Warsaw SE conference 060510

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SOCIAL ECONOMY – A MODEL FOR INCLUSION, ENTREPRENEURSHIP AND LOCAL DEVELOPMENT

RESULTS OF THE SEMINAR IN WARSAW ON 10-12 MAY 2006

The social economy, one of EQUAL's nine themes, accounted for 155 development partnerships in its first half, and in its second half a further 256 were carried out.

The first in a series of mainstreaming events in this theme took place in Warsaw on 10-12 May 2006, hosted by the Polish Ministry of Regional Development. Subsequent events in 2006-7 were held in Italy, Finland and - together with the business creation theme - Germany.

The seminar examined the lessons of 17 successful EQUAL projects from nine different countries in the following policy areas:

  • quality and impact measures
  • public procurement
  • developing social enterprises in care, neighbourhood services and the environment
  • business support, replication and social franchising
  • participation and empowerment
  • management skills and qualifications

Participants divided into four parallel workshops, co-ordinated by Finland, Italy, Sweden and the UK respectively.

Contents

PREPARATION

This seminar kicked off the series of mainstreaming events in the social economy theme leading to a Policy Forum to be held in Germany in June 2007 jointly between the two themes in the entrepreneurship pillar.

A series of preparatory meetings were held by representatives of Member States and the Commission These are described in the document Shaping the social economy mainstreaming event in Poland on 10-12 May 2006. The main stages are summarised here.

BERLIN 19 SEPTEMBER 2005 / BRUSSELS 19 & 28 OCTOBER 2005

The first meeting among Member States to decide upon a programme of mainstreaming activities in the entrepreneurship pillar of EQUAL was hosted by Germany in Berlin on 19 September 2005. At this meeting, Poland, Italy and Finland each offered to host an event. The Commission then hosted meetings of the mainstreaming groups for both Entrepreneurship themes on 19 October 2005 in Brussels. The social economy group was attended by eight Member States: AT, BEnl, DE, EL, IT, NL, PL and SE.

Participants learnt about the Commission’s grants procedure and were in broad agreement that the first event would display the ‘jewels’ of the first round of EQUAL and would be built around workshops on:

  • relations with government
  • the business
  • support and networking
  • the users

The Commission’s officials, the technical assistance expert for the theme and the Polish and Italian representatives than met a week later to discuss contents and format of the Polish event.

WARSAW 30 NOVEMBER 2005

The next meeting was held in Warsaw on 30 November 2005, with the following six countries present: DE, FI, IT, PL, SE and – a newcomer – UKgb. During discussion, it was decided to reduce the number of tables to be organised during the first event from 12 to eight and to shift the emphasis slightly from the technical to the policy aspects. Four Member States – FI, IT, SE and UKgb – volunteered to be responsible for one workshop. Each workshop would cover two topics, and each topic would be illustrated by two cases form different countries.

The event programme was envisaged in the following way:

  • opening plenary – the European and Polish context
  • workshops session 1 – discussion of cases
  • visits to local EQUAL projects
  • workshops session 2 – formulation of recommendations
  • plenary round table to discuss results
  • conclusions and action plan

ROME 3 FEB 2006

In December, Poland wrote to all Member States inviting them to propose cases of development partnerships to be featured. Some 26 proposals were received, sorted and structured so as to draw out their key lessons, vertical and horizontal mainstreaming aspects and local development relevance. This was discussed at the meeting in Rome on 3rd February 2006.

PREPARATION OF CASE STUDIES AND DOCUMENTS

The preparatory work consisted in selecting the cases to be presented during the Warsaw seminar and preparing 17 case studies and a background paper for each of the four workshops. These documents were published on the EQUAL website of the European Commission before the seminar..

AMSTERDAM 1 APRIL 2006

A final preparatory meeting took place in Amsterdam to check progress, agree organisational and methodological details, and discuss follow-up proposals.

EU POLICY CONTEXT

Policy towards the social economy at EU is broad and lacking coherence. Enterprise policy deals with issues such as the preparation of European statutes for the various types of organisation (e.g. co-operatives) to facilitate their access to the single European market, with the compilation of adequate statistics and with surveys of existing support mechanisms in the Member States – in short the ‘formal’ issues concerning the types of enterprise that are working in the area of social economy. Meanwhile much of the policy related to the ‘content’ – the activities – of social economy organisations falls within employment and social affairs policy, – and some support for projects in this area is given by the European Social Fund, and in particular by the EQUAL Community Initiative. In recognition of their relevant role on this policy, social economy organisations are also very active in such consultative bodies as the European Platform of Social NGOs and the Civil Society Contact Group.

It is recognised that the activities of the social economy are manifold and that they need to be dealt with in relation to trade-sector specific issues (e.g. agriculture, credit, housing). However it is also recognised that there are some policy areas the social economy approach has key strengths, notably in the area of social and economic inclusion, or the exploitation of the new sources of jobs through local development and employment initiatives. For this reason, the social economy receives particular consideration within the following areas:

  • Multiannual programme for enterprise and entrepreneurship
  • European Employment strategy
  • European Social Fund (EQUAL Community Initiative)
  • Local and regional development
  • Social inclusion policy
  • Services of general interest
  • Education and training policy
  • Corporate social responsibility
  • Research policy, in particular the Targeted Socio-Economic Research Programme (TSER), its antecedents and successors

ACTIVITY IN EQUAL

ROUND 1

In the first round of EQUAL, 155 development partnerships from 11 countries worked on a wide range of issues in the social economy theme including:

