Social progress is also profit

Traditional concepts of profit and financing models do not always fit the bill for social enterprises. This is why new financing solutions are needed. Rabobank Executive Board Chairman Wiebe Draijer believes Rabobank has a responsibility to help develop these solutions.

Wiebe Draijer said this at the Social Enterprise Day in Utrecht (the Netherlands, 21 May 2015), that attracted 500 participants. While social enterprises operate as a business (they provide products or services to the market and earn income as a result), they have mainly a social objective and want to make progress towards achieving it.

Accepting co-responsibility

‘Social enterprise means businesses accept co-responsibility for the society in which they operate’, Wiebe Draijer explains. This can pertain to matters such as liveability, education or the environment. ‘We see a void emerging because the Dutch government is withdrawing from many areas. So we need new solutions to fill this gap. Society needs social enterprises, but they don’t simply come about automatically without some assistance.’

Quest

Financing is one of the main issues faced by social enterprises. This poses a difficulty because how can a company define the ‘broad concept of profit’, in other words objectives that cannot be expressed only in euros? And how can they be translated in such a way that investors and financiers are convinced of the future potential for returns on their investments? ‘That is a quest’, says Wiebe Draijer.

Rabobank is already embarking on this kind of journey of discovery in Utrecht through The Colour Kitchen. This commercial catering company provides both catering services and training to disadvantaged youths. A pilot with social impact bonds for financing the young people’s training has recently been launched. According to this system, as soon as the social result has been achieved (the young person has successfully completed a training programme or has gained employment), the Dutch government (which saves on unemployment benefits as a result) repays the financiers that pre-financed the young person’s training. The Rabobank Foundation is one of the financiers.

Rabobank also has a social role

Wiebe Draijer says co-designing the financing for social enterprises suits Rabobank’s position. He points out that the local Rabobanks have been strongly rooted in their local communities since their foundation and Rabobank also holds that position within the wider Dutch economy. ‘We provide 40 percent of the lending to Dutch small and medium-sized enterprises. This means we also have the responsibility to help enable the Dutch business community to develop.’ This facilitation is provided not only in the form of financing, but also through promoting innovation and entrepreneurship, developing and providing access to knowledge and connecting people, for example at enterprise meetings and in networks.

Social developments generate growth

Wiebe Draijer is convinced that social enterprise and healthy business development can go hand in hand: ‘There is growth to be found in social developments and this provides opportunities for businesses.’ He mentions bringing people together in networks as a concrete example of such an opportunity for Rabobank. It first of all benefits the people involved because it gives them an opportunity to meet other people who have ideas and plans with whom they can collaborate. ‘But it has value for us as a bank as well because we are also involved.’

Dialogue with society

In order to be able to optimally fulfil this social role, Rabobank puts a lot of energy into charting the key social trends in the Netherlands. Large-scale dialogue sessions with Dutch society will take place in late May and early June 2015. Rabobank members, clients and employees and social welfare organisations will all participate in these sessions. The results will constitute key input for developing a sort of agenda for the Netherlands that will provide a picture of what Dutch society could look like over ten years. It will provide insight into what has to be done and what role Rabobank can play in this process both locally and nationally. This role builds on what is already being undertaken such as supporting social initiatives via cooperative dividend and the Rabobank Foundation’s activities that are aimed at promoting people’s self-sufficiency.