“Our society has to become more of a unity”

The Netherlands of the future

Pension to many people is something for tomorrow. It is a fact that the pension system is about to change. But how about our society? What will the Netherlands of tomorrow look like? We ask people from a cross-section of society. In this edition: Björn Vennema, co-founder of Social Finance NL, an organization for measuring, financing and enhancing social impact.

We are living in a prosperous country, but not everyone benefits from this prosperity to the same extent. The corona crisis emphasizes that once again: people with a non-western migration background, less education and an occupational disability, for example, seem to be additionally vulnerable to the loss of employment and poverty. These vulnerable groups also have to benefit from prosperity and well-being in the Netherlands of the future, according to Björn Vennema, co-founder and co-director of Social Finance NL. How? By utilizing money in a smarter, more objective and more honest way to solve social issues.

How do you perceive the Netherlands of today?

“The Netherlands is flat to the eye, but a polarized landscape is hidden below the surface. The contradictions in terms of politics, culture and the social aspect are huge. The gap between rich and poor also increases. Less and less money is made available to support the vulnerable groups within society, such as the underprivileged youth and the elderly. This means the dichotomy in the Netherlands is growing. If we don’t do anything about that, the social issues will only become bigger.”

How should the Netherlands of the future look like in your opinion?

“Our society has to become more of a unity again. The bottom of society should also be given opportunities to fully participate and to access all means available. In order for that to happen, we have to change our financial system. Most investors are now mainly taking a risk-return approach when deciding to invest money in a certain project or sector. If they would also look at the impact of a company or project to society, you can establish societal changes together. For example by consciously investing in solar energy, in social housing or in a project for debt assistance.”           

But aren’t there all kinds of government institutions or charitable organizations for that types of purposes?

“Those institutions and organizations often focus on the system and not on the human-being. People with psychological problems or debts asking for help sometimes get lost in a maze of organizations all working in isolation. Moreover, the social sector usually doesn’t have a businesslike disposition: they are not focusing enough on how an as large and positive impact on society can be realized. This means a lot of social value is not utilized. An example is Ctalents, a secondment organization for people suffering from an audiovisual impairment. Joining and guiding jobseekers and employers took more time and energy than for the average candidates but those efforts didn’t translate into a higher fee. This meant Ctalents was unable to compete with commercial employment agencies. That’s a shame. A better earnings model would allow us to help more people, but such earnings model for social enterprises is still lacking in the current financial system.”

You are saying we should change the financial system, but how?

“We have to adapt a different approach towards value, towards result. Until now, we mainly measure success based on money, on financial value. But we also have to start looking at the societal costs and returns: how much would it benefit or maybe harm society? That could also come with a price tag. Besides the financial gain of companies, you could look at, for example, the costs for society when damage is caused to the environment or when people have to apply for unemployment benefits due to reorganizations. For government organizations or subsidized projects it is possible to look at how much societal ‘gain’ these create, for instance in the form of more prosperity, less loneliness or more labor participation. Once you know that and are able to compare, investors can invest in a targeted manner in companies and organizations that return the most financial and societal value.”

Tangible example?

“You can use Social Impact Bonds to link money of investors and social objectives. An example is a project to reduce the youth unemployment in Rotterdam South, the highest level in the country. Only if that has truly been accomplished, the municipality pays back the investors, with a return. If the project does not succeed, the investors lose their money and therefore bear the risk. In this case, 72 percent of the 250 participating youth found a job. This means everyone benefits: the young people get a job, the municipality saves on benefits and investors realize returns. Such Social Impact Bond will now also be introduced for fall prevention of the elderly. That could lead to less bone fractures, less healthcare costs and more elderly who are able to live independently for a longer period of time.”    

Are these new forms of financing also interesting for pension providers, such as APG?

“We are currently mainly working with governments and social entrepreneurs and financers. Major investors, such as APG, need more large-scale projects to realize sufficient returns in order to pay our pension. It is our dream to achieve that needed scale in the future, maybe helped by a national government fund and local crowdfunding. It will then also become interesting for major investors, such as banks, insurers and pension funds. APG already integrates sustainability and social policy into all of its investment decisions, but then you would be able to assess the costs and returns for society in an even more targeted manner. And participants will then have an even clearer understanding on what that will yield for their pension pot and society. Most important: financing in a different way could help accomplish that everyone in the Netherlands of the future gets its share and reaches its full potential. That is our ultimate goal.”