PANF workshop 6 third sector

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This document summarises the above-mentioned workshop. The expert in charge of the workshop design and reporting was Toby Johnson under his assignment to AEIDL for the EQUAL thematic group ‘Inclusive entrepreneurship’.


Comprehensive and high-quality social services are a key distinguishing feature of modern European societies. The state is a major provider, but the third and private sectors are also important innovators and providers. In particular voluntary associations, co-operatives, foundations and charities are close to the needs of different sections of society and have often created new social services to meet changing needs, which have then been taken over by the public sector. In the present-day, issues such as changing family structures, urbanisation, rural depopulation and migration pose a continual series of new challenges. In many European countries well-rooted partnership arrangements exist between the state and the third sector. A mixture of payment systems exists: general taxation, employment insurance (public, mutual or private) and user charges all have a role to play.

As living standards have risen, the demand for an increasing variety of social services has risen along with it. Due in part to the improvement in social services, the European population is now living longer than before, at the same time as it is limiting its fertility. This places an increasing burden on the working population to support the steadily growing number of retired people, and the dependency ratio is rising. In parallel, the breaking down of barriers to global trade and investment has been accompanied by a desire to hold down taxation in the pursuit of competitiveness. These two factors – rising demand coupled with budgetary limitations – has led to a search for more effective ways of delivering an increasingly complicated range of social services, and for alternatives to centralised state provision.


One of the keys to efficient service provision appears to be the involvement of the users (beneficiaries) and the workers (providers) in the planning and delivery of the service. Where users and providers are in close contact, and information feedback chains are short, quality concerns can be quickly, informally and simply resolved. Where social service workers have a say in how the service is delivered, they tend to be more loyal and thus the continuity and standard of the service delivered is maintained. Where the quality of the service relies on relational factors, then participation and ownership seem to be a big plus factor.

One particularly useful characteristic of many third sector solutions is that they combine multiple sources of revenue to create multiple streams of benefits. For instance revenue might come from state grant aid, charitable donations, the sale of services to various local authority departments and voluntary time. Benefits might be in terms of improved health, reduced unemployment, better education and skills, the relief of poverty and reduced environmental damage.

The third sector is based upon the values of the primacy of the individual, democratic control, non-profit distribution to external shareholders and user participation. Whereas co-operatives and mutuals serve their members, charities and voluntary organisations serve people and society at large. The relatively recent category of social enterprises is defined its relative complexity. In the European context it is usually held to have nine distinguishing features:

Economic criteria:

  • continuous activity of the production and/or sale of goods and services (rather than predominantly advisory or grant-giving functions).
  • 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').
  • 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.
  • 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:

  • 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.
  • 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.
  • 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 other shareholders.
  • 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.
  • 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.


  • What types of innovation in social services are needed?
  • In what different ways can the different components of the third sector contribute to innovation in social service provision?
    • charitable voluntary organisations – representing groups of beneficiaries
    • campaigning NGOs – promoting specific solutions
    • mutuals – providing insurance and pension saving as well as caring services
    • social co-operatives – multi-stakeholder organisations that allow the different groups of stakeholders, such as users, paid provides, volunteers and public authorities, to combine forces
  • To what extent can the idea of social enterprises – organisations that behave in a businesslike way and aim to make a profit, but apply all or most of it to their social objectives – improve on traditional public or voluntary sector provision?
  • How does the relationship between the state and the third sector need to change?
  • social co-operatives as an alternative to public sector provision
  • commissioning and the public procurement process (direct contracts, tenders, sub-contracting...)
  • effective mechanisms to involve the public in service improvement
  • the way government deals with the third sector, through specific departments and/or according to a functional division
  • How can third sector social service provision be financed?
  • How can training and quality management contribute to innovation?



Project summary

The Barka Foundation for Mutual Help, based in Poznan, is the best-known and innovative organisation in third sector social service delivery in Poland. It has been pioneering social economy approaches to work integration since 1989.

With the Social Economy in Practice project, it created social co-operatives as a way to integrate socially excluded groups into work, and prevent their further exclusion. It challenged the passive welfare approaches that have dominated Polish social policy, by empowering and training excluded groups and supporting them through the creation of three model local Social Economy Centres (SECs), in three contrasting environments: a big city (Poznan), a small town (Drezdenko in Lubuskie region) and a rural district (Kwilcz in Wielkopolska region).

