A seminar organised by the OECD LEED Trento Centre for Local Development and the Institute for the Development of Non-Profit Organisations (ISSAN) in co-operation with the United States Agency for International Development (USAID).
Social enterprises are organisations that take different legal forms across countries to pursue both social and economic goals with an entrepreneurial spirit. Social enterprises have developed from and within the social economy sector, which lies between the market and the State and is often associated with concepts such as ‘third sector’ and ‘non-profit sector’. In fact the distinctive organisational forms that social enterprises adopt depend on the existing legal frameworks, on the political economy of welfare provision and on the cultural and historical traditions of non-profit development in each country. As a result, the social enterprise sector today includes both new typologies of organisations and traditional third sector organisations re-fashioned by a new entrepreneurial dynamic. In this respect, the social enterprise concept does not seek to replace concepts of the non-profit sector or social economy. Rather, it is intended to bridge these two concepts, by focusing on new entrepreneurial dynamics of civic initiatives that pursue social aims.
A range of economic and social criteria have been identified which serve as useful tools in establishing a relevant working definition. Social enterprises are involved in the production of goods or the provision of services on a continuous basis and do not have as a major goal advocacy activity or the redistribution of financial flows. This notwithstanding, social enterprises are normally voluntarily created by a group of people and are governed by them in the framework of an autonomous project. Although they may depend on public subsidies they are normally not managed, be it directly or indirectly, by public authorities or other organizations (federations, private firms, etc.) and they have both the right of “voice” (the right to take up their own positions) and “exit” (to terminate their activity). Whilst their activities do not necessarily require the involvement of paid workers, the trend towards hiring staff should prevail. Organisations that are reliant upon voluntary work but who exhibit characteristics associated with other economic and social criteria can be considered social enterprises, albeit at an early stage of development.
Such economic criteria are in turn complemented by social criteria which emphasise the role of social enterprises in encouraging active citizenship and developing partnerships for social innovation. Indeed, one of the main goals of social enterprises is to serve the community or a specific group of people, not single individuals. Serving the community, or a specific group of people, also involves incorporating them as stakeholders into the decision making processes of the social enterprise. Accordingly, voting power on the governing body is not distributed based on ownership of capital shares. Rather, decisions are shared and a high degree of participation of all stakeholders is favoured, accompanied by a democratic management style. Such goals and processes do not completely exclude profit-making organisations. However, the key-criterion is the exclusion of organizations with a profit-maximising goal.
It is important to recognise that the economic and social criteria briefly outlined above are neither definitive nor prescriptive; they are articulated in order to be useful working tools which can help to establish the boundaries of organisations that are considered social enterprises
The seminar focused on the role of legal frameworks in defining and regulating social enterprises across OECD countries in order to:
The seminar was open to participants from countries of Central, East and South - East Europe with the participation of experts from other OECD member countries.
For further information and networking opportunities please contact Ms. Paola.Babos@oecd.org