Social Economy in Europe: Croatia
Table of contents
Note: The data presented in this table derive from the OECD country factsheets and the European Commission DG GROW studies. Variations in scope, methodology and most recent available years may lead to differences in the headline figures across countries and with other sources.
Source: Data for Croatia relates to 2021 (CIRIEC; Euricse; European Innovation Council and SMEs Executive Agency (European Commission); Spatial Foresight, 2024[1]) (OECD CFS, 2023[2]), except data on the involvement with any social economy organisation as a volunteer relating to 2020-2025 (European Commission, 2025[3]).
There is no national definition of the social economy in Croatia. Instead, there is recognition of social enterprises and there are specific acts which govern different social economy entities, notably notably in the Law on Associations NN 74/14, 70/17, 98/19 (Republic of Croatia, 2023[4]) and the Law on Foundations NN 106/2018, 98/2019, 151/22 (Republic of Croatia, 2018[5]). The Ministry of Labour, Pension System, Family and Social Policy has competence over social economy policy. In April 2013, the Croatian Government adopted the National Strategy for the Development of Social Entrepreneurship, aiming to support and promote social entrepreneurship for the period 2014-2020 (OECD CFS, 2023[2]).
Institutions
The Ministry of Labour, Pension System, Family and Social Policy is the primary national agency for social economy policy. Other important institutions include the Ministry of Economy, the Ministry of Croatian Veterans (through the veteran co-operatives), the Croatian Agency for SMEs, Innovations, and Investments (which falls within the Ministry of Economy), the Ministry of Justice, Public Administration and Digital Transformation, and the Government of Croatia’s Office for NGOs. In 2016, the Ministry of Economy merged with the Ministry of Entrepreneurship and Crafts and became additionally responsible for the promotion of work and entrepreneurship.
Most of the support relevant to the development of the social economy is encapsulated by the support for civil society organisations (CSOs). In this regard, another important national institution is the National Foundation for the Development of Civil Society, which is a public foundation established by the Republic of Croatia by a special law adopted by the Croatian Parliament on October 16, 2003 (NN 173/03) (Narodne Novine, 2003[6]).
Competence
The Ministry of Labour, Pension System, Family and Social Policy oversees social economy policy. A dedicated policy unit was recently created under the Directorate for Labour Market and Employment with social economy competence. The Ministry, however, does not have particular competence on the different legal forms such as associations, co-operatives, mutual societies, foundations and enterprises in general. The Ministry’s competence falls to the particular activities of such organisations which are aligned with social economy principles and criteria. The Ministry of Economy legislates and is responsible for the functioning of co-operatives. The Ministry of Justice, Public Administration and Digital Transformation oversee legislation for foundations and associations as well as strategy related to digital transformation of public services. Finally, the Government of Croatia Office for NGOs creates new legislative frameworks for the activity of the non-governmental, non-profit sector and develops recommendations for financing the activity of civil society organisations from the state budget and other public funds, as well as structural funds of the European Union.
One national institution that appears especially active is the National Foundation for the Development of Civil Society. The organisation is both an operational foundation and a foundation that grants financial support. It is funded in part by the state budget and in part through its own activities. Aside from providing a handful of collaboration functions, the foundation also aims to foster a spirit of volunteerism and raise awareness among school-aged children for sustainable development through programmes, initiatives and awards.
Between 2012 and 2016, there was a National Strategy for the Creation of an Enabling Environment for Civil Society Development (2012-2016) whose implementation was monitored by the Government of Croatia Office for NGOs (Government of the Republic of Croatia, 2012[7]). A Working Group to draft a new National Plan for Creating an Enabling Environment for the Civil Society Development 2021- 2027 was established in January 2022 but limited progress has since been made (European Civic Forum (ECF), 2024[8]).The Strategic Action Plan of the National Foundation for Civil Society Development (2021-2025) includes social innovation and social entrepreneurship support as strategic goals.