  • partnership with local authorities in the planning of social service delivery
  • the creation of jobs in growth sectors such as neighbourhood services
  • methods of opening up access to larger markets, notably incorporating social criteria in public procurement procedures
  • methods of raising the profile of the social enterprise sector and reaching broader markets, e.g. through online marketing databases
  • methods of quality and impact measurement such as social audit and the balanced scorecard
  • training and qualifications – both for managers of and advisers to social enterprises, and also in the social care field, thus helping reduce informal work by migrants
  • tailored business support methods including incubation, ‘activity co-operatives’ of micro-enterprises
  • ensuring that mainstream business support organisations cater for the specific needs of social enterprises
  • work integration enterprises such as social firms and ‘type B’ social co-operatives, catering for various target groups including handicapped people, mentally ill people, ex-offenders and drug misusers
  • replication methods such as business format franchising
  • the provision of common services to stimulate local development in rural areas

Following two sets of workshops in Brussels, work on these themes culminated in the Strengthening the Social Economy conference held in Antwerp in May 2004.

ROUND 2

The social economy theme went into the second round of EQUAL considerably strengthened. Three new countries have joined, and the number of partnerships is up by two-thirds leading to 245 development partnerships. Work focuses on four themes: improving the institutional framework, building better businesses, improving individuals' life chances, and territorial development. The first angle of approach, taken by three-fifths of the projects, is to improve the quality of social enterprises considered as businesses. The largest group of these projects plans to operate ‘incubators’ to nurse new firms into life, while other clusters focus on promoting specific trade sectors such as the environment, tourism, care and neighbourhood services, or on improving quality management in existing social enterprises.

In second place, nearly a quarter of the projects look at social enterprise primarily as a way to improve the life chances of disadvantaged individuals, especially those who are disabled or long-term unemployed, by offering them the chance to carry out a productive activity – often in the recycling or personal services sectors – in a sheltered environment.

A sixth of the projects are tackling the institutional framework within which social enterprises operate, for example improving the way public procurement works, developing new tools to measure the quality and impact of new approaches, or building the capacity of NGOs. Finally, a dozen projects, in both rural and urban contexts, take territorial development approaches. These are based essentially on encouraging the participation of local residents, and building partnerships between different local organisations to manage the process of improving skills, creating new businesses and improving the quality of services. Analysing the DPs according to the content of the work of the enterprises concerned enables three significant trade-sector clusters to be distinguished:

  • Care and neighbourhood services are the priority for 35 DPs: 8 of these are primarily concerned with the institutional framework, 23 with business development and 4 with training. It may also be noted that in their responses to the transnationality survey, 15% of DPs said they would be working on neighbourhood and other services (this would equate to 40 DPs out of 265)
  • the environment is the focus for 14 DPs
  • tourism, leisure, culture and fashion is the focus for 16 DPs

The chief target groups are long-term unemployed people and disabled people.

MAIN DIFFICULTIES IN MAINSTREAMING

EQUAL has provided the framework within which actors have addressed a number of key issues, and these have been discussed at events held under the aegis of EQUAL’s Entrepreneurship for All European Thematic Group (ETG2), for instance at the Strengthening the Social Economy conference held in Antwerp on 10-12 May 2004. Many of these were also addressed at the Warsaw event two years later. The main difficulties in mainstreaming them seem to be as follows:

  • the issues are complex. The social economy by its very definition addresses social objectives through economic activity. It thus exists at the cusp of the business and the social universes. It requires a combination of expertise in several areas which is difficult to master. Nevertheless the different actors in the field of the social economy realise advantages by connecting the two aspects, and by focusing their activities on carrying out profitable trading activity, but in a value-driven way;
  • the topic is politically contested to a much greater extent than for example are some of its components such as enterprise policy or equal opportunities policy: some political viewpoints are favourable to the social economy and some are not, and some economists admit the validity of social economy approaches while others do not;
  • the social economy is in a process of constant evolution and adaptation to new challenges, which means that much of the policy area is quite new;
  • linked to this, the vocabulary is imprecise. There are no universally accepted definitions of terms such as ‘social economy’ and ‘social enterprise’, and these terms are often used with political overtones, and in contradictory ways in different contexts and different countries. For instance ‘social enterprise’ is used very generally in the UK, while a much more detailed characterisation resting on nine criteria is current at European level. Meanwhile in Finland the term is used in the much more limited sense of ‘integration enterprise’. (Even more confusingly, these are known in the UK as ‘social firms’);
  • the issues do not relate solely to employment and social policy, but cross departmental boundaries. Administrative bodies have not always proved ready to collaborate to address these issues.

THE CONFERENCE SESSIONS

OPENING PLENARY

EQUAL in Poland: objectives and challenges

Paweł Chorąży, Director of Department for European Social Fund Management, Ministry of Regional Development

The EQUAL programme, which is funded 75% from the European Social Fund, offers Poland the first opportunity to tackle labour market disadvantage. Poland chose to work on five of the nine EQUAL themes, of which the social economy (theme D) is one. Interest in the theme exceeded expectations. There were 127 applications submitted, of which 27 were selected for funding. They involve some 280 partner organisations, half of which are NGOs and 16% commercial bodies. The budget for theme D is around 200 million zlotys or approximately €49m.

Taking part in EQUAL is attractive for Poland as transnational co-operation and the exchange of experience enables Poland to learn new approaches and to create a Polish model of social economy. Such transnational learning has already led to social co-operatives being introduced. The main beneficiary groups are first of all the long-term unemployed, and also young people and graduates, as well as over-50s (a new target group for Poland).

When EQUAL comes to an end, its lessons will be mainstreamed into the Human Capital operational programme, which has a social economy component.

