Social Economy in Europe: Germany
Table of contents
Note: The data presented in this table derive from the OECD country fact sheets 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 Germany relates to 2021 (CIRIEC; Euricse; European Innovation Council and SMEs Executive Agency (European Commission); Spatial Foresight, 2024[1]), except data on the involvement with any social economy organisation as a volunteer relating to 2020-2025 (European Commission, 2025[2]).
Germany does not have a single framework law for the social economy; instead, different organisational forms are regulated by separate laws. Associations are governed by the Civil Code (Bürgerliches Gesetzbuch, BGB), co-operatives by the Cooperative Societies Act (Genossenschaftsgesetz), and foundations by federal rules supplemented by state foundation laws (Landesstiftungsgesetze). Eligibility for public-benefit status (Gemeinnützigkeit), which underpins preferential tax treatment, is defined in the Fiscal Code (Abgabenordnung, AO)
Institutions
In Germany, there is no designated authority or central competence for the social economy at the federal level. Due to the country’s federal structure, various types of legal forms and the diverse activities governed by different laws, multiple ministries are responsible for different aspects of the SSE (Social and Solidarity Economy) at the national level (OECD, 2023[3]). The Federal Ministry for Economic Affairs and Climate Action (BMWK) and the Federal Ministry for Family Affairs, Senior Citizens, Women and Youth (BMFSFJ) are the primary ministries overseeing policies relevant to the social economy. Additionally, the Federal Ministry for the Environment, the Federal Ministry of Education and Research (BMBF), and the Federal Ministry of Justice are also actively involved in shaping the social economy landscape. Other ministries may have strategies related to social enterprises and social innovation as well. In general, there is a longstanding tradition of having a strong involvement of social economy organisations (“Wohlfahrtsverbände”) in the delivery of social services across Germany.
Competence
Several ministries are involved in the development of the social economy :
The Federal Ministry for Economic Affairs and Climate Action supports the development of social start-ups and social enterprises. The Ministry is broadly responsible for sponsoring and supporting social economy entities in their capacity as enterprises. They also provide support to co-operatives jointly with the Federal Ministry of Justice (through co-operative law). The Ministry also supports social innovation jointly with the Federal Ministry of Research and Education.
The Federal Ministry for Family, Senior Citizens, Women and Youth co-ordinates the activities of non-profit, voluntary welfare umbrella organisations which typically provide social services as prescribed by law and often through state funding.
Federal Ministry of Research and Education supports social innovation development in collaboration with BMWK under the umbrella of the National Strategy for Social Innovation and Social Enterprise. A Commissioner for Social Innovation is appointed at the Federal Ministry. BMBF also has an active role in the development of federal research reports, such as “Federal Report on Research and Innovation 2024” (Federal Ministry of Education and Research, 2024[4]).
Other ministries oversee a variety of relevant policy areas. The Federal Ministry of Labour and Social Affairs has jurisdiction regarding legally prescribed social services and their funding. The Federal Ministry of Finance oversees budget and taxation regarding the social economy entities, and the Federal Ministry of Justice develops the various legal forms social economy entities might be organised in such as co-operative law. Other ministries may contribute on an ad hoc basis. Federal Ministry of Transport, Building and Urban Affairs, for example, has issued regular calls for applications for socially innovative entrepreneurial initiatives targeting sustainable urban development.
In 2023, the federal government at the time launched the National Strategy for Social Innovation and Social Enterprise (Nationale Strategie für Soziale Innovation und gemeinwohlorientierte Unternehmen) (Platform for Social Innovations, 2025[5]). The comprehensive strategy was jointly developed by BMWK and BMBF, involving extensive stakeholder consultation. It aims to enhance the impact of social enterprises by facilitating financial support, expanding the ecosystem, and improving the legal and regulatory environment (Federal Government, 2023[6]).
