Social enterprises boom despite lack of ad hoc law

What do a group of Irish savers who lend money at a reasonable interest rate have in common with a Portuguese street paper and a Polish workshop that sells souvenirs made by people with autism have in common? They are all activities that have a social aim, managed with the efficiency, dynamism and freedom typical of a for profit enterprise. Social enterprise, is what the European Research Network (Emes) calls them in its report: Social Enterprise in Europe – recent trends and developments, that takes a snapshot of a third sector that looks towards entrepreneurship even though national governments still don’t recognise them the status of social enterprises.

A reality that is tougher than the law
This is Germany’s case, that Emes defines paradoxical because social businesses “that according to the media, academia, the government and the wider public don’t exist, are today at the front line when it comes to dealing with social emergencies”. But unacknowledged social enterprises exist in Denmark too, where there are more than 9 thousand non profit organisations involved in the provision of public services. And Poland, where entrepreneurial projects with a high social impact have to operate under the juridical terms “foundation” or “association”.

Apart from Italy, that in 1991 recognised the entrepreneurial side of non profit activities for the first time, with a law on cooperatives, and that recently has approved a law on social enterprise, the UK is the only country to have passed an ad hoc law for social enterprise. A law has meant that the UK now boasts 55 thousand social enterprises that contribute 8.4 billion pounds to the country’s economy, 1% of its Gdp.

What about the rest of ‘old’ Europe? In France, Spain, Portugal and Greece the idea of social business is tied to new cooperative entities. From the société coopérative d’intéret collectif (Scic), created in France in 2002 to allow for profit, non profit, public and private actors to work together on local development projects, to the Portuguese solidariedade social coops that are not allowed to distribute their dividends between their members.

Not just social inclusion
Training and employment opportunities for disadvantaged communities and individuals, that remains the main aim of European social enterprises, is not, however, their only mission. In Sweden and France the child care services that are not deemed good enough by parents and sector professionals are now being taken over by social enterprises, while in the UK there is a boom of services being offered to the elderly and the disabled, in the field of planning and renting of social housing and in sports and culture. Local development is, on the other hand, the ambit of Greek and Irish social enterprises, where groups of women join forces in rural areas to foster growth in their local areas. In Spain and Portugal, but also in Poland and Finland, social enterprise has chosen provision of services to the community as its main objective, and looks to Italy to find new sectors of social utility, such as the protection of the ecosystem, education and sustainable tourism.

The challenge for the future? The same for the whole of Europe: devolution of public services through open calls that take social criteria into consideration. Winning the challenge will not be easy.

Devolution and vouchers for the free welfare market
The laws, when it comes to the allocation of public service providers, vary from country to country and, in some cases, poses real obstacles for social enterprise. This is case in Sweden, where national law forbids the government to take into account social factors and to reserve a preferential treatment to social enterprises, which is what happens in Ireland, the UK, Portugal and Spain. Competing in an open market with profit enterprises on financial criteria alone remains an impossible feat for most of the European third sector, but countries like Belgium are clearing the road for others by imposing the need to take social criteria into account when delivering a public contract. And, still in Belgium, a voucher system is being tested for home care for the elderly and the disabled, that allows citizens to choose where best to spend the public money destined for their care.

www.emes.net