Social Economy in Eastern Neighbourhood and in the Western Balkans CountryRef. Ares(2018)2895585 Report - - 04/06/2018

Social Economy in Eastern Neighbourhood and in the Western Balkans

Country report – GEORGIA - February 2018

This project is funded by A project implemented by the European Union AETS Consortium Social Economy in Eastern Neighbourhood and in the Western Balkans Country Report - Georgia

Directorate-General for Neighbourhood and Enlargement Negotiations (DG NEAR)

Social Economy in Eastern Neighbourhood and in the Western Balkans

Contract N°2017/386778 FWC BENEF 2013 - Lot 10 – Trade, Standards and Private Sector EuropeAid/132633/C/SER/Multi

Country report – GEORGIA

February 2018

Authors Andreja Rosandic (Project Team Leader) Giorgi Arsenidze (Country Expert) Salome Khutsishvili (Country Expert)

This report has been prepared with the financial assistance of the European Commission. The information and views set out in this report are those of the author(s) and do not necessarily reflect the official opinion of the Commission. The Commission does not guarantee the accuracy of the data included in this study. Neither the Commission nor any person acting on the Commission’s behalf may be held responsible for the use which may be made of the information contained therein.

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TABLE OF CONTENTS 1. EXECUTIVE SUMMARY 6 2. INTRODUCTION 7 3. STATE OF PLAY OF THE SOCIAL ECONOMY IN GEORGIA 8 3.1. Nature and size of the social economy sector 8 3.2. Key sectors for social economy and phases of development of social economy players 10 3.3. Funding and financial tools social enterprises use 10 3.4. Monitoring and evaluation of the financial and social return 13 4. THE ECOSYSTEM FOR SOCIAL ENTERPRISE DEVELOPMENT 13 4.1. Relevant policies, regulatory and institutional framework 13 4.1.1. THE LEGISLATIVE AND REGULATORY FRAMEWORK RELATED TO SOCIAL ECONOMY 13 4.1.2. INSTITUTIONAL FRAMEWORK 16 4.1.3. LINKS WITH EXISTING SOCIAL PROTECTION AND SOCIAL INCLUSION SYSTEMS 16 4.2. Key stakeholders and existing coordination mechanisms 17 4.3. Existing funding strategies for social economy 19 4.3.1. NATIONAL PUBLIC FUNDING SCHEMES 19 4.3.2. EUROPEAN UNION FUNDING 22 4.3.3. SOCIAL INVESTORS, SOCIAL IMPACT FUNDS AND OTHER SOCIALLY DRIVE FINANCING INSTITUTIONS 23 4.3.4. PRIVATE SECTOR 24 4.3.5. MICRO-FINANCING 24 4.3.6. DEVELOPMENT AID AGENCIES 25 4.4. Type of additional non-financial support to social economy 25 4.4.1. BUSINESS DEVELOPMENT SERVICES 25 4.4.2. LOCAL/NATIONAL AND/OR REGIONAL NETWORKS 26 4.4.3. ACADEMIA 26 4.5. On-going and planned initiative addressing social economy issues 27 4.6. Best practices in the country and replicable models 27 5. GAP ANALYSIS AND NEEDS ASSESSMENT 28 5.1. Macro-social factors determining the sector 28 5.2. Access to finances 28 5.3. Lack of relevant skills to access the market 29 5.4. Opportunities and key drivers boosting the development and scaling up of the social economy 29 6. CONCLUSIONS AND GENERAL POLICY RECOMMENDATIONS 29 Legal Framework Legislation and Policy Framework 30 Modification of tax regulations 30 Development of encouraging mechanisms in the state procurement legislation 30 Responsible state agencies and strategy development 30 EU’s role in the sector development 31 The necessity of raising public awareness and visibility of the sector 31

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Trainings 31 Diverse social goals 31 Access to finances 31 6.1. Priority sectors for country level intervention 32 7. ANNEXES 34 7.1. Annex 1 - Questionnaire survey 34 7.2. Annex 2 - List of Interviews 39 7.3. Annex 3 – Bibliography 42

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LIST OF ABBREVIATIONS

SE Social Enterprise NNLE Non-Entrepreneurial (Non-Commercial) Legal Entity LTD Limited Liability Company CSO Civil Society Organisation NGO Non-Governmental Organization iNGO international Non-Governmental Organization EU European Union EFSE European Fund for Southeast Europe SIDA Swedish International Development Cooperation Agency DANIDA Denmark’s Development Cooperation GoG Government of Georgia MoE Ministry of Economy and Sustainable Development of Georgia MoA Ministry of Agriculture of Georgia MoJ Ministry of Justice of Georgia MoC Ministry of Corrections of Georgia MoLHSA Ministry of Labour, Health and Social Affairs of Georgia SSA Social Service Agency LEPL Legal Entity of Public Law CSRDG Centre for Strategic Research and Development of Georgia ASB- Arbeiter-Samariter-Bund e.V. Germany (ASB) Country Georgia Office Georgia EPF Europe Foundation SEAG Social Enterprise Alliance of Georgia GDP Gross Domestic Product ENPARD European Neighbourhood Programme for Agriculture and Rural Development East Neighbourhood AR AZ Blr GE Georgia MD UK Western Balkans AL BA FBiH Federation of Bosnia and Herzegovina XK * MK** The former Yugoslav Republic of Macedonia ME RS WB Western Balkans

* This designation is without prejudice to positions on status, and is in line with UNSCR 1244 and the ICJ Opinion on the Kosovo Declaration of Independence. ** Provisional code which does not prejudge in any way the definitive nomenclature for this country, which will be agreed following the conclusion of negotiations currently taking place under the auspices of the United Nations

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1. EXECUTIVE SUMMARY

Development of social entrepreneurship in Georgia started in 2008-09 and in this short time period there have been concrete positive results indicating the development of the sector is heading in the right direction. The sector is becoming more and more popular. More and more CSOs, government institutions, business companies, academic institutions and broadcasting companies are interested in the SE concept.

Social Enterprises are the most innovative form of social economy entities. The main drivers of social entrepreneurship development in Georgia were and remain local civil society organizations (CSOs).

The majority of the social enterprises provide a variety of products and services in the fields of education, healthcare, agriculture, art, culture and social protection. A large part of the production is created by the beneficiaries, among them are persons with disabilities, internally displaced people, artisans, ethnic minorities, persons in conflict with the law etc.

The vast majority of the social economic entities in the country established their organizations with grant support from donors and philanthropists.

The biggest contribution to the development of the social entrepreneurship concept in Georgia is from the European Union, other international organizations, the Government of Georgia and the local non- governmental sector. As part of their grant, international and local donors provide capacity building in the form of improving skills and qualifications of social entrepreneurs.

Since 2009, the total amount invested in the social entrepreneurship sector, including SE start-up, sector promotion, capacity building, technical assistance etc. is around 2.4 million Euros.

There is no legal regulation of social entrepreneurship in Georgia. Moreover, neither the normative act nor the central or local level defines social enterprises. Subsequently, this problem is caused by tax barriers and lack of supportive regulations that create significant problems in terms of sector development. In addition, there are no government agencies in Georgia that are responsible for the support and development of social entrepreneurship.

Central and local government programs aimed at SE development are very scarce. Moreover, there are no specific budget programs aimed at developing the sector.

Sources of financing of social enterprises are not diversified. The majority of Social Enterprises do not have more than 1 source of income. Some of them depend on grants received from international/local NGOs, and another part depends on entrepreneurial activity. Social enterprises do not have access to flexible loans, there are very few cases of issuing state grants to social enterprises and to social entrepreneurship sector development. In state procurements there are no incentives to encourage SEs to participate.

SEs have problems such as lack of business skills, limited access to training, undeveloped networks and lack of experience sharing, lack of industrial space and much more.

To tackle all these problems and challenges CSOs, SEs and organizations working on SE support need to work closely. Initiation of the draft law on social entrepreneurship is one example, which is planned to pass to the Parliament of Georgia in 2018.

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2. INTRODUCTION

Georgia is a country in the region located at the crossroads of western Asia and Eastern Europe. The country covers a territory of 69 700 square kilometres and in 2017 the population was about 3.7 million. Its GDP per capita has grown gradually to reach 4 127 USD (equivalent to 3 353 EUR).

Georgia was one of the first Soviet republics to take steps towards independence. Georgia's Declaration of Independence was adopted on 9 April 1991. The first few years of the formation of an independent, market-based economic system were especially difficult for Georgia: civil unrest, armed conflicts in Abkhazia and South Ossetia, energy and transport blockades, extremely high crime rates, severed economic ties, the loss of old, traditional markets and suppliers, and the absence of new connections and suppliers to adequately replace old ones, high rates of workforce migration - this is just a small list of the negative factors which led to unprecedented economic stagnation, hyperinflation and a catastrophic increase in unemployment during the first few years of Georgia’s independence.

Following the restoration of Georgia’s independence, the country experienced two waves of economic reforms. The first wave, which established the institutional foundations for a new economic system, was carried out after the crises of the first half of the 1990s. These policies implemented during this first stage initially succeeded in stimulating economic growth; however, this growth was impeded by the end of the 1990s. The primary aim of the second wave of reforms launched in 2004 was market liberalization, which, among other issues, was based upon such measures as the reduction of taxation and bureaucratic reform.1

In June 2014 the Ministry of Economy and Sustainable Development of Georgia, together with the Ministry of Agriculture and Environment, launched a new government program “Produce in Georgia”. The program is directed towards the development of entrepreneurship through establishing new enterprises, advancing existing ones and promoting entrepreneurial culture in the country.2

In July 2013 the Parliament of Georgia adopted the Law on Agricultural Cooperatives. The Legal Entity of Public Law “Agricultural Cooperatives Development Agency” was created. In the framework of various grant programs for the development of agricultural cooperatives, the state has spent more than 6 million Georgian Lari (approximately €2 million) since 2013.3

Rural development is very important in Georgia, where 42.8% (1,590 thousand) of the population live in rural areas (2017 data), while 48.6% of those employed are engaged in agriculture, hunting, forestry and fishing. In 2017, agriculture’s contribution to Georgia’s Gross Domestic Product (GDP) was 9.3%.4

The European Union (EU) provides support to rural development and agriculture in Georgia through the European Neighbourhood Programme for Agriculture and Rural Development (ENPARD). Implemented since 2013, the main goal of the ENPARD programme is to reduce rural poverty. Programme assistance is provided to the government and also to NGOs working directly with communities on the ground. The total budget for ENPARD in Georgia, covering the period of 2013- 2022 is €179.5 million.5

Civil society organizations (CSOs) are actively engaged at every stage of the development processes. Since 2009, Georgian civil society organizations (CSOs) have been supporting the development of social

1 Social-Economic Development Strategy of Georgia “Georgia 2020”- https://www.adb.org/sites/default/files/linked-documents/cps-geo-2014-2018-sd-01.pdf 2 Enterprise Georgia annual report 2016- http://enterprisegeorgia.gov.ge/files/document/1938313d7f039122cb076f052ed0aef7.pdf 3Forbes Georgia- Challenges of the Georgian Cooperatives- http://forbes.ge/news/1583/%22sabWoTa-mentalobis%22-qarTuli-kooperativebis-gamowvevebi 4 National Statistic Office of Georgia- Agriculture of Georgia 2016- http://www.geostat.ge/cms/site_images/_files/georgian/agriculture/2016%20wlis%20soflis%20meurneoba.pdf 5 ENPARD project- http://enpard.ge/en/what-is-enpard/

AETS Consortium – November 2017 7 Social Economy in Eastern Neighbourhood and in the Western Balkans Country Report - Georgia entrepreneurship in the country. The interest in the field has been aroused by the powerful examples of newly emerged, but rapidly growing entities in the USA and Europe that solve the most critical social problems (unemployment of marginalized groups, inequality, poverty, pollution, etc.), in a cost effective way.

During 2012-2013, significant progress has been made in laying the foundation for the diversification of CSOs' funding sources; in 2012, a legal amendment was introduced which allowed government bodies to provide grants to civil society. The Ministry of Justice and the Ministry of Youth and Sports have been particularly active in using this new possibility.

The Ministry of Health, Labour and Social Affairs has more than 5 years' experience of contracting civil society organizations (CSOs) as social service providers. A further improvement in CSOs' financial status came in 2013, when amendments were introduced to the Tax Code which made it possible for CSOs to obtain tax exemption on in-kind donations.

In Georgia, social entrepreneurship is still not well developed. Despite the activities of the donors and support organizations working on the topic, there are still many challenges to overcome.

This study is dedicated to social enterprises and the social economy in Georgia. It is implemented in the framework of the “Social economy in Eastern Neighbourhood and in the Western Balkans: Preparing a methodology/toolbox for EU Delegations” project, funded by the European Commission – DG NEAR. The main objective of this assignment is to identify the conditions and the modality of support to efficiently develop social economy and social entrepreneurship in the Enlargement and Neighbourhood East countries.

