An important element in paving the way for social innovation is, unsurprisingly, funding - where should the money for social innovation come from? Perhaps we should start calling it investment, not spending, when we talk about the money we spend on our shared public sector. On schools, education, health care, safety nets, rule of law, etc. On functions in our society that are envied from much of the rest of the world
According to several international organisations , Denmark is one of the best countries in the world to do business in. One of the reasons is our social model, which ensures a skilled workforce, a flexible labor market model with a safety net and ensures that the differences in living standards and opportunities do not become too great and create social unrest. Our society is characterized by closeness and trust - and this shows that our social model is a good investment.
But our social model is not infallible or natural. If we don't develop it, we risk it slowly falling apart. Because we're not doing enough when thousands of young people from each year end up outside the community. When housing policy lacks the tools to create safe and vibrant places to live throughout Denmark. When companies lack manpower while a large group of people are unemployed.
If we fail to make a real effort to solve the fundamental problems in our society. If we fail to utilize the huge potential we have as a well-functioning, open and resourceful society. If we allow the cohesion and fundamental trust on which our society is built to erode. We risk losing the foundation on which our success as a society is built.
That's why we must invest in the continued development of our social model. Both the ongoing, natural evolution and the more fundamental change where necessary.
If our strong social model is to endure in the future and continue to create the framework for one of the most satisfied people and one of the best business climates in the world, we must ensure that our society is sustainable, also socially. Unlike most other places, sustainability in Denmark is perceived almost exclusively as something green. For most people, it's about reducing greenhouse gas emissions, limiting food waste, restructuring our transportation and consumption and much more. These are insanely important efforts. But sustainability is, and has been since the Brundtland Report "Our Common Future" from 1987 both social, green and economic. They are interdependent and inseparable.
In its many sustainability policies, the European Commission emphasizes that both the green and digital transitions are social in the sense that they require a movement of all of us. Transisitions must happen in a way that supports our model of society and our values of openness, freedom and equal opportunities. In other words, the bottom lines contain all the relevant societal agendas - the social, the economic, the digital and the green.
In Denmark, we have seen companies and investors' sustainability efforts focus on the green, which in some contexts has left the other bottom lines - and the other SDGs - on the platform. In fact, only five of the 17 SDGs are purely green (7: Sustainable Energy, 12: Responsible Production and Consumption, 13: Climate Action, 14: Life in the Sea and 15: Life on Land). The others deal with gender equality, education, decent jobs, strong institutions, hunger and health and well-being. The same applies when companies and investors work with ESG - environmental, social and governance.
If you make an - admittedly unfair and impossible - comparison between the Green Future Fund and the Social Investment Fund, the first has DKK 25 billion at its disposal, while the second has DKK 78 million. Just to make the differences a little clearer. I'm not advocating cutting back on the first, but if we want to create social innovation, we probably need to increase the second.
This calls for us to take sustainability seriously as more than just green, so we can find funding for social innovation.
Although social innovation covers a much broader scope than what we traditionally call "the social area" and can also include education, health, employment, etc., the discussion about financing and investing in social innovation often faces the challenge that profit on social initiatives is not so popular in Denmark.
We don't turn up our noses when the government, on behalf of all of us, invests DKK 800 million in Bavarian Nordic to develop a COVID-19 vaccine that we can all see the health and earnings benefits of. Nor does anyone see anything problematic about the fact that for decades we have invested public funds in the development of green solutions that have made private companies rich. On the contrary, we are ramping up this type of investment - just think of the energy island, which the state will invest more than DKK 105 billion in order to have majority ownership. And surely it makes sense as a society to invest in something we can all enjoy and make money from?
But when it comes to social profit, the reactions are different - you shouldn't be able to profit from people in vulnerable positions. And it's understandable and sensible that we don't want to open up a market for scam artists and disingenuous people who take advantage of other people's bad situation. But we don't seem to have the same concern in the green sector, in medico, govtech or welfare tech - or even in the closely related employment sector. Here, we don't make rules based on the fact that there may be a few bad apples, but on the fact that there is a mutual benefit in investing in solutions that benefit us all.
No one should profit from someone else's bad situation, but can't we live with the fact that some people profit from solving the problems that we as a society can't solve otherwise?
If you ask social entrepreneurs, businesses or organisations about the problems with funding, one of the things that comes up is that money comes with a price. Money pulls your idea, your business, your organisation in a direction.
For many social entrepreneurs, the first money they raise is from a philanthropic fund. Before you get that far, you need to decide whether you want to set up a business, an association, a foundation or something else when you register in the CVR register. If you're aiming for philanthropic money, you typically choose an association, foundation or social enterprise because they allow you to make a donation. There's nothing wrong with that. But if you manage to create a proof of concept and want to expand or scale, you often need a different type of money for that phase, and here it becomes a challenge that you have a legal status that makes profit very difficult. An analysis by Danish Social Innovation Academy indicates that there are major challenges with funding in the transitions between growth stages for social entrepreneurs.
Another thing about the different types of funding is that "normal" entrepreneurs who need to raise money to develop a product or go to market with an already developed product emphasize their shortcomings when raising money. In addition to money, they may also lack marketing skills or the skills to develop the right business model or something else. Investors at this stage invest not only money, but also skills and networks to make their investment a success.
The situation is different with many philanthropic funds. Traditionally, if you want to secure a grant from a philanthropic foundation, you have to convince them that you have a solution, that you are the best person to implement it, and that you know how, when and with what to do it. Fortunately, there are significant exceptions, but there is still typically no access to mentoring, skills you don't possess or mentorship from those with the money at stake.
The different logics, the transitions and the narrow boxes you have to define yourself into from the start are challenges that need to be addressed in order to create a more cohesive market ecosystem for social innovation.
For many years, Denmark has exported knowhow in various areas - agriculture, ecology, design, green transition, elderly care, etc. At the same time, Denmark has a social model that - not only in terms of green, digital and economic aspects - is admired in large parts of the world, also because of its social aspects. We have a holistic approach, where we work together across interests to benefit everyone and thus develop good societal solutions.
We have done it historically - just think of insurance, public schools, the cooperative movement, daycare, the labor movement, the housing movement, the labor market model, etc. There is plenty to be proud of. And we are still good at trusting and solution-oriented collaboration. But we can be even better. And if we rediscover our outstanding ability to solve societal challenges through fundamental change, wouldn't other countries be interested in learning how?
