Social Enterprise An International Literature Review 2006

Social Enterprise
An International Literature Review

SBS/SEnU
A report submitted by GHK
in association with
Toby Johnson
Roger Spear
March 2006
526 Fulham Road, London SW6 5NR

Tel: 020 7471 8000; Fax: 020 7736 0784
www.ghkint.com
Social Enterprise International Literature Review
DISCLAIMER
The views expressed in this report are those of the authors and do not necessarily reflect those
of the Small Business Service or the Government
Document Control
Document International Literature Review
Job No. J1837
Prepared by Nick Henry, Toby Johnson, Roger Spear
Checked by James Medhurst
Date March 2006

EXECUTIVE SUMMARY
1. The Social Enterprise Unit (SEnU)1 commissioned this international review of social
enterprise policy as part of its on-going process of policy development.
2. The overarching aim of this international review is to identify lessons and conclusions
from policy and strategy on social enterprise in a range of countries, which could inform
future UK policy and strategy towards the social enterprise sector.
3. The review first examines social enterprise policy and strategy at the European Union
(EU) level, before examining social enterprise policy in detail in four member states
(France, Germany, Italy and Poland) and in the USA. A detailed Glossary completes the
document. National case studies were chosen to reflect the development of a range of
organisational models of social enterprise that exist across Europe; the USA was chosen
because of the characteristically strong business and commercial culture of the sector.
International Definitions of Social Enterprise
4. The international review highlights the lack of any universally agreed definition of social
enterprise, although a broader agreement exists on a group of organisations (co-
operatives, associations, mutuals, Not for Profits, as well as social enterprises) that
comprise the ‘social economy’.
5. At European level, the work of EMES2 provides a useful framework for definition with its
identification of four economic and five social criteria; within these criteria the most
distinctive aspect of the UK definition of social enterprise is the limited emphasis placed
on democratic control (criteria 7) and the extent of citizen initiative (criteria 6) and
participatory character (criteria 8).
Distinctive National Social Enterprise Sectors
6. The social enterprise sectors of different countries remain distinctive. The development
of the sector in different countries reflects the history of each nation’s political economy –
including the balance drawn between the respective roles of the private, public and ‘third
sector’. In turn, this balance is replicated both in regulatory and institutional structures
within which the sector works and expectations as to the rightful role of social enterprise
in the economy (for example, compare USA with France).
7. Nevertheless, this sectoral distinctiveness is characterised more by i) (dominant)

organisational form and ii) level and type of engagement with government structures than
by difference in social objectives with social enterprises delivering common services and
activities across nations.
1
Tasked with being the focal point for Government support for social enterprise in the UK, SEnU
sits within the Small Business Service section of the Department for Trade and Industry
(http://www.sbs.gov.uk/sbsgov/action/layer?r.l1=7000000412&r.s=tl&topicId=7000000634)
2
The European Research Network EMES owes its name to its first research programme, on "the
emergence of social enterprises in Europe". It studies socio-economic entities and is currently
the best-established European research network in the field (http://www.emes.net). See also
Glossary – ‘EMES’. The criteria are listed in full on page 3.
8. In common with the development of the Community Interest Company (CIC) in the UK,
the country case studies highlight continued efforts to facilitate innovation, cohesion,
partnership and social enterprise sector development across ‘families’ of organisations
through legislative and regulatory change; the aim is to achieve pathways of adaptation
rather than multiple legal forms (see, for example, the French SCIC example in
comparison to Germany’s more rigid legal structures).
Policy Goals and Implementation for the Social Enterprise Sector
9. The diversity of social enterprise sectors across the country case studies highlight how
different organisational models are pertinent to the achievement of different policy goals
– and that there is no single ‘right or wrong’ policy framework.
10. Whilst recognising the multiple interests and objectives of social enterprise and the social
economy more widely, the case studies reveal a tradition and a prevailing interest in the
use of social enterprise as a means of integrating disadvantaged members of the
community into work (for example, long term unemployed or disabled people, see also
OECD 19993); and as a means of augmenting public service delivery, especially in the
areas of health and social care (although the spread of services is extensive).
11. Additionally, the review suggests a framework for policy development which reflects
nation states’ own policy interests in social enterprise; requiring policy makers to identify
the expected or desired contribution that social enterprise can make to policy goals.
Within the UK, this process can be seen in the identification of three major drivers for
policy development: economic development, social cohesion and public service delivery.
12. Within the broader understanding of social enterprise at international level, the UK policy
emphasis and interest in social enterprise as part of the process of economic
development - including an expectation that such enterprises will be increasingly
financially self-sustaining through traded activities and contribute to regional and national
economic competitiveness - extends the understanding of the economic outcomes
expected of the sector, compared to the other countries reviewed.
13. The process of creating an enabling environment for sector development is facilitated
where a vision of the sector as long term, joined-up and contributing fully to the diversity
of a plural economy has been articulated (see the UK in comparison to temporary work
schemes and/or prohibition on trading in markets in other European countries).
14. In many instances, social enterprises meet public policy aims through their activities in
areas of market failure. A number of country case studies highlight recognition of this
value of the sector, and the costs of addressing market failure, through the use of
economic instruments to support the sector in the delivery of policy goals (for example,
vouchers and tax breaks). Financial sustainability does not appear to be a primary goal
or expectation, but the need to compensate social enterprise for additional costs (for
example, in relation to the integration of disadvantaged groups in the workforce) is
recognised.
15. The review evidence suggests that regional structures can both connect with local
activity and maintain strategic understanding of the breadth and depth of the sector and
its contribution to policy goals. Within the UK this supports the strengthened role of the
3
OECD (1999) Social Enterprises OECD, Paris
Devolved Administrations and Regional Development Agencies in assisting the

development of the sector.
16. A number of the case studies (Italy, European policy) and experience within the UK
highlight that sector development is enhanced through the development of an
autonomous support structure for the sector.
17. The Table below summarises distinguishing features drawn from each case study
undertaken within this international review.
Distinguishing Features
European • Different definitions of social enterprise can be identified across Europe

Policy (p.3) • A diversity of organisational models exist, and continue to develop, within the sector
• Organisational diversity provides a fertile context for learning across nation states
• Sector development is facilitated by evolving regional structures and powers
• Autonomous organisational structures have empowered sector development
France (p.17) • Cohesion within the sector has been encouraged

• Cohesion has been facilitated through simple legal frameworks
• Positive examples exist of the integration of provider and user voices within
enterprises
• The social benefits delivered by social enterprises have been recognised through
economic instruments for the sector
Germany (p.27) • Policy frameworks have created barriers to the development of self-sufficient
enterprises
• Organisational innovation has been inhibited by legal and administrative structures
• Development has been inhibited by the absence of a long term and joined-up vision
for the sector
Italy (p.36) • Explicit recognition exists of the benefits of social enterprise

• The sector has retained and benefited from organisational flexibility in its
development
• Numerous examples of multi-stakeholder structures exist within the sector
• Consortia are used as a tool to create sectoral structures and deliver services
• Tax relief is used to reflect social benefits delivered by the sector
• A braided business support system exists in support of the sector
Poland (p.45) • European networks are being used to develop the sector
• Social enterprise is identified as a component of the plural economy
• Regional initiatives are being used to stimulate the growth of the sector
• Public finance is available for sector development
USA (p.54) • Corporate philanthropy acts as a sector development tool

• A proportionately larger Not-for-Profit Sector in comparison to European economies
• Increasing social entrepreneurship is a driver of sector development
• A long tradition, and range, of rural co-operatives
• Government support for employee ownership as a model of social enterprise
THE POLICY EXPERIENCE OF THE CASE STUDY COUNTRIES

18. The international review has revealed considerable similarity between the experience
and development of the social enterprise sector and associated policies in the UK with
that taking place in Europe and the USA. Following a comment on the main policy
difference identified, we briefly summarise these below.
The Main Policy Difference

19. There is little difference in the broad strategic issues facing the social enterprise sector in
the different countries reviewed. Following the Review of the UK Social Enterprise
Strategy (SES)4, the most significant difference lies in the strong emphasis given by the
SES to the promotion and support for enterprise and entrepreneurship, with attendant
emphasis on the economic benefits that might be achieved. In the UK, this leads to a
particular interest in the extent of financial self sufficiency of the sector and a desire to
increase traded income generated by the sector.
20. This emphasis contrasts with the focus and approach taken in the countries reviewed
which retain a broader perspective on the ‘social economy’ and on the full range of sector
criteria as defined by the EMES Network. In turn, this places relative emphasis on the
benefits of a plurality of approach to services and of organisational structure and
operation; and relative emphasis on the benefits to members of participation as well as
the services and outcomes provided.
The Main Policy Similarities

21. With the exception of the particular policy emphasis described above, the case studies
reveal a number of areas of sector development and policy response which echo that
undertaken in the UK.
• Complexity and Integration – Continuing debates over what constitutes a social

enterprise and the position of such organisations within the broader idea of social
economy are apparent in all of the cases. These debates have not resulted in a
barrier to the development of the sector across countries (however defined in detail),
and the integration of the sector within broader social and economic activity including
commercial and public sector actors. Indeed, the plurality of approach and
organisation which leads to potential issues of definition is one of the sector’s
strengths.
• Flexibility and Plurality of Organisational Form – The case studies demonstrate a

wide range and experience of organisations considered to be social enterprise, and
that this range is itself a key asset in allowing the sector to develop and to meet
divergent interests and objectives. In the context of the SES, this plurality is reflected
in the scope to stratify different types of social enterprise with different policy
interests.
• Regional Agencies and Networks – The evolving focus of social enterprise policy
in the UK at the regional level (Devolved Administrations and Regional Development
Agencies), reflecting the optimisation of strategic ‘top-down’ policy perspectives with
more detailed ‘bottom-up’ implementation, is mirrored in the case studies. This partly
4
GHK (2005) A Review of the UK Social Enterprise Strategy, SEnU/SBS; available at:
http://www.sbs.gov.uk/SBS_Gov_files/socialenterprise/GHK-Review-Full-Report.pdf
reflects, in the case of EU countries, the influence of European funding programmes

for economic development and social cohesion, delivered through regional agencies.
This coalescence on the regional scale provides new opportunities for networking
between policy actors and sector representatives. For example, this may substitute
(at least in part) for the reduced role of the EQUAL Programme in facilitating cross
border exchange of experience and good practice.
• Autonomous Sector Organisations – The case studies generally confirm the

benefit to sector development of forming and operating autonomous organisations
capable of representing the social enterprise sector in wider public policy making.
This representation assists to maintain a discrete focus to the sector and to lever
resources, market opportunities and roles within public service delivery. It also
assists in the promotion of a ‘braided’ or blended policy response between specialist
sector advice and mainstream business services, and ensures the avoidance of a
‘one size fits all’ policy response based on a general small firm policy.
• The Use of Consortia or Collective Responses – Increased networking between

social enterprises, partly facilitated by sector organisations, and the emerging needs
and opportunities for the sector has given rise to the use of consortia as a means of
ensuring the necessary breadth and scale of service offer, in competition with
mainstream public and private sector suppliers. These responses demonstrate a
growing level of market awareness and sophistication in progressing the interests
and approaches of the sector.
• Quantification of Benefits and Impacts – The case studies have to varying

degrees highlighted the escalating issue of specification of the nature of economic,
social (especially) and environmental benefits provided by the sector; in addition to
the benefits that flow from participation in and engagement of different approaches
and responses to economic, social and environmental needs. This quantification is
partly a reflection of the need to formalise the role of the sector in responding to
market failure, and as a basis for allowing economic instruments and incentives
directed at the sector.
CONTENTS
EXECUTIVE SUMMARY..................................................................................................................
THE POLICY EXPERIENCE OF THE CASE STUDY COUNTRIES.............................................6
1 INTRODUCTION.........................................................................................................................1
1.1 Review Aims and Objectives....................................................................................................1
1.2 Selection of Countries for Study...............................................................................................2
1.3 Structure of the Review............................................................................................................2
2 THE EUROPEAN CONTEXT FOR SOCIAL ENTERPRISE.......................................................3
2.1 A European Definition of Social Enterprise...............................................................................3
2.2 The Emergence of an EU Policy Context for Social Enterprise................................................4
2.3 Current EU Policy for Social Enterprise....................................................................................6
2.4 Social Enterprise Sector Representation at European level...................................................14
2.5 Potential Lessons for the UK..................................................................................................14
3 FRANCE: THE SOCIAL AND SOLIDARITY ECONOMY.........................................................17
3.1 Defining Social Enterprise in France......................................................................................17
3.2 Government and the Social Enterprise Sector........................................................................19
3.3 Policy and Sector Examples...................................................................................................23
4 GERMANY: ASSOCIATIVE AND CO-OPERATIVE FAMILIES...............................................27
4.1 Defining Social Enterprise in Germany...................................................................................27
5 ITALY: SOCIAL CO-OPERATIVES..........................................................................................36
5.1 Defining Social Enterprise in Italy...........................................................................................36
6 POLAND: ASSOCIATIONS AND FOUNDATIONS..................................................................45
6.1 Defining Social Enterprise in Poland......................................................................................45
7 USA: BUSINESS-ORIENTATED AND COMMERCIAL............................................................54
7.1 Defining Social Enterprise in the USA....................................................................................54
7.2 Government and Social Enterprise.........................................................................................59

8 CONCLUSIONS: LESSONS FOR THE DEVELOPMENT OF THE UK SOCIAL ENTERPRISE
SECTOR.......................................................................................................................................63
8.1 Defining the social enterprise sector.......................................................................................64
8.2 Framework for development...................................................................................................65
8.3 Supporting the Social Enterprise Sector: policy rationales.....................................................67
GLOSSARY................................................................................................................................69
Social Enterprise: International Literature Review
1 INTRODUCTION
1 The Social Enterprise Unit (SEnU)5 commissioned this international review of

social enterprise policy as part of its on-going process of policy development.
The review first examines social enterprise policy and strategy at the European
Union (EU) level, before examining social enterprise policy in detail in four
member states (France, Germany, Italy and Poland) and in the USA.
2 This work builds on a previous international review of social enterprise

undertaken by the Organisation for Economic Co-operation and Development
(OECD) in 19996. In attempting to make comparisons across countries, the
OECD study recognised the difficulty of defining the concept of ‘social enterprise’
and that ‘there is no universal, commonly accepted definition of social
enterprises’ (OECD, 1999, p.9). The study did, however, refer to the then
ongoing work on definition by EMES7 that is detailed later in this report.
3 The OECD limited their study to organisations in fifteen OECD member countries
that had engaged in the reintegration of individuals back into the labour market
whilst deriving income from the production of goods and services. Understood as
a particular form of social enterprise (intermediate labour market organisations),
and representing only one strand of the ‘social economy’ or ‘third sector’, the
report was careful to acknowledge the contribution of the social economy as
much more than one of ‘back-to-work’ activity alone.
4 This review provides further clarification of the international usage of the term
‘social enterprise’, discusses the now broader contribution to economic and
social life that social enterprise activity makes (beyond that of labour market
activity alone) and details coverage in additional countries.
1.1 Review Aims and Objectives

5 The overarching aim of the review was to identify lessons and conclusions from
policy and strategy on social enterprise in a range of countries, which could
inform future UK policy and strategy towards the social enterprise sector.
6 The objectives of this review were:
 To provide an overview of government policy and strategy towards social

enterprise in a range of countries
 For EU countries, to provide an overview of the overarching EU policy

context for social enterprise, primarily typified by EQUAL
5
Tasked with being the focal point for Government support for social enterprise in the UK, SEnU
sits within the Small Business Service section of the Department for Trade and Industry
6
OECD (1999) Social Enterprises OECD, Paris (http://www.oecd.org).
7
The EMES Network owes its name to its first research programme, on "the emergence of
social enterprises in Europe". It studies socio-economic entities and is currently the best-
established European research network in the field (http://www.emes.net). See also Glossary –
‘EMES’
1
 To detail the various rationales for government intervention in supporting

social enterprise and the related evidence base, especially in relation to the
impacts of social enterprise
 To detail the approaches taken to support social enterprise, with reference to

key examples of policy intervention. Where possible, specific mention of the
role of national and regional government and agencies should be made in
the national political context
 To draw out lessons for UK policy and strategy on how governments can
strengthen and promote social enterprise
1.2 Selection of Countries for Study

7 The project’s Steering Group selected five countries for study. The rationale for
each choice is summarised in Table 1.1 below.
Table 1.1: Selected Countries
Country Key Characteristic Key Interest

France Social and Solidarity Economy comprising Collaboration and hybridisation across
range of models of social enterprise models of social enterprise
Germany Strongly defined role of co-operatives Moves to broaden the activities of co-
delivering self-help within society in contrast to operatives and create a more
welfare organisations performing a public duty enterprise-oriented sector
Italy Relatively high profile position of co-operatives Process by which sector has achieved
in economy and society position
Poland Largest New Member State; rebuilding social Development of social enterprise
enterprise activity activity within current European
framework
USA ‘Not-for-Profit’ sector Business and commercial culture of
the sector
1.3 Structure of the Review

8 The review begins with an overview of the European context for social enterprise.
Subsequently, each of the chosen member states is taken as a national case
study before moving beyond European examples to that of the USA. The final
section provides a summary of potential lessons and distinguishing features for
UK policy and strategy, detailing ways in which governments might strengthen
and further promote social enterprise activity.
2
2 THE EUROPEAN CONTEXT FOR SOCIAL

ENTERPRISE
2.1 A European Definition of Social Enterprise8

9 The term ‘social enterprise’ is not formally defined, or universally accepted, at
European Union level. Rather, a number of different terms are used, of which the
most common is ‘social economy’. Thus the title, Social Economy Unit, was given
to a dedicated unit established by the European Commission in 1989, whose
portfolio was broadly equivalent to ‘social enterprise’.9
10 The European research network, EMES, has proposed a definition of social

enterprise which is based on four economic and five social criteria, and provides
a useful framework for differentiating definitions of social enterprise across
Europe:
Economic criteria:
1) continuous activity of the production and/or sale of goods and services

(rather than predominantly advisory or grant-giving functions);
2) a high level of autonomy: social enterprises are created voluntarily by

groups of citizens and are managed by them, and not directly or indirectly by
public authorities or private companies, even if they may benefit from grants
and donations. Their shareholders have the right to participate (‘voice’) and
to leave the organisation (‘exit’);
3) a significant economic risk: the financial viability of social enterprises

depends on the efforts of their members, who have the responsibility of
ensuring adequate financial resources, unlike most public institutions;
4) social enterprises’ activities require a minimum number of paid workers,

although, like traditional non-profit organisations, social enterprises may
combine financial and non-financial resources, voluntary and paid work.
Social criteria:
5) an explicit aim of community benefit: one of the principal aims of social

enterprises is to serve the community or a specific group of people. To the
same end, they also promote a sense of social responsibility at local level;
8
Sources for this European overview include interviews with Girma Anuskeviciute and Apostolos
Ioakimidis, Enterprise DG
9
The unit was created within DG XXIII which was responsible for ‘Enterprise Policy, Distributive
Trades, Tourism and Social Economy’. In 2000 it was subsumed into the Enterprise DG, in a
merger with DG III (Industry) and the Innovation Unit of DG XIII (Information Technology). See
also Glossary – ‘Social Economy Unit’
3
6) citizen initiative: social enterprises are the result of collective dynamics

involving people belonging to a community or to a group that shares a
certain need or aim. They must maintain this dimension in one form or
another;
7) decision making not based on capital ownership: this generally means

the principle of ‘one member, one vote’, or at least a voting power not based
on capital shares. Although capital owners in social enterprises play an
important role, decision-making rights are shared with the other
stakeholders;
8) participatory character, involving those affected by the activity: the

users of social enterprises’ services are represented and participate in their
structures. In many cases one of the objectives is to strengthen democracy
at local level through economic activity;
9) limited distribution of profit: social enterprises include organisations that

totally prohibit profit distribution as well as organisations such as co-
operatives, which may distribute their profit only to a limited degree, thus
avoiding profit maximising behaviour.
11 There are slight differences between the definitions used by the European
Commission and the UK government. The Commission’s definitions of both
social economy and social enterprise10 place more emphasis on the dimension of
democratic control (EMES criterion 7) than does the UK government’s definition
of social enterprise. Additionally, the Commission’s definition of the social
economy mentions the co-operative, mutual, association and foundation
‘families’11 along with social enterprises. It also mentions the principle of voluntary
and open membership in respect of the first three families. The Commission
defines social enterprises as:
 having a social and societal purpose combined with an entrepreneurial spirit
of the private sector
 reinvesting their surpluses to achieving a wider social or community objective
 being registered as private companies, as co-operatives, associations,
voluntary organizations, charities, or mutuals; some are unincorporated
12 The distinction between ‘social’ and ‘societal’ is not made explicit; it is however
believed that, drawing on the cognate French words, ‘social’ refers primarily to an
organisation’s internal relations between employee and employer, while ‘societal’
refers to its relations with non-members.
2.2 The Emergence of an EU Policy Context for Social Enterprise

13 The first strand of social enterprise policy development at an EU level occurred
within enterprise policy. On 16 February 1994, the Commission agreed a
Multiannual Programme (MAP) of work (1994-96) for co-operatives, mutual
10
http://europa.eu.int/comm/enterprise/entrepreneurship/coop/index.htm
11
Categories of organisations defined according to their operating principles and legal constitu-
tion, for instance co-operatives, mutuals, associations and foundations, are commonly known as
‘families’
4
societies, associations and foundations (collectively referred to as CMAF) in the

Community. It aimed to lay down the infrastructure necessary for the sector to
develop at European level, and to stimulate innovation and the transfer of
experience between the member states. Its priorities were:
 to take a horizontal12 approach to the sector, by carrying out studies on its
development and by establishing a consultative committee
 to support specific actions in four areas: encouraging transnational co-
operation in the search for new activities, improving information,
disseminating social innovation, and strengthening the role of the social
economy as a vehicle of EU policies
 to improve statistics, support training and research & development in the
sector
14 The work programme made significant progress on three European Statutes (for
the European Co-operative Society, European Mutual Society and European
Association), the first of which was adopted by the Council on 3 June 2002.13 It
improved statistics on the sector, and resulted in the creation of the Consultative
Committee for CMAF’s in the EU, a 66-member representative body for all three
families, which acted as a dialogue partner for EU institutions. It supported three
broad European pilot projects in finance (SOFICATRA14), information (ARIES)
and training (REEN) and around 300 smaller projects. It also resulted in the
communication on Promoting the Role of Voluntary Organisations and
Foundations in Europe15.
15 Subsequently, with the merger of the Directorate General for Enterprise Policy,
Distributive Trades, Tourism and Social Economy (DG XXIII) into the Enterprise
DG in 2000, enterprise policy for the social economy has been effectively
downgraded as it became one of the responsibilities of the unit for Small
Enterprises, Crafts, Co-operatives and Mutuals (Unit E3).
16 The second strand of EU policy development concerned with social enterprise

has occurred within employment policy in reaction to concern that job growth has
not matched economic growth. In the mid-1990s, the Commission’s Forward
Studies Unit (a unit attached directly to the Commission President) carried out
research on increasing the job intensiveness of economic growth and on defining
and exploiting the “new sources of jobs” which were springing up in 19 areas
related chiefly to personal services, improving the quality of life, culture and new
technologies. Within these activities, social economy organisations were heavily
involved in the realisation of subsequent “local development and employment
12
‘Horizontal’ is used to mean applying to all or the vast bulk of organisations under consider-
ation, rather than to just one part of them. It may be contrasted with ‘vertical’, which is applied to
organisations active in a particular activity, such as transport or care
13
See Glossary – ‘European Statutes’
14
A European consortium of cooperative financial institutions, originally set up with support from
the European Commission, to both invest directly in social economy initiatives and provide
strategic advice and assistance (www.soficatra.org)
15
COM (1997) 241 final of 6 June 1997.
See http://europa.eu.int/scadplus/leg/en/cha/c10714.htm
5
initiatives”.16 Thereafter, the Community Initiatives17 Adapt and Employment took

up this work, and this has continued in the current Community Initiative, EQUAL.
17 This work, supported by the European Social Fund, was paralleled from 1997 to
2001 by the Third System and Employment (TSE) pilot action. This ‘TSE’ action
supported and studied 81 projects, clustered in the social services, culture and
environment sectors. The final evaluation18 made the point that third system
organisations build social capital by enhancing trust relations and civic
engagement. It recommended that tax systems should recognise the fact that
they internalise social costs in this way, thus reducing public expenditure overall.
The reduced social costs that result from improved employability, for example,
could be recompensed by a transparent social payment. Public sector
contracting-out policies could also give due credit for the added value of third
system delivery, because if contract price is the only criterion, quality will be
sacrificed. It also emphasised the need for micro-credit and other community
development finance institutions.
18 The programme’s evaluators identified the following external barriers to the

sector’s development including:
 political preferences for market or state solutions, coupled with inadequate
social and fiscal policies, and inappropriate contracting procedures and legal
frameworks for third sector activity
 the lack of a “third system culture” and a cultural preference for bureaucratic
organisation of social services provision
19 The evaluators also identified internal barriers including:

 a lack of managerial and professional skills
 a lack of quality control systems for social services provided by private
organisations
 a lack of co-ordination, leading to price competition among service deliverers
 difficulty in accessing finance
 an inadequately developed system of second-level support organisations.
2.3 Current EU Policy for Social Enterprise

20 As mentioned earlier, there is no shared definition of social enterprise at the
European Union level and, therefore, this review is based on an understanding of
policy directed towards the different components of the social economy at EU
level. For example, policy towards co-operatives, which have clear economic
16
Local Development and Employment Initiatives: An Investigation in the European Union, SEC
564/95
17
Community Initiatives are funding streams which support innovative and transnational work as
a way of encouraging learning and gearing up the effectiveness of the European Social Fund
and European Regional Development Fund. See also Glossary – ‘Community Initiative’
18
The Third System, Employment and Local Development – Volume 1 – Synthesis Report, Mike
Campbell, Leeds Metropolitan University, August 1999
(http://europa.eu.int/comm/employment_social/empl_esf/3syst/index_en.htm)
6
functions in the single market, is better defined than that towards the voluntary
end of the spectrum.19
21 Nevertheless a policy towards social enterprises is slowly emerging. In his study

of EU policy toward the ‘third sector’, Jeremy Kendall 20 sums up the situation as
one of “sustained policy salience but contested policy substance… This does not
mean that such policy can be expected to be coherent, consistent or consensual,
but simply that the topic will stay alive, as a contested and fraught domain
characterised by competing interests and ideas.” Kendall notes that:
 definitions of the third sector are politically constructed, as they determine
who benefits from subsequent regulatory and funding decisions;
 most policy refers to the ‘vertical’21 policy field, though certain ‘horizontal’22
issues have emerged, such as legal status, citizenship, consultation, funding
and volunteering;
 the most important level of interaction between the third sector and
government is the local level, as this is where policy is delivered, not the
national or European;
22 Despite Kendall’s view, there is evidence of the development of a more joined-up

view, as illustrated by the treaties of Maastricht and Amsterdam, the Commission
communication on voluntary organisations, the management of the Structural
Funds and the governance debate.
23 The European Commission is currently exploring how the social economy at EU

level can:
 contribute to efficient competition in the markets
 provide potential for job creation and new forms of entrepreneurship and
employment
 meet new needs
 favour citizen participation and voluntary work
 enhance solidarity and cohesion
 contribute to the integration of the economies of the candidate countries.
19
A number of dimensions may be used in describing the wide range of organisations that make
up the social economy. One is the extent of mutuality: co-operatives primarily serve their
members’ interests, while charities serve the interests of non-members, that is disadvantaged
persons within the wider community. Another dimension is the degree of democratic participation
by members, and a third is the degree of financing that comes from trading as distinct from
government grant. As many social economy organisations have multiple stakeholders and
multiple sources of revenue, they exist on a continuum along these dimensions.
20
Kendall, Jeremy, Third Sector European Policy: Organisations Between Market and State, the
Policy Process and the EU, TSEP working paper no. 1, London, 2005. Study supported by the
EU Research and Technological Development Framework Programme.
21
Referring to a social issue such as poverty or employment
22
Cross-cutting issues that cover all organizations under consideration
7
24 For all these objectives social enterprise has a significant role and therefore is
receiving support from the European Union through the following:
 Multiannual Programme for Enterprise and Entrepreneurship
 European Employment Strategy
 EQUAL
 Regional policy
 Peer review of social inclusion policy among Member States
 Services of general interest
 Education and training policy
 Corporate social responsibility
 Research policy
 Education and training policy
2.3.1 Multiannual Programme for Enterprise and Entrepreneurship

