The Marc Impact Programme, which is an impact and social enterprise scaling and development programme, was launched on June 6th during the Impact Days in Vienna, as the joint initiative of ERSTE Foundation, Erste Social Finance Holding and IFUA Nonprofit Partner/SIMPACT. An interview with Johann Heep about Erste’s role in this programme, and the aims and dreams of Erste on Impact Economy.
Why did Erste decide to initiate a programme that supports impact economy, social enterprises and impact startups?
For many years, Erste Social Banking is a driver of entrepreneurship development programmes across Central and Eastern Europe. Our aim is to increase the capacity of organisations, so from the society point of view they become more stable, stronger and achieve higher social and environmental impact, but also to make them financeable from the bank’s point of view. All organisations need financial means to grow, to scale up, and our Social Banking units therefore support Social Business and NGOs. As these organisations strengthen and grow, our region will be a better place to live for all of us, and this is what we envision here.
Why did you shift focus towards social enterprises and impact enterprises?
To be clear, NGOs are very important to support. But social enterprises and impact enterprises are a huge opportunity too, and they are closer to our world as a bank, they have business operations, a business model that we can assess and help improve, they sell products or services, they may require loans to grow, which are territories that are easier for us to support. At the same time, these enterprises have a tremendous purpose-driven impact on the world, comparable to NGOs. Social Businesses can focus more on creating impact instead of using a big portion of their time to fundraise instead.
So, impact economy is a territory between business and civil society. If this impact economy grows, how would the society, people’s lives be impacted?
The chances for the different members of the society would become more equal. Everyone would have fair chance to create their own personal wealth, they would be able to fulfil their dreams more, and impact enterprises would support them with that. The society would become far more just and open to all.
What is Erste’s role in this journey towards an impact-enterprise-driven society?
We should not view Erste as just a bank providing financing. Erste is a partner with a great network, we partner with business corporations, social organisations, state and public entities, investors and so on, and we can and shall mobilize this network to achieve a lot higher impact together.
As an example, we have run the SEEDS programme together with SIMPACT and IFUA Nonprofit Partner for 6 years in Hungary. Here, we connected NGOs, social enterprises with corporations and pro-bono supporters or funders to achieve their social goals or solve their challenges. In Austria, we initiated and recently closed the Social Impact Bond, where we worked together with the Ministry of Social Affairs and the social service provider to tackle a social challenge. These are very successful business-civil-state partnerships.
What kind of enterprises would you like to see most, as participants or applicants to the new Marc Impact Programme?
On the one hand, operating social enterprises, who faced limitations so far due to the lack of know-how, expert inputs or resources. They did not know so far, how they could grow beyond their current state, extend to new territories of geographies. On the other hand, we would love to see for-profit companies too, who have intentions to do business in a more responsible or sustainable way, but don’t know exactly how to do that.
Do you see differences between the CEE countries on the development of this impact economy, and the role that Erste needs to play?
Yes, there are big differences. Not only in their development phase, but also available support systems. State and private financial and non-financial impact enterprise support differ from country to country. This means that local Social Banking offers are different from one country to another, and therefore this programme adjusts to country circumstances and needs.
An important focus of this programme is to support organisations to become finance-ready. What makes an organisation finance-ready in your view?
The biggest question is whether the organisation wants to really grow to the next level and is willing to take financing to achieve that if needed. This is of course the free will and intention of the organisation. If this is the case, the business model and the financial plan needs to be in place, well thought through. Pulling in external financing needs a sensible approach and feasible growth should balance out any additional financial risks. In many cases, we play the role of improving those plans, so that they are strong enough, and so the financing enables their growth plans rather than limits them.
But Erste shall not be the single investor in the programme ecosystem to offer financing, you are also inviting investors. Why are these investors interested to join in?
The Marc Impact Programme offers need-based and tailored development to each participating organisation, so they become investment-ready or finance-ready. Many of our participants will be both willing and ready to take investment to grow to the next level and generate even greater impact. If we identify gaps in the financing offer of Erste we will create those needed instruments or look for external impact investors, philanthropic organisations or angel investors to close that financing gap.
We will strive to offer Erste funding to everyone who is eligible and ready to process it ideally completing the new programme . We have a great variety of funding options that flexibly fit to most needs. For many years, we are offering special Social Banking loans to social economy members and NGOs. We provide bridge loans, investment loans, mezzanine financing etc. We recently developed a special mezzanine loan that we call quasi-equity, and we keep developing further financial instruments based on our participant feedback from this programme also.
We collaborate with other development programmes running in the countries and try to channel applicants pending on their stage of development into the fitting programme.
What would be your message or recommendation to those, who consider applying to this programme?
Look at the Marc website application form (link here), and do apply, even if you are uncertain, whether it is a fit. You may participate in this programme, or we will recommend you better fitting solutions. fitting Let’s start the discussion, learn from each other and develop together.
In case you become a participant, take the programme seriously, join our sessions, devote attention and focus, and share feedback, so we can improve too.
In the programme, we will support you to become stronger, more resilient and more impact generating, so that your enterprise can help all of us improving our daily lives, giving fair chances to all and making our society and world more sustainable. And we will be very committed in supporting you. This is not a marketing initiative for us, not PR, not CSR, it is real commitment. We are not striving for quick wins but your true long-term win and growth of your impact.