The social economy offers an innovative approach to addressing social and economic challenges, while also facilitating more people-centred approaches to different transitions. It creates jobs (6.3% employment in the EU), promotes inclusive governance through stakeholder participation and reinvests surpluses into social missions and local communities.
The social economy is active across numerous economic and social sectors, and includes a wide range of entities, social missions and legal forms. It generates a turnover of over EUR 912 billion in the EU, operating in sectors such agriculture, food, retail, banking, insurance, energy, housing, education, health and care. In many countries, social economy entities complement public services and serve as grassroot solutions to local needs. Their diversity influences the development of institutional frameworks and policies supporting the social economy.
The social economy offers opportunities to build sustainable competitiveness. It pioneers innovations in economic, social and environmental activities. It contributes to quality jobs as a direct employer and in supporting the training of workers. It also strengthens territorial cohesion across cities and rural areas, building on its local roots and addressing local concerns. As seen during the COVID-19 pandemic, the social economy also contributes to resiliency.
This joint OECD/EC report supports the implementation of high-level guidance by both institutions to integrate the social economy into broader socio-economic policies and to create measures that foster an enabling environment for its growth.
Part I explores the role and contributions of the social economy to care services and housing, and their innovative approaches and solutions.
Part II analyses existing framework conditions for the social economy, mainly 1) institutional arrangements across levels of government, 2) business support and 3) taxation.
Country notes for EU Member States provide a comprehensive mapping of these three framework conditions.
Part I: The contribution of the social economy to care and housing
The housing and care sectors are increasingly critical policy priorities for inclusion and competitiveness, shaped by accelerating demographic change and mounting affordability pressures. An ageing population is driving sustained growth in demand for long-term care, while rising housing costs, limited supply and widening inequalities are placing significant strain on household and public budgets. To remain competitive, businesses need their workers to have access to affordable housing in their local labour markets and care for their families to be available for work. Meeting the growing demand for affordable and quality care will also contribute to the long-term sustainability of welfare systems.
Social economy entities are credible and strategic partners in delivering effective, accessible and people-centred care and housing solutions. Working closely with public authorities, they provide services through alternative models that prioritise quality, affordability and community over short-term profit. They strive to maintain high standards of transparency and accountability. Their capacity to mobilise local stakeholders, reinvest surpluses and innovate in service design and delivery enables them to address gaps that the public and private sectors may not be able to fill. To fully leverage their contribution, policymakers need to better understand how the social economy creates value and establish enabling policy frameworks to promote their expansion and long-term impact.
Care
The social economy has a strong presence in the care sector, including long-term care for older people, care for persons with disabilities and childcare. One in three Europeans is estimated to have caring responsibilities. The demand for long-term care services is already growing and expected to continue to grow with an ageing population. While most care is informal, i.e. provided by family and friends, social economy entities increasingly complement public and private services. They provide care in innovative ways, supporting ageing with autonomy, reaching rural areas, integrating health and social services, applying social innovation to improve delivery, and promoting quality working conditions for care workers. However, limited visibility of the sector and awareness of what the social economy does, staff shortages, and a lack of supportive frameworks hinder their ability to expand their contributions and provide more comprehensive services.
Given the rising share of care spending and shortages in care services, policy action needs to be two-fold: addressing needs of the care sector in general and the contribution of the social economy in it. The care sector overall can benefit from raising the profile of its occupations, fostering long-term partnerships to fill gaps and establishing shared standards and monitoring for quality. Policy can better recognise the social economy’s role in the care sector through legal frameworks and procurement measures. These actions can help expand its quality-driven and locally accessible contributions that generate additional benefits such as local cohesion and community well-being.
Housing
Affordable and quality housing is another area where social economy entities are providing innovative solutions. In the 2025 Eurobarometer on urban challenges and investment in cities, four out of ten respondents and over half (51%) of responding urban dwellers identified a lack of affordable housing as an immediate and urgent problem. The housing sector also faces challenges related to the limited supply, quality and homelessness. Social economy entities are offering affordable housing options for vulnerable groups. They are also increasingly adopting energy-efficient, renewable and circular practices to go beyond cost-minimisation and promote sustainable and durable infrastructure. Social economy providers prioritise long-term affordability, resident participation and community benefit rather than profit, enabling them to reinvest resources into better services and maintain broader access.
Social economy entities, especially non- or limited-profit housing associations and co-operatives, can account for an important share of the housing stock. For example, housing associations provide almost a third of the housing stock in the Netherlands and a quarter of homes in Austria, while housing co-operatives make up 24% of the housing stock in Sweden, 16% in Poland and 12% in Czechia. They often complement housing provision with support services, such as care, financial education and legal aid. They also encourage community development through participatory governance and common spaces. Some social economy entities also promote inter-generational exchange where younger and older generations live in the same place, sharing care responsibilities for the elderly and children.
