An overview of the regulatory and competitive landscape of social enterprise in Europe, with a lot of across-country diversity. Attention is paid to incorporation choice, finance, networks, and linkages with local economic development.
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Social enterprise: the European landscape
1. //TRENDS//
Social enterprise: landscapes from Europe
Alberto Cottica
D4SB Master Course
From opportunity assessment to business planning in social business
Lesson 6
4. Social enterprise:
USA
• commercial activities of non-
profit organizations (like running
a café)
• meant to generate revenue for
the core mission
• not necessarily linked to the
core mission
5. Social enterprise: EU
• continuity
• autonomy
• economic risk
• explicit aim to benefit the
community
• decision making power not
based on ownership
• limited profit distribution
6. cooperative company open form
Italy, Portugal,
Belgium, UK Finland, Italy
France, Poland
7. Cooperatives
• Italy: type A (for care services)
and B (by disadvantaged
citizens) cooperatives
• Portugal: total lockdown on
assets
• France: Société Co-opérative
d’Intèret Collectif
• Poland: work cooperatives like
Italian type B, economic
activities “a necessary evil”
8. Companies
• Belgium: sociétés à finalité
sociale. Governance is
regulated. Directors liable for
allocation of resources
diverging from social goals
• UK: Community Interest
Companies. “Light touch”
regulation, community interest
test. Can pay dividends to
shareholders.
9. “Open form”
• focus on activity, not legals
• Finland: subsidies to employ
disabled or long-term
unemployed
• Italy: for-profits and public
entities are prohibited from
controlling a social enterprise
10. Lots of diversity!
• What regulation?
• How to define social finality?
• Affirmative or negative
constraints on asset allocation?
• What governance structure?
14. Form Activity Actors
Investments in financial markets
Portfolio screening
using exclusion or inclusion filters
(exclusionary or Ethical funds, foundations
Responsible indirect based on environmental, social and
inclusive)
investing governance (ESG) criteria.
("placement Pension funds,
Shareholder Shareholders that utilise their role to
responsible") awareness raising
engagement influence the practices of
organisations, some
(or activism) enterprises.
ethical funds
Investment tools
Risk capital with socioeconomic developed by
goals (i.e. job creation, local and associational actors
Development capital
Responsible regional development, and (labour solidarity funds,
investing environmental). cooperatives and credit
(pro-active/direct) unions)
Solidarity-based Micro-credit, financial
Financing of community economic
finance (social cooperatives, hybrid
development and social enterprises.
finance) innovative financial funds
Source: Adapted from Chantier de l'économie sociale (2006) and Mendell and Bourque (forthcoming).
Other terms such as “sustainable”, “responsible” and “social banking”
are now part of the vocabulary and are to overused, generating confusion
Connecting savings often
and uncertainty among those interested in Source: OECD investment
social business screening their
activity. Today, references to ethical investment include both
15. Lots of innovation!
• Securitization: loans or equity investments are pooled into lower-risk funds;
quotas of these funds are resold on to the financial markets (eg. Blue Orchard
- USA for microlending)
• “Patient” loans: 15 year capital repayment standoff (eg. FIDUCIE – Quebec)
• Ethical capital markets: still in their infancy (eg. ETHEX - UK, Bolsa de Valores
Sociais - Brazil)
• Donor-Advised Funds: donors steer institutional investment funds clear of
rogue investments (eg. Fidelity’s – USA)
• Social performance measurements indices (eg. Dow Jones Sustainability
Index or FTSE4Good Index - USA)
• Crowdfunding platforms (eg. Kickstarter - USA
• Venture philantropy: grants treated as investments in equity (eg. Rockefeller
Foundation -USA)
16. Many issues remain...
•assessment of risk
•measurement and evaluation tools
•image of the sector
•lack of appropriate legislative framework
20. Social business can
partner with govt
• strengthens the service
economy
• creates new employment, and
is friendly to less mobile
workforce (women, young)
• strengthens local welfare
systems
• puts unmovable assets
(environmental or cultural
heritage, voluntary labor) to
value
21. •Legislation •choose the right tool
•Finance •what do you need?
•Networks •definitely be in many?
•Local Economic •partner up with the public
Development sector
22. Legal stuff
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