EU funding mechanism offer investors opportunity to scale up

EU funding programs InvestEU Fund and European Social Fund Plus (ESF+) can help impact investors to scale up and boost their impact, says Peter Surek, CEO of Erste Social Finance Holding.

European flag flying in the wind near the European Commission building. Nicolas Landemard / Zuma Press / ANP

“So far social investments are relatively small and not sufficient to tackle the issues that society is currently confronted with,” says Peter Surek, CEO of Erste Social Finance Holding and Head of Social Banking at Erste Group.

“I would encourage impact investors to look at the InvestEU Fund and European Social Fund Plus (ESF+ target: _blank) because they could help them scale up their impact substantially,” he tells Impact Investor, underlining the importance of public-private partnership for scaling up the whole ecosystem of social investment.

Surek is one of the speakers at the Annual Conference of the European Venture Philanthropy Association (EVPA) on 9 November 2021, where he will highlight opportunities and mechanisms for impact investors to engage in and access the two most important EU funding programs.

Partnering up with the public sector and making use of the EU guarantee in the InvestEU Fund can help impact investors decrease the risk of their portfolios and allow them to launch new initiatives for which they would not have funding otherwise.

InvestEU Fund

Through the InvestEU Fund, the European Commission will provide EU guarantees worth a total of €26.2bn. These guarantees are expected to mobilise €372bn of public and private investments.

For the first time, social investment will have a special window within the InvestEU Fund, with guarantees worth €2.8bn which are expected to mobilise around €14bn of investment in the social sphere.

“I think this will be very appealing to impact investors but also to foundations that would like to invest for social impact,” says Surek, who is also one of the eleven independent experts in the InvestEU investment committee.

The committee approves the use of the EU guarantee for financing and investment operations proposed by the implementing partners of the InvestEU Fund.

European Social Fund Plus

The European Social Fund Plus (ESF+) is the main fund tackling social issues in the EU. €100bn is earmarked for this instrument during 2021-2027.

Unlike the InvestEU Fund, ESF+ provides mainly grants. Most of the grants are distributed by the local managing authorities in the member states.

Here impact investors can come into the play and use parts of this funding for financial instruments for social impact.

“There is a quite huge potential for impact investors to plug in and help to define local priorities and the programs that will be executed at the local levels,” Surek says.

Public-private partnership key to access finance

The Annual Conference of EVPA – comprising more than 300 social impact organisations – is part of EVPA’s Impact Month, which provides a space for the impact community to come together, share best practices and connect with other impact players across the globe.

For Bianca Polidoro, Senior Policy and EU Partnership Manager at EVPA and one of the speakers at the Annual Conference, it was important to have a session on public-private collaboration and funding.

“This is super relevant. Access to finance is key and you need to involve the public sector that is an expert on social economy and impact investing. It’s really about fostering private-public cooperation and financial instruments that can help mobilise resources to achieve societal impact,” she tells Impact Investor ahead of the seminar.

It offers impact investors the opportunity to connect with representatives from key EU institutions; also speaking at the seminar are Silvia Manca, Head of Social Impact Programmes at the European Investment Fund as well as Frank Lee, Head of Division of Advisory services at the European Investment Bank.

Learn more

Do you want to know more about how EU funding can help boost your business? Register for The Gateway for Impact Investors to the EU long term budget: InvestEU and ESF+ 9 November.