33.1. Short description
The “Fondazione3 Welfare Ambrosiano” (FWA) was created by a heterogeneous core of both institutional and associative stakeholders: the Municipality of Milan; the Province of Milan; the Milan Chamber of Commerce, Industry, Handcraft and Agriculture; the three main Milanese trade unions (CGIL, Camera del Lavoro Metropolitana; CISL, Unione Sindacale Territoriale di Milano; and UIL Milano e Lombardia). After being announced in 2007 by the former Mayor of Milan, and created in 2009, the foundation really initiated its activities only in 2011 under the new municipal administration. The long gestation was due to “technical difficulties”, mainly related to the possibility to pay loans to citizens, for which it was necessary to define agreements with the banks. The foundation pursued an agreement with the National Association of Banks, but this attempt failed. The present municipal administration blames on the former mayor and councillors’ scant political will and resilience to rapidly tackle the problem.
The foundation was initially created after the impulse of Milanese trade unions that wanted to make available to the City a capital of 6 million euros, accumulated during the 1970s as part of collective bargaining. Originally meant to implement social development projects, and particularly to support women’s access to the labour market, due to difficulties in coordination with local bodies this capital had never been used. In the framework of the foundation, two-thirds of the available budget is destined to support innovative local welfare initiatives that are being designed and developed together by the members of the foundation and with other third sector bodies, such as Caritas Ambrosiana and Fondazione Cariplo (a big bank foundation4).
The foundation has the mission to support individuals and families who either live or work in the city of Milan, or who have a firm, or want to open a firm operating within the administrative boundaries of the city, disregarding their place of origin and their previous or current type of working contract, and who are in conditions of temporary need for various reasons (job loss, illness, etc.). These could be either persons who are not protected by existing, category-based social protection measures, and therefore are exposed to new forms of social exclusion, or persons or families who do not live in disadvantaged conditions, but who – due to temporary and unexpected difficulties – risk falling into real poverty. The aim is not, then, to substitute existing institutions assisting long-term situations of need (such as long-term unemployment). Rather, the aim is to intercept short-term risks of workers or jobless people who experience exceptional economic problems that often have serious long-lasting negative effects for the whole household. For instance, “families with budget problems may make decisions, such as the interruption of children’s education, that they would not make in other circumstances, and that may affect the future of family members on the long run, since they are hard to catch up later”.
The targets of the foundation’s measures are therefore all persons living or working in Milan with economic difficulties that make it impossible for them to make ends meet. The definition of the household is flexible, and for instance disregards whether the applicants are married, separated or cohabitating. This reflects a secular orientation of the foundation and of its members, which distinguishes it from other bodies, especially confessional ones, acting in the area. Two fundamental feature of the foundation’s action are the active approach and the rotation in the use of funds. The active approach is reflected in its slogan: “we help you to help yourself”, which underlines that the commitment of the recipients to project their own path to solve their problem is understood as necessary. The rotation in use of the funds is obtained – as we shall see – by privileging financing tools such as micro-credit, as opposed to non-repayable financing; this choice is specifically due to the will of the involved trade unions to create an economic capital for the city that could last in time.
33.2. Conceptions and ways of addressing users
The foundation intends to answer emerging social needs and reduce economic precariousness. At present, this purpose is basically pursued through the promotion of guarantee funds to favour access to credit, via the micro-credit tool (Yunus 1998).
The first goal of the foundation was in fact to build instruments to overcome one of the main negative effects of the present financial and economic crisis, i.e., the credit crunch, which prevents many individuals with few resources to access to bank loans despite of the deservingness of their need conditions and/or of the feasibility of their projects. FWA favours the access to micro-credit of the so-called “non-bankable” persons, that is persons who have slight or no chance to access bank credit, due to lack of guarantees and/or to a past record of “bad payers”.
Two types of micro-credit are foreseen:
- “social credit”, reserved to persons who – especially, but not only because of the crisis – can hardly afford expenses such as the payment of university fees of their children, or unexpected health expenditures;
- credit for self-employment, to overcome an unemployment or under-employment or harshly precarious condition.
The access to micro-credit is promoted through a network of selected local bodies that operate as territorial “front-desks” intercepting existing needs. At present, eighteen front-desks are operating, mainly managed by trade unions, but also by social cooperatives, associations, parishes that are not among the members of the foundation (e.g. ACLI, Legacoop, etc.). New front-desks are going to be opened, with a “light accreditation system”. The idea was not to create new structures or offices in addition to the existing ones, but rather to ask those organisations that already deal with poverty and vulnerability in the city to become the “working branches” of the FWA.
