AVISE social enterprise seminar 060704

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France takes a deeper look at social enterprise

France's leading support body for the social economy wants to stimulate the growth of social enterprise. At its seminar on 4 July 2006, participants got the chance to compare contrasting models from round the world, with their varying emphasis on the individualist and collective dimensions.

Key promoting bodies in the social economy got a deeper appreciation of social enterprise at a seminar entitled Accompagner le Développement de l'Entrepreneuriat Social – regards croisés sur des expériences internationales held in Paris this summer. Organised by the Agence de Valorisation des Initiatives Socio-économiques (AVISE) http://www.avise.org with the support of the OECD, the event looked at the concepts of social entrepreneurship and social enterprise in the round, to try to give depth to what are quite new and often nebulous ideas. Some 170 people gathered in the building of Mutuelle Générale de l'Education Nationale to learn from experiences in Belgium, Italy, Spain, Britain, Canada and Europe at large.

According to AVISE's Farbod Khansari, the event, which forms part of the 'EST' EQUAL project, aimed to inform the 'catalysts' of social enterprise – the networks of advisers to the social economy and business in general, training agencies and local authorities and to demonstrate to them that social enterprise is not a passing fad or yet another 'French exception', but is here to stay.

Six types of social objectives
- integration of disabled people 
- integration of excluded people 
- fair trade 
- relieve poverty 
- services to the community 
- strengthen the social fabric 
Four ways to be a social enterprise
- through legal status 
- through products or services 
- through users or clients 
- through workforce 

AVISE's publications already give budding social entrepreneurs a very good grounding, distinguishing six major types of social objectives and four ways to express an enterprise's social nature. But social enterprise has never been very clearly defined in France. Various European countries have evolved around various definitions of combining the 'enterprising' with the 'social'. A key hidden distinction is that between the collective idea of an 'enterprise' and the individualistic one of an 'entrepreneur'.

Not just a passing fad

Hugues Sibille, President of AVISE, set the scene, referring to the bewildering profusion of terms to describe the activity of doing business for social goals. The idea of social enterprise exerts a strong fascination, and, he emphasised, "it's not a passing fad – it's a fundamental change." It responds to many of the pressing issues that society faces: welfare reform, changing consumer attitudes, the emergence of corporate social responsibility, and the place of people in the economy – part of the search for meaning following the collapse of communism.

For him, three criteria define a social enterprise:

  • first, economic activity – it is in the market, sells something
  • secondly this is carried out for the common interest, for social usefulness;
  • lastly it has participative governance, an element of democracy.

The growing concept of social enterprise

Professor Jacques Defourny from the Centre for Social Economy at the University of Liège gave a run-down of the history of the idea of social enterprise, then outlined the approach taken by the EMES research network http://www.emes.net that he co-ordinates.

The idea was first promoted in 1980 in an individualistic, vocational form by Bill Drayton, who, inspired by Gandhi, founded the Ashoka institute to coach social entrepreneurs. Harvard University took up the idea, which mutated towards meaning 'economic activity by a non-profit organisation', and the Social Enterprise Alliance was set up in 2002. Then come the parallel movements of corporate social responsibility and social co-operatives: this latter status was brought into being in Italy in 1991 and today there are some 7,100 social co-operatives in the country.

In 2001 the EMES research network published its book on the 'emerging social economy'. This reports that social enterprises are active in three main areas – personal services, integration through work and local development. EMES develops a characterisation of social enterprise that is based on nine criteria: economic activity, autonomy, risk, paid staff, an explicit social objective (not just member benefit), citizen initiative, decisions not based on capital ownership, participative dynamic, and a limit on (but not necessarily a total prohibition of) profit distribution. These constitute an 'ideal type' in the sense of Weber, not a normative definition, like the co-operative principles.