More specifically, this report provides an analysis of social economy and the social entrepreneurship ecosystem in Georgia. It includes an assessment of the state of play of social economy in the country; including an assessment of its nature, size and key sectors, as well as an overview and analysis of the regulatory framework, the institutional support, the financing options and the available support structures.

The methodological approach is based on a mix of desk research, qualitative interviews and documentary analysis. An assessment mission in Georgia took place January-February 2018. Formal and informal interviews were conducted with the main stakeholders during the mission. The list of interviews is indicated in Annex B. The mission was conducted by Mr. Giorgi Arsenidze and Ms. Natasa Gospodjinacki while the report has been developed by Mr. Giorgi Arsenidze and Ms. Salome Khutsishvili.

3. STATE OF PLAY OF THE SOCIAL ECONOMY IN GEORGIA 3.1. Nature and size of the social economy sector Social enterprises (SEs) are the most innovative form of social economy entities. The main drivers of social entrepreneurship development in Georgia were and remain local civil society organizations (CSOs).

As of December 1, 2017, there are 38136 active non-entrepreneurial (non-commercial) legal entities (NNLE) in Georgia. Under NNLE are considered:  NNLEs which are established by the government;  CSOs;  Professional and Trade Unions;  Federations;  Foundations;

6 Number of NNLEs- http://www.geostat.ge/index.php?action=page&p_id=239&lang=eng

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 Associations

The area of their activities is diverse and includes delivering vocational trainings for members of different vulnerable groups and promoting their employment, provision of social and healthcare services to target group representatives, protection of the rights of different minorities and promoting their integration into society, etc.

In the last decade, because of the activities focused on promoting social entrepreneurship development, many local CSOs view social entrepreneurship as a way of achieving greater social impact and financial sustainability.

In the absence of legal regulation of social entrepreneurship and social economy, social enterprises in Georgia use several legal forms for their administration:  Non-entrepreneurial (Non-Commercial) Legal Entity;  Limited Liability Company;  Cooperative

In Georgia, NNLE is the most popular form for social enterprises, which has its own causes:  The majority of social enterprises are initiated by CSOs – registered as Non-entrepreneurial (Non-Commercial) Legal Entities and because NNLE is allowed to have a mission-related business activity they do not use any other legal form and carry out business activities on their own basis;  There is no specific legal form for social enterprises;  In the vast majority of grant competitions announced for promotion of social entrepreneurship, only NNLEs are eligible to apply

Based on the EU definition of social enterprise, around 70 entities out of the above mentioned number of NNLEs and LTDs operate as a social enterprise.7 It should also be noted that a large number of NNLEs, in accordance with the legislation, are engaged in a mission-related business activity that has no connection with social entrepreneurship.

As of 2016, according to the official data, the volume of turnover from the mission-related business activities of NNLE sector was 98.6 million Georgian Lari, 10% of their total production output,8 which was 2.7% higher than the previous year. In 2016, the number of employees in the NNLEs amounted to 52.9 thousand, 53.3% of which were women and 46.7% men.9 As for the Limited Liability Company, this legal form is also used by social enterprises, although a large portion is still functioning in the form of NNLE. The advantage of using this form lies in the fact that when a CSO establishes an enterprise, it can distinguish entrepreneurial and non-profit activities.

As a result of the ENPARD program implementation and the Cooperative Development Government Program, In Georgia there already exist 1440 agricultural cooperatives. From the statistical data provided by the National statistics office the total number of registered cooperatives equals 5043, since only 305 of them are active.10 In many countries “cooperative” is a frequently used legal form for social enterprises, whereas in Georgia just one cooperative considers itself as social enterprise.

7 Since 2009 around 100 Social Enterprises were established, out of which about 70 SEs are operating currently. Information provided by the SE support organisations, as well as from the Social Enterprises. 8 The National Statistics office of Georgia defines output as quantity of production made by an economic entity, and volume of realized output including goods or services bought for resale and changes in stocks of finished goods. 9 Non-commercial organisations- research findings 2016- http://www.geostat.ge/cms/site_images/_files/georgian/business/Press%20Release_Arakomerciuli_2016.pdf 10 Number of cooperatives- http://www.geostat.ge/index.php?action=page&p_id=239&lang=eng

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3.2. Key sectors for social economy and phases of development of social economy players As of 2016, the largest share of NNLEs’ turnover comes in the fields of art, recreation and entertainment (26.5%), as well as education (23.1%), healthcare and social services (22.1%), other services (10,8%) and professional, scientific and technical activities (10,6%). As for social enterprises, creating statistical indicators in the absence of law is impossible and so the information is scattered in the above indicators.11

The majority of the social enterprises provide a variety of products and services in the fields of education, healthcare, agriculture, art, culture and social protection. A large part of the production is created by the beneficiaries, among them are persons with disabilities, internally displaced people, artisans, ethnic minorities, persons in conflict with the law etc.

At the initial stage of social entrepreneurship development in Georgia, CSOs were interested in establishing social enterprises in order to reduce unemployment rates of their beneficiaries. Nowadays, there is an increase in the number of informal initiative groups which show interest in social enterprise establishment. Also, the issues social enterprises are created for became more various and now embrace not only employment and economic empowerment of vulnerable groups, but also promotion of human rights and social inclusion of those excluded from the labor market; provision of access to education; environmental protection; provision of services to specific, often vulnerable groups, etc.

In order to study the present situation and the challenges SEs face, an online survey was conducted. 57 social entrepreneurs were addressed, out of which 30 respondents (about 40% of the functional SEs in Georgia) filled the questionnaires in. Here are the findings:

Out of the interviewed SEs, 1 SE was established in 2010; 1 SE in 2007; 3 SEs in 2010; 4 SEs in 2011; 3 SEs in 2012; 2 SEs in 2013; 2 SEs in 2014; 4 SEs in 2015; 6 SEs in 2016 and 4 SEs in 2017.

22 SEs operate under the legal form of NNLE, 1 SE as a cooperative, 1 SE as a Joint Stock Company and 6 SEs as LTD.

2 interviewed SEs are at the startup stage, 21 SEs are at the validation stage and 7 SEs at the scaling stage.

All interviewed SEs derive income from their economic activities. For 10 SEs income from entrepreneurial activities represents 20-50 % of the total income, 70-95 % for 4 SEs and 100% for 16 SEs. For 14 SEs grants from donors remain one of the sources of income.

The average number of employed people among SEs is 9.4, in total 282 people (maximum 25 persons and minimum 2). From employed personnel 5.1 on average represent the beneficiary group, in total 154 persons (persons with disabilities, vulnerable people, IDPs and etc.)

3.3. Funding and financial tools social enterprises use The vast majority of the social economic entities in the country established their organizations with grant support from donors and philanthropists.

The biggest contribution to the development of the social entrepreneurship concept in Georgia is from the international organizations, the Government of Georgia12 and local non-governmental sector. A large

11 Non-commercial organisations- research findings 2016- http://www.geostat.ge/cms/site_images/_files/georgian/business/Press%20Release_Arakomerciuli_2016.pdf 12 The biggest player from GoG side is the Children and Youth Development Fund, who supports social entrepreneurship development through granting scheme. Besides the state budget, Fund also used international donors’ money during the Call announcements. Unfortunately it was impossible to define what portion of the investment in SE development was purely used from the state budget.

AETS Consortium – November 2017 10 Social Economy in Eastern Neighbourhood and in the Western Balkans Country Report - Georgia number of SEs are funded by grants or sub-grants received from international organizations. As part of their grant, international and local donors provide capacity building in a form of improving skills and qualifications of social entrepreneurs.

Since 2009, the total amount invested in the social entrepreneurship sector, including SE start-up, sector promotion, capacity building, technical assistance and etc. is over 2.5 million Euros.13

The charts below show the investment distribution in the social entrepreneurship sector per donors and per support organizations:

Chart 1: Investment in Social Entrepreneurship Sector per Donor14

€ 543,246 € 473,993 € 476,703 € 384,501 € 287,250 € 245,399

€ 104,277 € 22,521

Note: This chart represents figures including December 2017.

Chart 2: Investment in Social Entrepreneurship Sector per Support Organisation15

€ 557,868 € 574,965 € 462,802 € 384,501

€ 245,399 € 226,240 € 86,116

ASB GEORGIA CHILDREN AND IOM EPF SCRDGCSRDG TREE OF LIFE OTHERS YOUTH DEVELOPMENT FUND

Note: This chart represents figures including December 2017.

The promotion of the social entrepreneurship concept in Georgia started with donor organizations’ support in 2008-09. Despite the fact that businesses helping people with disabilities and supporting other

13 This information is provided by the SE support organisations, as well as from the Social Enterprises (ASB Georgia, CSRDG, EPF, Children and Youth Development Fund, Presidential Reserve Fund, IOM, Tree of Life, Life Chance, Crystal, SE Wheelchair Workshop, SE Mziani) 14 These figures are elaborated based on the information provided by the supporting organizations and SEs 15 These figures are elaborated based on the information provided by the supporting organizations and SEs

AETS Consortium – November 2017 11 Social Economy in Eastern Neighbourhood and in the Western Balkans Country Report - Georgia vulnerable groups were existent (mostly in the forms of cooperatives), the level of public awareness of social enterprise in the country was very low. This was largely due to the fact that before the country’s independence, Georgia had to be part of the social economic system, where market economy and independent business organizations did not exist.

As a result of projects and activities implemented by international NGOs and local CSOs, the concept of social entrepreneurship is quite popular in Georgia and the number of such enterprises is constantly increasing.

For sector development there is the Centre for Social Entrepreneurship,16 which provides SEs with consultation, training and other types of technical assistance. The Centre is administered by the "Centre for Strategic Research and Development of Georgia" (CSRDG).17 This organization also announces grant competitions for start-up and already existing SEs, elaborates development concepts and action plans.

In the next phases of development, social economy entities use mixed sources of financing, including:  Grant;  Mission-related business activity;  Government financing through voucher system;  Donation.

Grant funding remains the dominant source of income for NNLEs. The financial support provided by international or local donors can be used to cover organization’s operational and project implementation costs. Even though each donor has different limits regarding the activities. Financial support is also available specifically for organizations or initiative groups aiming at establishment or strengthening of social enterprises. In some cases, social entrepreneurs are allowed to use financial support only for purchasing inventory, raw materials and arrangement of space for entrepreneurial activities. Financial supporters avoid to cover administrative costs of the enterprises. Based on the analysis of financial information provided by the local donors and SEs, except in very rare cases, average financial support per SE is in the range of 5 000 – 25 000 EUR.

Mission-related business activity allows social economic entities to have free cash, which should not be used in accordance with donor requirements, but profit must be reinvested in order to maintain their mission.

Government financing through vouchers is often used by social service providers in order to serve beneficiaries and cover the organization’s operational costs. The total income amount is dependent on the quantity of service beneficiaries. Voucher financing is issued per beneficiary and the daily amount differs due to the type of the service.

Georgian society is engaged in donation campaigns, but their financial support mainly is directed to the political parties or foundations supporting individuals with severe diseases or other vulnerable groups. The share of the donation is very low in the social economy entities’ income.

Additionally, social entrepreneurs use other financial sources at the startup stage, including:  Their own savings;  Loans;  Crowd funding.

Financial support received at the start up stage often is not enough to promote entrepreneurial activities. Often, SEs are requested to contribute at least 10% of their own money to the project, as per the donor requirement. Since 2017, SEs have the opportunity to get a flexible loan, the so called “Social Credit”

16 The Centre for Social Entrepreneurship- http://segeorgia.org/ 17 The Centre for Strategic Research and Development of Georgia- http://www.csrdg.ge/

AETS Consortium – November 2017 12 Social Economy in Eastern Neighbourhood and in the Western Balkans Country Report - Georgia developed by the Georgian microfinance organization “Crystal”. The maximum amount of the “Social Credit” is 5 000 GEL (equivalent to 1 630 EUR). 7 SEs have already used this service and the total amount of issued loans was 32 000 GEL (equivalent to 10 432 EUR). The maximum repayment period for “Social Credit” is 24 months and it is a 0% interest rate loan.18

Crowd funding is not well developed and not popular in Georgia. There were several cases when SEs used different platforms to aggregate necessary financial resources, in particular: in 2017, the Social enterprise “Knowledge Café” gathered around €14 000 in 6 months using their own web-page and social media.19 The management of the social enterprise started a campaign after they faced the problem related to the operational space. As a result of the campaign they bought land in Tsnori (Kakheti region, East Georgia). The second part of the campaign has started and it aims to gather financial resources for the construction of the café. Around € 20 000 is requested to achieve the goal.