25 The Enterprise and Industry DG is responsible for the regulatory environment for
business. The Social Economy Unit that formed part of DG XXIII until 2000 has
been succeeded by Unit ENTR/E3 – Crafts, small businesses, cooperatives and
mutuals; this is responsible principally for the co-operative and mutual families,
but not the associative and foundation ones.23 Supporting social enterprise forms
a small but defined part of the Multiannual Programme (MAP) for Enterprise and
Entrepreneurship, in particular for Small and Medium-sized Enterprises 2001-
2005. Action 2.2 aims to raise the visibility of social enterprises and the
understanding of their role, by publicising cases of good practice in promoting
them. A study will be commissioned to prepare a comparative overview of
regulation and promotion in participating countries and identify best practice
cases, which will then be presented at a conference.24
26 The MAP also contains an action to implement the European Co-operative

Statute. It is envisaged that six meetings of legal experts will be convened, to
resolve the remaining difficulties, especially in countries with little experience of
co-operative legislation. Member States have until 18 August 2006 to pass the
necessary implementing regulations.
27 Work is also ongoing with Eurostat and national statistical offices to establish
reliable statistical information through satellite accounting25.
23
http://europa.eu.int/comm/enterprise/entrepreneurship/coop/index.htm
24
http://europa.eu.int/comm/enterprise/enterprise_policy/mult_entr_programme/programme_200
1_2005.htm
25
The term ‘satellite account’ describes an economic impact account which is developed as a
‘satellite’ to the core set of National Accounts. While it is linked to that core set, it presents
information that is outside that currently provided in the National Accounts. This information
focuses on a particular aspect of the economy (i.e. the social economy) that otherwise could not
be easily measured. It also permits further linkages to additional information specific to the study
area.
8
2.3.2 European Employment Strategy (EES)

28 The social economy has repeatedly been identified as having significant job
creation potential, as in the conclusions of the spring council held in Brussels on
22-23 March 2005:
“It is essential to attract more people into the labour market.
This aim will be achieved by following the course of an active
employment policy, of making work pay and of measures to
reconcile working life and family life, including the
improvement of child care facilities; priority must also be given
to equal opportunities, active ageing strategies, encouraging
social integration and converting undeclared work into lawful
employment. New sources of jobs must also be developed in
services to individuals and businesses, in the social economy,
in town and country planning and environmental protection
and in new industrial occupations, partly through promotion of
local growth and employment partnerships”26
29 Despite this, as the strategy has changed over time, the social economy has
been progressively sidelined.27 Social economy is mentioned in the new
Integrated Guidelines for Growth and Jobs (2005-2008),28 which have subsumed
the employment guidelines, but the mention is not prominent. The following
guidelines are relevant to social enterprise, to varying degrees:
 Guideline 18 – to ensure inclusive labour markers for job-seekers and
disadvantaged people – notes that “special attention should be paid to
promoting the inclusion of disadvantaged people in the labour market
including through the expansion of social services and the social economy”,
(the only explicit use of this term);
 Guideline 9 – to create a more attractive business environment – covers the
assessment of economic, social and environmental impacts of regulation,
which implies the adoption of indicators of social added value such as the
New Economics Foundation and others have been developing;
 Guideline 8 – to ensure open and competitive markets – covers the removal
of regulatory barriers to competition (for instance through the European Co-
operative Statute or the UK’s Community Interest company), and the need to
retain high quality ‘services of general economic interest’ in the context of
liberalisation;
26
http://ue.eu.int/ueDocs/cms_Data/docs/pressData/en/ec/84335.pdf
27
In 2001-2, European Employment Guideline 11 invited Member States to “promote measures
to enhance the competitive development and job creation capacity of the social economy,
especially the provision of goods and services linked to needs not yet satisfied by the market,
and examine, with the aim reducing, any obstacles to such measures.” The 2003-4 guidelines
abolished the five pillars in favour of three “overarching and interrelated objectives” of full
employment, quality and productivity at work, and social cohesion and inclusion. Guideline 2
covered inclusive entrepreneurship, but the social economy was mentioned only as a tool for
creating jobs at local level, as part of reducing regional disparities (Guideline 10).
28
COM(2005) 141 final of 12 Apr 2005.
See http://europa.eu.int/growthandjobs/pdf/COM2005_141_en.pdf
9
 Guideline 10 – to promote a more entrepreneurial culture and create a

supportive environment for SMEs – covers entrepreneurship training.
Moreover, it says that “particular emphasis should be put on facilitating the
transfer of ownership”, which includes worker buyouts;
 Guideline 20 – to promote flexibility combined with employment security and
reduce labour market segmentation – covers “innovative and adaptable forms
of work organisation”, which includes for example the flexible working
conditions that care co-operatives are able to provide;
 Guideline 22 – to expand and improve investment in human capital – also
covers entrepreneurship training.
2.3.3 EQUAL
30 EQUAL is the Community Initiative to address inequality and discrimination in the
labour market. It is the most important source of support for social enterprise in
financial terms, but has not taken a lead on policy. This may be due to the fact
that many issues that concern the social economy do not fall strictly within the
realm of employment policy, but are the responsibility of various Directorates
General of the Commission.
31 Over the period 2002-2008, EQUAL is contributing around €300 million of

European Social Fund money (about 10% of its overall budget of €3 billion) to the
social economy. This figure is matched from national resources. Social economy
is one of nine themes. Fourteen of the 27 managing authorities29 have allocated
resources to the theme, which have been divided among 159 development
partnerships (DP’s)30 in the first round, and a further 268 development
partnerships in the second round. The largest programmes are found in Italy,
Poland, Germany and Great Britain. These development partnerships together
currently involve some 1,800 different organisations.
32 The Commission’s analysis of EQUAL identified the main clusters of activity

(groups of development partnerships) as in generic business support to social
enterprises, the development of labour market integration enterprises,
management and vocational skills training, neighbourhood services and rural
local development. Some development partnerships are addressing more
strategically important issues such as performance indicators (impact
measurement), public procurement and social franchising. Thus, many
development partnerships are addressing theoretical issues at the same time as
delivering pilot services, though a process of action research.
29
The 268 second round DP’s are supported by the following managing authorities, in
decreasing order: Italy (111 DP’s), Poland (27), Slovakia (25), France (24), Finland (13), Greece
(10), Great Britain (10), Czech Republic (9), Germany (9), Netherlands (9), Austria (8), Portugal
(7), Flanders (4) and Wallonia (2). Other managing authorities, especially Spain and Sweden,
are supporting a number of DP’s that are in the social economy in practice although classified in
another theme. Note that the UK and Belgium each have two managing authorities.
30
EQUAL supports the activity not of individual organisations, but of ‘Development Partnerships’
(DP’s). These typically comprise local authorities, other public sector organisations, social
enterprises, universities, employers’ organizations and private companies, united by a common
work programme to address EQUAL’s objectives. See also Glossary – ‘Development
Partnerships’
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33 In round two, 60% of the 268 development partnerships come from a business
development perspective, 22% from a desire to integrate disadvantaged
individuals, 13% tackle systemic issues and 5% take a local development
approach.
34 Some of the lessons to come out of the first round development partnerships, as
identified at European thematic workshops of development partnerships, are:
 that the European public procurement directives do not preclude public
authorities from inserting social criteria in calls for tender, and national
governments should implement the directives accordingly. This should
ensure that social enterprises have access to public markets;
 that measures of social value added should be developed;
 that in some countries legal frameworks need to be improved;
 that governments should have a department which is clearly responsible for
liaison with social enterprises, as well as good inter-ministerial liaison on this
topic;
 that social enterprises benefit from a ‘braided’ support structure combining
specialist with mainstream business support.
35 Though many development partnerships are addressing issues crossing out of

the traditional realm of employment policy, for instance public procurement or
quality and impact measurement, there has been some reluctance to make policy
proposals based on this work, or to support transnational platforms to develop
innovative ideas such as social franchising. However a unified way of proceeding
has now been agreed between the Commission and the Member States, and
there are opportunities within this to tackle key issues for social enterprises.
During 2006 and 2007, the Commission will grant-aid activities led by the
Member States. These are divided into five types:
 exchange events, to share good practice among practitioners
 peer reviews, to facilitate the systematic transfer of expertise between
countries
 learning seminars, to improve the internal working of EQUAL
 networks or communities of practice, to strengthen institutional capacity
 policy fora, to influence policy-makers at national and supranational level
36 These activities will fulfil the purposes of sharing ideas and results, validating
achievements, learning about the implementation of the EQUAL principles31,
networking with the wider professional community and transferring good practice.
37 Poland, Italy and Finland are acting as sponsors of a chain of three activities:
 an exchange event in Kraków in April 2006
31
Partnership, innovation, mainstreaming, transnational co-operation, gender mainstreaming
and learning from evaluation
(http://europa.eu.int/comm/employment_social/equal/about/index_en.cfm)
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1
 a policy forum in Italy in November 2006 on the social economy and local
development
 a policy forum in Finland in early 2007 to present lessons to policy-makers.
2.3.4 Regional Policy

38 Due to its involvement in the development of the new member states, the
Regional Policy DG leads on public-private partnerships. It also manages the
Interreg Community Initiative, which is scheduled to take on board the EQUAL
priorities in the 2007-2013 programming period. It is therefore likely to be an
important source of development support to the sector, including strands of
Interreg that cover the whole territory of the EU.
2.3.5 Peer Review of Social Inclusion Policy by Member States

39 Part of the action programme to combat social exclusion is a programme of peer
reviews of member state policy on inclusion32. Many of the reviews (for example,
Sweden and Finland) involve voluntary organisations and several have touched
on social enterprise. The Greek review in October 2005 examined a specific type
of social enterprise, the social co-operative for mentally ill people, KoiSPE.
2.3.6 Services of General Interest

40 A policy area of relevance to social enterprises is the directive on the
liberalisation of services, and the definition of ‘services of general interest’
(SGI’s).
41 The Commission published a green paper on SGI’s on 21 May 2003, received

some 300 comments, and published a white paper on 12 May 200433.
42 The Commission appears to work from the position that all services are
essentially economic and should be delivered in a framework of free competition
between enterprises across the EU. Social enterprise organisations point out that
while this might be the case for telecommunications and railways, social services
such as health and care provision cannot truly be said to fit this mould. They are
not typically delivered with making a profit in mind, but in order to meet a need.
They are labour intensive, their users are often vulnerable, and quality depends
very much on human relational factors. Continuity and local provision are often
preferable. There is not really a market here, and the nature of ‘economic activity’
is at issue. Furthermore, the principles of proportionality and subsidiarity should
be applied34.
32
At the Lisbon European Council in March 2000 the EU Member States committed themselves
to make a decisive impact on the eradication of poverty and social exclusion by 2010. To
achieve this, a new Open Method of Coordination (OMC) on social inclusion was agreed. Every
two years, Member States will present their priorities, efforts and commitments by means of a
National Action Plan (NAP) to integrate those threatened with social exclusion. Peer Reviews
are a key element of the OMC as they are mutual learning processes based on the systematic
evaluation of good practice and assessment of selected policies or institutional arrangements
coming under the various National Action Plans. See http://www.peer-review-social-inclusion.net
33
COM(2004) 374 final
34
See Glossary entries – Principle of proportionality and Principle of subsidiarity
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2
43 The Commission proposes to exclude only those SGI’s that are publicly financed,
but this is inadequate as charitable and social economy services would still be
covered. Options under consideration in the European Parliament are to explicitly
exclude health and social services from the scope of the services directive, or
more generally to exclude SGI’s that are not of an economic nature, but this latter
option would lead to even more legal uncertainty. A further option is to restrict the
application of the country of origin principle, and insist on host country standards
or harmonisation of standards.
44 Some Commission policy makers in this field believe that social enterprises have
a key role to play and should figure prominently in policy in this area.
2.3.7 Corporate Social Responsibility

45 This issue cross-cuts a range of directorates in the European Commission.
Social enterprises have been included in the multi-stakeholder forum that
reported in 2004, and are keen to assert their credentials.
2.3.8 Research Policy

46 Research on social enterprise has been sponsored fairly consistently under the
Framework Programmes (FPs) for Research and Technological Development
(the ‘Targeted Socio-Economic Research Programme’ under FP4, the key action
‘Improving the Socio-Economic Knowledge Base’ under FP5, and the ‘Citizens
and Governance in a Knowledge-Based Society’ priority under FP6). It is likely
that this funding stream will continue in the Seventh Framework Programme
under the ‘Social Sciences and Humanities’ rubric.35 Projects supported include
those of the EMES network36 on ‘work integration social enterprises’, childcare,
etc., and the Third Sector European Policy (TSEP) project led by Jeremy Kendall
at the London School of Economics. This is currently in its concluding phase and
revised papers will be posted on its website37 imminently. Two particularly
relevant ones analyse the process surrounding the European Associations
Statute and the Local Social Capital Pilots.
2.3.9 Education and Training Policy

47 The Leonardo da Vinci vocational skills action programme takes a peripheral
interest in social enterprise, and brought relevant projects together at a thematic
seminar on ‘Developing and Promoting Vocational Training for Social
Enterprises’ in July 2004.
2.3.10 Other Policy Areas

48 Internal market policy leads on the issue of public procurement, and competition
policy on state aids, both of which involve social enterprise. The Environment DG
core funds some environmental NGO’s and at least one network of social
enterprises (RREUSE).
35
http://europa.eu.int/comm/research/social-sciences/index_en.html
36
http://www.emes.net. See Glossary – ‘EMES’
37
http://www.lse.ac.uk/collections/tsep
1
3
2.4 Social Enterprise Sector Representation at European level

49 The social economy is quite well represented at EU level through family-specific
federal bodies: CEDAG for associations, EFC for foundations, AIM for health
mutuals, ACME for mutual insurers, and the recently reconfigured Co-operatives
in Europe for co-operatives. Within the co-operative family there are federations
by sector, for instance CECODHAS for social housing, EUROCOOP for
consumer co-ops and COGECA for agriculture.
50 A joint representative body exists in the form of CEP-CMAF 38, the European
Standing Conference of Co-operatives, Mutual Societies, Associations and
Foundations. Its predecessor CCCMAF was granted official negotiating status in
the late 1990s, but this disappeared during the restructuring of the Commission
in 2000.
51 The European Platform of Social NGOs39 is core subsidised by the Education

and Training DG. It has combined with umbrella bodies for environmental,
overseas development, women’s issues, human rights and cultural NGOs to form
the Civil Society Contact Group.
52 The European Parliament has an Intergroup on the Social Economy, presided by

ex-research commissioner Philippe Busquin, and the European Economic and
Social Committee has also established a Liaison Group with European Civil
Society organisations and networks40.
53 The main representative structures for social enterprises are CECOP41

(European Confederation of Workers’ Co-operatives, Social Co-operatives and
Participative Enterprises), ENSIE42 (European Network for Social Integration
Enterprises) representing work integration social enterprises, and CEFEC43
(Confederation of European social firms, employment initiatives and social co-
operatives) with an accent on handicap.
2.5 Potential Lessons for the UK

54 Drawing from the review of European policy and strategy towards social
enterprise, the following provides potential lessons for understanding of the
sector and policy development within the UK.
2.5.1 Defining Social Enterprise
55 European policy towards social enterprise is fragmentary and has suffered from
national differences of conception. The terminology used and the resources
made available have fluctuated significantly over programme cycles. The
‘horizontal’ interests of social enterprises as businesses trading in the single
market have been acknowledged within policy and acted on to some degree, but
38
http://www.cepcmaf.org. See Glossary – ‘CEP-MAF’
39
http://www.socialplatform.org . See Glossary – ‘European Platform of Social NGOs’
40
http://www.esc.eu.int/sco/group/intro/index_en.asp. See Glossary – ‘EESC Liaison Group’
41
http://www.cecop.coop. See Glossary – ‘CECOP’
42
http://www.ensie.org. See Glossary – ‘ENSIE’
43
http://www.cefec.org. See Glossary – ‘CEFEC’
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4
with regard to the more ‘vertical’ fields, such as of employment and welfare
reform, the role of social enterprise has been less pronounced.
56 Within the UK, by contrast, a broad coalition has been developed around the
concept of ‘social enterprise’. Progress in the UK has been achieved through the
blurring of potential fault lines between families within the social enterprise (and
social economy) sector. Most categories of organisation within the social
enterprise domain, for instance co-operatives, embody the principle of
democratic control by an involved membership, but some do not (for instance
trusts). Charities exist to benefit exclusively non-members whereas co-operatives
and mutuals exist to benefit members. The history of policy at European level
shows that these underlying differences of approach may simmer and eventually
resurface. In particular, one area which may prove sensitive is whether a criterion
of democratic member-user control should form part of definitions of social
enterprise.
2.5.2 Diversity of Organisational Models

57 Nevertheless, it is precisely one of the strengths of the sector that it is never
satisfied with its current structure and is always seeking to reinvent itself to meet
new needs and take new opportunities. There is a constant process of
hybridisation and no definition should be treated in too rigid a fashion.
58 It is important to stimulate innovation by providing pathways for conversion

between various legal forms, for instance so that a company limited by guarantee
can easily convert into a society for the benefit of the community without facing a
large tax bill. Such pathways should not be used as ways to circumvent
restrictions placed on the distribution of assets, for example, by charities or
Community Interest Companies (CICs).
2.5.3 Learning from Diversity

59 The European experience also shows the richness that diversity can bring.
European networking and the incentive of access to European financial support
have enabled steps forward in one country to be assessed and emulated in
others. In terms of its own diversity and tradition of openness, the UK is well
placed to learn from a variety of traditions. It is important not to rely on inspiration
only from other English-speaking cultures.
60 Pathways should therefore be built along which actors can adapt their structures
and behaviour, for example:
 sponsored study visits
 an international information network, probably web based;
 an international social enterprise magazine
 an international dimension in social enterprise events such as conferences
 strengthened links with global knowledge exchange systems such as the
International Co-operative Alliance research network, for example CIRIEC,
and EMES.
1
5
2.5.4 Regionalism
61 Within the EU experience of social enterprise the importance of the regional level
can be seen, especially in examples such as the northern border regions of Italy
(and also in Spain and Scotland) where regional legislation can act as a pilot for
later national adoption. A degree of regional autonomy offers the chance for the
cultural variety and inventiveness of local people to be made use of, and for
people to act to address their own problems, without the upheaval and cost that a
national debate would entail. The solution can then be evaluated and adopted
more generally if it has been a success.
2.5.5 Empower Organisational Structures

62 UK policy already recognises the benefits of empowering the movement’s own
structures. Supporting an autonomous support structure is an efficient way to
generate change.
1
6
3 FRANCE: THE SOCIAL AND SOLIDARITY

ECONOMY
3.1 Defining Social Enterprise in France44

63 Rather than the term ‘social enterprise’, French policy tends to use the term
‘social and solidarity economy’. This includes both established ‘social economy’
families, and newer movements (which have adopted the label ‘solidarity
economy’).
64 The initial idea of ‘social economy’ in France grew up in the 19 th century but was
subsequently eclipsed by the co-operative and public sectors. Then, in 1980, the
first ‘Social Economy Charter’, promoted by UNIOPSS (Union Nationale des
Offices Publiques Sociales et Sanitaires; National Association of Health Care
and Social Welfare Organisations) and others, defined the social economy in
vague terms as being “at the service of mankind”. In 1981 the Socialist Party
came to power and set up DIES, the Délégation Interministerielle à l’Economie
Sociale (Interministerial Working Group for the Social Economy), which defined
the social economy in terms of its legal structures as “co-operatives, mutuals and
associations that approach them” and its principles of private ownership,
democracy, solidarity and non-profit. In 1983 IDES45, the Institut de
Développement de l’Economie Sociale (Institution for the Development of the
Social Economy), was established.
65 Meanwhile activity was burgeoning in the worlds of associations and local

development, which emphasised the activity undertaken rather than the legal
structure. In the 1980s, as a response to long-term unemployment, the social
economy (économie solidaire) grew up under the banner of decentralising and
reweaving the social fabric, and reconnecting the economy with its roots in
society. Thus, the French government defines the social and solidarity economy
(économie sociale et solidaire) as being composed of a variety of organisations,
defined either by their legal status (associations, co-operatives, mutuals, found-
ations) or their activities and objectives (integration, fair trade), and which
44
Demoustier, Danièle, Anselme, Denis and Ramisse, Marie-Laure, France, in The enterprises
and organizations of the third system in the European Union, CIRIEC, Liège, 1999
Demoustier, Danièle, ‘Approches récentes de l’économie sociale et solidaire’, in Le
Bulletin no. 62, RACINE, Paris, January 2004
Eme, Bernard and Gardin, Laurent, Work integration social enterprises in France, EMES
working papers, 2002
Laville, Jean-Louis, France – Social enterprises developing proximity services, in Borzaga,
Carlo and Defourny, Jacques, The emergence of social enterprise, Routledge, London, 2001
Margado, Alix, A new co-operative form in France: Société Coopérative d’Intérêt Collectif
(SCIC) in Borzaga, Carlo and Spear, Roger, Trends and challenges for co-operatives and social
enterprises in developed and transition countries, Edizioni 31, Trento, 2004
Scanzi, Françoise, with Soulage, François and Hipszman, Marcel, Regard sur vingt ans
d’histoire de l’économie sociale, IDES, Paris, 2004
Interviews with Alix Margado, CGSCOP, Joël Grimaud, Racine (EQUAL technical
assistance office)
45
http://www.esfin-ides.com/
1
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recognise certain common principles: voluntary nature, democratic operation,

general interest purpose.46
66 The French model has been a large influence on European thinking on the social
economy; French organisations have been active members of the sector’s
European representative organisations, and French Members of the European
Parliament have supported the development of the sector. France has also
benefited from the transfer of experience from other EU countries, notably from
the Italian experience of social co-operatives, which it has translated into the
Société Coopérative d’Intérêt Collective (SCIC; Cooperative Society of Collective
Interest, see 3.3.1).
3.1.1 The Scale and Scope of Social Enterprise

67 France has a well established social economy, employing some 7% of the
workforce.
 There are some 1.6 million associations in France, of which probably
700,000 are active and of which 200,000 are recognised as being of public
utility. They employ 1.3 million people (830,000 fte) – 5% of the working
population. Half the jobs are in the health and care sector.
 The 6,000 non-financial co-operatives have 3 million members and employ
some 180,000 people. This includes the 1,500 worker co-operatives (SCOPs.
Société Cooperative de Ouvrières Production; Workers cooperative))
employing 23,000 people. The four co-operative banks employ a further
130,000 people.
 The health mutuals number over 900 and employ some 57,000 people.
Insurance mutuals number 13 and employ 21,000 people.
 The ELEXIES study by the EMES network identifies seven types of ‘work
integration social enterprises’ (WISEs) (see Box 1), designed to help
disadvantaged people to enter the world of work by combining work
experience, training and social contact. Taken together, these 2,500
enterprises offer around 38,000 full-time equivalent integration places47.
Box 1: Types of Work Integration Social Enterprises in France
Associations intermédiaires (AI, intermediate associations). Born in 1983 as a way to

formalise undeclared work being done by long-term unemployed people. Registered under a law
of 1987, they act as labour agencies, supplying temporary workers, who are employed on
permanent minimum-wage contracts, work for up to one month per year, and are exempted from
social security charges. The AIs are VAT exempt. The constraint that they must not compete
with either the public or the private sector was abolished in 1998. A minority of AIs offer training.
Individual customers contribute most of the earned income. In 2000 there were 1,013 AIs
employing 182,000 workers, 60% of whom were women. This was equivalent to 17,000 fte. The
family is in slow decline as a result of government policy.
46
http://www.vie-publique.fr/decouverte_instit/finances/finances_3_3_0_lien.htm
47
Listed by order of numbers of organizations these seven types are are: Intermediate
Enterprises, Integration Enterprises, Temporary Work Integration Enterprises, Neighbourhood
Enterprises, Employers’ Groups for Integration and Qualification, Centres for Adaptation to
Active Life, and Integrating Enterprises
1
8
Entreprises d’insertion (EI, integration enterprises). These have moved from protected to the
open market. They may incorporate as associations (about two-thirds), private companies (about
one quarter) or worker co-operatives. They offer temporary jobs with on-the-job training. They
qualify for grant aid of some €7,600 per person per year (1999 figure). There are some 860
integration enterprises employing 4,300 fte permanent employees and 9,300 employees in
integration.
Entreprises de travail temporaire d’insertion (ETTI, temporary work integration enterprises).

