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Better future for social economy EU policy

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About EU policies on social economy. Who wants to answer to any EU calls for developing good practises?

About EU policies on social economy. Who wants to answer to any EU calls for developing good practises?


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  • 1. A better futureResults of the network for betterfuture of social economy 1
  • 2. 2
  • 3. A better futureResults of the network for betterfuture of social economy 3
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  • 5. Foreword Dear Madam / Sir, I am deeply convinced that mutual learning and transnational co-operation, We present this although it requires an additional effort publication, which during our everyday activities, is of great sums up the three- benefit for the development of concepts year cooperation of and the improvement of practice. I hope European Member that the network’s effort will be continued State institutions in future years. managing programmes co-financed by the This publication has been put together byEuropean Social Fund. During this time a team of international experts coordinatedwe have shared our knowledge and by DIESIS. Samuel Barco Serrano,practice, and learnt from each other how to Gordon Hahn and Gianluca Pastorelli, witheffectively support the development of the invaluable assistance from Toby Johnsonsocial economy, to make it a modern and and Dorotea Daniele, wrote part 1 andinnovative tool for achieving the European edited part 2 on the basis of the work ofSocial Fund’s goals. the national BFSE experts: Sven Bartilsson (social franchising), Marek Jetmar (financialThis work is published in June 2012, at instruments), Floriana Nappini and Danielaa moment when policy on many of the Gatti (social added value), Krzysztof Herbstissues considered is still in the process and Mikołaj Gurdała (socially responsibleof formulation. For instance the legislative public procurement) and Bianca Buijs (stateframework for the 2014-2020 structural aid and social services of general interest).funds, the reform of public procurement,the modernisation of the state aid regime or I hope you will read it with interest and findthe European Social Entrepreneurship Fund in it inspiration for programming futurehave been drafted but are not yet definitive. European Social Fund interventions toWe have tried to use the latest documents improve social and economic cohesionand updated information, but the reader in your countries, regions and localshould be aware that changes could have environments.occurred meanwhile.I would like to express my thanks to thenetwork coordinators: Małgorzata Lublińskaand Monika Andrzejewska (Poland), Filip ^Kucera (Czech Republic), Adriana Cheber(Lombardy region, Italy), Anna-LenaWettergren Wessman and Bosse Olsson(Sweden) and Bianca Buijs (Flanders) as well Paweł Orłowskias the other European and member state Undersecretary of Stateofficials, social economy representatives and in the Ministry of Regional Developmentexperts who have contributed. Warsaw, June 2012 5
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  • 7. ContentsPart 1: The social economy and the 18 investment priorities of the ESFIntroduction 11Overall recommendations 13What is the social economy? 15What role should the social economy play in delivering the ESF’s 18investment priorities in 2014-2020? 19 Promoting employment and supporting labour mobility 21 Investing in education, skills and lifelong learning 31 Promoting social inclusion and combating poverty 37 Enhancing institutional and administrative capacities 47Chart of social economy needs from the ESF 52Part 2: Thematic recommendationsSocial franchising 57Financial instruments and mechanismsof fund allocation to social economy 63Measuring social added value 71Socially responsible public procurement and public social partnership 81State aids and social services of general interest 91List of abbreviations 98 7
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  • 9. A better futureResults of the BFSE networkPart 1: The social economyand the 18 investmentpriorities of the ESF 9
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  • 11. IntroductionThe Better Future for the Social Economy 1. social franchising(BFSE) Network is a Learning Network 2.inancial instruments and fund allocation fpromoted by Managing Authorities of the mechanisms to social economyEuropean Social Fund, which exchanges 3. measuring social added valueknowledge and experiences and shares bestpractices, in order to foster the development 4.  ocially responsible public procurement and sof the social economy within ESF operational public-social partnershipprogrammes. 5. Community law (state aid) and social  services of general interest (SSGIs)The network is led by the Polish Ministry ofRegional Development in partnership with In each strand the members of the networkthe ESF Managing Authorities of Flanders have shared their knowledge and good(Belgium), Sweden, the Czech Republic practices, and taken part in peer reviews andand Lombardy Region (Italy). As well as learning seminars in order to understandthese core partners, other ESF Managing how Managing Authorities can betterAuthorities (namely England and Finland), support the development of social economypublic authorities, experts and social through the ESF.economy representatives at local, regional, The products of each strand’s worknational and European level are involved (good practices, recommendations, tools)in the network’s activities. The Network are available on the project web siteis funded by a grant from the European www.socialeconomy.plCommission for 2009-2012. This publication is the result of the commonOver the last three years the network work of the network partners and aims tohas worked together with partners and provide a set of recommendations on how tostakeholders in order to reach its objectives, support social economy through the Structuralnamely: Funds. The recommendations are based on I mproving the quality and efficiency of solutions already tested within the ESF or Structural Fund programmes and their other programmes in different Member States. impact on employment, social inclusion and training across Europe; The publication is dividedromoting support for social economy in P  into two parts. participating Member States; Part 1 suggests what role the social economy dentifying, sharing and disseminating good I should play in the ESF’s investment practices regarding support measures, priorities for the forthcoming planning especially to countries where the social period 2014-2020. It identifies the main economy is less developed; challenges, the present European policy trends and the role of social eveloping EU policy and tools (vertical D  economy for each thematic area mainstreaming). covered by the new ESF regulation.BFSE has worked on solutions for the social It also proposes, for each of theeconomy in five thematic strands focusing on: 18 investment priorities, concrete 11
  • 12. examples of successful solutions We hope that this publication will be implemented by social economy interesting and useful for you and will organisations in different Member contribute to building a States. A few overall outstanding recommendations are proposed to BETTER FUTURE FOR Managing Authorities and policy- THE SOCIAL ECONOMY! makers at national and European level.Part 2 summarises the results of the work done in each thematic strand. Each chapter (one per strand) analyses the policy context and the current issues at European level, describes some good practices and proposes some recommendations on each specific theme.12
  • 13. Overall recommendationsEuropean Social Fund support for the social Whenever possible they should be organisedeconomy should form part of an integrated into thematic programmes on issues suchstrategic approach which is designed, as socially responsible public procurement.implemented and assessed through Coherence of approach should bepartnerships. ensured through a dedicated department or structures for interdepartmental collaboration.1. A partnership framework 3. Use of the StructuralThese partnerships should suit the localcontext and should include the relevant Fundsactors in the territory concerned: the public The social economy can contribute to manyauthorities, social entrepreneurs themselves of the 11 Structural Fund thematic objectives(directly or through umbrella bodies), and and to all 18 of the European Social Fundalso researchers, funders, businesses, investment priorities. It is well known for itssupport organisations and advisers. innovative, well-targeted and sustainable approach. The examples given in this bookThe governance system should be based show how its potential can be maximised.on transparency, a pluralistic approach andrespect for the role of every actor.2. An integrated strategic approachThe policy framework should becomprehensive, ideally covering thefollowing issues:Institutions: egal forms, recognition of social economy actors, administrative bodies and proceduresKnowledge: research, education, awareness raising, etc.Business development: advice, training, mentoring, management development, access to larger markets etc.Finance: a sound financial ecosystem covering tax, grants, loans, guarantees, impact investment, financial engineering etc.Assessment: The partnership should develop an assessment system that includes process and other quality indicators. 13
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  • 15. What is the social economy?Like many key concepts in the economic differences are not an insurmountablefield, the definition of social economy is obstacle, not even the fact that in somecontroversial. As this report assesses the countries the concept (though not therelevance of social economy as a policy reality it represents) is unknown (or partiallyissue, it seeks to provide a definition which unknown to key actors in policy-making).serves the purposes of political actors, be Furthermore, the social economy representsthey public authorities or organisations a significant reality in the Europeanworking in the policy field. economy. Thus, according to the EuropeanThere are several definitions of what social Parliament own initiative report on Socialeconomy is, but we will use the one produced Economy it “represents 10% of all Europeanby one of the most active EU institutions in businesses, with 2 million undertakings orthis regard: the European Economic and 6% of total employment”. 2Social Committee. Its website says: Over the last few years, new concepts such as solidarity economy, social entrepren- The social economy sector covers a range of eurship, social enterprise, social business and concepts used in the various Member States even social business enterprise have grown such as “the solidarity economy” and “the third sector”. Beyond national differences up, whose exact meanings are perhaps regarding terminology and legal forms, even more fluid than that of social economy. social economy enterprises are all inspired They share the general thrust of seeking to by common values such as solidarity, social conceptualise and popularise better ways cohesion, the primacy of the individual over to use capital to satisfy human needs – on capital, social responsibility, democratic the one hand through grassroots citizen management and the fact that they are not involvement, and on the other hand through driven by profit and any profits are reinvested the reorientation of financial and business into the company and into society. structures. Social economy is therefore a different way of doing business, which continuously This is a tremendously positive development, associates the general interest, economic but does not in any way mean that the performance, social considerations and established forms of social economy democratic operation.1 organisation are outdated. As these processes of organisational innovation and hybridisation continue, the social economyThis definition brings out the three basic remains at the heart of delivering goods andideas of the social economy: it comprises services in ways which meet human andenterprises (economic actors), which pursue social needs.social as well as economic goals, and doso in a different way from other companies.Another relevant factor is that the socialeconomy has different realities dependingon the local and national context, and evenhas different names. Nevertheless, these1 http://www.eesc.europa.eu/?i=portal.en.social-economy-category2 http://www.europarl.europa.eu/sides/getDoc.do?pubRef=-//EP//TEXT+TA+P6-TA-2009-0062+0+DOC+XML+V0//EN 15
  • 16. The Europeanpolicy frameworkIn fact, European social economy policy was called Third System and Employment, whichborn at a moment where in many countries was managed directly by the Commissionthis concept did not exist. The first milestone between 1997 and 2000. However theis the 1989 EC communication,3 along with most relevant policy in terms of resultsthe creation of the Social Economy Unit within was EQUAL, the Community InitiativeDG XXIII (the Directorate General for Small and against inequality and discrimination inMedium-sized Enterprises), which may have the labour market,5 which made socialbeen inspired by the renaissance of this concept economy a specific theme (2D) withinin the seventies in France. In the following years the entrepreneurship pillar. In this case itthere were many initiatives of institutionalisation must be highlighted that, though in manyand political recognition that favoured the countries (such as Spain) this theme wasintroduction of social economy as a policy not included in the national strategy, thereobject in the ESF initiatives in the nineties. were very numerous projects led by and/ or aimed at the social economy. With 424Although there is no “genuine European develop­ ent partnerships (DPs) involving mspecific policy with its own legal instruments”4 some 3,500 organisations, social economyin the area of entrepreneurship or social was the third most popular theme in EQUAL,economy, the most relevant issue in this and over six years attracted resources ofarea has been the promotion of the different some €600 m (an average budget perEuropean statutes (for co-operatives, DP €1.3 m). However its real impact wasmutuals, associations and foundations), but, much higher because the social economyafter a long period of stalemate, only the first showed its role as a social innovator inhas come into force (2003). Nevertheless, all other pillars (increasing employability,these actors have played a role in other areas encouraging inclusive entrepreneurship,such as the European Employment Strategy. facilitating adaptability, promoting genderThus, from the birth of the Luxembourg equality and integrating asylum seekers)process back in 1997, the social economy and took part in numerous developmentstarted to receive attention as a relevant partnerships in those pillars.vehicle. Within the ESF, social economyorganisations, as well as regularly using In the 2007-13 programming period the ESFESF programmes for training and capacity continued to support the social economy,building, achieved major results in terms of though this work has been less visible due to theinnovation and systemic support thanks to absence of a dedicated Community Initiative.the Community Initiatives Now, Horizon and Thus, the ESF has continued to promoteEuroform between 1990 and 1993 and Adapt transnational cooperation and mutualand Employment between 1995 and 2000. learning (the BFSE network is a good example of this) and has also built onThe social economy’s role in employment work and innovations from precedingwas further explored during a pilot action programmes. Thus we have seen some3 Businesses in the Social Economy Sector – Europe’s frontier-free market, SEC (89) 2187, 18.12.894 L  earning for Change – A Better Future for the Social Economy baseline study. Available at: http://www.socialeconomy.pl/ x/566857?projekt=5313025 http://ec.europa.eu/employment_social/equal_consolidated/16
  • 17. operational programmes working on social social enterprises in the ERDF and one onfranchising, some Progress initiatives in promoting the social economy and socialthe area of socially responsible public enterprises in the ESF.8procurement, the continuation of workon lifelong learning initiatives for socialeconomy organisations in Spain, andseveral other examples that will be Social economyaddressed in this publication. and the public sectorFurthermore, it is worth mentioning This prefigures what is shown in this publication,other new initiatives such as the Social that the social economy is a very suitable vehicleBusiness Initiative,6 which represents a for promoting employment, inclusion and entrepreneurship, and it has proven its role inmore integrated attempt to promote social producing more sustainable local, regional andentrepreneurship. It saw the light in October national economic systems. Not only this, but it is2011 after intense preparatory work which also one of the best partners for social innovationinvolved workshops and an opinion of the in many policy areas. This could be summarised inEuropean Economic and Social Committee. the first article of the Toia report:9This new initiative raised much interestfrom the social economy sector since it “Points out that the social economy playsaddresses several key challenges such as: an essential role in the European economy, by combining profitability with solidarity, creating high-quality jobs, strengthening an integrated policy approach social, economic and regional cohesion, the legal framework generating social capital, promoting active access to funding citizenship, solidarity and a type of economy visibility and awareness raising with democratic values which puts people networking first, in addition to supporting sustainable development and social, environmental andAmong the 11 key actions the Commission technological innovation.”proposes: “that an investment priority for ‘social All these capabilities have been tested in enterprises’ be expressly introduced in the close collaboration with public authorities, ERDF and ESF regulations from 2014 in order enhancing the sustainability of the solutions to provide a clear legal basis and enable thanks to their different corporate forms. the Member States and regions to include On the other hand public authorities have targeted activities in their ESF and ERDF programmes for 2014-2020”.7 responded to this by improving the legal framework, for example introducing newUnder the common thematic objective of legal forms such as the social co-operativepromoting social inclusion and combating model. This model was born in 199110poverty the subsequent draft regulations in Italy and immediately improved bothinclude an investment priority on support for social entrepreneurs’ access to funding, governance models, legal security, hybrid6 http://ec.europa.eu/internal_market/social_business/index_en.htm7 Social Business Initiative. Creating a favourable climate for social enterprises, key stakeholders in the social economy and innovation, 25.10.2011. COM(2011) 6828 Proposal for a Regulation of the European Parliament and of the Council on the European Social Fund and repealing Council Regulation (EC) No 1081/2006, Brussels, 14.3.2012 COM(2011) 607 final /29 European Parliament resolution of 19 February 2009 on Social Economy (2008/2250(INI)). 17
  • 18. models of resources, etc; and the capacity  t is close to the people and their problems; iof local authorities to find innovative local  t is flexible and can combine multiple iways to meet emerging social needs in the resources, such as grants, contracts, sales,area of local welfare systems. As a result, volunteer time and commitment, to producemore than 7,000 social co-operatives were multiple benefits for multiple stakeholders;born and this legal innovation has been  t has an honourable history of being the itransferred to several countries. first to come up with solutions to social problems, which are then taken up by theBut the response of public authorities state (examples can be found in manyhas not been only in the area of the legal countries such as the Barka Foundation inframework. The social economy has become Poland, charities in the UK and Wohlfahrts-a key actor in the partnership approach to verbände in Germany);local development and led, for example,  he surplus stays in the community and is tto the creation of the first international reinvested;organisation focused on partnership more  t is open to excluded people (principle of ithan 15 years ago: the REVES Network.11 open and voluntary membership) and has aFurthermore, there are relevant examples history of caring about excluded groups;of comprehensive partnerships such as the  ts basis of mutual trust means that it sup- iGlobal Compact and the Social Enterprise ports development;Strategy (UK), the Andalusian Pact for  t is mutually supportive – co-operatives iSocial Economy (Spain), the Małopolska help each other to grow. They do thisone (Poland) and the Public-Social Partner­ through creating secondary/federal struc-ships (Scotland). In all of them, public tures which are democratically controlled byauthorities have recognised the relevance of their member co-operatives, as shown bythe social economy within their own power the success of CGM Gruppo Cooperativo12and competences. These partnerships and Corporación Mondragón.13have mobilised public and private fundsbut also intangible resources such as All of this makes the social economy a firstknowledge, social capital and legitimacy. level partner for the Europe 2020 strategy inThey have addressed issues such as all its pillars and all the more in the cohesionsocial and techno­ogical innovation, public l policy for the next programming period.procurement, rural development, organicproduction, social inclusion and promotingentrepreneurship in all levels of education.The social economy has been able todeliver on all these issues, at the sametime addressing other pressing challenges,because it benefits from a seriesof features such as:10 Law N. 381/91 of 8 November 1991, “Regulation of social co-operativesco-operativeco-operative”11 http//www.revesnetwork.eu12 C  GM is the main and oldest Italian consortium of social cooperatives associating more than 1,000 social co-operatives and over 45,000 workers (72% women) all over Italy – http://www.consorziocgm.org/.13 M  CC (Mondragón Corporación Cooperativa) is the best-known co-operative group, and has been operating in the Basque region in different sectors (industry, finance, distribution and knowledge) since 1956. It has a turnover of almost €14 billion (2010) and employs almost 84,000 workers – http://www.mondragon-corporation.com/.18
  • 19. What role should the social economyplay in delivering the ESF’s 18 investmentpriorities in 2014-2020?As we have seen, the European Union has investment priority is devoted to thebeen developing a policy on the social development of the social economy andeconomy for several decades. This form of social enterprises. Nevertheless, as isentrepreneurship was very soon identified already the case, social economy can andas a relevant instrument for achieving should also play a role in the other priorities.complex goals and addressing problematicchallenges. Its qualities also made it a very The following sections, and theirsuitable instrument for employment and social accompanying examples, show how apolicies, and it has long been a partner in ESF better use can be made of ESF fundsprogrammes. All this previous work can now in collaboration with social economybe exploited in the new programming period, companies and organisations.and specifically in the implementation of ESFprogrammes and projects. For each thematic objective, we delineate the problem to tackle, provide some figuresAccording to the proposed new regulation:14 showing the situation in the EU as a whole and in some countries, and indicate the the ESF shall promote high levels of main EU policies and documents. We employment and job quality, support the also provide examples of how the social geographical and occupational mobility economy contributes and can contribute to of workers, facilitate their adaptation to delivering each investment priority. change, encourage a high level of education and training, promote gender equality, equal opportunities and non-discrimination, enhance social inclusion and combat poverty, thereby contributing to the priorities of the European Union as regards strengthening economic, social and territorial cohesion. It shall do so by supporting Member States in pursuing the priorities and headline targets of the Europe 2020 strategy for smart, sustainable and inclusive growth.The new regulation identifies four thematicobjectives and, for each of them, severalinvestment priorities – 18 in all. A specific14 Proposal for a Regulation of the European Parliament and of the Council on the European Social Fund and repealing Council Regulation (EC) No 1081/2006, Brussels, 14.3.2012 COM(2011) 607 final /2 19
