European funds are an important resource for financing social enterprises

Author: Loreta Isac, Center for Not-for-Profit Law (Romania)

Published on: 2021/12/06

In Romania, the most important public funds dedicated to set up social enterprises are those of the Human Capital Operational Programme 2014-2020, axis 4, priority 9v. Other programmes (e.g. National Rural Development Programme, Start-up Nation Programme) encourage the set up of enterprises, which may also include social businesses without any specific mentions of them.

In addition, there are a series of other support programmes for social enterprises aimed at setting up and developing social enterprises. The main categories of services and opportunities through this type of programme are:

• courses and training for business plans and in general for business planning;
• European funding or grants for the set up of a social enterprise;
• strategies for maximizing profits;
• visibility support;
• networking;
• development of communication and collaboration platform.

 The Human Capital Operational Programme (POCU) 2014-2020

This is the most important donor at the moment for social businesses. Provided under Axis 4, Priority 9v, the measures involve funding the establishment of social economy structures that meet certain conditions:

• a newly established social enterprise must consist of a minimum of 5 persons, out of which a minimum of 2 persons must have employee status. The remaining persons forming the social economy entity may be members, volunteers, beneficiaries of the services/ products provided by the social economy entities;
• minimis aid scheme of EUR 100,000/ social economy entity (structure) created;
• activities in the field of agricultural production, primary processing of agricultural products, fisheries and aquaculture, transport of goods and import-export of goods and products are exempted from funding;
• even though the POCU also aims to fund the development of existing social economy structures, only those involving the establishment of new structures are provided for in the activities detailed in the Applicant’s Guide.

For more information click HERE.

National Rural Development Programme – Sub-Measure 6.2 and Sub-measure 6.4

Sub measure 6.2 – Support for the establishment of non-agricultural activities in rural areas provides for the support of people from rural areas to develop non-agricultural businesses in the area where they live. Without express provisions in the Applicant’s Guide, this sub-measure contributes to the establishment of social businesses by funding those projects aimed at creating workplaces in rural areas by setting up micro and small-sized enterprises and developing non-agricultural activities, including those in the field of services. The amount of funding granted is EUR 70,000/ project in the case of production, medical, veterinary and agro-tourism activities and EUR 50,000/ project for other activities covered by the application for funding.

National Rural Development Programme – Sub measure 6.4 – Investments in the creation and development of non-agricultural activities

The purpose of this sub-measure is to fund micro and small-sized enterprises in rural areas, which create or develop non-agricultural activities in rural areas. Existing rural micro and small-sized enterprises, micro-enterprises and small start-ups, which make proof of co-funding, may benefit from funding. The amount of funding is a maximum of 90% of the total cost of the project, without exceeding EUR 200,000/ project for 3 fiscal years. Projects are funded for 36 months and the financial results recorded by the applicant in the last 3 fiscal years have been used in the calculation of the funding.

For more information click HERE.

The acquisition of equipment, premises and machinery, consumables and buildings (not intended for housing), fixed and mobile assets, plus expenditure related to patents, training courses, including salaries for new employees (the reference value is the average gross salary per country at the time of application for funding) are funded.

The most serious problems highlighted by the beneficiaries of European projects were: the repeated postponement of the launch of calls for project proposals; lack of relevant justifications for the score given by the evaluators; delays in processing payment orders by certain intermediate bodies; the request by the managing authority of additional documents compared to those established by legislation, etc. Also, another disadvantage of European funded projects is the fact that they do not address to existing social enterprises for their development.

European funds are an important resource for the development of new social enterprises, but in Romania it is important to provide more transparency and to simplify of the process of accessing these funds.