These were brought into existence by the government, and since 1998 benefit from total
exoneration from social security charges, and so have taken over some of the work of AIs. Their
objective is to place people in difficulty in temporary jobs with other employers, and to monitor
the success of the placements. They receive grant aid towards their staff costs. There are some
276 ETTIs employing 900 permanent staff and providing 49,300 integration places (6,770 fte).
They may incorporate as associations or companies (often subsidiaries of associations).
Régies de quartier (RQ, neighbourhood enterprises) grew up during the 90s as an autonomous
grassroots movement to create jobs and improve dilapidated urban neighbourhoods. They are
incorporated as associations and aim to manage services democratically involving local
inhabitants, social housing companies and municipalities. They offer both temporary and
permanent jobs in activities such as cleaning, maintenance, gardening and road mending. They
are now 110 in number, employing some 6,000 people (3,500 fte). The status is trademark
protected and licensed by the sector’s federation, the CNLRQ.48 Their average income is
€400,000 p.a. of which 80% is earned at 20% grant aid to integration and training.
Groupements d’employeurs pour l’insertion et la qualification (GEIQ, employers’ groups for

integration and qualification). These are groups of firms with fewer than 100 employees, who
share the services of a pool of workers, who are employed by the GEIQ. They take integration
relatively seriously and alternate work placements with training that leads to a qualification. They
do not receive state grants for integration, but do receive grant to cover administrative and
monitoring costs. There are some 84 GEIQs with 1,250 employees.
Centres d’adaptation à la vie active (CAVA, centres for adaptation to active life): workshops
for the severely disabled, mostly attached to residential homes. Most workers receive benefits,
not a salary. They may be on short-term or long-term placements. There is no constraint of
productivity of self-financing. There are some 110 CAVAs.
Entreprises insérantes (IE, integrating enterprises): a heterogeneous group of ‘alternative’ self-

integration enterprises, including co-operatives. The SCICs (see below) fall into this category.
There are a number of alternative finance organisations such as the 600 or so CIGALES49:
(Clubs d’investisseurs pour une gestion alternative et locale de l’épargne; Groups of Investors
for an alternative and local management of savings) and microcredit organisations such as
ADIE50 (Association pour le Droit à l’Initiative Economique; Association for the Right to Economic
Initiative) which support such initiatives.
3.2 Government and the Social Enterprise Sector

68 The French government views the chief outcomes deliverable by the social
economy sector as local development, particularly in rural areas subject to
depopulation and distressed urban areas, and the economic and social inclusion
of disadvantaged groups. These outcomes are delivered in the main through
three departmental relationships with the sector:
48
www.cnlrq.org
49
http://www.cigales.asso.fr/
50
http://www.adie.org/
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 the Délégation Interministerielle à l’Innovation Sociale et à l’Economie

Sociale (DIES; Interministerial Working Group for the Social Innovation and
Social Economy) includes in its remit improvement of the environment for
association activity;
 the Caisse des Dépôts et Consignations51 (CDC) seeks development of local
partnerships and services, and;
 the Ministère de l'Emploi, du Travail et de la Cohésion Sociale (Ministry of
Employment, Work and Social Cohesion) oversees business support
activities to the sector
69 The Délégation Interministerielle à l’Innovation Sociale et à l’Economie Sociale

(DIES; Interministerial Working Group for the Social Innovation and Social
Economy) forms part of the Ministry of Youth, Sport and Associative Life. It has a
staff of 14 advisers, and links to the regions through correspondents attached to
the prefects in the regions and départements52. It administers the Conseil
National de la Vie Associative (National Council for the Associations), the
Conseil Supérieur de la Coopération (National Council for Cooperation) and the
Comité Consultatif de l’Economie Sociale (Advisory Committee for the Social
Economy). DIES’s mission has recently been redefined to focus more closely on
improving the financial, legal and human environment for associations. It has
helped to promote legislation promoting volunteering, reducing social security
charges for associations and simplifying employment regulations for small
associations. A bill to make volunteering easier was published on 2nd May 2005.
Other families of the social economy are in discussions with the government as
to the future role of DIES.
70 Another important source of support is the Caisse des Dépôts et Consignations

(CDC), which, following the Loi sur l’Initiative Economique (Law for the Economic
Initiative) of August 2003, brought together its activities in support of
microenterprises, the social economy and decentralisation into a single
department for ‘Local Partnerships and Services’. It has worked with various
microcredit organisations such as ADIE to provide start-up finance for 20,500
microenterprises. It also supports the professionalisation and consolidation of the
associations sector, and has supported the creation of a support network for
associative projects that have both an economic and social purpose.
71 The Ministry of Employment, Work and Social Cohesion has supported the
establishment of over 95 local social enterprise development agencies hosted in
existing structures (DLAs – dispositifs locaux d’accompagnement; local
measures for the support of social enterprises). The DLAs support socially useful
business start-ups through needs diagnosis and business planning, and sponsor
consultancy support. CDC has also supported the creation of a chair of social
entrepreneurship at ESSEC and the publication of a Guide for the social
entrepreneur along with the Agence de Valorisation des Initiatives Socio-
économiques (AVISE; Evaluation Agency for socio-economic initiatives).
51
The Caisse des Dépôts et Consignations (CDC) is a state-owned financial institution that
performs various public interest economic and social development missions on behalf of
France’s central, regional and local governments.
52
The Départments are sub-regional administrative units.
2
0
72 As regards work integration social enterprises, EMES notes the trend towards a
more commercial approach and characterises the public policy response as
being to attempt to unify the diverse families of organisations. The law of 29 July
1998 defines l’insertion par l’activité économique (IAE; social inclusion through
economic activity) and sets up support for projects offering employment to people
who have social and professional difficulties.
3.2.1 Vouchers for Services Provided by the Social Economy – Chèques Domicile
73 France has introduced service vouchers as a way of crystallising the latent
demand for neighbourhood services, and at the same time regularising informal
work, by subsidising the cost of services bought through an approved agency. By
targeting subsidies it also improves living conditions for poor people.
74 Since 1997 the chèque domicile53 (services voucher) has given French
households access to services such as housework, gardening, shopping,
childcare, elderly care and help with schoolwork, carried out by agency staff.
Each voucher has a value of €14, but poorer households can obtain a rebate of
between 50¢ and €4, depending on income, if they buy more than 24 per quarter.
They are typically issued by works councils, mutuals, pension funds, local
authorities and social services offices. The scheme is operated by a broad
partnership of social economy organisations, with the majority of the capital being
contributed by the Chèque Déjeuner co-operative. There are more than 75,000
users and 4,500 agreed service providing agencies with 300,000 employees. By
2004 annual turnover had grown to €17.6 million.
75 Like the chèques emploi service (domestic service vouchers), there is tax relief of
50% of the amount spent, on spending of up to €10,000 a year. However
chèques domicile has the advantage for the householder in that he or she does
not have the responsibilities associated with being an employer. The agency
covers staff sickness and holiday, and the contract can be terminated without
notice. From the employee’s side the agency provides a secure job and training.
Employers can sponsor chèques domicile up to a ceiling of €1,830 a year, which
is relieved of social security payments.
3.2.2 EQUAL
76 EQUAL is the Community Initiative within the European Social Fund concerned
with combating discrimination and inequality in the labour market.
77 In implementing the social economy theme of EQUAL, France places more

emphasis on stimulating local and rural development than on building national
coalitions or capacity, or on having an impact on national policy. The Community
Initiative Programme (CIP) aims to reduce inequality in access to collective
services, and to support the territorial dynamic of actors, through services to
persons (except home care) and services to enterprises (outside the competitive
sphere).
78 France submitted a revised CIP for funding in round 2. This sets out the strategic
goals of developing a culture of active citizenship by liberating energy,
knowledge and creativity at local level, particularly in rural areas threatened with
53
www.chequedomicile.fr
2
1
population decline and in sensitive urban areas. Action is focused on creating

equality of access to ‘services of collective interest’. These are defined as
“services which do not substitute for services provided by the state or local
authorities, which are indispensable to the life of the inhabitant of a territory”.
Priorities are personal services (excluding home care), business services
(excluding those in the competitive field), and services meeting new needs. They
should bring collective economic and social benefits.
79 The actors targeted are not restricted to the ‘social economy’ – co-operatives,
mutuals, associations and foundations – but the ‘solidarity economy’, which is to
be understood to mean “a way of managing a territory which aims to promote co-
operation among different economies and different actors with the goal of
contributing simultaneously to the creation of activities and social links”. It
therefore applies to all sectors of the economy, including the market, the non-
market and the non-monetary. By ensuring services are provided, one goal is to
encourage qualified people to ‘return to the land’.
80 Types of actions envisaged are: services to improve the quality of life of groups
that are discriminated against; neighbourhood services whether private (such as
bakeries, food shops and newsagents) or public (such as cultural or quality of life
services); single access points for services; experimenting with new economic
activities; improving skills; financial engineering such as guarantee funds. One
classic type of project is the creation of points multiservice (PMS; multiservice
points), which are usually existing village shops that install a range of services
such as fax and internet.
81 In France, EQUAL funding is used differently from UK and Germany in that many
development partnerships have a relatively local scope. Among the 28
development partnerships in the theme in round 1, transnational partnerships
have predominantly been built with southern countries such as Italy and Spain.
82 France established a national thematic group for the social economy. This met in
2003 to set up two working groups – on measuring added value and
dissemination and capitalisation – but these have not achieved a high profile. An
initiative was also taken to organise a joint approach to dissemination (Action 3).
83 In round 2 of EQUAL, neither theme within the Entrepreneurship pillar is

considered a priority and little central support will be made available.
Nevertheless the pillar has been allocated 18.8% of the budget (€61 million). Just
over half of this – €32 million – goes to theme D, social economy, and this is
matched with €18m in public and €12m in private co-financing, giving a total of
€60 million. Eighty percent of the budget is distributed to regional projects.
84 There are 24 development partnerships in the social economy theme, of which

three are of national scope. The first is led by the national federation of workers’
co-operatives, CGSCOP (Confédération Générale des Sociétés Coopératives
Ouvrières de Production; General Confederation of Workers’ Cooperatives),
which aims to make co-operatives more woman-friendly and to set up three
‘regional houses for the development of entrepreneurship in the social economy’
as well as several SCICs (see below). The second development partnership will
pilot new services to elderly residents of social housing and the third, led by the
2
2
Chèque Déjeuner co-operative, is concerned with the establishment of an

electronic solidarity currency called the Sol. This would be contained in a smart
card and is akin to LETS (local exchange and trading system) in the UK.
3.3 Policy and Sector Examples

85 The following section provides two examples of interest drawn from French social
enterprise policy and sector activity.
3.3.1 SCICs54
86 Of particular interest is the introduction four years ago55 of a novel legal status for
social enterprises, the société coopérative d’intérêt collective (SCIC; Cooperative
Society of Collective Interest). SCICs are the legal embodiment of the idea of a
social enterprise; that is an enterprise with social objectives. They are mentioned
in the EQUAL CIP as being a valuable vehicle for delivering services of collective
interest.
87 The status of SCIC was introduced by a series of relatively simple amendments

to existing co-operative legislation.56 It acts to shift the emphasis from what an
organisation’s corporate form is to what its objective is. Thus, it enables an
association to convert into a co-operative without having to change its legal form.
88 In comparison with existing co-operative law, its chief innovation is the multi-
stakeholder obligation: at least three different interest groups must be
represented in the membership. Users and employees must make up two of
these categories, thus ensuring both a user orientation and employee
participation in decision-making. The other three stakeholder categories are
volunteers, public authorities and other individual or corporate supporters. Voting
is on a ‘one member, one vote’ basis, though voting in colleges is also provided
for under certain circumstances.
89 The implementing regulations57 provide that the prefect approves a SCIC’s status
for periods of five years, and it is withdrawn if it fails to meet the conditions. In
order to qualify, SCICs must declare their ‘general interest’ objectives and are
subject to a co-operative audit. In accordance with co-operative principles, SCICs
are not totally non-profit-distributing. At least 57.5% of profit must be set aside as
an indivisible reserve, but the remainder can be distributed to shareholders,
subject to the legal ceiling of the average interest paid on private bonds. On
dissolution any assets remaining are transferred to a body with similar objectives.
90 Capital is not a significant condition as the legal minimum is €3,750. Public

bodies can subscribe for up to 20% of the capital. Financing is eased by the fact
that the law also extends the right to issue non-voting shares to co-operatives
incorporated as private limited companies (SARLs).
54
See www.scic.coop. The author is indebted to Alix Margado of CGSCOP for sharing his
expertise on SCICs
55
Law 2001-624 of 17 July 2001
56
in particular the co-operative law 47-1775 of 1947
57
decree 2002-241 of 21 February 2002
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3
91 So far, 63 SCICs have been registered of which 3 have folded.58 The largest is
AMI (Actions Méditerranéennes pour l’Insertion; Mediterranean Actions for social
inclusion) in Marseilles with around 60 employees, and the smallest employs a
single person. The average size is around 8 employees so, in total, this new type
of enterprise provides around 500 jobs. Future growth is expected to be steady
but not spectacular. There is a spread of activities, including landscaping, waste
processing, culture, education, sport, care, housing and social tourism. It may be
possible to develop clusters in sectors such as environmental services, for
instance a labour market integration operation involving collecting waste, sorting
it and neutralising hazardous components such as batteries. This would involve
Revi+ in Angoulême, which has already been active in waste treatment for 11
years in the form of an association, Riscoll in Pessac near Bordeaux, which has
expertise in biological waste treatment, and a workers’ co-operative (SCOP) in
the Basque Country. Partners in this development include the Regional and
Departmental Councils. It might be replicable in several regions. Other SCICs are
active in the ecological sector, for instance ecological brickworks with a kiln
powered by waste. EU finance has not been sought for this type of development.
92 A second potential growth sector is information and communications

technologies, such as open source software. A noteworthy SCIC in this field is
Websourd59 in Toulouse, which has invented a piece of software that allows deaf
people to deal with bureaucracies using sign language. Sign language
interpretation of interviews is delivered via a monitor and webcam. It has sold its
innovative service to the city of Toulouse, to a number of arrondissements (urban
districts) in Paris, and to other public agencies dealing with the public such as the
Caisse des allocations familiales (Benefit Agencies). Another SCIC, Ev@soc in
Paris, has developed software to manage the relationship between disabled
people and the authorities.
93 The existence of the new statute has been an important factor in the start-up of
most of these businesses. It makes it easier to mobilise new partners. Roles and
objectives are clearer, and public authorities seem to be more prepared to buy
into the equity than they would to become a member of an association. An
example is Okhra in Roussillon, of which Lubéron National Park became a
member once it had converted from an association. Financial transparency is
another positive factor.
94 The status has not opened up access to CGSCOP (Confédération Générale des
SCOP; General Confederation of of workers cooperatives)’s SOCODEN
investment fund, which only decided in May to lend to SCICs. However the
MACIF Foundation, the Direction du Travail60 and the Caisse des Dépôts et
Consignations have invested in SCICs. CGSCOP plans to set up a venture
capital fund especially for SCICs.
95 As regards the multi-stakeholder nature of SCICs, there have as yet been no

conflicts between different membership constituencies. However this may arise
after the ‘honeymoon’ period is over. It is to be noted that not all SCICs have
written their rules in consultation with all stakeholders. There have been
58
A survey of SCICS was unveiled in June 2005 in Paris; see www.avise.org
59
www.websourd.org
60
The Direction du Travail is the regional employment office.
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instances of the volunteer constituency withdrawing once they realised that

becoming a SCIC would mean sharing power with the employees. Conversely,
there have been two cases where the employees withdrew when they realised
they would have to take responsibility for the success or failure of the business.
96 The regulatory implementation of the SCIC was deficient in one respect, in that
the expected tax relief was not legislated for (this was a matter of political
misjudgement rather than a fundamental objection). The original plan had been
for SCICs to be exempted from the taxe professionelle (a payroll tax to provide
for vocational training). However given the uncertain future of the taxe
professionelle, and the fact that it is a purely French tax, the strategy now is to
push for concessions for all forms of social enterprises at European level. These
might take the form of tax or social security exoneration or preferential access to
markets.
3.3.2 Coopératives d’activités et d’emploi

97 The coopérative d’activités et d’emploi61 (worker’s co-operative) has also recently
been invented. It has no separate legal status, but is a form of SCOP (société
coopérative ouvrière de production or workers’ co-operative) which offers
common administrative and support services to self-employed people, rather like
a business incubator.
98 These ‘business and employment co-operatives’ are creating a new type of

economic actor, the “entrepreneurial employee”. They are co-operatives whose
members help each other to set up their own independent businesses. During
the process, members are paid a wage, and the co-operative provides
administrative support and a legal status. Once their business is up and running,
members can either stay within the co-op or float off into a completely
independent existence. France and Belgium now have some 36 such co-ops with
800 members – just over half of them women – turning over €8 million. This form
of co-operative has also taken off among Russian immigrants in Finland.

99 There are four potential lessons that the United Kingdom can draw from the
French experience:
(1) Encourage cohesion:
100 The relative cohesion of the families of the social economy has
encouraged the co-operative and mutual families to make use of their
relative financial and organisational strength to bring a more professional
approach to the associations.
101 Government relations with the social economy have in the past benefited
from the existence of a single body, DIES, in a situation akin to the focal
point now provided by the Social Enterprise Unit (SEnU) in the UK.
Currently, possible synergies between EQUAL and government policy
remain to be developed both across programmes and between
ministries.
61
http://www.cooperer.coop
2
5
(2) Keep legal frameworks as simple as possible:
102 Some aspects of good practice that can be drawn from the case of the
SCIC are that it is not necessary to have a multiplicity of legal states. It is
instead possible to create a legal vehicle that has high visibility, yet
shares links with existing families and actors so that they own it. Care
has also been taken in the legislation to provide migration pathways
through which existing organisations can easily adapt themselves to new
needs. In the UK context this would mean creating bridges between
guarantee companies, charities, IPSs, share companies and
partnerships so that any of them could easily become a social enterprise.
(3) Integrate a provider and user voice:
103 SCICs embody democratic ownership. This is seen as a factor in

sustainability, in that a strong relationship is retained with stakeholders
and their needs. The structure formalises the involvement of users
(customers) and producers (employees). This safeguard is missing from
the UK Community Interest Company (CIC). There is a strand of thought
that holds that the close linkage to employees and users will inhibit their
growth away from their original communities but, if this were evident,
then a strategy of replication, possibly formalised into some sort of
franchise, could be pursued. Nevertheless, the full extent of such
integration is likely to require careful consideration in terms of the
growing engagement of social enterprise with public procurement.
(4) Economic instruments that reflect the social benefits accrued by
social enterprise activity in instances of market failure:
104 Cheques domiciles – vouchers for services provided by social enterprises

– are an example of an economic instrument provided by the state to
provide support to social enterprise activity in areas of market failure, in
recognition of the social benefits accrued.
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4 GERMANY: ASSOCIATIVE AND CO-

OPERATIVE FAMILIES
4.1 Defining Social Enterprise in Germany62

105 Germany has a federal structure in which governmental responsibilities are
shared between the republic (Bund) and the 16 regions or Länder. Between 1949
and 1990, 10 of these Länder made up the Federal Republic of Germany (West
Germany) and 5 formed the German Democratic Republic (East Germany), while
Berlin was divided. Third sector organisations are typically also structured at
these two territorial levels.
106 Policy in Germany has followed the relatively strict division between co-
operatives (pursuing self help) and welfare organisations (performing a public
duty). During the 1990s the European Commission’s Social Economy Unit tried,
with limited success, to persuade German organisations of the potential of
looking at the families of the ‘social economy’ in a horizontal way, that is,
considering their similarities as a strength. The co-operative sector viewed it as
imperative that co-operatives should focus on serving their members’ economic
interests, and was suspicious of taking on any ‘social’ role for the purposes of the
state. When the co-operative principles were revised at the Centennial Congress
of the International Co-operative Alliance in Manchester in 1995, the seventh co-
operative principle – concern for community63 – was added, with German
agreement. Since then attitudes have softened slightly and more bridges have
been built between the associative and co-operative organisational families. In
the German case, an additional conceptual difficulty in defining social enterprise
is caused by use of the term “social market economy” to mean a system of
tripartite consultation between the state, capital and labour.
107 Building on their work in the EQUAL thematic working group on the social
economy, a number of the key federal bodies (among them Netz, BAG
Integration and Best 3S) are working to build a new common identity as social
enterprises.64 The aim is to bring together social firms (Integrationsfirmen), co-
62
Evers, Adalbert, Bode, Ingo, Gronbach, Sigrid and Graf, Achim, ‘Germany’ in The enterprises
and organizations of the third system in the European Union, CIRIEC, Liège, 1999
Evers, Adalbert and Schulze-Böing, Matthias, Germany: social enterprises and
transitional employment in Borzaga, Carlos and Defourny, Jacques, The emergence of social
enterprises, Routledge, London, 2001
Schultz, Andreas, National profiles of work integration social enterprises: Germany,
Elexies project
Castelli, Luisa (ed.), European Social Entrepreneurs – looking for a better way to produce
and to live – work report, Le Mat, Ancona, 2005
Interviews with Claus Annus-Simons (BMWA), Hans-Gerd Nottenbohm (Netz), Arnd
Schwendy and Tony Senner (BAG Integration), Truda Ann Smith (BAG Arbeit)
63
“Co-operatives work for the sustainable development of their communities through policies
approved by their members.”
64
In German the term adopted sometimes is Unternehmen mit sozialen Ziele (‘enterprise with
social goals’) in preference to Soziales Unternehmen (‘social enterprise’), as the latter is prone to
confusion.
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7
operatives (Genossenschaften) and trading welfare associations (Wohlfahrts-

verbände), to achieve legal recognition as labour market operators. It would be
possible to base this on a hard criterion of 25% disadvantaged members, or on a
softer one of the obligatory presence of social values in each co-operative’s
rules. This strategy is preferred to pushing for reform of the law on charitable
status (Gemeinnützigkeit) to grant charitable tax relief to social enterprises.
108 As a result of a parliamentary commission of enquiry, several reforms are due to

be made to co-operative law at the same time as the European Co-operative
Statute is adopted at national level (by October 2006). This reform will make it
easier to use the co-operative form to create social enterprises. It will reduce the
minimum number of members from seven to three; dispense with audit for co-
operatives with a balance sheet under €2 million; simplify administration by
dispensing with the separate supervisory board for small co-operatives;65 and
permit co-operatives to pursue cultural and social objectives as well as economic
ones. However one key element of social enterprises – the way they include
different groups of stakeholders such as users, employees and volunteers – has
not been addressed.
4.1.1 The Scale and Scope of Social Enterprise

109 The German welfare system is established on a corporatist model with well
established welfare federations (Wohlfahrtsverbände) as the largest employers in
the country, with 1.3 million employees between them. The Catholic Caritas and
the Evangelical Diakonie employ 400,000 and 330,000 people respectively. The
other four federations are the Paritätischer, Arbeiter- and Jewish
Wohlfahrtsverbände and the Red Cross. Ninety percent of their income comes
from federal (state) or Land (regional) subsidy for the provision of social services.
110 The co-operative family is also strong in Germany, but has weak attachment to
the idea of social enterprise. It comprises:
 2,500 co-operative banks with some 200,000 employees and 14 million
members, which are major lenders to SMEs
 3,800 agricultural co-operatives (including some 1,300 that grow out of
collective farms in the DDR) which employ around 140,000 people and have
1.1 million members
 1,500 trade and industrial co-ops (craft marketing, joint purchasing etc.) with
105,000 employees and 300,000 members
 60 retail co-ops with some 600,000 members (the sector has suffered severe
contraction in recent decades)
 2,000 housing co-ops with 25,000 employees and 3.2 million members
111 There are also some 340 mutual health insurers (Versicherungsvereine auf
Gegenseitigkeit) with an estimated 3 million members.
65
German company law provides for a supervisory board (Aufsichtsrat) which nominates the
members of the management board (Vorstand) and supervises its activities on behalf of the
company’s members.
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112 The Elexies study66 distinguishes four types of work integration social enterprise
in Germany:
 social enterprises owned by municipalities: these were started from the
1980s under the Social Assistance Act (Bundessozialhilfegesetz) as a more
flexible alternative to other labour market projects, and aim to integrate long-
term unemployed people who would otherwise depend on the municipalities
for social assistance. They are usually incorporated as GmbHs (profit-making
companies) or eVs (associations). They are widespread but no data exist as
to their number. They are not allowed to compete for sales.
 social enterprises owned by welfare organisations: the
Wohlfahrtsverbände sponsor social enterprises with the primary aim of
countering poverty and social exclusion, the Diakonie and Paritätischer being
the most active. They are normally incorporated as GmbHs or eVs. There are
several thousand such enterprises.
 social enterprises owned by small local initiatives, which are mostly
incorporated as associations (eV);
 social integration enterprises with tapering subsidies: these conceive of
themselves as businesses trading in the market, and are of two types:
- social firms, usually incorporated as GmbHs, that benefit from

subsidy both organisationally and per individual
- small co-operatives that receive no subsidy as an organisation,

but rely on the individuals being integrated who are supported
through SGB III67 (6,000-7,000 in number)
113 These types of work integration social enterprises make use of a combination of
public funding streams, the three main sources being:
 The federal ‘ABM’ job creation scheme (Arbeitsbeschaffungsmassnahmen)
has resulted in some 4,000 Social Employment Initiatives (Soziale
Beschäftigungsinitiativen) offering 95,000 jobs, but as they are not permitted
to operate in competitive market sectors they have little chance of
permanence. They are typically operated by welfare organisations, churches
or trade unions, and employ long-term unemployed people on fixed-term
contracts to complete tasks useful to the community, such as environmental
improvements;
 In the new Länder after reunification, another type of job creation scheme
was the ‘Company for work promotion, employment and structural change’ –
ABS (Gesellschaft zur Arbeitsförderung, Beschäftigung und Strukturwandel).
These typically took on the entire workforce of companies that had been
closed down and, taken together, employed 155,000 people. They too were
prohibited by their non-profit status from trading in the open market and did
not build links into the local economy which could have helped their
employees gain permanent jobs elsewhere.
66
http://www.ensie.org/elexies/ - a study of work integration social enterprises across Europe
that reported in 2003.
67
SGB III is the Third Volume of the German Social Welfare Code and comprises support for
employment measures and programmes including vocational rehabilitation.
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9
 The Länder of Nordrhein-Westfalen, Niedersachsen and Sachsen-Anhalt

have promoted a more market-oriented type of social enterprise, the Sozialer
Betrieb. These are either existing firms that take on long-term unemployed
workers, or new firms started for the purpose. They receive a wage subsidy
that tapers off over a five-year period.

114 Within German government, the main policy drivers for support of the sector are
to reduce unemployment, to integrate disabled people into the workforce and to
counter poverty, social exclusion and racial discord.
115 There is no coordinated government dialogue with social enterprises in Germany.

Different ministries deal with different families of organisations. Employment
enterprises (Beschäftigungsunternehmen) deal with the economics and
employment ministry (BMWA), while Integrationsfirmen are looked after primarily
by the health ministry, with employment ministry involvement. Co-operatives deal
with the justice ministry.
116 Responsibility is also split vertically and temporally. Whilst the Federal Labour
Office (Bundesarbeitsagentur) administers the unemployment benefit that is paid
for the first year of unemployment, thereafter responsibility for administering
Arbeitslosengeld II falls on the municipalities. Furthermore, the Hartz reforms
have decentralised more employment policy decisions to the municipalities.
117 There is no common position among the various families of organisations. A live
issue for the Integrationsfirmen is the decision of the government not to include
social clauses in public procurement contracts. Some social enterprises are
happy to work with the ’€1 jobs’ scheme, under which long-term unemployed
people receive €1 per hour on top of their benefit, while others are not.
118 The recent change in government makes it unlikely that further legislation will be
pursued.
4.2.1 EQUAL
119 Germany, like the UK, funded relatively few and relatively large development
partnerships in the social economy theme. In the first round there were eight and
in the second there are nine. The theme’s budget in round 2 is €57 million (€32m
ESF + €18m public national + €7m private).
120 The concept of social enterprise has not truly caught the imagination of the
EQUAL administrators, and a welfare association approach prevails, rather than
an entrepreneurial one. A thematic working group (Arbeitsgruppe 10) was
established in the first round, but work on the planned publication has halted.
121 One of the round 2 development partnerships, INCUBE (279), is managed by

FAF (Fachberatung für Arbeits- und Firmenprojekte), the consultancy arm of
BAG Integrationsfirmen. This aims to address the business development needs
of many integration firms (firms in Germany whose primary aim is to integrate
disabled people into the labour market) by establishing a service that would
conduct proper market research and develop business plans, which could be
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0
franchised. It would also offer the necessary management training (it has
informal links with Social Firms UK).
122 The first round of EQUAL supported the Innova development partnership, which
piloted the model of the social co-operative, using co-operative law. Innova is
piloting a number of types of social enterprise. It has set up a development
agency in Leipzig and helped to found some eight new co-operatives. The
majority aim to create jobs for long-term unemployed people, sometimes based
on grant-aided employment training schemes. Some offer social and
neighbourhood services, and one (Gründergenossenschaft Witten) is a co-
operative to support the start-up of businesses by self-employed people. Innova
is thus piloting a wide range of types of social enterprises. In round 2 its separate
funding has not been renewed, but is included in two other development
partnerships, Neue Arbeit und Soziales Engagement (NASE, 200) and
Navigationssystem für Existenzgründer in der Region Oberefranken/Oberpfalz
(NAVEX, 205). It plans to focus on four themes: co-operatives of unemployed
people, co-operative of business start-ups (Gründergenossenschaften), social
service co-operatives and multi-stakeholder co-operatives.

