Nova workboard

a blog from young economists at Nova SBE

Alternative financing sources

Education is said to be the key to a more or less stable future in times like these. Unfortunately increasing inequalities in income and poverty among Europe are contributing to an unequal access to education. This distortion in chances created from the earliest years of education on, leads to a future without a positive outlook and, in the extreme point of view, governmental social transfers and unemployment being the only solution to some parts of the society. The state plays a significant role in this scenario as it is expected to create and enable equal access to aspects such as education and provide support for the less benefitted. The problem here is naturally the financing source, which in times of the European crisis seems to be drying out ultimately and thus aggravating current situations.

An alternative approach to state financed social programs are privately or churchly financed projects. These ones represent a big part in the social sector of most European societies and are of a great significance in trying to maintain a social balance.  Their dependence on private capital and donations is the crucial part of the story and often limits those initiatives in utilizing their real abilities. New ways of financing and a broader access to capital markets could be one way to reduce this problem. New arising non-profit organizations and internet platforms such as betterpalce.org started tackling this issue through trying to turn donation processes more transparent and centralizing projects on their platforms. Providing thus an easier access to social projects and increasing incentives to donate.

Another example are social stock exchanges, which in my opinion are a intelligent way of exploiting the benefits of our “capitalistic system” for the good. The integration of a highly profit oriented institution with a social constant creates benefits for both sides. On the one hand it broadens immensely the access to capital, as aspects such as credibility and transparency are enforced by creating a social stock exchange that is linked to the common stock exchange. It ensures investors that projects are evaluated properly from a competent team and it centralizes projects such that smaller and less known NGOs have a fair chance of financing their projects.  On the other hand it gives an institution, which nowadays is often negatively perceived, the chance to allay its reputation of the negative burden and opens the access to investors to finance projects that were unknown to them before.

It is obvious that these social projects and NGOs are not an alternative to state financed social welfare programs because essential social areas are of the state´s responsibility. However for private social initiatives these mechanisms represent an efficient way of financing and enabling more social programs to help easing aspects such as unequal access to education and a lack of support and thereby leading maybe to a future for some people that is less futureless.

Friederike Strate

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Author: studentnovasbe

Master student in Nova Sbe

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