SE learning network themes

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This document was circulated by the Flemish and Polish ESF Managing Authorities on 12 Sep 08, along with an invitation to a meeting in Brussels on 15 Oct 08.

See also: Social economy learning network ideas, Social economy transnational workplan

Learning Network Social Economy


A. Macro economic approach

1. Measuring social added value


Social added value can be defined as (NEF quality and impact toolkit):

“Added value can be described as the extra benefit created by an organisation that delivers a positive outcome (for people, the environment, the community of the local economy) in the process of creating goods or delivering services for which a client or customer pays. This added value is often created by the means in which social enterprises operate. For example, social enterprise that trains and employs long-term unemployed people in delivering recycling services “adds value” to a contract for recycling services through its positive social impact”.

Challenges for the social economy and the public sector:

Changing markets force social enterprises to operate more “businesslike”. Limited resources increase competition with other SE-organisations and private companies. Grants are more and more considered as investments to create positive social change. Maximizing the benefit from strategic investments becomes more and more important. Ex ante evaluation of the social impact of investments and grants can support the decision making process of allocating public funds (eligibility and justification).

Ex post evaluation of the social impact will help public authorities to communicate to which extent the investment has contributed to the objectives (effect) and to which extent the results correspond to the financial means incurred.

Within Equal several Development Partnerships have experimented with different tools which measure the ‘social’ effect of social firms and social economy. The Social Balance Sheet, SROI, Social Reporting, Social Audit and LM3 are a few examples of the tools and instruments that have been used.

Organisations need to invest considerable time and effort in understanding and implementing the tools. Moreover a general agreement on principles and instruments is lacking which makes comparison between countries and methods difficult.

There is a need for common principles on measuring social value and a 2nd-tool which is easy accessible and applicable and gives an understanding of how social value is created in particular through ESF interventions.


  • Make an inventory of instruments with strengths and weakenesses;
  • Exchange of best practices in the different Member States,
  • Develop common principles of measuring social added value;
  • Develop a common assessment tool to enable ex-ante and ex-post evaluation of the social impact of investments, grants and purchases;

2. Adding social value to public procurement


Public procurement legislation allows for three possibilities to include social issues in public procurement contracts:

  • contract performance conditions
  • reservation
  • integration in the subject of the contract

The inclusion of social clauses in purchasing decisions brings many advantages:

  • achieving multiple aims
  • better returns on money spent
  • strengthening the value base of decisions

Several good practices (within Equal and outside Equal) have been trialled in different Member States in order to increase socially responsible public procurement. The instruments were mostly directed towards local authorities as they are possibly the biggest buyers from social economy.

Throughout the Member States public authorities are becoming more and more aware of the possibilities the EU regulation on public procurement offers, but public administration officials often lack procurement professionalism and the capability to match supply and demand.

Most important in the whole process of public procurement is that ‘social’ principles should be included in the planning phase of programmes. This means a change in attitude of the public buyers which can only be accomplished by raising awareness and by developing clear communication of the benefits and opportunities.

The European Commission is preparing a handbook on ‘social’ procurement which will be available by the end of 2008. The handbook will help raise awareness and clarify the outlines of the regulation.

The capability of matching supply and demand in the procurement process depends on the capability:

  • to translate strategic policy goals and needs into legally and professionally correct procurement solutions that lead to the desired value outcomes;
  • to communicate with the market and detect latent demand for (social) needs;
  • to collaborate cross-functional;
  • to collaborate cross-agency;

When a contract is reserved for a certain type of social enterprises, the social enterprises become competitors. Increased competition could lead to mission drift. On the other hand it could also increase collaboration between social economy organisations, sharing knowledge, experience and maybe help further development of social enterprises.

From the above can be concluded that public procurement offers many opportunities for public authorities to achieve their social goals, but in the mean time social economy face challenges such as increased competition.

How to balance the demand and supply side therefore is one of the major issues in public procurement at this moment.