The strategy expands funding and advice initiatives and aims to develop favourable legal frameworks. It suggests an extension of the INVEST start-up grant to socially responsible funding forms, a shift in focus of the EXIST programme towards sustainability and the introduction of the EXIST Women programme to support women entrepreneurs in social businesses. It signposts programmes such as REACT with impact (launched in 2023) which offers finance and free consultancy. To improve the regulatory framework, the plan aims to digitalise association law and to update company law to better accommodate social enterprises. These plans are also being actively implemented. The German Ministry of Justice published a draft law in 2024 to digitise proceedings before civil courts, which includes updating company law (Federal Ministry of Justice, 2023[7]). The EXIST women programme has been introduced and the EXIST programme has begun to target sustainability (Berliner Hochschule für Technik, n.d.[8]).
A focus on a national platform as a central contact point for information, networking, and learning, as well as an emphasis on a collaboration mechanism, forms a part of the national strategy. Examples include the digital platform and the promotion of "open social innovation processes" to forge alliances for long-term impact (Federal Government, 2023[6]).
Relevant laws shape the framework for social-economy entities in Germany. Associations are regulated by the Associations Act (Federal Ministry for Justice, 1964[9]), and co-operatives by the Cooperative Societies Act (Federal Ministry for Justice, 1889[10]). The special role of the major Welfare Associations is recognised in §17(3) of the Social Code I (Federal Ministry for Justice, 1975[11]), which calls for close co-operation between public authorities and independent welfare providers. The rules for obtaining public-benefit status, including related tax advantages, are set out in §§51–68 of the Fiscal Code (AO) (Federal Ministry for Justice, 1977[12]). Germany also recognises the public-benefit limited liability company (gGmbH), based on the GmbH Act (GmbHG) (Federal Ministry for Justice, 2024[13]), with tax treatment defined in the Fiscal Code (AO), the Corporate Income Tax Act (KStG) (Federal Ministry of Justice, 1976[14]) and the Trade Tax Act (GewStG) (Federal Ministry of Justice, 1936[15]).
The federal states (Bundesländer) support social economy entities as well as innovation ecosystems, but the level of support varies across states. A clear area of responsibility for the federal states lies in the promotion of start-ups and supervision of co-operative audit associations. Much of the initiative to support activities for social economy happens at a cross section between regional and local levels.
Institutions
Germany is a federal state with a regional parliament in each of the 16 federal states (Bundesländer). Their main mandates focus on education, culture, police and administrative law. Many bills require explicit consent from the Bundesrat (one chamber of national parliament) to enter into force. The country is further divided into counties and municipalities (European Committee of the Regions, n.d.[16]).
While federal states support social economy entities as well as innovation ecosystems, the relevant ministry in charge, as well as the level of support, varies from state to state. Their main areas of responsibility are the promotion of start-ups, collaboration with social economy entities delivering care and social services (“Wohlfahrtsverbände”) and the supervision of co-operative audit associations.
Competence
Federal states' activities to support social economy entities and innovation ecosystems range from targeted funding to promotion initiatives. The level of commitment of the federal states depends on the priority given to the social economy. In addition, much of the initiative to support activities for the social economy and social enterprises happens at a cross-section between regional and local levels, especially for city-states (see Municipal arrangements). The Berlin Senate Department for Economics, Energy and Public Enterprises, for example, supports the organisation of the annual Berlin Social Enterprises Award in the city.
Institutions
Berlin, Bremen, and Hamburg are city-states where the regional and local levels are unified within a single governmental authority. The Hamburg Metropolitan Region and the Berlin/Brandenburg Metropolitan Region have implemented notable regional and local strategies and initiatives to support the development of social enterprise and innovation. In Berlin, activity is co-ordinated by the Berlin Senate Department for Economics, Energy and Public Enterprises, while in Hamburg, initiatives are led by the Ministry of Economics and Innovation and are administered through the Hamburg Investment and Development Bank (IFB Hamburg). Other cities that have similar initiatives include Cologne and Munich.
Competence
Municipalities are active in the development of regional and local strategies for activities relevant to the social economy. In 2020, Berlin launched its Social Economy Berlin (SEB) project executed by Social Entrepreneurship Netzwerk Berlin (SEND) and Technologie-Netzwerk Berlin e.V. (TechNet). The project’s key objectives included connecting stakeholders, facilitating social entrepreneurship and developing the visibility of the social economy and built on the work of a previous scoping project, “Social Innovation Capital Berlin” (RIPESS Europe, 2020[17]). In 2024, Hamburg launched #UpdateHamburg as part of the Social Entrepreneur Strategy. The strategy focuses on developing innovative solutions for social challenges and aligns with the Senate's Regional Innovation Strategy for "a city worth living in".
