Social Enterprise NL is committed to creating a positive climate where Dutch social entrepreneurs can thrive and make a significant impact on society. Last week, ABN AMRO renewed its sponsor contract with our network organisation. For me and my team, this is an acknowledgement of our dedication. My name is Willemijn Verloop, and in this guest blog, I will explain why this cooperation is so important for social entrepreneurs in the Netherlands.
ABN AMRO not only provides financing, but offers our members advice and assistance as well.
Willemijn Verloop Director Social Enterprise NL
It all starts with a sustainable business model
The primary motivation for social entrepreneurs is to address social issues. Impact is their inspiration, and money the means. Their ability to make an impact hinges on making profits, which are after all essential for continuity. Size of the company positively feeds into impact as well. Examples of social enterprises are companies that focus on tackling pollution or helping people with disabilities enter employment. Social entrepreneurs show some similarities with charities – such as their passion to make an impact - but unlike charities, they choose business models so designed that they do not depend on donations and subsidies. As a result, they are more innovative, and have an easier time scaling up their impact once they achieve success.
Problems despite prosperity
Over the past fifty years, we have seen staggering growth of prosperity in the Netherlands. However, despite all these years of plenty, we are still facing considerable social problems today. The recovery in the wake of the second world war and strong economic growth have provided most of us with a home and a job. But there are still too many problems to truly consider our economy a successful one. People with disabilities are unable to find employment, and cannot fully participate in society. The environment is overburdened and the earth's natural resources are being depleted. Many people the world over, including over a million in the Netherlands, live below the poverty line. The current system does not offer any actionable, structural solutions for any of these issues.
Entrepreneurs with a mission that matters
I am convinced that entrepreneurship is a wonderful tool to bring social innovation, to develop new solutions for social problems. Both in the Netherlands and abroad. Fortunately, a growing group of inspired and enthusiastic entrepreneurs have proven me right over the past few years . TTC (Text to Change) is a beautiful example. Two friends came up with a new way to extend the reach of vital information campaigns in Africa about topics ranging from health care (including AIDS and ebola) to education and agriculture. They saw an opportunity in a previously unutilised medium: the cell phone. Today, TTC reaches millions of people across 24 countries, in both populated and remote areas. The company offers its services to NGOs, businesses, governments, and universities.
Social ventures deserve more credit
A little assistance would be very welcome for the many social ventures we see. For example, they often have a hard time obtaining financing. Which is often understandable , as financial profits are not a priority for social ventures, while many consciously choose to operate at a competitive disadvantage. Sustainably cultured cocoa, for example, is simply more expensive for chocolate manufacturers than beans from 'regular' plantations. However, financiers can decide to look beyond the financial aspects and attach appropriate value to the impact of the venture – such as environmental benefits and helping people with occupational disabilities earn their own money. That would give social entrepreneurs the credit that they deserve, in my view.
New vision on financing
For many social entrepreneurs, gaining access to working capital is a sizeable barrier. Especially entrepreneurs in fair trade products often have to pay their suppliers long in advance. Entrepreneurs who develop cradle-to-cradle products – a model focusing on use rather than possession - are in dire need of working capital as well. Many of these companies cannot evolve because they are unable to finance their inventories.
Many banks still take the old-fashioned approach towards risks and returns. But new forms of financing could offer solutions. One example is lending with support from the new European EASI guarantee fund: a guarantee scheme for social entrepreneurs, backed by the European Union.
Growing mutual understanding
The good news is that these days account managers at banks are starting to recognise social entrepreneurs and their specific problems better and earlier. I see this happening within ABN AMRO as well. Their activation programmes about social enterprises are helping account managers understand the challenges social entrepreneurs are facing.
Recently, we organised a number of financing workshops with the bank, to give entrepreneurs a platform to present their plans. It provided them with more knowledge on other interesting forms of financing, such as crowdfunding and informal investment services.
It is good to see that more and more investors in the Netherlands are specifically focusing on growth capital for social enterprises. I am a co-founder of the impact fund Social Impact Ventures NL (hyperlink) and ABN AMRO is active in this niche as well. The ABN AMRO Social Impact Fund (hyperlink) has invested in nine social enterprises over the past few years, one of which is Text to Change, which I just mentioned.
Our contribution to social entrepeneurship
Social Enterprise NL is there to answer questions from social entrepreneurs and support them in their growth process. Any questions about possible forms of financing are skilfully answered via our direct connection with ABN AMRO. The bank is committed to supporting enterprises with a mission, but they do keep an eye on the risks. That inevitably means that social entrepreneurs sometimes get 'no' for an answer. But when the bank backs up its decision with the reasons behind it, I view that as constructive feedback.
In addition to direct support we also look for indirect support, by means of nurturing a healthy ecosystem for social entrepreneurs. One way to strengthen the sector is through research and education. By educating talent, we can ensure that the next generation of social entrepreneurs will rise to follow in our footsteps. Social Enterprise NL played a role in the creation of the new Social Entrepreneurship chair at the University of Utrecht, as did ABN AMRO. We would love to see more attention for this field at universities and colleges.
Partnership with ABN AMRO
At the launch of Social Enterprise NL, we looked to cooperate with organisations who could support our range of services for social entrepreneurs, not just with products, but with extra service as well,. ABN AMRO is just the kind of partner we want. The bank not only provides financing, but offers our members advice and assistance as well. For instance, ABN AMRO employees coach social enterprises on a voluntary basis several times a year. These coaching sessions are highly rated by the participants.
Richard van Eeden from Stichting Nelis told us about how he entered the ABN AMRO coaching without high expectations – and how he came out incredibly enthusiastic. 'It was a very confronting conversation,' he told us. Richard guides young adults into employment in the cleaning industry. 'But I would recommend it to anyone who wants to get to the next level. My ABN AMRO coach challenged me to think outside the box, and became a sounding board, a mirror in both my private and professional life.' The work relationship between Richard and his coach eventually evolved into a highly valuable cooperation. Meanwhile, four coach-kick offs have already seen the light of day, and Stichting Nelis has been joined by about forty entrepreneurs who were each paired up with an ABN AMRO coach.
The socially responsible puzzle
I consider our cooperation with ABN AMRO to be a true win-win situation – not only for social entrepreneurs, but for the bank as well. With the knowledge gained by working with social enterprises, the bank is better prepared to provide innovative financial solutions for organisations with non-traditional business models. Additionally, the cooperation is opening doors to new markets, which can be interesting to their private banking clients. Above all, the bank contributes to a better society itself as well, by increasingly shifting purchasing towards social enterprises such as Taxi Electric and YouBeDo.
Social enterprises will be able to maximise their impact when all the pieces of the puzzle combine: innovative services, enthusiasm among the idealistic people behind the scenes, and sufficient capital. Together with our partners we are creating a climate that will allow social entrepreneurs to make a growing impact. The next generation of entrepreneurs is already starting to look more consciously at their role in society. Perhaps one day, they will end up rendering Social Enterprise NL redundant. On that day, I will rejoice in the satisfaction of a job well done.