  • What can be done at the demand side to reduce the risk of “mission drift”?
  • What are the cost and benefits of social considerations in public procurement?
  • PP must not lead to new burdens for SMEs
  • What factors determine success or failure? How to set up an analytical framework?


  • Increase awareness among public commissioners
  • Increase the ability of public officers to execute the procurement process efficiently and correctly
  • Increase cross-functional collaboration among departments within public authorities


  • Make an inventory of best practices in the different EU countries
  • Study visits for decision makers

3. Social enterprises and community law

In 2005 the European Commission presented the ‘state aid action plan: less and better targeted state aid: a roadmap for state aid reform 2005-2009”. The increasing complexity and the growing number of documents made the European Commission want to streamline state aid policy and focus on the most distortive types of aid. The objectives of the reform are to make state aid more predictable and user-friendly, minimising the legal uncertainty and the administrative burden.

In July 2008 the Commission has adopted General Block Exemption Rules thus consolidating and harmonising the previously existing regulations. The regulation authorises aid in favour of SMEs, research, innovation, regional development, training, employment and risk capital.

Public authorities wanting to support the growth and to stimulate innovation of social enterprises have to take into account the state aid rules.

The impact of the state aid rules is a challenge for public sector investors. Lack of clarity in state aid rules and different interpretation from MSs have led to different approaches in the MSs. Clarification and support to the public sector when making decisions to support social enterprises is therefore necessary.


  • Analyse the different ways in which member states have used public sector investment into social enterprises to enable risk and in the meanwhile ensuring accountability
  • Analyse the different ways in which MS have applied state aid rules with respect to social enterprises
  • Develop a joint EU protocol clarifying state aid exemption rules in relation to a wide range of social economy models.
  • Issue best practice guidelines
  • Stimulate mutual learning and exchange of good practices

4. Social services of general interest in the context of social economy development

Brief definition of the subject:

The term “social services of general interest” appeared in 2003 in the context of a discussion on services of general interest. The European Commission presented Green Paper and White Paper on services of general interest, in which the issue of social services was raised. The crucial point took place when the European Commission announced Social Agenda 2005 – 2010 in February 2005. In the Communication was stated that social services constitute one of the elements which forms the European social model and it was announced that another Communication will be provided in order to present the frames of social services’ functioning. This Communication occurred in April 2006. At the same time this discussion overlapped with another one related to the services in the internal market. In 2007, after social consultations, following Communication appeared concerning social services. The Protocol on services of general interest enclosed to the Treaty of Lisbon was another relevant element in the discussion.

Actually the discussion concerns two areas:

  • the objective (or subjective) definition of social services of general interest,
  • the aim of subjective separation.

In the context of social economy it is worth paying attention that according to the European institutions the initial definition of social service in many areas coincides with the definition of social economy (characteristic aspects: solidarity, comprehensive and individualised character, non-profit activity, participation of volunteers, rooting in cultural tradition or asymmetric relationship between contractor and user).

As far as the aim of subjective separation is concerned, discussion concerns the question whether social services should be treated in a different way than services which base exclusively on the law market as well as what the range of this separation should be (state aid, public procurement, competition law).

Questions we want to analyse:

  • Developing definition of social services in EU Member States including their subjective and objective frame/character;
  • Analysing specificity of social services in particular countries (including the subjective scope - the service maker).

Objectives we want to achieve:

In the framework of activities undertaken we want to work out:

  • The attempt to compare the term “social services” in different EU Member States;
  • The attempt to standardise the term “social services of general interest”, particularly in the context of social economy;
  • The indication of particular features of social services of general interest, which can be common elements of the definition in the whole European Union and which may become useful in the discussion at the European level.

5. Financial instruments

Brief definition of the subject:

In spite of existing financial instruments which support pro-employment activities, there is a lack of instruments which would directly address the support to the social economy entities. There are two main barriers to receiving aid. On the one hand, the social economy entities are not defined as potential participants of the planning activities. On the other hand, very complicated procedures on providing financial support are an obstacle of fundamental importance for organisations which act in the area of social economy.

