investors and entrepreneurship and social innovation initiatives, EMPIS has organized “Village of Social Innovation“, having occupied for two days a shale village in the Lousã mountain range, where dozens of projects gathered, presented their results and participated in several activities. The 2 day event provided the perfect conditions for all actors of social innovation Portuguese Ecosystem to network, creating the right vibe to
informality and dialogue in a beautiful place, integrated with nature, but relatively remote.
“Village of Social Innovation has aroused curiosity, stimulated creativity, promoted
partnerships, created networks and helped build bridges” states Filipe Almeida.
A dedicated competition held just before the event showed the dynamism of Portuguese social entrepreneurs. In about two weeks, more than 60 projects have applied to the contest for innovative ideas for fire prevention and socio-economic revitalization of wildfires affected areas.
Goals of Portugal Social Innovation Initiative
But now let’s go on detail on Portugal Social Innovation Initiative main goals:
- To promote entrepreneurship and social innovation in Portugal, as a way of generating new solutions, complementary to traditional answers, to solve important societal problems;
- To stimulate Portuguese social investment market, creating financing instruments suitable to the specific needs of the social economy sector and projects of innovation and social entrepreneurship;
- To empower actors of the social innovation and entrepreneurship Ecosystem in Portugal, improving the response levels of social economy organizations and contributing to their economic and financial sustainability.
Financial instruments and their main characteristics
- Capacity Building for Social Investment is a financial instrument to support the development of the organizational capacity and management skills of the teams involved in the implementation of social innovation and entrepreneurial projects in Social Economy Organizations. 100% support of financing needs for the Capacity Building activities. Social innovation and entrepreneurial Initiatives must be supported by a public or private social investor and provide a need analysis of the initiative to accurately assess the priority domains for capacity building.
Marketing and Fund Raising, Impact Evaluation, Governance, Information Technologies and Operation Management were the capacity building domains more funded so far. This trend seems consistent with Social Economy organizations’ concerns and expectations. Concerns like, for instance, not having enough funds to act or not reaching their right public in a donation campaign. Expectations like, for instance, to develop evidence of the impact of their initiatives on the ground, to communicate it better or raising the efficiency of their operations and information and communication technologies.
- Partnerships for Impact is a financial instrument to support Social Innovation and Entrepreneurship Initiatives to solve important societal problems and to achieve greater scale and impact. The funded-scheme has a minimum level of 50,000 euros of public funding through a non-refundable fund of 70% of financing needs, the remaining 30% being provided by one or more social investors.
Public and private entities, or national and international social, and cooperative organizations, may act as social investors, who commit themselves to allocate financial resources to support a Social Innovation and Entrepreneurship Initiative, in a philanthropic sense of impact. There can, however, be no control relationship with the entities which they finance.
Under this instrument, were funded Social Innovation and Entrepreneurship Initiatives focused in Social Exclusion, Employment competences, Promotion of Health and Well-being. And a lot more are on the pipeline in the evaluation stage.
- Social Impact Bound is a financial instrument to support innovative projects that answer to societal problems prioritized by public policy, in a pay-as-you-go logic. The project is implemented by one or more private entities and financed by one or several social investors, aiming to achieve certain measurable social results, whose indicators and metrics must be previously validated by the Public Entity responsible for the sector policy. If results are achieved, social investors are fully reimbursed.
The risk of failure is, therefore, on the side of social investors who initially bear the costs necessary to implement the project.
This instrument has specific advantages for the State: to stimulate the experimentation of solutions that are potentially more efficient in solving societal problems – with the risk of this experimentation being on the side of the social investor – to promote the adoption of a culture of experimentation and innovation within of Public Administration and to test a new logic of public investment: on payment based on measurable results.
Under this instrument, 3 projects are being funded in areas related with Employability and Social Protection.
- With an allocation of 55 million euros, the Fund for Social Innovation is aimed at Social Innovation and Entrepreneurship Initiatives in the process of consolidation or expansion.
The Fund will function as a hybrid fund, operating both with debt and equity. In the area of debt, it will provide guarantees to credit institutions allowing them to lend on terms more favorable to the final beneficiary, considering market conditions. On the capital side, it will co-operate in capital and quasi-capital operations of small and medium-sized enterprises, together with social investors, which may be Venture Capital, Business Angels, Companies, Foundations or Social Economy Organizations.
There is no similar financial instrument in Europe funded by European Social Fund funding, which makes it a pioneering mechanism.
