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Social Enterprise Funding Infrastructure

One of the biggest issues for the social enterprise sector in the coming years will be funding. It is not surprising that much of the sector has relied heavily on government funding, as can be seen by the Wheel’s survey from 2009. This is an issue in many Western countries, as the move towards both venture philanthropy and earned income has been slower particularly in Europe than in the U.S.  The creation of the European Venture Philanthropy Association in recent years is a welcome development, as now there is a central point for the development of this important sector. In Ireland there are a small number of organisations that use the Venture Philanthropy ethos including Social Entrepreneurs Ireland and the One Foundation.

Although there are some funding opportunties from other organisations, such as Clann Credo, there is still a deficit of financing options. The Irish Small and Medium Enterprises Association (ISME) has been tracking credit to SME’s from the banking sector, or lack of credit as it turns out. What chance then for a small or medium sized social enterprise, or a social entrepreneur trying to start a new organisation? Ireland has been the leader in the Credit Union movement for a very long time, but isn’t it time that there was such a movement for both the SME sector and the Social Enterprise sector? Is there a way for some of the Credit Unions to move towards small scale financing of organisations that the larger banks won’t support in these post-Celtic Tiger days? It is difficult to see how many social enterprises will survive into the future if something doesn’t change.

This is one of the reasons why the Ryan Academy has called on the government to create a Social Enterprises Strategy. The aim of the strategy should be to stimulate this sector of the economy which not only provides urgently needed services to the less well off but also is a major provider of jobs. The UK and Wales have had Social Enterprise strategies for a number of years, and issues relating to financing could be addressed in the development of such a strategy. Innovative ideas to address this shortfall, including the creation of Earned Income strategies, is the only way forward.

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