Social enterprise: the European landscape


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An overview of the regulatory and competitive landscape of social enterprise in Europe, with a lot of across-country diversity. Attention is paid to incorporation choice, finance, networks, and linkages with local economic development.

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Social enterprise: the European landscape

  1. 1. //TRENDS//Social enterprise: landscapes from EuropeAlberto CotticaD4SB Master CourseFrom opportunity assessment to business planning in social businessLesson 6
  2. 2. Overview•Legislation•Finance•Networks•Local Economic Developmentsource:
  3. 3. Legislation
  4. 4. Social enterprise:USA• commercial activities of non- profit organizations (like running a café)• meant to generate revenue for the core mission• not necessarily linked to the core mission
  5. 5. Social enterprise: EU• continuity• autonomy• economic risk• explicit aim to benefit the community• decision making power not based on ownership• limited profit distribution
  6. 6. cooperative company open formItaly, Portugal, Belgium, UK Finland, ItalyFrance, Poland
  7. 7. Cooperatives• Italy: type A (for care services) and B (by disadvantaged citizens) cooperatives• Portugal: total lockdown on assets• France: Société Co-opérative d’Intèret Collectif• Poland: work cooperatives like Italian type B, economic activities “a necessary evil”
  8. 8. Companies• Belgium: sociétés à finalité sociale. Governance is regulated. Directors liable for allocation of resources diverging from social goals• UK: Community Interest Companies. “Light touch” regulation, community interest test. Can pay dividends to shareholders.
  9. 9. “Open form”• focus on activity, not legals• Finland: subsidies to employ disabled or long-term unemployed• Italy: for-profits and public entities are prohibited from controlling a social enterprise
  10. 10. Lots of diversity!• What regulation?• How to define social finality?• Affirmative or negative constraints on asset allocation?• What governance structure?
  11. 11. Finance
  12. 12. Social goals constrain profit maximization Capital ebbs away
  13. 13. Socially responsiblefinancing$ 3 trillion13% of savings in the USA (2006)£11.6 billion7% of savings in the UK (2006)
  14. 14. Form Activity Actors Investments in financial markets Portfolio screening using exclusion or inclusion filters (exclusionary or Ethical funds, foundations Responsible indirect based on environmental, social and inclusive) investing governance (ESG) criteria. ("placement Pension funds, Shareholder Shareholders that utilise their role to responsible") awareness raising engagement influence the practices of organisations, some (or activism) enterprises. ethical funds Investment tools Risk capital with socioeconomic developed by goals (i.e. job creation, local and associational actors Development capital Responsible regional development, and (labour solidarity funds, investing environmental). cooperatives and credit (pro-active/direct) unions) Solidarity-based Micro-credit, financial Financing of community economic finance (social cooperatives, hybrid development and social enterprises. finance) innovative financial fundsSource: Adapted from Chantier de léconomie sociale (2006) and Mendell and Bourque (forthcoming). Other terms such as “sustainable”, “responsible” and “social banking” are now part of the vocabulary and are to overused, generating confusion Connecting savings often and uncertainty among those interested in Source: OECD investment social business screening their activity. Today, references to ethical investment include both
  15. 15. Lots of innovation!• Securitization: loans or equity investments are pooled into lower-risk funds; quotas of these funds are resold on to the financial markets (eg. Blue Orchard - USA for microlending)• “Patient” loans: 15 year capital repayment standoff (eg. FIDUCIE – Quebec)• Ethical capital markets: still in their infancy (eg. ETHEX - UK, Bolsa de Valores Sociais - Brazil)• Donor-Advised Funds: donors steer institutional investment funds clear of rogue investments (eg. Fidelity’s – USA)• Social performance measurements indices (eg. Dow Jones Sustainability Index or FTSE4Good Index - USA)• Crowdfunding platforms (eg. Kickstarter - USA• Venture philantropy: grants treated as investments in equity (eg. Rockefeller Foundation -USA)
  16. 16. Many issues remain...•assessment of risk•measurement and evaluation tools•image of the sector•lack of appropriate legislative framework
  17. 17. Networks
  18. 18. Too many to count! Shared workspaces too
  19. 19. Local economic development
  20. 20. Social business canpartner with govt• strengthens the service economy• creates new employment, and is friendly to less mobile workforce (women, young)• strengthens local welfare systems• puts unmovable assets (environmental or cultural heritage, voluntary labor) to value
  21. 21. •Legislation •choose the right tool•Finance •what do you need?•Networks •definitely be in many?•Local Economic •partner up with the public Development sector
  22. 22. Legal stuffThis work is licensed under the CreativeCommons Attribution-NonCommercial-NoDerivs3.0 Unported License. To view a copy of thislicense, visit or send a letter toCreative Commons, 171 Second Street, Suite300, San Francisco, California, 94105, USA.All photos licensed CC on Authors (top to bottom):Rainer Ebert, unknown author, brezzadilago, Jasmin Cormier,unknown author, unknown author, unknown author, marie-II,unknown author, Filippo Podestà, antoniofurno,ballacoicinghiali