NESsT & The Citi Foundation: Enterprising Solutions to Social Challenges

NESsT & The Citi Foundation: Enterprising Solutions to Social Challenges: NESsT-Citi Social Enterprise Development Program

Hungary, HungaryHungary
Project Stage:
Scaling
Budget: 
$100,000 - $250,000
Project Summary
Elevator Pitch

Concise Summary: Help us pitch this solution! Provide an explanation within 3-4 short sentences.

NESsT is a social enterprise catalyst and incubator. We support early-stage enterprises in emerging markets with investments, capacity support, and strategic business mentoring. Since 2007, NESsT and Citi have co-hosted 13 social enterprise development programs in Eastern Europe. Our collective experience, resources, and business expertise have enabled 201 employment-generating social enterprises to achieve their impact goals.

About Project

Problem: What problem is this project trying to address?

While modern economic models bring prosperity to emerging market countries, they also lead to growing inequalities in the distribution of wealth. Millions of people are deprived of economic opportunities, fair employment and wages, and access to basic services. Efforts to alleviate these problems often follow a short-term approach, which lacks the sustainability necessary to achieve lasting impact. In Central and Eastern Europe, employment opportunities are especially bleak among marginalized groups, including people with disabilities, Roma minorities, at-risk youth, mothers with young children, unskilled or under-educated workers, and low-income communities.

Solution: What is the proposed solution? Please be specific!

Social enterprises can effectively break the cycle of poverty by creating sustainable income opportunities. Social enterprises do not depend on philanthropy but instead generate their own financial returns and reinvest them into a social impact agenda. NESsT provides long-term support (5-7 years) to its portfolio of social enterprises through grants and soft loans; business planning, implementing, managing, and scaling workshops; collaborative retreats; tested social business-enhancing tools; on-site mentoring; access to a Business Advisory Network of corporate professionals; and continuous monitoring and evaluation. The NESsT-Citi partnership has led to 3,000 economic opportunities at the 201 enterprises supported since 2007.
Impact: How does it Work

Example: Walk us through a specific example(s) of how this solution makes a difference; include its primary activities.

Balint Dvariecki, founder of a specialized IT service provider for blind and visually impaired people in Budapest, applied to the NESsT-Citi Social Enterprise Development Program in 2011 with an innovative business plan for a digital newsstand for the visually impaired. Upon review by Citi volunteers and NESsT’s Business Advisory Committee, Alko-soft won a small venture grant to launch the newsstand (e-rikkancs). Through the NESsT-Citi program, Balint refined his plan in NESsT's business workshops and strengthened capacity during NESsT's site visits. Accompanied by a Citi mentor, he met with publishers about participating in e-rikkancs. In 2013, the newsstand successfully launched, and Alko-soft reached 520 visually impaired beneficiaries.

Spread Strategies: Moving forward, what are the main strategies for scaling impact?

Project strategy: NESsT’s future strategy of cooperation with the Citi Foundation includes more intense employee involvement in the incubation phase as well as continued business planning. Geographic reach: In addition to Central and Eastern Europe, NESsT has a strong presence and local staff in Latin America. Policy strategy: Through thought leadership and outreach—including research, publications, events, and networks—NESsT is working to build a thriving social enterprise ecosystem by sharing best practices and tools with entrepreneurs, investors, and policymakers.
Sustainability

Marketplace: Who else is addressing the problem outlined here? How does the proposed project differ from these approaches?