123 The following section provides three examples of interest drawn from German
social enterprise policy and sector activity.
4.3.1 Social Firm Federations

124 Social firms have grown up since the late 1970s as a reaction to sheltered
workshops. These existed in East Germany as Sozialbetriebe, and also as part
of West German companies such as Volkswagen, a section of whose works at
Wolfsburg operated as a social firm. They are now active in sectors ranging from
assembly of goods to hotels, multimedia and information technology. Normally
over 50 per cent of their employees are officially recognised as severely
disabled. They operate within a grant regime defined by amendments made to
the Schwerbehindertengesetz in October 2000 and to Sozialgesetzbuch (SGB)
IX in July 2001. The climate of certainty that this led to generated a boom of
start-ups.
125 Social firms are organised into two main federations:
126 (1) BAG Arbeit
Bundesarbeitsgemeinschaft Arbeit68 was founded in 1989 and has 370 member

firms, which represent an estimated 50,000 people, including both permanent
staff and temporary workers. (Nationally some 400,000 people are benefiting
from various types of labour market measure.) Their size varies from 10 to over
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1,000. They have no specific legal form and can be incorporated as associations
(eV), profit-making companies (GmbH) or charitable companies (gGmbH). They
may be founded by municipalities, churches, welfare associations or individuals.
Almost all of them are members of the welfare associations as well as of BAG
Arbeit.
127 Firms are active in businesses such as second-hand goods, recycling, landscape
gardening, environmental and social services and catering. They cater for long-
term unemployed people with a wide range of disadvantages, including migrants,
older people, physically and mentally disabled and drug abusers. Young people
can be employed on apprenticeship contracts, for instance in ‘training
restaurants’. Around half of workers are women.
128 Member firms may be supported under different programmes with different
subsidy rates. The ABM scheme offers a 90% wage subsidy and some municipal
schemes a 100% subsidy. Another source is the ‘€1 jobs’ scheme introduced
under the Hartz IV reforms. They typically rely to a large extent on public grant,
as they are prohibited from going into competition with the public or private
sectors. In this sense, their product is integrated people. They succeed in placing
around 40% of trainees in permanent jobs. They are responsible to their local
authority, but they also depend on the support of the private sector, which
benefits from their work in the form of a trained workforce. In order to win repeat
public sector contracts they must successfully place their trainees with local
firms.
129 As part of the labour market reforms currently under way, the period for which
contracts are signed is tending to fall from one year to six months, in order to
raise throughput. This raises fears that the quality of the personal development
work will suffer, and the integration will be less successful.
130 BAG Arbeit belongs to the European network ENSIE. It carried out a round 1
EQUAL project, ‘Second Chance’, which networked social firms in the second-
hand and recycling business and prepared them for the European electronics
equipment recycling (WEEE) directive. It is now starting on a round 2 project,
which aims to equip integration firms to be more sustainable. This includes such
aspects as diversifying sources of funding, adapting to the changing regulatory
environment, finding new fields of activity, making new partnerships and the
image of the firm. One aspect of this is that the Hartz IV changes devolve more
decision-making on labour market measures to regional level. The drive is,
however, not to make social firms more entrepreneurial, as they may only trade
in areas of the economy that are ‘additional’ to the activities of existing
businesses.
131 (2) BAG Integration
Bundesarbeitsgemeinschaft Integrationsfirmen69 is a federation of 520 integration

firms catering principally for disabled people. These benefit from a legally defined
status and subsidy regime. Their income is derived from:
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Further information available at www.bag-integrationsfirmen.de (German only?)
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 compensation for reduced productivity (Nachteilsausgleich) = 30% of wage

costs (Lohnkosten)
 integration supplement (Integrationszuschuß)
 consultancy (Beratung)
 overheads (Regiekosten) for those enterprises employing over 25% disabled
people
132 This support is paid for not from taxes, but from a fund that employers pay into if
they employ less than their quota of 6% disabled (the fine for not doing this is
€120-€280 per month).
133 The 520 member enterprises provide 16,400 jobs, of which 50% are for severely
disabled (Schwerbehinderte) people. Most of them are incorporated as non-profit
associations (Vereine) with charitable (gemeinnützige) status, for which they
qualify if they have over 40% disabled workers.
134 Integration firms also employ ethnic minorities; for instance at Nostra Verbund-
Werkstatt GmbH,70 a 120-strong firm in Cologne carrying out jobs such as
despatch, assembly and metal fabrication. Half the workforce is disabled, and
80% of the remaining half is of foreign nationality. Thirty percent of the long-term
unemployed are non-German born (with large communities from Turkey and
Russia).
135 Sectors of activity include light production tasks such as assembly and despatch,
gardening, printing, administrative tasks such as data processing and
bookkeeping. A growing sector is hotels and canteens, as is services for
residential homes: for instance care homes may directly employ only their care
workers, and outsource the rest, such as cleaning and catering, to integration
firms. The sector also profits from the global trend to outsourcing by
multinationals.
136 The average size is 20-30 workers. The initial intention was to encourage a
collective management style, but the Integrationsfirmen have now developed
hierarchical structures and there is no real participation. Some disabled workers
rise to middle management positions as the firms grow. Workers join the
mainstream trade union for the relevant trade sector.
4.3.2 Co-operative Federations

137 After the reunification of Germany in 1989, many producer co-operatives in the
new Länder closed, and the co-operative movement in the West was rather
reticent to offer help to start new co-operatives. Some agricultural and industrial
worker co-operatives did survive. The established co-operative movement has
more recently come round to the view that it should support the foundation of
new co-operatives.
138 Those social enterprises that are co-operatives must be members of a

federation, and the audit functions that these incorporate. There are five main
federations. The vast bulk of co-operatives, some 7,000, are in the Deutscher
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Genossenschafts- und Raiffeisenverband (DGRV). This federation has four

internal groupings - the consumer co-operatives, independent retailers, farmers
and banks – and a regional structure. Of the regional groupings, it is those in
Bavaria, Saxony and North Germany (including Berlin) that are most supportive
of the development of social co-operatives. The four remaining federations are
much smaller, with less than 100 members each. These are the housing co-
operative federation, the Verband Deutscher Produktivgenossenschaften (VDP)
which was set up after reunification to offer a lifeline to those co-operatives in the
new Länder that were viable, and two other small groups that split away from
VDP.
139 The Netz für Selbstverwaltung und Selbstorganisation (‘network for self-
management and self-organisation’) federates some 1,500 alternative, ecological
firms representing around 9,000 people. Most are participative and corporately
responsible in nature, but are not formally social enterprises.
4.3.3 CAP-Märkte
140 ‘CAP-Märkte’ (CAP markets, from ‘handicap’) is an initiative to establish a
national brand by taking over small neighbourhood supermarkets in suburbs and
villages that have been made redundant by the growth of hypermarkets. They
typically have a sales area of 500 m², stock 7,000 lines and employ 8-12 people,
two-thirds of whom are disabled. They:
 provide jobs for disabled people, aiding their integration through direct
contact with customers
 bring about local regeneration (accessible facilities for people without cars)
 counter exclusion by offering services such as home delivery of meals or
post office services
141 The first CAP-Laden opened in Sindelfingen in 1999. There are now about 25
shops, mostly in Baden-Württemberg, trading under the slogan “CAP – der
Lebensmittelpunkt” (grocery point/centre of life). They benefit from joint
purchasing discounts and an integrated point-of-sale bar code system. They are
run by GDW (Genossenschaft der Werkstatten eG), which is a co-operative of
sheltered workshops, founded in the 1950s to sell the goods the workshops
produced. The CAP shops themselves are not members.

142 There are three potential lessons that the United Kingdom can draw from the
German experience:
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(1) Safeguard incentives for self-sufficiency:
143 The disadvantage of creating temporary work schemes which are prohibited from
trading in the market is that their employees are prevented from building links
with the mainstream economy and hence prevented from integrating. A more
promising approach is to award a wage subsidy to individuals who suffer some
disadvantage in the labour market, and then allow the enterprise that employs
him or her to trade freely (as with Soziale Betriebe).
(2) Do not stifle organisational innovation:
144 A lesson to emerge from the German experience is the importance of building
bridges between different types of organisation, so that hybridisation and
organisational innovation can occur in the search for solutions to emerging
problems. For government, this means finding incentives which will encourage
existing organisations with an interest in social enterprise, including those who
might perceive themselves as threatened by its growth, to experiment.
(3) Think long-term and joined-up:
145 The need emerges to see social enterprise in a wider frame than that of job
creation in the short term. This implies recognising the contribution participative
multi-stakeholder enterprises can make to local economic development,
community development and social capital. They can create for their worker
members not just work and an income, but learning in how to take initiative and
participate. These benefits may only become evident after some time and are
more difficult to measure than simple jobs. This highlights the need to develop
indicators of the social benefit sought and generated.
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5 ITALY: SOCIAL CO-OPERATIVES
5.1 Defining Social Enterprise in Italy71

146 The role of the co-operative movement is anchored in Italy’s constitution and the
sector is large and well organised. The Italian co-operative sector, and within this
the social co-operative movement, maintains a high profile in the European
sectoral representative organisations, and it has considerable influence on
European policy.
147 By contrast the associations in Italy are relatively badly structured. The country
has been responsible for some innovative partnership ideas such as the ‘third
system’ (see Glossary). It is, however, the co-operative family that has been the
engine for innovation, by bringing a businesslike approach to the achievement of
social objectives.
148 Though terminology varies, the social economy is normally thought of as

including all co-operatives, along with mutuals, associations and foundations.
The third sector, or third system, is the part of this that works for the public
benefit and does not distribute profit. It comprises the following principal families
of organisations:
 ‘associazioni non riconosciute’ (non-recognised associations) is commonly
used to refer to cultural or interest-representation associations, often called
‘di promozione sociale (for the social promotion)’. Typical are the ‘circoli
ARCI’ (non-profit cultural and recreational associations) which operate
cultural facilities, restaurants, bars, etc.
71
Borzaga, Carlo and Santuari, Alceste, ‘Italy: from traditional co-operatives to innovative social
enterprises’, in Borzaga, Carlo and Defourny, Jacques (eds.), The emergence of social
enterprise, Routledge, London, 2001
Borzaga, Carlo and Zandonai, Flaviano (eds.), Beni Comuni – Quarto rapporto sulla
cooperazione sociale in Italia, Edizioni Fondazione Giovanni Agnelli, Turin, 2005
Cosi, Dante; Iannizzotto, Martina; Lulli, Amalia; Sacconi, Stefano and Zolea, Stefano, ‘Italy’
in The enterprises and organizations of the third system in the European Union, CIRIEC, Liège,
1999
De Rita, Guiseppe, CENSIS, speech at Quasar seminar, Rome, 14 June 2005
Goergen, Renate, ‘The case of Italy’ in Social entrepreneurs, discover and sample the
unknown secrets of European social entrepreneurs, report of ‘Promoting social firms – from
exclusion into entrepreneurship’ project, Magma, Pesaro, 2002
Iamiceli, Paola, ‘The Italian experience: a legal framework in progress’, in Borzaga, Carlo
and Spear, Roger (eds.), Trends and challenges for co-operatives and social enterprises in
developed and transition countries, Edizioni 31, Trento, 2004
Maranzana, Giovanna, ‘Italy’ in SQUARES (EQUAL Development Partnership),
Observations on the relationship between local authorities and the social economy, 2004
Ranci, Costanzo; Pellegrino, Mauro and Pavolini, Emmanuele, The third sector and the
pollcy process in Italy: between mutual accommodation and new forms of partnership, TSEP
working paper no. 4 [draft], London, 2005
Interviews with Dorotea Daniele (DIESIS), Francesco De Rosa (ASTER-X), Renate Goergen
(Le Mat)
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 ‘organizzazioni di volontariato’ (voluntary organisations) refers to voluntary

organisations delivering services
Though unincorporated and with unlimited liability, associations of both types
listed above can in practice operate as enterprises.
149 Further principal families of organisations are:

 social co-operatives
 NGOs, which work with developing countries
 recognised associations and foundations
5.1.1 The Scale and Scope of Social Enterprises

150 Statistics on the social economy in Italy tend to be unreliable. There are some
160,000 co-operatives in Italy, some of which are members of the two main
federations - Legacoop (10,000 members) and Confcooperative (18,000
members). Total employment is around 450,000. There are some 220,000
associations, with estimates of employment varying between 250,000 (Lunaria)
and 418,000 (Johns Hopkins), in addition to 270,000 volunteers. There are 100
or so banking foundations.
151 In terms of scale, the social enterprise sector (using the EMES definition, see
Section 2.1) comprises:
 7,100 social co-operatives
 around 2,000 of the 10,000 voluntary associations (although they
theoretically should not offer services on a permanent basis)
 several hundred other associations
 between 1,000 and 1,500 other co-operatives, which operate for the public
interest but do not call themselves social co-operatives
 approximately 200 of the 800 public institutions for charitable and social care
(istituzioni pubbliche di assistenza e beneficienza – IPAB; Public Institutions
for Social-Assistance) which have converted themselves into private
foundations (though their board appointments and many decisions still
require government approval)
 a few conventional companies
152 Altogether these are estimated to total around 11,000 social enterprises in Italy.
The key family is the social co-operatives.
5.1.2 Social Co-operatives

153 Social co-operatives are defined as follows:
 the objective is the general benefit of the community and the social
integration of citizens
 type A co-operatives provide health, social or educational services
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 those of type B integrate disadvantaged people into the labour market. The
categories of disadvantage they target may include physical and mental
disability, drug and alcohol addiction, developmental disorders and problems
with the law. It does not include other factors of disadvantage such as race,
sexual orientation or abuse.
 various categories of stakeholder may become members, including paid
employees, beneficiaries, volunteers (up to 50% of members), financial
investors and public institutions. In type B co-operatives at least 30% of the
members must be from the disadvantaged target groups
 the co-operative has legal personality and limited liability
 voting is one person one vote
 no more than 80% of profits may be distributed, interest is limited to the bond
rate and dissolution is altruistic (assets may not be distributed)
154 A good estimate of the current size of the social co-operative sector in Italy is
given by updating the official ISTAT figures from the end of 2001 by an annual
growth rate of 10% (assumed by the Direzione Generale per gli Ente
Cooperativi; General Directorate of Cooperative Associations). This gives totals
of 7,100 social co-operatives, with 267,000 members, 223,000 paid employees,
31,000 volunteers and 24,000 disadvantaged people undergoing integration.
Combined turnover is around €5 billion. The co-operatives break into three types:
59% type A (social and health services), 33% type B (work integration) and 8%
mixed. The average size is 30 workers.

155 Italian government policy towards the third sector has historically been
unsystematic and pragmatic. Since the 1990s overhaul of the Italian constitution
and under the on-going process of devolution, a more stable governmental
framework has grown within which the third sector has been able to work more
coherently. Three broad coalitions have grown up around the existing cultural
associations, voluntary associations and social co-operatives.
156 Under the centre-left government a structured dialogue in the form of the Third
Sector Forum72 was established in 1997, and has subsequently spawned
regional, local and thematic groups. Other institutions were established, including
a parliamentary committee on the third sector and an expert committee in the
National Labour Department. Since 2000 the current government prefers to
bypass this machinery in favour of direct bilateral negotiations.
157 Before the EU procurement directive, registration as a type B social co-operative

gave access to public contracts without tendering. The local authorities promoted
social co-ops by giving them contracts, because they could deliver services more
cheaply than public or private sector provision, and were also more flexible, in
particular with regard to personnel. Social co-operatives therefore took on the
new services such as home care that had previously been provided within
families. The sector is now making the transition from an essentially protected
status to free market competition for public contracts with a concern that
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procurement contracts will be decided purely on cost grounds, with a resultant

loss of service quality.
5.2.1 Agenzia per le ONLUS

158 In 2000 Italy established an agency to promote and supervise the third sector
and non-profit organisations of social utility, the Agenzia per le ONLUS –
Agenzia per le Organizzazioni Non Lucrative di Utilità Sociale; Agency for Non-
Profit Associations).73 It has the tasks of carrying out studies on the sector in Italy
and abroad, making legislative proposals, conducting awareness-raising
campaigns and promoting training. Its ten board members are nominated by the
government: four are ministerial representatives and six are chosen for their
experience of economics, finance and the activities of the sector. In practice it
has not been very active.
5.2.2 Legal Framework

159 The main laws governing social enterprises are:
 law 1577/47 (Basevi law) instituting tax relief for co-operatives’ profits put into
indivisible reserve
 law 49/85 (Marcora law) allowing redundant workers to use their
accumulated unemployment benefit to capitalise a buyout co-operative
 law 44/86 (De Vito law) supporting co-operatives employing young people
 law 266/91 defining voluntary organisations
 law 381/91 defining social co-operatives
 law 266/97 defining small co-operatives (of 3-8 members)
 law 460/97 introducing the concept of ONLUS
 law 461/98 regulating banking foundations, which must apply at least half
their profits to cultural, educational, research or welfare goals (e.g. via social
enterprises)
 law 68/99 on the employment of people with disabilities in for-profit, public
and non-profit organisations
 law 327/00 which regulates labour costs and health and safety at work in
public procurement contracts
 law 328/00 which sets out the qualifications that social co-operatives must
have to operate in healthcare, social services and other community services,
and defines a voucher system
160 The most significant innovation in the development of the sector is law 381 of
1991 which, after a decade of political negotiation, established the status of
social co-operative (cooperativa sociale). This established the two types of social
co-operatives: A (social services provision) and B (labour market integration).
These offer effective social and labour market integration in a participative way
and at low cost to the public purse. Until now, this has been the only
organisational form that is explicitly tailor-made for social enterprise, and has
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inspired new legal forms in Belgium, France and Portugal. As from 2005, a
broader legal framework for other types of social enterprise (impresa sociale) is
being created.
5.2.3 New Law on Social Enterprise

161 A very recent legal development is the adoption by the Senate of a law on 11
May 2005 defining ‘social enterprise’ (impresa sociale). Debate on implementing
the regulations is now under way and the first decree, on civil code aspects, is
expected to be published in the autumn of 2005. The law provides that the term
‘social enterprise’ covers “private non-profit organisations that exercise, in a
stable and principal way, an economic activity of the production or exchange of
socially useful goods or services, aimed at fulfilling objects of general interest”.
The regulations will define their social character, based on the principles of
unrestricted access to services, non-profit distribution, reinvestment of surpluses,
independence of other public or private sector bodies, transparent administration
and altruistic dissolution. There is thus no requirement for democratic
management, though there is a bar on social enterprises being subsidiaries of
profit-making ones (or of public authorities).
162 Tax relief on profits and on donations has not been granted at this stage, but
attitudes are thought to be changing to favour this as a move away from direct
government subsidy. At the same time, the government would like to remove tax
relief from all co-operatives, including social co-operatives.
5.2.4 Regional Government Policy

163 A result of Italy’s regional government system is that regions implement
legislation at differing speeds and with differing degrees of enthusiasm. It has
typically been the northern regions such as Lombardy and the autonomous
region of Trentino-Alto Adige (Südtirol) that have been in the vanguard, while,
Calabria, for instance, has still not implemented the law on social co-operatives
that was passed in 1991. There is also a wide variation in the regional
implementation of law 328/00.
5.2.5 EQUAL
164 Of all member states, Italy has the most activity in the social economy theme, in
terms both of budget and number of development partnerships. In round 1, €99
million of European Social Fund (ESF) money was divided among 71
development partnerships, and in round 2, €100 million (matched with €76m of
national and €24m of regional money) supports a further 111 development
partnerships. In round 1 Italy thus accounted for 40% of the resources of the
thematic programme. However the development partnerships are relatively small,
with the average budget being €1.8 million (total funding). The development
partnerships are distributed evenly round the country and many are active at
provincial level.
165 The change of government that intervened occurred the selection of the
development partnerships and the start of the programme led to a discontinuity in
the technical assistance office. Despite the large weight of activities in Italy,
during round 1 no effective national networking was done in this theme, and
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there was little interest in the European dimension. It is hoped that Italy will host
a European event in 2006 but no official information is available.
166 Community Initiative Plan (CIP) priorities are to promote the sustainability and
quality of social enterprises and their services through an integrated approach,
including through the use of information technology. It thus focuses on training,
professionalisation and economic strength rather than on job creation. A possible
benefit for social co-operatives is that EQUAL helps them to make the cultural
change to bidding competitively for work. A favoured technique has been to form
partnerships between third sector and private sector businesses with the aim of
injecting a more entrepreneurial approach. This aroused some resentment
among the existing social co-operative sector.
167 In round 1, approximately 19 development partnerships focused on skills and

management systems, 16 on business start-up and development and 10 on
labour market integration. The others mostly worked in specific sectors such as
neighbourhood and social services or tourism.
168 Some interesting activities are the creation and specification of new jobs to do
with integrating and qualifying immigrants. Another project aims to create a
‘social franchising’ system to spread a chain of hotels run by disadvantaged
people on the model of the successful Il Posto della Fragola in Trieste. There has
been some useful work on the clarification of public procurement procedures and
working in partnership with public authorities to ‘co-plan’ social service delivery.

169 The following section provides three examples of interest drawn from Italian
5.3.1 QUASAR – tackling the mainstream business support service

170 One of the national projects is particularly interesting for the way in which the
social co-operative movement has worked in partnership with the chambers of
commerce nationally to create a mainstream support service for social co-
operation.
171 QUASAR aimed to build a bridge between social enterprises and the chambers
of commerce. It sought to make the culture of social enterprise managers more
businesslike and, at the same time, make the chamber of commerce culture
more sensitive to the benefits of social enterprise. The project worked with the
chambers in eight provinces: Milan, Treviso, Forlì-Cesena, Florence, Cagliari,
Potenza, Bari and Palermo. Co-ordinated by a central unit, the project’s work
was based around seven specialist working groups combining experts from the
third sector and from the chambers. These tackled issues such as social services
reform, social quality, training, finance and local development, and produced an
impressive series of guidance manuals.
172 It tapped into the compulsory subscriptions that all businesses make to chambers
of commerce, by setting up ‘Observatories of the civil economy’ in the eight
provinces. A further four provinces (Rome, Pisa, Perugia and Benevento) are
developing self-financed observatories. The observatories have the job of doing
research and providing information to the chambers of commerce; representing
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the third sector; and advising existing and new social enterprises. They are
managed by committees comprising the chamber, university, co-operatives,
associations and voluntary service. They thus create local hubs where
information and know-how can be exchanged.
173 The project conducted ‘enterprise health checks’ on 240 enterprises, of which
45% were social co-operatives, 32% permanently trading VAT-registered
associations, 15% committees and clubs, and the remaining 8% foundations and
social enterprises of other types. The check-ups were carried out by a
specialised agency attached to each chamber of commerce. They went through
the topics of mission and vision, strategic planning and social marketing, and on
to image and competitiveness. Key issues are social accounting – the bilancio
sociale – and human resources.
174 The outcome is that the chambers of commerce have gained a new service,
which is tailored to the needs of the fastest-growing section of their membership,
social enterprises. Social enterprises emerge with a stronger identity, legal
recognition, strengthened management skills, and a steadily growing regional
support network.
5.3.2 Consortia
175 A further key feature of the Italian social enterprise sector is its structuring into
consortia (consorzi). Although a dedicated legal status exists for this, in practice
most consorzi are incorporated as secondary co-operatives. Consorzi are
member-controlled bodies that exist to promote and serve their members in the
technical field, in parallel with the federations that exercise representational and
audit roles.
176 The social co-operative sector is organised as a system and takes a pragmatic
rather than a party-political approach. There are four major national consortia of
social co-operatives: Consorzio Gino Mattarelli (CGM; Consortium Gino
Mattarelli) springing from Confcooperative, DROM and Impresa a Rete from the
Lega and Farsi Prossimo Consorzio from Caritas Ambrosiana74
177 The models of the different federations are very different: the Lega has 1,000
social co-operatives in membership, and some of them, such as CODES in
Bologna and Venice, have over 2,000 members. The Lega model is that all
activities are carried out within the co-operative, so there are few local consortia.
An exception is COIN, the first consortium of type B co-operatives, which has 50
member co-operatives.
178 In comparison Confcooperative has 5,000 social co-operatives, and sponsors the
CGM Consortium, which is the most significant organisation among social
enterprises. It federates 79 territorial consortia, in turn comprising some 1,500
social co-operatives. These have 40,000 employees, of whom 5,000 are
volunteers. Their combined turnover in 2003 was around €1 billion.
179 In Confcooperative’s sphere of influence, social co-ops do not compete with one
another. Rather, they stick to providing services in a particular area, do not want
to grow too large, and want to keep their local roots and participative nature.
74
Caritas Ambrosiana is a catholic NGO , (www.caritas.it)
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When new needs/opportunities arise, a new co-operative is started as a spin-off.

This is sometimes referred to as the ‘strawberry patch’ model of growth.
Coherence and quality is provided by central services by the consortium, yet the
needs orientation and close link with users are retained.
180 It might be said that the Lega model lies towards the self-help end of the co-
operative spectrum while the Confcooperative model lies towards the community
benefit end. CGM has a de facto European presence through the European-level
service organisation DIESIS,75 which is linked to the European federation
CECOP76 (The European Confederation of Workers’ Cooperative and
Participative Enterprises) .
5.3.3 ‘Welfare Italia’ – branding social enterprise

181 In May 2005 CGM launched a new development strategy at a conference which
attracted 1,000 people. It is based on the new brand ‘Welfare Italia’77 which will
appear as a trademark, in television adverts, etc. CGM will propose social co-
operatives as partners with government and private sector, promoting
themselves as a nationwide network combining solidarity with competitiveness
and offering reliable services that meet people’s needs and are based on trust.