The Social Economy and the Post-Accession Rural Support Project

Jan Pakulski, World Bank

Mr Pakulski introduced his speech by reminding us that the World Bank is the single largest donor supporting social sector development. It works in 140 countries, providing finance to reduce poverty and promote growth. It disburses $20 billion a year. Poland was a founder member of the World Bank in 1944 at Bretton Woods, and rejoined in 1989. The Polish social, energy and agriculture programmes total some $5 million a year.

It is a good time to talk about the social economy, he said. Poland has started work on the social economy, but late: “There is still a need for an elegant articulation of the concept that fiscal measures to support the social economy do not crowd out private sector initiatives. The bottom line is how much we recognise the need for interventionist engineering to create an environment conducive to the social economy. It is an area that needs a lot of attention.” Poland has had quite impressive economic growth, but its problems are an unemployment rate of 18% – the highest in the EU – and an employment rate of only 52%. So can the social economy be a replacement for the moderate impact of active labour market policies? “The figures speak for themselves: unemployment is not going away,” he said. “This is the moment to look at integrated approach to social inclusion – an integrated approach is vital.”

Mr Pakulski gave credit to the EU for pushing a social inclusion strategy – and Poland has a very good one, which the new government has kept in place. It was prepared in a highly consultative manner, and has a big chapter on the social economy.

The Poland Post-Accession Rural Support Project (PARSP)

This project addresses the problem of the absorption capacity for structural funding, primarily by local government. €11.5 billion of EU structural funding has to be absorbed. The main aim of the $90 million World Bank loan is to gear up and flush the system. Its secondary goal is to build social inclusion. $50 million (€40 million) will be spent over four years on social inclusion in the 500 poorest gminy (municipalities), to help them to provide social services to address exclusion. Unlike EQUAL, the money does not go direct to initiatives, but via the local authorities, so as to build their capacity. One-third of gminy have a social inclusion strategy and can obtain a loan, which it can sub-contract to local NGOs.

“It would be easy to spend the money on ad hoc measures like hot meals for schoolchildren, but the Bank prefers to be more ambitious,” he said. “It is trying to fund the fishing rod rather than the fish. The Bank wants NGOs to be closely involved in the programme.”

The Polish Social Economy

Marek Rymsza, Institute of Public Affairs

In Poland there are new and old waves of the social economy, and the country has a rich tradition based on the principle of mutuality. However, in recent times, the meaning of ‘socialism' has changed. The social economy, along with the co-operative movement, was left behind in the post-Communist reform. Maybe in the first phase of the reform there was no space for the social economy, but now there is – because we are creating a market economy with a low level of employment. We cannot go on creating more and more redundancies, so people have realised the need for the social economy. Fortunately the EQUAL initiative was there to fill the gap.

Problems facing the second wave of the social economy:

  • activation: social inclusion is not just about lack of resources, but also a lack of participation in society. We need to reactivate people through the social economy.
  • ideological opposition: disproving the ‘crowding out’ hypothesis asserted by conservative economists is something we have to do empirically – by demonstrating that the social economy works – rather than through theoretical debate.
  • dual labour market – we should try to place people in niche labour markets as it may help them to join the main labour market eventually.
  • Stigmatisation
  • NGOs – how to manage economic activity carried out within associations

Trends:

  • social capital: EQUAL projects are creating human capital, but they are not creating social capital, because it is harder to measure. We should focus more on social capital, especially as EQUAL will end all too soon.
  • targeting: we are focusing on vertical integration, on including the worst excluded, but we are forgetting the mutuality rule, and forgetting the not-so-disadvantaged
  • conservatism: social service personnel adopt a defensive stance – they do not want to work with NGOs, and do not want to move forward
  • silos: This is a structural problem – we need to find a way to persuade government departments to work with each other.

The Institutional Framework for Social Enterprises: Challenges for the New Member States

Roger Spear, Open University (UK) & EMES Research Network

In the 15 ‘old’ member states of the European Union, social enterprises provide around 8.9 million full-time equivalent jobs, or 7.9% of the workforce. However this share varies from country to country from 3.3% (in Greece) to 16.6% (in the Netherlands). They have grown up through successive interaction between activists and the public authorities (often initiated by local government officers), which has led to a gradual process of institutionalisation. In the new EU member countries, the vibrant social economy sectors that existed prior to World War II became co-opted under Communism. The early neo-liberal transition reforms were hostile to the sector, but it has now re-emerged as a response to severe recession.

There are various definitions of what social enterprises are, but the most widely accepted one at European level is that propounded by the EMES research network. This sets out nine criteria which social enterprises are likely to embody to some extent:

  • Four economic criteria: 1. continuous activity in producing and/or selling goods and services; 2. a high level of autonomy; 3. a significant economic risk; 4. a minimum number of paid workers
  • Five social criteria: 5. an explicit aim of community benefit; 6. citizen initiative; 7. decision making not based on capital ownership; 8. participatory character, involving those affected by the activity; 9. limited distribution of profit

There is considerable variety in the national contexts within which social enterprises have grown up, particularly with regard to two factors – the welfare regime and the role of the family and the church. But there is also wide diversity from one city to another – for instance between a town dominated by a single large paternalistic employer and one with a multiplicity of small businesses.

Social enterprises grow up within new legal forms within structured public frameworks (such as the social co-operatives in Italy), through a ‘self-labelling’ process (by forms such as co-operatives, social firms and community businesses in the UK), and through ad hoc constructed contexts that lead to new forms of social enterprise (as in Denmark). Existing institutions play an important role in granting these enterprises recognition, identity, professional advice and support. They are thus both new organisations and existing ones refashioned by new dynamics within the third sector.