The first barrier can be reduced in a simple way, however, the second one is of great importance. On the one hand, it limits (and even in some cases prevents from) the implementation of empowerment rule, according to which the ultimate beneficiaries of the activities should take part in the process of its planning. On the other hand, this obstacle does not permit the people at risk of social exclusion to participate independently in policies made by public institutions, which are focused on strengthening groups in the weakest position on the labour market. It can cause a trap of passivity as well as a restriction of rights and liberties of people at risk of marginalisation.

Current solutions in the area of planning and implementing projects cause that many social economy entities and groups involved in the implementation of activities in the area of social economy are excluded from participation in the projects due to inadequately educated employees as well as institutional and procedural barriers.

The very important obstacle for social economy entities is the lack of integrated strategies and programmes of co-operation between entities of this sector as well as the lack of strong umbrella organisations, which would assure institutional support, counselling and employees.

Questions we want to analyse:

  • Map of financial support instruments which are addressed to social economy entities in EU Member States;
  • Methods of activities within financial instruments which allow to address them properly to the groups which require support;
  • Access of beneficiaries to the described financial instruments.

Objectives we want to achieve:

  • Identify barriers which hinder social economy entities in the access to financial instruments (or even prevent from having it);
  • Work out the map of recommendations containing the directions of activities which will increase access to financial instruments for social economy for nearest years.

B. Micro economic approach

Social economy is not a new phenomenon. SE has well established itself as a ‘sector’ within the economy. Generally social economy has been accepted as a provider of social services such as employment for disadvantaged people (sheltered workshops). In some countries social economy has been active in the more classical economic sectors (automotive, …) and others have been active as innovative social service (and solution) providers. No matter if the social enterprise is active in the labour intensive sectors or in the innovative niches, each is confronted with a competitive economic environment. Rising labour costs force the social economy to rethink its position within the economic playing field. Combining ‘competitive prices’ with social objectives requires a business model that differs from private sector organisations.

Discussion with the private sector concerning competition and state aid make it even harder for public authorities to financially support the social economy. Public authorities are looking for evidence of performance-based objectives, result-oriented output and financial viability. The economic environment pushes the social economy to operate in a more ‘businesslike’ way.

The business model of the social therefore needs to be flexible. The short term activities and long term mission of the organisation need to be balanced.

In order for the social economy to grow the business model needs to be adjusted for innovation, public-private partnership, increased competition in the light of reserved public contracts, ….

The demands on the staff with respect to skills and qualifications is high, not only do the employees have to have social skills in working with and supporting the workers but they also have to be good marketeers, business managers, finance experts in order to win contracts, receive grants and funds…

Social economy on top of all these challenges has to fight a low profile. As a result social economy organisations have more and more difficulty in attracting and keeping qualified and dedicated staff.


  • Compare strategies of price-setting by social economy organisations
  • Develop a low-profile business tool for starting social economy organisations in order to check assess the economic viability of the activities (See also SROI-tool)
  • Develop common standards of professional qualification in social enterprise management

1. Social Franchising

Brief definition of the subject:

Social franchising has appeared in several European countries as a form of traditional franchising understood as a business action. The social franchisor does not derive any direct financial benefits from the support of the franchisee who uses franchisor’s name, trademark, business model, experience, knowledge and methods. The franchisee, on the basis of the agreement, covers only the fees related to the objectives stipulated by company bylaws, such as training and marketing funds. Such a solution enables to decrease the risk associated with starting up new business activity. The mutual relations are defined in the agreement between franchisor and franchisee which specifies all detailed provisions of co-operation between social enterprises in the franchising network (e.g.: quality requirements or appropriate presentation of a trademark). The owner of the license acts as the incubator of social economy, i.e. ensures support in training and counselling for everyone interested in this form of business activity (know-how, trainings, reeducation).