Meanwhile in 2002 we see the British government unveiling an innovative Social Enterprise Strategy, with a dedicated government unit and funding for the Social Enterprise Coalition http://www.socialenterprise.org.uk as an external counterpart. It adopts a contrasting definition of social enterprise that glosses over the issues of structure and participation, and insists only on the delivery of social benefits and limited distribution of profits. In this conception of social enterprise, the market clearly dominates. Just a few weeks ago the UK took a further step by appointing a minister of the third sector, which brings social enterprise back into a more internationally comprehensible framework.

On the theoretical side, Professor Defourny said, there is still work to be done. The EMES network has started to try to verify a characterisation based on social enterprises having multiple goals and multiple stakeholders, and has found a fertile analysis in terms of 'contracts' and 'incitants'. Another view is that social enterprises are a bridge between co-operative and non-profit organisations – they draw co-operatives towards the idea of public service and non-profits towards the idea of production. A book exploring this is due for publication in a month or two.

To sum up, Professor Defourny showed why he supports the concept of social enterprise. "The idea of social enterprise is still not clearly defined and there is some theoretical work to do. But it has the advantage of being a more internationally comprehensible term, an integrating factor, not at all a competitor to the ideas current in France of 'social and solidarity economy'. It also shows openness towards management sciences and is academically respectable."

World tour

A series of highly qualified presenters then filled in this framework with examples of how social enterprise works in practice from country to country.

Antonella Noya from the OECD's LEED unit took the examples of Australia, New Zealand and Mexico. In neither of the former two countries is there an official definition of social enterprise – but there is a lot of voluntary sector activity and things are evolving. Mexico by contrast puts a lot of resources into the social economy: its National Social Enterprise Fund has disbursed $650m between 2001 and 2006.

Hilary Norman, Social Enterprise Director at the UK Cabinet Office, explained Britain's unique Social Enterprise Strategy. Using Britain's very outcome-oriented definition, the latest survey has identified some 55,000 social enterprises. The insistence on economic performance does not detract from their social utility – over half of them are found in the most deprived fifth of the country's wards.

The British government sees social enterprise as contributing to a number of policy areas: not only social inclusion, but also economic growth, regeneration, innovation and the delivery of public services. Ms Norman pointed out the value of mainstreaming: "We are interested in the way social enterprises can change behaviour in other parts of the economy – for instance we now see mainstream business implementing fair trade principles. This perhaps has more effect than social enterprises would have alone."

The government's strategy is to tackle the barriers to the growth of social enterprise – principally the lack of understanding caused by the complexity of the issue, the lack of evidence of impact, fragmented support and difficulties to access finance. The three outcomes it aims at are to create an enabling environment, to make social enterprises better and more sustainable businesses, and to establish the value of social enterprises – what do they contribute?

Activity over the last three years has included:

  • a new legal status, the community interest company (CIC) with an asset lock and capped return to investors – 300 have registered in its first year (plus a further 700 in the 2nd year);
  • addressing market failure in finance: new loan funds and tax relief for contributions to CDFIs (community development finance institutions);
  • business support and capacity building (support for the Social Enterprise Coalition – SEC);
  • a public procurement toolkit, plus guidance and training for purchasers;
  • promotion and confidence building, including awards;
  • but no tax relief in general (only for charities).

Regional is beautiful

Samuel Barco, Director of International Relations at CEPES Andalucia, painted a picture of this region's strong and deeply rooted social economy.

The region of Andalucia, with a population of 8 million, has 13,000 co-operatives and SALes (worker-owned companies) employing 100,000 workers and being responsible for 13% of GDP. It owes its strength to a long history and widespread presence – co-ops started early, survived Franco, helped to found the Comisiones Obreros (CC.OO) trade union and are present in 85% of communes – to the values of co-operation and participation, and to speaking with a single voice, since 1993 exercised through CEPES. The results are the 2000 Andalucian Pact for the Social Economy, which has brought negotiating status as a social partner to match its high level of public acceptance.

