THE ROLE OF FINANCIAL INSTRUMENTS ON THE GROWTH OF ITALIAN SOCIAL COOPERATIVES

Abstract

The Third Sector in Italy records a slow but constant growth due to the increase of the number of entities but not of their dimension. The difficulties in financial management, generated by a low attraction of debt and equity financial resources and a low level of managerial skills characterized the non profit organizations. Focused on the social cooperatives, the article describe the effects on the financial structure of innovative financial instruments as the participative loan. In the last years in Italy there has been an increasing attention towards the ethical finance. The consideration of the social co-ops as a part of the Third Sector allows them to have a privileged interlocution with the institutions of the ethical finance. But the development of this institutions, although it is originated from the will to support the social responsible development, at the moment seems not to support a substantial resolution of the financial needs related to the management of the social cooperatives. The article shows an analysis on a particular financial intermediary, the Cooperazione Finanza Impresa (CFI). This institution is a private equity investor which since twenty years is dedicated to worker cooperatives and social cooperatives. The interest for this institution, besides the entities financed, is based on a particular form of participative loan developed. The investigation start from the observation of a singular social cooperatives with the elaboration of a set of indicators based on the financial ratio analysis. The evaluation regard the financial structure previous to the financing operation and its subsequent modification. Due to the first conclusions, the investigation enlarged the analysis to a sample of 10 social cooperatives in order to confirm the first results. The observation of modified financial structure up a period of five years shows significative positive change that support both the economic and the financial equilibrium, with a significant reduction of the average cost of the debt in all the cooperatives financing by participative loans.