182 There are six potential lessons that the United Kingdom can draw from the Italian
experience:
(1) Give recognition to the benefits of social enterprise:
183 From a UK sector perspective, Italy is admired for a co-operative sector

which is relatively well entrenched, recognised in the constitution, and
has a number of privileges or special statuses. For instance its federal
structure is strengthened by the compulsory payment of 3% of profit by
members, and the Marcora Law provides that in a case of factory
closure, employees may roll up their future unemployment benefit to
capitalise a co-operative to take over the enterprise.
184 Social co-operatives are also seen as an enviable institution, in that they
have grown up relatively quickly to become a substantial sector, which
exhibits strong and consistent participative and democratic values and is
readily taken into partnership by public authorities.
75
www.diesis.coop
76
www.cecop.coop
77
www.welfareitalia.com
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3
(2) Take advantage of the sector’s flexibility:
185 To some extent this is the result of the legal incapacity of associations.
This meant that social enterprises, to find a corporate vehicle suitable for
a business, had to turn to the co-operative form and adapt it for multi-
stakeholder use. Such a manoeuvre has not been necessary in the UK
as the company limited by guarantee and society for the benefit of the
community have been available and easily adaptable for use by
voluntary organisations wishing to trade. It does reflect favourably on the
pragmatic mix of altruism and self-help that co-operatives are able to
deploy.
186 The legal and organisational flexibility of UK legal forms, and a generally
flexible administrative and tax system, means that development can take
place easily and quickly. It is the coherence of the Italian social co-
operative model that has proved to be its strength; the restrictions placed
on social co-operatives tend to give them stability.
(3) Explore multi-stakeholder structures:
187 The strength of the multi-stakeholder form is that it gives all stakeholders
a voice: it involves the service deliverers (employees) and the
beneficiaries (users) as well as volunteers and supporters (who would be
able to give highly qualified advice and check service quality levels) as
well as possibly investors and/or local authorities.
(4) Structure through consortia:
188 The coherence of the sector has enabled it to act in a systemic way. The
individual co-operatives are grouped into local or provincial consortia,
which provide services such as training and business consultancy. They
in turn are grouped into national consortia, which have the scale to
operate at European level. The biggest of these is CGM, the Consorzio
Gino Mattarelli. The UK social enterprise sector currently lacks this
coherence, and might try to learn something from the consortium model.
(5) Use tax relief to reward social benefit:
189 Another advantage of the special status of social co-operatives is that

they can be given fiscal relief. The relief in practice is that they are
relieved of social security charges in respect of members undergoing
integration into the workforce.
(6) A braided support system:
190 Further lessons might be learnt from the way that, through EQUAL, the
social co-operative sector is now working to transform the nature of the
mainstream business advice system, and to establish the legitimacy of
social enterprise among business advisers. The result is a ‘braided’
business support system, in which both specialist support agencies exist
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(in the Italian case, consortia) and, at the same time, the mainstream
business support system takes social enterprise seriously.
6 POLAND: ASSOCIATIONS AND

FOUNDATIONS
6.1 Defining Social Enterprise in Poland78

191 In Poland, the term ‘social economy’ is chiefly associated with the country’s
associations and foundations. The social economy in Poland has rich traditions
between the wars but became a tool of centralised planning under communism;
the reputation of co-operatives has, for example, not yet recovered from their
instrumentalisation by the communist regime.
192 The transition years of the 1990s proved painful with little middle ground between
centralised government and ‘wild capitalism’. NGOs, however, grew fast on a
traditional redistributive model and gradually a debate on new forms of self-help
has developed and initiatives started to fill gaps in state service provision and to
improve the quality of services through self-organisation and participation (often
termed ‘communities’). There is the start of a new worker co-operative movement
and, even more recently, of social co-operatives. New social enterprises have
been established which, while fragile, operate in areas such as second-hand
shops, furniture renovation, rickshaws and organic farming. The most remarkable
development is the co-operative banking system, SKOK (spółdzielcze kasy
oszczednościowo-kredytowe),79 which has grown to have over 1 million members
and 13,000 branches, and is larger than the country’s largest conventional bank.
It has a 5% market share in SME finance.
193 Poland is by far the largest of the new Member States which joined the EU on 1
May 2004 with 38 million people and is using European resources to develop
social enterprise; a large EQUAL programme began in 2005 aimed at
strengthening the sector’s infrastructure and establishing a number of new work
integration enterprises and social co-operatives.
6.1.1 Scale and Scope of Social Enterprise

194 The Polish social economy is generally seen as comprising:
 45,000 associations
78
Leś, Ewa, Co-operatives in Poland: from state-controlled institutions to new trends in co-
operative development in Borzaga, Carlo and Spear, Roger, Trends and challenges for co-
operatives and social enterprises in developed and transition countries, Edizioni 31, Trento,
2004
Sadowski, Tomasz, Social economy in Poland – new perspectives in overcoming social
exclusion, paper to conference on ‘Shaping the new social policy in Poland’, 31 Jan 05, Poznań,
Barka Foundation website – www.barka.org.pl
Interviews with Ewa Leś, Warsaw University, and Kuba Wygnański, Forum of Non-
Governmental Initiatives (FIP)
79
www.skok.pl
4
5
 7,000 foundations, about half of whom are active and employing volunteers.
This heavily city-based sector is growing despite poor funding environments.
 19,000 co-operatives (numbers are static), with a membership of 1 million
and employment of 150,000.
195 The sector has received significant backing from foundations in Western Europe
and USA seeking to build up ‘civil society’, but these schemes are now winding
down.
196 The main representative body is the Forum of Nongovernmental Initiatives (FIP).
197 The renaissance of social enterprises has been led by the associations and
foundations, for example the Barka Foundation. These are now grouped into the
‘Association of Organisations Promoting Social Employment’ which has about 20
members.

198 There is still an issue in Poland over vocabulary. The term ‘social enterprise’ is
not much used in Poland, and the term ‘third sector’ is more common.
Sometimes the term “social economy” is set in opposition to “market economy”
rather than alongside it.
199 Like other governments, the Polish government recognises the useful role of the
social economy in tackling a wide range of issues including entrepreneurship,
employment, youth unemployment, drug abuse and social inclusion, and in
promoting democracy.
200 The main motivation of the Polish government to support the development of
social enterprises is as a source of jobs to counter the high unemployment and
associated acute poverty. Neither the private nor the public sector has been able
to create enough jobs for unskilled workers, and many jobs were lost in the
transition to the market economy. As a result, the government is now looking to
enlarge the range of partners beyond the foundations such as Barka that initiated
the movement.
201 A platform for the social economy is being established, based on the preparatory
committee for the European Social Economy Conference held in Kraków in
October 2004. This aims to be the formal dialogue partner with the government,
but some parts of the sector see it as too traditional, and it may therefore fail to
provide a unified voice in negotiations.
202 It should be noted that Poland has an extremely decentralised system of

government, with 2,500 powiats, which have an important role in financially
supporting existing activity and likely future social co-operatives. With such a
large number of authorities, it is inevitable that many of them are not fully skilled
or equipped to promote local development.
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6.2.1 Legal Framework

203 Over the past few years Poland has developed a reasonably coherent legal
framework for social enterprises, and developments are ongoing. Legislation
comprises:
 Law on Activities of Public Benefit and Volunteerism of 24 April 2003
204 This legitimates associations and foundations by establishing the principle of

subsidiarity and defining the principle of public benefit. It obliges public
authorities to consult citizens, by establishing an advisory council, consisting of
five government representatives, five from local authorities, and ten from the
foundation and association sector.
205 It exempts organisations of public benefit from tax on “real estate, land, treasury
charges and rent”. It is important in entrenching in law the difference between
social enterprise and conventional enterprise. Analogous to charities in the UK,
public benefit organisations are subject to rules of transparency, have limits set
on their economic activity, and can access public funding to deliver services,
based on a ‘best value’ model. However, the transfer of service delivery to public
benefit organisations has been slowed because they are wary of competing
openly with those very public authorities on which they depend for their income.
 Law on Social Employment of 13 June 2003
206 This law creates the status of Centres of Social Integration, which are
intermediate labour market enterprises. This includes initiatives such as the
Barka-Kofoed School in Poznan (see below) based on the Danish model created
75 years ago in Copenhagen. The School operates education, therapeutic and
support groups and a wide range of job skills from sewing to gastronomy to
languages to computing.
207 It was designated a Centre in 2004 with seven others: five by local
administrations (in Torun, Olsztyn [see below], Elblag, Kudowa Zdroj and
Drezdenko) and three by NGOs: the Barka School, Caritas in Kielce and Krag
Association in Gorzow. Take-off has been relatively slow as the learning curve is
steep and status is given for periods of three years.
208 The programme is financed by local authorities at county (poviat) level, which are
encouraged, but not obliged, to establish such centres. The NGO-operated
centres receive public support at about the 25% level and rely on voluntary
support. There is some concern that the local government run ones will be too
bureaucratic in style.
209 To provide jobs for long-term unemployed people with social problems, the
Centres operate vocational reintegration workshops, training courses and
support groups. People are trained for one year and trainees receive benefit of
about €100 a month. They also have the opportunity to gain work experience for
1-1½ years (the employer receives a partial wage subsidy).
210 The Centres run programmes of social and economic integration that include
education and therapy as well as job and enterprise skills. So far 300 people
have started these courses, but as they only got under way about nine months
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7
ago, only a few have so far graduated. To reintegrate into the labour market,
graduates have three options: they might find a job on the open market; they
might work in a new enterprise set up within in the Centre for Social Integration;
or they might set up their own independent social co-operatives
 Law on Promotion of Employment and Labour Market Institutions (including
note on social co-operatives) of 2 April 2004
 Bill on Social Co-operatives of 17 November 2004
211 A new law on social co-operatives is currently being considered by parliament,

and the wording of the bill should be finalised in June 2005. The law fills out the
range of types of incorporation and provides that social co-operatives shall be
registered in the national registry court alongside foundations and associations. It
provides for subsidies of about €1,700 for each person who founds a social co-
operative, and of €1,000 for people who subsequently join. Only members of
target groups such as long-term unemployed, drug or alcohol addicts, immigrants
or disabled people qualify for the grants. A third incentive is relief from social
security payments for an 18-month period for the target group members, to
compensate for their low productivity.
212 The law allows the conversion of co-operatives of disabled people that have
existed since the communist regime to convert into social co-operatives, but it is
not known how many will wish to do so. No special provision is envisaged for
associations to convert, as is the case with the French SCIC.
213 Membership has a minimum of 5 and a maximum of 50. Professional staff may
comprise up to 20% of the membership. Volunteers can be members of social
co-operatives, although there is no insistence, as in the SCIC (see para 66), on
different stakeholder groups being in membership. It is possible that the final text
of the law will include a provision to allow corporate members. This would allow
investors such as SKOKs to join. SKOKs are currently legally prohibited from
investing in corporate bodies, and can only lend to individuals. The SKOKs
favour the change as it would enable them better to fulfil their social mission.
However the co-operative banks do not wish to see SKOKs’ customer base
enlarged in this way.
214 A proportion of profit must be put into a common fund, and there are limits on its
distribution. Members have a ‘co-operative labour contract’ with the co-operative.
215 An important provision is that ‘small’ social co-operatives can dispense with
setting up a supervisory council. This is an important derogation because such
councils, which have the role of ensuring that co-operative principles are
respected, are expensive to maintain. Although such councils might be thought to
be a way to introduce multi-stakeholder checks and balances into the
governance of a social co-operative, in fact their members are nominated by the
National Co-operative Council from among local co-operatives.
216 Identity is further protected by the provision that social co-operatives may only
merge with other social co-operatives.
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217 The conditions for creating a social co-operative are still being negotiated. The
problem is that investment capital is difficult to find. Even large and well
established organisations in the sector have found it difficult to obtain the bank
guarantees needed to take part in EQUAL. The new co-operative movement
hopes to set up a Polish fund for social enterprises, in partnership with the
SKOKs.
218 Future planned legislation includes:

 Law on Financial Support for the Construction of Shelters and Social
Housing
 The revision of the Co-operative Law. This will resolve the issue of the
ownership of co-operative property, by clarifying the ownership rights of
members.
219 In September 2004, the Secretary of State in the Ministry of Social Policy
concluded an agreement with the Chairman of the Managing Board of the
Friends of Integration Association to run a campaign to promote the employment
of disabled persons. It will aim to change the stereotypical perception of disabled
persons as helpless and needing to be looked after by the state, and encourage
employers to employ disabled people as a responsible business practice.
Support will also be given to the vocational development of disabled university
graduates and for the employment of disabled people in information technology
jobs.
6.2.2 EQUAL
220 Poland is one of the three new Member States to have allocated a budget to the
social economy theme within its EQUAL programme funding.80 The managing
authority is the Ministry of Economy and Labour (Department for European
Social Fund Management). The budget for 2006-08 is €178 million, and – unlike
in the old Member States – projects are financed at 100%. The budget for the
social economy theme is €36.7 million.
221 To establish the EQUAL programme, a working group was convened with a
number of ministries and two NGOs: the Foundation of Socio-Economic
Initiatives and the Polish Scouts Association. Members consulted around 200
NGOs, and agreed five objectives:
1) Facilitating access and return to the labour market of persons

experiencing discrimination (theme A).
2) Strengthening of the national strategy of social economy in particular

by improving the quality of employment and development of services
in favour of local communities (theme D). (The entrepreneurship
pillar is devoted entirely to the social economy, not because
business start-up is not thought to be important, but because it is
80
http://www.funduszestrukturalne.gov.pl/English/EQUAL. The national support structure is the
Co-operation Fund Foundation, tel: 22 625 39 37, fax: 22 625 28 05, www.equal.org.pl, e-mail:
equal@cofund.org.pl
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already supported under the Integrated Regional Operational

Programme.)
3) Supporting the adaptability of firms and employees to structural

economic change resulting from development of new technologies
by developing IT skills and introduction of new management
methods (theme F).
4) Reconciling family and professional life, as well as the reintegration

of men and women who have left the labour market, by developing
and promotion of flexible forms of employment and work
organisation, and support services (theme H).
5) Social and vocational inclusion of persons covered by protection in

the territory of the Republic of Poland and repatriates as well as
assistance for persons applying for refugee status (asylum seekers
theme)
222 There were 127 applications under the social economy theme, of which 27 were
selected. Taking all themes together, EQUAL is supporting 95 NGOs to the tune
of €200 million in EU money. There is now a big demand for partnership and
learning among Polish development partnerships. Ten of them came to Brussels
on 7 February 2005 to attend a partnership seminar organised by DIESIS, more
than from any other country other than Italy. There are at present some
procedural delays, and not all contracts have been issued, although by now
Action 1 should have been completed.
223 The Polish EQUAL programme aims to support the development of a Polish
model of the social economy, work out the necessary mechanisms, revitalise
deprived areas and bridge regional gaps. Activities include building the model,
helping people to cross from the second to the first labour market, improved co-
operation among actors, better instruments and mobilising local communities.
224 Projects selected include the development of social enterprises in heritage

tourism on the ‘Amber Trail’ along the River Vistula in southern Poland which
targets young people and women in rural areas; the ‘Na Fali (‘On the Wave’)
project in the Gdańsk area which targets long-term unemployed people;
employment activation for disabled people including a project in language
industries for blind people; and enterprise creation among unemployed Roma
people.
225 A more strategic ‘sectoral’ project (Tu jest Praca – ‘We have Jobs’) promoted by
Warsaw University looks at key roles, standards of assessment, finance and
management skills at national level. It will establish a postgraduate programme
for managers in the social economy, summer schools, an observatory and, it is
hoped, a fund for social entrepreneurship in partnership with the SKOKs. WAMA-
COOP and the Barka Foundation are both partners, and the development
partnership will pilot local co-operative development techniques in their
respective (high unemployment) regions of Masuria (Olsztyn) and Wielkopolska
(Poznań). It has transnational partners in the Trentino, Val d’Aosta, Marseilles
and Slovakia. A project led by the UNDP (‘Searching for a Polish Model of Social
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Economy’) is looking at the legal framework and what adaptations are needed,
especially as regards economic activity by associations, and at best practice in
developing the sector at local level.

226 The following section provides three examples of interest drawn from Polish
6.3.1 Barka Foundation

227 The Barka Foundation, and its founders Tomas and Barbara Sadowska, are
internationally renowned, and have won the World Bank Award of the Global
Development Network, been dubbed ‘European Hero’ by Time Magazine, and
been invited to the World Economic Forum in Davos. They are credited with
having been the prime movers behind legislation such as the laws on education
and social employment and on social co-operatives. Barka operates:
 a community programme, offering therapeutic communities of 25-30 people;
 a socio-educational programme, which combines social support and
education to achieve reintegration;
 an employment opportunity programme, which has run for 11 years and
places 50 people a year in permanent jobs;
 a housing programme.
228 Barka pioneered the Centres of Social Integration, which help disadvantaged
people to create their own employment by setting up social co-operatives. Other
organisations are now also founding such centres. The Barka school in Poznań
gives training in the legal, organisational, market research and economic aspects
of setting up social co-operatives.
229 The EQUAL programme has given the Barka Foundation its first opportunity to
scale up social enterprise and involve other major organisations in partnership.
Barka’s EQUAL project called Social Economy in Practice will set up three model
Centres of Social Economy in three contrasting locations: Poznań (city), Kwilcz
(small province) and Bogatynia (town of 30,000 people). Their objective is to
develop a staff training programme, based on the existing ‘School of Social
Animation’,81 which was itself inspired by the Danish idea of a Folk University.
The idea is to train 130 people, including former prisoners, residents of mental
homes and orphanages, homeless and long-term unemployed people, who are
referred by institutions such as Municipal Centres of Social Help and Work
Offices.
230 It is hoped that these trainees will go on to create several dozen social co-
operatives. Sectors that have been researched include second-hand shops,
metal recycling, rickshaws for cemetery visitors, sport and recreation centre
administration, and agro-tourism. A street paper on the British model is being
founded and multi-trade social co-operatives offering services such as cleaning,
renovation and gardening are considered a promising avenue.
81
http://www.barka.org.pl/sas/index.htm
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231 Other objectives of the project are to improve public perceptions of the target
group, to promote European standards of equal opportunity, and to improve the
qualifications and effectiveness of individuals employed in the social economy.
6.3.2 Centre for Social Integration, Olsztyn

232 This was set up at the initiative of the major of Olsztyn at the end of 2003. The
first group of 26 trainees – drawn from the long-term unemployed (those out of
work for longer than 2 years), homeless, drug and alcohol abusers and ex-
prisoners – began their social inclusion programme in June 2004. The second
intake is now in place. Half the trainees are women. The courses last one year.
Two days per week are devoted to education and therapy, and the other three
days are taken up with vocational training workshops at 23 different places in
Olsztyn – public, private and third sector. Each trainee follows an individually
designed curriculum, and is supported by a team of psychologists, therapists,
social workers and vocational advisers. They receive an allowance of €100 per
month. The centre also operates a community transport service for old people.
6.3.3 WAMA-COOP
233 WAMA-COOP82 in Olsztyn is a co-operative development agency that has been
set up on the Swedish model with the help of the Kooperativa Forbundet Project
Centre and the Olof Palme International Centre in Sweden. It works in the
Olsztyn area in NE Poland (Warmia and Masuria) where unemployment is high –
in one powiat as high as 42% – owing to the closure of collective farms.
234 The National Co-operative Council is supporting WAMA-COOP for three years, in
what constitutes a hopeful sign that a spirit of renewal is afoot in the traditional
co-operative movement. The training is financed by the local labour offices.
235 WAMA-COOP was founded in 1999 as an association. It employs one person

(the president, Przemysław Rosiński). Its aim is to set up two co-operatives a
year, and it has so far set up six co-operatives, the last two under the new social
co-operative law. They are active in basket weaving, information technology,
catering and tourism. WAMA-COOP sees potential in elderly care, childcare and
recycling.
236 The association’s development process follows the stages of speaking to local
organisations to promote the idea; forming a start-up group; developing the
business idea; building a coalition of supporters; legal registration; training in
interpersonal and vocational skills; launch. The group has permanent contact
with an adviser.
237 Its independence from local government is an important factor in its credibility
with its clients. Nevertheless the active participation oflocal authorities is vital
where a new co-operative is to be established. One simple form of help they
habitually give is the rent-free use of premises.
238 WAMA-COOP finds it difficult to raise capital, and hopes that the forthcoming law
on social co-operatives will enable local authorities to invest directly in new co-
ops. The need for sustained financial support should be borne in mind, as
82
www.wamacoop.olsztyn.pl
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several other similar agencies were started using EU pre-accession funds, but
have since closed owing to lack of finance. WAMA-COOP itself proposed an
EQUAL project, but it has not been selected.

239 There are four potential lessons that the United Kingdom can draw from the
Polish experience:
(1) Use European networks:
240 Poland has had the benefit of committed practitioners, and has drawn on their
expertise to rapidly set up a framework of enabling legislation. It has also
benefited from international support.
(2) Do not pigeon-hole social enterprises:
241 The focused use of EQUAL resources on one theme is efficient. However there
is the concomitant risk that, by separating the funding sources for mainstream
entrepreneurship and the social economy so completely, the development of the
social economy will become delinked from business development. This seems to
suggest that social enterprises are not thought of as enterprises in the full sense,
and might encourage the economic development industry to ignore social
enterprises and lead to unbalanced development. There are around 180 local
business incubators, whose services NGOs currently do not access. A feeling
exists that greater consultation between the government and the movement
beforehand would have led to a better use of the EQUAL resources.
(3) Stimulate regional initiative:
242 Poland also shows the need for local development to be based on empowering
local actors, and the impossibility of relying on established hierarchical
structures, which may have become fossilised.
243 The WAMA-COOP regional co-operative development agency shows the value
that local initiatives can derive from being part of European networks. It also
shows the need for a coherent regional policy, based on authorities with the
scale to formulate and implement development strategies, and to support central
government’s desire to see the social enterprise sector grow.
(4) Ensure finance is available:
244 Major problems exist in the areas of motivation, skill and finance. Despite the
large presence of microcredit initiatives (e.g. BISE) and the growth of the SKOK
co-operative banks, lack of investment capital is still a major barrier to social
enterprise growth.
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7 USA: BUSINESS-ORIENTATED AND

COMMERCIAL
7.1 Defining Social Enterprise in the USA

245 The meaning of social enterprise is generally not well understood in the USA,
although an emerging movement around social entrepreneurship is beginning to
use the terminology.
246 Within the USA, the broad field of social enterprise might be taken to include co-
operatives, Not-for-Profit organisations (NfP’s) and the mutuals sector; all share
a common characteristic of high levels of commerciality compared to their
international brethren. The fast growing social entrepreneurship movement links
top universities with foundations and NfPs and is proving to be very dynamic.
Within this context (for example, Harvard Business School, Dukes University and
the Ashoka Foundation), social enterprise is used to mean an organisational
outcome of social entrepreneurship83. This usage has now developed beyond US
shores within a network of top European universities including the UK’s Skoll
Centre for Social Entrepreneurship at Said Business School, University of
Oxford.
247 The main source of information on cooperatives is the US National Co-op
Business Association (NCBA)84. Different theoretical arguments exist for the
origins and development of the NfP sector in relation both to the private and the
public sectors85. The John Hopkins University Centre for Civil Society Studies
launched an international comparative study of NfPs in many developed
countries in 1990; they reported in 1995, and have provided a database that
informs much theory and policy86.
83
www.ashoka.org; www.hbs.edu/socialenterprise
84
http://www.ncba.org/. See Glossary – ‘NCBA’
85
See Powell, W. 1987, The Non-Profit Sector, Yale University Press
86
Salamon, L. 1995, Partners in Public Service: Government-Nonprofit Relations in the Modern
Welfare State. The Johns Hopkins University Press
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7.1.1 The Scale and Scope of Social Enterprise87

(a) Co-operatives
248 US co-operatives have followed classic patterns of development; farmers
collaborating for joint purchasing/marketing, consumers combining to buy quality
food more cheaply, smaller worker co-ops arising from alternative movements,
and more recently in response to opportunities in the welfare sector. U.S. co-
operatives serve some 120 million members, and they operate in every industry
including agriculture, childcare, energy, financial services, food retailing and
distribution, health care, insurance, housing, purchasing and shared services,
telecommunications, and others.
249 The US experience is marked by a number of interesting examples in the health
sector, and quite a few examples of secondary co-ops where organisations (co-
ops or SMEs) collaborate for joint purchasing or marketing. There are some very
large co-ops in the US, especially in the agricultural sector – there are 29
cooperatives with annual revenues in excess of $1 billion, including such well-
known names as Land O'Lakes, Inc., and ACE Hardware. The top 100 co-ops
have a combined $117 billion in revenues.
250 The scope of the co-operative sector includes:
 Some 250 purchasing cooperatives which offer group buying and shared
services to more than 50,000 independent businesses;
 Nearly 10,000 U.S. credit unions with 84 million members and assets in
excess of $600 billion;
 More than 6,400 housing cooperatives that provide homes for 1.5 million
households;
 About 30% of farmers' products in the U.S. are marketed through more than
3,000 local agricultural cooperatives with 2 million farmer, rancher and
grower members. These comprise some 27 state and regional councils of
cooperatives, which are linked by 50 national, regional and federated farmer
cooperatives. A recent development has been that of ‘new generation’
agricultural cooperatives which have been organised in North America to
produce value added goods (for example, mozzarella cheese, pasta) due to
increasing competition arising from vertical integration in the food industry,
free trade, and declining farm supports. It is estimated that over 200 of these
have been created since 1990;
 There are about 500 retail cooperative food stores in communities across the
United States. Cooperative buying clubs are organised more informally, to
87
Sources: Austin, J, May 2004 "A Few First Principles for a Booming Third Sector." The Times
Higher Education Supplement. ; O’Connor, J. and Thompson G., 2001, International Trends in
the Structure of Agricultural Cooperatives.; Lester M. Salamon, S. Wojciech Sokolowski, and
Associates Global Civil Society: Dimensions of the Nonprofit Sector, Volume Two (Bloomfield,
CT: Kumarian Press, 2004); Lester M. Salamon, editor Global Civil Society: An Overview. Lester
M. Salamon, S. Wojciech Sokolowski, and Regina List. (Baltimore: Johns Hopkins Center for
Civil Society Studies, 2003); Global Civil Society: Dimensions of the Nonprofit Sector.
(Baltimore: Center for Civil Society Studies, 1999); Lester M. Salamon Partners in Public
Service: Government-Nonprofit Relations in the Modern Welfare State. (Baltimore: The Johns
Hopkins University Press, 1995); Lester M. Salamon and Sarah Dewees. 2001. In Search of the
Nonprofit Sector: Improving the State of the Art. CCSS WP 18; Whyte, W. Hammer, T., Meek,
C., Nelson, R., & Stern, R. 1983. Worker Participation and Ownership. Ithaca. NY.
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buy directly from a wholesaler and save substantially on groceries. They

usually require members to volunteer time towards ordering, bookkeeping
and distribution or common grocery items or special produce such as
organic. There are approximately 75 cooperative food warehouses -
secondary co-ops that are owned and controlled by the local cooperatives
they serve. They supply food to retail co-ops and buying groups within their
regions and provide technical assistance;
 There are now more than 150 non-profit funeral-planning groups in most
states of the U.S. and in the provinces of Canada;
 Many Health Maintenance Organizations (HMOs) were originally consumer-
owned cooperatives, although competition and the high cost of healthcare
have reduced the number of consumer-owned HMO co-ops. Those still
existing include Health Partners Inc. which is based in Minneapolis,
Minnesota, and is the nation's largest consumer-owned HMO providing
health care services and insurance for nearly 660,000 members. Group
Health Co-operative is based in Seattle, Washington and is the nation's
second largest consumer-governed, nonprofit HMO, providing care for nearly
600,000 members;
 Hospital Group Purchasing Cooperatives are secondary co-ops that provide
group purchasing for medical devices, equipment and supplies, together with
training and other educational services for their members such as small
community-owned non-profit hospitals, community-owned health care
systems and their doctors. One example is VHA Inc., a nationwide
cooperative that is owned and governed by its 2,200 members. . It negotiates
contracts with sellers of supplies for hospitals (using its group buying power),
and it also provides services relating to clinical training, healthcare worker
safety, operational efficiency, management, etc. A similar example is the
University Health System Consortium which is a purchasing co-op for
University-based hospitals;
 Similarly there are Independent Pharmacy Purchasing Co-ops for small,
independently owned pharmacies. One example is EPIC Pharmacies which
serves over 500 independent pharmacies in seven mid-Atlantic states.
Independent Pharmacy Co-operative based in Sun Prairie, Wisconsin is the
largest purchasing organisation owned by independent pharmacies with more
than 1000 affiliates and 4,000 members. State Pharmaceutical Co-ops and
Buying Groups are purchasing cooperatives and multi-state buying groups
which negotiate lower prices with drug manufacturers;
 Health Insurance Purchasing Cooperatives, again at the secondary level,
allow small businesses and municipalities to band together to negotiate for
improved health insurance coverage for employees. PacAdvantage is the
country's largest non-profit small business health insurance purchasing
cooperative, serving employers with 2 to 50 employees, and offering a wide
variety of health plan options to some 150,000 people;
 There are more than 1 million units of Cooperative Housing throughout the
United States, largely in major urban areas like New York City, Chicago and
Washington. These generally involve some form of ownership, but there are
a variety of types: some operate at market value of properties or shares;
some limit the return allowed when shares are sold; and some lease the
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property from an investor on a long-term basis, sometimes with an option to

buy. Residents operate the property as a cooperative including some
designed with service features for senior citizens and, in certain cases, enjoy
government subsidies;
 Consumer-owned Utility Cooperatives play a key role in providing affordable
utility services across both rural and urban America. There are three primary
types of utility co-ops: electricity co-ops, telephone co-ops, and water co-ops.
Most operate in rural areas with the support of the US Dept of Agriculture
(typically via loan and loan guarantee schemes). Electricity co-ops cover
some 75% of U.S. land mass. The 865 consumer-owned distribution
cooperatives serve 36 million consumer-members (12 percent of the U.S.
population). A further 65 secondary generation and transmission
cooperatives, owned by their member electricity distribution co-ops, produce
and transmit electricity;
 Telecommunications Cooperatives serve millions of people in rural America.
They provide local and long distance telephone (via 270 telephone
cooperatives), Internet, and satellite television services to their consumer-
owners. At the secondary level, the National Rural Telecommunications
Cooperative (NRTC) is a co-op, owned by its 1,000 member utilities,
providing access to long distance services, broadband access, and satellite
television to enhance the services provided by rural utilities to their
customers. Its serves more than 1.7 million rural consumers;
 Community or member-owned water cooperatives are less common but are
found particularly in the rural West, providing water and/or wastewater
services on an at-cost basis;
 There exist about 300 worker-owned co-ops operating in a variety of sectors
including childcare, commercial and residential cleaning, food service,
healthcare, technology, consumer retail and services, manufacturing,
wholesaling, etc. In the main, however, they operate in the home healthcare
field with the best known example (which has informed British developments)
being Cooperative Home Care Associates, South Bronx, New York. It is a
600 member, worker-owned home health care service operating on a
contract basis to large health-care providers.
(b) Not-for-Profit Sector

