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Federal Family Minister Schröder: We need social innovations to gear up for the future.

Press Release from 2011-10-25 / Group

  • The Federal Family Ministry and KfW present a new instrument for financing the growth of social enterprises

Dr Kristina Schröder, Federal Minister for Family Affairs, Senior Citizens, Women and Youth and Dr Axel Nawrath, Executive Board Member of KfW Bankengruppe are today (Tuesday) presenting in Berlin a new funding instrument for social enterprises. With innovative ideas, social enterprises contribute to solving social problems. The new funding facility will enable them to obtain the necessary capital to disseminate effective approaches.

“Nursing care or Mrs Montessori’s nursery schools would not exist today if they had not found supporters who did not let themselves be put off by sceptics or critics. Social entrepreneurs need our support, because they make a key contribution to the wealth of ideas and, with that, the competitiveness of our country. We need social innovations to gear up for the future. With our new funding instrument, we will provide capital that social enterprises need to spread their ideas and reach as many people as possible,” said Minister Dr Kristina Schröder.

KfW Executive Board Member Dr Axel Nawrath: “Education and integration, environmental protection, poverty reduction and coping with demographic change are just some of the key social challenges we face now and in future. Government cannot cope with these on its own; we also need entrepreneurial initiatives. Promising approaches and ideas are already available today and these are what KfW wants to promote with its financial facility.”

Till now, there has still been a lack of disposable finance for social enterprises to facilitate their market-aligned corporate development. A particular deficit is growth finance for the period following start-up. The new financial instrument developed by KfW on behalf of the Ministry for Family Affairs will close this gap.

The KfW programme for financing social enterprises starts on 1 January 2012. It targets enterprises seeking to solve a social problem with an innovative business model and an explicit general welfare agenda that have already successfully negotiated the first steps as businesses and are now looking to expand. KfW will provide the requisite equity capital for this. It will collaborate here with other finance partners, such as funds, business angels or foundations. In future, KfW can match their contributions with an equal amount under the same terms and conditions in the individual case, not exceeding EUR 200,000.

The programme will thus enlarge the financial scope of social enterprises in two ways: Firstly, the enterprise will be provided directly with more equity capital for financing investments. Secondly, social enterprises also need a sound equity base for commercial banks to support growth finance with their own loans, for example.

The largest sponsor for social entrepreneurs, Ashoka, welcomes the initiative: “This instrument will also set an international example. Socially-minded investors will be motivated to finance social enterprises in the best way to ensure their independent growth,” said Ashoka’s Country Director for Germany, Felix Oldenburg.

Promoting social enterprises and social innovations is a priority of the National Engagement Strategy of the Federal Government.

You can find further information at www.bmfsfj.de (German only)