Social enterprises carry on three main types of activity (sometimes in combination):

  • producing value-based goods and services, especially fair trade
  • providing welfare, community and environmental services
  • providing employment for disadvantaged people

Social enterprises are recognised by both national and European policies. The UK has established a Social Enterprise Unit which works closely with the Social Enterprise Coalition made up of the federal bodies for the main types of enterprise. The UK’s policy has three priorities:

  • creating an enabling environment for social enterprise
  • making social enterprises better businesses
  • establishing the value of social enterprise

EU policy recognises that social enterprises contribute to efficient competition, aid job creation and new forms of entrepreneurship and employment, meet new social needs, favour citizen participation and voluntary work, enhance solidarity and cohesion and contribute to the integration of the economies of candidate countries. The Third System and Employment programme concluded that third system organisations build social capital (trust relations and civic engagement). Tax systems and social transfers should be used to recognise and compensate for the fact that social enterprises internalise social costs, thus reducing public expenditure. Support frameworks for social enterprises may take a number of forms, which may be characterised as coalition, service centre, agency or networked enterprise. They may exercise the functions of co-ordination, representation and service provision and have varying degrees of specialism.

The institutional framework that social enterprises require comprises:

  • a legal framework that does not disadvantage them compared to conventional businesses
  • fiscal support for the social benefits they create
  • access to the same markets (financial, product and service) as other firms, including public sector markets
  • self-regulatory federal bodies to represent the sector’s interests
  • financial and business support bodies

WORKSHOPS

Participants divided into four parallel workshops, as follows:

WORKSHOP A: Relations with the state – Facilitator: Jeremy Nicholls (UK)

Table topic A key question Case presentations
1. Quality & impact measures How can social enterprises & public authorities use measures of the social added value that social enterprises create for the community? C3 – A Credible, Competitive & Confident Social Economy / SEP/NEF (UK)
Sol - Création d’une monnaie électronique solidaire (FR)
2. Public procurement What do local authorities need to do to implement effective social criteria within EU public procurement legislation? Best Procurement (UK)
Agenzia di Cittadinanza (IT)

WORKSHOP B: The business – Growth sectors – Facilitator: Eveliina Pöyhönen (FI)

Table topic A key question Case presentations
3. Developing social enterprises in care and neighbourhood services What partners and what roles, what changes in behaviour, what tools are needed for the quicker development of social enterprises in growth sectors? Regie Buurt- en Nabijheidsdiensten (BEnl)
CREATE – Entreprendre Ensemble sur un Territoire pour l’Inclusion par la Coopération (FR)
4. Developing social enterprises in the environment & recycling ditto EcoNet (AT)
Second Chance (DE)

WORKSHOP C: Support & networking – Facilitator: Maurizio Franzini (IT)

Table topic A key question Case presentations
5. Business support for social enterprises What services do new and growing social enterprises need? How should they best be delivered, and by whom? SLUP.SE (SE)
QUASAR (IT)
6. Replication (social franchising, licensing etc.) Which business sectors and methods are most promising for rapid replication of social enterprises? Peiran (EL)
Albergo in Via dei Matti no. 0 (IT)

WORKSHOP D: The users – Facilitator: Alec Carlberg (SE)

Table topic A key question Case presentations
7. Participation, empowerment, integration, governance, dealing with specific target groups How can social enterprises best serve to integrate specific excluded groups? Vägen Ut! (SE)
Synergia (EL)
8. Management skills and qualifications What skills and qualifications are needed, by whom, and how should they be provided? Social Enterprise Partnership (UK)
C3 – Consultoria para o 3° Sector (PT)

SITE VISITS

Visits were made to four development partnerships active in Warsaw:

  • Partnership for the Vocational Activation of Roma through Social Economy Tools
  • Searching for a Polish Model of Social Economy
  • We Have Jobs (Tu Jest Praca)
  • Partnership for the Rain Man – the Rain Man for the Partnership

PANEL DEBATE

The panel chair, Wolfgang Borde (Community Initiatives Unit, Employment and Social Affairs DG, European Commission) opened the debate by remarking that things have moved on since the EQUAL seminar Strengthening the Social Economy held in Antwerp exactly two years ago to the day. He was looking forward to finding out how we have used the EQUAL laboratory to fight discrimination in the labour market and to influence social policy and practice.

Workshop A – Relations with the state

  • Public procurement

Paul Lewis (Social Enterprise Unit, UK) reported that the table had discussed what public authorities can do to implement social criteria in their purchasing, and to open up their markets to social enterprises.

Key issues are the ability and willingness of public authorities (which is a question of culture, skills and capacity), what should the sector do to influence decision makers, and the different models of partnership (as in the Italian example) and procurement (as in the UK).

Vertical mainstreaming issues are:

  • the need for legal clarity
  • building a ‘business case’ (a justification) on how to achieve best value
  • leadership from the European Commission
  • cultural change
  • technical skills

Horizontal mainstreaming issues are:

  • the evidence base
  • structures and networking

Steve Wallace (Social Enterprise Unit, UK) announced that the UK government reshuffle that had taken place this week means that the Social Enterprise Unit has been moved from the Department of Trade and Industry to become part of a new Third Sector Unit in the Cabinet Office, under the direct responsibility of the Prime Minister.

He pointed out that we have to help procurement officials to do their job better. “It would be helpful if they looked at the wider impacts of their decisions, and took the wider benefits to society into account, but it isn’t as simple as that,” he said. “For instance making a saving for the health authority will not reduce the local council tax and help a councillor to get re-elected! We need to be subtle.”

Mieke Vercaeren (Office of the Minister for Social Economy, Flanders) said that procurement offers a way for government to exercise corporate social responsibility, to make the social economy visible, and to convince other ministries by creating facts and figures. Given increasing competition from countries such as China, we need to help the social economy to innovate.

