Brussels' Village Finance: Grants to create jobs and improve the local environment
In Brussels Capital Region, micro-grants have been used to support the growth of green businesses in disadvantaged areas, and encourage new and aspiring entrepreneurs.
Village Finance is a non-profit fund designed to support the development of green and social enterprises in the city’s poorest areas and create new, sustainable jobs. Village Finance mainly provides grants to entrepreneurs starting out who lack financial resources and would not qualify for loans in a commercial bank. In addition, a range of expert organisations collaborate with Village Finance to provide free advice and support to new entrepreneurs on specific topics related to their business.
The programme invests in projects that will have a positive impact on the local environment and the potential to create long term employment. Since the beginning of the programme 181 new jobs have been created. Village Finance encourages local economic development by informing the local population about the new businesses and encouraging the grant beneficiaries to hire people from the target neighbourhoods.
The initiative is co-funded by the European Regional Development Fund ; a new version of the project is under assessment for the ERDF funding period 2014-2020.
Originally published by EUROCITIES, the network of 130 European cities - PDF: http://nws.eurocities.eu/MediaShell/media/353-green-web_final.pdf
Background and objectives
Despite being considered one of the most economically dynamic cities in Europe, more than a third of the inhabitants of Brussels Capital Region live below the poverty threshold. The city also has a higher unemployment rate compared to other areas in the country. Deprivation is concentrated in certain neighbourhoods, which have higher rates of unemployment, lower incomes and are more polluted. It is important to foster small and medium sized enterprises active in the area of sustainable development as an important way to reduce unemployment and tackle environmental issues.
Brussels Capital Region partnered with the municipality of Saint Gilles and two non-profit organisations to set up Village Finance, a non-profit fund designed to support the development of green and social enterprises in the city’s poorest areas and create new, sustainable jobs. The grants are provided mainly to entrepreneurs starting out who lack financial resources and would not qualify for loans in a commercial bank. These entrepreneurs can be currently unemployed, have low educational attainment or have struggled in the past to enter the labour market.
Proposals for new enterprises and business development projects are assessed by environmental, social and economic experts. To get a grant the entrepreneur has to include environmental benefits in their business plan. The programme invests in projects that will have a positive impact on the local environment and the potential to create long term employment. Village Finance funds a range of businesses including:
- Sustainable food: organic food markets, raw food restaurants, bio/organic canning factories and short food supply chains i.e. food production with fewer stages between the producer and consumer.
- Eco-construction: from a renewable energy consultancy to an enterprise selling energy efficient prefabricated timber houses or cooperatives that combine sustainable construction practices with hiring and training non-qualified staff.
- Function oriented business models: businesses that focus on sustainability by selling a function or service rather than a product. For example a car sharing collective or a company that rents clothes for children up to 3 years of age.
Financing and resources
Grants are co-funded by the European Regional Development Fund (ERDF). From 2009-2014 Village Finance received €739,000. Its staff and operational costs are funded by the Ministry of Environment and the Ministry of Economy and Labour of the Brussels Capital Region (23% and 67% respectively).
Results and impacts
Since the beginning of the programme in 2005, 67 out of 89 grants have been allocated to entrepreneurs who faced financial difficulties and labour market exclusion. The social economy or green enterprises developed through the grants led to the creation of 181 new jobs: 122 entrepreneurs and 59 employees.
These enterprises also provide residents in disadvantaged areas with the option of buying environmentally friendly products and services and raise awareness of environmental and social issues. Village Finance informs the local population about the new businesses and it encourages the grant beneficiaries to hire people from the target neighbourhoods.
Barriers and challenges
There is a certain level of risk involved in launching new businesses with less qualified entrepreneurs. Since 54% of the beneficiaries have no formal qualifications, the local advice services ‘Guichet d’économie locale’ works in partnership with Village Finance to help prospective entrepreneurs deal with the administration related to setting up their business and drawing up their business plan. Collaborating with ‘Guichet d’économie locale’ is a condition of the grant. The beneficiaries also receive support writing reports one year into the project on its results.
In addition they are encouraged to make use of free training courses provided by other local advice services who work in partnership with Village Finance. The courses offered include business plan writing, financial and profitability analysis, basic management principles, and market analysis and strategy. A range of expert organisations collaborate with Village Finance to provide free advice and support to new entrepreneurs on specific topics related to their business.
For example, entrepreneurs can contact an agency for social economy to get advice on the legal framework for social businesses or from an organisation that can help them to understand Belgian legislation on bio-standards and where to find suppliers for a bio restaurant.
Lessons learned and transferability
In Green Jobs for social inclusion (see references), EUROCITIES identifies three main factors that contribute to the success of these city initiatives to create green jobs for social inclusion at the local level.
1. Combining demand and supply side interventions: an intervention does not solely focus on developing people’s competences, skills and motivation (supply side intervention) but also aims to create a tangible route into the labour market (demand side intervention).
On the demand side, the programme's objective is to provide a ‘protected’ working environment with the view of supporting people to gain real work experience to enable them to compete in the mainstream labour market.
These demand side interventions are then complemented by well-matched activation and training measures (supply side interventions) helping people to gain specific skills and improve their chances of accessing the labour market.
2. Linking the interventions to local employment opportunities
The second success factor is the strong link between the programmes and local employment opportunities. Cities as the level of government closest to the people have an in-depth knowledge of their local labour markets. They can design programmes in line with local economic demand and prepare people for jobs that are available locally. The effectiveness of the demand and supply interventions is made stronger when they are grounded in local businesses and job market needs.
3. Tailoring activation measures to the specific needs of people
The third success factor of the programmes is linking the activation measures to the specific needs of the target groups.
For local authorities, programmes that combine greening and social inclusion bring added value, particularly during periods of budgetary constraint and growing demand for services. Integrated programmes that address several objectives with one investment bring efficiency to local interventions. Given the longer term perspective of the sector, linking job seekers to local jobs in the green economy should continue to bring results as the sector is set to grow.
A new version of the project is under assessment for the ERDF funding period 2014-2020. The geographical reach of the project will probably be widened to more neighbourhoods, giving more entrepreneurs the opportunity to apply for the grant.
More information on the success factors: http://nws.eurocities.eu/MediaShell/media/green_jobs_for_social_inclusion_intro_FINAL.pdf
"Local strategies to implement national energy efficiency schemes", in Green Jobs for social inclusion, EUROCITIES, June 2015, 22-23.