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  • 21. Promoting employment andsupporting labour mobility What is the challenge? EU policy in this area There is not much more that can be said on The main reference for Europe’s the imposing challenges for the European employment policy is the European Union in terms of employment. Eurostat Employment Strategy, based on estimates that currently 24.5 million men the Open Method of Coordination, and women in the EU27 are unemployed – which consists of a framework for EU 10.8% of the labour force. More worryingly, countries to share information, and this is a growing trend, since these figures discuss and coordinate their employment have been increasing every month for the policies.15 The EES is one of the policy last year. instruments to achieve the Europe 2020 goals. The National Reform Programmes In the case of the younger generation the (NRPs) within this EES, which describe situation is even more dramatic: in February the employment policies of the Member 2012, 5.5 million young persons (under 25) States, are analysed by the Commission for were unemployed in the EU27, of whom 3.3 compliance with the Europe 2020 targets million were in the euro area. Compared and flagship initiatives. with February 2011, youth unemployment increased by 262,000 in the EU27 and Funding instruments at EU level include by 106,000 in the euro area. In the same the Progress programme, the European month, the youth unemployment rate Social Fund and the European Globalisation reached 22.4% in the EU27 and 21.6% in the Adjustment Fund (EGF). In the current euro area, growing from 21.0% and 20.5% proposal for the EU’s regional, employment respectively the year before. and social policy for 2014-2020, there is a But these figures hide some enormous new programme: the Programme for Social differences among the regions, where Change and Innovation (PSCI). This is to be we can find some with only 3% total managed directly by the Commission, and unemployment and others with well over will incorporate three existing programmes: 30%, and examples ranging from 5% to Progress (Programme for Employment 60% in young unemployment. This is highly and Social Solidarity), EURES (European pertinent for the ESF since this tool has Employment Services) and the European shown its capacity to adapt to different Progress Microfinance Facility and extend local and regional realities providing a very their coverage – notably by allocating flexible tool for social innovation. €95.5 m for investment in social enterprises.1615 h  ttp://ec.europa.eu/social/main.jsp?catId=101&langId=en16 h  ttp://ec.europa.eu/social/main.jsp?langId=en&catId=89&newsId=1093 21
  • 22. More specifically, in the area of self-  the European Regional Development employment, entrepreneurship and business Fund, which supports entrepreneurshipcreation, the European Social Fund (ESF) via INTERREG projects includingpromotes entrepreneurship through financial ENSPIRE.EU, Senior Enterprise and YESand business support services. Also,  he JEREMIE and JASMINE initiatives in the ttargeted support is provided to women area of micro-credit and credit for SMEs.entrepreneurs and disadvantaged anddisabled people. Furthermore, it is worth mentioning that the Social Business Initiative includes anOther relevant measures of the ESF are the initiative to set up a new “European Sociallearning networks. Apart from BFSE, it is Entrepreneurship Fund” label, so thatworth mentioning: investors can easily identify funds that focus on investing in European social businesses. the Community of Practice on Inclusive  Entrepreneurship (COPIE) opening up There are other policy lines which could be entrepreneurship to all parts of society of interest such as the one on “exploiting the European Network on Youth  the employment potential of personal and Employment exchanging best practices household services”. The social economy has on youth entrepreneurship traditionally played a role here, even a central role in shaping the so-called fourth pillarSpecific funding instruments in this area are: of the welfare state, where it has been the leading actor in social innovation in this area. the European Progress Microfinance  Facility, which helps stimulate self- Finally we should mention the continuous employment and the creation of micro- commitment of EU policy towards the enterprises development of the social economy, as we22
  • 23. can see in the Commission communication  A more business-like approach canTowards a job-rich recovery17 which states: increase the sustainability of projects by obliging promoters to plan at the start Social economy actors and social enterprises ways to balance the books. are important drivers of inclusive job creation and social innovation and require  Vulnerable groups are also suffering more specific support, including through public from the crisis. The social economy has a procurement and access to finance. proven record in addressing this. Apart from this, the social economy offersThe role of social economy a series of features which give it a highly relevant role in tackling the complexThe current situation poses many and very problems mentioned.complex challenges. Among the mostpressing – and the most suitable to be For instance, local employment initiativesaddressed by social economy policies are vital because increased mobility cannot– are the following: absorb the enormous regional disparities that are opening up. In local development Quality of employment: in many actions, the social economy has shown countries we have seen how sustainability, its ability to produce wealth by mobilising salaries, working conditions, etc. endogenous resources (both tangible and are worsening rapidly. The social intangible) even in areas where external economy provides for higher levels investment has been non-existent. Moreover in most of them. this wealth is more evenly distributed, given the principle of avoiding (or minimising) the Differences among regions and countries distribution of profit to shareholders. are growing, but that does not mean that these (countries and regions) are The current crisis has proven again that not interdependent, so deterioration social economy enterprises are highly in one place will end up affecting the resilient companies in term of maintaining other places. The social economy employment in times of crisis. There are is a recognised key actor in local several well-known examples that show development. how some co-operative groups such as Mondragón or CGM develop supportive Due to credit difficulties and austerity strategies to maintain employment in such measures investment is scarce, and times. Also, social economy companies therefore we need to improve the have traditionally shown more internal employment creation efficiency of flexibility. Workers can choose to reduce/ investment. The social economy is one postpone wages when times are hard, of the best actors in producing more and/or transfer workers to other and better employment with less initial enterprises in social economy groupings, investment. thus reducing layoffs.17 COM(2012) 173 final, 18 April 2012 23
  • 24. They offer easier access to entrepreneurshipfor people with little access to external Investment priority 1:investment, as for example the coopératives Access to employmentd’activité in France have shown. for job-seekers andFinally, the current climate of increasing inactive people includingretirement ages makes job quality and local employmentresilience to lay-outs even more important. initiatives and supportOther factors that make the social economy for labour mobilityrelevant to these priorities are: Empowerment: as it is based on Clean green jobs for the mostindividuals rather than capital, has open disadvantagedand voluntary membership and insists Catalyst Pluss (UK) sprang out of Pluss,on democratic voting, it promotes active a social enterprise employing some 500citizenship, empowers people, and is by its people, half of them disabled, owned bynature inclusive; a number of local authorities in southwest England. It uses the social enterprise Entrepreneurial biodiversity: an economy model as a vehicle to enable those mostis healthier and more sustainable if it is disadvantaged in the labour market tomade up of a variety of corporate types; gain access to paid employment, work experience and training. The ESF-funded Gender equality: social economy project supports the setting up of new socialorganisations not only employ a high enterprises, enabling those not in workproportion of women, but also give them to develop and have control of their ownaccess to management positions and business or to gain other work or training.promote female entrepreneurship. From The support is intended to create viablethe point of view of reconciliation between employee-led enterprises that employ thework and private life they are more prone to most disadvantaged people. Since Apriladapt working times to suit workers’ private 2010, Catalyst Pluss has created around 20commitments; paid jobs in washing cars, charity shops, online shops and grounds maintenance. Social economy organisations, owing totheir multistakeholder governance structure, The eco-friendly hand car-washingare more likely to address and satisfy the enterprise, Future Clean, was set up inneeds of multiple stakeholders. partnership with a private company, 2G, and inspired on the German model used by Nordberliner Werkgemeinschaft. It has proved to be very successful providing employment opportunities and attracting interest nationally and internationally. Future Clean works in partnership with local authorities and operates from local authority controlled city-centre car parks. It has created about 40 jobs for people with moderate to severe learning difficulties,24
  • 25. complex mental health issues and multiple Levanto provides work placements andphysical disabilities. training for around 50 young people a year, at a cost of €47,500. The young people workCatalyst Pluss has been refining the model part-time in places like nursing homes, afor Future Clean and has introduced wholefood shop, Mechelen football club,working interviews for the recruitment of Planckendael zoo or the youth hostel. Thestaff and has adopted the intermediate project has a success rate of 94% comparedlabour market model for its employees. with the 80% achieved by the city itself. AEmployees are issued with a temporary further nine students have found work in thecontract of employment and during their context of the Social Maribel (a reductionperiod of employment they are assisted in social security contributions for new jobswith job seeking activities to enable them to created in the non-profit sector).move into external employment. This modelis now being formalised into a traineeship De Ploeg finds work for 21 youngsters aprogramme that will see employees issued year, and in return for receives a paymentwith a contract for 21 hours per week for six of €21,000. It has 13 partners offeringmonths which will include in-work training part-time jobs to young people, such as theand help to find external employment. Nekker sports centre, Prisma multicultural integration centre, nursing homes andhttp://www.esf-works.com/projects/short- kindergartens. Even young people withreviews/projects/401140 specific problems such as attention deficit hyperactivity disorder (ADHD) and Investment priority 2: unaccompanied refugees may find an Sustainable integration opportunity at De Ploeg. of young people not in www.deploeg.be, www.levanto.be employment, education or training into the labour Investment priority 3: market Self-employment, entrepreneurship andFlanders bridges the gap business creationbetween school anda proper job A test bed for new businessesThe Flemish city of Mechelen is working An activity co-operative is a launch pad, awith two social economy companies to business incubator that provides buddingenable youngsters to combine part-time business people with an easy transition fromeducation with employment. The evaluation inactivity to self-employment. It providesof De Ploeg and Levanto shows that giving entrepreneurs with financial and legal coveryoungsters the chance to combine their during the trial business period. Intendingtraining with appropriate work experience entre­ reneurs benefit from a safe legal pmeans they are better equipped to status and an income guarantee as thefind a job, and can avoid prolonged business builds up, as well as peer supportunemployment. (but not necessarily premises). They pass through three stages: 25
  • 26. 1. First, they remain technically unemployed Investment priority 4:but develop their business idea under thewing of the activity co-operative; Equality between men and women and2. Next, if it looks like being a success, they reconciliation betweenbecome a ‘salaried entrepreneur’ with thesecurity of a part-time employment contract; work and private life3. Finally they become a self-sufficientbusiness, sharing in the ownership and Child care co-operativesmanagement of the co-operative. all over EuropeThe structure thus provides the small The existence of child care structures is anbusiness person with the best of both important pre-condition to ensure equalityworlds – control over their working life, but between men and women and reconciliationwith the support of a group of people who of private and professional life.are facing the same problems and want topool their enthusiasm and expertise. It helps In Italy, the major consortia of socialto overcome one of the most discouraging co-operatives together with one of thefeatures of becoming self-employed – the major national banks created in 2004isolation. Activity co-operative clients are in PAN consortium. PAN develops servicesall sorts of activities from cookery, industrial for children through the social enterprisecleaning, furniture restoration and organic formula, an entrepreneurial form coherenthorti­ ulture to violin making, jewellery, c with the ‘public’ purpose of these services.translation and web design. Local governments responsible for the administration of child care services andActivity co-operatives are operating in families or private/public companiesaround 100 locations across France, interested in creating “companyand there are eight in Belgium as well as nurseries” are also playing an importantexamples in Sweden, Morocco and Quebec. role as partners.At any one time, they are supporting around PAN offers planning, start-up assistance and3,500 nascent enterprises. loans to organisations and people interested in establishing new types of services forhttp://www.apce.com/pid648/cooperatives- children in the form of social enterprises.activites.html A guaranteed quality trademark is given to all social enterprises members of PAN with quality check tools. PAN also helps families with personal loans focused on making the access to early childhood services less expensive. In just four years, PAN has successfully built 150 new infant schools with 4,500 available places and more than 1,000 new jobs. Nowadays there are in Italy more than 400 day nursery centres which take care26
  • 27. of about 12,000 children and employ more Investment priority 5:than 3,000 people. Adaptation of workers,www.consorziopan.it enterprises and entrepreneurs to changeIn Andalusia there is a tripartite programmewhere Municipalities offer buildings and/or surface to a co-operative to build a Equipping managerskindergarten and the regional governmentsigns an agreement to cover some public to meet new needsplaces in the school. Social entrepreneurs Adaptation to change is a key challengehave to build the building and they receive for most enterprises and so it is for thetechnical support from CEPES-Andalucia for social economy. In the case of Andalusia,the design and development of the project. one key line of development has been theThere exist also some agreements with role of leadership. This is a role that cannotsome regional financial institutions (banks). be addressed in the same way as withinAll childhood schools are in rural areas. profit-maximising, individualistic enterprises. The sector and the government realised thehttp://escuelasinfantiles.innoves.es/ need to set up a highly innovative instrumentescuelas/?q=node/37 to address the multifaceted nature of leadership and change in social economySweden is faced with sparsely populated organisations. This is how the Andalusianareas where public services are increasingly School of Social Economy was born indisappearing. Long distances to childcare 2002. It is a top-level education institutionmake the work-life balance unsustainable. managed by a foundation set up byOne example where this was prevented was CEPES-Andalucía (the umbrella organisationin the village of Brännberg in the north of representing the social economy in thisSweden. The public preschool was closed Spanish region) and FAECTA (the regionaldue to a small number of children. The federation of workers’ co-operatives) andparents in the village decided to create a funded by the regional government. Itsparent co-operative, and thereby avoid the headquarters is a restored 17th centurydaily extra travelling to take the children convent in Osuna, in the centre of Andalusia,to daycare in a neighbour village. Parent where it can accommodate more thanco-operatives are owned and managed by 25 people. In its more than 12 years ofthe parents of the children on the daycare history it has set up a range of trainingcentre. The parents are responsible for programmes:the management of the daycare centres,although hired staff account for most of   IDES for Senior Managers (FIDES Fthe daily work. The parents are involved in Directivos y Directivas): an MBA-typethe board, economy, maintenance etc. In programme to prepare senior managersthis way the parents have the possibility to and officials to respond to the changingensure participation, influence, and safety conditions in society.when leaving their kids in childcare.  FIDES Entrepreneurs (FIDES Emprende): www.kfo.se, www.coompanion.se for start-up social entrepreneurs, paying special attention to collective entrepreneurship. 27
  • 28.  FIDES tutors (FIDES Tutor) to train alumni Welfare Italia Servizi is a social enterprise from ‘FIDES for senior managers’, as created in 2009 by the CGM Consortium, coaches and teachers. It also serves to Intesa Sanpaolo and Banco Popolare, to keep the school in contact with its alumni. propose an innovative model of welfare in the health services. Welfare Italia is a FIDES leaders (FIDES Rector) aimed at network of medical and dental practices leaders of organisations representing offering high-quality services at affordable social economy in Andalusia. The prices. Welfare Italia is organised through speakers are first-level figures in the a franchising system based on values subject such as former prime ministers, such as the central role of the person and leading journalists, top officials both the family, a welcoming environment, and national and from other countries, etc. paying special attention to people in difficult Social Economy and Care (FIDES situations. Welfare Italia has so far opened Economía Social y Dependencia): 12 clinics in different parts of Italy. an MBA-type programme for senior managers of social enterprises in the www.welfareitalia.eu social and health care sector.http://www.escueladeeconomiasocial.es/ investment Priority 7: Modernisation and investment Priority 6: strengthening of labour Active and healthy ageing market institutions, including actions toTackling the challenges of enhance transnational labour mobilitythe new welfareIn Italy, Legacoop has recently launched anintersectoral project on health, responding Going abroad for newto demographic changes and new needs ofthe population (active and healthy ageing, business ideasnew models of care services). The project In 2009 the European Commission launchedaims to create a network among the various Erasmus for Young Entrepreneurs, anactors in the co-operative and mutual exchange programme that helps newsectors in order to integrate the supply of entrepreneurs to acquire relevant skills forcare and health services. Collaboration with managing a small or medium-sized enterprisethe public sector is crucial to the reform of by spending time (1 to 6 months) in anthe welfare system. Cooperation among enterprise managed by an experiencedthe different actors will promote more entrepreneur in another European country.efficient services and a new culture of a The co-operative movement participatedsustainable welfare system based on “fewer in the programme with the consortiumhospitals – more prevention, home care and COOPERASMUS, led by Cooperativesmanagement of chronic diseases”. Europe and involving partners from 6 European countries. Co-operative umbrellahttp://www.legacoop.it/VisualizzaPagina. organisations from UK, IT, SE, BG, BE andaspx?idpagina=123 ES have been selected as intermediaries28
  • 29. to help new and host entrepreneurs to get Thirdly, it constituted a great chance to fosterin contact and to assist them during the the creation of new co-operative businessesrelationship. The programme was a great and to enable co-operatives to gain anopportunity for the co-operative movement. international dimension. The members of theFirstly, this project responded to a need which CoopErasmus consortium collected someco-operative businesses have expressed 100 applications and succeeded in organisingseveral times in the past: new entrepreneurs/ 20 successful relationships and one failedco-operators, especially in the start-up relationships, involving 22 entrepreneurs.phase, need to exchange experience withexperienced entrepreneurs. Secondly, it was http://ns39179.ovh.net/~coopsue/spip.another official recognition of co-operatives php?article753as key actors in the current market context. 29
  • 30. 30
  • 31. Investing in education, skillsand lifelong learningWhat is the challenge? to upgrade the skills and competences of the workforce.Education and training has always been a Nevertheless, figures for early school leavingprimary policy goal in the European Union, in the EU remain high: over 14% (over 15.5%but in the current situation of crisis and for the euro area) of the population agedausterity measures this objective is even 18-24 have at most lower secondarymore relevant. Sometimes the short-termism education and are not in further educationbrought on by the crisis situation makes it or training (2010).more difficult to align the key actors behindthese long-term, structural objectives. In relation to lifelong learning the situation is worsening rapidly: in 2010, the proportion ofFurthermore, in an era characterised by persons aged 25 to 64 in the EU receiving“liquidity”, or rapid changes in paradigms some form of education or training in the fourand in solid references, the tools provided weeks preceding the labour force survey wasby solid education and training play an 9.1%; a share that was 0.7 percentage pointseven more necessary role, as the joint lower than the corresponding share for 2005,progress report of the Council and the which makes it more difficult to achieve theCommission on the “Education & Training 2020 goal of 15%.2010” work programme18 acknowledges.However, education is not only a tool Nevertheless, here again figures are veryfor employment but also a factor of full different depending on the country, varyingparticipation in society and this is something from 1.3% in Romania and 3% in Greece tothe social economy understood from the 32.8% in Denmark.very beginning, as the fifth of the RochdalePrinciples (or Co-operative Principles) states: Finally, as the Commission states, it is worthco-operative societies provide education and noting that “the EU has around 80 milliontraining to their members and the public.19 people with low or basic skills – benefitingOn the other hand, the crisis and rising less from lifelong learning than moreunemployment can favour a return to school educated people”.and a reduction in school dropouts, andtherefore there is also an opportunity thatshould be seized. However this depends ona reversal of the worsening conditions in thelabour market (in terms of less job securityfor example) which may affect the capacity18 Key competences for a changing world, Official Journal C 117 of 6 May 2010.19  he Rochdale Principles are a set of ideals for the operation of co-operatives. They were first set out by the Rochdale Society of Equitable Pio- T neers in Rochdale, England, in 1844, and have formed the basis for the principles on which co-operatives around the world operate to this day. 31