Kuba Wygnański (Federation for the Support of Social and Economic Initiatives – KLON) pointed out two problems. First, in a country where there is hysteria about corruption, bureaucrats gravitate towards using price as the sole criterion for purchasing decisions. A really strong voice in support of social criteria from European level could help to shift this blockage. Secondly, NGOs tend to accept low prices, so they cannot invest in their own growth and skills. Antonella Noya (Organisation for Economic Co-operation and Development – OECD) explained that through its Local Economic and Employment Development (LEED) programme, the OECD has been working on the issue of the social economy for ten years. “Measuring social added value is essential, as social added value is what makes the difference,” she said. ”The explicit mission of social enterprises is not just to act locally, but to change the broader landscape of society. The challenge of achieving a common viable standard of social added value poses a challenge that needs to be taken up jointly by researchers, social enterprises and policy-makers, in a participative way.”

Pierre Wolkowinski (European Network of Cities and Regions for the Social Economy – REVES) introduced REVES, whose members are both public and social economy partners in 50 regions. In his view, measuring social added value is a crucial part both of acting effectively and being visible globally. He added that international exchange is vital in this area, as owing to culture, custom and even corruption, public procurement laws are interpreted with varying degrees of effectiveness in different places.

  • Quality and impact measurement

Lisa Sanfilippo (New Economics Foundation) then outlined the activity of the Quality and Impact project that ran within the Social Enterprise Partnership DP. It looked at developing and then using the means to measure social added value. The horizontal mainstreaming dimension relies on:

  • establishing shared values
  • defining indicators of quality (some common, some specific to types of social enterprise)
  • creating scales of measurement based on social science (e.g. self-esteem) and carrying out training
  • developing common processes
  • use these to create a brand

Vertical mainstreaming focuses on articulating these shares values with policy-makers and professionals such as accountants, and accepting both qualitative and quantitative measures (stories and numbers). Consultation is important to avoid the risk that too great an emphasis on quantitative measures could backfire and become a hurdle rather than a selling proposition. Local strategic partnerships and awareness raising are part of local development. As regards sustainability: values, measurement and branding + policy support and public awareness à a strategy for survival when ESF funding ends.

Two key points are:

  • common values
  • qualitative and quantitative measures

Mieke Vercaeren pointed out that what is needed is a simple measure that can be easily used in practice. Ted Fowler (Bristol City Council, UK) echoed this: “The blood drains from my colleagues’ faces when they think about these complex measures,” he said. “Social enterprise should focus on what they need. We should think in terms of two or three feasible indicators that everybody can use – buyers, social enterprises and conventional businesses too. We should challenge the private sector. This is about mainstreaming into the economy at large.”

Truda Ann Smith (European Network for Social Integration Enterprises, ENSIE), commented that ENSIE encourages its member enterprises to make evident the social value they add: “We feel under more pressure to quantify our impact than conventional businesses,” she added.

Workshop B – The business – growth sectors

Eveliina Pöyhönen (National Research and Development Centre for Welfare and Health – STAKES, Finland) asked whether the place of social enterprises is on the margins or in the mainstream. They need recognition, to get into the main market. Therefore, they need mixed financial systems that combine income streams from public subsidy, from private sources and from commercial trading. Social enterprises need public funding, related to the target group, not as a subsidy for the business as such, but as compensation for the lower productivity of some of their workers.

Workshop B concentrated on two sectors where social enterprises are relatively common – care and neighbourhood services, and the environment and recycling. In both sectors, finance and recognition are needed. Salient issues are:

  • relationship to policy-makers – we should make public bodies realise that they are beneficiaries of social enterprise activities – society benefits, and this justifies a payment
  • products – inclusion is a product and should be sold
  • networks are crucial to growth:
  • with the private sector (especially in the environment sector) to avoid disagreements over ‘unfair’ competition
  • with local actors and
  • with ministries at high level
  • professionalisation – business and social skills bring sustainability
  • quality measurement systems

Growth depends on how we make our added value visible.

Two key points are:

  • the role of public funding
  • networking with the private sector and with public authorities

Steve Wallace first pointed out that in the UK, it has been realised that it is the private sector that are often the better customers for social enterprises, as they are more flexible. Secondly, he cautioned against over-optimism: “We still have some way to go before we can prove the benefits of social enterprise to the satisfaction of the world at large,” he reminded us. “Many people still don’t think of social enterprise as an option. As an example, social enterprise was so well mainstreamed at the EQUAL conference in Warsaw last February that it was practically invisible. If we cannot even get the message over to the other themes in EQUAL, what hope have we?”

Antonella Noya felt that as regards public subsidy, the best strategy is to rely on mixed funding. “It is a challenge to policy-makers to define the scope of such subsidy, but I do not see any problem in subsidising social enterprises. They need to compete in the market, but policy-makers need to create the right conditions in which they can do this. This requires tax relief, subsidy or some other tool. I am fed up with people complaining about unfair competition. Private enterprises receive flows of public money to support innovation – so why the quarrel about subsidies for social purposes?”

She added that it is very important to make existing private-social partnerships visible, and the OECD aims to organise a conference on this topic.

Pierre Wolkowinski commented that REVES was created on the presupposition that both sectors are necessary: when a local authority joins, it has also to bring social economy actors into membership within a year.

Eva Arvidsson (Social Democrat Member of Parliament, Sweden) insisted on the need for partnership, as neither the public sector nor the private sector have enough knowledge to make progress on this issue alone.