NESsT distinguishes itself through its long-term incubation of early-stage social enterprises. Unlike most incubators that offer services of at most 2 years, NESsT develops a 5–7 year relationship with its enterprises, providing a combination of early-stage financial support (seed capital), capacity building, and close management of impact. In this way social enterprises in the NESsT portfolio gain access to patient capital alongside high-touch capacity and management support so that they are ready to absorb social investment. In order to scale, social enterprises need to prove their business concept and demonstrate the sustainability and social impact potential of their enterprise. Some of the changemakers working similarly are Yunus Social Business (operating in an area of mutual interest), I-DEV (a leader in impact investment and social enterprise), and Monitor Institute.
Team

Team

The key people working on the NESsT-Citi collaboration are listed below, but we are also supported by NESsT's global fundraising, operations, finance, IT, and communications staff members as well. Project-Specific Team NESsT • Nicole Etchart, Co-founder and Co-CEO (Santiago, Chile) • Loïc Comolli, Co-CEO (San Francisco, California, USA) • Andreja Rosandić, Central and Eastern Europe Sustainability Manger (Zagreb, CRO) • Anna Horvath, Country Director (Budapest, HU) • Laura Toth, Enterprise Development Associate (Budapest, HU) • Éva Vörös, Central and Eastern Europe Operations and Finance Manager (Budapest, HU) • Citi Foundation • Swati M Patel, Senior Vice President, Citi Foundation • Eva Hencz, Public Affairs Officer, Senior Vice President - Cluster Head for HU, CZ, RO, SK and BLG • Judit Pozsari, Public Affairs Assistant, Citi HU
About the Lead Co-Creation Partners
Organization:
CITIBANK EUROPE PLC. MO-I FIOKTELEPE
Visit website
LEAD SOCIAL-MISSION ORGANIZATION
Type of organization (e.g. NGO, association, not-for-profit, foundation, social enterprise)

Not-for-profit

Total Number of Full-Time Employees

4 (part of an international network of 34 employees)

Lead Contact First Name

Annamária

Lead Contact Last Name

Horváth

Title

Country Director

Country

Hungary

LEAD CORPORATE PARTNER
Organization Name

CITIBANK EUROPE PLC. MO-I FIOKTELEPE

Total Number of Full-Time Employees

2200

Lead Contact First Name

Eva

Lead Contact Last Name

Hencz

Title

Public Affairs Officer, Senior Vice President, Cluster Head for Hungary, Czech Republic, Romania, Slovakia and Bulgaria

Country

Hungary

Basic Info
Project Starting Year

NESsT has developed sustainable social enterprises since 1997. Citi enabled NESsT to pioneer first joint program in 2007 in CEE

Primary European Country where this Project is creating social impact

, XX, Hungary

Additional European countries where this Project is creating social impact

Croatia, Czech Republic, Poland, Romania, Slovakia

Select the category that best fits the type of your project:

Job Creation: Entries in this category create new jobs for people away from the labor market.

What awards or honors has the project received?
Project Summary
Co-Creation Model: Tell us about your main strategic partners and how the partnership truly create value. For each Partner please include its type (business/social/public), its name, a short description, its key motivation to participate in the co-creation project, and the key contributions it is making in the co-creation project. Please follow the format displayed below:

Partner: Citi Foundation
Type: Business
Short description sentence [Max 25 words/partner]: Citi Foundation promotes economic progress and financial inclusion. Our investment strategy involves enterprise development—to increase the number of small and microenterprises that provide new income generation or employment opportunities for low-income individuals.

Key motivation to participate in the co-creation project [Max 35 words/partner]:
In our partnership with NESsT, Citi Foundation supports employment generation through social enterprise development. We provide financial support, and Citi employees mentor social enterprises and evaluate business plans.

Key contributions in the co-creation project [Max 35 words/partner]: Since 2007, the Citi Foundation has supported 13 NESsT programs with substantial grants, an executive on NESsT’s Business Advisory Network, skills-based volunteer work from 89 Citi employees, and wider exposure for NESsT in CEE.

Partner: NESsT
Type: Social/not-for-profit

Short description: NESsT develops sustainable social enterprises that solve critical social problems in emerging market economies. Since 1997, NESsT has trained 5,000 social enterprises in over 40 countries and invested about US$8 million in social enterprises.