  • 32. Chart 1:  ercentage of the population aged 18-24 with at most lower secondary education and not in P education or training (2009) and trend 2000-2009 (% relative change) 3.9 Croatia -51.3 Benchmark 2010 + 2020 4.9 Slovakia -26.9 5.3 Slovenia -17.2 5.3 Poland -28.4 5.4 Czech Republic -5.3 7.7 Luxembourg -54.2 8.7 Austria -14.7 8.7 Lithuania -47.3 9.9 Finland 10.0 10.6 Denmark -9.4 10.7 Sweden 46.6 10.9 Netherlands -29.2 11.1 Belgium -19.6 11.1 Germany -24.0 11.2 Hungary -19.4 11.3 Ireland -22.6 11.7 Cyprus -36.8 12.3 France -7.5 13.9 Estonia -7.9 13.9 Latvia -17.8 14.4 EU-27 -18.2 14.5 Greece -20.3 14.7 Bulgaria -28.3 15.7 United Kingdom -13.7 16.2 MK (:) 16.6 Romania -27.5 17.6 Norway 36.4 19.2 Italia -23.5 21.4 Iceland -28.2 31.2 Spain 7.2 31.2 Portugal -28.4 36.8 Malta -32.1 44.3 Turkey -25.3 (:) Liechtenstein (:)50 40 30 20 10 0 -60 -40 -20 0 20 40 60 EU policy in this area and Inclusive Growth that of “helping people of all ages anticipate and manage change through investment in skills & training”. In relation to EU policy the main reference is the strategic framework for European As we have already pointed out, this is a cooperation in education and training policy issue with a long-standing history in (ET 2020) which sets out the long-term the European Union. This can be seen in the strategic objectives of EU education and existence of several programmes (some with training policies: an outstanding tradition such as Leonardo, Youth, Erasmus, etc.). The two flagship  making lifelong learning and mobility a  initiatives of the Europe 2020 strategy in the reality area of education and training are “Youth on  improving the quality and efficiency of  the move” and the “Agenda for new skills education and training and jobs”.  promoting equity, social cohesion and  active citizenship Finally, in many European countries the  enhancing creativity and innovation,  social economy has taken initiatives in including entrepreneurship, at all levels of training and education. Some of them are education and training. quoted in the good practices included in this As for the relation of these policies within document, such as the intersectoral plans the Europe 2020 strategy, the Smart Growth for the social economy in Spain, which have priority includes the aim of “encouraging been active for more than a decade now. people to learn, study and update their skills”32
  • 33. The role of the social participation (as for examples Mondragón University in the Basque Country or Floridaeconomy Co-operative Group in Valencia21).In relation to upgrading the skills and Investment priority 8:competences of the workforce, socialeconomy companies are widely recognised Reducing early school-as sustainable vehicles for workers and leaving and promotingentre­ reneurs. This is for several reasons: p equal access to good- As people-centred organisations they  quality early-childhood, tend to allocate more resources to their primary and secondary development; education They develop several strategies to make  employment sustainable, which is the basis for any strategy to upgrade skills Entrepreneurship education and competences; Many co-operatives include even in their  provides instructions for life legal obligations a minimum allocation to Mainland Finland’s ESF operational programme education and training. for 2007-13 totals €1.4 bn, of which €544.5 m to the national programme. This is mostly madeThe issue of early childhood education is up of 23 ‘national development programmes’.closely related to access to employment for These support clusters of projects pursuingwomen and the reconciliation of professional strategic objectives, and one of these is forand personal life. The social economy has entrepreneurship education. This makesplayed a key role in countries where the Finland almost unique in using ESF funds forwelfare system does not provide a public education purposes.solution for this issue, such as Spain or Italy.In these countries the social economy is a The €8 m National Development Programmekey actor in childcare, especially in areas Driving Change through Entrepreneurialwhich are under-served by the public and Education and Competence is managed by theprivate sectors, as we can see in some Finnish National Board of Education (FNBE).of the examples included here. The EU is It is an ambitious programme with 85% ESFpaying growing attention to this stage of funding, and fits perfectly into national policy.education20 and its role in tackling social and It contains 7 projects, whose goals are to:cultural inequalities.  develop teachers’ and head teacher’s In relation to tertiary education, the social competence in enterprise educationeconomy is playing an increasing role  create regional networks in promoting entrepreneurship, in post-  build learning pathways (primary to higher graduate education and in some countries education)has even set up universities and equivalent  develop learning environments & teaching education institutes as a way of increasing resources20 http://ec.europa.eu/education/school-education/childhood_en.htm21  his is a co-operative group born in the first half of the 1970s that now runs several educational institutions and has demanded the regional T government’s approval to set up its own university. 33
  • 34. The programme’s rationale is that degrees can open up access to post-entrepreneurship education and graduate education for potential socialentrepreneurial skills provide young people entrepreneurs. As a result, this type ofwith the resources to cope in a world programme has a longstanding traditionof continuous change and ever greater and they are present throughout the country.complexity. In addition, these projects highlight In Spain there are three different types ofcreative and innovative aspects, alongside the masters degree:willingness to take risks in education, as wellas the ability to plan and manage activities in  Those taught by universities such as order to achieve one’s goals. the Master in Social Economy at the universities of Valencia or BarcelonaThe long-term effects of the projects enhance  Those taught by social economy growth, competitiveness, productivity and organisations (universities or not) such asfinding employment. As a country with a those from Mondragón University or thewelfare system, it is important to Finland that Andalusian School of Social Economyits young people view entrepreneurship as a  Those taught by other types of tertiary valued career option. It is also vital that they education institutions not directly relatedparticipate in creating new entrepreneurship to the social economy, such as businessopportunities and business activity for Finland. schools like ESADE or EOI (both among the four best business schools in Spain)The experience is transferable as all or university institutes such as IGOP inFinland’s ESF operational programmes have Catalunya.an objective for teacher training, and thiscan be used for enterprise education. In Italy several universities deliver MBA- type programmes, often in cooperation withhttp://www.rakennerahastot.fi/rakennerahastot/ social economy umbrella organisations.tiedostot/esitteet/TEM_National_Development_ Often co-funded by the ESF, they focusProgrammes_lores.pdf either on management of non-profit and third sector organisations or on co-operative studies. Social economy companies offer Investment priority 9: internships for trainees. Improving the quality, In Poland several universities use the ESF efficiency and openness of to fund post-graduate courses on social tertiary and equivalent economy, namely Warsaw University education with a view to (Institute of Social Policy), Wrocław University (Institute of Political Studies), increasing participation Kraków University (Małopolska School and attainment levels of Administration). There are also some courses not connected with the ESF, such as those offered by Lublin UniversityMasters degrees in the (Maria Skłodowska-Curie University) and Bydgoszcz Higher School of Economy.social economySpanish policy for social economy hasalways paid attention to knowledge-relatedmeasures and it has realised that masters34
  • 35. Investment priority 10: These are special plans exclusively for workers in social economy organisations Enhancing access to and enterprises. The national programme lifelong learning, is co-funded by the ESF (it represents upgrading the skills less than 8% of the total funding) within the Multiregional Operational Programme and competences of the (Adaptability and Employment) and so workforce and increasing are the regional plans. They are managed the labour market in partnership, with the national and relevance of education regional umbrella organisations sharing and training systems the management and even providing part of the training either themselves or through specialised social economy enterprises. In 2011 the budget for all national intersectoralTraining in partnership plans was €44.9 m, of which €7.3 m wentOn the one hand, lifelong learning plays to the social economy ones. A similara key role in the social economy. On the amount is allocated to the regional plans.other hand, the social economy has long The national Intersectoral Plans for Socialbeen accepted as a strategic sector for the Economy trained 20,371 people for 908,000Spanish economy, so one would expect to training hours.find specific measures for it in the nationalplan for lifelong learning. The public http://www.fundaciontripartita.org/orientacion/ planes_de_formacion_financiados_economia_authorities have included the Intersectoral social.htmPlans for the Social Economy within it. 35
  • 36. 36
  • 37. Promoting social inclusionand combating PovertyWhat is the challenge? These have been affected in many countries by severe cuts in public spending as theAccording to the Joint Report by the Commission states:Commission and the Council on Social SSGIs in all Member States have comeInclusion, social exclusion is: under serious pressures as a result of the economic and public budget crisis. … a process whereby certain individuals are pushed to the edge of society and prevented from The contracting economy has led to participating fully by virtue of their poverty, or the growth of the need and demand lack of basic competencies and lifelong learning for social services and, at the same opportunities, or as a result of discrimination. time, has significantly constrained the This distances them from job, income and financing basis in public budgets.23 education opportunities as well as social and community networks and activities. They have little access to power and decision-making People at-risk-of-poverty or social exclusion % bodies and thus often feel powerless and unable and 1000 persons to take control over the decisions that affect 1000 persons their day to day lives.22 120 kThe crisis is producing a sharp rise in 110 kinequalities in Europe as the daily lives 100 kof many social entrepreneurs attest.This deterioration can be seen in several 90 kindicators, such as the Gini coefficient (see 80 kbelow), growing financial exclusion and over-indebtedness, and the increasing social and 70 kpolitical exclusion of vulnerable groups such 60 kas the Roma and migrant communities. 50 kThese trends are challenging the basis of the 40 kwelfare state in some EU countries and theyaffect the social fabric of many communities. 30 kNevertheless, we should not only consider 20 kthis to be a conjunctural issue. There were 10 kother negative trends prior to the crisis whichare also a major concern, such as in-work 0 EU (27 countries) Euro areapoverty (see below). geoFurthermore, the austerity measures are also 2006 2007 2008 2009 2010posing a major challenge for social services. Source of Data: Eurostat22 Joint report by the Commission and the Council on social inclusion. 7101/04, 5 March 200423 Second biennial report on social services of general interest. Commission staff working document. SEC(2010) 1284 final, 22 October 2010 37
  • 38. In-work at-risk-of-poverty rate (Source: SILC) In relation to the Flagship Initiatives withinTotal Europe 2020, there is one that deals solely with social inclusion and combating 11 poverty: the “European platform against 10 poverty”. Social inclusion is included in many European programmes and financial 9 instruments in the social field (ESF, EGF, 8 Progress, SBI) and also in related areas (Daphne, Youth and some actions in 7 regional policy such as the Regional 6 Policy DG’s pilot project on Pan-European Coordination of Roma Integration Methods). 5 4 Nevertheless, we should keep in mind that 3 social inclusion is a multifaceted problem with non-economic dimensions. Social and 2 political inclusion is also of high relevance 1 and the social economy has always tried to address them in a complex and 0 EU EU Now Euro systemic way. (27 (15 Mem area cou cou ber (... ntrie ntrie Stat. s) s) .. geo The role of the social 2006 2007 2008 2009 2010 economy Source of Data: Eurostat Much could be said in an area where the social economy is more widely recognisedEU policy in this area for delivering solutions. Firstly, at a time of crisis, we might be tempted to disaggregate and separate the objectives and think couldWith respect to EU policy we should tackle one, because it is more important, andmention that this is also an area of mere then tackle the other at a later stage. Socialopen coordination. The main overarching economy has shown its significant capacityinstrument is the Social Agenda, which was to address several challenges at once. Thus,renewed for the last time on 2008 but has we can see initiatives in the area of financialnot been updated since it expired in 2010. inclusion, income generating activities,In the new strategy (Europe 2020), there social inclusion of vulnerable groups, socialis no separate chapter on social inclusion. services, health services, community-ledNevertheless it has been intertwined into the initiatives, etc. and also many addressing allmain theme of inclusive growth and it is one or most of those goals at the same time.of the five general targets, but in this casethis is somehow reduced to its economic Secondly, at a time of crisis and austerity,dimension.24 a business-like actor, with a long record of24 T  he three indicators used to assess this target are of an economic nature: “People living in households with very low work intensity”, “People at-risk-of-poverty after social transfers” and “Severely materially deprived people”.38
  • 39. social innovation and sustainability in terms TQS project25 from REVES funded underof new proposals and delivering results to the Progress programme in the area ofold problems, is a key partner for public social service quality or the Piani di Zonaauthorities. (mentioned in the SRPP chapter in Part 2).Member States are increasingly focusing Finally, the social economy is a key localon active inclusion to strengthen social development actor, whose role has beenintegration. There is a clear trend towards highlighted by several actors. It facilitatesmaking benefits more strictly conditional on the mobilisation of endogenous resources,active availability for work, and improving the local cohesion which is fundamentalincentives through tax and benefit reforms. for local development, and the inclusion of excluded groups which may be even moreFor those people who are furthest from the necessary in times of scarce resources. Itlabour market, some Member States have has shown its capacity to build long-termput in place policies such as in-work support sustainable partnerships (even accepting itsfor job retention and advancement, on-the- role in mobilising financial resources), and itjob training and a rise in minimum wages to does not relocate to lower-cost regions.ensure that work pays. Within the broad galaxy of the socialThe social economy is an important source economy a specific kind of social enterpriseof jobs and entrepreneurship, including has played a major role in the fight againfor people with poor qualifications or social exclusion: those aiming at thewhose capacity for work is reduced. It can social and professional integration ofenable the most disadvantaged to exercise disadvantaged people. A specific term hassome kind of gainful activity or to create emerged in recent years in Europe to refer toemployment in areas without mainstream work integration initiatives within the socialcompanies and employers (peripheral economy: Work Integration Social Enterprisesareas, remote rural areas). It also provides (WISEs). WISEs are autonomous economicvital social services and assistance that entities whose main goal is to help poorlyare often overlooked in the market economy qualified unemployed people who are atand plays a key role in involving participants risk of permanent exclusion from the labourand European citizens more fully in society market. These enterprises integrate themsince stakeholders – i.e. workers, volunteers back into work and society in general throughand users – are as a rule involved in productive activity. They offer either transitionalmanagement. Social inclusion calls also job opportunities for workers needing to trainfor a political inclusion that could be even or update their skills before going back to themore relevant in these times. One easy general economy, or permanent and adaptedexample is the provision of voice and vote jobs for the most disadvantaged categoriesto citizens and/or workers in social services. (mentally ill or physical handicapped people,Many projects have shown the relevance etc.). As demonstrated by the Progressof multi-stakeholder participation in key WISE project, WISEs play a major role inaspects of social services provision (design, achieving many of the European Union’simplementation and evaluation) such as the objectives and policies.2625 T  he objective of the TQS project was to develop mechanisms for a participatory (re-)definition and measuring of local quality standards for social services of general interest (SSGIs) which would respond to local needs and provide an orientation to service users, services providers, local authorities and the local community. More info: http://tqs.revesnetwork.eu/26 http://www.diesis.coop/images/stories/publications/guidelines_for_EU_Policy_makers_EN.pdf 39
  • 40. Investment priority 11: up process, Le Mat social entrepreneurs discover and share interesting and innovative Active inclusion practices in inclusive tourism, hospitality and sustainable local development, identifyingLe Mat: travelling with social needs, demand, processes and qualityentrepreneurs standards. Step by step Le Mat distils the different experiences it knows and meets,Le Mat is a brand and a social franchise extracts the most significant quality elementssystem of social entrepreneurs in tourism. and it tries to replicate them. Le Mat isLe Mat officially started in 2004, through working to become a well-known brand foran EQUAL project, by distilling good and travellers who are curious to know the worldsustainable practice from Trieste in the north- of social entrepreneurs: special places,east of Italy. Il Posto delle Fragole (Le Mat special people, special values!founder member) is a worker-owned social Le Mat is owned in Italy and in Europe byco-operative composed of young psychiatric social-co-operatives. In Italy it is a consortiumpatients, artists, drug addicts, physicians (a co-operative society of social co-and sympathisers, that has managed a small operatives), owned by 9 social co-operatives,hotel in Trieste since the late 1980s. As Le Mat 3 consortia of social co-operatives, the Ledeveloped further, the EQUAL project distilled Mat Travellers Association and Coopfond,more than just one model a co-operative development agency. At the– a 30-room hotel in main cities, near European level Le Mat is also a co-operativetransport links, completely accessible and owned by Le Mat Italy and Le Mat Sweden.usable by people with disabilities – but there Presently, in Italy there are 18 approved Leare many different ways to be a Le Mat Mat Special Places. In Sweden at the momentSpecial Place. Even if there are common there are two Le Mat B&Bs. Nowadays Lequality elements, each Le Mat is different Mat is growing up also in UK and in Bosnia –and unique, there are variations in culture, Herzegovina.geography, architecture, entrepreneurshipand social aspects. Thanks to a bottom- http://www.lemat.coop/40
  • 41. Investment priority 12: the project on 1 January 2011. The present number of Roma employees is six. Integration of marginalised communities http://www.esfcr.cz/projekty/ac-aero-kultivace- such as the Roma krajiny-oderska Investment priority 13:Green job opportunitiesfor Roma Combating discrimination based on sex, racialIn the Odry region, the Czech ESF is or ethnic origin, religionsupporting a project to help the sociallyexcluded Roma minority (which represents a or belief, disability,significant share of the inhabitants) age or sexual orientationand, at the same time, to promotethe development of the Odry natureconservation area. The work integration U Pana Cogitosocial enterprise “AC AERO s.r.o.” was About 400,000 people are estimated toestablished to offer gardening services (in suffer from schizophrenia in Poland. It isprivate houses, town parks and company extremely difficult for them to find a job.premises) and to cultivate vegetation in the At the end of the 90s, representatives ofcountryside. AC Aero also builds, maintains non-governmental organisations, localand repairs smaller buildings. The income government units and Kraków schoolsearned is invested in the development were invited to Edinburgh to witness howof the company (widening its activities, Six Mary’s Place, a guesthouse employingmechanisation and marketing) and in people with psychic disturbances,establishing further jobs for members functioned. The idea to undertake a similarof the target group. venture in Kraków occurred. An NGO from Edinburgh, along with two PolishThe key project activities are individual associations, applied jointly for a grant toconsultancy and support to help Roma the National Lottery Charities Board in Greatemployees to change their attitudes to work Britain to acquire funds for the investment.and life style and to improve their financial They were successful! In 2000–2002, thesituation. The management holds regular grant covered the administration costs andgroup discussions with the employees assured financing of 20% of the costs for theto solve problems on either side. These investment. Scottish NGOs supported anddiscussions could result in changes supervised completion of the project. Fundsin work organisation and conditions, which were also acquired from private sponsorslead to improved quality and productivity, and public resources. As reflected in theand generally to more positive working marketing analysis a three-star guesthouserelations. Support services and management was the most suitable for the guests visitingof the firm is provided by a highly Kraków. It was decided that the hotel shouldmotivated team, experienced in garden operate as an institution of vocationaldesign and working with the target group. activation for the schizophrenia patients. The Kraków authorities offered a historicalThanks to the project, 17 Roma people have building needing renovation on a 40-yearbeen employed by AC Aero since the start of lease. Opening of the guesthouse cost 1.2 41
  • 42. million PLN (€300,000). PFRON (the State The entire income is allocated forFund for Rehabilitation of Handicapped rehabilitation of the workers, subsidisedPersons) granted 40%, and the remaining medicines, rehabilitation camps, andpart was acquired through grants. additional training sessions. After 2 years, in 2005, the association opened the secondIn 2003, ‘Mr Cogito’s’ guesthouse facility, a social enterprise in the form of aopened its doors. Before it happened, limited liability company, supporting thethe association organised courses for work of the guest house. Start-up costsemployees, kitchen help works, reception were financed by the ESF (430 000 PLNasset works, cleaning services etc. Later €108,000 – 52% of the total investment).on there were catering courses as well ascomputer literacy courses, internship and Recently the association has also developedapprenticeship organised in cooperation other activities such as bicycle hire andwith Kraków hotels such as Holiday Inn and catering services for conferences, training,Regent, and Fundacja Kawiarnia “Hamlet” outdoor events, and private events.(Hamlet Foundation) and OccupationalTherapy Workshops. About 40 people with http://www.pcogito.pl/language,4,english.htmthe past mental illness were trained. 21people suffering mainly from schizophreniawork in the guesthouse.42