Kuba Wygnański commented wryly: “Social enterprises and non-governmental organisations always complain about finance, because it comes early in Maslow’s hierarchy of needs, but the problem goes much deeper. In Poland we get an immediate reaction from the private sector if subsidies for social enterprises are proposed. We are tolerated only if we stay small. We have masses of anecdote, but we need a strategy. We are also hampered because we have no single model of the social economy / social enterprise. Our task is not made any easier by changes in the Polish government. It is now or never, as the national development plan for the 2007-2013 period is being discussed now!”

Truda Ann Smith thinks of social integration enterprises as being contracted to bring back unused production resources – potential that the general economy will not activate. The issue is how we can use the quality of our companies to take part in growth sectors.

Workshop C – Support and Networking

Maurizio Franzini (La Sapienza University, Italy) reported the results of the third workshop. Horizontal mainstreaming:

  • support – replicate national experiences
  • access to franchising – both ‘open source’ and ‘patented’ (embodying two different attitudes to the issue of intellectual property rights)

Vertical mainstreaming:

  • press for an Enterprise DG budget for innovative models of business support for social enterprises, based on social franchising
  • enhance local government participation in support structures
  • make legal framework more supportive to business support

Local development:

  • mobilise idle resources
  • overcome obstacles to local co-operation
  • build capacity of local policy-makers
  • strengthen local entrepreneurial capacity

Sustainability:

  • quality and specificity of services and empowerment
  • specialised financing, mainly public

To applause, Eva Arvidsson took up the challenge and said that Sweden would consider leading a programme on social franchising.

Drawing on the existence of the START Centres in Flanders, Mieke Vercaeren felt that the skills of developing social enterprises were valuable and should be exported to the mainstream economy.

Workshop D – The users

Alec Carlberg (Basta Arbetskooperativ, Sweden) said that in order to create an enterprise that empowers its users, the key element is personal growth. Social enterprises have to keep one eye on their soul and the other on their market. Managers in the social economy need a higher profile.

Summarising the results from table 8, Luca Pastorelli (DIESIS) added that a number of factors are needed to create a good working environment in social enterprises, empowering and involving the users:

  • support for managers to raise quality and meet customers’ needs
  • networking, consortia, franchising and communications strategies
  • strong leadership, and special skills that the social economy requires
  • an ‘open method of co-ordination’ that involves the various stakeholders

Steve Wallace agreed that social enterprises have specific needs: “The evidence that is coming out of the EQUAL projects can go a long way to help us define what it is that is specific to social enterprise and how social enterprise specialisms fit in with mainstream business support,” he said.

Pierre Wolkowinski pointed out that networking builds confidence – being in REVES allows its members the build long-lasting transnational collaborations.

Eva Arvidsson felt that empowerment is the best way to growth – we are talking about work capacity not obstacles.

Wolfgang Borde stressed that the guidelines for Structural Fund support after EQUAL leave the Member States more scope to define what they support, particularly measures in the field of social economy as the Member States agreed to pay special attention to promoting social services and the social economy.. The National Strategic Reference Frameworks (NRSFs) are now being written, so now is the time to try to influence them.

Eva Arvidsson introduced the Swedish National Thematic Group on Social Enterprise (socialt företangande), which she chairs. Its success factors include:

  • participation of 10 development partnerships, representing users, social enterprises, support organisations and authorities
  • access to ministers
  • support from the ESF Agency

“The National Thematic Group has scored a significant success as regards the future use of the Structural Funds,” she continued. “We are proud to say that the social economy makes up as much as a quarter of the National Strategic Reference Framework document that Sweden is submitting to the European Commission. My advice to you all is to check your national action plans and make sure that the social economy gets a big mention.”

CONCLUSIONS – FUTURE EVENTS IN THE ACTIVITY CHAIN

Sebastian Białęski (Fundacja Fundusz Wspólpracy, Poland) thanked the members of the Social Economy Steering Group, experts, case presenters and workshop facilitators for the work they had contributed to preparing this event. Antonella Attanasio (ISFOL, Italy) announced that the next event in the social economy activity chain would be held at Tivoli near Rome on 4-5 December. Its objective would be to devise guidelines for policy-makers planning the use of the Structural Funds. It would be based on the exchange of experience in thematic workshops and focus groups, involving many of the same actors as have already been identified, including policy-makers, development partnerships and experts. It would also be the occasion to see a video that has been made of the round 1 DPs.

Eljas Liila (Ministry of Labour, Finland) noted that only around 40 social enterprises have been founded following the introduction of the law on the subject at the start of 2004. Finland will therefore be hosting an event in February 2007 in Helsinki, which will focus on the business side of social enterprises. It will cover (at least) business skills, finance, public procurement, new markets and growth sectors, support structures and the legal framework. Bettina Reuter (Federal Ministry for Employment and Social Affairs, Germany) announced that the policy forum to conclude this series of mainstreaming events will take place in Hannover in June 2007. It will bring together the two themes within EQUAL’s entrepreneurship pillar, that is business creation as well as the social economy.

PARTICIPANTS AND THEIR EVALUATION

The 120 participants came from 16 countries, broken down is as follows:

  • old EU member states: 72 (59%)
  • Poland: 37 (30%)
  • non-EU member states: 5 (4%)
  • EU & intergovernmental bodies: 9 (7%)

The mix of actors from partnerships in the first and second rounds facilitated the transfer of lessons learnt, and the choice of cases led to the formulation of persuasive policy messages. However political changes immediately prior to the event mean that the Polish government was represented at a lower level than had been envisaged.