Within the EQUAL Initiative in October 2007 some organisations from EU Member States decided to create the European Network of Social Franchising. Experiences to date related to social franchising are very promising, since social franchising could be one of the crucial direction of social economy development within partnership with business sector. Moreover, social franchising could be one of the potential direction for transnational actions related to social economy.

It is important to emphasize that social franchising concerns not only economic actions but also social ones (franchising of organisations’ trademarks and social actions). There are two main problems related to social franchising: the first one concerns the low awareness of the idea in the society, the second one results from the lack of knowledge about franchising principles among potential users.

Questions we want to analyse:

  • Social franchising functioning in EU Member States;
  • Methods of social franchising implementation;
  • Successes and failures in social franchising functioning.

Objectives we want to achieve:

  • Develop general methodology of social franchising implementation;
  • Develop methods of social franchising promotion within social economy sector.

2. Public-private-social partnership as a factor of social economy development

Brief definition of the subject:

One of the important conditions of development and expansion of social economy sector is the establishment of co-operation networks. The implementation of the project in partnership contributes to generating considerable added value expressed in the effect of synergy, which results from joint implementation of tasks in the project, development of common solution to the problem as well as departure from fragmentary and often not coordinated activities undertaken by different entities in the same areas.

The problem of partnership was a subject of discussion at European level in the context of public procurement. The presented Green Paper on public-private partnerships as well as documents from the latter discussion have been mainly focused on the establishment of partnerships in the context of EU regulations on public procurement. This issue needs serious discussion, especially if we take into consideration that in some countries there is a difference between terms of public-private partnership and public-social partnership (which includes non-governmental organisations and social economy entities).

Issues which need to be additionally analysed:

  • The co-operation of social economy entities with public institutions (except for public procurement), including the question of developing common action programmes, implementing joint undertakings which have non-economic character, initiating local short-term and long-term agreements;
  • The co-operation with business sector referring to: demand for specific services and employees, joint elaboration of training programmes which support development of social economy.

Questions we want to analyse:

  • Ways of partnership co-operation between public institutions and non-public entities in economic and non–economic dimension;
  • Influence of EU solutions on national legal solutions;
  • Review of research methods, social added value worked out as a result of public–private–social partnerships.

Objectives we want to achieve:

  • Compare legal solutions concerning partnerships of social economy entities or institutions working for social economy;
  • Analyse the influence of legislation and European practice on establishing partnerships with social economy entities.

3. Quality standards in social economy entities

Brief definition of the subject:

The increasing consciousness of citizens as well as customers, access to information and competition cause the rise in interest in the quality of services provided and instruments of measurement. This process is different in EU Member States, however, in most countries it assumes a form of standards which have formal or informal character. Not only are these standards made by public institutions but also by social economy entities themselves. The very important fact is that the social economy entities - through the provision of services for citizens which base on local societies and individualised services adjusted to their diverse needs - are able to compete effectively with market institutions at the level of quality. Taking into consideration this fact, it is very important to define and monitor the quality standards which include the particular for social economy features, mainly concentrating on ‘soft’ indicators reflecting added value in the services provided. During the current changes in the European social model the question of quality standards should play more and more important part in the creation of the modern social policy. However, the lack of comprehensive policy in this area can lead to the decrease in the quality connected with costs reduction. Therefore, in spite of European diversity, the activities which lead to determine common frameworks related to the definition of standardisation requirements are indispensable.

Questions we want to analyse:

  • Existing quality standards specific for the social economy entities in different EU Member States;
  • Influence of quality standards implementation on development of social economy entities;
  • Methods of evaluation concerning the quality standards implementation in the sector of social economy.

Objectives we want to achieve:

  • Analyse existing quality standards in social economy;
  • Analyse methods of quality standards evaluation for social economy;
  • Work out the map of recommendations containing the directions of standardisation for social economy for nearest years.