  • 43. Investment priority 14: Etica and Banca Popolare di Sondrio obtained €3 million each. Enhancing access to affordable, sustainable www.finlombarda.it and high-quality services, In the Czech Republic, the “Investment including health care and support for the social economy” global social services of general grant, part of the ERDF integrated interest operational programme, provides start- up capital for social service providers, employers and other social economyCapitalising social organisations. Grants range from €12,000 toco-operatives €200,000. In parallel, the “Social economy” global grant, part of the ESF HumanJEREMIE ESF Lombardy (IT) is designed Resources and Employment Operationalto promote easier access to credit to Programme, supports the creation andmicro, small and medium enterprises and development of new social businesses.access to employment and education Grants range from €4,000 to €200,000to disadvantaged people. Under the (under the de minimis regime).JEREMIE initiative, the ESF LombardyRegional Operational Programme makes www.socialeconomy.plloans to shareholders belonging to socialcooperatives or workers’ cooperatives thatemploy at least 30% of disadvantaged Investment priority 15:members, in order to enable them to buyshares in the social cooperatives that Promoting the socialemploy them. This extra working capital economy and socialstrengthens the enterprises’ capacity to enterprises (systemicprovide services and employment. approach, policy co-The local financial intermediaries provide ordination)loans to disadvantaged people amountingto €4,000. The JEREMIE contribution is50%, configured as a ‘bullet component’, Coordinated cooperationa 5-year interest-free loan, with a single Poland’s high-level working group onrepayment. The above-mentioned local the social economy enables differentfinancial intermediaries provide the rest, ministries to co-ordinate their policies. Inalso in the form of 5-year loan, but with a 2008 the Polish Prime Minister constitutedfixed interest rate and monthly repayments. the Social Economy Working Group forThe JEREMIE fund, worth €20 million, Systemic Solutions, with 21 membersis managed by Finlombarda, a public nominated by the Minister of Labourfinancial institution, through selected and Social Policy. They include six vice-financial intermediaries. After the first call ministers and representatives of thein 2010 Banca Popolare di Bergamo and ministries, representatives of other publicFederazione Lombarda BCC received bodies, along with representatives of€5 million each, and in 2011 Banca social economy organisa­ions, the Trilateral tPopolare di Bergamo, Banca Popolare Commission and academics. The group’s 43
  • 44. main task is to discuss strategies and recognised unique representative of theproposals to foster the development of the whole social economy in Andalusia (CEPES-social economy and to make sure that it Andalucía). The Andalusian Pact includes ais taken into account in the government’s follow-up system which foresees a sessionstrategic documents such as strategies for in the regional parliament to assess it. Inregional develop­ ent, social capital, human m all the sessions the assessments from allcapital, an efficient state, innovativeness, parties in parliament were highly positiveand sustainable rural development. It has asking the govern­ ent to pursue them. mfour sub-groups dealing with legal issues, Andalusia has become the leading regionfinancial infrastructure, education and in terms of number of social economystrategy, so as to create synergies and enterprises, employment in social economycoordination between different policies enterprises and in budget allocation, andand tools affecting the social economy. it is recognised at world level for its policyThe group’s first strategic document framework for social economy.is a draft Social Economy Pact for theModernisation of the Polish Social Model2030, as a contribution to the Poland 2030 Investment priority 16:report. But the most recent achievements Community-led localare the drafting and consultation on a new development strategieslaw on social entrepreneurship and socialenterprise (ready to be submitted to theParliament) as well as a policy paper on Revitalising local retailingLong-Term Social Economy Development. through work integrationIn Scotland the social economy goes back CAP Märkte (CAP Markets) are medium-hundreds of years, but the first national sized neighbourhood supermarkets instrategy was launched only in 2007, with Germany employing disabled people. Eachcross-party support. It aims to reduce unit is typically run by a local disablementpoverty, create jobs and develop businesses. association, but the brand is owned by a co-operative of sheltered workshops. AsAndalusia was the first region in the well work integration under good workingworld to sign a tripartite document with conditions, they revitalise empty retail sitesa comprehensive and detailed policy and provide a cherished community service,programme for the development of the especially for less mobile residents.social economy back in 2002. Since then,two new versions have been signed (2006 The first CAP Markt opened in Sindelfingen,and 2011) and it has inspired similar near Stuttgart, in 1999. Using the socialpolicy instruments in other contexts franchising principle, the chain has grownsuch as the Małopolska Pact (2008). steadily to nearly 90 shops across Germany.There are differences due to the different They provide some 1,200 jobs, of which 650political contexts, but both are based are for severely disabled people.on a partnership approach and develop CAP Markets provide multiple benefits toa set of concrete measures. In the first multiple stakeholders. A CAP Markt notcase, the signatories are the regional only provides satisfying work for disabledgovernment (which has extensive political people, but also supplies staple foodstuffscompetencies), the trade unions and the within walking distance of people’s homes, reduces car use (which has health, energy44
  • 45. and congestion benefits), and regenerates owned by a co-operative of shelteredthe local economy by recirculating money workshops and supplies come from alocally. They counter exclusion by offer­ng i retailer’s co-operative. The chain is stillservices such as home delivery of meals or growing steadily, and as demand from localpost office services. authorities across Germany shows, it has soThey also demonstrate synergy between far only scraped the surface of the potentialdifferent families within the social economy demand that is there.– the shops are usually operated by local http://www.cap-markt.dedisablement associations, the brand is 45
  • 46. 46
  • 47. enHancing institutional andadministrative caPacities(convergence regions only)In this chapter we are not dealing with pressing and demands the development ofa specific problem or challenge. This is innovative approaches such as the use ofsomehow a more instrumental objective so public procurement in a more coherent andwe cannot keep the same structure as for comprehensive way to achieve multiple goals.the other three. Nevertheless, we would liketo address here an issue which is closely Policy networks are born in a context whererelated to the objectives and methodological a wider or narrower range of stakeholdersapproach of the ESF: the issue of partnership. can collaborate to address complexAs we have already mentioned above, problems. Their most efficient results arepartnerships are crucial for local development partnerships which ensure a certain degreeand at the same time they offer the best of sustainability. Such partnerships haveconditions for mutual capacity development. been in action in Europe to address variousThere is a growing consensus among local challenges: environmental ones (Agendadevelopment practitioners and researchers 21), rural development (PRODER andon the benefits of the networking/partnership LEADER) and R&D (technology parks). Theyapproach and on the basic strategy of have also been active in employment andbuilding the capacity of territories by working social policy, the primary example beingon the mutual reinforcement of public and the partnerships within the cohesion policyprivate actors. In this area the European Union funds (ESF being the most relevant one).can claim a leading position since it has veryearly identified the relevance of partnerships In the area of social economy development,but also given the fact of its prevalence in the the experience is also quite relevant, asmost relevant policy documents. One of the the examples mentioned in this publicationlatest examples of this is the Commission staff show (Andalusian Pact, Małopolskaworking document “The partnership principle Pact, Scottish PSP etc.). Furthermore, an ,in the implementation of the Common accumulated practice exists in the field ofStrategic Framework Funds – elements for a social economy/social entrepreneurship inEuropean Code of Conduct on Partnership”27 Europe thanks to the REVES network,which starts: a unique network made of public authorities and social entrepreneurs which celebrated Action for growth and jobs requires both its 15th birthday in 2011. ownership at the top political level and mobilisation from all actors across Europe. These and other patterns may also demand Partnership has therefore been identified as the development of the institutional key to delivering the Europe 2020 Strategy. capacity of public administrations and public services, so as to be able to harnessIn a context of diminishing public funds, these changes. Enhanced capacitiesthe need for higher efficiency is even more for coordination, management of the27 Brussels, 24.4.2012. SWD(2012) 106 final 47
  • 48. participatory process, quality assessment, This is a policy area (financial instrumentsetc. are also needed. A particular issue or financial engineering) where publicis the need to develop new approaches actors and public funds can have ato evaluation, for instance methods of considerable impact. But this requiresmeasuring social value (see the good capacity building based on partnership withexample on this below). social economy actors.Furthermore, as we show in the examplesof good practice, there are several regional In the case of socially responsible publicexamples in different countries and contexts procurement it is also very clear that capacitythat show this. There are also national building on both sides (public authoritiesstrategies like the one in Spain or the Social and social economy) is fundamental for itEnterprise Strategy in the UK. to deliver results. SRPP is a complex policy instrument that requires adaptation from both key actors – public authorities and the socialCapacity building on economy sector. The EU cohesion fundsspecific issues have already addressed this task – as the BFSE network in the case of ESF or the PASEIn a more specific way, there are several project28 in the case of ERDF show.issues where capacity building maybe of special significance, for example some Finally, in the case of social services ofof the themes that the BFSE network has been general interest, the social economy hasworking on: social value, socially responsible played a role in developing many of thempublic procurement, financial instruments and (childcare, training, social inclusion, elderlysocial services of general interest. care, marginalised groups, equal rights, etc.) and many examples of this can be seen in thisIn the first case, social value, enhancing publication. Furthermore, these developmentsthe capacity of a political system in terms came with an enhanced capacity for localof quality assessment and indicators is and regional administration to deal withof even greater significance in a situation complexity. Many of them brought in moreof diminishing resources available to complex management systems, or more openpublic policy. Social value is one of systems, which stimulate to social innovation.the strands of an international trend to The EU funds have also been in the front line,improve measurement instruments such for example the Territorial Quality Standardsas the Stiglitz commission in France, the in Social Services of General Interest (TQS)Happy Planet Index, and social return on project shows. This is one of eight Progress-investment (SROI). This is linked with the financed projects on social services qualityrecent development of impact finance, and it provided instruments for a participatorywhich requires the measurement of the definition and measurement of local qualitysocial goals and results of the investment. standards, applicable to any social serviceThe growing relevance of private funding at local and regional level, mainly in thewith social and environmental aims makes field of long-term care and related healthmore desirable the development of policy to services. Thus, it provides partnerships withbuild financial ecosystems that foster social highly innovative and complex instruments toinnovation and social entrepreneurship. develop more resilient local welfare systems.28 Public Policies and Social Enterprise, an Interreg IV C Project completed in 2011. http://www.pase-project.eu/48
  • 49. Investment priority 17: The same OP measure also supports individuals planning to start up social co- Investment in operatives through grants of up to 20,000 institutional capacity PLN/€5,000 per person. and in the efficiency of Up to now the programme has supported public administrations 292 Social Economy Support Centres which and public services with have served about 5,400 social economy a view to reforms, better organisations, thus permitting the creation of regulation and good 1,500 jobs in the sector. governance A mid-term evaluation of the programme shows that the number of appointedRegional support centres social economy support centres was toofor the social economy big and support was too short. It will be better to fund one SESC per sub-regionIn Poland the ESF Human Capital for at least 24 months. A major strengthOperational Programme 2007–2013 includes of the programme is the multidimensionala specific priority (implemented regionally) and integrated support (training, grants,for the promotion of social integration, whose advisory, and partnership) and its capacityobjective is to strengthen and develop to influence regional authorities andthe social economy sector. Measure 7.2. strategies in order to build local/regional(Counteracting exclusion and strengthening the coalitions for social economy development.social economy sector) has a budget of €435million devoted to projects addressing peoplethreatened by exclusion, social economy Investment priority 18:institutions, and institutions supporting the Capacity building forsocial economy environment (public-social stakeholders deliveringpartnerships, pacts, local authorities). employment, educationIn order to build the support system for and social policiesSE institutions at the regional level, the and for sectoral andprogramme has funded the creation of territorial pacts toSocial Economy Support Centres (SESCs) mobilise for reform atin each region. Appointed through a call forproposals these institutions: national, regional and local level provide legal, bookkeeping and marketing  services work as advisory centres / points, social  Tools to measure social valuen economy incubators As an activity during the BFSE network, provide training on how to start up and  the Lombardy Region worked on the lead social economy entities creation of a tool for evaluating the social help building local partnerships for social  value produced by social enterprises. economy development The main aim of this work was to provide promote the social economy as a source  public authorities (as well as other potential of employment. investors both public and private) with a 49
  • 50. practical tool they could use when taking established, for the first time, that all publicdecisions concerning funding allocation. bodies in England and Wales (includingThe tool in fact allows for an assessment of local authorities, government departments,the social value produced by both a social National Health Service Trusts, fire andenterprise as a whole and by a specific rescue services, housing associations etc.)project/intervention. Moreover, the tool will be required to consider how the serviceshas been conceived with a high degree they commission and procure might improveof modularity so that it will be possible to the economic, social and environmentaladapt it to specific regional, local or national well-being of the area. This new legislationcontexts. The main goal was in fact to is very important and it will inevitably bringcreate a tool which would be as close as local authorities in the UK to introducepossible to the actual needs of the players specific tools and procedures for evaluatinginvolved and would be applicable in their social value in their daily working life. Moreeveryday life. While a detailed description information concerning this new initiative isof the tool is provided in Part 2 – Chapter available at:3 Measuring Social Added Value – of thispublication, it is important to highlight here http://www.socialenterprise.org.uk/uploads/that instruments of this type are increasingly files/2012/03/public_services_act_2012_a_becoming an important support for public brief_guide_web_version_final.pdf http://www.wikipreneurship.eu/index.authorities. For example, in February 2012 php5?title=Social_valuea new law was passed in the UK – thePublic Services (Social Value) Act – which50
  • 51. 51
  • 52. WHat tHe social economy SPECIFIC Training for workers and managers imProve tHe ecosystem for tHe social economy Training for public by addressing officials (public key obstacles procurement) to tHe birtH and scaling-uP of social Braided Awareness economy business raising enterPrises support Spread social franchises52
  • 53. needs from tHe esfMEASURES Networking Financial tools and partnerships imProve tHe caPacity Coordinated of local strategies systems and Measure territories social value to Produce social innovations Improve knowledge base (statistics, models, etc.) Trans- national exchange 53
  • 54. 54
  • 55. A better futureResults of the BFSE networkPart 2: Thematicrecommendations 55
  • 56. 56
  • 57. Social franchising1. The policy context cross-border social enterprise initiatives. and current issues The EU and Member States should fund and support the setting up forums, trainee exchanges, ‘social innovation camps’ andSocial franchising (see below for a more social franchising, which may be a betterdetailed definition) is primarily a method for way of encouraging new ideas and cross-transferring knowledge from one established border cooperation.1social enterprise to another that wantsto achieve the same social and financialgoals. Social franchising is one of the clear Furthermore, social franchising is a strategysuccesses of ESF funding. The EQUAL for scaling up and replicating socialinitiative (2000–2008) has been the single enterprises and social innovation. Thus it fitsmost important financial resource for social well in those initiatives and priorities relatedfranchising. This programme contained a to this, such as the Social Business Initiativephase in which applications could be made and the Social Innovation Europe. Thus, infor separate dissemination projects and social the first case we find:franchising was the main issue in some ofthem. For social franchisors, this participation Dedicating efforts to exploiting expertisein EQUAL made financing the development and resources across Europe will generatephase possible and that should be a lesson significant value added, e.g. by scaling- up proven businesses and businessfor future ESF, or any other cohesion policy models across the EU, establishing EU-wideprogrammes. From this point on, it is platforms and networks of businesses,desirable for future programmes to contain investors and providers of businessthe opportunity to disseminate projects that development services.2have been successful earlier.Social franchising has also been included in In the case of social innovation, scaling-up issome ESF operational programmes in the one of the main themes. In both cases, a tested2007-13 programming period, such as the OP entrepreneurial instrument with a proven recordfor England and Gibraltar. Nevertheless, given in replication and scaling-up social enterprisesits nature, it has not been mainstreamed into and social innovation can play a relevant role.other EU policy, although it has attracted theattention of relevant EU institutions such as the In addition, social franchising is a way ofEuropean Economic and Social Committee: disseminating solutions to other local or national contexts. Although many of the 3.2.2 Social enterprises are often locally business ideas behind social enterprises based, and expansion is not always an respond to the needs of local markets, and obvious interest or priority. Rather than they are often based on national regulations competing or expanding their model, they such as salary contributions or work in a often prefer other approaches to growth. This must be considered when exploring market for social services formed by local or national governments, it is also true that1 Opinion of the European Economic and Social Committee on ‘Social entrepreneurship and social enterprise’ (exploratory opinion). (2012/C 24/01)2 European Commission, Memo/11/735. Brussels, 25 October 2011 57
  • 58. many of the ideas and solutions from social  an interchange of knowledge between enterprises could be successfully transferred membersto other countries. Proof of this is the  an agreement that regulates rights and example of Le Mat, the Italian network which obligations and secures the sustainabilitywas transferred to Sweden with the active of the franchise as a systemparticipation of the ESF. The ownership of Social franchising is a recent phenomenomthe Le Mat brand is now in the hands of Le that has achieved a rapid expansionMat Europe, which is attempting to establish and impact in the EU. In a a web-basedthe brand in further countries. The process questionnaire during spring 2011, 63 socialof extending Le Mat to Sweden was financed franchises across Europe were identified. Theyentirely by the ESF (the development phase are spread across the continent and existby EQUAL, and the start-up of the Göteborg in 12 European countries. The UK leads inhotel using mainstream ESF). Other terms of numbers of social franchises with 31,examples are: followed by Germany with 11. Future Clean, run by Pluss (UK), also  Ten of these 63 social franchises are still not funded by the ESF, has been able to set up confirmed as franchises. It may be that they a franchise in France; have a model which does not fall within a strict Dialogue in the Dark (DE), has been spread  definition of franchising or do not perceive to 16 countries all over the world; themselves as franchisors. However, the In a project funded by the ESF, CASA, the  general idea is that there are more social UK social franchisor of domicile care, is to franchisors than those already identified in the spread to Sweden. research. For example, as it was conducted in English, some existing franchises may have been missed in countries such as France or1.1 Why should we foster Spain (in this case the fact that this country is not a member of the BFSE network may have social franchising? also had an impact).In the work carried out by the social When that research was carried out, 50franchising strand of the BFSE network, social possible social franchisors had beenfranchising has been defined as follows: identified, 19 social franchisors were operating 20 social franchises (one organisationIn a social franchise both the social franchisor provided results for two social franchises) andand franchisees are social enterprises four aspiring social franchises responded and(i.e. businesses that trade and have a social completed the survey.purpose) sharing the same values.In a social franchise there are: Social franchises are having a significant impact in a short period of time. The results for  n organisation that replicates a social a the 19 existing social franchises show that: enterprise business model – the social franchisor  They employ 6,766 employees;  at least one independent social franchisee    5% of their employees are disadvantaged 6 that has been replicated by the social in the labour market (e.g. have a disability); franchisor  They have a combined turnover of € 200   common brand under which the social a million; franchisees operate58
  • 59.  They have in total 324 social franchisees franchising concept at AETES is still in the and the average social franchisor has start-up phase, it is run by one person. Jean- 21 franchises. Pierre Lloret is both manager and person responsible for the setting up and supportFrom this research, and though no reliable of new franchisees. In addition he providesdata exist, we can can assume that there are administrative help if needed. “It is a lot of workover 10,000 employees in the social franchise but the start-up is important for the future. I wantsector in Europe. to give the new partner conditions that are as good as possible. When up and running, theEvidence from the survey indicates that the franchisee needs to focus on the services hepromise of rapid growth is beginning to be provides his clients.”realised. Most social franchises are relativelynew and have thus grown relatively rapidly, http://www.socialfranchising.coop/uploaded/with 40% of our sample having established Aetes_ESFN_Case_Study_8.pdftheir first franchise in the last five years andover 80% in the last ten years. Care and Share AssociatesBut in order to deliver, some issues need to Care and Share Associates (CASA) wasbe addressed. Thus, in the survey’s opening established in 2004 to provide essential supportquestions, several respondents expressed the services to older and disabled people, throughopinion that the greatest difficulty was financing developing a franchise network of majorityexpansion. One respondent expressed it thus: employee-owned social care providers. It“We need to reach a high number of franchisees is based on the award-winning Sunderlandin order to become sustainable as a franchisor. Home Care Associates model, which has beenThe social franchisees are weak and so the delivering quality domiciliary support sincefranchising processes is very slow if there is no 1994 (350 employees). CASA has developeddevelopment money we can provide to them. five CASA franchise companies operatingWe would need a huge European project to across six territories with 270 workers.develop more quickly, and with more risk capitalin order to more quickly reach break-even.” Core funding for CASA in its development phase was provided by the European EQUAL-2. Good practices funded project INSPIRE, while each new business requires an initial investment of € 175,000 from local funders and a commitmentAETES Environment from the local authority to purchase a specified number of hours once the company isAETES Environment provides cleaning established. In addition, CASA has an ongoingservices to businesses. The company started relationship with a social finance provider, whichin 2009 by linking together Augias, a company has made loan agreements with each new unitoffering cleaning services located in Yutz in to contribute towards working capital.north-eastern France, and A.S.P Association .Pde Sauvegarde et Promotion de la Personne, CASA is now completely self-financing. Oncean organisation focusing on helping people far franchise companies achieve break-even,away from the labour market, disabled children, they pay CASA a royalty/licence fee of 4.2%adults and families based in Augen, France. of their turnover.The reality of AETES is typical. Since the http://www.casaltd.com/ 59