In the case of successful social enterprises income generated from their economic activity represents minimum 50% of their overall budget.20

Social enterprises sell products using different channels, including:  Retail sales;  State voucher system in case of social services;  State Tenders.

Despite this fact, in many cases most of the social enterprises established by CSOs prefer additional grant support for the expansion of their activities and services. The existing social enterprises seek funding in the range of € 8.000 – 25.000 depending on the size and level of development of the organisation. SEs that provide social and professional integration also seek public funding as subsidies on the salaries and/or social benefits.

3.4. Monitoring and evaluation of the financial and social return Aside from the fact that SEs are still in the early stages of development and the effects are yet to be seen, they rarely use systematic monitoring/evaluation solutions to track and verify their social impact. This does not negate their potential to make a measurable impact in the medium and long-term.

Social enterprises mostly use internally developed monitoring tools to measure their outputs in order to provide information for the reports to donor. However, because no standardisation has been implemented for data collection, aggregating social impact data remains challenging.

4. THE ECOSYSTEM FOR SOCIAL ENTERPRISE DEVELOPMENT

4.1. Relevant policies, regulatory and institutional framework 4.1.1. The legislative and regulatory framework related to social economy Georgian legislation does not recognize the term of Social Enterprise and Social Entrepreneurship. Although several central and local government strategies consider social entrepreneurship as a tool of support for vulnerable groups of people (economic empowerment, rehabilitation, employment, access to social services etc.) and a support mechanism for social innovation, no single legislative act defines social entrepreneurship and/or social enterprise.

As a result of CSO activeness during the past years, social entrepreneurship became more and more popular in Georgia and the number of Social Enterprises are growing constantly. Parallel to this process, several social entrepreneurship definitions were formed, mostly by the social entrepreneurship support

18 This information was provided by the micro finance organization Crystal. 19 Crowdfunding web site for SE Knowledge Café- http://www.codnebi.ge/donate/ 20 The percentage relies on the observation process of SE development from the side of main support organizations working in this field.

AETS Consortium – November 2017 13 Social Economy in Eastern Neighbourhood and in the Western Balkans Country Report - Georgia organizations. According to one of the most popular definitions, a Social Enterprise is an enterprise with business principles, which is socially driven and uses innovative business approaches to solve community problems. However, unlike a traditional business, Social Enterprise uses its profit to achieve social goals.21

During the last years, there were several attempts for SE legal regulation. For this reason, several actors addressed the Parliament of Georgia with legislative initiatives to regulate social entrepreneurship by law. In 2015 the Centre for Strategic Research and Development of Georgia (CSRDG) passed the legislative initiative to the Parliament of Georgia. The initiative was supported by the majority of SEs, as well as the SE support organizations. According to the initiative, Social entrepreneurship was defined as an organized entrepreneurial activity that aims to achieve social goals in the field of social care, social adaptation, poverty reduction and alleviation, support to and/or employment of vulnerable groups in the community, education, healthcare, culture, sports and environmental protection.22

According to the CSRDG initiative, a Social Enterprise is a legal entity established in accordance with Georgian legislation, which: a) Is established to achieve social goals in the areas of - social care, social adaptation, poverty reduction and alleviation, promotion of employment of vulnerable groups in the community, education, healthcare, culture, sports and environmental protection; b) Engages in entrepreneurial activity and the major part of its revenues is generated from the entrepreneurial activity; c) Reinvests not less than 70% of its profits in the activities targeted at achieving social objectives envisaged by the Charter; d) Is governed by democratic principles and the change of charter and statutory goals shall be allowed by at least 80% of the vote; e) Is not directly or indirectly connected or subordinated to the state or local self-government body.

As mentioned above, another initiative was also made for SE legal regulation, namely by the Foundation TASO23- suggesting implementation of the Georgian Law on “Philanthropy, Charity and Societal Partnership” and by the Union of the Blind in Georgia24- aiming to make changes in the “Law of Georgia on Entrepreneurs” and to add the terms “Social Enterprise” and Social Cooperative”.

However, all these initiatives failed due to the lack of joint position among the main actors (CSOs and SEs) and low interest from the Government, as they could not see the importance of legal regulation of social entrepreneurship.

In 2016 an informal lobby group was formed which consists of the leading SE support organizations in Georgia, successful Social Entrepreneurs, the newly established Social Enterprise Alliance of Georgia (SEAG), and representatives of the Central government and Parliament of Georgia. This group was formed on the initiative of the Centre for Strategic Research and Development of Georgia (CSRDG), Arbeiter-Samariter-Bund Georgia (ASB)25 and Education Development and Employment Centre (EDEC)26. The draft law, which is based on the previous initiative developed by CSRDG, is further developed and discussions were made with several committees of the Parliament of Georgia, as well as with the central government representatives. It is planned that this initiative be brought to the Parliament of Georgia in the first quarter of 2018.

21 Social Enterprise Definition according to the Centre for Social Entrepreneurship- http://www.segeorgia.org/info.php?ID=70&ln=en 22 Draft law on Social Entrepreneurship and its supporting mechanisms- http://info.parliament.ge/file/1/BillReviewContent/132460 23 Draft law on Philanthropy, Charity and Societal Partnership- http://info.parliament.ge/file/1/BillReviewContent/122188 24 Georgian Blind Union- http://gbu.ge/ 25 Arbeiter-Samariter Bund Deutschland e.V. (ASB) Country Office Georgia- http://asb-georgia.org/en 26 Education Development and Employment Centre- http://edec.ge/index.php?lang=en

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It should also be emphasized that the absolute majority of social enterprises in Georgia state joint position is that without the legal regulation of social entrepreneurship they have many obstacles, including:  The impossibility to identify social enterprises and distinguish them from traditional businesses;  Difficulty accessing finances (target loans, grants, etc.);  Under these circumstances it is impossible to develop supporting mechanisms for promoting social entrepreneurship by the government;  In existing state and municipal programs that consider social enterprises as the beneficiaries, it is difficult to select them. This problem also concerns initiatives from the private sector;  Difficulty in measuring social impact;  Difficulty in evaluating the sector and collecting statistical data on SEs.

There is no specific legal form for SEs in Georgia. Therefore, theoretically any entrepreneurial and non- entrepreneurial legal entity can operate as a social enterprise. However, in practice Social Enterprises with the following legal forms dominate: (a) Non-Entrepreneurial, (Non-Commercial) Legal Entity and (b) Limited Liability Company.

Non-Entrepreneurial, (Non-Commercial) Legal Entity (NNLE) represents a special form of legal entity. In terms of private law, the main difference of NNLE with other forms of legal entities is that it is not an enterprise created for the purpose of commercial activities and material benefits. NNLE is entitled to perform any activities that are not prohibited by law, regardless of whether or not this activity is provided for in its constitution.27

Although an NNLE can not be commercially oriented, it is entitled to engage in supporting entrepreneurial business activities. Profit from such activities shall be utilized to realize the objectives of NNLE and its distribution is not allowed among its founders, members and/or donors.

The Civil Code of Georgia implies that NNLE should not essentially move on to entrepreneurial activities, i.e. its main activity and purpose should not be altered by commercial activities and profit making. The purpose of the creation and functioning of NNLE is first of all the nonprofit activity and act to achieve certain social or societal goals. Such organizations are mainly created to benefit the public.

Based on the above mentioned purpose, entrepreneurial activity should be an additional activity for the NNLE, the purpose of which is financial sustainability to achieve the greater social mission and objectives.

Limited Liability Company (LTD) is an established entrepreneurial legal entity based on the Law of Georgia on Entrepreneurs. According to this law, LTD shall be a company whose liability to creditors is limited by all its assets.28 Such a company can also be established by an individual person. In terms of an organizational management perspective and its structure, LTD is quite an easy and flexible legal form. Its management, structure, organizational arrangement and other issues are determined by the company’s constitution. The law establishes only minimal requirements in terms of structure and management of LTD. The rights and obligations of the LTD's partners and the distribution of shares is defined by the shareholders’ agreement.

Although NNLE and LTD are quite simple and flexible organizational and legal forms of organizational structure and management, none of them are able to fully implement the idea of social entrepreneurship without challenges.

In this sense, the problem of NNLE according to Georgian legislation is that a non-entrepreneurial legal entity is not considered as an income-oriented organization. Such an organization is prohibited to distribute its profit and at the same time cannot benefit from tax reliefs in case of reinvestment. Its legal

27 Civil Code of Georgia, Chapter II, Article 25- https://matsne.gov.ge/ka/document/view/31702 28 Law of Georgia on Entrepreneurs, chapter III, Article 42- https://matsne.gov.ge/en/document/view/28408

AETS Consortium – November 2017 15 Social Economy in Eastern Neighbourhood and in the Western Balkans Country Report - Georgia form does not create sufficient guarantees for creditors, which makes it difficult for an NNLE to access loans and/or investments. Also, SEs are less perceived as real enterprise in the society, because of their legal form of operation.

Regarding the LTD, it does not ensure the integrity of social goals. It is perceived as a form of entrepreneurial subject in the society. According to the tax code of Georgia, an LTD (except of higher education institution) is not entitled to receive grants,29 also expenses incurred by non-economic activity (social spending, such as transportation, additional training/coaching expenses of employees’ with disabilities and vulnerabilities etc.) are taxed with profit tax. LTD does not benefit from the tax privileges associated with various social goals. LTD-based social enterprises are also unable to participate in the (scarce) state programs that aim to promote the concept of social entrepreneurship.

4.1.2. Institutional framework Currently, there is no state institution in Georgia officially responsible for social entrepreneurship development. Although the importance of social entrepreneurship is reflected in some action plans and strategies of several ministries and local municipalities in the country, the non-governmental sector has the major role in sector development.

The process of drafting the legislation and other policies on social entrepreneurship started in 2015 by local CSOs, international and local NGOs, and SEs. Several ministries were part of this process, mostly in the form of giving feedback on the draft law and the importance of sector regulation, such as the Ministry of Justice, Ministry of Education and Science, Ministry of Finance, Ministry of Economy and Sustainable Development. Despite these attempts, no official body demonstrated their willingness to take responsibility for the draft law initiation, as well as for sector development. Currently, stakeholders interested in sector regulation run negotiations with the Parliament of Georgia, who is the responsible institution for the bill adoption in the country.

Having in mind the cross-cutting nature of social entrepreneurship which incorporates aspects of economy, social and labor market inclusion, empowerment of vulnerable groups, environment, agriculture, sport, education, culture, innovation and etc., horizontal coordination and responsibility would be beneficial to utilize the full potential of the sector. From 2016, an informal lobby group is created, whose goal is to lobby the draft law adoption, as well as include in this process institutions from government side. The group consists of the representatives of local CSOs, iNGO, SEs, Social Enterprise Alliance of Georgia, Parliament of Georgia and LEPL Children and Youth Development Fund.

4.1.3. Links with existing Social Protection and Social Inclusion systems Social Enterprises are mostly seen through the lens of social protection and social inclusion. This is largely due to the context and nature of SEs, as the vast majority of them are committed to social and labour market inclusion of vulnerable groups.

The LEPL Social Service Agency (SSA) 30 operating under the Ministry of Labour Health and Social Affairs of Georgia (MoLHSA)31 is the main responsible institution in the country working on delivering social services. After the deinstitutionalization process, which started in 2005 in Georgia, the state decided to outsource the delivery of services to the private sector, mostly to the CSOs. CSOs who fulfil certain criteria set out from the SSA are registered at MOLHSA as the service providers, can receive beneficiaries, who are financed by the state in forms of vouchers. According to the Ordinance of the Government of Georgia (GoG) on State Program of Social Rehabilitation and Child Care in 2017,32 there were:

29 Law of Georgia on Grants, Chapter I, Article 4- https://matsne.gov.ge/ka/document/view/31702 30 LEPL Social Service Agency- http://ssa.gov.ge/ 31 Ministry of Labor Health and Social Affairs of Georgia- http://moh.gov.ge/en/ 32 State Program of the Social Rehabilitation and Child Care in 2017- http://www.ssa.gov.ge/files/01_GEO/KANONMDEBLOBA/Kanon%20Qvemdebare/230.pdf

AETS Consortium – November 2017 16 Social Economy in Eastern Neighbourhood and in the Western Balkans Country Report - Georgia a) 86 Day Centres in Georgia with 2055 beneficiaries. State budget for Day Centres is 3 600 000 Georgian Lari (GEL) (equivalent to 1 161 000 EUR); b) Shelter for mothers and children with maximum 73 beneficiaries in 3 centers, with the state budget of 366 500 GEL (equivalent to 118,200 EUR); c) 35 Small group homes (orphanages) with 373 children and state budget of 2 280 000 GEL (equivalent to 735,500 EUR); d) 20 Community Centers (Shelters) with maximum 258 beneficiaries and state budget of 1 130 000 GEL (equivalent to 364,500 EUR).