- Fiscal incentive – As from 2018, Portugal decided to introduce a fiscal incentive/tax relief for the investment in Social Impact Bonds, recognized in IRC (Corporate Income Tax) as an “expense” for the year, with an increase of 130% of the amount invested.
National Strategy for Investment and Social Innovation
In June 2018, the Portuguese Working Group for Social Investment has published the Progress Report “Three years of learning, achievements and new challenges” about the third anniversary of the public launch of the National Strategy for Investment and Social Innovation in Portugal. The Portuguese Working Group for Social Investment aims to promote the social investment ecosystem in Portugal. The coordination of the Working Group was provided by a consortium of entities including MAZE – Decoding Impact (formerly the Social Investment Laboratory), Social Finance UK and the Calouste Gulbenkian Foundation.
Report main findings:
- “Portugal is now a reference country in the area of social investment. This is mainly due to the flexibility in the adoption of new financial instruments such as Social Impact Bonds and the pioneering use of 150 million euros of European funds to promote social investment, which is Portugal Social Innovation Initiative.”
- “In 2018, an entrepreneur with an effective solution to solve a social problem can more easily raise investment and support his business compared to 2015.”
- “There is a growing spirit of collaboration between sectors when discussing the resolution of a given societal problem. Whether it is the complementarity of solutions, the need to add more resources or mobilize skills, it is increasingly common to find projects implemented in partnerships between social, public and private sector organizations.”
- “The involvement of investors and the private sector is still small, requiring more investment and skills from large companies, institutional investors, venture capital and business angels.”
- “The progress made in Portugal in the area of social investment is undeniable. In this sense, it is important to highlight EMPIS’s role in the promotion of the Portuguese ecosystem. Regardless of the implementation challenges associated with the pioneering use of European funds for social innovation, EMPIS has brought opportunities and dynamism to this sector that did not exist previously. Social entrepreneurs in Portugal have privileged access to finance compared to their European counterparts.”
- “Encouraged by this progress, more and more companies, philanthropists and the public sector are coordinating efforts. Partnerships have emerged between sectors to support the growth of entrepreneurship and social innovation in our country. An example of this is the capacity building and acceleration initiatives that support the growth and development of organizations. There are resource centers accessible to all, informal learning-sharing groups and online platforms with funding opportunities.”
“Social innovation, understood as sustainable social change resulting from a new social response develop to reduce or solve a societal problem, is a strategic investment opportunity for 21st century social investor’s.” states Filipe Almeida. The President of EMPIS believes that “With the Portugal Social Innovation initiative, Portugal became a pioneer in Europe in encouraging and financing social innovation with European funds, supporting projects in different stages of maturity, and involving social investors in this movement, enabling them to organize their philanthropy oriented towards a strategic, measurable, results-focused and socially-relevant investment.”
This is the result of an intense work of Portugal Social Innovation Initiative, but not only. Filipe Almeida says “We currently have in Portugal a very relevant group of investors, consultants and public and private institutions actively involved in promoting social innovation and entrepreneurship. It is a very interesting and challenging time in the history of the country, where new agents of innovation and new ways of thinking and organizing policies and practices are emerging to improve the way we live”.
Portugal is certainly an inspiring example paving the way regarding Social Innovation and Entrepreneurship at European level.
Don’t miss my next articles where I’ll present in detail Social Innovation and Entrepreneurship Initiatives being funded in Portugal. 😉
Learn more at Social Innovation Academy
Portugal Social Innovation is just one of many initiatives featured by the Social Innovation Academy – the first fully online management training programme focusing exclusively on social innovation. Why Social Innovation Academy? Social Innovation has been increasingly perceived as the answer to the rising number of European societal challenges.
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Luísa Bernardes. I work for EMPIS within Portugal Social Innovation Initiative which aims to promote social innovation and social entrepreneurship in Portugal by supporting innovative projects using EU funds. I’m part of the evaluation and monitoring team. I’m mentor in Copernicus Accelerator – a project of the European Commission’s DG Growth, part of the Copernicus Start-up Programme, which is designed to accompany start-ups from the generation of a business idea to its full commercialisation. I am also an Advisor to Social Innovation Academy.
I’ve worked in Enterprise Europe Network and other European networks for 18 years, helping businesses to innovate and to grow on an international scale. I am a proud member of Toastmasters International, the world leader in communication and leadership development. I hold a degree in International Relations from the University of Minho and a specialization in European Studies from the University of Coimbra.
LinkedIn: Luísa Bernardes