In 2015, Croatia adopted its first national strategy relevant to social economy development. This was the Strategy for the Development of Social Entrepreneurship in the Republic of Croatia for the period of 2015-2020. The main objective of the strategy was to boost social enterprise creation and growth in the country by establishing more supportive legislative and financial frameworks. It also prioritised education and visibility; provided a definition of social entrepreneurship; and proposed policy orientations, especially on the inclusion of vulnerable groups such as Roma people.
Several national acts relevant to the frameworks which support social economy entities. These include the Act on Foundations (Official Gazette, 106/2018, 98/2019, 151/22), the Act on Institutions (Official Gazette, 76/93, 47/99, 35/08, 127/19, 151/22), the Act on Credit Unions (Official Gazette, 141/06, 25/09, 90/11), the Act on Co-operatives (Official Gazette, 34/2011, 125/2013, 76/2014, 114/2018, 98/2019), the Act on Vocational Rehabilitation and Employment of People with Disabilities (Official Gazette, 157/13, 152/14, 39/18, 32/20) supported by the Institute for Expertise, Vocational Rehabilitation and Employment of persons with disabilities, and the Act on Associations (Official Gazette, 74/2014, 70/2017, 98/2019, 151/22).
Institutions
The Republic of Croatia is a centralised unitary state with 21 counties (županija). The City of Zagreb has a special status as both a city and a county. Decentralisation has been a priority since 2001 (European Committee of the Regions, n.d.[9]) and counties have some limited legislative powers within their self-governing remit. Primary legislative power remains with the central state.
At the regional level, counties, cities and municipalities have competences over financing social economy entities and other activities that enhance their development. However, they often need to rely on the national framework for the social economy and there is no clear evidence of where and how this competence is enacted.
Competence
The National Foundation for the Development of Civil Society appears to be active at a regional level to the extent that it influences important support for social economy actors. For example, the Foundation is key in the establishment of several “Knowledge Centres for Social Development” whose activities include research and analysis of public policies in the field of activity and promotion of positive social change (National Foundation for the Development of Civil Society, n.d.[10]). These centres are currently limited to the regions in which the Foundation is most active, and it is unclear whether these are still operational. The Foundation also supports other regional specific institutions which are developing to bring together social enterprises and other relevant entities. One example is CEDRA SPLIT, a non-governmental, non-profit organisation focused on the promotion and development of social entrepreneurship and social innovations as well as on providing expert support to integrated sustainable and inclusive local development in the targeted area of Dalmatia and Lika. The organisation is a part of the national Cluster for Eco-Social Innovation and Development CEDRA HR, which includes sister organisations in Rijeka (CTK Rijeka), Osijek (SLAP Association) and Dubrovnik (DEŠA).
Institutions
The Republic of Croatia comprises of 127 towns/cities (grad) (excluding Zagreb) and 428 municipalities) (općina) within the 21 županija. There is little evidence of local frameworks or specific municipal mechanism in the country to support the activities of social economy actors.
Competence
While there is limited municipal engagement in the social economy, cities can provide support to the activities of social economy entities through procurement. The City of Split, for example, has been supporting the social care activities of non-profit associations through procurement, funding and co-financing (OECD, 2016[11]).
There is limited evidence of institutionalised mechanisms of co-operation. Croatia is currently taking part in a project funded by the Technical Support Instrument (TSI) of the EU to support the development of a national strategy for the social economy, which will also focus on introducing co-operation mechanisms to co-create such strategies with other public authorities and social economy stakeholders.
Across multiple public authorities and/or levels of government
The National Foundation for the Development of Civil Society is active in both the support of CSOs and the development of different regional foundations. For example, since 2007 and in partnership with four other regional foundations (in Split, Zagreb, Osijek and Pula), the National Foundation has implemented a Decentralised Model of Financing Civil Society Development, or Civic Activism at the Local Level. The Partnership ended on December 31, 2017, but is cited to have continued in the form of programmatic co-operation (National Foundation for the Development of Civil Society, n.d.[12]). Beyond this, given the lack of a clear definition of the social economy and limited long-term strategy related to its development, the institutional co-operation across levels of government is absent.