From 2016, GoG launched a new employment platform, worknet.gov.ge33, which is administered by the SSA. One component of this platform is to support employment of youth (age 16-29), persons with disabilities and persons with special educational needs. In the case of employment of these beneficiaries, the employer can receive a government subsidy for up to 4 months, namely 50% of the employee’s salary but no more than 470 GEL (equivalent to 151 EUR). The program also envisages professional consultations, intermediary services connecting job seekers to potential employers, organizing employment forums, conducting qualitative researches to identify required professions and the required knowledge and skills in the labor market etc. The state budget for 2018 to implement this program is 700 000 GEL (225 800 GEL).34

Hence, outsourcing of social services to the CSOs and/or employment of youth, persons with disabilities and persons with special educational needs can be of particular interest for social enterprise.

4.2. Key stakeholders and existing coordination mechanisms

Table 1: Key Stakeholders in the Social Enterprise Ecosystem in Georgia Organization Role Policy Makers Parliament of Georgia  Responsible for the adoption of the law on Social Entrepreneurship Ministry of Labour, Health and Social  Provides financing through voucher system to the social Affairs service delivery organizations Ministry of Economy and Sustainable  Implements the programs for business support, such as Development (Enterprise Georgia…) Produce in Georgia Ministry of Agriculture  Implements the programs for agriculture development, such as: o Plant the future, o Georgian Tea Plantation Rehabilitation Program o Agro-production Promotion o Preferential Agro Credit Project o Co-financing of Agro Processing and Storage Enterprises o Agro insurance o Seasonal Projects Ministry of Corrections of Georgia  Uses social entrepreneurship as a tool for target group rehabilitation and socialization Ministry of Justice of Georgia  Uses social entrepreneurship as a tool for target group rehabilitation and socialization Funders EU Funding (CSO and LA, ENPARD,  Provides grant funding to CSOs for projects in various areas EU4Justice, EU4Youth, EIDHR) including social inclusion, employment of vulnerable groups, human rights, CSO empowerment, entrepreneurship development etc.

33 Government employment platform- http://worknet.gov.ge/ 34 Ordinance of the GoG- Employment Support Service Development 2018 State Program- https://matsne.gov.ge/en/document/view/4001171

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Centre for Strategic Research and  Provides grant funding to SEs Development of Georgia (CSRDG)  Provides technical assistance to SEs and groups interested with SE establishment  Builds partnerships between business companies and the social enterprises  Advocates adoption of legal framework and effective ecosystem for development of SEs  Organizes workshops, conferences and other public events to promote social entrepreneurship  plans to set up a fund of private donors to the support SEs such as Venture Philanthropy and impact investment Arbeiter-Samariter-Bund  Provides grant funding to SEs Deutschland e.V. Country Office  Advocates adoption of legal framework Georgia (ASB)  Provides capacity technical assistance to SEs Europe Foundation (EPF)  Provides grant support to CSOs for SE start up or improvement  Provides technical assistance to CSOs running a SE  Organizes workshops, conferences and other public events to promote social entrepreneurship  Promotes multi-stakeholder dialogue on social enterprise development, its advantages, challenges and opportunities. Charity Humanitarian Centre  Provides grant funding to SEs “Abkhazeti” (CHCA)  Provides technical assistance to SEs LEPL Children and Youth  Provides grant funding to SEs aiming at empowering youth Development Fund Tree of Life  Provides grants to SEs MFO Crystal  Provides micro low interest and flexible loans to SEs  Provides financial support to SEs Presidential Reserve Fund  Issues financial support to the organisations in form of grants  Supports social entrepreneurship programs, like student competitions on SE Support Organizations and Institutions Education Development and  Provides technical assistance to SEs and groups interested with Employment Centre (KEDEC) SE establishment  Advocates adoption of legal framework Impact Hub Tbilisi  Organizes workshops, conferences and other public events to promote social entrepreneurship  Promotes social entrepreneurship among youth and students Social Enterprise Alliance of Georgia  Creates a united platform for SEs and represents members’ interests with the third parties  Promotes social entrepreneurship development in Georgia  Organizes fairs and exhibitions for SEs to raise their awareness and sales Education and Management Team  Organizes international competition “Diamond Challenge” in (EMT) Georgia. The Diamond Challenge is a real world business concept competition with an educational purpose. Participating students from 9th-12th Grade.

Creative Development Centre  Provides SE informal educational courses for youth. Geocell  Promotes Georgian SEs through promotional videos. Poti Sea Port  Provides financial support for activities related to Social Entrepreneurship promotion  Purchases SE products for company’s CSR activities TV 1  Provides TV coverage for Social Entrepreneurship events.

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4.3. Existing funding strategies for social economy

4.3.1. National public funding schemes As already mentioned, except for the LEPL Children and Youth Development fund35 there is no government institution directly responsible for the social entrepreneurship sector. There are no state or municipal funds in Georgia which specifically allocate funding to SEs in the form of loans, grants, or any other form of financial or non-financial support. There are also no institutions that will help SEs to get loans or provide some kind of financial guarantees for them.

Lack of a responsible institution is due to the lack of a public strategy, concept or policy document at the central and local level in Georgia which would directly target SEs in the country and support the concept of social entrepreneurship. There are no programs/services in the country that are tailored and directly aimed at funding, development or support of social entrepreneurship.

However, there are/were some initiatives to support social entrepreneurship and the establishment of social enterprises by various government agencies at the central and local level.

The pioneer and leader in terms of implementation of projects focused on social entrepreneurship development and support among government agencies is LEPL Children and Youth Development Fund. It is a legal entity of public law functioning under the Ministry of Sport and Youth Affairs of Georgia. From 2018 the Fund will continue to function under the Ministry of Education and Science of Georgia. The aim of the Fund is to support children and youth unions, encourage youth initiatives, support their projects, organize and implement events oriented towards children and youth empowerment.36 Social Entrepreneurship development is one of the main priorities of the "Child and Youth Development Fund" for the last few years. The fund was the first state organization that announced calls for proposals for youth organizations.37 During 2013-2017, the fund financed 210 projects, including 61 projects on SE development. The total amount issued on social entrepreneurship projects by fund was 1 159 953 GEL (equivalent to 462 800 EUR).38 In terms of social entrepreneurship, the fund also finances academic activities in order to further study and popularize this direction in Georgia. An example of this are various thematic summer schools and trainings on "Social Entrepreneurship and Social Innovations". The fund cooperates with international and local organizations working in the field of social entrepreneurship and participates in the elaboration of legislative initiatives in this field. Despite the significant interventions implemented by the "Children and Youth Development Fund", the financial resources of this organization are scarce and they are not directly related to the development of social entrepreneurship. The fund considers Social Entrepreneurship as a tool for youth support, innovation, empowerment and employment and in this regard finances SEs.

As described in the previous chapter, LEPL Social Service Agency is a legal entity of public law functioning under the Ministry of Labor Health and Social Affairs of Georgia. After the deinstitutionalization process, started by the GoG in 2005, the state outsourced the majority of the social services to the private sector and mostly to the CSOs. In this regard, this sector became interesting for SEs, who are oriented towards social service delivery. In 2017, SSA provided 7 376 500 GEL (equivalent to 2 379 500 EUR) to Day Centers, Shelters, Community Centers and Small Group Homes, i.e. any social service oriented SE, registered and accredited by MoLHSA is entitled to receive financial support through the voucher system.

An interesting initiative led by the Ministry of Corrections of Georgia (MoC)39 considers social entrepreneurship as one of the resocialization and employment opportunities for inmates. The MoC

35 LEPL Children and Youth Development Fund- http://fondi.gov.ge/menuid/1/lang/2 36 History, Mission and Vision of the LEPL Children and Youth Development Fund- http://fondi.gov.ge/menuid/6/lang/2 37 Social Entrepreneurship for LEPL Children and Youth Development Fund- http://fondi.gov.ge/menuid/13/id/43/lang/1 38 Information on the number of financed projects, as well as total amount of grant funding was received during the interview with the Children and Youth Development Fund. 39 Ministry of Corrections of Georgia- http://moc.gov.ge/en

AETS Consortium – November 2017 19 Social Economy in Eastern Neighbourhood and in the Western Balkans Country Report - Georgia established two social enterprises providing employment opportunities for the prisoners and ex- prisoners. Though the MoC does not have targeted programs or funds to support social entrepreneurs, their initiative is an example of good practice when it comes to re-socialization, rehabilitation, crime prevention and preparation for release, even though it is limited by the administrative requirements and operations. Both social enterprises were created in half-way penitentiary institutions: the first one processing wood and employing 25 former drug addicts, migrants and potential migrants in cooperation with the National Probation Agency and the International Organization for Migration with the total budget of 98 500 CHF for the two-year project;40 and other internal bakery and pasta manufacturing factory, employing 16 prisoners – persons with disabilities.41

The new legislative initiative is in the preparation process by the MoC, which foresees giving certain tax reliefs to the businesses, who will start to operate inside the penitentiary institutions and employ the inmates. Furthermore, the Ministry foresees several incentives like direct procurement from these businesses. The initiative is planned to be passed to the Parliament in 2018.42

The Ministry of Justice of Georgia (MoJ)43 also foresees social entrepreneurship as an effective tool for re-socialization, crime prevention and rehabilitation of former inmates. Similar to the MoC, the Ministry has established two SEs employing former inmates and drug addicts, being supported by the International Organization for Migration and Swiss Federal Office for Migration.44 MoJ programmes are very limited in the area of social entrepreneurship, serving only within their own structure. Furthermore, the establishment of these SEs, like in the case of MoC, was a one-time case funded by the international donors and lacks a systematic approach. The MoJ does not pursue a separate, targeted program aimed at supporting social entrepreneurship, institutional development or financial sustainability for social economy actors. Although Article 11 of the Statute of the LEPL Center for Crime Prevention, established by the MoJ, specifies promotion and institutional support to social entrepreneurship as a tool for effective employment of former inmates,45 the MoJ does not have any specific programs or strategies to promote social economy sector development.

The Ministry of Economy and Sustainable Development (MoE) does not run special programmes supporting social entrepreneurship, but social entrepreneurs are among the potential beneficiaries of the projects administered by the Ministry. In 2014 the MoE launched a new government program “Produce in Georgia46 focused on increasing the competitiveness of the private sector and enhancing the country’s export potential. Produce in Georgia incorporates 3 main components: access to finance, access to infrastructure and consulting services. The programme is targeted for a) initiating a new business and b) expansion/retooling of the existing enterprise through provision of loans for SMEs, access to real estate, loan assurance for large businesses, technical assistance for business development.

Produce in Georgia is implemented by LEPL Enterprise Georgia, LEPL Agricultural Projects’ Management Agency and LEPL National Agency of State property, together with commercial banks and leasing companies.

Although social entrepreneurs might be the beneficiaries of the Program, they are in a less favorable condition compared to traditional business due to the lack of infrastructure and property guarantees while participating in the competition.

40 SE opening in the penitentiary institution- http://moc.gov.ge/ka/pressamsakhuri/akhali-ambebi/article/19405-kakha- kakhishvilma-thavisuflebis-shezghudvis-datsesebulebashi-khis-satsarmo-gakhsna 41 SE opening in the penitentiary institution- http://moc.gov.ge/ka/pressamsakhuri/akhali-ambebi/article/21691-kakha- kakhishvilma-thavisuflebis-shezghudvis-datsesebulebashi-akhalgakhsnili-puris-sackhobi-da-makaronis-satsarmo-daathvaliera 42 Legislative initiative on tax incentives for businesses- http://www.interpressnews.ge/ge/sazogadoeba/474916- biznessubieqtebs-romlebic-penitenciur-datsesebulebebshi-satsarmoebs-gakhsnian-shesadzloa-skhvadaskhva-sakhis- sheghavathi-dautsesdeth.html?ar=A 43 Ministry of Justice of Georgia- http://justice.gov.ge/ 44 SE opening- http://www.justice.gov.ge/News/Detail?newsId=5060 45 Statute of the LEPL Crime Prevention Centre- http://prevention.gov.ge/uploads/files/aqtebi/debuleba0901207.pdf 46 Enterprise Georgia- http://qartuli.ge/eng/sub/about-program/program-details/

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In addition, as social entrepreneurs are oriented towards achieving greater social impact rather than profit growth, they are not able to fill the latter criteria of the competition. Some of the social entrepreneurs are barred by the fact that they are often non-entrepreneurial legal entities and thus are in unfavorable conditions to provide guarantees on loans. Other than this program, the MoE does not have any targeted programme directly oriented to the development of the social economy sector.