  • 60. Komosie employed 1,831 people. Now they employ 3,861 people and have a turnover o € 28.5Unlike many social franchises, the business million.operation of the biggest social franchisor in http://www.komosie.be/Europe, KOMOSIE, predated the formationof the franchise. In the early 1990s a numberof second-hand shops were set up to Vägen ut!provide employment for disadvantagedpeople – at that time there were 14 There are some 60,000 drug addicts inorganisations with 15 shops. However, they Sweden, and the idea of starting halfwaybegan to recognise that they were facing houses for recovering addicts sprangincreasing competitive pressures and that from their own personal experience. Inthey needed to speak with a common voice 2003, some of the people from thesewhen talking to government. self-help organisations opened the first halfway house, Villa Vägen ut! Solberg.They accordingly came together in This is a cooperative that is member of the1994 as a federation (KVK – Koepel van consortium Vägen ut! kooperativen, whichVlaamse Kringloopcentra) and from this consists of ten workers’ co-operatives.set up KOMOSIE. With a three-year grant Vägen ut! wanted to spread this successfulof € 50,000 per year from a philanthropic halfway house concept and decided to usefoundation, they developed the brand of ‘De social franchising to do so.Kringwinkel’ which 65% of their membersadopted on its launch in 2002. Now 95% of Villa Vägen ut! Solberg and some of thetheir second-hand shops in Flanders are other cooperatives were started within anbranded De Kringwinkel. EQUAL partnership. The development of the franchise was also done in a project fundedOver time, KOMOSIE provided more and by EQUAL and promoted by Coompanion,more support to those operating under which made a special call for projects tothe Kringwinkel brand. It developed a give the opportunity for the disseminationshop format to improve shop layouts, of good practice. Working from scratchprovided marketing support, created quality to set up the halfway house franchisestandards and carried on a range of other system, the consortium and Coompanionactivities. in Göteborg distilled the experience and know-how obtained from the pilot intoAlthough KOMOSIE did not recognise it at a set of key documents: the handbook,the time, they had effectively set up a social the quality handbook, the final franchisefranchise with members paying KOMOSIE agreement and a training package. Duringto manage the Kringwinkel brand and to this project, some initial work was done withprovide support to its members. some franchisee prospects. However, the future franchisees in three locations appliedThis support transformed the impact of for their own standard ESF projects, andmembers and led to the rapid growth of the the ESF became an important financier,Kringwinkel brand. primarily for training the new entrepreneurs, who came from social exclusion caused byWhen KOMOSIE and the Kringwinkel brand criminality and addiction.was set up, the 39 organisations ran 93shops with a turnover of € 14.2 million and http://www.vagenut.coop/60
  • 61. Barka Foundation dissemination is possible. And secondly, working in partnership with other financers.For twenty years, the Barka Foundationhas been working in Poland with excluded 1. Emphasise growth!and vulnerable people. Among its manyprojects, Barka has developed vocational As well as their use in starting socialschools for the unemployed (Centres of enterprises, ESF programmes can nowSocial Integration), numerous social and have a greater impact on unemploymenteconomic enterprises, and a programme and exclusion by replicating successfulof accessible housing and self-sufficient models. Social franchising is one model,communities in the countryside. Similar and even though the method does notneeds are everywhere in Europe. Since 2007 suit all social enterprises it can providewhen Barka started in London, it has been inspiration. Social franchising producesapproached several times by different actors results – 10,000 jobs have been createdin large European cities. Today Barka is in by social franchisors. ESF is the mostthe process of starting centres in Stockholm, important source of funding for these jobs.the Hague, Utrecht, Berlin and Bremen.Barka first adopted a franchise model in There are no structures or actors to1989-2008 within Poland, establishing 20 implement innovative social enterpriseassociations and 20 social cooperatives in projects except for the enterprisesa network. Barka has recently been working themselves. They have scarce resourcesin 40 sub-regions of Poland on a franchising for expansion. Support for replication is asbasis, creating partnerships with councils essential as support for innovation.and entrepreneurs as well as organisationswithin government projects. In every sub-  Include social franchising and replicationregion, Barka creates social integration in operational programmes by highlightingcentres and cooperatives. Barka started it as a means of generating employmentto develop the franchising model outside and social inclusion.Poland in 1995 when starting new BarkaAssociations in France, the Netherlands, the  Managing Authorities must build linksUK and Ireland, but within a very specific with support and expert organisations“business area”: helping excluded and and stimulate them to work with socialvulnerable people back to a decent life and franchising and other replication techniques.in many cases a socially accepted life.http://www.barka.org.pl/ 2. Facilitate the growth of good examples by3. Recommendations designing programmes withAs we have seen, the ESF has played a very better opportunities forimportant role in the financing of the first replication.social franchisors. In order to be capable ofplaying this role in the future, there are above The ESF could reduce the financial gapall two things that are crucial. In the first place, when a successful project enters thethe successful completion of the development development phase prior to its growthphase, i.e. reaching the point where phase. This can be done: 61
  • 62.  f ESF programmes had a phase of I developed by the social franchisors of development in which the tools for the European Social Franchising Network dissemination could be created with few (ESFN), and convincing projects or no requirements for co-financing. If to adhere to this code once it exists. such an option existed, the investment Working together with the ESFN to already carried out in experimental develop this code. projects will give better results. This would   ighlighting good practice and successful H turbo-charge the effect of the investments social franchises. made by the programme.   atching evidence of impact of social M f capacity-building networks for future I franchising with measurement of social social franchisors were funded and added value funding was available for mentoring by existing networks of social franchisors.  y actively engaging potential social B 5. Employ social franchising as franchisors in forthcoming transnational a means of transnationality programmes The aim of transnationality is to spread from one region to others learning that could be3. Play an active role in making useful in overcoming European challenges. finance available Social franchising is a way of spreading solutions to other sites.To reduce the financial gap in social franchisingESF could play a more active role by:   ocial franchising can be a means of S enabling effective transnationality and building networks with financial actors to  should be declared a natural part of create a mix of finance for franchising. forthcoming transnational programmes. National authorities, ESF and ERDF   ake use of the ESF network to M need to work together with financial spread social franchises developed intermediaries to create partnerships with the support of the ESF to potential for financing franchisors. This includes entrepreneurs or project promoters. Managing Authorities’ active involvement in the creation of national Social Entrepreneurship Funds following the Social Business Initiative funding mechanism for these funds. ncrease competence within Managing I Authorities.4. Reduce suspicionThere is a natural suspicion among actorsand potential entrepreneurs towards allfranchising. Actions to overcome this include:  upporting the creation of a widely known S code of conduct and quality standards62
  • 63. Financial instruments and mechanismsof fund allocation to social economy1. The policy context Ensuring that this sector continues to grow and current issues and flourish would therefore be a valuable contribution to meeting the objectives ofIn its Social Business Initiative3 the European the Europe 2020 strategy. The sustainableCommission states that it considers that growth of the EU’s social enterprise sectorthe funding system for social enterprises is depends on drawing on a wide range ofunderdeveloped compared with that used investment and financing sources. The EUby other businesses. Different financial tools level has just taken some initiatives andand an appropriate regulatory framework are others are on the way.necessary in order to establish equal accessto capital for social enterprises. For example, the Commission has proposed a microcredit initiative for social enterprisesSocial enterprises constitute an emerging as part of the Programme for Socialsector in the EU. They are undertakings whose Change and Innovation, which is to start inprimary objective is to achieve social impacts, 2014.5 This programme includes a fundingrather than generate profits for shareholders. instrument for the start-up, development andIn achieving these impacts, social enterprises expansion of social enterprises. The aimseek to build on business techniques – is to provide approximately € 450 million inincluding business finance. The sector is microloans as well as approximately € 100characterised by rapid growth. According to million dedicated to direct support to socialthe Global Enterprise Monitor 2009 report, enterprise development.between 3% and 7.5% of the workforce inselected EU Member States were employed in Another financial instrument is the regulationvarious forms of social businesses. for the European Social Entrepreneurship Fund (EuSEF)6, proposed by the Commission atThe social mission of social enterprises the end of 2011. The aim is to facilitate accesscorrelates with a strong focus on sustainable to the financial markets for social enterprisesor inclusive development, and on tackling by harmonising rules for investment funds.social challenges across EU societies: this The objective is to stimulate the creation ofmeans that investment in social enterprises dedicated funds, enabling them to be activeis likely to have a greater positive social across the whole EU single market.impact than investment in SMEs generally.J. P Morgan suggests that social investment . Even if all these instruments are welcome incould grow rapidly to become a market well order to improve the supply of appropriatein excess of € 100 billion, underlining the capital for social enterprises, more is needed.potential of this emerging sector.4 These initiatives need to be regarded as3 COM(2011) 682, 25.10.20114 See J.P Morgan, Impact Investments: An Emerging Asset Class, 2011. .5 http://ec.europa.eu/social/main.jsp?langId=en&catId=89&newsId=10936 COM(2011) 862, 7.12.2011 63
  • 64. the first step towards tailored financialinstruments that still need to be explored. 1.1 Cooperation between different sectors inIt is also important, when designing anappropriate financial framework, to look at providing funding forexisting investment instruments specifically social enterprisesdeveloped and adapted for socialenterprises. These include social investment Financial market imperfections weakenfunds, cooperative banks7, ethical and the ability of social enterprises to obtainsocial banks8, commercial banks with social appropriate resources on the open market.programmes9, innovative instruments such The reasons usually presented are aas “social impact bonds”10 and favourable slow return on investment, lack of owntax-funded solutions. Such instruments could resources for co-financing, lack of propertybe used as part of a hybrid capital approach, as a guarantee for the loans and in somewhich is often seen as the most appropriate cases, short business history. Privatemodel for financing social enterprises. financial institutions have traditionally been very conservative in assessing businessAs investment priorities for the 2014- opportunities and very risk-averse. The2020 programming period, the European implementation of the Basel II and Basel IIICommission has proposed “Support rules will greatly affect banking practices andfor social enterprises” in the ERDF and will result in a re-tightening of lending rules.“Promoting the social economy and social This development will have an adverse impactenterprises” in the ESF, in order to provide a on funding of social enterprises. Borrowedclear legal basis and an inclusive approach funds are often covered by several collaterals.to diverse financial instruments targeting This policy, however, significantly reduces thesocial enterprises.11 This is further developed chance for social entrepreneurs starting up toin the Commission working paper “Common obtain loans on the financial market.strategic framework for implementation ofstructural funds 2014-2020”.12 Another aspect is the market situation in the segment of financial intermediaries. In manyIn addition to the most welcome initiatives of countries there is a wide range of small andfinancial instruments for social enterprises large banks, credit cooperatives, municipalthere is a need for further actions to be taken unions and other financial institutionswhen implementing EU programmes with operating nationally or regionally, which, owingregard to financial instruments, especially in to high competition in the market segment, arethe areas of: able to distinguish their products according to the special needs of target groups. A different1. cooperation between the financial sector,  situation concerns oligopolistic markets NGOs and the public sector in providing controlled by large banks, which have little funding for social enterprises interest in dealing with small interest groups,2. integrated support schemes or investing in the development of a new3. strengthening capacity. segment of financial products.7 www.eurocoopbanks.coop.8 w  ww.triodos.be. 9 For example www.bancaprossima.com, https://www.unicredit.it/it/chisiamo/per-le-imprese/per-il-nonprofit/universo-non-profit.html and www.ubibanca.com/page/ubi-comunita10 www.socialfinance.org.uk/sib11 http://ec.europa.eu/regional_policy/what/future/proposals_2014_2020_fr.cfm12 http://ec.europa.eu/regional_policy/what/future/index_en.cfm64
  • 65. Another factor influencing the decision of financial product. This form of support mightfinancial intermediaries to finance social encourage financial intermediaries to createenterprises is corporate strategy based on a range of other products tailored to theCSR. It is possible to demonstrate examples needs of social enterprises.of products for social enterprises closelylinked to marketing and promotion policy. On The structural funds – ERDF (guarantees,the other hand, for a number of large banks, loans and resources for the JEREMIEcreating special products for social enterprises initiative) and ESF (microcredits, JEREMIEand their financing is too expensive that they in Lombardy) play an important role. Thesedo not find these strategies. examples show that the creation of favourable conditions encourages local banks to solveIn countries with a strong tradition of the specific needs of their clients. In providingcivic engagement by civil society, non- these loans, they represented an opportunitygovernmental or mutual organisations operate to supplement the existing range of productsin order to provide equity or lending capital. and to reach new customers.These entities focus on mobilising citizensin order to provide resources for financinginvestment by social enterprises, usually in 1.2 Integrated supportsocial services. However in many countries schemesthese organisations are not financially strongenough to provide financial resources to start Social enterprises, like all types ofsocial enterprises on a larger scale. Another businesses, face the need to obtain funds atproblem is the scarce experience of these various stages of their business development.organisations in providing financial services. They need initial capital for starting up and stabilising the business, working capital forThe public sector reacts to this situation in continuous operations and funds for furtherdifferent ways. It can contribute to creating corporate development. Moreover, specificalternative financial mechanisms to provide needs for social finance for start-ups haveinvestment resources for social enterprises. been identified in countries with a short socialPublic authorities traditionally create grant economy tradition, where it is first necessarymechanisms whose aim is to provide initial to create a functional social economy sector.capital for start-ups, which complement the An important aspect of this is to identify andrange of commercial tools on the market. create financial intermediaries that understand the value orientation of social enterprises andIt may focus its activities on the financial their specific financial needs. It is unrealisticintermediaries, influencing their decisions on to think that the future development of socialthe financing of business plans by reducing enter­ rises will be based solely on income pcredit risk and portfolio risk, or by providing from their operations.additional financial resources for low interestrate loans and microcredits. It uses the mix Smaller financial institutions operating inof tools that are supported by the public the regions have greater understandingsector, but are implemented by private of the needs of social enterprises. Thesefinancial intermediaries. A typical example mutual financial institutions, credit unionsis providing guarantees for loans, providing and ethical banks know the local businesscapital to create new financial instruments environment and business opportunities well,administered by financial intermediaries and can usually better reflect local needs.or providing additional capital for a joint Although the procedures for assessing 65
  • 66. business plans and applications are similar The possibility of using the ESF and ERDFand result from efforts to reduce risks, to kick off these financial instrumentsgreater knowledge of the social environment, is important. Legislative support forpersonal contact with the applicant, the establishment of European Socialclose familiarity with his or her situation Entrepreneur­ hip Funds or European Venture sand possibilities, as well as the ability to Capital Funds (as proposed by the Europeanappreciate his or her social capital, increase Commission) can then create the necessarythe chance of receiving funds. Ethical banks, institutional framework for the functioning ofin addition to assessing the financial and these mechanisms.business risks, examine the consistency ofthe business plan with their values and thoseof stakeholders. There is also an opportunity 1.3 Strengthening capacityto invest available funds of savers only intonarrowly-defined thematic areas. Like all businesses, social entrepreneurs face many problems when starting up. Moreover,Local financial intermediaries are more willing in social enterprises, enthusiasm all too oftento provide a wider range of financial products goes along with a lack of realistic assessment(particularly different types of loans) for of business opportunities (setting up asocial enterprises, and to flexibly respond to sustainable business strategy) and limitedchanging requirements. They are able to meet access to capital to realise their ideas andmost of the financial needs that arise in the life plans. Since the main driving force behind theof a business. In situations where this is not business is often societal change, in manypossible, under existing conditions, to provide cases business experience and knowledgean investment loan, there is an opportunity of the business environment, including theto establish cooperation with the public regulatory framework, is limited.sector. The possibility of using knowledge offinance, professional staff and the existence Successful start-up business must overcomeof distribution channels for the provision of this handicap. It is therefore important topreferential products is a big advantage. invest in human resources, strengthening their ability to operate in the changing businessThe importance of these financial institutions environment, and enabling them to captureis in providing short-term funding and business opportunities. Strengthening theliquidity to social enterprises. They provide capacity of social entrepreneurs beforefunds that supplement current income from starting and when developing their businessthe sale of goods, charges for services etc. is an important step towards a successful business. It is a necessary prerequisite forAnother source of financing the investment the initiation and operation of a sustainableneeds of social enterprises is venture capital social business. Furthermore, to increase the– seed and venture funds. The accumulated efficiency of support for the development ofcapital is contributed by private investors, social entrepreneurship it is necessary to seebanks, government (unclaimed assets, all aspects of the business cycle. Thereforedormant accounts), capital injections from a chain of interconnected, complementarypublic institutions indirectly controlled by measures is needed that will also focus onthe government or a combination of these skills development.sources. Funds are then used directly forsocial enterprises, or to capitalise financial Knowledge of the specificities of socialintermediaries. entrepreneurship among financial institutions66
  • 67. is generally weak. Most of them do not The local financial intermediaries providedistinguish between traditional small loans to disadvantaged people amounting toand medium-size enterprises and social € 4,000. The JEREMIE contribution is 50%,businesses and therefore they apply the configured as a ‘bullet component’, a 5-yearsame scoring and evaluation rules when they interest-free loan, with a single repayment. Theassess business plans. Resources could be above-mentioned local financial intermediariesused to strengthen the capacities of other provide the rest, also in the form of 5-yearactors such as local financial intermediaries, loan, but with a fixed interest rate and monthlyso that they may better understand the needs repayments. The JEREMIE fund, worth € 20of social enterprises and adapt their products million, is managed by Finlombarda, a publicand services for this business segment. financial institution, through selected financial intermediaries. After the first call in 2010The ESF represents a unique tool that can Banca Popolare di Bergamo and Federazioneaddress most of these problems. It may be Lombarda BCC received € 5 million each, andused to strengthen the capacity of social in 2011 Banca Popolare di Bergamo, Bancaentrepreneurs and their employees in such Popolare Etica and Banca Popolare di Sondrioareas as marketing, management, financial obtained € 3 million each.management, business planning andprofessional knowledge. Resources can also http://www.finlombarda.itbe used for capacity building of providers ofthese services. 2.2 Good practices of integrated support2. Good practices schemes2.1 A good practice in In the Czech Republic, the “Investment cooperation between support for the social economy” global grant, part of the ERDF integrated different sectors in operational programme, provides start- providing funding for up capital for social service providers, employers and other social economy social enterprises organisations. Grants range from €12,000 to € 200,000. In parallel, the “Social economy”JEREMIE ESF Lombardy (IT) is designed global grant, part of the ESF Humanto promote easier access to credit to micro, Resources and Employment Operationalsmall and medium enterprises and access to Programme, supports the creation andemployment and education to disadvantaged development of new social businesses.people. Under the JEREMIE initiative, the ESF Grants range from € 4,000 to € 200,000Lombardy Regional Operational Programme (under the de minimis regime).makes loans to shareholders belonging to socialcooperatives or workers’ cooperatives that http://www.eesc.europa.eu/resources/docs/hire at least 30% of disadvantaged members, presentation-by-linda-marsikova.pdfin order to enable them to buy shares in thesocial cooperatives that employ them. This extra Ekobanken is a Swedish ethical bank whereworking capital strengthens the enterprises’ the public good and the benefit of memberscapacity to provide services and employment. are the main driving forces and the reason 67
