A model for collaboration to support financial inclusion of the social economy.
About this good practice
Through innovative collaboration, a social and micro financing-model, a “joint social venture”, was developed increasing access to financial services and investments for the social economy sector.
Coompanion is an independent, cooperative federation providing advice and business development support to cooperatives and social enterprise start-ups. Financed partly by a grant from the Swedish Agency for Economic and Regional Growth, regions and municipalities, Coompanion provides free business advise. Often denied loans, and even bank accounts, social enterprises and cooperatives need support, training and financial solutions making them bankable and investment ready. Moreover, the traditional banks are inexperienced regarding legal forms and social business models increasing their risk aversion and exclusion of the sector.
To help fill this gap, Mikrofonden was founded in 2010 - an impact fund providing investments and supporting social innovation owned by, and for the benefit of the social economy. Providing credit guarantees and direct investments, Mikrofonden has helped more than 140 social enterprises, NGOs and cooperatives to access financing
By sharing resources, networks, platforms, organizing joint events ,training and educational activities, Coompanion helps Mikrofonden reach out to the social economy-sector all over Sweden.
Coompanion’s certified advisors use a variety of structured processes and support materials and direct those in need for financing to Mikrofonden
Resources needed
The cooperation is focused on the clients and the time spent is smooth. The more strategic cooperation is coordinated by representation from Coompanion in the boards of the regional and National Mikrofond. The National Mikrofond invites personnel and board members four times a year.
Evidence of success
The main advantage is the client’s rate of survival.
In 1 year, from October 2023, 244 social enterprises, NGOs and cooperatives were screened and coached. 39 of them applied for investments and received support to become finance ready.
In 2023, 23 (60%) of the customers in Mikrofonden´s portfolio have had previous support from Coompanion, saving time and resources for Mikrofonden. They received 3,5 SEK ( 31 % of the total Mikrofonden capital). The credit loss was under 1%."
Potential for learning or transfer
The collaborative model presented demonstrates a form of bootstrapping that enables small organizations to develop and operate a registered financial institution a "non-banking institution" with the aim of counteracting financial exclusion while also offering clients added value, such as business advisory services. This advisory support is critical, as many of the entrepreneurs are in early stages of development and often lack commercial maturity and experience in business practices.
The collaboration between Coompanion and Mikrofonden began in the Gothenburg region and has since spread to other regions with the support of a national consortium, which also makes it possible for applications to be submitted from all over Sweden. Mikrofonden Sverige and Coompanion continuously develop this initiative, making it an excellent way to scale up and gradually expand the concept.
Further information
Good practice owner
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