This case study presents the Portugal Social Innovation 2030 Initiative (PSI), a programme funded by the European Social Fund (ESF) dedicated to promoting social innovation and the social economy. Building on the foundation established by the 2015 PSI, the initiative provides support to social economy entities—including associations, co-operatives, foundations, and social enterprises—through innovative financial instruments and a Capacity Building programme. Key tools include Social Impact Bonds (SIBs) and Partnerships for Impact (PFI), which aim to promote results-based funding and foster public-private collaboration. Despite implementation challenges—such as regional disparities and administrative delays—PSI successfully enhanced organisational capacities, introduced outcome-based financing models, and stimulated social entrepreneurship. These efforts contributed to the launch of innovative projects like telemedicine and online education, demonstrating the initiative’s role in fostering social innovation across Portugal.
Portugal’s Social Innovation Initiative
Abstract
Portugal has a vibrant and dynamic social economy, as defined by the 2013 Social Economy Framework Law. It is mainly driven by associations, which account for 93.4% of all social economy entities and generate 65% of total social economy employment, particularly in health and social services in 2020 (OECD, 2023[1]). The 2013 Social Economy Framework Law strengthens policy coordination, led by the Ministry of Labour, Solidarity and Social Security, in collaboration with the António Sérgio Co-operative for the Social Economy (CASES). CASES serves as a key partnership body, bringing together the government and major umbrella organisations.
Launched in 2023, the Portugal Social Innovation 2030 initiative (PSI) seeks to boost and promote social innovation. This initiative builds upon the previous Portugal Social Innovation (PSI) launched in 2015 and is targeted at social economy entities that develop and support social innovation projects (Council of Ministers, 2023[2]). It encompasses four instruments, among which social impact bonds that fund innovative projects through outcome-based contracts. These projects aim to achieve specific social outcomes and efficiency improvements across priority public policy areas such as social protection, employment, health, justice, and education.
During the 2014-2020 programming period, Portugal received EUR 9.14 billion in European Social Fund (ESF) support—comprising both EU and national co-financing—representing approximately 24.7% of the country’s total European Structural and Investment Funds allocation (European Commission, 2025[3]). The funding prioritised three main areas: (1) enhancing the competitiveness of SMEs, (2) educational and vocational training, and (3) research and innovation. PSI is recognised as a notably innovative approach within Portugal’s ESIF programming framework.
ESF+ is coordinated by the national Agency for Development and Cohesion. At the national level, two Managing Authorities oversee the implementation of programmes through nine Intermediary Bodies. One authority manages the Programme for Demography, Qualifications, and Inclusion, while the other oversees the Programme for Innovation and Digital Transformation. At the regional level, ESF+ operations are administered by the seven regional administrative entities, each with its own Managing Authority and regional operational programme (see Figure 1).
Source: Authors’ own elaboration based on information provided by Portugal.
PSI was established in response to increasing social challenges arising from austerity measures implemented after the 2008 financial crisis. These challenges were addressed by Portugal’s social economy actors—such as associations, foundations, co-operatives, and mutual societies—alongside a growing number of social entrepreneurs and start-ups. The initiative aimed to promote social innovation and entrepreneurship as complementary solutions to mainstream social services, while also fostering the development of the social investment market through tailored financial instruments for socially innovative projects (European Commission, 2018[4]).
PSI strengthened the organisational capacity of the social economy and provided various innovative tools (Quaternaire Portugal, 2022[5]). The initiative helped organisations in the social economy to improve their management, marketing, and fundraising skills through a capacity-building programme. It introduced tools like Social Impact Bonds (SIB), which link public funding to measurable results, and Partnerships for Impact (PFI), which encouraged private co-funding of social projects. While SIB and PFI had limited uptake, with implementation rates of 23% and 24%, respectively, they demonstrated how new approaches can address social challenges more effectively. The Capacity Building programme had a high success rate (76%) and significantly improved the performance of organisations.
Delays, administrative inefficiencies, and regional disparities created barriers. The launch of financial tools, such as the Social Innovation Fund (SIF), took longer than anticipated, which disrupted the programme's flow. Administrative challenges, including slow reimbursement processes and complex eligibility requirements, made it difficult for organisations to participate. Additionally, there were significant regional disparities in resource allocation; for instance, Lisbon and the Algarve received more funding and support, while underdeveloped regions such as the North and Centre faced challenges due to weaker collaboration and less developed ecosystems. (Quaternaire Portugal, 2022[5]).
Innovative tools and capacity-building programmes strengthened the social innovation ecosystem. They provided social economy entities with management skills and capabilities to implement measurable, results-oriented social innovation initiatives. PSI introduced innovative financial tools aimed at improving accountability and provided alternative funding options. For instance, Social Impact Bonds (SIBs) linked funding to clear, measurable outcomes, while Public-Private Partnerships (PFIs) encouraged collaboration between public and private sectors to tackle social issues. The capacity-building programme provided training for organisations to enhance their management, marketing, and impact assessment skills. Portugal’s Social Innovation Mission Unit (EMPIS), which oversees PSI, promoted collaboration and tailored complex methods to meet local needs. Successful pilot projects, such as online education tools and telemedicine services, demonstrated how innovation can effectively address specific challenges. (Quaternaire Portugal, 2022[5]).
The ESF funding of EUR 75.2 million enabled PSI’s innovative approaches, covering most of the project’s costs and allowing the development of tools and training programmes for SE organisations. Funding facilitated the development of innovative approaches for addressing social challenges. By focusing on capacity building, introducing new financial models, and implementing pilot projects, the European Social Fund (ESF) helped establish a foundation for long-term improvements in Portugal's ability to foster social innovation. Although there were some challenges during implementation, this funding was essential for initiating and testing these initiatives. (Quaternaire Portugal, 2022[5]).
References
[2] Council of Ministers (2023), Council of Ministers Resolution No. 54/2023, https://files.diariodarepublica.pt/1s/2023/06/11100/0000300007.pdf?lang=EN.
[3] European Commission (2025), Cohesion Open Data platform - Portugal, https://cohesiondata.ec.europa.eu/countries/PT/14-20.
[4] European Commission (2018), The Portuguese Social Innovation Initiative, https://www.fi-compass.eu/sites/default/files/publications/fi-compass%20study%20on%20the%20Social%20Impacts%20Bond%20programme%20under%20the%20Portugal....pdf.
[1] OECD (2023), “Country Fact Sheet: Portugal”, https://www.oecd.org/content/dam/oecd/en/topics/policy-sub-issues/social-economy-and-social-innovation/country-fact-sheets/country-fact-sheet-portugal.pdf (accessed on 3 April 2025).
[5] Quaternaire Portugal (2022), “Evaluation of Measures Fostering Social Innovation”.
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