12 March 2021

The European Parliament plenary adopted the InvestEU programme for 2021-2027 and what’s in it for philanthropy

All good things take a while. After many months of deliberations, the European Parliament adopted the InvestEU programme for 2021-2027 at its plenary session on 9 March 2021, upon which the Council adopted the InvestEU Regulation on 17 March 2021. The newly launched website of the InvestEU programme can be accessed here for more information. The regulation establishing InvestEU is expected to enter into force at the beginning of April, after which the Commission will finalise the necessary procedures with the implementing partners.

InvestEU will build on the experiences of, and replace, the current EFSI (European Fund for Strategic Investments), also called the Juncker Plan, established in 2015. The programme brings together diverse EU financial instruments within a single structure. By doing so, it hopes to boost strategic public and private investments, as well as to support the economic and social recovery from the Covid-19 pandemic. It will do so through an EU guarantee of €26.2 billion which aims to mobilise around €400 billion in additional investments. The guarantee is divided into the following four policy windows:

  • Sustainable infrastructure: €9.9 billion
  • Research, innovation and digitalisation: €6.6 billion
  • Small and medium-sized enterprises: €6.9 billion
  • Social investment and skills: €2.8 billion

Each policy window will be composed of two compartments: an EU compartment and a Member State compartment. The national compartment can be complemented by the Member States with other additional amounts, for example those made available to them through the Recovery and Resilience Facility, but also from the structural funds they receive. This allows national governments, in the words of co-rapporteur José Manuel Fernandes (PT, S&D), to “plan the use of their funds and not just be mere end users of these funds”.

Overall, the InvestEU Fund should allow for smooth and efficient blending of grants, financial instruments, or both, funded by the Union budget or by other funds, such as the EU Emissions Trading System (ETS) Innovation Fund.

What is in it for philanthropy?

The InvestEU programme recognises the necessity to invest in social economy business models and seeks to harness the collective power of public, commercial and philanthropic capital, as well as support from foundations and from alternative types of finance providers (see paragraph 24 of the InvestEU regulation). Foundations could come in with different roles: as social economy actors on the “recipient” end and as co-funders and co-investors, but also as providers of other ways of support. To this end, the Invest EU programme also foresees the possibility to provide support through the InvestEU Advisory Hub to create the right conditions for the expansion of eligible recipients, in particular where the small size of individual projects raises the transaction cost at the project level, such as for philanthropic organisations (see paragraph 60 of the InvestEU regulation).

Of the InvestEU guarantee, 75% is provisioned for the EIB Group, and the remaining 25% shall be granted to other implementing partners. Besides national promotional banks, also other entities such as financial institutions or financial intermediaries which fulfil the criteria laid down in the Financial Regulation should be able to become implementing partners. The implementing partners shall provide a financial contribution as determined in the guarantee agreement, which needs to be concluded between the implementing partner and the European Commission. It is hoped that the implementing partners will consider the perspective of philanthropic investors in the design of the financial products should they wish to get them on board as co-investors. The regulation foresees in the possibility to set up investment platforms to build expertise within implementing partners that have limited experience in the use of financial instruments. To this end, it is noted appropriate to involve also civil society and other relevant actors to promote the use of investment platforms in relevant sectors (paragraph 51). Civil society and public-private partnerships are also considered key when developing collaborative research and innovation projects.