251 The USA has one of the highest levels of voluntary sector activity in the world. In
a 36 country comparative study it was 4th (with a 9.8% share of civil society
organisation workforce as a percentage of the economically active population)
behind Netherlands, Belgium and Ireland, and ahead of the UK88. This amounts
to 8.6 million FTE89 paid workers. In addition there is a high level of volunteer
activity with 49% of the population contributing their time to NfPs.
252 Table 7.1 outlines the different sectors in which NfPs are found. NfPs are very
strong in health and education where the nonprofit sector accounts for half of
88
Lester M. Salamon, S. Wojciech Sokolowski, and Regina List Global Civil Society: An
Overview (Baltimore: Johns Hopkins Center for Civil Society Studies, 2003)
89
Full Time Equivalent
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U.S. colleges and hospitals. In welfare, the sector accounts for nearly two-thirds
of all social service agencies; culture and recreation are also strong with almost
all symphony orchestras, for example, being NfPs.
253 Table 7.1 also shows that philanthropy plays a large part in US funding of NfPs;
in fact it makes up almost as large a share as government. Nevertheless, fees
charged are the major source of income, making up more than 50% of income on
average. This indicates NfPs operating in a very commercial manner; indeed
some commentators regard them as not so different from private commercial
providers of services.
Table 7.1
254 Many philanthropic foundations arose from successful family businesses. The
role of philanthropic foundations (such as Ford and Rockefeller) has traditionally
been very strong in the US, and in the early days of the development of NfPs,
especially in the area of education and health, they were regarded almost as
partners in capitalist development. Thus top universities have been endowed with
high levels of philanthropic resources partly to ensure that a well educated
workforce is available for business. Furthermore, in the 19th century the elites in
business, foundations and NfPs were strongly linked and leaders rotated
between the sectors. This pattern of partnership was subsequently modified, both
by responses to the needs of poor people during the Depression, and by the
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state seeking to regulate and co-opt the NfP sector for public service delivery.
Nevertheless, there continues to be a strong private orientation in the sector,
together with a US culture resistant to too much state service provision.
Similarly, the foundations have been regulated, largely because some of them
were seen as taking advantage of tax breaks to support rich families.
(c) Mutuals
255 Membership in the National Association of Mutual Insurance Companies
(NAMIC) is not restricted to mutual insurance companies. Stock insurance
companies, reinsurance companies and industry vendor companies may also
apply to become members of the association and enjoy the benefits membership
can bring.
256 Founded in 1895, NAMIC is a full-service national trade association with more
than 1,400 member companies that underwrite 43 percent ($196 billion) of the
property/casualty insurance premium in the United States. Of these, more than
1,000 mutual insurance companies, with more than $80 billion in net written
premiums, are owned by their policyholders.
257 NAMIC members account for 44 percent of the homeowners market, 38 percent
of the automobile market, 39 percent of the workers’ compensation market, and
31 percent of the commercial property and liability market.
7.2 Government and Social Enterprise

258 In the USA, Government support for the NfP sector must be understood within
the broader economic and social characteristics, or political economy, of the
USA. In particular, philanthropic giving is almost twice the average for developed
countries and significantly higher than for the UK (Table 7.2). Combined with a
much higher level of fee earning activity amongst the sector also, government
support provides only a third of revenues to the sector.
Table 7.2: A comparison of USA Not-for-Profit Sources of Income
Country Fees Government Philanthropy

Developed Countries 45% 48% 7%
UK 45% 47% 9%
USA 57% 31% 13%
259 For 2000, in the USA philanthropic giving was made up of the following sources:
 Individuals: $152.07 billion (75.0%)
 Foundations: $24.50 billion (12.0%)
 Bequests: $16.02 billion (7.8%)
 Corporations: $10.86 billion (5.3%)
260 The high rate of philanthropic giving is supported by tax breaks, with 1.25 million
organisations with tax exempt status from the Internal Revenue Service.
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261 Public charities receive their tax-exemption under subsection (3) of Section
501(c). This allows donors to make tax-deductible contributions to the
organisation. The IRS defines these organisations as ‘charitable’ because they
serve broad public purposes, including educational, religious, scientific, and the
literary activities, among others, as well as the relief of poverty and other public
benefit actions. Private foundations are also charitable organisations exempt
under Section 501(c)(3). Most private foundations are created to distribute
money to public charities or individuals. They must meet strict guidelines
requiring distribution of a proportion of their assets each year. Other types of tax-
exempt organisations include social welfare organisations (501(c)(4)), labour and
agricultural associations (501(c)(5)), business leagues (501(c)(6)), and fraternal
beneficiary societies (501(c)(8)).
262 Government also supports the sector through grants although these comprise
only about 8% of revenue for all reporting charities (about $59 billion).
Importantly, this does not include government contracting of services (fee
income) such as the dominant role played by the sector in health care (for
example, Medicare and Medicaid).
263 Finally, government supports charities indirectly, as individuals may receive
grants or subsidies to pay fees for services and goods provided by nonprofits, for
example, primary and secondary school vouchers or college scholarships.
264 Relatedly, employee ownership enjoys tax breaks with, for example, both worker
buyouts and succession buyouts supported as strategies that have expanded the
activity of the sector
7.2.1 Support Structures

265 An extensive array of diverse structures support activity at the State level and
trade associations play a particularly strong role. Examples include American
Hospital Association, Council on Foundations, Independent Sector and
federations like United Way and Goodwill Industries. In addition, organisations
such as American Red Cross and March of Dimes are major corporate structures
comprising, for example, branches, chapters and divisions.
266 Probably the most important support organisation for the NfP sector is the
Independent Sector - a nonprofit, nonpartisan coalition of more than 700 national
organisations, foundations, and corporate philanthropy programs, collectively
representing tens of thousands of charitable groups in every state across the
nation. Its mission is to promote, strengthen, and advance the nonprofit and
philanthropic community to foster private initiative for the public good.
267 Other examples are the Council on Foundations – a membership organisation of
more than 2000 grant making foundations and donation programmes that
provides leadership expertise, legal services and networking opportunities—
among other services to its members and the general public; the Foundation
Center aims to strengthen the nonprofit sector by advancing knowledge about
U.S. philanthropy; and the Alliance for Nonprofit Management is the professional
association of individuals and organisations devoted to improving the
management and governance capacity of nonprofits.
268 Within the co-operative segment, NCBA is the lead national membership
association representing cooperatives of all types and in all industries. It is
democratically organised and operates according to cooperative principles. It
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provides services including education, co-op development, communications,

public policy, member services, and international development programs. It also
provides a lobbying voice on Capitol Hill. CooperationWorks! is a national
organisation of 21 U.S. cooperative business development centres working
together to revitalize communities through effective cooperative enterprise
development.

269 The following section provides three examples of interest drawn from USA social
enterprise policy and sector activity.
7.3.1 Social Entrepreneurship

270 In the US, several philanthropic foundations are supportive of social
entrepreneurship initiatives. These include the Skoll Foundation (Jeff Skoll,
founder of ebay), the Ashoka foundation (which aims to develop the profession of
social entrepreneurship around the world), and the Schwab Foundation for social
entrepreneurship.
271 The website: www.socialedge.com (sponsored by the Skoll Foundation) is a
central node for communications in this network.
272 Academic institutions, such as Dukes University’s Center for the Advancement of
Social Entrepreneurs, Stanford University’s Center for Social Innovation, and
Harvard Business School play an important role in this movement. In Harvard,
the Social Enterprise Initiative was begun in 1993. Their approach to social
enterprise is concerned with individual or organisation contributions for social
improvement, regardless of its legal form (nonprofit, private, or public-sector) –
thus the social purpose and impact is paramount rather than the means (or form)
of its achievement.
273 NGOs include the Social Enterprise Alliance which is a “membership

organization devoted exclusively to building sustainable nonprofits through
earned income strategies”. The field of activity covers big business corporate
social responsibility, NfPs, and extends to NGOs supporting development and
advocacy in third world countries.
7.3.2 ESOPS and Employee owned businesses

274 There are estimated to be between 30-40,000 businesses in the USA in which
employee ownership is the major share. Many of these have arisen due to tax
breaks that allow new succession and retirement options to small business
owners, so that they can sell their companies to the workers in the form of a co-
op or an ESOP (employee stock ownership plan). Since the mid 1980s, this
measure has led to the creation of thousands of ESOPs. Similar structures have
been used for employee buyouts of failed conventional businesses.

275 There are five potential lessons that the United Kingdom can draw from the
American experience:
(1) The development of corporate philanthropy:
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276 The US enjoys a high level of corporate philanthropy, and Philanthropic

Foundations can be seen as important investment vehicles for third sector
activity. They have also historically played an important role in supporting
innovation in the sector. Corporate philanthropy in the UK is growing but does not
match the scale, scope or diversity of that undertaken within the USA.
(2) The US Not-for-Profit Sector:

277 The sector is characterised by high levels of commerciality, especially in health
and education, although trade-offs do exist against social outcomes achieved.
(3) Social entrepreneurship:
278 A growing movement in both the US and the UK this has the potential to provide
a cross-departmental strategy linking social innovation, social enterprise, and
NGO activity in the 3rd world.
(4) Rural co-operatives:
279 The USA has a long tradition, and range of examples, of co-operatives who act
as partners in the delivery of government rural policy; some may provide useful
case studies for UK rural enterprise activity.
(5) Employee ownership:
280 US government support for employee ownership has provided support for the
expansion of the sector.
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8 CONCLUSIONS: LESSONS FOR THE

DEVELOPMENT OF THE UK SOCIAL
ENTERPRISE SECTOR
281 The Social Enterprise Unit (SEnU)90 commissioned this international review of
social enterprise policy and practice as part of its on-going process of policy
development. The review has examined social enterprise policy and strategy at
the European Union (EU) level, in four member states (France, Germany, Italy
and Poland), and in the USA.
282 Drawing on the country case studies, and within the context of the Findings of the
Review of the UK Social Enterprise Strategy91, a number of potential lessons and
distinguishing features can be distilled to inform future UK policy and strategy
towards the social enterprise sector.
283 Table 8.1 below summarises distinguishing features drawn from each case study
undertaken within this international review. Sections 8.1 - 8.3 build on the
lessons identified and distinguishing features to draw some conclusions for the
development of the UK social enterprise sector.
90
Tasked with being the focal point for Government support for social enterprise in the UK,
SEnU sits within the Small Business Service section of the Department for Trade and Industry
91
http://www.sbs.gov.uk/SBS_Gov_files/socialenterprise/GHK-Review-of-SEStrategy.pdf
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Table 8.1: A Summary of Distinguishing Features of the Country Case Studies
Distinguishing Features
European • Different definitions of social enterprise can be identified across Europe

Policy (p.3) • A diversity of organisational models exist, and continue to develop, within the sector
• Organisational diversity provides a fertile context for learning across nation states
• Sector development is facilitated by evolving regional structures and powers
• Autonomous organisational structures have empowered sector development
France (p.17) • Cohesion within the sector has been encouraged

• Cohesion has been facilitated through simple legal frameworks
• Positive examples exist of the integration of provider and user voices within
enterprises
• The social benefits delivered by social enterprises have been recognised through
economic instruments for the sector
Germany (p.27) • Policy frameworks have created barriers to the development of self-sufficient
enterprises
• Organisational innovation has been inhibited by legal and administrative structures
• Development has been inhibited by the absence of a long term and joined-up vision
for the sector
Italy (p.36) • Explicit recognition exists of the benefits of social enterprise

• The sector has retained and benefited from organisational flexibility in its
development
• Numerous examples of multi-stakeholder structures exist within the sector
• Consortia are used as a tool to create sectoral structures and deliver services
• Tax relief is used to reflect social benefits delivered by the sector
• A braided business support system exists in support of the sector
Poland (p.45) • European networks are being used to develop the sector
• Social enterprise is identified as a component of the plural economy
• Regional initiatives are being used to stimulate the growth of the sector
• Public finance is available for sector development
USA (p.54) • Corporate philanthropy acts as a sector development tool

• A proportionately larger Not-for-Profit Sector in comparison to European economies
• Increasing social entrepreneurship is a driver of sector development
• A long tradition, and range, of rural co-operatives
• Government support for employee ownership as a model of social enterprise
8.1 Defining the social enterprise sector

284 Three conclusions can be drawn on the issue of defining the social enterprise
sector.
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8.1.1 No Single Definition of ‘Social Enterprise’ Exists:

285 The international review highlights the lack of any universally agreed definition of
social enterprise, although a broader agreement exists on a group of
organisations (co-operatives, associations, mutuals, Not for Profits, as well as
social enterprises) that comprise the ‘social economy’.
8.1.2 The Relative Emphasis in the UK Definition of Social Enterprise:

286 At European level, the work of EMES (see Section 2.1) provides a useful
framework for definition with its identification of four economic and five social
criteria; within these criteria the most distinctive aspect of the UK definition of
social enterprise is the limited emphasis placed on democratic control (criteria 7)
and the extent of citizen initiative (criteria 6) and participatory character (criteria
8). Within this broader understanding of social enterprise at international level,
the UK policy emphasis and interest in social enterprise as part of the process of
economic development - including an expectation that such enterprises will be
increasingly financially self-sustaining through traded activities and contribute to
regional and national economic competitiveness - extends the understanding of
the economic outcomes expected of the sector, compared to the other countries
reviewed.
8.1.3 National Variants of the Social Enterprise Sector Remain:

287 The social enterprise sectors of different countries remain distinctive. The
development of the sector in different countries reflects the history of each
nation’s political economy – including the balance drawn between the respective
roles of the private, public and ‘third sector’. In turn, this balance is replicated
both in regulatory and institutional structures within which the sector works and
expectations as to the rightful role of social enterprise in the economy (for
example, compare USA with France).
288 Nevertheless, this sectoral distinctiveness is characterised more by i) (dominant)

organisational form and ii) level and type of engagement with government
structures than by difference in social objectives with social enterprises delivering
common services and activities across nations92.
8.2 Framework for development

289 The international review has produced a range of conclusions as to the likely
nature of the policy framework conducive to the further development of the
sector.
8.2.1 Multiple Policy Objectives Delivered Through a Variety of Organisational Models:

290 The diversity of social enterprise sectors across the country case studies
highlight how different organisational models are pertinent to the achievement of
different policy goals – and that there is no single ‘right or wrong’ policy
framework.
92
Within Europe, it is suggested that further detailed review of implementation of the EU
programme EQUAL would provide further insight on national models of social enterprise
development.
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291 The review suggests a framework for policy development which reflects nation
states’ own policy interests in social enterprise; requiring policy makers to identify
the expected or desired contribution that social enterprise can make to policy
goals. Within the UK, this process can be seen in the identification of three major
drivers for policy development: economic development, social cohesion and
public service delivery, which we consider below.
8.2.2 Dominant Policy Goals of Workforce Integration and Improved Service Delivery:
292 Whilst recognising the multiple interests and objectives of social enterprise and
the social economy more widely, the case studies reveal a tradition and a
prevailing interest in the use of social enterprise as a means of integrating
disadvantaged members of the community into work (for example, long term
unemployed or disabled people, see also OECD 199993); and as a means of
augmenting public service delivery, especially in the areas of health and social
care (although the spread of services is extensive). These imperatives are also to
be found in the UK and embraced by the present Social Enterprise Strategy.
8.2.3 Economic Instruments to Support the Sector in the Delivery of Social Benefits:
293 In many instances, social enterprises meet public policy aims through their
activities in areas of market failure. A number of country case studies highlight
recognition of this value of the sector, and the costs of addressing market failure,
through the use of economic instruments to support the sector in the delivery of
policy goals (for example, vouchers and tax breaks). Financial sustainability does
not appear to be a primary goal or expectation, but the need to compensate
social enterprise for additional costs (for example, in relation to the integration of
disadvantaged groups in the workforce) is recognised.
8.2.4 Organisational Flexibility and Hybridity:

294 In common with the development of the Community Interest Company in the UK,
the country case studies highlight continued efforts to facilitate innovation,
cohesion, partnership and sectoral development across ‘families’ of organisations
through legislative and regulatory change; the aim is to achieve pathways of
adaptation rather than multiple legal forms (see, for example, the French SCIC
example in comparison to Germany’s more rigid legal structures).
295 The process of creating an enabling environment for sector development is

further facilitated where a vision of the sector as long term, joined-up and
contributing fully to the diversity of a plural economy has been articulated (see
the UK in comparison to temporary work schemes and/or prohibition on trading in
markets in other European countries).
8.2.5 Regionalisation as an Effective Unit of Policy Delivery:

296 The review evidence suggests that regional structures can both connect with
local activity and maintain strategic understanding of the breadth and depth of
the sector and its contribution to policy goals. Within the UK this supports the
strengthened role of the Devolved Administrations and Regional Development
Agencies in assisting the development of the sector.
93
OECD (1999) Social Enterprises OECD, Paris
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8.2.6 Representative Structures:

297 A number of the case studies (Italy, European policy) and experience within the
UK highlight that sector development is enhanced through the development of an
autonomous support structure for the sector as part of sector development,
growth and professionalisation (including consortia).
8.2.7 A Single Government Body as the Focal Point for Strategy and Policy Towards the
Sector:
298 Within the principles of subsidiarity and national systems of governance, vision,
representation and the development of strategy and policy towards the sector
has been assisted through units dedicated to the sector; indeed, their creation is
often symptomatic of growing recognition of the sector.
8.2.8 International Engagement:

299 Evidence exists across Europe of the impact of EQUAL (and its antecedents) in
developing international understanding of the sector and spreading good practice
examples of social enterprise activity. The new member state of Poland has
exemplified the benefits of European support and expertise in progressing sector
development.
8.2.9 Evaluation of Social Enterprise as an Economic and Social Agent:

300 Whilst international evaluation of the sector is still in development, little evidence
exists that evaluation activity is being driven by a concern for economic efficiency
and effectiveness in contrast to social outcomes achieved.
8.3 Supporting the Social Enterprise Sector: policy rationales

301 The Review of the UK Social Enterprise Strategy identified three policy drivers
that support the promotion of social enterprise by government. Lessons from the
international review can be drawn in relation to these drivers.
8.3.1 Economic Competitiveness

302 Within the UK, a key policy driver exists concerned with developing the
contribution of the social enterprise sector to the plural economy, including
expanding its economic value in terms of employment, productivity, skills,
innovation and, ultimately, the development of a self-sustaining sector.
303 The international review suggests that contribution to economic competitiveness

remains less of a concern among other countries; the sector’s contribution is
recognised as a response to market failure (rather than promoted within the
mainstream economy).
304 The willingness of other countries to recognise the additional costs associated
with addressing market failure has potentially important precedents in the move
to increase the financial sustainability of social enterprise.
8.3.2 Social Cohesion

305 The contribution of social enterprise to social cohesion stands as a common
policy interest across nation states, including within the USA. Cohesion may be
understood in terms of the individual (for example, workforce integration in
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Germany and Italy) or of disadvantaged areas (for example, France and Poland).
The perceived value of social enterprise to improving social cohesion is therefore
at least as great in other countries as in the UK, and arguably more so. The
particular UK interest in area-based policy (for example, Sustainable
Communities) might benefit from a more detailed consideration of responses in
other countries.
306 As a common policy interest, the use of tax breaks and credit systems to
encourage social enterprise response, as introduced in other countries such as
France and the USA, may have further lessons for UK policy development.
307 In this context, the increasing interest in the UK to evaluate the social benefits of
social enterprise activity (and which does not seem so evident in other countries)
potentially provides the basis for measures that seek to internalise these benefits
in the compensation to social enterprise.
8.3.3 Public Service Delivery

308 A tradition of social enterprises delivering public services exists in all the
countries examined (with the possible exception of Germany) but has attained a
renewed vigour and purpose under UK policy. The US provides particular
experience in liberalisation and externalisation across a range of pubic services
(education, health care, housing, etc.) and their delivery through social
enterprise.
309 The participatory commitment of social enterprise to representation by both

provider and users has increasing value where services need to be designed and
delivered with the full support and advice of users, driven by the increasing
attempts to decentralise and improve local service delivery. This participative
approach has particular merit where, as in the context of the UK procurement
strategy, there is a desire to see greater discussion and a more holistic approach
to the design of local services.
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GLOSSARY
ABM The ABM (Arbeitsbeschaffungsmassnahmen)programme is a German federal
employment creation measures package which aims to create new jobs by means
of wage subsidies (between 30% and 75% of the factual wage) and loans. These
funds are granted for a particular period of time in the expectation that the
employer will transform this employment into a regular job (www.lse.ac.uk).
ABS The ABS (Gesellschaft zur Arbeitsförderung, Beschäftigungs und
Struckturwandel) scheme supports employment and structural development
companies that had their origin in 1991 in the former East Germany. They aimed
to provide a bridging and training/retraining function for workers being shed from
state enterprises following re-unification (www.ilo.org).
ACME The Association of European Cooperative and Mutual Insurers (ACME) helps
promote collaboration and represents the interests of members in Europe
(www.acme-eu.org). In addition to its influential role in helping to shape European
Union's financial services policy, ACME provides opportunities for networking and
information sharing in a non-competitive environment.
ADIE Association pour le Droit à l’Initiative Economique (ADIE) is an association which
helps of the people excluded from traditional banking structures and labour
markets to create their own company and therefore their own employment.
Created in France in 1989, assistance is offered through microcredit facilities
(www.adie.org).
Agenzia per le Agenzia per le ONLUS , full name Agenzia per le Organizzazioni Non Lucrative di
ONLUS Utilità Sociale, was established in Italy in 2000 to promote and supervise the third
sector and not-for-profit organisations of social utility (www.agenziaperleonlus.it).
Its tasks include carrying out studies on the sector in Italy and abroad, making
legislative proposals, conducting awareness raising campaigns and promoting
training. Its ten board members are nominated by the government; four are
ministerial representatives and six are chosen for their experience of economics,
finance and the activities sector.
AIM The Association Internationale de la Mutualité (AIM) is a grouping of autonomous
health insurance and social protection bodies operating according to the principles
of solidarity and non-profit-making orientation (www.aim-mutual.org).
ARIES A non-profit information network for the social economy, set up with support from
the European Commission Social Economy Unit, ARIES made available
information on European news affecting the social economy, including news about
funding opportunities and tenders, seminars and conferences, publications etc.
Associations Similar to foundations, associations differ only in the degree of permanence in the
shared existence. An association is a grouping of natural or legal persons whose
members pool their knowledge or activities either for a purpose in the general
interest or in order to directly or indirectly promote the trade or professional
interests of its members (www.europa.eu.int).
Associazioni non Associazioni non riconosciute di Promozione Sociale are Italian terms used in this
riconosciute di report to describe cultural or interest-representation associations. An example of
Promozione Sociale such an organisation is the Circoli ARCI programme which operates affordable
cultural facilities, restaurants and bars etc.
AVISE AVISE, the Agence de Valorisation des Initiatives Socio-économiques, or the
Evaluation Agency for Socio-Economic Initiatives, was created in 2002 by the
CDC and its social economy representatives. It aims to publicise and consolidate
the work of the social economy, whilst supporting the emergence of new socially
oriented enterprise (www.avise.org).
BAG Arbeit BAG Arbeit is the association of employment and training enterprises in Germany.
BAG Arbeit and its members, that is social enterprises and service providers for
the labour market, promote member networking to increase responsivity to social
change participate actively in the formulation of political demands and objectives
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(www.bagarbeit.de).
BAG Integration BAG Integration, or BAG Integrationsfirmen, is a union of integration enterprises in
Germany . It offers support and advice to its member organisations, whilst
representing their interests at a political level (www.bag-integrationsfirmen.de).
Barka Foundation The Barka Foundation is a Polish non-governmental organisation whose stated
aims are to offer support for social development of excluded groups, give
conditions to rebuild their lives by creating a system of mutual help, education and
entrepreneurship, in line with a citizens’ society (www.barka.org.pl). The Barka
Foundations pioneered the ‘Centres of Social Integration’ model which helps
disadvantaged people to create their own employment by setting up social
cooperatives.
Best 3S The Best 3S partnership and network promotes the development of the social
enterprise sector in Germany using EU EQUAL funds. The current funding
program runs from 2002-2005 (www.best3s.de).
Bundessozialhilfeges English translation: Social Assistance Act, Germany
etz
Caisse des Dépôts The Caisse des Dépôts et Consignations (CDC) is a state-owned financial
et Consignations institution that performs various public-interest economic and social development
(CDC) missions on behalf of France's central, regional and local governments
(www.caissedesdepots.fr).
CAP-Märkte CAP-Märkte, or CAP Markets, is an initiative in Germany aiming to establish a
national brand by taking over small neighbourhood supermarkets in suburbs and
villages that have been made redundant by the growth of hypermarkets. They
typically have a sales area of 500 metres squared, stock 7,000 lines and employ
8-12 people, two-thirds of whom are disabled (www.lemat.org).
CCCMAF CCCMAF, the Consultative Committee of cooperatives, Mutuals, Associations and
Foundations, was the predecessor of CEP-CMAF. CCCMAF aimed to assist the
Commission in decision taking on issues in the field of Social Economy by reacting
and giving opinions on all questions in the economic and social domain which
concern the civil society, employment and enterprise policy.
CECODHAS CECODHAS, the European Liaison Committee for Social Housing, is a non-
profit making organisation, representing its member organisations to European
and International Institutions (www.cecodhas.org).
CECOP The European Confederation of Workers Cooperatives and Participative
Enterprises (CECOP) is an international non profit association representing small
and medium-sized worker-controlled enterprises across 42 member countries of
the Council of Europe (www.cecop.coop).
CEDAG CEDAG, the European Council for Non-Profit Organisations, is a network of non-
profit organisations from across the EU member states. The network was
established in 1989 in order to provide a voice for the non-profit sector at
European level on issues, which are common to all non-profit organisations
(www.cedag-eu.org).
CEFEC The Confederation of European Social Firms, Employment Initiatives and Social
Cooperatives (CEFEC) is a European NGO, which represents, SMEs, NGOs, and
organisations, which share the aim of creating work for people with disabilities in
social firms (www.cefec.org).
CEP-CMAF CEP-CMAF, the European Standing Conference of Cooperatives, Mutual
Societies, Associations and Foundations, is the EU-level representative institution
for the social economy. It aims to give cooperatives, mutual societies, associations
and foundations better visibility on issues which are common to them at a
European level, with a view to strengthening their political and legal recognition
and demonstrating the importance of the social economy structures in the
economic and social life of Europe (www.cepcmaf.org).
CGM Consorzio Gino Mattarelli (CGM) was established in Italy in 1986 and is the most
significant national consortium for social cooperatives. As at October 1997 it
grouped together 42 territorial consortia, which in turn comprised of around 700
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cooperatives (www.issan.info).
CGSCOP The Confédération Générale des Sociétés Coopératives Ouvrières de Production
(CGSCOP), or the General Confederation of SCOPs, leads and coordinates the
SCOP enterprise network and represents SCOPs at the national level in France
(www.scop.coop). See also ‘SCOP’
Chèque Déjeuner The Chèque Déjeuner Cooperative is a cooperative society which produces the
Cooperative chèque déjeuner, or luncheon voucher. This voucher is the group’s main product,
but it also makes and distributes chèques domiciles (household vouchers),
chèques services (service vouchers) and a range of chèques loisirs (book tokens,
record tokens and vouchers for cultural events) (www.groupe-cheque-
dejeuner.com).
Chèque Domicile A Chèque Domicile is a household voucher available in France that enables
access to services such as housework, gardening, shopping, childcare, elderly
care and help with schoolwork. Vouchers are redeemable against services bought
from an approved agency and 50% tax relief occurs on spending of up to 10,000
Euro a year. Subsidies are also available for poor households
(www.chequedomicile.fr). This system aims to crystallise the latent demand for
neighbourhood services and regularise informal work, whilst targeting subsidy and
improving living conditions for poor people.
Chèques Emploi The Chèque Emploi Service (CES) is a home help employment voucher available
Service in France that can be used to pay for officially approved domestic and family
services, like childcare, housekeeping, cleaning or ironing, gardening, assistance
to elderly or disabled persons, etc. The CES serves at the same time as a contract
of employment, an instrument to settle the social security contributions in order to
insure the worker, and a means of payment. Its basis is the minimal wage per
hour. Tax relief occurs on spending of up to a preset level and additional subsidies
are available for poor households (www.ces.urssaf.fr).
CIC The Community Interest Company (CIC) is a new type of company in the UK,
designed for social enterprises that want to use their profits and assets for the
public good. The DTI intends that CICs will be easy to set up, with all the flexibility
and certainty of the company form, but with some special features to ensure they
are working for the benefit of the community (www.dti.gov.uk).
CIRIEC International non governmental scientific organisation, aiming to carry out and
promote the collection of information, scientific research and the publication of
works related to economic sectors and activities oriented to the service of general
and collective interest: the action of public authorities in economic fields; public
services; public and mixed enterprises at national, regional and local levels; the
social economy, cooperatives, mutuals and non-profit associations; participation of
workers (www.ulg.ac.be/ciriec).
Citizen Participation There is no universal definition for citizen participation. Essentially the term means
participation in planning by people who are not professional planners or
government officials It is citizens participating in the planning and decision making
that affects their community (www.encyclopedia.thefreedictionary.com).
Civic Engagement Similar to citizen participation, the degree to which civic engagement is occurring
refers to levels of activity in the following sorts of areas; influence over events in
the community, knowledge of local affairs, taking action, involvement in local
organisations (www.statisitics.gov.uk).
Civil Society Contact The EU Civil Society Contact Group brings together six (of which the European
Group Platform of Social NGOs is one) large rights and value based NGO sectors. Jointly
it aims to represent the views and interests of rights and value based civil society
organisations across the European Union on major issues, which affect them
across their sectors of activity. The group seeks a role as an interlocutor with the
EU institutions in specific fields of common interest to discuss the substantive
concerns of the huge range of civil society organisations represented within its
composition. Its objective is to encourage and promote a transparent and
structured civil dialogue that is accessible, properly facilitated, inclusive, fair, and
respectful of the autonomy of NGOs (www.act4europe.org).
CMAF Cooperatives, mutual societies, associations and foundations are often referred to
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collectively as CMAF (www.europa.eu.int).