One-third of participants returned the evaluation questionnaire. Responses are overwhelmingly satisfied, with only a handful falling below the level of “good”. Overall ratings are:

  • achieving objectives: 1.29 / 2 = adequate +
  • organisation and logistics: 2.49 / 3 = good to excellent
  • content and documentation: 1.97 / 3 = good

Achievement of objectives: The event succeeded in fulfilling its primary objective of codifying and transferring good practices from the first round of EQUAL. However it was also seen as being useful in formulating policy messages and workplans. Participant comments demonstrate the unavoidable complexity of the concepts involved in discussions of the social economy and social enterprise.

The most useful aspects were meeting other people and gaining new ideas (10 mentions) and learning about practical experiences (6 mentions). Specific idea transfer also took place, for example of measuring social return on investment SROI, mixed financing for mixed objectives, and a specific scheme for recycling used mobile telephones. The seminar was in this sense practice-oriented, being more effective in showing positive models for action than in revealing evidence for policy change.

Follow-up action being taken: While the intentions of 16 of the 25 people who commented are limited to sharing information and experience, 9 of the 25 intend to take action of some sort. Four of these nine intended actions are of a horizontal mainstreaming nature (e.g. replicating a scheme for recycling mobile phones) while the remaining five involve vertical mainstreaming (e.g. contacting one’s MEP, proposing EU thematic work)

The participative method is a strong point, with both the workshop moderators and the case presenters being favourably rated. Documentation was rated good, and facilities excellent.

Problems: People attending workshops D (users) and B (growth sectors) showed the highest levels of satisfaction, while those in workshops A (the state) and C (support and networking) were slightly less satisfied. Problems mentioned include the absence of interpretation in one workshop and the predominance of the English language.

LESSONS

SUBSIDIES TO INTEGRATION ENTERPRISES ARE LEGITIMATE

At macroeconomic level, the strong recommendation from the representatives of the international institutions who were present at the seminar – the OECD and the World Bank – is that there is no principled objection to the granting of public subsidies to certain types of social enterprises, under defined circumstances. These are that the grant should be used to establish fair competition for social enterprises that are carrying out an integration function. In other words if businesses are incurring additional costs by giving work to people who are less productive than the norm, they should legitimately be compensated for these extra costs. In this way, the task of integration can be made financially sustainable in the long term. This conclusion already formed part of the conclusions of the EU’s Third Sector and Employment pilot action in 1999, but still arouses politically motivated debate.

MEASURING SOCIAL IMPACTS IS USEFUL IN POLICY FORMATION

The seminar brought to light the fact that several countries are now at the stage of putting figures to the value of various impacts of social enterprise, over and above financial costs and benefits. Such impact measurement can be the basis of improved policy-making, for instance in public procurement.

The process is one of:

  • agreeing a set of values which are shared by the social enterprise and its customers
  • deriving a set of quality indicators, some of which will be common to many enterprises and others unique to a given enterprise, some of which will be qualitative and others quantitative
  • turning these into a brand and communicating it. A key demand from policy-makers is for simple measures that are easily understood. Care should be taken not to erect quality and impact measurement into another barrier to the growth of social enterprises.

Some examples from EQUAL of work under way are:

  • In Sweden, a study by researchers from Göteborg University shows that for each male heroin user who is taken off the street through membership of a social co-operative, the state saves around €211,000 per year, primarily in costs of the justice department. The analogous saving for an alcohol addict are about €68,000. In each case the saving in the case of women is about half those in the case of men.
  • In Germany, the revenues that flow back to the state through the payment of tax and social insurance when an inactive person starts work in a social enterprise largely outweigh any subsidy that is given. In social firms in Berlin the return on such subsidies (two-thirds of which are provided by the federal state) is just over 50%. Additional VAT income and intangible returns such as saving in health and policing costs are not taken into account in this figure.
  • The New Economics Foundation, a think-tank based in London, has created the Proving & Improving toolkit that social enterprises can use to design their own processes to measure their quality and impact. It is web-based and summarises over 20 different methods, including social accounting, LM3, EMAS, EFQM etc. A key component is the SROI primer, a video introduction to the Social Return on Investment indicator. In Bristol, such a calculation is used to assess the benefits of transferring public assets such as land and property to social enterprises. The European Social Return on Investment Network has now been set up to spread this method.
  • In Finland, the Social Value Added Working Group of the Social Enterprise National Thematic Network is developing the ‘SYTA method’ of assessing the economic and the content-related outcomes of a social enterprise’s activities. The economic side involved calculating the returns to the state, the municipality and the employees and comparing these with what would otherwise have been the case. The method will be finalised in spring 2007.
  • In France, the bilan sociétal is a set of 100 indicators (ranging up to 400 for large companies) that show how the enterprise impacts on society. In Italy, the bilancio sociale is a similar tool.
  • The British co-operative movement practices a simpler set of ten Key Social and Co-operative Performance Indicators, which measure for instance not only whether members receive a dividend on profits and whether they turn up at annual meetings, but how much carbon dioxide the business emits and whether it takes ethics into account in its purchasing.

SOCIAL ENTERPRISES BRING BENEFITS TO PUBLIC PROCUREMENT

Useful progress is being made in methods of applying social and environmental criteria in public purchasing decisions within the European public procurement directives. This relies on capacity building on both the supply and the demand sides of the equation. On the one hand social enterprises can be strengthened through training and the formation of consortia, and on the other hand public procurement officials can benefit from technical skills in writing tender specifications so as to achieve best value. In particular, it is clear that where authorities have social objectives such as inclusion, these can be the object of purchasing decisions and should be explicitly included in tender specifications.

A second lesson is that the best way to involve social enterprises in public service delivery can sometimes be by their becoming sub-contractors to other private companies – they do not necessarily need to be the lead contractor. In this way they can help private companies to implement their corporate social responsibility aims.

