Brussels, 20 June 2014
Social entrepreneurship: new standard to measure social impact
A new standard to allow social enterprises of all sizes to better measure and demonstrate their social impact and so help them in their discussions with partners, investors, and public sector funders has been published by the European Commission. The standard, featured in a report on social impact measurement, will help European social enterprises to benefit from funding via the European Social Entrepreneurship Funds (EuSEF) and the new Employment and Social Innovation programme (EaSI). The report has been endorsed by an expert group on social entrepreneurship (GECES) set up by the Commission.
EU Commissioner for Employment, Social Affairs and Inclusion, László Andor, said: "We support the role of social entrepreneurs and their social investments. The new standard will help social enterprises to access EU financial support, and sets the groundwork for social impact measurement in Europe. It also contributes to the work of the Taskforce on Social Impact Investment set up by the G7 to develop a set of general guidelines for impact measurement to be used by social impact investors globally."
EU Commissioner for Internal Market and Services Michel Barnier said: "This report is an important step in the implementation of the Social Business Initiative. It will bring clarity and trust to an area which is attracting more and more attention, given the role that social impact measurement can play in helping the development of a supporting ecosystem for social enterprises."
The report found that it was not possible to devise a rigid set of indicators in a top-down way to measure social impact in all cases. Instead, it proposes a standard for social impact measurement in five stages, which is flexible enough to be adapted to the needs of very different social enterprises.
The necessity for a standard for the measurement of social impact is important in terms of funding: the EaSI programme stipulates that social enterprises must demonstrate that they are focused on achieving measurable, positive social or societal impacts in order to benefit from support. The new EuSEFs (European Social Entrepreneurship Funds) also require social businesses seeking financing to measure their social impact.
The development of a standard should help to avoid the current duplication of costs due to the fact that there are different approaches, as well as encouraging best practice in the rapidly evolving field of social impact measurement.
The Single Market Act II states that the Commission will develop a methodology to measure the socio-economic benefits created by social enterprises. The EaSI Regulation adds that the EaSI programme will fund the development of the social investment market and facilitate access to finance for social enterprises.
On the initiative of the Commission; the European Social Entrepreneurship Funds (EuSEF) were set up. Companies seeking to use these funds must invest at least 70% of their capital in social businesses. With the EuSEF, investors will know that the majority of their investment is going into social businesses, which are identified (similarly to the EaSI) by their pursuit of measurable positive social impacts.
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