Key motivation: NESsT’s mission is to develop sustainable social enterprises, which often lack financial capital, business experience, and skills. Together with its business partners, NESsT aims to leverage capital and transfer business expertise.
Key contributions: NESsT has more than 16 years of experience in social enterprise development and a proven development methodology for planning, incubating, and scaling sustainable social enterprises.

Impact
Impact: What is the impact of the work to date? Also describe the projected future impact. Please specify using qualitative and quantitative data (e.g. # of indirect and direct beneficiaries); help us understand how this solution truly makes a difference.

To date, the NESsT-Citi Social Enterprise Development Program has achieved the following impacts in employment generation, economic growth, and financial literacy. (Social impacts not included.)

•605 new jobs created
•2,400 additional economic opportunities created, including people receiving skills training and other income opportunities
•201 social enterprises supported, including 105 new social enterprises launched, 67 existing social enterprises strengthened to more efficiently provide high-quality services to clients, and 29 social enterprises expanded
•132 individuals trained in positive financial behaviors (94 demonstrating improved financial knowledge and skills, 94 maintaining positive financial behavioral changes over time, and 44 newly using financial products to help improve their financial stability)
•89 Citi employees involved as pro-bono business mentors

Sustainability
Funding: How is your project financial supported? [select all that apply]

Foundations, Businesses, Customers.

Sustainability Plan: Has your project already reached financial sustainability? If not, what is this solutio’s plan to ensure financial sustainability? Do the main partners have enough stake to sustain the solution? If this project requires limited budget, how will other resources be secured to maintain or grow this work?

NESsT is supported by foundations, government agencies, corporations, private equity firms, individuals, and NESsT Consulting. The latter provides professional services in social enterprise research, development, and implementation to clients in various sectors. NESsT will soon launch and manage its First Stage Fund, which offers early-stage enterprises patient debt financing. The Fund bridges enterprises between philanthropy and impact investments while building a pipeline for investors looking for growth opportunities.

The Citi Foundation continues to take a “more than philanthropy approach” to achieving economic growth. It combines its vast business resources with the commitment and expertise of its staff to help entrepreneurs reach their goals. Co-creation of the Citi approach led to financial investments accompanied by volunteer-based social and intellectual capital.

Team
Founding Story: Share a story about the "Aha!" moment that led the Partners to get started and/or to see the potential for this to succeed.

In 2004, NESsT Co-Founder Lee Davis met with Citi Foundation Vice President Leslie Meek in New York City. Since the Citi Foundation focused on small enterprise development, after learning about NESsT’s mission, the partners saw a great fit between their priorities. They collaborated on a project with the United Way Foundation in 2006 and launched the first joint program in 2007.

About the Co-Creation
Barriers: What main barriers may you have encountered to co-create during the creation and implementation of the project and how did you try to overcome them?

European countries have not widely adopted an engaged approach to philanthropy, which includes granting access to intellectual and social capital in addition to financial investments. This kind of approach provides mentoring, consulting, and assistance on day-to-day management issues as well as networking, pro-bono advice, and in-kind gifts to leverage additional financial support. The Citi Foundation has been a pioneer on this front but much work remains to support it in the region.

Governance: What is the type of the relationship between the partners? (e.g. joint venture, contractual relationship, joint project...)

NESsT and the Citi Foundation have a contractual relationship based on seven years of mutual cooperation. Since 2007, the Citi Foundation has supported 13 NESsT programs in Europe at a total investment cost of US$1.27 million.

Interaction model: How is the project a transformative partnership? How is the interaction transforming the partnering organizations and their employees/ leadership in terms of creating a new vision, new management practices, new skills and new organizational structures? Please provide for concrete examples

This partnership is quite clearly transformative for NESsT enterprises and NESsT itself, both of which gain financial and capacity support from Citi volunteers. But the corporate philanthropy model embodied by NESsT and the Citi Foundation also transforms the Citi volunteers, who share their business expertise but also gain understanding of innovative social enterprises they can then champion within their own circles.

How did you find out about this competition?

Through Ashoka Hungary’s Facebook page.