COGECA COGECA, the General Confederation of Agricultural Cooperatives in the
European Union, is an officially recognised representative body of all agricultural
and fishery cooperatives in the EU. COGECA represents their general and specific
interests vis-à-vis the Community authorities: European Commission, Council of
Ministers, European Parliament, Economic and Social Committee, Committee of
the Regions (www.cogeca.be).
Cohesive Definitions vary as to what constitutes a cohesive community. In the UK however
Communities the LGA define a cohesive community as one where:
• there is a common vision and a sense of belonging for all communities;
• the diversity of people’s different backgrounds and circumstances are
appreciated and positively valued;
• those from different backgrounds have similar life opportunities; and
• strong and positive relationships are being developed between people
from different backgrounds in the workplace, in schools and in
neighbourhoods.
(www.lga.gov.uk)
Community Community Development Finance Institutions (CDFIs) are sustainable,
Development independent financial institutions that provide capital and support to enable
Finance Institutions individuals or organisations to develop and create wealth in disadvantaged
communities or under-served markets (www.cdfa.org.uk).
Community Initiative The EQUAL Community Initiative Programme (EQUAL CIP) tests and promotes
Programme - new ways of combating all forms of discrimination and inequalities faced by those
EQUAL groups most disadvantaged in the labour market (www.objective3.org).
Community Initiative The Interreg III (the latest phase of Interreg) Community Initiative Programme is
Programme - financed under the Regional Policy DG’s European Regional Development Fund
Interreg stream for the period 2000-2006. It aims to strengthen economic and social
cohesion in the European Union by promoting cross-border, transnational and
interregional cooperation and balanced development of the European Union
territory (www.europa.eu.int). Actions in relation to the borders and border areas
between Member States and between the European Union and non-member
countries are, therefore, at the heart of the Initiative.
Community Initiative The ADAPT and EMPLOYMENT Community Initiative Programmes sought to
Programmes - foster innovative policy development and practical activities through a range of
ADAPT and development projects, supported through the European Social Fund on a match
EMPLOYMENT funding basis. The themes of innovation, transnational collaboration and
mainstreaming were central to each programme - with new ideas being trialled in
the context of national and transnational partnership, and findings being
disseminated and used to inform both practical and policy development. Projects
funded under ADAPT focused on SMEs to assist the adaptation of the workforce
to industrial change and promote competitiveness, and under EMPLOYMENT to
support different target groups facing specific difficulties in the labour market. The
EMPLOYMENT programme consisted of four strands:
• NOW – promoting equal opportunities between men and women
• YOUTHSTART – targeting young people under 20 years of age
• HORIZON – targeting disabled people
• INTEGRA – targeting vulnerable and disadvantaged groups
Lessons learned were fed into the EQUAL based Community Initiative.
(www.dfes.gov.uk)
Confcooperative Confcooperative, known in full as the Confederazione Cooperative Italiane was
first established in 1919. It is the first of two main cooperative federations in Italy
(see also ‘Legacoop’) and works to represent, assist and protect the cooperatives
and social enterprises sector (www.confcooperative.it).
Consorzi English translation: consortia. A key feature of the Italian social enterprise sector is
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that it is structured into ‘consortia’ at the local, territorial and national levels – these
are member-controlled bodies that exist to promote and serve their members in
the technical field, in parallel with the federations that exercise representational
and audit roles (www.issan.info).
Cooperativa Sociale English translation: social cooperatives. These social cooperatives are the most
common form of social enterprise in Italy but full legal recognition was not attained
until 1991. The Act of 1991 divided social cooperative societies into two
categories, which correspond to two types of activity. Type A Cooperatives carry
out activities in the area of health, social or education services and Type B
Cooperatives act as firms for integrating disadvantaged people in the labour
market. All together these social cooperatives offer effective social and labour
market integration in a participative way and at low cost to the public purse. Until
2005 this was the only organisation form in Italy that was explicitly tailor-made for
social enterprise. From 2005 onwards however, a broader legal framework for
other types of social enterprise is being created – it is called the ‘Impresa Sociale’
(www.issan.info).
Coopérative A Coopérative d’Activités et d’Emploi is a new form of SCOP which offers common
d’activités et administrative and support services to self-employed people, rather like a
d’emploi business incubator (www.scop.coop). See also ‘SCOP’
Cooperatives An autonomous association of persons united voluntarily to meet their common
economic, social, and cultural needs and aspirations through a jointly owned and
democratically controlled enterprise (www.europa.eu.int).
Cooperatives in The Cooperatives in Europe group was established in March 2004 following the
Europe agreement on a strategic partnership between the International Cooperative
Alliance (ICA Europe) and the Brussels based Coordinating Committee for
Cooperative Associations in Europe (CCACE), to create a common platform to
build the cooperative presence and visibility in the European Union
(www.cooperativesineurope.coop).
Corporate Social Corporate Social Responsibility (CSR) policy aims to encourage companies to
Responsibility develop socially and environmentally aware practices and policies
(www.lgib.gov.uk).
Credit Union A financial cooperative organisation of individuals with a common affiliation (such
as employment, labour union membership, or place of residence). Credit unions
accept deposits of members, pay interest (dividends) on them out of earnings, and
primarily provide consumer installment credit to members
(www.encyclopedia.thefreedictionary.com).
DDR The East German communist state that existed from 1949 to 1990 in the former
Soviet occupation zone of Germany was known as the Deutsche Demokratische
Republik (DDR), or the German Democratic Republic (www.en.wikipedia.org). See
also ‘New Länder’
Délégation Générale The Délégation Générale à l’Emploi et à la Formation Professionnelle (DGEFP), or
à l’Emploi et à la the General Delegation for Employment and Vocational Training, is the French
Formation government department charged to propose the direction of policy for employment
Professionnelle and vocational training. It liaises with other government departments and industry
to build legal frameworks, leading on policy delivery and results evaluation. The
DGEFP is also responsible for feeding French policy into European strategies for
employment, action against poverty and social exclusion (www.travail.gouv.fr).
Département du The Département du Fonds Social Européen is the French government
Fonds Social department that manages EU ESF funds within France (www.travail.gouv.fr/fse).
Européen
Deutscher Deutscher Genossenschafts- und Raiffeisenverband (DGRV), or the German
Genossenschafts- Cooperative and Raifeissen Confederation, is the national apex organisation and
und top-level auditing federation of the German cooperative sector. Approximately
Raiffeisenverband 5,380 primary cooperatives in Germany work within the organisation under the
roof of DGRV for the interests of their 16.4 million members (www.dgrv.org).
Development Development Partnerships (DPs) are the strategic partnerships which carry out
Partnerships EQUAL funded activities. Development Partnerships bring together geographical
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and sectoral representatives who define and agree a strategy and workplan for
tackling inequality and discrimination in the labour market within a chosen Theme
(www.equal.ecotec.co.uk).
DG XXIII/A/4 See ‘Social Economy Unit’
DGXXIII In previous years DG’s were identified numerically – DG XXIII covered ‘Enterprise
policy, distributive trades, tourism and cooperatives’. When the DG’s were
reorganised and renamed in 2000, DGXXIII became part of the DG for Enterprise
and Industry (www.europa.eu.int).
DIES The Délégation Interministerielle à Innovation Sociale et à l’Economie Sociale
(DIES), or the Interdepartmental Delegation for Social Innovation and the Social
Economy, was established in France in 1981. The DIES has the role of creating
within government a favourable financial, legal and human environment for the
associative sector (www.associations.gouv.fr).
DIESIS DIESIS, the European and International Research and Development Structure for
Cooperatives and the Social Economy, aims to support the development of the
social economy and, in particular, of cooperatives and social enterprises in Europe
and in the world through the implementation of development and knowledge-
based activities, such as training, project design, consulting and advisory services,
technical assistance and research (www.diesis.coop).
Dispositifs Locaux Dispositifs Locaux d’Accompagnement (DLAs), or the Local Devices of
d’Accompagnement Accompaniment, were created by the state and the Caisse des Dépôts et
Consignations in France in 2003 to support activity and employment at a local
level in the associative sector (www.associatis.com)
Économie Sociale See ‘Social Economy’
Économie Solidaire See ‘Solidarity Economy’
EES The European Employment Strategy (EES) is the main tool to give direction to and
ensure coordination of the employment policy priorities to which Member States
should subscribe at EU level. The EES is built around four priorities: employability,
entrepreneurship, adaptability and equal opportunities and Employment
Guidelines, proposed by the Commission and approved by the Council, present
common priorities to the Member States national employment policies. Every year
each Member State presents a National Action Plan outlining how the
Employment Guidelines will be applied in the way best suited to that country. The
most recent EES covers the three year period, from 2005 to 2008
(www.europa.eu.int).
EESC The European Economic and Social Committee (EESC) is a non-political body
that gives representatives of Europe's socio-occupational interest groups, and
others, a formal platform to express their points of views on EU issues. Its
opinions are forwarded to the larger institutions - the Council, the Commission and
the European Parliament. It thus has a key role to play in the Union's decision-
making process (www.esc.eu.int).
EESC Liaison Group In February 2004, the EESC adopted several important proposals for stronger and
more structured cooperation with European civil society organisations and
networks. The Committee decided to set up a Liaison Group to interact with these
organisations and networks and designed to be both a liaison body and a structure
for political dialogue. The Liaison Group ensures that the EESC has a coordinated
approach towards these organisations and networks, as well as monitoring joint
initiatives (www.esc.eu.int).
EFC An independent international association, the European Foundation Centre (EFC)
is a gathering point for independent funders active in and with Europe
(www.efc.be).
ELEXIES This study undertaken by the EMES network, is specifically concerned with the
different types of social enterprise for integration, also known as work integration
social enterprise (WISE) in 12 EU countries. Its aim is to identify and describe their
main characteristics as social enterprises, the type of work integration they
provide, their numbers, and how they have developed and are supported. The
ultimate goal of the project is to build a database accessible on internet. The study
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is conducted using the EMES Network definition of social enterprise as a common

reference point and guideline for determining the social enterprises to be included
in the study (www.elexies.info).
EMES The EMES Network owes its name to its first research programme, on "the
emergence of social enterprises in Europe". It studies socio-economic entities and
is currently the best-established European research network in the field
(www.emes.net).
Employability An individual's ability to find or keep a job in a given socio-economic environment.
Employability concerns the appropriateness of skills in relation to the requirements
of the labour market, so that the individual concerned can keep his or her job or
find a (new) job in reasonable conditions in a reasonable length of time. A public
intervention in favour of employability concerns human resource development and
particularly training. The employability of an individual can be examined indirectly
on the basis of pre-established factors (e.g. qualifications, experience, mobility,
existence of job offers) (www.evalsed.info).
ENSIE The European Network for Social Integration Enterprises (ENSIE) was established
in 2001. For several years, exchanges between European networks for social
integration enterprises had already made it possible to identify the common
fundamentals of these initiatives within the various nations of the European Union.
ENSIE however was created to take responsibility for and ensure the
representation, maintenance, and development within the European Union of
networks and federations for economic social integration in Europe
(www.ensie.org).
Enterprise and The Enterprise and Industry Directorate General ensures that EU policies
Industry DG contribute to the competitiveness of EU enterprises and ensure that EU policies
facilitate job creation and economic growth (www.europa.eu.int). Specific
activities and objectives identified for 2005 are:
• Activity 1 - Encouraging entrepreneurship
• Activity 2 - Research – Promoting innovation and change
• Activity 3 - Getting still more from the internal market
• Activity 4 - Competitiveness and sustainable development
Environment DG The Environment DGs main role is to initiate and define new environmental
legislation and to ensure that measures, which have been agreed, are actually put
into practice in the Member States (www.europa.eu.int).
EQUAL Funded through the European Social Fund, EQUAL is an initiative which tests and
promotes new means of combating all forms of discrimination and inequalities in
the labour market, both for those in work and for those seeking work, through
transnational cooperation. EQUAL also includes action to help the social and
vocational integration of asylum seekers (www.equal.ecotec.co.uk). EQUAL
funded activities are carried out by strategic partnerships called Development
Partnerships and deliver around 8 Themes lettered A - I (excluding G).
Equal – Theme A Facilitating access and return to the labour market for those who have
difficulty in being integrated or re-integrated into a labour market which
must be open to all.
Equal – Theme B Opportunities to promote potential for ethnic minorities within the world of
work.
Equal – Theme C Opening up the business creation process to all by providing the tools
required for setting up in business and for the identification and
exploitation of new possibilities for creating employment in urban and rural
areas.
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EQUAL – Theme D EQUAL Theme D aims to strengthen the social economy, in particular the services
of interest to the community, with a focus on improving the quality of jobs
(www.equal.ecotec.co.uk).
EQUAL – Theme E Promoting lifelong learning and inclusive work practices which encourage
the recruitment and retention of those suffering discrimination and
inequality in connection with the labour market.
EQUAL – Theme F Supporting adaptability of firms and employees to structural economic

change and the use of information technology and other new
technologies.
EQUAL – Theme G Reconciling family and professional life, as well as the re-
integration of men and women who have left the labour market, by
developing more flexible and effective forms of work organisation
and support services.
(N.B”The GB programme is not taking part in theme G. Actions
related to work/life balance have been included in the Adaptability
pillar (themes E and F) and issues related to access to employment
should be covered by the Employability pillar (themes A and B),
http://www.equal.ecotec.co.uk/themes/)
EQUAL – Theme H Promoting gender equality in the work place, reducing gender gaps and
supporting job desegregation.
EQUAL – Theme I Helping the integration of asylum seekers. Depending on the official status
of the asylum seeker – an extremely complex area, with variations
between Member States – assistance may be for new ways of helping to
access the labour market, or to provide training for unsuccessful asylum
seekers prior to their leaving the country.
ESF The European Social Fund (ESF) is a Structural Fund and is the main financial
tool through which the European Union translates its strategic employment policy
aims into action. This stream focuses on providing citizens with appropriate work
skills as well as developing their social interaction skills, thereby improving their
self-confidence and adaptability in the job marketplace. The key aim of the Fund is
to provide supporting finance for implementing the National Action Plans for
Employment.
ESOP An employee stock ownership plan (ESOP) is a type of defined contribution
benefit plan in the U.S. that buys and holds company stock. ESOPs are often used
in closely held companies to buy part or all of the shares of existing owners, but
they also are used in public companies (www.nceo.org).
ESSEC ESSEC (the Institut des Sciences Economiques et Commerciales), or the Institute
of Economic and Commercial Sciences, claim to be the first large French school of
management, in association with the London School of Economics and the
Harvard School of Government, to create a sub-school of expertise on the
questions relating to the growing economic and social role of social
entrepreneurship. The ESSEC School of Social Entrepreneurialism was launched
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in January 2003 and aims to explore the ways in which the social economy can
complement the activity of the private and public sectors (www.essec-entrep-
social.com).
EU EU stands for the European Union, formerly known as the EEC (European
Economic Community) and the EC (European Community). The Union now has 25
member states. The EU's decision-making process in general and the co-decision
procedure in particular involve three main institutions:
• the European Parliament (EP), which represents the EU’s citizens and
is directly elected by them;
• the Council of the European Union, which represents the individual
member states;
• the European Commission, which seeks to uphold the interests of the
Union as a whole.
This ‘institutional triangle’ produces the policies and laws that apply throughout the
EU. In principle, it is the Commission that proposes new laws, but it is the
Parliament and Council that adopt them (www.europa.eu.int).
EUROCOOP Founded in 1957 EUROCOOP is the European community of consumer
cooperatives and its members are the national organisations of consumer
cooperatives in 17 European countries. An important part of Euro Coop's activity is
the representation of consumers within the numerous advisory committees set up
by the European Commission, and in particular the Consumer Committee
(www.eurocoop.org).
European The European Commission is the politically independent institution that represents
Commission and upholds the interests of the European Union as a whole. It proposes
legislation, policies and programmes of action and it is responsible for
implementing the decisions of Parliament and the Council. The European
Commission is divided into 26 directorates-general (DGs) and nine services, which
are in turn divided into directorates and directorates into units
European The European Cooperative Statute, known in full as the Statute for a European
Cooperative Statute Cooperative Society (SCE), was adopted by the Council of the European Union on
22nd July 2003 and aimed to provide cooperatives with adequate legal
instruments to facilitate their cross-border and trans-national activities. Europe's
300,000 cooperatives play an important part in the economy, employing 2.3 million
and providing services to 83.5 million members yet cross-border cooperation
between cooperatives had been hampered by legal and administrative difficulties.
This new Statute parallels the Statute for a European Company (SE), adopted in
2001, but has been tailored to the specific characteristics of cooperative societies
(www.europa.eu.int). See also ‘European Statutes’.
European Economic The European Economic and Social Committee (EESC) is a non-political body
and Social that gives representatives of Europe's socio-occupational interest groups, and
Committee others, a formal platform to express their points of views on EU issues. Its
opinions are forwarded to the larger institutions - the Council, the Commission and
the European Parliament. It thus has a key role to play in the Union's decision-
making process (www.esc.eu.int).
European Platform of The Platform of European Social NGOs is the alliance of representative European
Social NGOs federations and networks of non-governmental organisations active in the social
sector. The Social Platform is core subsidised by the Education and Training DG
and promotes social justice and participatory democracy by voicing the concerns
of its member organisations (www.socialplatform.org).
European Statutes In 1992 the Commission presented 3 proposals for Statutes for the creation of a
European Cooperative, European Mutual Society and European Association. Each
Statute consists of; the Regulations to facilitate the development of trans-
national and cross-border activities of cooperatives, mutuals and associations
within the Single Market, and the Directives to ensure minimum rules for the
involvement of workers in the major decisions of such enterprises and
organisations. Once adopted the Statutes will be new legal instruments based on
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Community law that give the option of forming a European Cooperative Society
(SCE), European Mutual (ME) or European Association (EA). Such enterprises
would be able to operate on a Europe-wide basis according to a single set of
rules, and be governed by Community law directly applicable in all Member
States.
Agreement between Member States on the texts of the European Cooperative
Statute was agreed in June 2002, after which it was sent to the European
Parliament under the consultation procedure. Having accepted certain
amendments proposed by the Parliament, the Council adopted the European
Cooperative Statute on 22nd July 2003. Work will now proceed on the
transposition of the Directive into national law. Member States will have a period
of three years to transpose its provisions into national law - the Statute will
therefore be available as an option from 2006.
The Statute for a European Association is currently under discussion in the
Council working groups. The Statute for a European Mutual may be considered
under future Presidencies once agreement has been reached in respect of the
European Association (www.europa.eu.int).
Eurostat Eurostat is the Statistical Office of the European Communities. Its task is to
provide the European Union with statistics at European level. By harmonising
statistics from the European Statistical System (ESS) to a single methodology, the
statistics are made comparable (www.europa.eu.int).
eV / e.V German abbreviation. English translation: ‘association’ (see ‘Association’)
FIP The Forum of Nongovernmental Initiatives (FIP) works to build coalitions within the
foundations and associations sector. The founders of the movement, the initiators
and the participants believe that ‘a strong movement of foundations and the
associations dealing with many aspects of life, aiding specific community groups
and the common good is a necessary condition for complete democracy of a
nation’ (www.fip.ngo.pl).
Forward Studies Unit The Forward Studies Unit was set up in 1989 as a department of the European
Commission reporting directly to the President. The Unit has three main tasks:
• to monitor and evaluate European integration
• to establish permanent relations with bodies involved in forecasting
• to work on specific briefs
(www.europa.eu.int)
Foundations Bodies with their own source of funds which they spend according to their own
judgement on projects or activities of public benefit. They are entirely independent
of government or other public authorities and are run by independent management
boards or trustees (www.europa.eu.int).
Framework The Framework Programmes (FPs) for Research and Technological Development
Programmes for are the European Union's primary funding mechanism for collaborative research
Research and and development projects in science, technology and engineering. The FP
Technological supports collaborative and trans-national activities and provides a mechanism for
Development pooling facilities and knowledge, which is a useful mechanism through which UK
researchers can gain access to wider networks and competences. The Seventh
Framework Programme (FP7) will take over from the current Sixth Framework
Programme (FP6) towards the end of 2006 (www.europa.eu.int).
FTE Full Time Equivalent (FTE)
Genossenschaften English translation: ‘Cooperatives’
gGmbH German abbreviation. English translation: ‘charitable company’
GmbH German abbreviation. English translation: ‘profit-making company’
Hartz reforms Since 2002 the government in Germany has been planning and implementing a
broad programme of labour market services reform. A commission was created on
‘Modern Services in the Labour Market’ (known as the Hartz Commission after its
chairman) - its aim was to achieve a significant reduction of unemployment. At the
heart of the so-called Hartz reforms is the reform of the Federal Employment
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Services into a modern services company, the promotion of self-employment, the

improvement of young people’s opportunities in the labour market and the merger
of unemployment benefit and social welfare to form the new unemployment benefit
II (Hartz IV) (www.germany-info.org).
Horizontal policy, Horizontal policy, synonymous with cross cutting policy, describes policy relating
issues or interests to processes that cut across discrete vertical fields like for example social care or
health (www.lse.ac.uk).
IAE L’insertion par l’activité économique (IAE) is the French phrase describing social
inclusion through economic activity. Le Conseil National de l’insertion par l’activité
économique (CNIAE) advises the French government on policies aimed at
promoting social inclusion through economic activity. Its aim is to help spread best
practice, exchange experience, and develop and reinforce links between the key
actors in the area (www.cniae.gouv.fr).
IDES Institut de Développement de l’Economie Sociale (IDES), or the Development
Institute for the Social Economy, was established in France in 1983 when the
institutions of the social economy decided to invest part of their reserves to benefit
enterprises in the social sector. Its present portfolio amounts EUR 7,000,000
invested in 74 businesses. IDES also manages guarantee funds:
• FGIF for the setting up, the take over or the development of companies
run by women
• FGIE for companies favouring the social integration of disadvantaged
people
• FGAP for companies employing disabled people
• Micro loan guarantee fund. These loans are provided and managed by
ADIE
www.esfin-ides.com
Impresa Sociale English translation: social enterprise (see ‘Social Enterprise’)
Integrationsbetriebe / English translation: ‘Integration firms’ – these are firms in Germany whose primary
Integrationsfirmen aim is to integrate disabled people into the labour market
Intergroup on the The Social Economy and Subsidiarity Intergroup is an informal association
Social Economy composed of members of the European Parliament of all nationalities and
representing all the main political groups. The aim of the Intergroup is to foster
synergies among the different Social Economies in Europe, not only to promote
common initiatives and European projects, but also to represent the wide range of
families of the Social Economy before the European Commission with one sole
voice, which is both strong and coherent (www.europa.eu.int).
International Founded in 1895, the International Cooperative Alliance (ICA) is an independent,
Cooperative Alliance non-governmental organisation which unites, represents and serves cooperatives
worldwide. It is the largest non-governmental organisations in the world. ICA
members are national and international cooperative organisations in all sectors of
activity including agriculture, banking, fisheries, health, housing, industry,
insurance, tourism and consumer cooperatives. ICA's priorities and activities
centre on promoting and defending the ‘cooperative identity’, ensuring that
cooperative enterprise is a recognised form of enterprise that is able to compete in
the marketplace (www.ica.coop).
IPS Industrial and Provident Societies are a legal form for trading businesses in the
UK.
IRS The Internal Revenue Service (IRS) is a bureau of the US Department of the
Treasury. The IRS’s role is to help the large majority of compliant taxpayers with
the tax law, while ensuring that the minority who are unwilling to comply pay their
fair share (www.irs.gov).
ISTAT The Istituto Nazionale di Statistica (ISTAT), or the Institute of National Statistics in
Italy, aims to produce and to disseminate reliable, impartial, transparent,
accessible and pertinent information to describe the social and economic
conditions of the country and its regions. It aims particularly to improve the
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pertinence of the information produced in relation with the real requirements of

