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European Innovation Council and SMEs Executive Agency (EISMEA)

Social Economy

About

Traditionally, the term social economy refers to the four main entities that provide goods and services to their members or society generally. They are

  • cooperatives
  • mutual benefit societies
  • associations (including charities)
  • foundations

The social economy operates in a large variety of economic sectors, including forestry, agriculture and fisheries, energy and climate, financial services and culture and media. In an EU context, the social economy covers entities that share common principles and features.

  • the importance of social and/or environmental purpose over profit
  • the reinvestment of profits and surpluses in activities benefitting the interest of members or users
  • the reinvestment of profits and surpluses in activities benefitting the interest of society at large or participatory governance

EISMEA implements social economy projects under the former COSME programme and currently in the SME pillar of the single market programme (SMP).

Social economy and local green deals

In September 2021, the call for proposals, Social economy and local green deals supporting SMEs to become more resilient was launched. The aim of the call is to boost resilient economic growth through the involvement of local businesses, authorities, people and social economy enterprises.

The call builds on the work of Intelligent Cities Challenge and European Social Economy Regions (ESER) as well as ongoing Social economy missions (SEM) projects. In particular, the call will contribute to building economic resilience and the social economy under 2 headings: local green deals and social economy missions for community resilience.

The evaluation phase of the call ended in February 2022 and grant agreement preparation is ongoing for the expected start of projects’ implementation in May 2022. 

Legal frameworks for social enterprises

In 2016, the report Social Enterprises and their Eco-systems: Developments in Europe highlighted that a growing number of European countries had adopted specific legal frameworks for social enterprises.

However, the legal frameworks had a weak understanding of the concept of social enterprises, a lack of stakeholder involvement and suitable incentives, and recognition of only part of the social enterprise sector.

In this context, the European Commission’s expert group on social economy and social enterprises, asked the Commission to help countries design adequate frameworks to support the expansion of social enterprises.

The overall objective of this project is to support the development of legal and regulatory frameworks in EU countries, which will allow social enterprises to thrive. The Organisation for Economic Co-operation and Development (OECD) is implementing the project by analysing national legal and regulatory frameworks on social enterprises. It will then provide guidance for national governments to assess, design and improve laws and regulations, and sharing the results with interested parties at EU and national level.

Social Enterprises and their Eco-systems: Developments in Europe

Designing Legal Frameworks for Social Enterprises

Expert group on social economy and social enterprises

Social economy missions

The aim of the social economy missions (SEM) grant scheme is to build a European social economy community through regional collaboration, innovation partnerships, sustainable growth and quality job creation. Where appropriate, the awarded grants will lead to future inter-regional projects.

The call was launched in spring 2020. It offered the chance for 3 different regions, cities or municipalities from at least 3 different COSME countries with similar social economy situations to share good practices, find solutions to existing challenges and develop inter-regional partnerships. A wide range of social economy participants joined the local and regional authorities.

The Call attracted more than 50 applicants. The evaluation phase resulted in the selection of 20 winning projects that implemented individual missions in 2021. In total, 78 regions, cities and municipalities from 27 COSME countries and various social economy umbrella organisations participated.

More details are available on the COSME data hub

Promoting social considerations in public procurement

The Buying for Social Impact (BSI) project took place from July 2018 to January 2020 by a consortium of European organisations that promoted local development and social economy enterprises. The project had two objectives:

  • to encourage contracting authorities to use public procurement for social goals
  • to increase participation of social economy enterprises in public procurement and access new markets

Actions were targeted at key audiences in 15 European countries. A selection of 23 good practice examples from 12 of the countries was published.

One of the key findings from the BSI project is that while the EU Directive is necessary to promote and implement socially responsible public procurement, it is not sufficient. Legal frameworks need to be coupled with initiatives to increase knowledge and capacity-building among public authorities and economic enterprises.

Buying for social impact: good practice from around the EU

Promoting cross border activities

The main outcome of the project is a study to identify, analyse and report on cross-border social economy activities as well as corresponding European and national policies.

The European Commission has conducted various studies to assess the effect of SME internationalisation on the economy. However, these did not always focus on social enterprises and the effect of internationalisation on the social economy. So, while some of the findings could be generalised, and extended to the social economy, often these businesses differ in their objectives.

Social economy participants embark on cross-border activities for reasons that may not necessarily be connected to generating profit. A 2021 study showed that they engage in cross-border activities in 4 ways

  • distribution (instead of export for for-profit businesses)
  • replication (instead of equity or ownership-based activities)
  • sourcing (wider than imports)
  • exchange and collective impact (broader than contractual business agreements)

The analysis also identified the diversity of the sector in relation to legal, spatial, business and sectoral aspects, and that cross-border activity is best understood by the fact that the social impact on communities is the main driver. The contractor identified 11 ways in which social enterprises engage in cross-border activity, with each way connecting a typical activity.