  • 68. why Ekobanken finances initiatives within development and offers co-financing of upthe social economy. Loans varying between to € 200,000.approximately € 2,000 and € 250,000 grantedprimarily to initiatives that involve the social http://www.belsif.be/defaulteconomy or have ecological aims. aspx?ref=ACAAAY&lang=ENhttp://www.ekobanken.se/?id=2951 2.3 Good practices inTrividend is a Belgian cooperative thatprovides venture capital to organisations with strengthening capacitya social value. It is a public-private partnershipcreated by the Flemish government and Human Capital Operational Programmestakeholders from the social economy, and its Poland’s ESF sub-measure 7.2.2 of thename refers to the “triple bottom line”: people, human capital operational programmeplanet and profit. Trividend invests money, in is entitled Support to social economy andthe form of risk capital and subordinated loans, makes it possible inter alia to provide grantsbut also offers business support in the form of for advice and training to individual andguidance (shaping the business plan), support groups. The focus is on the knowledge andand monitoring. Trividend provides direct skills necessary to set up and run socialequity investments of up to € 150,000 per cooperatives. The sub-measure focusescustomer, becoming a minority shareholder on building the support system for socialwith the right to appoint a director to the board. economy institutions at the regional level, andExit is usually after a maximum of six years, but is based on a call for proposals for existingthis can be extended. Trividend also provides institutions (at least 2 in each region) whichsubordinated loans to companies and provide legal, bookkeeping and marketingassociations, whose maximum duration services, advice centres, social economyis normally 10 years. incubators, training on how to start up and lead social economy organisations, buildinghttp://www.trividend.be/ local partnerships for social economy development, and promoting the socialThe Social Investment Fund (SIFO) in economy as a source of employment. TheBelgium offers a solution to a market initiative has led to 292 social economydeficiency, in that traditional banks are not support centres being created. 5.400 socialinterested in offering loans to the social economy organisations have receivedeconomy at a rate that is acceptable by support and 53,129 people within the socialsocial economic organisations. SIFO offers economy have been reached. Furthermore,funds at a discounted rate to intermediary 1,500 jobs have been created as a directfinancial organisations that meet certain result of the initiative, and the share of owncriteria. These organisations can combine revenues in the income of the social economythese funds with their own finance to organisations has increased up to 45%.offer social economy organisations loansat a discounted rate. The target groupis organisations that are part of what in 3. RecommendationsFlanders is called the inclusion economyand are recognised as such by the Flemish 1. Co-operation between the financial sector,government. SIFO aims to support NGOs and the public sector in providingorganisations in all phases of entrepreneurial funding for social enterprises is necessary.68
  • 69. From this perspective, local financial 3. t is efficient to couple the investment I intermediaries need to understand the in social enterprises with investment role and needs of social enterprises and in human capital. The ESF should be recognise their financing as a business significantly focused on strengthening opportunity. Policy-makers and Managing the capacity of social entrepreneurs and Authorities should understand the their employees, using already existing constraints of financial intermediaries so or developing new business support as to strengthen their capacity to work with services for coaching and mentoring the social economy. The lack of capital of social enterprises. Ensuring access or increased risk of lending can then be to capital without the corresponding remedied by involving public resources business services (advice, coaching, – primarily in the form of guarantees mentoring) only partly helps the – with a fair distribution of risk. development of social enterprises.2. It is necessary to set up integrated  4. Finally, it would be appropriate to continue  support schemes allowing the use of to strengthen the ability and capacity of various types of financial instruments and Managing Authorities and other policy- their combination (grant mechanisms, makers to create integrated financial loans using financial engineering mechanisms co-funded by the ESF or instruments). The aim is to make funds ERDF. It would be fruitful to continue to available for the different stages of promote the exchange of experience development of social enterprises. among Managing Authorities regarding Besides the initial capital investment the provision of support for innovative it is also necessary to consider the solutions in ensuring resources for social availability of working capital to ensure the enterprises. sustainability of social business. 69
  • 70. 70
  • 71. Measuring social added value1. The policy context of social enterprises, but also to recognise, measure and underline that the core of and current issues social business is represented by the social value and social impacts it produces. SocialSocial enterprises are increasingly value is in fact one of the key measures ofrecognised as key economic actors the success of social enterprises, togetherin Europe. In the introduction to the with other undoubtedly positive results suchCommunication on the Social Business as financial turnover, number of employees,Initiative,13 the Commission underlines that economic growth or innovativeness. “social enterprises contribute to the Europe Similar arguments can be found in 2020 strategy through smart growth by many recent EU documents, where the responding with social innovation to needs measurement of social added value, that have not yet been met; they create social change or social impact seems sustainable growth by taking into account their environmental impact and by their long- to be a precondition for the successful term vision; they are at the heart of inclusive implementation of directives, programmes growth due to their emphasis on people and or activities. For example, European Social social cohesion.” Entrepreneurship Funds, proposed by the Commission at the end of 2011,14 are basedMany communications relating to social on the possibility of measuring social impactenterprises in Europe emphasise the social at three levels: firstly of the enterprises inimpact that these enterprises produce. Still, the portfolio set up for investment funding,in order to support the argument in favour secondly of the social fund itself and thirdlyof social enterprise development, very often of the EU instrument of funds for socialquantitative data are the only sources used enterprises as whole.(e.g. the social enterprise sector employsaround 11 million people in EU countries; it This striving after one measurement methodrepresents one in four European businesses that would answer all efforts to capture socialand it stands for €100 billion in future added value was mentioned in 2009, ininvestment potential). the European Commission’s Beyond GDP initiative,15 which aimed to develop indicatorsAs emphasised in the Social Business that could be as clear and appealing as GDP ,Initiative, a social enterprise is an operator but more inclusive of environmental and socialin the social economy whose main objective aspects of progress. In 2010, a commission ledis to have a social impact rather than make by Nobel Prize winner Mr Joseph E. Stiglitz wasa profit for its owners or shareholders: it is created by the French government with the aimindeed important not only to recognise the of collecting best practices related to measuringquantitative and purely economic impacts economic performance and social progress.1613 COM(2011) 682, 25.10.201114 COM(2011) 862, 7.12.201115 http://www.beyond-gdp.eu16 http://www.stiglitz-sen-fitoussi.fr/documents/rapport_anglais.pdf 71
  • 72. In recent decades, several initiatives and other outcomes approaches, SROI alsoprojects (also financed through the EU contributes to managing and improvingEQUAL Initiative), have developed different services, and it is especially useful if thetechniques and instruments for measuring funders of an activity require outcomessocial added value and social impact. information in financial terms. SROI isThese include Social Accounting, different from many other approaches inSocial Reporting, quality standards like that it values outcomes by using financialEFQM (European Framework for Quality proxies, so that they can be added up andManagement) and SROI (Social Return compared to the investment made. While theon Investment). Even though a detailed ratio is important, SROI is about much moredescription of all these techniques would than this. It presents a story of change in abe beyond the scope of this chapter, it is compelling way and provides information toimportant to describe briefly at least two of help organisations maximise their outcomes.these techniques since they are at the basisof most (though not all) of the best examples Most of the best examples presented in thispresented here. chapter are based on these two techniques. All these techniques, practices andSocial Accounting attempts to broaden instruments represent very positivethe scope of accounting (and particularly developments, even though fundamentalof financial accounting) by introducing progress is still needed in order to find a wayadditional elements into accounting to measure social added value that is fit forprocesses. It starts from the idea that purpose.enterprises in general have impacts onand interactions with local society which Social value and social impact are widelygo beyond what is normally measured in perceived as being difficult to account for:financial terms by standard accounting. the concept of ‘social value or impact’ refersTherefore, accounting processes should to the idea that goods or services can havetake into account social aspects and not an additional dimension or value (besidesonly financial ones, so that companies can the economic one), which represents abe better accountable for the effects they benefit for society, but one which is notproduce. To do this, the technique involves normally captured by purely financiala larger number of stakeholders of any given measurement. This is what economists callcompany – the classes of people affected a ‘positive externality’.by its activities – to assess the results theyobtain (positive or negative). Through the The work carried out under the Measuringelaboration of specific indicators, social social added value strand of the BFSEaccounting allows for the monitoring of the project has tackled this difficulty and madesocial performance of enterprises as well a useful contribution towards theas the comparison and benchmarking of introduction of practices which couldresults with other enterprises. Hence, social account for social value. The case inaccounting represents a very good model favour of the introduction of such practicesfor linking economic profit to social (and at different levels (certainly regional andenvironmental) objectives. national but also European) relies on a number of arguments.SROI – social return on investment – isa way to measure and account for the The first key aspect is access to capital andvalue created by any type of activity. Like funding for social enterprises. The Commission72
  • 73. acknowledges in various recent publications in order to improve organisationalthat “above all, social enterprises have processes and management. At the samedifficulties finding funding”17. Among the causes time, evaluation processes allow socialof this difficulty, the Commission finds that enterprises to show their identity as well asinvestors often believe that social businesses to improve and affirm the distinctiveare too risky to invest in. Yet perceived risk value of their actions. With the aimdecreases as potential benefits increases. It of making the use of social valueis therefore clear that a system which could measurement tools accessible to socialmeasure the social value produced by social enterprises, a number of initiatives,enterprises may well have a very positive interventions and policies could be put ininfluence in terms of a change of attitude place at different levels.among investors (both private and public).A second important aspect concerns theevaluation of social value in the context of 2. Good practicesthe transformations currently occurring innational and international welfare systems. Social added value can be measured inIn a context of rising needs and, at the same different ways, and different methods andtime, scarce resources, it becomes a priority concepts exist to do this. In this section, ato improve the efficiency and effectiveness few common approaches are mentioned andof public authorities’ and social enterprises’ exemplified via concrete examples of good use.decisions. Effective social added valuemeasures may provide better conditions The BFSE Toolfor the development of welfare systems,nationally and internationally. The Measuring Social Added Value strand of the BFSE network (led by the LombardyFurthermore, there are several reasons for Region) has elaborated a practical tool to bethe introduction of evaluation practices of used by potential investors (and particularlysocial value within public systems. Firstly public authorities) as a support in decidingthere is a need for strong governance in funding allocation. The work done isthe implementation of inclusion policies and based on wide-ranging desk research,intervention programmes. Secondly, there questionnaires filled in by project partners,is a need to contain the costs of inclusion and in-depth interviews with selectedpolicies and services, as well as the need to stakeholders such as social enterprises andjustify choices and investments on the basis credit institutions.of the results achieved. Thirdly, there is aneed to guarantee quality levels in service With the aim of building a tool which isdelivery, by measuring and comparing comprehensive but at the same timeperformance and efficiency as well as costs. relatively simple, the model was created with a high degree of modularity. ModularityTogether with macro-level aspects of means that the tool is highly flexible andmeasuring social added value, it is that it gives the opportunity of not using allimportant to consider micro-level aspects. of its parts while still obtaining coherent andIn fact, social enterprises strongly need significant results. The first key element ofto monitor performance and curb costs17 e.g. COM(2011) 682 & COM(2011) 862 73
  • 74. modularity is its structure. The evaluation projects and interventions and not to entiresystem introduced in the model is in fact enterprises. This approach has beenmade up of two parts which can be used taken in order to promote the applicationjointly or separately, as needs dictate. of SROI techniques to a large number of organisations in the context of funding allocation.Part 1 – Evaluation of the overall socialadded value produced by social enterprises The tool (parts 1 and 2 together) has a relatively complex structure which takesThis part of the tool was built largely on the into account as many dimensions of socialbasis of the social accounting reporting enterprises’ activity as possible – theirexperiences developed in recent years at quality, social responsibility, interventions,national and international levels. It contains projects and the impact they produce.objective indicators covering 11 dimensions On the one hand, by applying the entire(e.g. economic and financial stability, profes- evaluation model, investors (public orsional resources, equal opportunities, socio- private) obtain a complete and detailedoccupational integration, environmental picture of the social added value and thesustainability) to help grasp and quantify impacts produced by each social enterpriseaspects of the social value added produced examined. On the other hand, to allow for aby social enterprises. Thus, it is a cost- simplified and prompt implementation, theeffective way of getting a broad picture of measurement tool also has a high degree ofthe status and development of aspects that flexibility which allows it be adapted to local,are assumed to lead to social added value. regional or national contexts. It providesThe tool’s structure allows for a partial use investors with a “European Toolkit” fromof this part – i.e. the selection of dimensions which each investor, public authority etc. canand indicators to suit specific needs and extract one or more tools relating to specifichence build specific measurement tools. economic contexts, sectors and types ofThis aspect is very important since it social enterprises.contributes to the modularity (and henceapplicability) of the model. Users can adapt For more information or to download the toolthe model to their own circumstances. it is possible to visit the network website: www.socialeconomy.plPart 2 – Evaluation of the social added valueproduced by single projects or interventions The TESSEA project in the Czech RepublicThe BFSE tool suggests the use of SROI(social return on investment) techniques The TESSEA project (Thematic Networkto evaluate the social impact generated for the Development of Social Economy)by projects and interventions. SROI is a was funded through the Czech Republic’svery flexible tool in itself since it allows for Human Resources and Employmentspecific applications, which could be more operational programme and activelyor less complex or detailed depending on involved a wide range of experts who directlythe context, project or enterprise in which contributed to the work. Its general objectiveit is applied. Project stakeholders asked was to support the development of socialfor a simple, user-friendly and accessible entrepreneurship in the Czech Republic bytool, so the tool applies SROI only to single raising awareness of the importance and74
  • 75. role of the social economy and by carrying classify specific indicators related to socialout a number of studies on key issues. enterprises and more specifically to work integration social enterprises (WISEs).The work of the project was divided into As a consequence, two sets of indicatorsthematic strands which covered all the key (one for social enterprises generally and theissues such as definitions, finance and other for WISEs) were elaborated togethercommunication. One strand dealt with with specific verification means and specificmeasuring social value, and one of its main weights. Because of time and resourceactivities was an SROI (social return on constraints, the project has not been able toinvestment) study of a Czech social firm. test the model, even though TESSEA expertsThe results were manifold. On one hand, the plan to fundraise for its piloting. However,work was very useful in terms of shedding the principles elaborated by the project havelight on the limitations and bottlenecks been already been adopted at national levelwhich hinder the development and use of by a foundation working on microcredit formeasurement tools (and particularly SROI the social economy.tools) in the Czech Republic. On the otherhand, it has allowed a model to be built to While further work in the field is surelyassess social enterprises against a number needed in the Czech Republic, the TESSEAof principles and specific characteristics. project represents a cornerstone and aOn the basis of such principles, the project’s very good example of initiatives whichexperts have been able to identify and can promote and gradually favour the 75
  • 76. introduction of measurement tools in public for solutions and actions to support. DAINadministrations procedures within EU conducted collaborative development andMember States. exchange between different partners across the EU in order to pilot an appropriate process. The SROI approach has helped toThe SOUL and DAIN projects define an intervention which can be used to test SROI ideas in relation to collaborative,The Swedish ESF project SOUL (a Swedish international exchange and how it mightacronym for learning and development impact on practice. DAIN is using a standardwithin organisations in the social economy) SROI process of identifying and engagingtrained over 170 people from more than with stakeholders in order to establish the130 organisations in SROI. As a result, nature of their involvement, identifying thetwelve SROI analyses were finalised, actual impact of the invested ESF moneywhich gave the organisations studied an and ascribing values to different elements ofimportant insight into the consequences of the project.their work. Several of them have thereforechanged their processes to increase the http://www.dainproject.orgvalue they create, and also focused onoutcomes in their planning and follow-up.Another consequence is that by measuring The SEIF experience in the UKoutcomes, the organisations have affectedtheir main stakeholders, making them reflect An important UK example relates to theon their own personal development. In total, Social Enterprise Investment Fund (SEIF)the participants express the importance of initiated by the Department of Health in theusing a tool such as SROI since it focuses UK in 2007. The aim was to enhance theon the right aspects of the organisation. role of social enterprise in providing healthAnd since it is highly scalable, the and social care. Since then the SEIF hasorganisations can choose which parts to dig invested more than £ 80 million ( €100m) indeeper within, and what parts to use the sector. During 2011, the SROI Networkin a more overarching manner. was assigned the mission to work with 31 organisations that received funding duringhttp://www.sroi.se 2009/10 or 2010/11, to train them in SROI and conduct an SROI analysis of at leastIn the UK, several ESF projects have a part of each organisation. The amountdeveloped SROI or have been evaluated of investment that these organisations hadusing the SROI method. One example is gained ranged from £62,000 (€77,000) tothe DAIN project in the East Midlands, £3 million (€3.7m). The aim of the mission iswhich aims to develop, test and deliver to increase the understanding of the socialapproaches to challenge the digital divide added value created from the investments,and help widen participation in employment both from an investor and an investeeand learning across the region. The DAIN perspective. The work is still going on, butproject has developed an evaluation strategy it shows that the analysis adds value forwith a particular focus on SROI, especially investors by helping investees achieve betterrelating to the transnational dimension. SROI indicators for decision making, createsis of growing importance across Europe important information to base decisions onas a means to evidence impact and in thanks to access to real evidence ratherparticular influence policy-makers looking than anecdotal stories, and it demonstrates76