These bodies are asked to stand “moral surety” for the families that they introduce to the foundation. They carry out:
- First screening: during the first interview, information about the micro-credit programme is given to the applicant and, at the same time, information about the applicant is collected.
- Orientation: applicants may be addressed to other welfare agencies (managed by public or third-sector bodies), that may be more appropriate for their case.
- Take-up and counselling: if after the first interview the case appears to have a profile that fits the requirements to access micro-credit, a second interview is organised with an expert of the Bank Volunteers for Social Initiatives association (Volontari Bancari per le Iniziative nel Sociale, or Vo.b.i.s.)5. In this interview, an analysis of the need and/or of the project is carried out, a feasibility study is formulated, a work plan is outlined.
- Monitoring and tutoring: moral and bureaucratic support is provided throughout the development of the project.
The capital to be lent is between 2,000 euros and 20,000 euros per applicant. On the basis of the preliminary inquiry, the front-desk “presents” the application to a commission of the foundation that may or not approve the project. If the project is approved, FWA issues a guarantee of 80 per cent of the capital. With this guarantee, applicants can make a request for credit to one of the banks that have signed the agreement with the foundation6, that will treat the application within 30 days and – in the positive cases – allocate the money.
The loan is basically granted on the basis of a trust relationship. The interest rates are much lower than the average bank rates, and differentiated by type of credit: 4 per cent for social credit (against an average rate for credit to persons of 11.21 per cent according to Banca d’Italia) and 6.5 per cent for self-employment credit (against an average rate of 10.25 per cent of credit to firms). The duration of repayment is such that should allow sustainability for everyone: during the first year only interest is repaid. The repayment of capital begins after the first 12 months and can be spread over up to 6 years. In case of insolvency, the foundation covers up to 80 per cent of the capital.
Since the first loans have been granted 1 year ago, repayment is beginning in these months; therefore, it is too early to evaluate the degree of solvency, and the reasons of possible insolvency. However, a monitoring system has been organised to assess the results and introduce changes if needed.
A preliminary evaluation of the applications received in the first 12 months of the programme has been carried out. Between October 2011 and November 2012 772 applications were received, 73 per cent for social credit and 27 per cent for self-employment (Bramanti and Spina 2012). In December 2012, of all presented applications: 30 per cent had received the credit; 54 per cent received a negative evaluation by the technical committee of the foundation, because of lacking requirements or excessive indebtedness; 9 per cent were reoriented towards other social services because of non-sustainability of the loan; those remaining were still under evaluation. Only 9 per cent of applications forwarded to banks are further refused.
Applicants are rather balanced by gender (57 per cent men and 43 per cent women), but diversified by age (33 per cent are aged 41-50 years; 26 per cent 31-40 years; 22 per cent 51-60 years; while those aged over 60 years represent only 6 per cent of applicants). Applications of young unemployed living with their parents are generally refused as not corresponding to the profiles of beneficiaries that could overcome a temporary difficulty with the FWA’s help. 76 per cent of applicants are resident in the municipality of Milan.
Among social credit applications, the main reasons identified are housing expenses, debt discharge or reduction and family needs, followed by training expenses, health expenses and mortgage loans. Indebtedness of the household is behind most of the applicants’ situations, together with the job loss of one of the family members, or the presence of atypical contracts (Mallone 2012). The amount awarded is rather moderate: 54 per cent of applications for social credit are in the lowest amount range, between 2,000 and 5,000 euros. As to demographic characteristics, 57 per cent of social applications are made by Italian citizens (Bramanti and Spina 2012).
Applications for self-employment credit concern start-up projects in 31 per cent of cases; in a larger number of cases they are due to economic difficulties, or need to purchase goods or services, of already existing activities. The amount paid is higher than in the case of social credit: 38 per cent of self-employment applications are between 17,100 and 20,000 euros. Most applications for this kind of credit are presented by Italians (71 per cent). The selection for self-employment micro-credit is rather strict: around 30 per cent of applications are accepted (Mallone 2012). As a sign of commitment, applicants need to create a firm, operating in Milan, before receiving the answer from the foundation committee, and that means for them to face up to an expenditure, albeit minimal. In self-employment credit the counselling activities developed by the operators and volunteers also aim at building some business culture and awareness in the recipients.