Knowledge sharing, network building and the enhancement of social innovation visibility form an important component of current local initiatives. Under the organisation of the Berlin Senate Department for Economics, Energy and Public Enterprises, the city hosts the annual Berlin Social Enterprises Award. The competition is structured by three categories: People, Planet and Transformation. The region also hosts an annual conference on social economy, which aims to connect stakeholders and increase visibility (re:publica25, n.d.[18]). In Hamburg, “Startup City Hamburg” is an extensive digital platform which signposts start-up funding and training, shares upcoming events and provides general information on the start-up ecosystem (StartUp City Hamburg, 2025[19]).
Education and capacity building (including financing and advice) have taken a leading role in local developments. The Social Entrepreneurship Akademie (SEA) is a collaborative initiative by three leading public universities across Munich (Social Entrepreneurship Akademie, 2025[20]). Established in 2010, it has set up an intensive certification programme across Germany and Europe since 2014, introduced an inter and transdisciplinary seminar focusing on social entrepreneurship (SEA:lab) and is a founding partner of the Global Entrepreneurship Summer School (GESS) programme (Social Entrepreneurship Akademie, n.d.[21]; Social Entrepreneurship Akademie, n.d.[22]).
There are both national mechanisms to facilitate co-operation across governmental bodies as well as a variety of public organisations which co-ordinate the activities of relevant stakeholders in the social economy.
Across multiple public authorities and/or levels of government
An Advisory Council for Social Innovation was established in November 2023. It is an international expert committee under the leadership of BMBF that consists of 18 high-ranking experts from business, science, and civil society to bring together diverse perspectives from around the world. It focuses on implementing the National Strategy and is chaired by the Commissioner for Social Innovation (Federal Ministry of Education and Research, n.d.[23]).
Other national committees have worked to bring cross-collaboration to government activities of sustainability and welfare. In 2019, a Sustainable Finance Committee (SFB) was created to advise the government on developing and implementing the Sustainable Finance Strategy (as formulated by the Federal Ministry of Finance and the Federal Ministry for the Environment, Nature Conservation and Nuclear Safety) (Federal Government, 2021[24]). It includes the objective: "Making a Sustainable Impact - Support for Public Welfare-Oriented Enterprises" and the BMWK fosters the exchange between German stakeholders in municipal, regional and national ecosystems.
Social economy representatives
There are designated networks to represent social enterprises. SEND (Social Entrepreneurship Network Deutschland) was founded in 2017 to connect social enterprises, represent their interests to politics, and promote their visibility in the public sphere (SEND, 2025[25]). It has published a 2024 German Social Entrepreneurship Monitor, and it organises events, workshops, and regional groups to facilitate collaboration and knowledge sharing.
Key umbrella organisations also support major segments of the social economy. Public-benefit associations in care and social services are represented by the Association of German Social Welfare Organisations (BAGFW, n.d.[26]), serving as a collective voice of the six major German welfare organisations at national and European level. Co-operatives are organised through sector-specific umbrella organisations, such as those in the housing sector, including the German Housing Co-operative (Genossenschaften, n.d.[27]) and the German Cooperative and Raiffeisen Federation (DGRV, n.d.[28]), aiming to develop, promote and represent cross-sector interests of co-operative institutions as an auditing entity. Mutual associations are represented by the Association of Mutual Insurance Societies (VVaG, n.d.[29]), bringing together mutual insurers and advancing their interests.
In April 2025, the BMBF and the BMWK hosted the Forum for Social Innovations and Public Benefit-Oriented Enterprises (SIGU) to highlight the ecosystem of social innovation and social entrepreneurship in Germany. It aims to showcase achievements in the impact sector, discuss current challenges and opportunities, facilitate networking among key stakeholders and work on next steps to unleash the potential of social innovations and public benefit-oriented enterprises (Platform for Social Innovations, 2025[30]).
Note: An OECD survey on institutional arrangements circulated in 2024 with national and regional social economy representatives contributed to the findings of this country note.