With social economy representatives
There is a lack of formal mechanisms to connect governmental work with various organisations that represent social economy entities. There is, however, a growing collection of networks which have made efforts to link social enterprises together. The most prominent of these is the Croatian Network for Social Entrepreneurship (Hrvatska mreža za društveno poduzetništvo). The organisation provides networking as well as training and development support. Other relevant organisations include the ACT Group, which became functional in 2003 and has developed to become the first Croatian consortium of social enterprises. The group began as an information and training platform and moved to become active in the establishment of ventures as it grew (ACT, n.d.[13]). The activities of ACT demonstrate good practice for partnership development and innovation such as their transnational partnership programme with Germany – InnoClusion – which aims to develop, test and implement user-centred green and digital solutions for the elderly through the creation of “Living Labs” (European Commission, 2024[14]).
Due to a weak self-recognition of social enterprise, there are also international organisations which operate to support the development of social economy in the country. The Nonprofit Enterprise and Self-sustainability Team (NESsT) is an international non-profit organisation that invests in social enterprises and is operational in Croatia (under its focus on Romania and the Balkans) (NESsT, n.d.[15]).
Source: An OECD survey on institutional arrangements circulated in 2024 with national and regional social economy representatives contributed to the findings of this country note.
Support from the public sector
The Ministry of Labour, Pension System, Family and Social Policy is the primary national agency for the social economy. Other ministries are involved in social economy development are the Ministry of Economy, the Ministry of Croatian Veterans, Croatian Agency for SMEs, Innovations, and Investments (HAMAG-BICRO), the Ministry of Justice, Public Administration and Digital Transformation, and the Government of Croatia Office for NGOs.
Public agencies have national funding programmes accessible to social economy entities. The Croatian Agency for SMEs, Innovation and Investments offers grants, guarantees and loans at favourable interest rates, while also funding programmes to encourage research, development and innovation. They also provide professional advisory services, support to SMEs in innovation and internationalisation, knowledge transfers through professional education, development support for business ideas (HAMAG-BICRO, 2020[16]).
The National Foundation for the Development of Civil Society offers financial support to civil society organisations. The National Foundation has provided 6 059 financial support services to civil society organisations between 2003 and 2023, investing in civic projects, cooperation programmes, and knowledge centres for social and regional development (The National Foundation for the Development of Civil Society, 2023[17]).
Support from the private sector
Several private sector actors are increasingly supporting social enterprises, especially through financing and tailored business development services. Founded in 2014, the Co-operative for Ethical Finance seeks to provide accessible banking services to actors traditionally underserved by mainstream financial institutions (European Commission, n.d.[18]). It focuses on organisations aligned with social values, including social enterprises, co-operatives and CSOs, offering loans and financial advisory services. Another example is the Erste Social Banking Group, which has developed a microfinance programme tailored to social enterprises and underserved entrepreneurs (European Commission, n.d.[18]). It provides favourable micro-loans, mentoring programmes, and business development support to start-ups and social entrepreneurs, to empower vulnerable groups and support the development of sustainable and inclusive business models. Impact investors are also emerging in Croatia, such as such as Feels Good Capital, which supports social enterprises with alternative funding opportunities.
Intermediary organisations and private initiatives are also instrumental in the development of social enterprises. The Čakovec-based ACT Group is a notable example, offering comprehensive support through incubation and acceleration programmes (Vidović, 2019[19]). Similarly, Impact Hub Zagreb provides training programmes, business development consultancy and networking opportunities, including through its Impact Incubator programme. Another example is the Reach for Change foundation, which – in partnership with the private telecom company Tele2 – targets social entrepreneurs working on projects that improve children’s lives, offering them financial support, mentoring and business incubation services.
Recently, impact investors have expanded to support social economy entities. FeelsGood Capital, launched in 2020 as Croatia’s first social impact venture fund, provides equity financing and mentorship to high-potential social enterprises (FeelsGood Capital, 2025[20]). Additionally, global initiatives and competitions are present – for example, the Social Impact Award programme engages youth in developing social start-ups – further enriching the support landscape. These private and third-sector initiatives complement ethical finance providers such as the Co-operative for Ethical Finance and Erste’s Social Banking, thereby offering tailored business development services alongside alternative funding options.