citizens, social enterprises and institutions (www.istat.it).
KoiSPE KoiSPE are limited liability social cooperatives established in Greece within the
framework of the social economy. These are mental health units aiming for the
socio-economic inclusion and entry into professional life of persons with severe
psycho-social problems. They operate as “for profit” entities (www.europa.eu.int).
Le Mat Le Mat is a social enterprise network, operating in Italy, and in Europe more
widely, that works with persons with a history of disability, mental illness or drug
addiction, as well as all those who, for one reason or another, are the subject of
discrimination and/or exclusion from the labour market. A core element of Le Mat’s
work has been the creation of a specialist business model; a small social
cooperative hotel franchising network. The network was a success not only
economically but also in the way it includes workers with disabilities and other
disadvantages and imparts professional skills. (www.lemat.org).
Legacoop Legacoop, founded in 1886, is the second of two main cooperative federations in
Italy (see also ‘Confcooperative’). It promotes cooperative development and
mutuality, economic and solidarity relations between member cooperatives and
encourages the spread of cooperative principles and values (www.legacoop.it).
Leonardo da Vinci This is the main European programme for vocational training. Following its initial
programme phase, from 1995 to 1999, the Community's Leonardo da Vinci vocational training
programme is now in its second phase, covering the seven-year period from 2000
to 2006. The programme promotes transnational projects based on cooperation
between the various players in vocational training - training bodies, vocational
schools, universities, businesses, chambers of commerce, etc. - in an effort to
increase mobility, to foster innovation and to improve the quality of training. The
Leonardo da Vinci programme aims at helping people improve their skills
throughout their lives (www.europa.eu.int).
LETS LETS, the Local Exchange and Trading System are local community-based
mutual aid networks in the UK in which people exchange all kinds of goods and
services with one another, without the need for money. LETS use a system of
community credits, so that direct exchanges do not have to be made. People earn
LETS credits by providing a service, and can then spend the credits on whatever
is offered by others on the scheme: for example childcare, transport, food, home
repairs or the hire of tools and equipment (www.letslinkuk.net).
Local Social Capital The Local Social Capital (LSC) Pilot was launched by the European Commissions
Pilots DG for Employment in July 1998 as an action under Article 6 of the European
Social Fund. The Pilot was managed by the Commission and comprised 30
projects in 12 Member States. The overall objective of the LSC Pilot was to
promote employment and social cohesion through bottom-up initiatives. Its specific
objectives were to: a) test a method of decentralised delivery (“the LSC
approach”); and b) explore the relevance of local social capital
Loi sur l’Initiative The Loi sur l’Initiative Economique, or the Economic Initiative Law, came into
Economique effect in France in August 2003. According to the French Government more than
fifteen million French wish to create their own company but only 175 000 each
year succeed in doing so. This new Economic Initiative Law simplifies the process
of creating, running and financing a business, whilst encouraging social
orientation. The Laws objective is to allow the creation of a million new companies
in five years (www.premier-ministre.gouv.fr).
MACIF Foundation The MACIF Foundation is a French foundation which aims to support the social
economy in France and Europe more widely, by assisting initiatives which
participate in it. (www.fondation-macif.org).
Microcredit Microcredit is the extension of small loans to entrepreneurs too poor to qualify for
traditional bank loans. In developing areas especially, microcredit enables very
poor people to engage in self-employment projects that generate income.
Definitions differ from country to country. Some of the defining criteria used
include; size, target users, the use of funds and terms and conditions
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Microenterprise Within the SME category, a microenterprise is defined as an enterprise which

employs fewer than 10 persons and whose annual turnover and/or annual balance
sheet total does not exceed EUR 2 million (www.sbs.gov.uk and
www.europa.eu.int).
Multiannual Multiannual Programme (MAP) for Enterprise and Entrepreneurship(in particular
Programme for for Small and Medium-sized Enterprises 2001 – 2005)A framework plan of
Enterprise and activities which aim at:
Entrepreneurship(in
• enhancing the growth and competitiveness of business in a
particular for Small
knowledge-based internationalised economy;
and Medium-sized
Enterprises 2001 – • promoting entrepreneurship;
2005) • simplifying and improving the administrative and regulatory framework
for business so that research, innovation and business creation in
particular can flourish;
• improving the financial environment for business, especially SMEs;
• giving business easier access to Community support services,
programmes and networks and improving the coordination of these
facilities.
It is also an instrument for implementing the 10 Action Lines of the European
Charter for Small Enterprise.
(www.europa.eu.int)
Multi-stakeholder For these organisations, ownership is heterogeneous and recognition is given to
Enterprises collective benefits (www.encyclopedia.thefreedictionary.com).
Mutual societies An autonomous association of persons (legal entities or natural persons) united
voluntarily, whose primary purpose is to satisfy their common needs and not to
make profits or provide a return on capital. Mutuals can be differentiated from
cooperatives (which are in many respects similar) by the fact that they operate
with their own, collective and indivisible funds, and not with share capital.
National Association Founded in 1895, the National Association of Mutual Insurance Companies
of Mutual Insurance (NAMIC) is a full-service national trade association that benefits member
Companies companies in the US through advocacy, public policy and member services
(www.namic.org).
NCBA NCBA, the National Co-op Business Association, is the lead national membership
association in the USA, representing cooperatives of all types and in all industries.
They are democratically organised and operate according to internationally
recognised cooperative principles. Their goal is to develop, advance and protect
cooperative enterprise (http://www.ncba.org).
Netz Netz, full name Netz für Selbstverwaltung und Selbstorganisation, is a federation
of small enterprises and organisations. This ‘NET for autonomy and self
organisation’ promotes cooperation between its small firms and projects in order to
strengthen their role society. (www.netz-bund.de).
New Länder The new Länder is a term that refers to the former east Germany area, also known
as the Deutsche Demokratische Republik (DDR), or the German Democratic
Republic (www.en.wikipedia.org).
NGO A non-governmental organisation (NGO) is any non-profit, voluntary citizens'
group which is organised on a local, national or international level. Task-oriented
and driven by people with a common interest, NGOs perform a variety of service
and humanitarian functions, bring citizen concerns to Governments, advocate and
monitor policies and encourage political participation through provision of
information (www.ngo.org).
Not-for-profit A Not-for-profit (NfP) organisation is established for charitable, humanitarian, or
organisations educational purposes, is exempt from some taxes and is an organisation in which
no one profits or losses (www.encyclopedia.thefreedictionary.com).
Observatories of the See ‘QUASAR’
Civil Economy
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OECD The OECD, that is the Organisation for Economic Co-operation and
Development, groups 30 member countries sharing a commitment to democratic
government and the market economy. With active relationships with some 70
other countries, NGOs and civil society, it has a global reach. Best known for
its publications and its statistics, its work covers economic and social issues from
macroeconomics, to trade, education, development and science and innovation
(www.oecd.org).
Organizzazioni di Organizzazioni di Voluntariato is an Italian term used in this report to describe
Voluntariato service delivering voluntary organisations.
Philanthropy Philanthropy involves the donation of time or money to worthy charitable causes. It
is seen as a way to directly effect change in society without recourse to the
bureaucratic mechanisms of government
Points Multiservice The Points Multiservice (PMS), or the Multi Service Points initiative was developed
in France in 1994, in association with consular agencies, to give local inhabitants
access to additional services. A central point is chosen, for example where
existing village shops or cafés are located, on a commune area with less than
2000 inhabitants. An information and communication technology hub is created,
allowing local and tourist populations to access fax, e-mail, internet, photocopying
facilities (www.pointmultiservices.com).
Powiat A powiat is a second-level unit of the administrative division and local government
in Poland, usually translated as county or district. A powiat is smaller than
voivodship (województwo), but larger than commune, municipality (gmina). A
powiat usually consists of 5 to 15 communes (www.en.wikipedia.org).
Principle of This is the principle by which an EU act should not go beyond what is necessary
Proportionality to achieve an objective set out in a Treaty (www.lgib.gov.uk). No decision
therefore can be defended if it is possible to fulfil the purpose with a less restrictive
measure. This means that directives shall be preferred before regulations and
recommendations before directives etc.
Principle of The general aim of this principle is to guarantee a degree of independence for a
Subsidiarity lower authority in relation to a higher body or for a local authority in respect of a
central authority. It therefore involves the sharing of powers between several
levels of authority, a principle which in the EU forms the institutional basis for
federal States. The purpose of including this principle in the European Treaties is
to bring decision-making within the Community as close to the citizen as possible.
(www.europarl.eu.int).
Public Procurement Procurement is the process of acquisition, usually by means of a contractual
arrangement after public competition, of goods, services, works and other
supplies. In relation to the social enterprise agenda, the Government believes
there is mutual benefit to be derived from the significant potential for more public
services to be delivered by social enterprises (www.sbs.gov.uk).
QUASAR The QUASAR project in Italy takes the form of the already well-structured social
enterprise sector building bridges with the conventional business community.
Italy's 6,500 social cooperatives are grouped into around 100 consortia, which
provide support at the local or provincial level. The social cooperatives also have
seven national consortia. The QUASAR project reinforces this structure, tapping
into the compulsory subscriptions that all businesses make to chambers of
commerce, setting up "Observatories of the Civil Economy" in partnership with
Chambers of Commerce, Industry Handicraft and Agriculture (CCIAA) in eight
participating provinces: Milan, Treviso, Forlì, Florence, Cagliari, Potenza, Bari and
Palermo. Their tasks are:
• to carry out research and supply information in support of the
chambers' policies
• to represent the third sector
• to offer social enterprises tools, information, and skilled technical
assistance to support their consolidation and development; these are
delivered jointly by the Special Agency of the Chambers of Commerce
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and local third sector organisations

• to assist social enterprise start-ups, by giving them the possibility to
become part of a system which has high quality standards and shares
best practice
(www.europa.eu.int)
REEN The REEN pilot project, supported by the European Commission, was established
as a third sector training network. It held a number of European conferences and
summer schools and published a directory of 140 providers.
Regional Policy DG The Regional Policy Directorate-General is responsible for European measures to
assist the economic and social development of the less-favoured regions of the
European Union under Articles 158 and 160 of the Treaty. The Regional Policy
DG is in charge of the administration of three major funds :
• the European Regional Development Fund (ERDF), which operates in
all 25 Member States
• the Cohesion Fund, which assists environment and transport projects
in the 13 Member States whose GDP is below 90% of the Community
average (Czech Republic, Estonia, Cyprus, Latvia, Lithuania, Greece,
Hungary, Malta, Poland, Portugal, Slovenia, Slovakia, Spain)
• the Instrument for Structural Policies for Pre-Accession (ISPA),which is
assisting the candidate countries to improve the environment and
develop their transport networks
(www.europa.eu.int)
RREUSE A specialised European network of national and regional social economy
federations and enterprises with activities in re-use and recycling (www.reuse.org).
SA Société Anonyme (SA) is the French term for a public limited liability company,
that is a company whose shares may be offered for sale to the public. This type of
company requires a minimum of seven shareholders and in it the liability of the
shareholder is limited up to the amount of their capital contribution
SARL A Société à Responsabilité Limitée (SARL) is the French term for a limited liability
company, that is a company of persons and of capital in which the shareholders
are not liable beyond their contributions and are not considered merchants.
Whatever its purpose, the SARL is a commercial entity and is subject to
commercial laws and practices (www.encyclopedia.thefreedictionary.com).
Schwerbehinderteng English translation: Severely Disabled Act, Germany
esetz
SCIC A Socièté Cooperative à Interet Collectif (SCIC), or Cooperative Company of
Collective Interest, is a new French multi-stakeholder model of the cooperative
company.
SCOP In France a SCOP (Société Cooperative de Ouvrières Production or workers
cooperative) is a cooperative enterprise where the employees hold the
majority of the company’s share capital. Employees elect the management
team, participate fully in decision-making, manage the company, and share
its profits, in accordance with the democratic economic principles of
cooperatives (www.scop.coop).
Services of General Services of General Interest (SGIs) are services that are subject to specific public
Interest service obligations. They include non-market services (e.g. compulsory education,
social protection), obligations of the state (e.g. security and justice) and services of
general economic interest (e.g. energy and communications) (www.lgib.gov.uk).
Seventh Framework The European Union’s Seventh Framework Programme (FP7),due to come into
Programme effect in 2007, aims to better coordinate existing research activity in the EU,
supporting the realisation of the European Research Area. It has a budget of 73
billion euro and a structure based on four specific programmes: cooperation,
ideas, people and capacities. A key feature of the Seventh Framework
Programme is a significant simplification of its operation compared with its
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predecessors (www.europa.eu.int). See also ‘Framework Programmes for

Research and Technological Development’.
Single Market The member states of the European Community form a Single Market in which
there is free movement of goods, persons, services and capital. The Single Market
came into being 1993, when export and import Custom entries were abolished for
intra-community trade(www.europa.eu.int).
Sixth Framework The Sixth Framework Programme (FP6) is the European Union’s current main
Programme instrument for the funding of research in Europe. Proposed by the Commission
and adopted by the Council and Parliament in co-decision, it is open to all public
and private entities, large or small. The overall budget covering the four-year
period 2003 - 2006 is 17.5 billion euro. Seven key areas for the advancement of
knowledge and technological progress within FP6 have been chosen: genomics
and biotechnology for health; information society technologies; nanotechnologies
and nanosciences; aeronautics and space; food safety; sustainable development;
and economic and social sciences (www.europa.eu.int). See also ‘Framework
Programmes for Research and Technological Development’.
SKOK SKOK, known in full as Spółdzielcze Kasy Oszczędnościowo-Kredytowe, is the
Polish cooperative banking system. The SKOK network has grown to serve over 1
million members via 13,000 branches, and is larger than the country’s largest
conventional bank (www.skok.pl).
SME Definitions vary as to what constitutes a Small or Medium-sized Enterprise (SME).
In the UK however Government has adopted the following definition; SMEs are
businesses which employ less than 250 staff (FTE). Within this category,
microbusinesses are those with 0-9 employees, small businesses have 0-49
employees and medium-sized businesses have 50-249 employees
(www.sbs.gov.uk).
Social Capital Social networks, norms, values and understandings that facilitate cooperation
within or among groups (www.oecd.org).
Social Economy Cooperatives, mutual societies, associations, foundations and social enterprises
are together referred to as the ‘social economy’ by the European Union and its
institutions. There are certain common characteristics shared by social economy
entities:
• Their primary purpose is not to obtain a return on capital. They are, by
nature, part of a stakeholder economy, whose enterprises are created
by and for those with common needs, and accountable to those they
are meant to serve
• They are generally managed in accordance with the principle of ‘one
member, one vote’
• They are flexible and innovative - social economy enterprises are
being created to meet changing social and economic circumstances
• Most are based on voluntary participation, membership and
commitment.
(www.europa.eu.int)
Social Economy Unit The Social Economy Unit, also known as DG XXIII/A/4, was established within the
former DGXXIII to provide a stronger focus on social enterprise. When the DG’s
were reorganised and renamed in 2000, DGXXIII and the Social Economy Unit
became part of the DG for Enterprise and Industry and Unit ENTR/E3 within it
Social Enterprise Although in Europe there is no universally accepted definition of a social
enterprise, its key distinguishing characteristics are social and societal purpose
combined with an entrepreneurial spirit of the private sector (www.europa.eu.int).
In Britain however, a social enterprise is defined as a business with primarily
social objectives whose surpluses are principally reinvested for that purpose in the
business or in the community, rather than being driven by the need to maximise
profit for shareholders and owners (www.sbs.gov.uk).
Social Enterprise The Social Enterprise Alliance is a membership organisation in the US devoted
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Alliance exclusively to building sustainable nonprofits through earned income strategies.

This is accomplished through a network connecting entrepreneurial nonprofits with
learning opportunities, technical assistance and resources to further their efforts
(www.se-alliance.org).
Social Social entrepreneurship is about developing social innovation through
Entrepreneurship entrepreneurial solutions. A social entrepreneur take notice of a social problem or
need, decide to passionately pursue it, creatively innovate new solutions and
entrepreneurially address the issue through an organised business plan approach.
Social Franchising Social franchising is a type of organisational structure that favours the
professionalism of excluded and less qualified people. Social franchising facilitates
the creation of new enterprises by giving them the opportunity to benefit from
existing positive experiences and tools (training tools, operating systems,
handbooks, skills, know how, marketing and a trademark) (www.europa.eu.int).
SOCODEN SOCODEN, established in 1965, is an investment fund financed and managed by
the CGSCOP. SOCODEN aims to finance SCOP creation, development and
assistance by offering a non-traditional support system. The promotion of inter
SCOP cohesion is a key SOCODEN fund aim (www.scop.coop). See also
‘CGSCOP’ and ‘SCOP’
SOFICATRA A European consortium of cooperative financial institutions, originally set up with
support from the European Commission, which both invests directly in social
economy initiatives and provides strategic advice and assistance
(www.soficatra.org).
Soziale Betriebe English translation: social firms. These social firms in Germany are organised into
two main federations: ‘BAG Arbeit’ and ‘BAG Integration’.
Sozialgesetzbuch IX Also known as SGB IX. English translation: Ninth Book of the Social Code,
Germany
Structural Funds The European Union supports poorer regions of Member States by providing
funds to help them regenerate their economies and create new jobs. The four
most important funding programmes are known collectively as ‘Structural Funds’.
These are:
• The European Regional Development Fund (ERDF)
• The European Social Fund (ESF)
• The European Agricultural Guidance and Guarantee Fund (EAGGF)
• The Financial Instrument for Fisheries Guidance (FIFG)
(www.gos.gov.uk)
Supranational An international organisation, or union, whereby member states transcend national
Organisation boundaries or interests to share in the decision-making and vote on issues
pertaining to the wider grouping. The EU is in this way a supranational as each
member votes on policy that will affect each member nation. The benefits of this
construct for the EU are the synergies derived from social and economic policies
along with a stronger presence on the international stage
Taxe Professionelle The ‘taxe professionelle’ is a tax payable in France by all business entities, be
they subject to corporation tax or not (www.frenchlaw.com). The taxable basis is
calculated according to a national formula, but the rate applied to that basis is
decided locally; a tranche is taken by each région (e.g. Limousin – 3.33%), each
département (e.g. Corrèze – 11.39%) and each commune (e.g. Brive-la-Gaillarde
– 20.32%) so the rate applied to a business is assessed at three levels and then
accumulated to give the total rate (in the above (real) example, 35.04%). The rates
differ vastly across France and there are many exemptions, some permanent and
some temporary.
The Commission The term ‘Commission’ is used in two senses. First, it refers to the team of men
and women – one from each EU country – appointed to run the European
Commission institution and take its decisions. Secondly, the term refers to the
institution itself and to its staff (www.europa.eu.int).
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Third Sector Refers to organisations between the market and the state. More specifically, there
is no single 'correct' definition in Europe, with different collective nouns involving
varied criteria of definition used for different purposes and in different contexts. For
the purposes of TSEP, the 'third sector' has provisionally been taken to include
those organisations which are self-governing and constitutionally independent of
the state; do not involve the distribution of profits to shareholders; and benefit to a
significant degree from voluntarism (www.lse.ac.uk).
Third System and Third System and Employment (TSE) pilot action is a European Social Fund
Employment pilot financed pilot scheme exploring and promoting the employment potential of local
action job creation initiatives intended to respond to needs for which neither the market
nor the public sector currently appear able to make adequate provision. It places
an emphasis on financing innovative pilot projects in the areas of social and
neighbourhood services, the environment and the arts (www.europa.eu.int).
Treaty of Amsterdam The Treaty of Amsterdam, signed on 2 October 1997, entered into force on 1 May
1999. It amended and renumbered the EU and EC Treaties. Consolidated
versions of the EU and EC Treaties are attached to it. The Treaty of Amsterdam
changed the articles of the Treaty on European Union, identified by letters A to S,
into numerical form (www.europa.eu.int).
Treaty of Maastricht Also known as the Treaty on the European Union, this Treaty was signed in
Maastricht on 7 February 1992 and entered into force on 1 November 1993. The
Maastricht Treaty changed the name of the European Economic Community to
simply "the European Community" and introduced new forms of cooperation
between the Member State governments - for example on defence, and in the
area of "justice and home affairs". By adding this inter-governmental cooperation
to the existing "Community" system, the Maastricht Treaty created a new structure
with three "pillars" which is political as well economic. This is the European Union
(EU) (www.europa.eu.int).
TSEP Third Sector European Policy (TSEP) network brings together leading third sector
and public policy researchers to initiate analysis of the development of European
policy towards voluntary, nonprofit, NGOs or social economy organisations -
referred to by some commentators as 'organised civil society' (www.lse.ac.uk).
Type A Cooperative See ‘Cooperativa Sociale’
Type B Cooperative See ‘Cooperativa Sociale’
UK Social Enterprise ‘Social Enterprise: A Strategy for Success’ was launched in July 2002. It set out a
Strategy programme for the next three years of how the Government intended to work with
key partners to promote and sustain social enterprise activity. This literature
review forms part of the 2005-2006 Review of the Social Enterprise Strategy and
SBS aims to publish the updated and revised version in Spring 2006
(www.sbs.gov.uk).
UNDP The UNDP, that is the United Nations Development Programme, is a partner
organisation in 6 Polish projects financed by EQUAL. One of these projects,
‘Searching for a Polish Model of Social Economy’, aims at defining crucial
requirements for the proper functioning of Polish model of social economy. This
would be achieved by analysis of a legal framework and proposing directions for
necessary changes as well as presenting examples of best practices, involving
actors traditionally active in the social economy field, especially at local level
(www.undp.org.pl).
UNIOPSS Union Nationale Inter Fédérale des Oeuvres et Organismes Privés Sanitaires et
Sociaux (UNIOPSS) brings together 129 national associations in the health, social
and medico-social field as well as 22 regional unions bringing together 7200
associative institutions and services (www.uniopss.asso.fr).
Unit ENTR/E3 Unit ENTRE/E3 sits within section E (‘Promotion of SME’s competitiveness’) of the
Enterprise and Industry DG. More specifically, sub-section E3 is responsible for
‘Crafts, small businesses, cooperatives and mutuals’ (the cooperatives and
mutuals elements of CMAF is therefore covered, but not the association and
foundation ones). This unit is the successor to the Social Economy Unit within
what was DGXXIII.
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Unternehmen mit English translation: social enterprise (see ‘Social Enterprise’)

sozialen Ziele
US National Coop US National Coop Business Association (NCBA) is a national membership
Business Association association representing cooperatives of all types and in all industries in the US
(www.ncba.org).
Verband Deutscher Verband Deutscher Produktivgenossenschaften (VDP), or the Association of
Produktivgenossens German Productive Cooperatives, was set up after the reunification of Germany to
chaften offer support services to those cooperatives in the new Länder that were viable
(www.mitunternehmer.de).
Vertical policy, Vertical policies are those that are developed and applied essentially within a
issues or interests particular field or domain (www.lse.ac.uk).
Voluntary Sector The voluntary sector of a nation's economy consists of those entities which are not
for profit and yet, at the same time, are not agencies of the state i.e. charities,
volunteer community centres and religious organisations
WAMA-COOP WAMA-COOP was established in Poland in 1999 as an initiative of cooperators
from Warminsko-Mazurskie County, with financial help from the National
Cooperative Council. It was one of the first Polish cooperative development
agencies and its aim were to give comprehensive help in cooperative development
by offering information, advice and training courses to new co-operatives and
people who want to start a co-operative (www.wamacoop.olsztyn.p).
WEEE The European Commission has adopted a proposal for a Directive on Waste
Electrical and Electronic Equipment (WEEE) and a proposal for a Directive on the
restriction of the use of certain hazardous substances in electrical and electronic
equipment. The proposed Directives are designed to tackle the fast increasing
waste stream of electrical and electronic equipment and complements European
Union measures on landfill and incineration of waste (www.europa.eu.int).
WISE The ELEXIES study was concerned with the different types of social enterprise for
integration, also known as work integration social enterprise (WISE). The study
has identified and described their main characteristics as social enterprises, the
type of work integration they provide, their numbers, and how they have
developed and are supported. Seven types of WISE were identified by the study:
• Associations intermediaries (AI, intermediate associations)
• Entreprises d’insertion (EI, integration enterprises)
• Entreprises de travail temporaire d’insertion (ETTI, temporary work
integration enterprises)
• Régies de quartier (RQ, neighbourhood enterprises)
• Groupements d’employeurs pour l’insertion et la qualification (GEIQ,
employers’ groups for integration and qualification)
• Centres d’adaption à la vie active (CAVA, centres for adaption to active
life)
• Entreprises insérantes (IE, integrating enterprises)
(www.elexies.info)
Wohlfahrtsverbände English translation: welfare organisations / federations
8
7

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Social Enterprise

An International Literature Review

A report submitted by GHK

526 Fulham Road, London SW6 5NR

Document International Literature Review

Job No. J1837

Prepared by Nick Henry, Toby Johnson, Roger Spear

Checked by James Medhurst

Date March 2006

International Definitions of Social Enterprise

Distinctive National Social Enterprise Sectors

7. Nevertheless, this sectoral distinctiveness is characterised more by i) (dominant)

Policy Goals and Implementation for the Social Enterprise Sector

Devolved Administrations and Regional Development Agencies in assisting the

European • Different definitions of social enterprise can be identified across Europe

France (p.17) • Cohesion within the sector has been encouraged

Italy (p.36) • Explicit recognition exists of the benefits of social enterprise

USA (p.54) • Corporate philanthropy acts as a sector development tool

THE POLICY EXPERIENCE OF THE CASE STUDY COUNTRIES

The Main Policy Difference

The Main Policy Similarities

• Complexity and Integration – Continuing debates over what constitutes a social

• Flexibility and Plurality of Organisational Form – The case studies demonstrate a

reflects, in the case of EU countries, the influence of European funding programmes

• Autonomous Sector Organisations – The case studies generally confirm the

• The Use of Consortia or Collective Responses – Increased networking between

• Quantification of Benefits and Impacts – The case studies have to varying

7.4 Potential Lessons for the UK..................................................................................................61

1 The Social Enterprise Unit (SEnU)5 commissioned this international review of

2 This work builds on a previous international review of social enterprise

1.1 Review Aims and Objectives

6 The objectives of this review were:

 To provide an overview of government policy and strategy towards social

 For EU countries, to provide an overview of the overarching EU policy

 To detail the various rationales for government intervention in supporting

 To detail the approaches taken to support social enterprise, with reference to

1.2 Selection of Countries for Study

Table 1.1: Selected Countries

Country Key Characteristic Key Interest

1.3 Structure of the Review

2 THE EUROPEAN CONTEXT FOR SOCIAL

2.1 A European Definition of Social Enterprise8

10 The European research network, EMES, has proposed a definition of social

1) continuous activity of the production and/or sale of goods and services

2) a high level of autonomy: social enterprises are created voluntarily by

3) a significant economic risk: the financial viability of social enterprises

4) social enterprises’ activities require a minimum number of paid workers,

5) an explicit aim of community benefit: one of the principal aims of social

6) citizen initiative: social enterprises are the result of collective dynamics

7) decision making not based on capital ownership: this generally means

8) participatory character, involving those affected by the activity: the

9) limited distribution of profit: social enterprises include organisations that

2.2 The Emergence of an EU Policy Context for Social Enterprise

societies, associations and foundations (collectively referred to as CMAF) in the

16 The second strand of EU policy development concerned with social enterprise

initiatives”.16 Thereafter, the Community Initiatives17 Adapt and Employment took

18 The programme’s evaluators identified the following external barriers to the

19 The evaluators also identified internal barriers including:

2.3 Current EU Policy for Social Enterprise

21 Nevertheless a policy towards social enterprises is slowly emerging. In his study

22 Despite Kendall’s view, there is evidence of the development of a more joined-up

23 The European Commission is currently exploring how the social economy at EU