Strategies, plans and legal framework
To further consolidate the National Strategy for Social Innovations and Social Enterprises, the Federal Ministry of Justice has presented a draft law to strengthen the co-operative legal form. This proposed legislation aims to enhance the digitalisation of co-operatives, simplify the founding process, and prevent misuse of the legal form (Platform for Social Innovations and Social Enterprises, 2024[31]).
Complementing these efforts, the International Advisory Board for Social Innovation released the Vision Paper “30 Billion by 2030” in 2024 (Krug, 2024[32]). This document proposes seven levers to foster an innovative economy and society, including establishing a shared vision for a German Impact Agenda 2030, developing common legal definitions and key performance indicators, and mobilising EUR 10 billion in funding for the sector (International Advisory Board for Social Innovation, 2024[33]).
Support from the public sector
A cornerstone of the National Strategy for Social Innovations and Social Enterprises is the establishment of the Platform for Social Innovations and Social Enterprises. This collaborative project, involving Social Impact gGmbH, the German Social Entrepreneurship Network (SEND) e.V., and the Technical University of Dortmund, serves as a central hub to inspire, inform, empower, and connect social innovators and organisations. The platform offers resources such as a funding finder, impact measurement tools, and networking opportunities, thereby enhancing the visibility and capacity of the social innovation sector in Germany (Platform for Social Innovations and Social Enterprises, n.d.[34]).
The government has implemented several programmes to fund social enterprises. The REACT with Impact Programme, funded by the EU's REACT-EU initiative, allocated EUR 90 million by the end of 2023 to support social enterprises. The programme focused on stabilising and professionalising social enterprises, facilitating skill development, and encouraging collaboration within the sector (Federal Ministry for Economic Affairs and Climate Action, 2023[35]). Additionally, the Federal Ministry of Education and Research launched the multi-stage Society of Ideas Competition (2020–26), which supports innovative social projects through various phases, from initial selection to implementation (Federal Ministry of Education and Research, n.d.[36]). The Federal Ministry for Economic Affairs and Climate Action has also introduced the Sustainable Impact – Support for Companies Serving the Common Good Programme, providing grants for consulting, qualification, information, and networking activities aimed at initiatives with social and environmental goals (Federal Ministry for Economic Affairs and Climate Action, 2025[37]).
Public banks also provide low-interest loans to social economy entities. For example, the public development bank Kreditanstalt für Wiederaufbau (KfW) offers the ERP Start-up Loan Programme, providing low-interest loans of up to EUR 125 000 to entrepreneurs, self-employed professionals, and small enterprises, including both for-profit and non-profit entities. This programme aims to enhance economic, social, and environmental conditions by supporting the establishment and growth of enterprises committed to serving the common good (Kreditanstalt für Wiederaufbau, 2025[38]).
Support from the private sector
The broader support ecosystem includes national networks, educational institutions, incubators, and financial intermediaries that collectively promote the growth and professionalisation of social enterprises. The Social Entrepreneurship Netzwerk Deutschland (SEND) serves as a national association representing the interests of social enterprises across Germany. With over 700 members, SEND advocates for improved policy frameworks, financial support mechanisms, and increased awareness of social entrepreneurship among policymakers and the broader public. It facilitates networking among social entrepreneurs and connects them with stakeholders in politics, civil society, and business sectors.
The Social Entrepreneurship Akademie (SEA) is a collaborative initiative of four universities which offers interdisciplinary education and training programmes aimed at promoting social innovation and entrepreneurship. Its offerings include workshops, certification programmes, and consulting services, targeting students, professionals, and organisations interested in addressing societal challenges through entrepreneurial means (Social Entrepreneurship Akademie, n.d.[39]).
Germany also hosts incubators and accelerators supporting social enterprises. The Enterprise Europe Network provides 53 contact points across the country, offering business support services (Enterprise Europe Network, n.d.[40]). Impact Hub, an international network, operates seven hubs in major German cities, providing co-working spaces and networking opportunities for social entrepreneurs (Impact Hub, n.d.[41]).