The Ministry of Agriculture of Georgia (MoA), like the MoE, initiates projects aimed at promoting entrepreneurship in general, encouraging entrepreneurs from the agriculture sector, mostly in forms of cooperatives.

Beneficiaries of such programs may become social enterprises after the overcoming of the relevant competition phases. Social enterprises will have the same barriers to participating in these programs outlined in the previous section. These programs are mainly implemented by the MoA’s agencies LEPL Agricultural Cooperatives Development Agency47 and LEPL Agricultural Projects’ Management Agency.

The GoG adopted a significant resolution on financing agricultural infrastructure. From February 1st 2018, all farmers (individuals and legal entities) will have the opportunity to use the agro credit and agro leasing services within 7 000 – 1 000 000 GEL (equivalent to 2250 – 322 500 EUR) to purchase agricultural infrastructure/techniques. Interest rate co-financing from the GoG side will be 11 % within agro-credit and 12% within agro leasing.48

In Georgia there are 11 regions, which are comprised by 64 municipalities and the City of Tbilisi. Only three municipalities run SE development programs, while only two regional strategies mention social entrepreneurship.

In 2015 the "Entrepreneurship Support" programme was approved by the Tbilisi city government, aimed at establishing a favorable environment for business (including SEs) and entrepreneurship development. The program served to raise qualifications and skills of entrepreneurs and raise access to finances.49 On February 17th, 2015 The Tbilisi City Council approved the conditions for releasing low interest loans as part of the program.50 According to the resolution, sole traders and legal entities, including social entrepreneurs could participate in this program. The program envisaged several supporting activities, including access to low interest loans from financial institutions with the help of the Tbilisi Municipality City Hall amongst other, to start up new businesses and/or develop existing businesses.

The total budget of the Entrepreneurship Support program in 2015 was 2 627 300 GEL (equivalent to 847 500 EUR). Unfortunately, there are no statistics to determine how many SEs received financial and/or non-financial support. It should also be emphasized that Tbilisi 2016 and 2017 budgets did not provide access to low interest loans for social enterprises.

It is important to note that including SEs in the cheap credit program was very important because it created the first case for access to low interest loans for SEs.

A very interesting opportunity for SMEs was recently announced. The Tbilisi municipality received EU funding in the amount of 506 634 EUR, in the framework of the “Mayors for Economic Growth” Call for Application. The project envisages to establish a business accelerator for startups and small businesses and offer services like free co-working and conference spaces, consultations on HR, legal, financial, tax, brand positioning and sales aspects. The accelerator will create the web-pages and

47 Agriculture Cooperative Development Agency- http://acda.gov.ge/index.php/eng 48 Resolution on financing the agricultural infrastructure- http://www.interpressnews.ge/ge/sazogadoeba/474759-levan- davithashvili-mthavrobam-soflis-meurneobis-teqnikis-dafinansebis-shesakheb-mnishvnelovani-dadgenileba- miigho.html?ar=A 49 Tbilisi city 2015 budget, entrepreneurship support (code 4.1)- https://matsne.gov.ge/ka/document/view/2636328 50 Tbilisi city council decree- https://matsne.gov.ge/ka/document/view/2735510

AETS Consortium – November 2017 21 Social Economy in Eastern Neighbourhood and in the Western Balkans Country Report - Georgia business plans to more than 100 sustainable and successful companies, 30 exhibition fairs will be organized as well. This project can become a good opportunity for the Social Enterprises operating in Tbilisi.51

Another example of a municipal program is that implemented by Zugdidi Municipality, aimed at social entrepreneurship, which envisages the development of social enterprises in the Zugdidi area by empowering vulnerable groups (socially disadvantaged, disabled, victims of child abuse etc.) through professional training and employment). Since 2015, the municipality implements the "Social Enterprise Development Support Program"52 in the Zugdidi area. The program issues small grants to SEs, in total 110,000 GEL was distributed among 13 SEs. In 2017 the program budget was 30 000 GEL.

The priority of social entrepreneurship support was reflected several times in the budget of Kutaisi municipality. For example, the sub-program “financing/co-financing of projects focused on supporting persons with disabilities” states that the projects will be financed/co-financed based on grant competition. Priority will be given to the projects focused on social entrepreneurship development and on income generating activities for persons with disabilities.53 Budget for this sub-program was 50 000 GEL. Due to a lack of the statistics, it is impossible to determine the amount of finances social enterprises received. The budgets of Kutaisi municipality in 2013 and 2014 included the "Small Business Promotion" program (program code 03 03 06). In 2013 the overall budget of the program was 115 500 GEL and in 2014 it was 100 000 GEL.The subprogramme included activities such as stimulation and support of small and medium businesses and social enterprises in partnership with other non- governmental and donor organizations. Since the overall purpose of the program was to promote small and medium businesses, it is impossible to determine what the direct impact was on social enterprises, but this program was important since it directly envisaged municipal funding for social enterprises.

The GoG approved the Mtskheta-Mtianeti Development Strategy for 2016-2021 on July 2016.54 The strategy reflects the current situation and the mechanisms to facilitate the development of the regions. The strategy is designed to define the existing potential of the region and offer proposals to achieve concrete results in a certain period of time. The strategy defines the main tasks that should be achieved as a result of the implementation of the strategy. One of the objectives of the strategy was to promote the development of innovative economies in the region and attract investments. To accomplish this goal different tasks, including "Development of Social Entrepreneurship" were developed. The strategy does not outline methods that should support the development of social enterprise in the region, or the amount of expenditure to be incurred for this purpose, but according to the strategy, social entrepreneurship is considered as a tool for stimulating the development of innovation and economy.

A similar strategy has been approved for the development of the Shida Kartli region. By the decree of the GoG on September 17, 2013 the "Strategy of the Development of Shida Kartli Region 2014- 2021” was approved. It should be noted that this document, in contrast to the Mtskheta-Mtianeti strategy, foresees social entrepreneurship as a mechanism for involving Internally Displaced Persons (IDPs) and other vulnerable groups in business activities. In order to achieve this goal, the strategy aims to create business incubators and social enterprises.

4.3.2. European Union funding The EU foresees the social entrepreneurship initiative as one of the most potentially promising paths to achieving sustainable and inclusive development in the Georgian regions. The EU country roadmap for engagement with Civil Society 2014-2017 in Georgia pays significant attention to this issue and puts one of the priorities on promoting the concept and practice of social enterprise in the country.55

51 EU grant to Tbilisi municipality- http://eugeorgia.info/en/article/708/evrokavshirisgan-tbilisis-gorisa-da-bolnisis- municipalitetebi--14-milion-evros-grants-miigeben-/ 52 Zugdidi municipality 2017 budget- https://matsne.gov.ge/ka/document/view/3506786 53 Kutaisi Municipality 2017 budget- https://matsne.gov.ge/ka/document/view/3719692 54 GoG decree on Mtskheta-Mtianeti Development Strategy for 2016-2021- https://matsne.gov.ge/ka/document/view/3337546 55 EU country roadmap for engagement within Civil Society 2014-2017 in Georgia (page 9 and 19)-

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EU funding is a major and important source of financial support in developing business ideas and initiating SEs. EU funding for SEs is available through re-granting projects and schemes of another organizations (intermediaries). The main instrument for SE development is the Non-State Actors and Local Authorities thematic program on Civil Society Organisations and Local Authorities. Furthermore, there are several programs which are also promoting social entrepreneurship such as: The Neighbourhood Regional Program on Agriculture and Rural Development in Georgia (ENPARD); Complementary Rehabilitation and Re-socialization Support in the Criminal Justice Sector; Support to enhance sustainability of Civil Society in Georgia; Neighbourhood Civil Society Facility, Human Rights thematic Program on European Instrument for Democracy and Human Rights (EIDHR); Support to Internally Displaced Persons (IDPS) in Georgia etc. These programs are directly or indirectly aiming at promoting social entrepreneurship. As SEs are not the direct recipients of EU funds and this financial support is always low and limited, it does not allow SEs to scale-up and build their sustainability and financial independence.

In 2016, the EU provided targeted grants to social entrepreneurship development in Georgia within the CSOs and LA program. The Center for Strategic Research and Development of Georgia (CSRDG), Education, Development and Employment Center (KEDEC) and Arbeiter-Samariter-Bund Georgia (ASB) in cooperation with the JSC microfinance organization “Crystal” are implementing a three year project ‘Social Entrepreneurship – Innovative Approach for Economic and Social Changes’. Through supporting the development of social entrepreneurship, the project is aimed at capacity building of civil society organizations to let them more effectively achieve their social and environmental objectives and facilitate the economic empowerment of vulnerable groups. In order to achieve the primary goal of the project, three major objectives have been delineated: (a) improved accessibility to expertise and institutional strengthening services, specifically tailored to the needs of social enterprises; (b) establishing an environment conducive to social enterprise development; (c) improved mechanisms for coordinating, protecting interests of social enterprises and sharing of experiences.

The European Union’s EU4Business initiative is an umbrella initiative that covers all EU activities supporting SMEs in the Eastern Partnership countries. Through international investment companies and local institutions EU4Business provides funding opportunities, including also micro loans in the range of 14 300 – 25 000 EUR, which can become an additional source to access finances for the SEs.56

4.3.3. Social Investors, Social Impact Funds and other socially drive financing institutions Currently, there are no national social investors, social impact funds or other socially driven financing institutions in the country providing support for SEs.

Initial interest and ongoing plans exist among local actors to jointly establish social impact funds in the country. There are 4 existing crowdfunding platforms in Georgia: wehelp.ge, startups.ge, crowdfund.ge, crystalcrowd.ge/ka. Except for wehelp.ge, all three platforms could be potentially used by SEs to attract investors/funders. It has to be mentioned that all these crowdfunding platforms are in their early development stage.

With the financial support of the Presidential Reserve Fund of Georgia, another crowdfunding platform- GETSTARTED.GE is planned to be launched. One of the main priorities of this platform will be to directly promote and support social entrepreneurship.

Another planned initiative within the EU funded project “Social Entrepreneurship – Innovative Approach for Economic and Social Changes” is the initiation of the concept of Venture Philanthropy and Social Investments for SEs, through raising awareness of Georgian businesses on these topics and engaging them in CSO/SE-business dialogue and cooperation.

https://eeas.europa.eu/sites/eeas/files/eu_roadmapfinal2014_2017_georgia_en.pdf 56 EU4business- http://www.eu4business.eu/smeprojects/georgia/finance

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The European Fund for Southeast Europe (EFSE) is a public-private partnership that brings together donor agencies, international finance institutions and private institutional investors. EFSE generates measurable impact in supporting micro and small enterprises as the backbone of local economies, satisfying the basic need for decent shelter and strengthening local financial markets. Through local partner institutions EFSE57 has already successful implemented several projects in Georgia. EFSE can become an additional source for SEs to access finance.

4.3.4. Private sector Unfortunately, there are very few initiatives involving the private sector in the financing of Social Enterprises. The most successful case from the private sector is Tree of Life, which is a fund established by the private bank - Bank of Georgia. This fund was established in 2008 to support conflict-affected people after the Russian-Georgian conflict. The fund started to rehabilitate educational institutions, as well as rehabilitation programs for mothers and children and special business education courses. From 2014, the fund announced new priorities: support to children with disabilities, education and environmental protection.

The fund uses social entrepreneurship as a tool to achieve its priority objectives. Since 2015, the fund is announcing a call for proposals and supports up to 5 projects annually, which aim to establish new SEs or expand already existing SEs. Maximum financial support per SE is 50 000 GEL (equivalent to 16 200 EUR).58

Among the business companies operating in Georgia, Corporate Social Responsibility (CSR) is becoming more popular and companies are starting to invest in their fields of interest. Some of these socially responsible companies support social entrepreneurship promotion and development in Georgia and use various methods during their activities. They work closely with the local CSOs, which play the main role in sector development in the country.

Geocell is one of the main mobile network operators in Georgia. In 2017, in partnership with the Social Enterprise Alliance of Georgia Geocell shot 13 promotional videos about SEs and uploaded them on the social media platform - “Geocell for business”.59 Approximately 3 000 EUR was spent in order to create promotional videos.

Poti Sea Port is the largest port in Georgia. Since 2015, Port is engaged in SE promotion and development through procurement of SE products, as well as sponsoring several SE support events and activities. More than 5 000 EUR was spent for these activities.

Tbilisi Mall is one of the biggest shopping centers in Georgia. In 2017, The Company supported Christmas market of SE products which lasted for 2 weeks. The space for the fair was provided without any charge. During the same period, the price for the space equaled around 3 000 EUR.

TV 1 is one of the major broadcasting companies in the country. The broadcasting company frequently covers events related to Social Entrepreneurship.