  • 77. the value of funds. From the investee corporate social responsibility. Together withperspective the initiative has for example the points of attention, the Flemish qualityhelped them to understand the value their system has determined five developmententerprise creates and who it creates it for, phases which organisations need to goestablish a framework for monitoring value through to achieve excellence: 1-focus onin the future, and become more accountable activities; 2-process-oriented; 3-integralto investors. involvement of employees, departments, teams etc.; 4-externally-oriented;The examples presented of the use of SROI 5-excellence. Of these, phase 2 (i.e.are just a fraction of all the good examples process-oriented) represents the minimumavailable from the EU countries where threshold.measuring social added value is being usedand tested nowadays. It is worth noting that The assessment tool promotesthe use of the SROI concept is spreading improvement: it invites organisations notquite fast across Europe. Additionally, only to guarantee minimum quality but alsothe CSI (Centre for Social Investment) at to optimise quality (to this end coachingHeidelberg University is currently doing a is provided both during and after theSROI meta-study that might provide some assessment). The quality assessments areinteresting input on impact assessment carried out by the ESF agency through visitsfor the proposal on European Social and interviews which assess organisation-Entrepreneurship Funds.18 wide quality (not single projects) in order to verify whether ESF funding was wellhttp://www.thesocialinvestmentbusiness.org/ invested.our-funds/seif/ The Flanders ESF Agency has also applied this very useful tool to social enterprises. InA Belgian experience fact the Agency is currently implementingof quality assurance an ESF project on “quality management in the social economy” with the aim ofThe ESF Managing Authority in Flanders professionalising the sector. The projecthas elaborated a specific tool for quality is in its second and final year and hasassessment of Flemish enterprises so far assessed 166 social economyaccessing ESF funding. This tool is based organisations. Together with the generalon the EFQM (European Framework aim of verifying the use of ESF funding, thisfor Quality Management) and is a self- project has two further objectives: to drawdeveloped quality growth model. The model up an up-to-date inventory of the strengths/takes into account nine main areas within weaknesses/opportunities/threats for thewhich it has identified 22 points of attention whole sector from a quality point of view,which need to be deeply investigated during and to draft recommendations for bothorganisation-wide quality assessment. social enterprises and national and localThe points of attention include financial policy-makers in relation to the furtherand organisational aspects (e.g. financial development of the sector.management, control of the key processesand governance structure) but they also http://www.esf-agentschap.betouch on more social issues such as Erik Conings – erik.conings@esf.vlaanderen.be18 https://www.csi.uni-heidelberg.de/SROI/ 77
  • 78. A Polish experience of social Once the model was drafted, the university carried out a pilot action to test it by sendingvalue measurement social enterprises an on-line questionnaire which asked them to provide all relevantIn Poland, the Kraków University of data for the indicators. The results fromEconomics has drafted and tested a tool each enterprise were compared to theto measure social impact which looked at average results of all the social enterprisesthree aspects: social value added, social participating to the pilot.credibility and economic credibility. The aimof the tool was to assess and measure the This experience was the very first attemptsocial value produced by the organisations’ to measure social added value in Poland.processes. To carry out this assessment, In most cases it showed that the Polishthe university drafted a set of indicators social economy is generally sceptical of the(specific to the Polish context) related to idea of measuring social value. Most socialthree main areas: social inclusion (including enterprises do not seem to understandwork inclusion), social capital and local the benefits that they would gain fromcommunity. In each of these areas the demonstrating the added value that theirindicators selected were also converted into work brings to local society. The work hasone general and cumulative index in order therefore been very useful in paving theto create a single evaluation parameter. way for additional activities and initiatives to be carried out with a bottom-up approach,The index of the social value added was involving social enterprises directly sosupplemented with three parallel indexes as to increase a sense of ownership ofthat perform complementary and control the activities themselves but also of theirfunctions: economic value added, social objectives, results and benefits.credibility and economic credibility. http://swd.msap.uek.krakow.plThe main features of the model elaboratedinclude:1. Multidimensionality – assessing both the economic the social spheres. 3. Recommendations2. Comprehensiveness – social enterprises It is indeed possible to use the work carried are assessed using both objective out within the Measuring social added value measures and recommendations strand of BFSE, together with other best (subjective approach). examples in Europe, to draw up a number3. Flexibility – the model can be used in of key conclusions and recommendations. different ways. Social enterprises are These recommendations are provided from assessed using individual indicators, sub- a stakeholder perspective: indices or the second order indices – the operator can choose his preferred way of evaluating. European Institutions4 Comparability – social enterprises are evaluated by comparing their 1. Social value measurement tools could be achievements with the achievements of a practice to be emphasised within the reference entities (i.e. similar in terms of Social Business Initiative promoted by the key features). European Commission.78
  • 79. 2. The European Commission should  effective evaluation systems assessing promote social value as an EU horizontal social value. issue in Structural Funds implementation (similarly to equal opportunities, 5. The Commission proposal for the 2014-  environment etc.). 2020 ESF regulation19 states that “at least 20% of the ESF allocation should beESF managing authorities and dedicated to promoting social inclusionother public authorities and combating poverty”. Managing Authorities could use tools for measuring3. In addition to evaluation systems already  social added value to implement, used in ESF operational programmes, verify and demonstrate the effective Managing Authorities could introduce implementation of this new rule. elements of social added value measure­ ment. Such elements introduced in ESF Social enterprises operational programmes would be based on the specific regional and national 6. Social enterprises can use social value  needs. measurement tools to improve the quality and effectiveness of their services, to4.  anaging Authorities and public M promote stakeholders’ engagement and authorities could invest resources from to better communicate their business to their ESF operational programmes to public and private investors. fund training and capacity building so as to endow public authorities with19 (COM(2011) 607 fin/2) 79
  • 80. 80
  • 81. Socially responsible public procurementand public social partnership1. The policy context “to recruit long-term job-seekers or to and current issues implement training measures for the unemployed or young persons, to comply in substance with the provisions of the basicPublic procurement is one of the key areas International Labour Organisation (ILO)currently under revision at European Union Conventions, assuming that such provisionslevel. The Europe 2020 strategy identified have not been implemented in national law,procurement as one of the market-based and to recruit more handicapped personsinstruments to achieve smart, sustainable than are required under national legislation”. 22and inclusive growth, and this reform is oneof the 12 ‘levers of growth’ included in the These so called social clauses have allowedSingle Market Act, with the aim of for a certain degree of experimentation in the field of social economy policy – but with “underpinning a balanced policy which uneven results. fosters demand for environmentally sustainable, socially responsible and Therefore, during the current process of innovative goods, services and works.” 20 reform, many voices, coming from public authorities as well as the social economy,The reform aims to make public procurement have called for the introduction in the newsimpler and more flexible, to open up package of some elements to foster SRPP .access to SMEs, and also to clarify the useof purchasing to achieve other policy goals. Among these efforts, some have beenThe Commission explicitly aims to ensure addressed at clarifying the social criteria mentioned in the regulations, so as to “greater consideration for social and elevate them to the same level as the environmental criteria such as life-cycle environmental ones, for example the costs or the integration of vulnerable and disadvantaged persons.” 21 United Kingdom response to the European Commission Green paper states:The directives currently in force date from “We also consider that the Directives should2004 when they replaced the 1993 package. provide clarification and clearer guidanceThey allow for companies to be required hire on how social and environmental issuesdisabled people or to subcontract to sheltered can be taken into account, how they canworkshops. Furthermore, they allow for the help to achieve value for money, and in whatintroduction in the contract performance circumstances they may be consideredconditions of social criteria such as relevant to the subject matter.” 2320 http://ec.europa.eu/internal_market/smact/docs/20110413-communication_en.pdf21 Press release IP/11/1580, 20 Dec 201122 Directive 2004/18/EC, recital 3323 http://www.scotland.gov.uk/Topics/Government/Procurement/policy/procurecombenefits 81
  • 82. Another relevant issue, but less successful for 1. significant differences betweenthe time being, is the introduction of elements legislations applicable to the socialto achieve greater coherence between public economy on the European level and inprocurement and broader public authority individual Member States;policy, especially at the local level, for 2. “gold plating” (going beyond whatexample the community benefit clause, as is strictly necessary) and problemsproposed by some UK public actors. with taking full advantage of public procurement directives;Finally, most actors (including the European 3. the directives’ failure to emphasiseCommission) have in view the need to adequately the possibility to apply socialincrease the participation of the social and environmental criteria in publiceconomy in public procurement, although procurement, or to use the innovativethey may not always agree on the best way potential of social services.26to achieve it. As a result, the current proposalfocuses on further enhancing “the element of As we have pointed out, the current reformquality in awarding contracts”24, leaving the proposal makes some improvements,other issues mentioned unresolved. clarifying the social considerations to be included in public procurement and wideningNevertheless, the European Commission the room for the application of a specialhas made significant efforts to foster socially regime for social services – for example, theyresponsible public procurement, such as the may include the services provided for by tradeBuying Social guide, included in the 2007-13 unions (see Chapter I, Art 74 ff and Annex XVI).Progress Programme25. Here we find thefollowing definition: Though the reform package has moved in the right direction to allow for a public procurement system that is more capable “SRPP means procurement operations that take into account one or more of (…) social of taking into consideration the potential of considerations.” the social economy as a partner in achieving multifaceted goals (both economic and social),and the statement that: there is still room for improvement. This is also the direction shown in the recent Commission communication Towards a Job-rich Recovery: “SRPP can be a powerful tool both for advancing sustainable development and for achieving the EU’s (and Member States’) “Social economy actors and social social objectives.” enterprises are important drivers of inclusive job creation and social innovation and require specific support, including throughFurthermore, EC documents identify a public procurement and access to finance”number of inherent deficiencies in theexisting mechanism. The Social BusinessInitiative points to the following major barriers Such an improvement may be facilitatedto the participation of social economy by the advance in social added value forbusinesses in public procurement: example. This will permit organisations24 Although the Social Business Initiative also calls for working conditions to be taken into account in the contractperformance conditions, little change has been made on this issue in the proposed directive.25 http://ec.europa.eu/social/main.jsp?langId=en&catId=89&newsId=97826 COM(2011) 682 Social Business Initiative, op. cit. p. 1282
  • 83. in the social economy other than thoseaddressed by the directive (mainly WISEs) Why should we fosterto play a more relevant role in SRPP . SRPP with the improvedThe potential is clear in certain areas ofpublic policy (different from Social Public participation of the socialProcurement addressed in Chapter I, Art 74 economy?ff of the reform proposal) such as housing,agriculture & fishing, culture, tourism, rural Social economy policy offers numerousdevelopment, etc. examples of fruitful cooperation between public authorities and social economyCurrently, there seem to be some problems enterprises, and some of the mostin assessing social added value though successful stories are based on the leadingit is commonly agreed that there is often role of coherent strategies, including publica ‘social added value’ to be gained from procurement. Many of the astonishingorganising the delivery of public services achievements in advancing local welfare,through social economy enterprises, which producing social innovations and creatingstems from their participative and locally- more inclusive societies through therooted nature. The benefits that they provide use of social cooperatives in Italy areextend beyond the simple delivery of a related to the strategic use of thresholds,service into the quality of the social relations reserved contracts, supporting measures,that are implicit in its quality. For example co-production and a whole set of policyin the area of care the recently finished measures at the disposal of local authorities.EU-funded project PRE.VIO has produced In recent years the growing interest inresults showing that the cooperative form making better use of public procurement foris better prepared to address issues such strategic local development has highlightedas hidden violence against the elderly, the role of the social economy in theseburn-out, and the participation of workers, policies. European Union initiatives andother stakeholders and the extended cohesion funds have played a key part incommunity. Furthermore, the quality of a many of them, as the PASE project and thesocial care service cannot be measured above-mentioned Buying Social guide show.purely in terms of hours of work; it alsodepends on the client having some degree In the current situation SRPP could be evenof power – for instance being able to choose more relevant, given the need to makehis or her carer – and also on the sense of a more efficient use of the public fundsengagement of the carer – as expressed in available. Social economy organisationsthe quality of their terms of employment and can demonstrate that they are trustworthythe rate of labour turnover. Other experience partners with a long history of delivering insuggests that co-operative and participative local development. Their ability to combineforms of organisation excel in these areas.27 social goals with economic sustainability, their capacity to mobilise endogenous resources and to reinvest in their communities, and their record of producing significant employment impacts (from the point of view of both quality and quantity) with less investment than27 See for example the case of Sunderland Home Care Associates – Sharing the Caring Model – athttp://ec.europa.eu/employment_social/equal_consolidated/activities/etg2.html 83
  • 84. other types of companies recommend their  increasing the capability and the capacityparticipation in the strategic use of SRPP. of the third sector to bid for and win public sector contracts.Public funds are intended for the good anddevelopment of territorial units. Success This is a very straightforward example of anor failure is dependent upon: a) physical integrated approach to develop an SRPPfactors: the infrastructure, urban fabric, etc. strategy. It has put in place the followingand b) the strengths and weaknesses of measures:territorial communities: the quality of civicsociety, social capital, governance, social (1) Increasing public sector understandingintegration, initiatives and self-help. of the third sector:Social economy is about investing social Developing Markets for Third Sectorcapital in development. Its key features are Suppliers. This a service to assist thedemocratic governance, reinvestment of public sector involved in commissioning andsurpluses in achieving the common goal procurement to:and restrictions on the rewards paid toanonymous (external) capital.  improve their understanding of third sector suppliers and thereby openMore in line with ESF we could also signal markets;some other elements which play a role  strengthen understanding and use ofin giving the social economy enhanced Community Benefits in Procurement; andrelevance in SRPP:  encourage routine use of co-production(a) it helps the absorption of the Structural in the design of public services and Funds; support the development of Public-Social(b) it increases the sustainability of projects Partnerships. by obliging promoters to take a more businesslike approach; Public-Social Partnerships (PSPs). This(c) it provides a framework for resilient a local system which involves third sector partnership; organisations in all three stages of public(d) it mobilises all actors available; services (design, implementation and(e) it structures and furthers the assessment). The Scottish government accountability and participation of the published guidance on developing and running local population. Public-Social Partnerships in July 2011. Community Benefits in Procurement. This2. Good practices is another initiative in the area of enhanced participation of Social Enterprises in PublicOpening Markets – Scottish Procurement or Socially Responsible PublicIntegrated Socially Responsible Procurement.Public Procurement PlanIn 2011 the Scottish government decided to Supported Businesses in Scotland. This isset up a programme with two clear aims: a programme to extend reserved contracts for Supported Businesses (Sheltered increasing public sector understanding of Workshops). the third sector; and84
  • 85. (2) Increasing the capability and capacity of for cooperation between institutions dealing Scotland’s enterprising third sector to bid with individual components of an action for and win public sector contracts: plan. They set out the tasks and subtasks, the initiators of the tasks and subtasks, theJust Enterprise Programme. The Scottish affiliates, and financing of the project. Tasksgovernment has put in place a new national are assigned to partners from differentprogramme to provide business support sectors and the diversification of fundingfor enterprising third sector organisations sources is specified. Each part of the Actionand this includes a range of activity for Plan includes a preliminary analysis of theorganisations with the greatest potential problem and proposed solutions, which areto grow and develop sustainably – that included in a table containing the detailedcould be in terms of income, employment description of the steps, implementers, costor contracts secured. This service offers and time.four main themes, and organisations mayregister for programmes on business In 2007, the VVSG (Association of Flemishsupport, procurement, start-up and learning Towns and Municipalities) developed a& development. set of guidelines on ‘social tendering’ that supports local authorities in the integrationSupplier development. Scotland’s of social criteria in their tendering policy.Supplier Development Programme (SDP)is a local authority partnership programme Ghent’s social services department put theestablished to offer small and medium- cleaning of its windows out to tender. In thesized enterprises (SMEs) the opportunity to specifications, it included an employmentgrow and diversify through procurement. It performance contract condition. For thehelps SMEs to improve their performance duration of the agreement, a†semi- orin winning contracts with public sector unskilled worker will be employed full-organisations. Scottish government funding time as a window cleaner. Major successenables third sector organisations to benefit factors were good cooperation betweenfrom the programme no matter where the training and employment centre linkedthey are based. The programme offers to Ghent’s social services department, andinformation, support and training events to the strong commitment of the buyer andhelp unravel the tendering process. the policy-makers. The choice of a shortage occupation in the selection of the contracthttp://www.scotland.gov.uk/Topics/ led to the project’s success.People/15300/enterprising-organisation/Opening-Markets By using a similar employment clause, the city of Kortrijk was able to link theFlemish Action plan for sustainable outsourcing of minor repair works to socialpublic procurement 28 employment.These plans shall specify in great detail therules for implementing sustainable public The social services department in Beringenprocurement. They give detailed instructions included in its specifications for the supplyfor planning and implementing public of bread to an old age people’s home thatcontracts in various sectors, and a schedule the position of baker/supplier should go to28 ESF Agency Flanders questionnaire 85
  • 86. a student in part-time education. Beringen The “Piani di Zona” is the local tool whichalso used the social preference principle favours the reorganisation, empowerment andand reserved a contract for the construction networking of services and interventions soof a gate to shut off a former local road for a that they are programmed and implementedcompany from the social economy”.29 as an integrated system. It is the standard tool to manage the process of adapting services,Criteria for sustainable procurement must providing more opportunities to people,comply with generally applicable national families and disadvantaged persons. It is aand Community law, in particular: strengthened tool of collaboration between different subjects in public and private social1 the principle of non-discrimination: the sector. Its strengthening comes from both its participation of bidders from other member contents and its development. states cannot be blocked or obstructed by national regulations. A very important element introduced2 the principle of equal treatment: all bidders by law 328/00 is the process known have the right to a fair assessment and as “co-planning”. This element is an equal opportunities to make an offer interesting procedure. In fact, this method based on the principle of competition. of awarding a contract for a social welfare service introduces the possibility for3 the principle of transparency: measures of social enterprises to implement a plan a public body must be logical, reasonable with objectives related to the territory and and transparent. designed within synergies established with local services.The ‘institutional coordination’In 2009 the Flemish department of work is generally made up of: an Institutionaland social economy set up pilots using the Coordinator, the Piani di Zona Coordinator,‘new style contract performance clauses’ all the mayors involved in the plan, theregarding construction and maintenance of President or the representatives of Mayors’social housing infrastructure.30 Consortiums (where existing), a manager from the Local Health Authority (‘ASL’),Illustrative co-planning of local representatives of Mountain Communities (ifactivities, Italy relevant to the Piani di Zona) and delegates from the third sector.The framework law 328/2000 provides fora specific planning method to create anintegrated system of interventions and social Małopolska and Andalusian Pactsservices, define minimum welfare levels, for Social Economy (Spain andensure the use of the services by families Poland)and people in general, and underline thecontributions that third sector bodies (as Andalusia was the first region in thedefined by article 1 of the law itself) will provide. world to sign a tripartite document with The law also identifies three specific tools a comprehensive and detailed policyto accompany and promote the whole programme for the development of socialprocess: one at national, one at regional and economy back in 2002. Since then, twoone at local level. new versions have been signed (in 200629 ESF Agency Flanders questionnaire30 ibid.86