SOCIAL ENTERPRISES ARE EXCELLENT TOOLS FOR TACKLING EXCLUSION

Neighbourhood services

Work as part of EQUAL in Southwest Flanders shows how the development of neighbourhood services can improve the quality of life of severely excluded people, such as migrants who have been unemployed for over five years. The system relies on breaking down barriers by co-locating different services, and on mixed financing, including service vouchers that effectively give a 70% wage subsidy. An example that sprang from a needs analysis is that short-term childcare enables unemployed women to attend job interviews and thus gain paid work. In one estate in Kuurne, 67 jobs have been created.

Mental health reform

Mentally ill people are one of the hardest groups to integrate. In Greece, the Synergia EQUAL project has been the way to deinstitutionalise the monolithic mental hospitals while avoiding the intense disruption to local economies that depended on them. So far 14 social co-operatives have been set up out of a projected total of 50 or so covering the country. They provide several hundred jobs in activities such as horticulture, honey manufacture, catering, baking, printing, carpet-weaving, paper recycling and car washing. As a result of legislation in 1999, the limited liability social co-operative (KoiSPE) has a dual status. On one hand it is an independent business benefiting from tax relief. On the other hand it is an official mental health unit, which means it can receive in-kind support, for instance by borrowing disused hospital premises or staff secondments. The law provides that at least 35% of each co-operative’s members are people suffering mental health problems, but also that mental health professionals can join and thus assure continuity of production, as well as corporate bodies, which can inject working capital by buying additional investment shares.

SECTORAL DEVELOPMENT APPROACHES ARE NEEDED

A trade-sector approach to developing integration enterprises can work. A movement across the EU has arisen to take advantage of the market opportunity brought into being by the passing of the Waste Electrical and Electronic Equipment (WEEE) directive in 1995. This has seen 1,000 recycling centres started up, employing 16,000 people, many of whom are disadvantaged. The centres provide training in new vocations as well as offering services to public and private customers. They rely on the creation of three-way partnerships: networks with public authorities create growth opportunities, manufacturers sign contracts to recycle their products, while liaison with local chambers of commerce avoids any accusations of unfair competition. Multiple sources of finance are tapped to support multiple activities. Underlying this is a strategic approach based on gaining intelligence of impending legislation, and acting to safeguard the interests of social enterprises. A European network (RREUSE) carries out large-scale lobbying and an EEIG Serranet has been established to promote the social enterprise approach.

SUPPORT SHOULD BE GIVEN TO REPLICATION METHODS

A cluster of EQUAL partnerships in several countries are achieving success in replicating – essentially copying with due regard for local circumstances – a proven business idea. Some of these have adopted the term ‘social franchising’ but this should not be taken to imply strong centralised and top-down control. On the contrary, the aim is to make unused local resources productive, by building a critical mass in the market place and through mutual aid. It is thus a process of local capacity building. There are two business models, the ‘open source’, where the know-how is available at no cost, and the ‘patented’, where the intellectual property is subject to a licence fee.

Some examples are:

  • Le Mat – a nascent chain of hotels employing mentally ill people, based on the model of the Hotel Tritone, which has operated in Trieste, Italy, since 1991. It has developed an operational manual and set up a permanent international association.
  • CAP Märkte – a group of 30 medium-sized supermarkets in Germany, originating in the Stuttgart area and employing 5–20 handicapped people. They are owned by a co-operative of sheltered workshops and collaborate commercially with a co-operative of grocery retailers.
  • Peiran – a chain of seven shops in rural Greece selling craft and traditional foodstuffs. They provide work for 17 young people and act as focal points for local development activities.
  • CASA (Care & Share Associates) – a group of companies providing home care services, on contract to local social services authorities. A distribution of shares in the company is made to employees each year. The core of this group is Sunderland Home Care Associates, which employs some 185 people, mostly women. It has been spread to four other towns in northern England.
  • Vägen ut! (Way out!) – a successful method which has established seven co-operatives employing 26 recovering addicts and ex-prisoners, is being spread from Göteborg to a number of other Swedish towns.

BRAIDED BUSINESS SUPPORT

Promoting social enterprises is best done through a combination of dedicated and mainstream provision - the braided approach. The best example of a dedicated support system is Sweden’s Coompanion - the new name of FKU – Föreningen Kooperativ Utveckling (Co-operative Development Association). Its 25 local agencies create around 300 new enterprises each year and have a revenue of €6.7m. They function on a partnership model which combines core funding from the state – creating stability – with local matching – creating anchorage. The loose national federal structure provides a community of practice among the agencies’ 85 workers, as well as allowing a political voice.

A good example of introducing support for social enterprises into the mainstream business support agencies is found in Italy. The Quasar EQUAL project is the fruit of a national partnership between consortia of social co-operatives and the chambers of commerce. The latter had previously not known how to serve the needs of social enterprises, and were anxious to enter this growing market. The partners set up observatories in eight towns, from Milan to Bari, carried out check-ups on 240 companies and trained the business advisers. Fresh towns are now following suit.

FOLLOW-UP

The seminar is to be followed by four further events as agreed in autumn 2005:

  • in Tivoli, near Rome, on 4-5 December 2006: a learning seminar that will look at selected good practice in four regions and themes and derive recommendations for Structural Fund policy implementation;
  • in Helsinki in February 2007: a learning event on sustainability. This will look primarily at ways of achieving better economy performance for inclusion enterprises;
  • in Flanders in spring 2007 (later postponed till spring 2008), an exchange event is proposed on enhancing public procurement with social return;
  • in Hannover in June 2007; a policy forum for the entrepreneurship pillar as a whole (i.e. combining the business creation and social economy themes). It is intended to devote at least three workshops to the social economy.