4.3.5. Micro-financing

Microfinance organization Crystal60 is a dynamically growing local microfinance organization, supporting development of micro and small business sectors in Georgia. Crystal is actually the only financial institution that has set a precedent by issuing tailored financial loans for the expansion of social enterprises. According to the organizations’ scheme, 7 interest-free loans have already been issued, the

57 European Fund for Southeast Europe- https://www.efse.lu/about-the-fund/target-region/ 58 Tree of Life- http://www.tree.ge/competition/ 59 Geocell for Business- https://www.facebook.com/geocellbusiness/ 60 MFO Crystal- http://crystal.ge/en/

AETS Consortium – November 2017 24 Social Economy in Eastern Neighbourhood and in the Western Balkans Country Report - Georgia maximum amount of 5000 GEL per SE.61 This scheme actually has a pilot character and serves as a creation of possibilities and promotion of using credit resources for social entrepreneurs.

Besides launching flexible loans for SEs Crystal provides so called “Social Credit”, and supports Social Enterprises for several years already. SEs “Peacock”, “Babale” and “Tairi Design” are among their beneficiaries who have received financial support for startup and business development, as well as financial support in terms of capacity building.62

Although several micro-finance and banking institutions provide micro credits to SMEs and start-ups, which can be also used by SEs, there are no targeted services from these institutions for SEs. As most Social Enterprises are operating as non-entrepreneurial legal entities and cannot provide the collaterals, they face big barriers from credit institutions to receive the loans.

4.3.6. Development Aid Agencies Except for the European Union, there are no development aid agencies directly working on social entrepreneurship development in the country. Despite this fact, there are some cases when different Agencies have supported social entrepreneurship through local CSOs.

The Swedish International Development Cooperation Agency (Sida)63 and Denmark’s Development Cooperation Agency (Danida)64 are core financial supporters of the Europe Foundation (EPF)65- the Georgian local CSO and one of the leading and first organizations promoting social entrepreneurship in the country. Since 2009, 12 SEs were established through EPF’s financial support. In addition, EPF is a founding partner of the newly established SE Impact Hub Tbilisi.

The United States Agency for International Development (USAID), which is one of the biggest international donor in Georgia, has also supported initiation of the SE “Wheelchair Workshop”, which was established by the Coalition for Independent Living.66 The coalition was the grantee of USAID, which received 250 000 USD as grant and used this funding for SE establishment to support employment of persons with disabilities. Nowadays the Wheelchair Workshop is one of the most successful SEs in Georgia. They employ 10 people with disabilities (in total 16 people) and produce several mechanical and electronic wheelchairs, ramps and different supporting and supplementary adaptive equipment for persons with disabilities.67

4.4. Type of additional non-financial support to social economy 4.4.1. Business Development Services Along with the increasing interest towards entrepreneurial activity from different sectors, the supply of consulting services has gradually increased. Mostly supported by international donors, tailored consultation services in Business Planning, Marketing and PR, Social Media Management etc., are provided for CSOs, social enterprises, public institutions etc.

The Centre for Social Entrepreneurship is a structural unit of The Centre for Strategic Research and Development of Georgia (CSRDG). The mission of the centre is to promote social entrepreneurship development in Georgia.

61 This information was provided by the MFO Crystal 62 MFO Crystal’s SCR- http://crystal.ge/en/255/social-projects 63 Swiss International Development Cooperation Agency in Georgia- https://www.sida.se/English/where-we-work/Europe/Georgia-/ 64 Denmark’s Development Cooperation Agency- http://um.dk/en/danida-en/ 65 Europe Foundation- http://www.epfound.ge/ 66 Coalition for independent Living- http://disability.ge/index.php?option=com_content&task=view&id=8527&Itemid=1&lang=en 67 SE Wheelchair Workshop- http://segeorgia.org/cmore.php?PID=139

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The Centre provides consultation services for organizations interested in social entrepreneurship. In order to assist SE start-ups, the Centre announces grant competitions and provides periodic consultations to the grantees on organizational, financial, marketing and legislative issues.68

Pro Bono Network Georgia is an informal union of Georgian and international companies operating in Georgia that are willing to use their expertise and professional resources for the benefit of the society.

Initiated by CSRDG, and supported by MitOst e.V., BMW Foundation Herbert Quandt and Taproot Foundation, Georgia’s Pro Bono Network was officially founded in October 2015. A pro bono provider can be either an individual volunteer or a company employee. Beneficiary organizations can be CSOs, SEs and public institutions. Companies offer Pro Bono assistance to their beneficiaries on a wide variety of topics, such as marketing and PR, strategy planning and organizational management, IT, legal issues, financial issues and HR management.69 Pro Bono network Georgia currently is comprised of 17 member organisations.

The B2B Social Enterprises exhibition aims at establishing and strengthening communication between the business companies and SEs, popularization of the concept and field development support in Georgia. In 2017 the first B2B event was organized for SEs.70 Socially responsible business organizations were given a chance to:  Become familiar with the various products produced by the leading social enterprises;  Negotiate for future cooperation plans with social entrepreneurs;  Introduce new practice in their organization giving the opportunity to contribute to solving social problems by buying products needed for daily business operation

21 leading Social Enterprises were presented at the event and 68 B2B meetings were held with the invited companies (44 business companies, 21 local and international organizations and 2 public agencies). Participant SEs received corporate orders in the amount of 63 245 GEL (equivalent to 20 400 EUR). B2B exhibition was organized by CSRDG in partnership with SEAG and will be held annually.

4.4.2. Local/national and/or Regional Networks In 2015, during the social entrepreneurship annual forum, participant SEs suggested to establish social enterprise alliance in order to create the united platform for enterprises. A year later, the establishment of the Social Enterprise Alliance of Georgia (SEAG) was announced at the “Social Entrepreneurship Forum 2016”.

SEAG is a newly established organization, although the founders of the alliance are the pioneers in promotion of social entrepreneurship in Georgia. They have gained rich working experience in the field and are well familiar with the existing challenges and ways for its solution to further develop the sector.

The mission of the alliance is to foster an environment in which social enterprises can thrive, ensuring sustainability of existing enterprises and initiating new social enterprises. Alliance is a united platform for social enterprises, which supports the joint interests of the members, awareness raising about the field, experience sharing and the development of the effective cooperation mechanisms between the sectors. Alliance represents member-based organizations and currently unities 20 social enterprises and SE support organizations.71

4.4.3. Academia Educational (high school and university level) programs do not include detailed information about social economy and its entities. Consequently, students, as well as society are less aware of the sphere.

68 The Centre for Social Entrepreneurship- http://segeorgia.org/info.php?ID=11&ln=en 69 Pro Bono network Georgia- http://probonogeorgia.ge/ 70 B2B event announcement- http://segeorgia.org/info.php?ID=74 71 Social Enterprise Alliance of Georgia- http://segeorgia.org/info.php?ID=59&ln=en

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In 2017, Tbilisi State University72 published the research work named “Social Enterprise Development Trends in Georgia”. It is developed for the students of higher education institutions specialized in Economics and Business and for the wide range of readers in this field. The work discusses social responsibility – a necessary precondition for launching social entrepreneurship; strengthening the trend from business entrepreneurship to social entrepreneurship – a prerequisite of being in harmony with the public values; European experience of social entrepreneurship, the challenges of social entrepreneurship in Visegrad countries; Current conditions of social entrepreneurship and its development opportunities in Georgia.

To fill the gap, local CSOs are supporting social entrepreneurship development in Georgia with grant funding, the organization of trainings, courses and competitions in order to promote the social economy among the students.

The “Students in support of social enterprises” competition program is implemented by CSRDG and has taken place since 2012. It aims to popularize the concept of Social Entrepreneurship among youth and as well as to enhance Georgian Social Enterprises by the help of students’ initiatives. Within the competition, seminars about “Social Entrepreneurship” are organized and selected student teams have the opportunity to meet and work with Georgian social entrepreneurs.73

Social Impact Hub educational program - together with Europe Foundation – the Social Impact Hub Tbilisi launched the Social Impact Award. Designed to promote the knowledge and practice of social entrepreneurship, SIA is an idea competition and year-round educational program dedicated to students. Starting back in Vienna in 2009 SIA it has rapidly expanded and was implemented in 20 countries in 2017, and continues to empower students and raise awareness about social entrepreneurship.74

4.5. On-going and planned initiative addressing social economy issues Currently, the social enterprise sector in Georgia faces its biggest challenge with the law adoption. Big efforts are made from the civil society sector to the Parliament of Georgia and GoG to push the process forward. Strengthening of the newly established Social Enterprise Alliance of Georgia (SEAG) is also a high priority for the SEs, as it is foreseen as a platform to lobby and advocate joint initiatives and challenges that SEs are facing.

Several initiatives are planned to empower the social entrepreneurship sector, like increasing access to finances and increasing sales. With the technical support of the EU funded project “Social Enterprise- innovative approach for economic and social changes”, we have first precedent, when micro finance organization Crystal started to issue flexible and low interest loans to SEs. Project implementing partners will continue to work actively with other financial institutions (banks and micro finance organizations) to develop tailored credit systems for SEs.

Popularization of the SE concept through fair-exhibitions and forums, which will also increase sales, is a high priority. Inside SEAG, working groups are created by SE representatives to come up with the concrete events, where SEs will have an opportunity to raise their awareness and sell their products. The Christmas market at Tbilisi Mall and B2B forum was a great example, which will be multiplied and similar events will be organized during the next months.

4.6. Best practices in the country and replicable models In 2017, the most successful SEs were “Ethno Design”, who won in the annual business award competition as the best Social Enterprise of the year, and “Kodala” - who was named as the best Social Enterprise of the year during the annual Social Enterprise Forum.

72 Tbilisi State University- https://www.tsu.ge/en/ 73 Students in Support of Social Enterprise program- http://segeorgia.org/info.php?ID=68&ln=en 74 Social Impact Award program- https://tbilisi.impacthub.net/programmes/

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Social Shop "Ethno Design"75 was established in 2015 in Tbilisi by "Georgian Craft Association". SE is a conceptual store that brings together high quality handmade products created by up to 250 traditional craftsmen across Georgia. SE mission is to support the economic empowerment of traditional craftsmen by enhancing their product development and awareness through trainings and consultancy services. The products presented at the shop combine Georgian traditional and at the same time innovative elements, that are distinguished with high quality and customized to the customer needs. As a result, SE creates a prospective employment platform for up to 250 artisans in different regions of Georgia, including different groups (IDP, ethnic minorities, women and young people). SE is fully sustainable, they also opened another shop in Vardzia and during 15 months their turn-over was 139 700 GEL (equivalent to 45 000 EUR).

A successful example of Social Enterprise is “Kodala”,76 which was established in 2013 by the youth movement "Davitianni" operating under the Patriarchate of Georgian. SE produces wooden ecologically clean toys that promote the development of the child's imagination and memory.

Through professional training of persons with disabilities, SE facilitates their integration into society by providing equal opportunities for employment. At present, 21 people are employed in SE. “Kodala” is self-sustainable, fully dependant on the sale revenues and in comparison to 2016, SE revenues in 2017 grew by almost 300% and amounted to 80 000 GEL (equivalent to 25 800 EUR).

Another successful case of social enterprise is New Mziuri Café.77 Mziuri Park is the “children’s town” and recreation space in the city center of Tbilisi. On June 13th 2015 a significant flood occurred in Tbilisi. It resulted in at least 20 human deaths, struck Tbilisi Zoo (leaving half of its animal inhabitants dead or on the loose), and destroyed the city’s infrastructure and also a big part of Mziuri Park.

After the flood, during the rehabilitation phase of Mziuri Park, the idea to open a social café was developed by the NNLE Mziani. An unprecedented fundraising campaign was initiated, which involved different stakeholders from state, NGO, diaspora and private sectors. As a result more than 81 000 EUR was raised and the adapted Social Café with amphitheater and children’s entertainment locations was opened on June 1st 2016.78

5. GAP ANALYSIS AND NEEDS ASSESSMENT

5.1. Macro-social factors determining the sector The absence of a legal framework is one of the crucial problems for a supportive eco-system for SE development. Although existing legislation in the country allows the functioning of various forms of social enterprises, it does not specifically recognise SE as there is no specific legislation on social entrepreneurship. Lack of legal recognition limits the government in introducing targeted support and incentives for SEs, thus inhibiting their development. Already existing government programs aiming at business support and development excludes SEs, as the programs are addressed only for entrepreneurial legal entities, while most of SEs in Georgia are non-entrepreneurial legal entities. Government tenders do not include social consideration during the procurement, which is highly recommended by the European Union and implemented by its many member states.