Financial support is further bolstered by organisations like the Finance Agency for Social Entrepreneurship (FASE) and AVESCO. FASE assists social enterprises in securing growth capital by connecting them with a diverse range of investors, including private investors, foundations, and banks (Finance Agency for Social Entrepreneurship, n.d.[42]). Similarly, AVESCO offers financial services and investment opportunities aimed at initiatives delivering social and environmental impact (AVESCO, n.d.[43]). These entities often collaborate to provide comprehensive financial support to the social economy sector.
Support from the public sector
Regional and municipal authorities provide targeted support to social enterprises and entrepreneurs. In Munich, for instance, the city administration has developed a comprehensive ecosystem to assist social entrepreneurs at various stages of their journey. The Munich Business Start-up Office offers free, cross-sectoral guidance on essential aspects of starting a business, including legal formalities, business planning, financial aid, and access to office spaces and start-up centres (Münchner Gründungsbüro, 2025[44]). Complementing this, Munich Business, the city's economic development agency, has established an ”Impact Entrepreneurship & Social Innovation” team dedicated to supporting social entrepreneurs through networking opportunities, workshops, and personalised advice. Additionally, the Munich Impact Incubator provides tailored support to start-ups aiming to address social challenges through innovative business models, offering services such as coaching, networking, and access to financing. These initiatives collectively contribute to a vibrant social entrepreneurship landscape in Munich, demonstrating the city's commitment to promoting social innovation and sustainable development (Munich Business, n.d.[45]).
Support from the private sector
Berlin provides support to social economy enterprises, through collaborative initiatives between public institutions and private organisations. The Social Economy Berlin project, initiated by the Social Entrepreneurship Network Germany (SEND) and Technologie-Netzwerk Berlin (TechNet), and funded by the Senate Department for Economics, Energy, and Public Enterprises, aims to interconnect stakeholders within the social economy, facilitate social entrepreneurship, and enhance the visibility of the sector through networking events and training programmes (Social Economy Berlin, n.d.[46]). Complementing these efforts, local incubators and accelerators such as the Berlin Startup School offer programmes like the Impact Accelerator, a six-month, equity-free initiative providing coaching, co-working spaces, and networking opportunities to early-stage social enterprises (Berlin Start-up School, n.d.[47]). Financial support mechanisms are also in place. Notably, the BürgschaftsBank Berlin's BBBsocial programme, launched in 2022, offers guarantees covering up to 80% of loans (up to EUR 1.25 million) to facilitate access to finance for social enterprises and non-profit organisations operating in Berlin (BürgschaftsBank Berlin, n.d.[48]).
Definition of public interest
Tax-privileged public benefit purposes are defined in the German Fiscal Code, section 51-54 (Federal Republic of Germany, 2018[49]). It outlines three types of tax-exempt purposes:
Public benefit purposes (Fiscal Code, section 52): An organisation pursues public benefit purposes if its activities are dedicated to selflessly promoting the well-being of society in material, spiritual, or mutual respects. Section 52(2) lists 26 purposes deemed to serve the general public, including the promotion of science and research, education, public health, environmental protection, and assistance for people facing social or economic hardship (European Commission, 2023[50]).
Charitable purposes (Fiscal Code, section 53): An organisation serves charitable purposes if its activities aim to support individuals in need due to their economic situation or physical, psychological, or mental condition.
Religious purposes (Fiscal Code, section 54): Religious purposes cover the advancement of religious communities that are public-law entities.
Economic activities
Public benefit organisations (PBOs) may engage in economic activities, whether related or unrelated to their public-benefit purpose (European Commission, 2023[50]). However, to be tax exempt, the annual revenue from unrelated economic activities must not exceed EUR 45 000 (as of January 2025).
According to section 21 of the German Civil Code (Federal Republic of Germany, 1881[51]), non-profit associations must not have economic activity as their main purpose. However, auxiliary commercial activities supporting their non-profit purpose are permitted.
Tax-exempt organisations must submit reports on their accounts, use of funds (activity report), and reserve accumulation to tax authorities (European Commission, 2023[50]). They can submit either a cash-flow accounting report with an inventory or a commercial annual financial statement with a balance sheet and profit-and-loss account. However, there is no obligation for public disclosure of these reports.
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