A Leap for the Social Investment Sector in Central, Eastern, and Southern Europe

Last week I spent an incredible four days in Warsaw.  It's not often when I feel that every day of the week represented one leap forward in developing a thriving social enterprise sector in the region.

These four days reflected once again what we all should ultimately come to accept.  Through informed and collaborative efforts, we can accelerate the development of high impact enterprises that are best positioned to solve exclusion and unemployment.

Launching the Task Force

On days one and two, I had the honor of working with 20 leaders from the region in identifying the objectives and platform of the newly launched Central and Southern European Social Investment Task Force. The Task Force aims to bring greater and better capital to create greater and better investment-ready socially driven enterprises. NESsT presented the idea of creating the Task Force at the European Venture Philanthropy Association (EVPA) annual conference in Paris last November. EVPA embraced it and has been working with us to develop the Task Force for the region, sponsoring the official launch meeting in Warsaw.

CEE Task Force Meeting  (Photo Courtesy of Impact Hub Zagreb)

CEE Task Force Meeting (Photo Courtesy of Impact Hub Zagreb)

As the group gathered in Warsaw to discuss priorities, we arrived at a shared vision for a two-year strategy including:

  1. The mapping of key stakeholders and activities in the sector so that we can build on successes and fill in the gaps.
  2. An impact report to be launched next year that provides the baseline on the scope of the industry and stories of what is already happening.
  3. Co-investments among the small group of investors in the region and an agreement to work with funders and investors, including the European Commission, on creating more and better financial instruments and tailored capacity support for enterprises.
  4. Sharing of knowledge and best practices with the Global Steering Group (GSG) whose mandate is to help strengthen the global movement and ensure that we are building on each other’s experiences.

At the meeting, we were joined by Sebastian Welisiejko and Jane Newman of the GSG, who helped to facilitate the discussions and provided their experience in helping to develop other Task Forces around the globe. In addition to EVPA and NESsT, the organizations present included: the Academy for Philanthropy Development (our generous hosts), Bcause Bulgaria, CEED Macedonia, Dokikino Serbia, Erste Social Banking, the European Commission, GSEN, Impact HUB (Vienna and Zagreb), Mozaic, TISE, and Yunus Social Business.

Site Visit to Siedlisko

On day three, I had the pleasure of traveling with my colleagues to visit one of the enterprises in our portfolio located in Kolonowskie, three hours south of Warsaw. Siedlisko runs a nursing home for the elderly and chronically ill that is staffed by 30 young people with disabilities as well as the long-term unemployed.

Lunch at Siedlisko
Lunch at Siedlisko

As we walked through the remodeled and energy-friendly building, we witnessed some powerful scenes of young people as they assisted and interacted with the center's elderly. These youth have lived in institutions all of their lives with little hope of ever attaining any kind of work. The pride they expressed as they fulfilled their responsibilities spoke millions.  We saw them helping to lift the residents from their beds and preparing them for the noontime meal.  Others were making sure that the rooms of the residents were clean and comfortable.  Those who work in the enterprise's catering side, which uses the kitchen's idle time to prepare and sell healthy meals to the surrounding hospitals and schools, proudly washed and peeled vegetables and cleaned and organized the kitchen facility for the next round of meals.

Siedlisko Employees

Siedlisko Employees

The dynamo entrepreneurial team that founded Siedlisko, Teresa Truch and Joanna Pietrzela, explained that the employees were fast learners quickly able to assume more complicated tasks and levels of outputs. Teresa shared that the enterprise had increased sales and done quite a bit of cost-cutting, and as a result, had reached break-even this quarter.  It is also on track in repaying its outstanding and recently refinanced Tise loans that it incurred for the purchase and renovation of the building. The loans are friendlier with longer repayment periods and lower interest rates. This comes two years after they entered our portfolio and were launched with NEST's investment.