Paola Iamiceli from the University of Trento in Italy described her analysis, which distinguishes three legal models for social enterprise:

  • co-operative: Italy (SC), Portugal (SSC), France (SCIC)
  • company: Belgium (SFS), UK (CIC)
  • "open forum": Finland (sosiaalinen yritys), Italy (impresa sociale)

There are also three ways of deciding what social objectives are: the 'broad brush', a specific definition in law, or definition of target beneficiaries or sectors. Several important issues remain:

  • should the law define what counts as a social objective?
  • should there be a total or partial constraint on profit distribution?
  • should stakeholders have rights – even if they are not members?
  • should social accounts be obligatory?
  • how far can social enterprises self-regulate?

Gérald Larose, President of the Caisse d'Economie Solidaire Desjardins in Quebec, was firm that the social economy enterprises he represents are a necessary part of a plural economy embracing public, private and third sectors. For the Québecois, the social economy was the only possible response to British colonialism, which was urban-based and starved country dwellers of capital as well as identity.

Alastair Wilson, chief executive of the School for Social Entrepreneurs in London, characterised the social entrepreneur as being a cross between Richard Branson (head of the Virgin group) and Mother Teresa. "You can't teach someone to be an entrepreneur, but you can help them to have a go," he said. "We take 20 people a year and give them an action learning experience, involving visits, expert witnesses, mentors, 'just in time' learning and peer learning." The experience is designed not to transfer knowledge, but to build confidence and legitimacy, to transform beneficiaries into active citizens. The results, calculated as yielding a 10:1 return on investment, are impressive.

Silvia Guzzini of the largest organisation of social co-operatives, the Consorzio Gino Mattarelli (CGM) in Brescia, told the story of CGM's growth to represent 83 local and regional consortia and 1,300 co-ops. Today, with the launch of the Nuovo Welfare brand, it is transforming itself from a development agency into a strategic input in welfare.

EQUAL lessons

Toby Johnson (AEIDL), expert for the social economy theme for the European Community Initiative EQUAL, gave very brief sketch of EQUAL's achievement before setting out the lessons of eight good practices that have arisen through the work of the development partnerships.

He pointed out the strength of the EQUAL method, which is that support is given not to individual organisations but to 'development partnerships'. EQUAL has led to around 3,500 such partnerships being created, and the links and working relationships that have been established will have a long-lasting effect. They constitute a higher level of capacity to carry out work in the future. Thus helping EQUAL to leave a sustainable legacy.

The eight examples were divided into four pairs, concerning respectively:

  • relationships with the state
  • the business as a business
  • support; and
  • the users.

The key issues in the relations with the state are measuring social added value, and the way it can be used to improve the way public authorities contract for the delivery of services – including through formal public procurement procedures. As for growth sectors, he took the example of recycling electronic waste to show what can be achieved by using [[partnership]s to combine multiple sources of finance for multiple activities. Social franchising and other replication techniques are being picked up in many different sectors all round Europe, and support to social enterprises can be through either dedicated or generalist organisations. Finally, examples from Greece and Flanders showed how social enterprise can bring real benefits to the most excluded people in society.

Democracy – the ghost at the banquet

The closing round table, chaired by Hugues Sibille, reconciled the "individual versus collective" debate – in the end "all enterprises suppose an entrepreneur, but also a collective aspect." Yet the consensus remains far from complete. Comments from the floor show that the practice of the social economy in France has deep political roots. The pragmatic approach exemplified by the UK's social enterprise strategy, which focuses on outcomes and cares little for ownership or ideology, will not easily be transferred. Democracy, for instance, is a key value that was felt to be strangely missing from the day's debate.

What the AVISE/OECD seminar did was to provide French actors with a theoretical framework buttressed by a host of practical examples from round the world, of what social enterprise and social entrepreneurship can achieve. With this road map to hand, plotting the future of the country's social economy will be that much easier. Future Anglo-French third sector events under the banner Bridging the Channel are planned which will take the debate one step further.

Documentation on the event, including the programme and speakers' presentations, can be found at http://www.avise.org.