Social co-operative

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The social co-operative is perhaps the archetypical social enterprise, in that it combines a businesslike style of operation with a profound attachment to social goals. What distinguishes it from a standard co-operative is that it has multiple stakeholders - usually its workers and its beneficiaries, and often volunteeer members as well.

This form of co-operative was pioneered in Italy and has grown most impressively there, although it is also strong in Spain. Belgium and France have also created special legal forms of this type.

Italian legislation

In Italy, social co-operatives are defined as follows, according to law 381/91:

  • the objective is the general benefit of the community and the social integration of citizens
    • type A social co-operatives provide health, social or educational services
    • type B social co-operatives integrate disadvantaged people into the labour market. The categories of disadvantage they target may include physical and mental disability, drug and alcohol addiction, developmental disorders and problems with the law. However they do not include other factors of disadvantage such as race, sexual orientation or abuse
  • various categories of stakeholder may become members, including paid employees, beneficiaries, volunteers (up to 50% of members), financial investors and public institutions. In type B co-operatives at least 30% of the members must be from the disadvantaged target groups
  • the co-operative has legal personality and limited liability
  • voting is one person one vote
  • no more than 80% of profits may be distributed, interest is limited to the bond rate and dissolution is altruistic (assets may not be distributed)

Italian social co-operatives benefit from relief of social insurance charges on their disadvantaged members, but this is the only form of subsidy they receive.

Scale of social co-operation in Italy

A good estimate of the current size of the social co-operative sector in Italy is given by updating the official ISTAT figures from the end of 2001 by an annual growth rate of 10% (assumed by the Direzione Generale per gli Ente Cooperativi). This gives totals of 7,100 social co-operatives, with 267,000 members, 223,000 paid employees, 31,000 volunteers and 24,000 disadvantaged people undergoing integration. Combined turnover is around €5 billion. The co-operatives break into three types: 59% type A (social and health services), 33% type B (work integration) and 8% mixed. The average size is 30 workers. (Source: Flaviano Zandonai.)

Social co-operatives and the state

Social enterprises supply both labour market integration and care services. They offer a way to meet social needs that is both more efficient than a state sector burdened with intricate personnel regulations and pension liabilities, and of better quality, because of the high relational content that they embody. Their commitment to social goals means that unlike the private sector they are unlikely to resort to cost cutting as a way to increase revenue.

Before the EU Public Procurement Directive, registration as a type B social co-operative gave access to public contracts without tendering. The local authorities promoted social co-ops by giving them contracts, because they could deliver services more cheaply than public or private sector provision, and were also more flexible, in particular with regard to personnel. Social co-operatives therefore took on the new services such as home care that had previously been provided within families. They thus enabled women to move into the paid workforce. The sector is now making the transition from an essentially protected status to free market competition for public contracts.