Siedlisko Co-Founders Teresa Truch (left) and Joanna Pietrzela (right)

Siedlisko Co-Founders Teresa Truch (left) and Joanna Pietrzela (right)

Now that it has reached a more stable situation, the enterprise is planning to expand the center´s infrastructure in order to add a common room as five additional beds for the nursing home residents.  The enterprise will also launch a service to provide weekend in-house care for the elderly who live in the surrounding areas to supplement the weekly service provided by the government.  This will allow the enterprise to extend its services without having to invest in additional infrastructure.  Once these investments are completed, Siedlisko will employ 50 at-risk individuals.  The employees of the Center make what is considered a dignified wage for Poland, enough to live independently.  They often prefer to stay at Siedlisko after they have completed their workday, where the environment is warm and accepting.  Teresa and Joanna's dreams expand beyond those of dignified employment.  In the enterprise´s next phase, Siedlisko is planning to develop affordable housing for the youth, so that they can leave the state-run institution hidden in the forest far from the view of most Poles, to a home they can call their own.

Siedlisko Facility

Siedlisko Facility

Portfolio Roundtable

Day four provided a more systemic view of how to scale and build many more Siedliskos in the country. We held the third and last in a series of round-tables in Warsaw focusing on NESsT Empowers, a program that focuses on investing and supporting enterprises that prepare at-risk youth and women to work in high-growth industries in the countries where we work.  In Poland, the program has focused on the IT/BPO sector, an industry that is growing very quickly and shows promise of being able to absorb thousands of candidates for entry-level positions in the coming years. The urgency is reflected by the 20% of youth that are unemployed, 18% that are neither employed or in education or training (NEET), and 19% pay inequality between men and women.

NESsT published an in-depth study of the sector providing an assessment on the number of jobs and types of skills that are needed.  Through a rigorous due diligence process, we selected two high-impact enterprises, Coders Lab and Dimpact, to train and prepare vulnerable individuals for longer-term careers in the sector.

After presenting the study at the roundtable, we divided into groups where both enterprises had an opportunity to discuss their value-proposition with employers and recruiters and receive feedback on whether they would uptake their trained clients (at-risk women and youth) for employment.

I sat in the group with representatives of Coders Lab, Hays (global recruiting firm) and the Warsaw Labour Office. In less than an hour, these three organizations provided each other with tremendously pertinent information on how they could help one another.  The social enterprise has a track-record of preparing coders for both front-end and back-end jobs and is now incorporating at-risk individuals into their model. More than 80% of those trained by Coders Lab are able to secure employment.   The recruiters confirmed that there is a tremendous need for well-trained candidates and that they recognize the need to work with other providers such as Coders Lab to be able to meet market-demand.  The Warsaw government representative, who runs trainings for the unemployed, verified that they would be able to provide support to at-risk candidates enrolling in the Coder Lab trainings plus offer a one-year salary for them to work in different IT/BPO companies.  As each group learned more about the other, it became clear that we had a win-win situation and that they were learning about these opportunities for the first time.

A similar encounter occurred in the parallel roundtable with Dimpact, a social enterprise that offers high quality trainings for positions needed by the industry on their online platform.  Their first cohort will be to train junior accountants.  Paribas, the employer at the table, confirmed that the industry needs 2,000 junior accountants per year and they believe that companies in Poland would be willing to pay a fee to have well-trained candidates to fill these jobs.The research had shown that focusing on soft skills and the ability of at-risk youth and women to cope with the work environment was as important, if not more so, than the actual technical skills needed for the job.  The industry confirmed that these entry-level jobs can be learned on the job, and that a willingness to do so was the most important factor of success.

These four days in Warsaw reflected once again what we all should ultimately come to accept.  Through informed and collaborative efforts, we can accelerate the development of high impact enterprises that are extremely well positioned to solve the critical challenges of exclusion and unemployment.

Whether focusing on building a movement with a group of peers such as those involved in the Social Investment Task Force, supporting a social enterprise that is working hard to prove its model of sustainable employment for its country's most vulnerable groups, or gathering a group of industry-focused actors trying to address the skills gaps and high unemployment in the country, the fact is that these efforts are working.

By building the investment industry with leaders in the region there will be more appropriate capital to support investment-ready companies like Siedlisko. By supporting early-stage impact investors like NESsT that are able to identify strong enterprises with potential to grow, the Siedlisko will be strengthened and ready to receive this capital.  And by working with corporations and recruiters, social enterprises like Coders Lab and Dimpact will be better able to train and prepare Poland's at-risk individuals for career tracks in high-growth industries.

Let's not waste more time in trying to figure out a solution.  The solutions are there.  We just need to embrace them.