33.3. Internal organisation and modes of working
The different orientations, traditions and interests of the founding members of the foundation is reflected in the negotiations about objectives and programmes. Trade unions have a tendency to privilege initiatives for standard workers; the chamber of commerce is inclined to promote the creation of new firms; the municipality is more willing to search for overall solutions to problems that concern the general citizenship.
Also, the distribution of positions reflects the heterogeneous composition of the members. The president of the Fondazione is the mayor of Milan, while political competence is devolved to the town councillor for Employment, Economic Development, University and Research; the vice president is indicated by the trade unions, while the general director of the foundation is a member of the council of the chamber of commerce. The governance of FWA is dualistic: a steering committee (Consiglio di Indirizzo), named by members and chaired by the mayor, and a management committee, named by members and by the steering committee. A technical-scientific committee, formed by academic and institutional experts, evaluates applications and formulates proposals.
The agreement with the banks about micro-credit proved to be a very difficult coordination issue that took a long time to be solved. Even with those banks that did sign the agreement, procedures are not smooth yet. Although an answer to the credit request is in principle due within 30 days, banks tend to expand this time very often and for long. The agreement with the banks was complemented with an agreement with the Lombardy Anti-usury Foundation which contributed a supplementary insurance of 30 per cent of the capital to the project, thus de-facto widening the available resources. The FWA charter foresees the possibility to collaborate with external bodies, and negotiations in this sense are already ongoing. The access-to-credit activities of FWA are possible thanks to the voluntary contribution of the Vo.b.i.s network (see above). The foundation also counts on the counselling of Permicro (http://www.permicro.it/), a company specialised in micro-credit targeted at entrepreneurship.
Common procedures are shared among all the members of the network and all the front-desks on the territory. Training and update meetings are organised for this purpose. The front-desk operators have attended a specific (2-day) training course to be prepared to carry out social tasks of welcome and listening. The foundation carried out a rather wide communication plan, advertising its micro-credit activities via the local press, Internet, flyers, and the network of local public and third-sector welfare agencies7. Among the persons who applied in the first 4 months, 71 per cent knew about the project from the press, 18 per cent by word of mouth and 11 per cent (mainly Italians) from the internet (Mallone 2012).
33.4. Interaction with the local welfare system
In the words of its founding members, the foundation intends to go back to the historical Milanese solidarity tradition and update it to issues currently at stake, as well as methods of intervention and patterns of governance. In this sense, the FWA seems to be an innovative experience deeply rooted in the local context. The head office is located in a periphery area, Quarto Oggiaro, a symbolic choice to underline the approach to improve and enhance the role of the working-class neighbourhoods out of the city centre. The programmes developed by the foundation are defined as relevant by the promoters, since few tools are available for public subsidised loans, whereas access to credit is a major concern due to the credit crunch that followed the financial crisis.
In the words of its director, the foundation can and must become a laboratory for social innovation, a place for the exchange of experiences and practices, and the study of original solutions. In addition, for the competent city councillor, the challenge of the foundation lies in the “degree of project innovation” that it will be able to develop. Accordingly, the aim of the foundation at present is not to enlarge the available capital, but rather to collect and elaborate ideas and proposals to exploit as best as possible the available resources. In this perspective, the collaboration with other territorial stakeholders is wished for (Percorsi Secondo Welfare 2011).
Born as an anti-crisis initiative, the foundation is currently envisaging its role also beyond the (hopefully close) end of the recession. New projects are on the go. A programme has just started that aims to anticipate the payment of short-time work schemes to concerned workers, since the bureaucratic procedures generally take several months before the benefits are effectively paid8. The foundation will then be paid back by the National Social Security Institute (INPS), thus maintaining the approach of the rotation of resources.
New projects in progress aim at revising and updating – after a proposal of the trade unions – the nineteenth-century tradition of mutual approach of the Società di Mutuo Soccorso (friendly societies)9, in order to try and fill the gaps of the Italian category-based social protection that leave workers with atypical contracts and most of the jobless uncovered. Other initiatives are being studied in the health field.
The foundation also promotes the analysis of local social problems, via seminars, training courses, fellowships and prizes. Up to now, FWA has promoted three doctoral fellowships (financed by private sponsors) aimed at comparatively studying urban poverty, with a focus on weak groups such as migrant women and the young, and the experiences of micro-credit, its functioning, types of applicants and territorial impact. These initiatives are not only aimed at deepening knowledge on related themes, but also more specifically at assessing the FWA projects’ results and, in the future, what the citizens have learnt about the functioning of the micro-credit tool that is new for the Milanese context.