Italy: social enterprise

“A social enterprise is an enterprise that makes at least 70% of its revenue through activities that have a social benefit” states article 2 of the decree DLGS 115/06 on Social Enterprise.

To complete the rules on social enterprises the government has approved four emitted decrees in 2008. The first of the four emitted decrees outlines how to calculate and define this 70% that marks the border between “enterprise” and “social”. And the decree explicitly excludes revenue from financial or real estate investment and capital gains from the percentage of socially sourced returns.

The second decree defines the procedures that social enterprises must follow to legally register their activities including the documents and acts that have to be presented. For example, along with the statute and social balance enterprises wanting to register, as social enterprises must also present a document with detailed information about their economic activity, that will be closely scrutinised. As far as the social balance is concerned (in Italy social balance’s were made obligatory by the 2005 social enterprise law) the third decree gives the guidelines that these are to follow. The information about governance, administration and management that must be included in a balance to make it “social” is outlined step by step.

Finally, the fourth and last decree indicates the methods that organisations that use the social enterprise formula to transform, fuse, or lease their existing structures should adopt. For such “out of the ordinary” cases, the Ministry for social affairs must open a consultation that can last up to 90 days to ensure that operations are legal and admissible.

Social enterprise is established in the Italian legal rules, but without any tangible application till now. That’s not because of lack in requirements by Italian non profit organisations, simply anyone have not yet decide to whip round and change their juridical form.