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Last week we had an interesting exchange with our members and Daniel Sorrosal from the European Federation of Ethical and Alternative Banks (FEBEA) and Claire Froment from Crédal, their Belgian member.

FEBEA is composed of banks, savings and loan cooperatives, investment companies and foundations –which I will refer to as ‘ethical banks’ from now on – which all share the same concern for transparency and social and environmental objectives. FEBEA aims to create financial tools that can help existing European initiatives and encourage the growth of new initiatives in the field of alternative finance.

How do ethical banks manage savings? When clients decide to invest money in the products of ethical banks, they decide to contribute to the fight against social and financial exclusion, and to support the idea of a fairer and more sustainable society.

Ethical banks offer products such as microcredit (up to €15,000) to individuals, entrepreneurs and self-employed workers who are unable to or encounter difficulties in getting access to credit from traditional banks. They also offer specialised products to support entrepreneurs and small- and medium-sized enterprises that carry out initiatives in the field of sustainable development. Finally, they have dedicated products to civil society organisations and social economy enterprises; for example, to provide loan bridges while waiting for payments by the public sector, including EU funds. They provide financial and technical advice to clients in setting up their projects, business and investment plans.

We also discussed with Mr Sorrosal how our sector could benefit from financial instruments (e.g. guarantees and loans) and in particular from the European Fund for Strategic Investments (EFSI).

He confirmed that there is an orientation at EU level to shift from grants to financial instruments in EU funding. For each EU policy there is an EU funding instrument that foresees financial instruments alongside grants. In this way, he sees that financial intermediaries become key players in the implementation of EU policies.

He said that 10% of EFSI is theoretically devoted to social economy. In short, this means having access to private funding. EFSI can be an interesting instrument for the social sector if we are able to pool our investment needs – as investments have to reach the amount of €20 million – and assess our financial capacity. If an organisation does not have an investment need, EFSI would not be a useful tool. For organisations interested in submitting projects, they can benefit from the technical assistance offered by the European Investment Advisory Hub. They can also showcase their projects at the European Investment Project Portal.

One recommendation we gave to FEBEA and the representative from the European Commission is to facilitate the cooperation between ethical banks, other financial institutions specialised in social finance and traditional banks on how to work and support the social sector. EFSI provides the EU institutions with the perfect opportunity to do so.