5.2. Access to finances Promotion of the social entrepreneurship concept in Georgia started in 2008-09. Thus, this sector is in its early development stage. Although most financial institutions have start up loans for SMEs in

75 SE Ethno Design- https://www.facebook.com/ethnodesignsocielshop/ 76 SE Kodala- https://www.facebook.com/woodwork.kodala/ 77 SE New Mziuri- https://www.facebook.com/akhalimziuri/ 78 Promotional video on New Mziuri Café- https://www.facebook.com/SEallianceGeorgia/videos/1405130809582191/

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Georgia, the majority of SEs prefer grants to start-up and/or expand their businesses. To access loans from financial institutions (banks and micro finance organizations) is very difficult for SEs as mostly they do not have assets for guarantee and lack repayment capacity, which makes it highly risky for the financial institutions to issue the loans.

Except for one example, when micro finance organization Crystal started to issue flexible loans to SEs, there are no such examples from the financial institutions. In this regard the absence of a regulatory framework makes it even more difficult for the institutions to provide such services, as it is impossible to distinguish traditional businesses from SEs.

Although there are some initiatives regarding the initiation of Venture Philanthropy and Social Investment, currently there are no national social investors, social impact funds or other socially driven financing institutions in Georgia providing support for SEs. Crowdfunding platforms are still less developed in the country and there is no interest from the SE side to use this funding opportunity.

5.3. Lack of relevant skills to access the market Social Enterprises in Georgia are mostly established by CSOs or local community members. As a consequence, SE managers mostly lack the business, financial and entrepreneurial skills required. Accordingly, in the absence of necessary skills, SEs have difficulties in developing products/services, expanding business, penetrating new markets and achieving financial sustainability.

SEs also face challenges in accessing the market. Being micro and/or small enterprises, they do not have the required production scale to penetrate and compete on the market. Some SEs also state that they cannot compete with traditional business because of price politics, as their cost of production is higher due to several social costs, which puts them in an unfavourable situation.

5.4. Opportunities and key drivers boosting the development and scaling up of the social economy Other barriers complicating social entrepreneurship sector development is a lack of a sustainable ecosystem that will provide support to SEs. There are tailored technical assistance programs (workshops, trainings, coaching and etc.) for SEs provided by the support organizations, but such initiatives are also project driven and these organizations do not have the capacity to provide such services in the long-run.

Socially responsible business companies show their initial interest in SE development. Bank of Georgia, Geocell, TV1 and Poti Sea Port already support SE initiatives which is a very good sign to establish diverse partnerships between business companies and SEs.

Despite the numerous challenges, the concept of social entrepreneurship is becoming more and more popular. More CSOs, government institutions, business companies, academic institutions and broadcasting companies are interested in the SE concept. Also diverse groups (youth, ethnic minorities, persons with disabilities, persons in conflict with law etc.) are interested and engaged in developing innovative ideas to community and societal problems.

The establishment of the Social Enterprise Alliance of Georgia is a very important and significant fact for SEs, as they have a unified platform to lobby and advocate the challenges they face.

6. CONCLUSIONS AND GENERAL POLICY RECOMMENDATIONS

After studying and analyzing the social enterprise environment and regulatory framework, the following recommendations for Georgian SEs were developed: change the Legal Framework, improve Tax Regulations, clearly define the Functions of Responsible Structures, Raise Public Awareness, conduct Training, contribute to Social Goals and Diversification of Income Sources.

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Legal Framework Legislation and Policy Framework First of all, it is necessary to define the terms "social enterprise" and "social entrepreneurship" in the legislation. This can be done in different ways. For example, these terms may be defined in civil and tax code, or by creating a separate law. Based on the international experience and taking into account the local environment, it will be better to adopt a separate law regulating this area not only to eliminate legal obstacles, but also to provide support mechanisms for the sector development. The sector should also decide which model will be suitable: to create a separate organizational-legal form of social enterprise, or to define SE status as LTD, NNLE, Cooperative etc.

Modification of tax regulations SEs have many obstacles with taxation. It is necessary to make amendments in Georgian legislation:  Grants received by SE and social expenditures need to be exempted from profit tax;  SEs functioning in the form of NNLE must be put in equal conditions as entrepreneurial legal entities and must have the same benefits. Namely, they must be tax exempt from profit taxes if they reinvest their profit in business expansion/development;  It is important to allow SEs to receive grants for entrepreneurial purposes. Therefore, changes should be made to the Law of Georgia on "Grants" and in the Tax Code;  Under the Law of Georgia on Development of Mountainous Regions, entrepreneurial legal entities which are granted with the status of a high settlement enterprise defined by the Tax Code of Georgia are exempted from taxes. Changes need to be made in the above-mentioned law to enable SEs functioning in the form of NNLE in the mountainous regions to receive the same benefits;

Besides the legal regulation on social entrepreneurship, tax incentives may be set by the State as a priority area, for instance, in the case of employment of persons of disabilities or other vulnerable groups. Tax incentives may be provided for business organizations that support social entrepreneurs as well.

Development of encouraging mechanisms in the state procurement legislation SEs rarely participate in state procurements and the revenues received in this way are very scarce. Based on this, in parallel with the legislative regulation, it is necessary to create exceptions in the state procurement procedures. This has to be done in such a way that SEs have the opportunity to compete in governmental tenders, and the state will also get increased social benefits. On the other hand, it must be taken into consideration that such an initiative will not cause market distortion. The GoG can use the recommendations provided by the EU to its member states. EU public procurement directive sets out the rules under which public bodies can purchase goods, services and works, and aim to guarantee equal access to, and fare competition for, public contracts in the EU market.79

Responsible state agencies and strategy development There are no governmental structures in Georgia that are responsible for elaboration and implementation of policy support for social entrepreneurship. In the first stage, it is necessary to define a governmental agency that will be responsible for the development of social entrepreneurship. Taking into account the cross-cutting nature of social entrepreneurship which incorporates aspects of economy, social and labor market issues, sustainable development, culture, environment, agriculture, innovation etc., it can be used by most of Ministries, as well as the municipalities as a tool for solving the sectoral problems. There are already some good cases in Georgia, which must be maintained, strengthened and multiplied.

79 Social Enterprises and the social economy going forward (GECES) page 33.

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Development of the SE state strategy and action plan needs to have high priority to enable the sector’s rapid development. Also, relevant Ministries and municipalities will be recommended to develop their own tailored strategies. State strategy must be developed together with donor and SE support organizations who accumulated huge experience in this sector. The EU’s involvement in this process will have particular importance, since it is the major donor in this sector development and it acknowledges the importance of social entrepreneurship as a priority in its roadmap.

EU’s role in the sector development The EU still remains the biggest donor in SE development in Georgia. It announces several Calls for Proposals, with the cross-cutting themes of Social Entrepreneurship. However, the thematic program - Civil Society Organizations and Local Authorities - is the only instrument which directly aims to fund social entrepreneurship development actions. The last funding opportunity which addressed the promotion of the concept and practice of Social Enterprise in Georgia (Lot 3 of the CfP EuropeAid/2015/137-001/DD/ACT/GE) was in 2015 with the total budget of 600 000 EUR. So far as EU is currently the only international donor aiming at SE sector development, it is very important that it increases the frequency and volume of targeted funds.

The necessity of raising public awareness and visibility of the sector The level of public awareness of social entrepreneurship still remains low in society. Also business interest towards the sector is very low. It is essential to inform the public about the essence of social entrepreneurship and its potential benefits in the community through the joint effort of social entrepreneurs. Tools such as social media, networks, press and social advertisements must be used. It is also necessary to strengthen dialogues with business organizations and involve them in the activities of the sector.

Trainings Many social entrepreneurs indicate that lack of business skills remains one of the main challenges for them. This is mainly due to the fact that the majority of Georgian SEs are staffed with professionals having experience in the NGO sector, who rarely have business experience. Therefore, training in marketing, business management, business law and other neighboring disciplines need to be systematically conducted for social entrepreneurs. Some of the already existing support structures can be used to provide such training to SEs.

Diverse social goals Goals of social enterprises in Georgia are not diverse as their mission is mainly employment and/or assistance of vulnerable groups. The government, NGO, private sectors and donor organizations have to encourage initiation of SEs in the areas where the state's services are expensive on one hand and the business has less interest on the other hand. The diversification of the sphere of social enterprise will, in turn, contribute to increasing public awareness of the sector and interest in social entrepreneurship.

Access to finances In the short-run, in order to increase access to finance, it is very important to provide SEs with soft loans. It is essential that the process is managed in close cooperation with business, microfinance and banking sector. Before initiating a soft loan program for social enterprises in Georgia, it is important to assess financial difficulties facing social enterprises as well as their ability to make effective use of loans. Soft loans can be accompanied with tailored business trainings and mentorship, including involvement of NGOs as intermediaries, which will increase efficiency and effectiveness of this financial resource use.

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6.1. Priority sectors for country level intervention The priorities in each area of support below are listed in such a way so as to show the urgency and the sequencing of the needed interventions. It emerges that the most urgent support needed is capacity building through different approaches and modalities. In parallel the need for increased and more streamlined funding will be necessary. With regard to this coordination among various stakeholders and funding institutions should be established to maximise the impact and improve prioritisation. The new law is under discussion and for the moment no additional support is needed. The table below shows the areas of intervention, priority areas and possible modality of support.

Areas of intervention What needs to be covered - priority areas Modalities of in order of importance support

First area of Priority area 1: Capacity building to ensure ongoing Bilateral envelopes intervention: and more systemic capacity support provided to SE (technical in all stages of development (planning, budgeting assistance, grants, and process management, etc.) CfP, twining, direct award etc.) Skills and access to Priority area 2: Tailored technical assistance to market support projects aimed at building SEs’ capacity Regional programmes (technical assistance, grants, etc.)

Second area of Priority area 1: Create State funding targeted Other support intervention: support for further SE development. schemes (indirect management) Priority area 2: Coordination and cooperation activities related to funding

 Donor coordination due to increased amount Bilateral envelopes Funding and type of financial support that should be (technical coupled with capacity building (mentoring, assistance, grants, trainings, peer exchange, networking, etc.). CfP, twining, direct  Cooperation with finance institution to create tailor-made financial support for SEs (soft award etc.) loans, repayable grants, zero interest loans, etc.).  Initiate venture philanthropy and/or social investment approach by start building social impact community. Third area of Priority area 1: Coordination, cooperation and Bilateral envelopes intervention: exchange of best practices (technical

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Coordination  Establish cross sector coordination platform assistance, grants,  Strengthened coordination among international CfP, twining, direct donors and SE support organizations award etc.)  Strat discussions and exchange of experiences (e.g. study tours, etc.) for exploring the Regional possibility of the introduction of programmes social/environmental criteria during the state (technical procurement process assistance, grants, etc.)

Fourth area of Priority area 1: Further support in creating legal and Further State intervention: regulatory framework conducive for further SE support/ no EU development. support is needed Policy, legal and for the time being institutional Priority area 2: Develop state strategy and action framework plan on SE development

Should you need information on the suggested horizontal or regional approach see the final report for this contract (contract details on pg. 2 of this report), a very general overview is provided here:  The analysis of SE in the Eastern Neighbourhood and in the Western Balkan countries shows that even though there are some differences, the approach in prioritising the support in both regions could be the same.  Due to a big number of stakeholders, fragmented support and lack of coordination, it is of a paramount importance that the European Commission takes the lead in setting the approach, the priorities and in defining the roles and responsibilities for EU horizontal approach.  When examining the needs in various countries the current support in terms of the format and amounts dedicated to SE might not be adequate or sufficient anymore.  The analysis showed that some areas should be covered on a country-by-country basis, but many priorities could be addressed through regional programmes

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7. ANNEXES

7.1. Annex 1 - Questionnaire survey

I. Questionnaire for the Delegations of the EU

This survey is being carried out by AETS on behalf of the European Commission. It is designed to gather information about the social enterprise ecosystem in your country. The information you provide will be confidential and used solely for the purposes of analysis. Please answer the following questions.

A. PERSONAL DETAILS OF RESPONDENT

1. Name: 2. Email address: 3. Telephone number: 4. EUDEL Country: 5. Position: 1. What is the key responsibility of your Section? What programmes/project you carry out? 2. Is your Section aware of the concept of social economy? If yes, can you provide your definition and/or understanding of the social economy and social enterprise concept? 3. Is there a law on social economy in the country? Or Strategy or Action plan? If not, under what regulatory framework social enterprises operate? Under whose jurisdiction social enterprises fill in? 4. Based on your opinion, is there an enabling environment for social enterprise development in the country? Were there any changes in the perception in the past years? 5. Does your Section have a social enterprise strategy/action plan? What are the key elements, if exist. 6. What type of programmes or facility EUDEL provide to the Civil Society Organizations in the country? Does your Section contribute to these programmes financially or otherwise? 7. Are there any support schemes that might be suitable for the needs of the social economy actors? For example, support to women, youth, civil society? Could they be suitable for social enterprises as well? 8. What type of capacity support exist in the country? Networks, HUBs, network of impact/patient investors, incubators, start-up competitions, mentoring, etc. Are there any synergies with existing support programs within the country? 9. Does your Section work with foreign partners implementing any social enterprise programme(s)? If not, do you think such partnership might be established? 10. Are you aware of any special development programme that contribute to the competitiveness or sustainability of social enterprises? Please explain if positive. 11. Based on your experience what is the nature and size of the social economy sector in the country? What are the key sectors/industries they cover? Are you aware of any assessment of the size of the sector? If not, what do you think is the reason? 12. What are in your opinion limitations or challenges preventing social enterprises from obtaining financing?

