Intesa Sanpaolo attributes a great deal of importance to the Third Sector, which represents a significant part of the economy and of Italian companies. These customers are assisted by Banca Prossima, which creates positive social impact through its lending activities. Its greater and more targeted credit with lower costs once again in 2014 supported the Third Sector in terms of inflows-outflows balancing, job creation and capacity to reach the ultimate beneficiaries. The Bank has achieved significant results in recent years. At the end of 2014 it had over 51,800 customers, with approximately 6.7 billion euro in deposits (of which 2.5 billion euro direct) and around 1.5 billion euro in loans. In 2014 the company reported revenues of 53 million euro (+16.7% on 2013). These are major milestones that demonstrate the ability to monitor a socially important segment, above all in the current context where Public Administration has partially withdrawn from its involvement in welfare matters.
In many of the initiatives launched, the collaboration with VoBIS (Volontari Bancari per le Iniziative Sociali), a national non-profit association comprising former bank employees who offer their expertise to citizens and non-profit organisations, providing applicants with mentoring and tutoring activities, proved to be particularly valuable.
For Banca Prossima, operating close to the community has also translated into promotion, in partnership with certain shareholders’ foundations and Third Sector entities, of the “Fiducia e nuove risorse per il Terzo Settore” Manifesto (Confidence and new resources for the growth of the Third Sector), which aims to build a network of operators providing financing sources at a moderate cost in order to support non-profit investments @.
In 2014, in agreement with the signatories and with assistance from Euricse (European Research Institute on Cooperative and Social Enterprises), nine stops of a roadshow were organised that allowed local development of the most important non-profit issues, promoting the sharing of the best ideas and access to all available support tools.
Subsidised loans to the Third Sector
Banca Prossima has gradually launched a series of initiatives to grant subsidised loans to the Third Sector. These loans are sustainable for the Bank through a number of low-cost deposit methods. The benefit for the Bank of lower cost of deposits fully translates into lower lending rates.
Essentially, this mechanism operates in three areas: the use of European Investment Bank loans, in 2014 a total of more than 35 million euro was granted for 14 loans; the collection of funds on the Terzo Valore crowdfunding portal and issue of the “Serie Speciale Banca Prossima” bonds.
Terzo Valore @ is a crowdfunding portal which allows anyone to lend money or to fund non-profit organisation projects directly, without intermediaries and with principal repayment guaranteed by the Bank. Terzo Valore has so far financed 17 projects with loans granted by external subscribers for 2.1 million euro, plus approximately 218 thousand euro donations.
With regard to the “Serie Speciale Banca Prossima” bonds, two issues were performed - one in October 2013 and one in June 2014. The Bonds are issued at lower rates than those normally adopted for securities with the same characteristics in terms of rate type and maturity. The total funding was used as loans to the Third Sector: amounting to approximately 45 million euro, divided among 218 projects of various types of organisation, primarily social cooperatives, associations and religious organisations.
In order to sustain the implementation of social enterprise ideas by encouraging access to employment for deserving university students, also through self-financing methods, Fondazione San Patrignano - in partnership with Banca Prossima - set up the Social Start-Up project “Giovani idee per il social business” (Young ideas for social business), an ideas competition addressed to university students and designed to award the best three social enterprise projects with a dedicated loan.
Through this initiative, Fondazione San Patrignano and Banca Prossima aim to activate business culture operating in the social field, assisting emarginated or excluded people and making itself known on the market to guarantee - in addition to transparency, responsibility and environmental protection - real economic sustainability.
The most significant partnerships with the Third Sector include: Consorzio SPIN-Sport Insieme, a non-profit entity deriving from the collaboration with the leading sports Promoting Entities at national level (ACSI, AICS, ASI, CSI, ENDAS, LIBERTAS, UISP, USACLI) to build new sports facilities, renovate or adapt the existing ones to promote sports activities in Italy. The SPIN credit access model is innovative: association takes on the risk by investing its own capital (minimum 20% of the amount) and undertakes a project study and analysis process together with the Consorzio. Banca Prossima’s credit decisions are supported by SPIN’s certification, which investigates some aspects, such as the investment’s economic and financial sustainability, the cost adequacy and the necessary authorisation process, which are key factors for the success of the project. 19 projects were financed in 2014, for a total amount of about 18 million euro.
Assessment of Banca Prossima social impact
At the end of 2013 an assessment process of Banca Prossima social impact was launched and was conducted in 2014 with a view both to conceptualisation and actual measurement. It can be assumed that the Bank’s impact can be divided into various lines:
- the service to existing non-profit organisations. Most of this impact is assumed to be associated with the credit, granted to a greater extent than other banks, priced at a level more suited to the “real” level of risk and therefore less expensive, “better” in other terms (more suitable types, sharing of the business plan, acceptable timing and guarantees).
- the effect generated at the end of the process by said organisations and involving two beneficiary categories: their workers (job creation) and the organisations' end users.
- the “structural” effect that improves the capacity of non-profit organisations to obtain funding (“investment readiness”)
The results were mainly obtained by sending a questionnaire to borrowing customers and asking them questions in order to assess the extent of this effect, bearing in mind the conceptualisation described above. One segment of the questionnaire was dedicated to recording customer satisfaction, which is used to measure both the impact and the commercial success. 546 valid responses were collected out of approximately 4,400 borrower customers to whom the questionnaire was sent.
To summarise, the results were as follows:
With regard to the economic impact on customers, an increase in business volume of customer organisations was recorded. This is associated primarily with medium/long-term credit and amounts to 26.8 million euro, which - as a ratio to the total Banca Prossima customers - means additional business for approximately 312 million euro. As regards the creation of new jobs, 811 were identified in the sample (over 10,000 if taken as a ratio to total customers). Lastly, with regard to the ultimate beneficiaries, the involved organisations estimated that these increased by around 65,600 in the sample, which corresponds to no less than 1,400,000 individuals if taken as a ratio to total customers.
The section of the questionnaire on customer satisfaction showed very high levels of satisfaction, both in terms of quality of relations and the opinion on financial terms. Relations were described according to four categories: communication effectiveness, deadlines met, support, ease of contact and completeness of responses. The percentages of “good” or “excellent” responses were always over 80%. The financial terms included financial restrictions, capital requirement conditions and the interest rate applied. The “fair” response category was the most frequent (29%-44%). The sum of “favourable” and “highly favourable” varies between 46% and 51%. The sum of the three classes is normally around 95%.
This process was not only useful for the initial quantification of the bank’s social impact. Among the most significant figures obtained we should mention the importance of Public Administration payment delays in generating dependence of non-profit organisations on short-term credit; the partial use of short-term funding also to finance additional projects; the great differences among the types of social impact mentioned by the organisations, which probably preclude the use of highly-standardised impact analysis methods; and the importance of detailed information on credit to document the bank’s commitment.
For all the impact categories it is important to distinguish between the short-term credit and medium/long-term credit effects. Medium/long-term credit usually finances the acquisition of certain assets and it is therefore possible to understand the additional operations made by the organisation as a result of the asset acquired and its final effects. Conversely, short-term credit finances current business, not additional operations, and it is difficult to apply the same logic.
Nevertheless, the responses show that short-term credit availability is necessary to support entire business lines or even the basic operations of the organisations in question, and that such availability is often not increased through banking relations other than those with Banca Prossima.
The process is not finished and Banca Prossima intends to improve and extend it in 2015 and in the future, both with regard to its activities and - if possible - to assessment of the impact of the applicant organisations.