The Better Entrepreneurship Policy Tool

PiacTárs - Priority project to develop social enterprises in the interest of a sustainable and competitive social economy (Hungary)

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What

In 2016, a consortium comprised of OFA Nonprofit Kft, IFKA Public Benefit Nonprofit Kft and the Hungarian Ministry of Finance launched Piac Társ (“MarketMate”) as a pre-evaluation system for social enterprises to apply for non-refundable and refundable grants under the Hungarian European Commission’s Economic Development and Innovation Operational Programme (EDIOP), co-funded by the European funds via the European Social Fund and the European Regional Development Fund. The programme combines a social impact framework, screening and pre-certification process with tailored business development support.

Its initial version (1.0) was designed to support Hungarian social enterprises through a combination of targeted financial and non-financial support and includes a pre-certification scheme that ensures investment readiness. Moreover, tailored training on the creation of a sustainable business model, business plans, marketable products and services is provided to social enterprises. MarketMate has since been further developed and introduced an exhaustive definition of social enterprises along a large number of criteria, whilst keeping its initial focus on social enterprises as a means to foster employment.

With additional funding from Interreg Europe, IFKA developed a version 2.0 of MarketMate, which was launched in 2020 and will conclude in September 2022. Based on the experiences from the first iteration, version 2.0 has been streamlined to develop a more concise understanding of social impact and provide an evaluation and certification system also to those enterprises not focused on employment.

Why

The goals of the programme are three-fold: generation of employment and other social impact through social enterprises, creation of a sustainable social enterprise ecosystem with access to dedicated funding, and the harmonisation of definitions of social impact along well-recognised norms and standards. The programme was co-created and further developed with stakeholders from the social enterprise field.

Originally, the Ministry of Finance developed the EU co-funded operational programme in order to increase the employment potential of social enterprises, their competitiveness and sustainable market activity as set out in the Partnership for Hungary for the 2014-2020 Development Period. It introduces clear criteria to define a social enterprise and by supporting the development and financial sustainability of these enterprises, the Hungarian government sought to strengthen their role in employment. In its second iteration the Piac Társ programme fosters the development of a conducive ecosystem for all social enterprises, including through the dissemination of a shared definition of social impact.

Key Activities

The original programme (version 1.0) is built around a pre-qualification and screening scheme that allows social enterprises to identify their strengths and weaknesses and eventual gaps prior to applying for funding and tailored support. In order to obtain a pre-qualification certificate, social enterprises must comply with three criteria: 1) legal form and other administrative requirements, 2) sustainable business plan and 3) measureable social impact.

The support measures include diverse business development and capacity building services, with a focus on building social enterprise skills and access to finance, e.g. consultancy, mentoring, organisation of networking events etc. Applicants and already supported social enterprises can continuously access these consultancy services through in-person meetings, email or telephone. Potential grantees that do not yet qualify for the funding scheme can also access advice services.

Version 2.0 of the programme was prepared between November 2019 and September 2020. It now includes: a form for applicant organisations to provide data online, on the basis of which the consortium conducts individual online interviews and provides assessment and feedback before proposing tailored development services. The questionnaire used is structured in five horizontal areas (mission, goals and framework, human resources, digitalisation, partnerships, planning and monitoring) and five key areas (social model, business model, social impact and plans) that allow the assessment of the sustainability of the social enterprise. Based on the information collected, the programme generates certificates on participation and qualification that include structured feedback and a benchmarking with other survey participants along each of the ten areas as well as a short set of conclusions on the development potential of the social enterprise. Certifications can also be used to apply for funding outside of the MarketMate scheme and are aimed at harmonising and lending credibility to funding applications by social enterprises.

Lessons learned from the first iteration were applied to include a less complex and burdensome certification system and allow it to extend its reach to social enterprises whose primary goal is not in employment. Any social enterprise can now benefit from certification and support as long as they comply with social impact goals and key markers of a social enterprise. Stakeholders were consulted in the development and testing of the assessment framework, the online tool as well as the data collection.

Impact

As of September 2020, 2 411 organisations registered 2 231 projects with MarketMate, 741 of which were certified under the pre-evaluation system. By 2020, a total of EUR 70 million has been allocated to Hungarian social enterprises in the form of non-refundable grants. An additional EUR 33 million were awarded as refundable grants with support of the Hungarian Development Bank and a consortium of commercial banks.

The version 2.0 of the certification system also allows to introduce sector-level monitoring, evidence-based development of policy instruments and dedicated  support programmes for social enterprises alongside  the issuing of social enterprise certifications. By developing a general framework for social enterprises and social impact measurement, MarketMate aims to foster more targeted policy interventions that take the different business development stages, sectors and social impacts of social enterprises into account.

MarketMate is an example of successfully pairing pre-assessment, refundable and non-refundable funding opportunities, tailored support and a certification scheme. The close coordination with stakeholders and the efforts in disseminating a shared understanding of social impact measurement can help programmes like these to create a more conducive ecosystem in the long-term. The programme has also contributed to stronger harmonisation, dissemination, and also helped to increase the credibility of social enterprises. Finally, the iterative improvement of the programme also illustrates a promising way for policy innovation, feedback and revision loops that can enhance the effectiveness and efficiency of these types of programmes.

 

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