II. Questionnaire for the Government institutions

This survey is being carried out by AETS on behalf of the European Commission. It is designed to gather information about the social enterprise ecosystem in your country. The information you provide will be confidential and used solely for the purposes of analysis. Please answer the following questions.

A. PERSONAL DETAILS OF RESPONDENT

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1. Name: 2. Email address: 3. Telephone number: 4. Government Authority: 5. Position:

B. REGULATORY FRAMEWORK

1. What is the key responsibility of your Government Authority? 2. Is there a law on social economy in the country? Or Strategy or Action plan? If not, under what regulatory framework social enterprises operate? 3. What kind of support social enterprises may receive from the Government bodies (such as that grants, subsidies, incentives, TA). Are there any incentives for companies to employ marginalized individuals? 4. Based on your opinion, is there an enabling environment for social enterprise development in your country? Were there any changes in the perception in the past years? 5. Please assess the importance of the topic to the political and economic agenda of the country.

C. SPECIFIC SUPPORT TO SOCIAL ENTERPRISES

6. Is your Government Authority aware of the concept of social economy? If yes, can you provide your definition of the social economy and social enterprise concept? 7. Does your Government Authority have a social enterprise strategy/action plan? What are the key elements, if exist. 8. Do you support social enterprises directly or indirectly? If yes, what type of support your Government Authority provide: technical assistance, capacity building, financial, access to market, access to capital. Please provide details of such support; range of support, conditions, years of support, type of support (grant, investment, etc...) 9. Are there any support schemes that might be suitable for the needs of the social economy actors? For example, support to micro, small and medium entrepreneurs? Could they be suitable for social enterprises as well?

D. OTHER MAIN STAKEHOLDERS

10. Who are the main stakeholders in the social enterprise eco-system in the country? Are there any support organizations, what type of support they provide, do you cooperate with them in any way? 11. Who are the main donor to the social enterprises (this may include national or foreign foundations, government grant schemes, EU funding, impact investors, individual family support, diaspora, angel investors network, etc.). 12. What are your Government Authority plans for the further social economy development?

E. EU SUPPORT TO SOCIAL ENTERPRISES

13. Are there any EU programmes or facilities that benefits social enterprises in your country? Please provide details, if positive. Does your Government Authority contribute to that programmes financially or otherwise? 14. Does your Government Authority work with foreign partners implementing any social enterprise programme(s)? If not, do you think such partnership might be established?

F. STATE OF PLAY OF SOCIAL ECONOMY

15. Based on your experience what is the nature and size of the social economy sector in the country? What are the key sectors/industries they cover?

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16. How would you assess the level of development of social enterprise sector in general in the country; start-up stage, validation stage, scaling stage? 17. What are the key challenges social enterprises face in the country? 18. What type of support social enterprises need? How do they fill it at the moment? 19. Please provide few examples of good practice of social enterprises in the country?

III. Questionnaire for the funders and supporters

This survey is being carried out by AETS on behalf of the European Commission. It is designed to gather information about the social enterprise ecosystem in your country. The information you provide will be confidential and used solely for the purposes of analysis. Please answer the following questions.

A. PERSONAL DETAILS OF RESPONDENT

1. Name: 2. Email address: 3. Telephone number: 4. Company name: 5. Position:

B. SUPPORT TO SOCIAL ENTERPRISES – SUPPLY SIDE

1. What type of support you provide to social enterprises? Please explain what products or services you offer? 2. What requirements you have in order to provide support to social enterprises? 3. What type of financing instruments you provide do social enterprises? Please explain the range of support, type of support (grant, loan, equity), typical amount, length of the support, additional capacity building attached to the financing, etc. 4. What products or services you offer to SMEs? Could they be suitable for social enterprises, if exist? 5. Do you have any future plans to create a more enabling environment for social economy development in the country or region? Who do you think should be responsible for social economy development within existing Government structure? 6. Would you consider partnering with similar organizations in order to provide additional support? Are you aware of any other support to social enterprises in the country/region? 7. How do you monitor and evaluate the progress of your support/investment?

C. SOCIAL ENTERPRISE NEEDS - DEMAND SIDE

8. What type of financing needs social enterprises usually have? What is the purpose of the support, typical amount they need, type of support they require? 9. What type of business advices, technical assistance and/or capacity building social enterprises typically have. Please explain. 10. What do you see as the key challenges social enterprises face when it comes to financing? 11. What do you see as the key challenges social enterprises face when it comes to capacity support? 12. What do you see as the key challenges social enterprises face when it comes to management and governing? 13. What are the key challenging in accessing the market for social enterprises?

IV. Questionnaire for the social enterprises

Note: Revised version of the questions was used for consultation meetings with the SEs

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This survey is being carried out by AETS on behalf of the European Commission. It is designed to gather information about the social enterprise ecosystem in your country. The information you provide will be confidential and used solely for the purposes of analysis. Please answer the following questions.

A. PERSONAL DETAILS OF RESPONDENT

Name: Email address: Telephone number: Social Enterprise: Position:

B. SOCIAL ENTERPRISE INFORMATION

1. Please explain the mission of your organization/social enterprise? 2. What is your legal status of your social enterprise? How are you registered and under what law? Why did you choose that legal entity? Does it provide any benefits/subsidies? 3. What are the main social issues your organization is working on? Who are your main beneficiaries and/or clients? 4. What was the reason of establishing social enterprise? 5. What products/services your social enterprise is offering to the clients? Who are your main competitors? Who are target customers of your social enterprise? 6. How many people work in your social enterprise? Please specify how many comes from the beneficiary group, how many are full time, part time, volunteers?

C. FINANCIAL INFORMATION

7. What is your annual turnover? Did you have any profit in 2016, or years before? How do you distribute profit, if any? 8. Please evaluate the current financial status of your social enterprise: a. We are losing money b. We are breaking even c. We are generating a profit (surplus of income beyond costs) 9. What tax you need to pay for the commercial activities within existing legal framework? 10. How did you get seed funding for your social enterprise? Please specify the source of funding: a. grant (domestic or international donors) b. own funds c. loan from a bank d. loan guarantee e. support from government funding f. impact investment g. angel investment h. equity i. diaspora j. other (please specify) 11. Please specify the purpose of funding and specify the amount provided including terms of funding: a. operating cost b. cost for the project activities c. employment d. start-up cost e. other 12. Did you get sufficient amount of money to start your business? If not, how did you cover the rest? 13. What type and amount of funding your organization need at this stage of social enterprise development?

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D. HUMAN RESOURCES

14. Did you have the necessary skills and experience to start your operations? If not, how did you obtain it? What type of support was provided? 15. What type of expertise and skills your social enterprise currently have? Do you know where you can obtain those? 16. Did you use any consulting support, capacity support, technical assistance, and networking? 17. Would you need additional consulting/mentoring/advisory support in the future? For what purposes? What specific skills your employees need?

E. OPPORTUNITIES WITHIN THE SECTOR

18. Is there an enabling environment for social enterprise development in your country? 19. Did you benefit from a membership in any social enterprise network? If yes, please specify the name of the network and type of support. What would you expect from such a network, what kind of peer support is most needed? 20. Are there any special development programs in your country supporting social enterprises? 21. Is there available EU support infrastructure for social enterprise development in your county? 22. Based on your experience what are the main challenges of social economy sector in your country. 23. Based on your experience what are the key opportunities for social economy in your country. 24. Please estimate the size of the social economy sector. Can you list some of the social enterprises in the country, giving us examples?

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7.2. Annex 2 - List of Interviews

Stakeholders were divided into three main groups:  Group 1: Representative of the public institutions  Group 2: Representatives of support organisations and funders  Group 3: Social entrepreneurs*

* Online questionnaires have been sent to the 67 Social Enterprises out which 30 SEs provided the filled questionnaire. Below are the names of SEs

Representative N Organization Position Name Surname Group 1 – Representatives of the Public Institutions Member of Parliament, Deputy Mr. Merab Chair of the Regional 1 Parliament of Georgia Kvaraia Policy and Self- Government Committee LEPL Children and Mr. Irakli 2 Youth Development Director Zhorzholiani Fund Attache/International European Union Ms. Dominika Cooperation Officer 3 Delegation to Georgia Skubida Civil Society and Democracy Ministry of Head of the Social 4 Corrections of Leila Aptsiauri Department Georgia Group 2- Representatives of Support Organisations and Funders

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Europe Foundation Ms. Ketevan 5 President (EPF) Vashakidze

The Centre for Social Strategic Research Ms. Eka 6 Entrepreneurship and Development Datuashvili Program Coordinator (CSRDG)

Bank of Georgia/ Mr. Boris 7 Head of CSR Tree of Life Kiknadze

Group 3- Social Entrepreneurs participating in an online survey

1. First Social Enterprise 2. Khvaramze 3. Ternali + 4. Hera 5. Mziani- New Mziuri Café 6. Impact Hub Tbilisi 7. Jokolo XXI 8. GorDesign 9. Ikorta 10. Global Initiative in Psychiatry 11. Istoriali 12. Leli 13. Abkhazinterkonti 14. Ethicfinance 15. Rea 16. Georgian Mental Health Association 17. Parents' Bridge 18. Georgian Public Interest Protection Association 19. Hangi 20. Gumbati

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21. Youth Organization Changes for Equal Rights 22. Green Gift 23. Ethnodesign 24. Knowledge Cafe 25. Biovalley 26. Arabuli Art House 27. Kodala 28. Free Space 29. Nukriani 30. Auto Life

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7.3. Annex 3 – Bibliography

Social-Economic Development Strategy of Georgia “Georgia 2020” https://eeas.europa.eu/sites/eeas/files/eu_roadmapfinal2014_2017_georgia_en.pdf

Enterprise Georgia Annual Report 2016 http://enterprisegeorgia.gov.ge/files/document/1938313d7f039122cb076f052ed0aef7.pdf

National Statistics Office of Georgia- Agriculture of Georgia 2016 http://www.geostat.ge/cms/site_images/_files/georgian/agriculture/2016%20wlis%20soflis%20meurne oba.pdf

National Statistics Office of Georgia- Non-commercial organisations Research Findings 2016 http://www.geostat.ge/cms/site_images/_files/georgian/business/Press%20Release_Arakomerciuli_20 16.pdf

Civil Code of Georgia https://matsne.gov.ge/ka/document/view/31702

Law of Georgia on Entrepreneurs https://matsne.gov.ge/en/document/view/28408

Law of Georgia on Grants https://matsne.gov.ge/ka/document/view/31702

State Program of the Social Rehabilitation and Child Care in 2017- http://www.ssa.gov.ge/files/01_GEO/KANONMDEBLOBA/Kanon%20Qvemdebare/230.pdf

GoG decree on Mtskheta-Mtianeti Development Strategy for 2016-2021 https://matsne.gov.ge/ka/document/view/3337546

EU country roadmap for engagement within Civil Society 2014-2017 in Georgia https://eeas.europa.eu/sites/eeas/files/eu_roadmapfinal2014_2017_georgia_en.pdf

European Social Enterprise Law Association (ESELA)- Social Enterprise in Europe Developing Legal Systems which Support Social Enterprise Growth https://esela.eu/wp-content/uploads/2015/11/legal_mapping_publication_051015_web.pdf

Social enterprises and the social economy going forward (GECES) 2016 https://ec.europa.eu/growth/content/social-enterprises-and-social-economy-going-forward-0_en

Social Enterprises and their Eco-systems: Developments in Europe 2016 http://ec.europa.eu/social/main.jsp?catId=738&langId=en&pubId=7934&furtherPubs=yes

Desk Research on International Experience in State Support Mechanisms for Social Enterprise Development http://segeorgia.org/FILES/doc/343_Desk_Research_State_SE_Support_Mechanisms_GEO.pdf

Desk Research- Existing Practices and Challenges in Social Entrepreneurship Sector in Georgia

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R.Gvelesiani, G.Erkomaishvili, I.Gogorishvili, E.Lekashvili, N. Paresashvili, L.Khurtsia (Tbilisi 2017) Study Research: Social Enterprise Development Trends in Georgia

Cooperative Research Georgia http://www.elkana.org.ge/uploads/98/Cooperative%20Research%20Georgia-Geo.pdf

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