The potential and growth of social economy entities in the housing sector are constrained by many factors. These include regulatory barriers specific to their legal forms such as the lack of laws defining the scope and operational modalities of social economy housing entities, a lack of affordable land, difficulties with balancing affordability and sustainability, as well as limited long-term financing options. Policy opportunities to maximise the social economy’s impact include: enabling legal frameworks that clearly define the scope of action for social economy housing entities (including their operational modalities and the available policy measures), access to affordable land through leasing public land, using zoning rules or offering land purchase loans, tailored financing (such as revolving funds, guarantees and subsidised interest rates), as well as partnerships with public authorities, financial institutions, the private sector and residents.
Part II: Strengthening framework conditions for the social economy
Better framework conditions for the social economy can facilitate its contributions across many economic and social sectors, including housing and care. This report considers three areas that have a particularly important influence on their activities: institutional, business support and fiscal approaches. Institutional recognition, supported by clear mandates and defined competencies at both national and local levels, can boost the visibility of social economy entities and facilitate their growth. Business support initiatives by the public and the private sectors can help scale their operations, enhance their capacity to professionalise, attract talent and develop financially sustainable and viable business models. Additionally, implementing preferential fiscal policies can encourage positive externalities such as social and community impact generated by the social economy.
Institutional arrangements across levels of government
At the intersection of social, economic and environmental policies, the social economy benefits from co-ordinated governance across local, regional, national and EU levels. Social economy policies are relevant not only at the national level, but also at the regional and municipal levels, as many social economy initiatives originate from local needs and community priorities. Across the EU, 11 Member States have both legal frameworks and institutions overseeing the social economy, and another seven EU Member States focus specifically on social enterprises. Having institutions with clearly defined responsibilities and mandates helps enhance the visibility and recognition of the social economy. While national frameworks can set overarching goals for the social economy, regional and local authorities are often better positioned to provide targeted support by translating these priorities into locally relevant actions. This involves close communication with social economy entities. Such co-ordination can also facilitate more informed resource allocation from the national government to local authorities.
Business support
Business support for social economy entities differs from that for conventional businesses, given their dual focus on social impact and financial sustainability. Particular needs include access to patient capital to allow long-term investments, specialised incubators with mentorship on social innovation, guidance to measure social impact and socially oriented procurement. Challenges such as financing gaps, skills shortages and scaling hurdles are often more pronounced for social economy entities. They face greater difficulties in obtaining loans or equity capital as their legal forms and participatory governance models may not be familiar to conventional financiers. They might face further administrative barriers compared to for-profit corporations. Better business support can increase their capacity to scale up, attract talent, access external financing and adapt to the digital transition.
Tailored business support for social economy entities should include a focus on their social impact, governance structures, stakeholder engagement and financial models. This means facilitating knowledge exchange, providing mentorship, connecting social economy organisations to local resources and partners, and helping them to adopt digitalisation. Policy efforts can prioritise measures such as clear national strategies, simplified legal frameworks, financing options adapted to their nature, integration of social economy entities into SME support programmes, responsible procurement practices and skills development.
Taxation
Taxation for the social economy typically includes tax measures for public benefit entities and/or social enterprises as well as incentives for financial support directed towards them. Measures may include exemptions or reduced rates for business income tax, VAT and social security contributions for hiring disadvantaged workers. Tax credits and incentives can also be used. These policies aim to recognise the social and economic value of the social economy, promote positive societal impacts, increase donations and investments, and create a level playing field with other businesses, such as SMEs. When well-designed, they can also support broader policy goals such as job creation, social cohesion, rural service provision, and affordable care and housing.
However, implementing tax frameworks for the social economy raises several challenges. Many social economy entities, in particular social enterprises with hybrid models combining economic activities and social missions, may be excluded from preferential measures. This exclusion was identified as a shortcoming by half of the respondents in the OECD/EC survey on taxation for the social economy. Additionally, complex and unclear tax language, along with burdensome reporting requirements, in particular for smaller entities, pose significant hurdles. The diverse legal forms within the social economy can also hinder the development of a coherent fiscal framework. To address these issues, measures such as establishing clear eligibility criteria through comprehensive legal frameworks, creating publicly accessible registers of eligible entities, implementing periodic reporting, providing transparent tax information, aligning state aid with competition laws and regularly evaluating tax expenditures can help leverage taxation effectively to support the social economy.