Support from the public sector
An increasing number of local authorities have introduced dedicated support for the social economy. Notably, the City of Zagreb’s new administration (elected 2021) established a Working Group on Social Entrepreneurship to strengthen the local ecosystem. This body is mapping social economy actors and designing city-level support measures, including targeted training, visibility campaigns and a forthcoming municipal funding call to support social entrepreneurship (RIPESS Europe, 2024[21]). Such initiatives at the city and county level, albeit in early stages, signal a shift towards more proactive subnational backing for social enterprises. They complement the ongoing work of local development agencies and incubators – for instance, by integrating social enterprises into municipal procurement and entrepreneurship programs – thereby embedding social innovation in regional development strategies.
Support from the private sector
Outside Zagreb, regionally focused intermediaries are playing an instrumental role in incubating social enterprises. For example, the CEDRA Split Centre (Cluster for Eco-Social Innovation and Development) operates a local start-up incubator and advisory hub for eco-social businesses in Dalmatia (Diesis Network, 2025[22]). Similarly, organisations like ACT Group (based in Čakovec) extend their accelerator and mentoring programmes to social entrepreneurs in surrounding regions, from early-stage development to scaling up (Perić, 2023[23]). These regionally rooted support structures often work in partnership with municipalities, EU-funded projects and national networks, ensuring that social enterprise support is not concentrated only in Zagreb. By providing on-the-ground coaching, coworking spaces and networking opportunities, such intermediaries help social entrepreneurs in various parts of Croatia access the knowledge and resources needed to sustain and grow their ventures.
Definition of public interest
The concept of public benefit or public interest (opće dobro) is legally defined and recognised under Croatian law, notably in the Law on Associations NN 74/14, 70/17, 98/19 (Republic of Croatia, 2023[4]) and the Law on Foundations NN 106/2018, 98/2019, 151/22 (Republic of Croatia, 2018[5]). Associations and other entities may obtain public benefit status if they serve the general welfare in areas such as human rights, health, education, culture, environmental protection, or social care.
Economic activities
Social economy entities (associations, foundations, co-operatives and social enterprises) may engage in economic activities provided these align with their statutory mission. According to Article 2(7) of the Corporate Income Tax Act NN 177/04 et seq. (Republic of Croatia, 2024[24]), if such activities create a market advantage, the entity must register with the Tax Administration as a corporate income taxpayer within eight days of starting the activity. Registration does not automatically confer an exemption from corporate income tax; rather, it allows the Tax Administration to assess whether the activity is taxable. Failure to register may result in the Tax Administration initiating proceedings and issuing a decision to impose corporate income tax obligations on the entity.
Social economy entities, including associations (udruge), foundations (zaklade), co-operatives (zadruge), and social enterprises, must comply with specific transparency and reporting obligations depending on their legal form and activities. Entities with public benefit status, or those receiving public funds, are subject to enhanced financial reporting, public disclosure of annual financial statements, and audit requirements (European Commission, 2023[31]). These obligations aim to ensure accountability, proper use of resources, and alignment with the stated mission of the entity.
References
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← 1. Under the VAT Act 73/13 et seq. (Republic of Croatia, 2025[25]), services in education, culture, and social welfare by recognised public benefit entities may be VAT-exempt. VAT registration is mandatory for entities exceeding EUR 60 000 in annual taxable turnover.
← 2. As per the Act on Professional Rehabilitation and Employment of Persons with Disabilities 157/13 et seq. (Republic of Croatia, 2020[26]) and the Labour Market Act 118/18 et seq. (Republic of Croatia, 2025[27]), entities employing persons with disabilities or marginalised groups may benefit from full or partial exemptions from health and pension insurance contributions, workplace adaptation grants, and wage subsidies.
← 3. According to the Local Taxes Act 115/16 et seq. (Republic of Croatia, 2024[28]), donations and legacies to public benefit entities are generally exempt from gift and inheritance taxes, subject to their use for mission-related purposes and recognition of public benefit status.