A second major objective of the project was to create mechanisms for local partnership building, mainly by training local social economy leaders (coming from both social economy organisations and local authorities) to set up activities benefiting both local communities and excluded people.

Discussion issues

  • Motivations for innovation: What was it that spurred the initiators into action? Who else did they need to convince to act along with them? How do you activate people to start social innovation? What turns them on?
  • What different tools are needed to cope with the different phases of integration? How do they fit together to form a system?
  • How can work on the ground be combined with parliamentary lobbying? How important are the media and other opinion-formers in changing the climate for innovation?
  • Sustainability: How do the various businesses perform economically in the market? What are the trends? Which industry/trade sectors are best? Public markets are important, but is collaboration with private companies a factor? Or a possibility?

DP: Ekonomia Społeczna w Praktyce (Social Economy in Practice), PL-39
Transnational partnerships: TCA 4177 STEN – Social Enterprises Trade European Network + TCA 4045 IFIPO
Contact: Barbara Sadowska
Fundacja Pomocy Wzajemnej BARKA
Ul. Sw. Wincentego 6/7, 61-003 Poznan, Poland
Telephone/fax: +48 61 872 0286


Project summary

The Agenzia di Cittadinanza (Citizenship Agency) is an EQUAL development partnership that has run through both rounds of EQUAL, and was of very substantial scale. It covered the entire Milan province, home to four million people. The partnership was led by Caritas Ambrosiana and brought together no less than 91 different organisations. Its overriding objective was to bring coherence to a previously fragmented system of social service planning and delivery.

Its key operating method in stimulating innovation in Milan’s urban neighbourhoods was to open six area offices – ‘territorial laboratories’, involving all those promoting local development and the social economy at local level (local authorities, co-operatives, associations, etc.). These are places where the local population can come together to identify their needs, and where the relevant solutions can be designed. Some of the varied results are housing agencies, childcare facilities, incubators for start-up enterprises and neighbourhood services, as well third sector fora and participation in local improvement plans.

The project supported the development of social co-operatives to improve social service quality, and carried out training. It also furthered the use of the bilancio sociale (social accounts) to measure the non-financial impacts of social co-operatives, and tried to improve the way public authorities conduct their purchasing by researching the use of social clauses in public procurement.

Discussion issues

  • How can local people be stimulated to get involved – what issues do they really care about? What are the keys to citizen participation?
  • What networks are necessary into and inside local authorities, institutions, government and other actors?
  • What joint initiatives work best?
  • What new types of partner can be involved?

DP name: Agenzia di Cittadinanza: sostegno all’imprenditorialità sociale, IT-IT-G-LOM-039 + Agenzia di Cittadinanza: sviluppo territoriale del welfare di responsabilità, IT-IT-G2-LOM-061
Transnational partnerships: TCA 575 SEED (Social European Enterprises Development) + 4004
Improving EQuality
Contact: Valentina Caimi
Caritas Ambrosiana – Ufficio Europa
Via San Bernardino 4, 20122 Milano, Italy
Tel: +39 02 7603 7269
Fax: +39 02 7602 1676


Project summary

This project aims to improve social responses by implementing quality management systems in third sector organisations in an inter-peer development and dissemination process. Six social enterprises have designed and implemented a quality management system based on the ISO 9001:2000 standard.

As part of its work it set up a permanent forum for the exchange of information and good practices in the management of social economy organisations. Management training has been cascaded down starting with a few individuals in each enterprise, who pass their learning on to their colleagues. The project has resulted in better-qualified and more efficient social enterprises.

Discussion issues

  • What were the quality problems that the project addressed?
  • How does the permanent information exchange work? This seems to be like a 'community of practice'. Does this involve for instance an online forum, or is it conducted through face-to-face meetings etc.? How do people learn from each other in practice?
  • How is training s cascaded down to each enterprise, and then within them?
  • How is efficiency measured? Are their market or price factors? Does funding / income / survival depend on it?
  • Is stimulating the participation of (a) the providers/employees and (b) the users/customers an issue, and if so how is it addressed?

DP: eQualidade, PT-2004-083
Transnational partnership: 3879 Triangle d’Or
Contact: José Carlos Veloso
Organisation: Engenho – Associação de Desenvolvimento Local do Vale do Este
Rua Dr Alciro Pinto, n° 2, 4770-522 Santa Maria Arnoso, Vila Nova de Famalicão, Portugal
Telephone: +351 252 916 040
Fax: +351 252 916 537