  • 87. and 2011) and it has also inspired similar company has recreational facilities for itspolicy instruments in other contexts such employees. More importantly, both Krakówas the Małopolska Pact (2008). There are residents and association’s clients benefitdifferences mainly due to the different political from that. Siemacha offers services to thecontexts but both are based on a partnership local population at competitive process,approach and develop a set of concrete and uses the surplus to cross-subsidisemeasures. In the first case, the signatories services for disadvantaged children. Inare the regional government (with extensive this way it reinvests 2 million zlotys a yearpolitical competencies), the trade unions and (10% of sales). It relies on a public-privatethe recognised unique representative of the partnership, and is supported not only bywhole social economy in Andalusia (CEPES- local authorities but by ArcelorMittal,AndalucÌa). In the second it is signed by a owners of the Nowa Huta steelworks.platform of support for social enterprise, with The city of Kraków provided the building,more than 30 institutions. and the association also bids competitively for council contracts.The assessments of the pacts done by actors This link with the city gives the association(or, in the case of Andalusia, also by the legitimacy.regional parliament) have shown their benefitsin terms of policy development, mobilisation of Specialised unit introducingresources, awareness raising, etc. socially responsible procurement practices, FranceIn the former case, it is worth noting thatAndalusia is now the leading region in The authorities of the town of AngersSpain in almost all figures related to social appointed a specialist legal adviser oneconomy (25% of all social economy environmental procurement. His task was tocompanies, 20% of employment, budget promote socially responsible procurementallocated by the government, level of co- practices with a view to introducing themproduction of policy, etc.). city-wide. The adviser delivered an internal training course for his colleagues, which raised awareness as well as transmittingCom-Com Zone, Poland technical and legal information. During the training, needs were identified, tenderThe Com-Com Zone Development Centre documents prepared and announced,is a multifunctional sports and recreation tenders analysed and evaluated in closefacility of about 6,000 m2 in Nowa Huta collaboration with enterprises.(Kraków), run by the Siemacha Association,which specialises in the social integration of Angers considers public works and servicesyoung people in difficulties. The “Com-Com to be priority sectors for socially responsibleZone” Development Centre is a good, but procurement, especially the constructionunfortunately infrequent, example of joint and maintenance of public buildings, roadsbusiness and social activity and effective and green spaces.public-social-private partnership. It is awin-win situation: the city has completed thisrecreational project which is now managedby a good operator, Siemacha Associationhas a reliable source of income, while the 87
  • 88. Two tools for sustainable policy or strategy level. The experience ofprocurement: a prioritisation the Andalusian and Małopolska Pacts andmethodology and a flexible the British Compacts should be drawn on.framework 2. It is necessary to develop and disseminate in Member States a contractThe UK’s Sustainable Procurement Task methodology which specifies the roleForce (SPTF), in charge of social and of social economy in territorial policyenvironmental protection issues, was implementation.established in May 2005 and published Ensure that the entire social economyits Action Plan on July 2006. The Action sector contributes to the development,Plan analysed the cost-effectiveness social integration and quality of life ofof sustainable public procurement, every resident. The exclusion of variousrecommended specific actions in six broad parts of the sector by uncoordinatedareas and provided two tools. The first, a regulations should be avoided. Periodicprioritisation methodology, is a risk analysis- assessments should be made ofbased tool which helps agencies and institu- social economy participation in publictions to focus their efforts and resources. procurement, and appropriate measuresRather than relying solely on expenditure should be put in place to guaranteedata, this methodology enables users to access to public contracts on a basisconsider environmental and socio-economic of equality. Implementation of the newrisks, the ability to influence suppliers and public procurement directive should beexisting sustainable growth improvement monitored.capabilities. The second, a flexible public Social clauses and SRPP in generalprocurement framework, helps users to should be inserted in a coherent andrecognise the steps that should be taken strategic policy framework with the above-regarding organisations and processes mentioned objectives. This strategy,in order to improve public procurement in line with the objective of enhancingprocedures and ensure their sustainability. quality in public procurement, should include instruments such as exemptions for low-value contracts, appropriate3. Recommendations use of thresholds, reserved contracts, community benefit clauses, etc. National1. Strategic partnerships have demonstrated legislation, for example clauses excluding their role in the development of coherent certain categories of bidders, should be strategies including SRPP as shown , reviewed. Guidelines on this should be by solutions such as regional contracts published. (including the French Contrat de Plan or Contrat de Projet). The local partnership 3. The links between the social economy effect should be strengthened by and public procurement should be preparing a methodology for strategic monitored. An evidence system should partnerships between public and social be created and the EC should include a parties. Partner cooperation between monitoring system in the reform proposal. public and non-governmental sectors should develop the forms and qualities of 4. Promoting the assessment of project sustainable cooperation on the national (not only product) life cycles into SRPP:88
  • 89. although this tool, included in the reform (PSP), drawing on the lessons of public- proposal, seems geared towards the private partnerships (PPPs). use of environmental consideration, it can also serve the introduction of 6.  romote the use of competitive dialogue P social considerations. Thus, with the and any other instruments that allow the launching of new projects, establishing social economy to play a proactive role support units and contracting should be in the initiation of the process. Another associated with responsibility for their instrument with the same objective could future (continuation), product life cycle be the introduction of a procedure similar and evaluation of these parameters. This to the Italian “private initiative” for PPP should be the matter of evaluation and/or (which enables a private entity to initiate, measurement. under specific terms and conditions, the procedure of PPP formation, if the public5. The EC should develop a multiannual  entity fails to take action), or the American programme to develop a model for a “unsolicited proposal” procedure. single-purpose public-social partnership 89
  • 90. 90
  • 91. State aids and social servicesof general interest1. The policy context internal market, across various guidelines and frameworks and current issues  To revise, streamline and possibly consolidate state aid guidelines to makeThe issue of state aids and SSGIs is a “hot” them consistent with those commontopic at European level. The Europe 2020 principles (first, the guidelines ongrowth strategy recognises the role of state regional aid, research & developmentaid for growth and its capacity and innovation, environmental aid, risk capital and broadband; followed by other “to actively and positively contribute to the guidelines) Europe 2020 objectives by prompting and supporting initiatives for more innovative, efficient and greener technologies, while  To revise the block exemption regulation facilitating access to public support for and the Council enabling regulation (and, investment, risk capital and funding for possibly, the de minimis regulation) research and development”.31  To clarify and better explain the notion ofOn 8 May 2012, the Commission set out an state aidambitious state aid reform programme.32Modernised state aid control should facilitate  To modernise the procedural regulationthe treatment of aid which is well designed, with regard to complaint-handling andtargeted at identified market failures and market information tools.objectives of common interest, and leastdistortive (“good aid”). This shall ensure thatpublic support stimulates innovation, green 1.1 The European Social Fundtechnologies, human capital development, and state aidavoids environmental harm and ultimatelypromotes growth, employment and ESF Managing Authorities have theEU competitiveness. Such aid will best responsibility to ensure that all operationscontribute to growth when it targets a market comply with state aid rules. Council regulationfailure and thereby complements, not 1260/99 art. 29 s.3 and s.4 require that statereplaces, private spending. aid rules are applied when resources from the ESF are granted.The Commission proposals include: Since resources from the ESF are considered To identify common principles for state resources they may constitute state aid. assessing the compatibility of aid with the31 Commission Communication “Europe 2020 – a strategy for smart, sustainable and inclusive growth”, COM(2010) 2020 final, 3.3.2010, p 20.31 Commission Communication “EU State Aid Modernisation (SAM) “, COM(2012) 209 final, 8.05.2012 91
  • 92. Making a proper assessment of the state regardless the legal form and the way ofaid issues is becoming an increasingly financing of the entity’.important and frequent aspect of policy-making right across government. Failing to If an entity is not profit-oriented, state aidtake proper account of the state aid rules rules will apply as long as it competes withcan have major implications for the delivery companies that are profit-oriented.of government policies, including stopping ascheme from being implemented, damaging The fact that the activity in question is termedthe overall objectives of the policy or, in ‘social’ is not of itself enough for it to avoidthe worst case, requiring funds paid under being regarded as an ‘economic activity’.a scheme to be recovered. However, an The activity will be considered economic ifover-cautious approach to state aid can it is provided in a market environment. Thelead to unnecessary delays in policies being economic nature of certain activities canimplemented, or to sub-optimal policy- therefore differ from one Member State tomaking. It is therefore important to consider another.state aid issues properly before policies areimplemented. 3. Selectivity State aid must be selective and affect theTo decide whether ESF funding can be balance between certain undertakings andconsidered state aid, the following four their competitors.criteria should be met: Selectivity is also satisfied if only part of the1. Transfer of state resources territory of a Member State is considered.ESF grants are considered state resources,so the first criterion is satisfied. Even if it Since some of the ESF programmes are onis not the public authority itself that grants a regional basis this criterion is also met inthe aid, for example the grants are given by these cases.private or public intermediate bodies, it isstill considered as a state resource. 4. Effect on competition and trade The criterion is already fulfilled if an aidSecond, the financial transfer can take has a potential effect on competition andmany forms, for example loan guarantees, trade between Member States. If it can beaccelerated depreciation allowances or shown that the beneficiary is involved in ancapital injections. economic activity and that it operates in a market in which there is trade between2. Economic advantage Member States, it is sufficient for it to beThe aid should constitute an economic considered to have an effect on competitionadvantage that the undertaking would and trade.not have received in the normal course ofbusiness. If these four criteria are met simultaneously, the aid, grant, etc. is considered state aidThe term undertaking is to be interpreted in and the scheme should comply with statea very broad sense. Following the Court of aid rules and be provided as compatible aid.Justice it is ‘any entity which exercises anactivity of an economic nature and which The Structural Funds regulation setsoffers goods and services on the market, out generally applicable ceilings on the92
  • 93. contributions of the funds as a proportionof eligible project costs. The state aid 1.3 Compatible state aidceilings may differ from the ceilings set in The Commission has declared a range ofthe Structural Funds. The state aid ceilings aid measures to be compatible with thetake precedence over the ceilings in the state aid regulation.Structural Funds when one of the four criteriais fulfilled. 1.  he General Block Exemption T Regulation 34 This gives automatic approval for a range1.2 The social economy and of aid measures. When applying the GBER state aid the Member States is relieved of notifying the Commission. The regulation authorisesSocial economy organisations in the EU aid in favour of SMEs, research, innovation,Member States take different legal forms regional development, training, employmentand undertake different activities. and risk capital. It also authorises environmental protection aid, aid measuresAccording to the European definition of the promoting entrepreneurship, such as aidsocial economy, approved in March 200233, for young innovative businesses, aid forit is already clear that social economy newly-created small businesses in assistedorganisations are active in different sectors regions, and measures tackling problemsand that they can be economic in nature. – such as difficulties in access to financeSocial economy organisations generally – faced by female entrepreneurs. Theseact in the market and therefore can be measures should allow Member States toconsidered ‘undertakings’ as defined above. focus their state resources on aid that will beIf a particular social economy organisation is of real benefit to job creation.an undertaking then Member States shouldbe aware that state aid rules apply when 2.  e minimis 35 Dproviding funds to it. The fact that an activity The de minimis rule was introduced in orderof a social economy organisation is termed to exempt small amounts of aid. It sets a‘social’ is not in itself enough for it to avoid ceiling below which aid is deemed not tobeing regarded as an ‘economic activity’. fall within the scope of Article 107(1) TFEU and is therefore exempt from the notificationESF Managing Authorities should therefore requirement laid down in Article 108(3) TFEU.always check if funding from the ESF can Aid of no more than €200,000 granted over abe considered state aid when dealing with period of three years is not regarded as statesocial economy organisations. aid within the meaning of Article 107(1) TFEU.33 “The organisations of the social economy are economic and social actors active in all sectors. They are characterised principally by their aimsand by their distinctive form of entrepreneurship. The social economy includes organisations such as cooperatives, mutual societies, associationsand foundations. These enterprises are particularly active in certain fields such as social protection, social services, health, banking, insurance,agricultural production, consumer affairs, associative work, craft trades, housing, neighbourhood services,education and training, culture, sport and leisure activities”. - Charter of Social Economy, published in 2002 byCEP-CMAF (European Standing Conference of Co-operatives, Mutual Societies, Associations and Foundations)the former name of Social Economy Europe.34 Commission Regulation (EC) No 800/2008 of 6 August 2008 declaring certain categories of aid compatible withthe common market in application of Article 87 and 88 of the Treaty (General Block Exemption Regulation)35 Commission Regulation (EC) No 1998/2006 of 15 December 2006 on the application of Articles 87 and 88 of the Treaty to de minimis aid 93
  • 94. 3.  ervices of General Economic S However for the beneficiary de minimis Interest 36 poses several problems. First of all theThe ‘SGEI Package’ defines the conditions beneficiary cannot predict the amount ofunder which state aid in the form of public aid they will get over a three-year period.service compensation can be considered Secondly the de minimis aid can come fromcompatible with the EU rules. multiple donors which makes it more difficult to manage. And last but not least if there isIn its communication of 20 December an infringement the aid will be withdrawn.201137 the Commission clarifies the basicprinciples of the state aid regulation, The GBER is not fully compatible withallowing an insight into its interpretation of the reality in which social economythe application of the Altmark criteria. If the organisations operate. The GBER does notaid complies with these Altmark criteria the fit all activities performed by social economyaid will not be considered state aid. organisations. For example guidance of disadvantaged workers cannot be providedThe decision states the conditions under under the GBER, only wage subsidies.which services of general economic interest Guidance however is a very important partare exempt from notification and are of the reintegration process into the labourcompatible with the internal market. SGEIs market.meeting social needs as regards health andlong-term care, childcare, access to and The definition of disadvantaged workersreintegration into the labour market, social as laid out in the GBER does not fit allhousing and the care and social inclusion vulnerable groups targeted by socialof vulnerable groups are within the scope of economy organisations, for example addictsthe decision as well. and ex-offenders.The principles set out in the framework apply The intensity and the eligible period doto public service compensation only in so not always reflect the needs of the mostfar as it constitutes state aid not covered vulnerable groups.by the decision of 12 December 2011.Such compensation is subject to the prior The new SGEI package clarifies a lot ofnotification requirement under Article 108(3) issues raised by the former communications,of the Treaty. The framework spells out the but for ESF Managing Authorities and ESFconditions under which such state aid can operational programmes the SGEI packagebe found compatible with the internal market is too difficult and not suited to the smallerpursuant to Article 106(2) of the Treaty. scale of the projectsPractice in the Member States shows thatthe de minimis rule is widely used becauseit is easy, flexible and the Member Statesdo not have to notify the aid being given.36 Communication from the Commission on the application of the European Union State aid rules to compensation granted for the provision ofservices of general economic interest – Official Journal C8, 11.01.2012, p. 4-1437 Commission Decision of 20 December 2011 on the application of Article 106(2) of the Treaty on the Functioning of the European Union to Stateaid in the form of public service compensation granted to certain undertakings entrusted with the operation of services of general economic inter-est - Official Journal L7, 11.01.2012, pp. 3-10d94
  • 95. 2. Good practices Flanders does not yet have any experience of SSGIs. However specifically for the social economy sector a new regulationFlemish ESF Agency – state aid is being worked out on the basis of thechecklist SSGI package.The Flemish ESF Managing Authority takes If none of the above options is suitable,a two-step approach to the control of state a notification will be considered.aid. The quality handbook sets out a specificprocedure for the control of state aid at two (2) On the project level Flanders has fourlevels: (1) during the preparation of a call for possible moments in time at which state aidproposals; and (2) at project level. will be considered:(1) When drafting a call for proposals the 1. Evaluation of the project: GBER: checkfour criteria for state aid are checked: that the ‘maximum allowable aid amount’ and the ‘aid intensity ceiling’ are not transfer of state resources exceeded. De minimis: check if the economic advantage beneficiaries have signed the ‘statement’. selectivity 2. At the start-up meeting: the beneficiaries effect on competition and trade will receive information through a presentation on the GBER or de minimis.If the four criteria are met simultaneously weare dealing with state aid and therefore the 3. Desk control: GBER: check that thecall should comply with the state aid rules. ‘maximum allowable aid amount’ and the ‘aid intensity ceiling’ are not exceeded. DeThe first step then is to see if the call can be minimis: check if the beneficiaries haveplaced under the general block exemption signed the ‘statement’.rules. The call should in that case specifyunder which regulation it operates. 4. Audit: GBER: check if the beneficiary is not combining multiple sources ofIf the call does not meet the criteria of the finance for the same costs and as a resultGBER de minimis, a public procurement exceeding the limits. De minimis: checkprocedure and SSGIs are considered: for other sources of de minimis aid and check if the ceiling is not exceeded In the first case the beneficiary has to sign a statement undertaking not to exceed the limits of de minimis and in the contract with the managing authority an article is 3. Recommendations written on de minimis. Also the call has to refer to de minimis so that the beneficiary knows beforehand that the financial aid is 1. Recognition of the social considered as de minimis aid. economy In the case of a public procurement The European Commission should accept procedure the market will be consulted the specific role of the social economy according to the regulation in force. and the added value of social economy 95
  • 96. enterprises and act accordingly when 3. Increasing the intensity and the period reforming state aid regulations. This starts of the aid for activities targeted towith assessing the impact certain decisions disadvantaged and disabled workershave on social economy enterprises. 4. Services of general2. Risk-based analysis  economic interest (SGEIs) of state aid The experience of local, regional andFor Member States to take a risk-based national governments with the applicationapproach to state aid and not use de minimis of the Altmark criteria is rather limited.as a solution for all types of support to It would be useful to support the exchange‘undertakings’, there should be specific training of practices throughout Europe and set upof ESF Managing Authorities in the matter of a network of practitioners. The Commissionstate aid. Only then can Managing Authorities could provide examples of how thereally assess the impact of a scheme. compensation should be calculated, etc.3. General block exemption Since it is unclear which control mechanisms the European Commission will use, it is regulation (GBER) difficult for Member States to assess the risk of engaging in SGEIs.For the social economy to have a maximumimpact the GBER should better reflect its When calculating compensation, not onlyreality. This means: economic criteria should be taken into account, but social criteria as well.1. Adjusting the definition of disadvantaged and  disabled persons to better reflect the people The Commission should clarify the benefitting from social economy activities; interrelationship between SGEIs and the procurement rules.2. Including guidance, social innovation etc.  as eligible activities;96
  • 97. 97
  • 98. List of abbreviations BFSE Better future of social economy CSR Corporate Social Responsibility DP Development Partnership EC European Commission EES European Employment Strategy ERDF European Regional Development Fund ESF European Social Fund GBER General Block Exemption Regulation GDP Gross Domestic Product MA Managing Authority MS Member State NGO Non-governmental organisation NRP National Reform Programme OP Operational Programme PPP Public Private Partnership PSP Public Social Partnership SROI Social Return on Investment SRPP Socially Responsible Public Procurement SGEI Services of General Economic Interest SSGI Social Services of General Interest WISE Work Integration Social Enterprise98
  • 99. Published by:Ministry of Regional DevelopmentDepartment for European Social Fund Management2/4 Wspolna Street00-926 Warsawwww.efs.gov.plDesign and printing:CMC Group sp. z o.o.www.cmc-group.plbiuro@cmc-group.plText: Samuel Barco Serrano, Gordon Hahn, Gianluca PastorelliContributors: Sven Bartilsson, Bianca Buijs, Dorotea Daniele, Daniela Gatti, Mikołaj Gurdała,Krzysztof Herbst, Marek Jetmar, Toby Johnson, Floriana NappiniPhotos provided by: FISE (fot. Mikołaj Grynberg, Magda Huszcza, Tomasz Ślęzak), Zorka Projekt,Pracownia Rzeczy Różnych SYNAPSIS, Le Mat, Siemacha, MSAP Toby Johnson ,The contents of this publication do not necessarily reflect the positionor opinion of the European Commission.This publication is free. It was co-financed with European Union funds by the European Social Fund. 99
  • 100. A better future Results of the network for better future of social economy www.socialeconomy.pl100