This chapter explores the European Social Fund (ESF) role in promoting and expanding social innovation across EU Member States. Based on a review of 96 ESF-funded projects from the 2014–2020 period—covering 24 countries to ensure balanced regional and sectoral representation—it identifies two primary categories: initiatives explicitly focused on social innovation, entrepreneurship, or the social economy, and projects that incorporate innovative elements aligned with social innovation principles. As the EU’s principal structural investment instrument for employment, skills, inclusion, and cohesion, the ESF has engaged a wide range of stakeholders—including managing authorities, government agencies, civil society organisations, academia, businesses, and local communities—in piloting and scaling novel solutions in areas such as education, vocational training, social care, migrant integration, and environmental sustainability. Insights and evidence gathered aim to inform ESF programming beyond 2027, in preparation for the European Commission’s proposal for the next Multiannual Financial Framework in July 2025.
Starting, Scaling and Sustaining Social Innovation
Abstract
This report analyses the impact of European Social Fund (ESF) funding on facilitating and scaling social innovation. In the EU, the ESF is the primary tool for supporting the development and implementation of social innovation across sectors. As one of the EU’s Structural and Investment Funds aimed at promoting cohesion, economic growth and social progress, as well as supporting the implementation of the European Pillar of Social Rights and implementing the European Semester’s country-specific recommendations, the ESF provides funding to local projects and organisations involved in areas such as employment, social welfare, education, skills and social cohesion (European Commission, 2023[1]).
The report also provides an analysis of 96 ESF-funded projects from the 2014-20 programming period, focusing on the application and scalability of social innovation to help inform future ESF programming post-2027. It is part of the studies informing the next multiannual financial framework, to be proposed by the Commission in July 2025.
These 96 initiatives were selected by the European Commission to provide a balanced representation of projects across EU countries and sectors. Based on a comprehensive review of these evaluations spanning 24 countries, the report highlights two main categories of projects involving diverse stakeholders:
Projects specifically oriented towards promoting and supporting social innovation, social entrepreneurship, or the social economy.
Projects that, while not explicitly focused on social innovation, employ strategies that resonate with the definitions, principles, and characteristics of social innovation.
Socially innovative projects supported by the ESF have engaged a wide range of stakeholders, including ESF Managing Authorities, national and local governments, local communities, businesses, civil society organisations, educational institutions, and various government agencies. They have successfully experimented with and scaled innovative solutions across sectors (such as education, vocational training, and care) or addressed broader objectives like social inclusion, migrant integration, and environmental sustainability.
Social innovation has gained significant attention in the early 21st century with the rise of social entrepreneurship and the growing recognition of the role of innovation in addressing social issues. Social innovation refers to the development and implementation of new ideas (products, services, and models) that simultaneously meet social needs and create new social relationships or collaborations. It may arise differently across cultures and places, hence the need to understand how local contexts influence the types of innovations that emerge (Nicholls and Edmiston, 2019[2]). Commonly cited definitions for social innovation emphasise the novelty, effectiveness and social objectives of these initiatives, as well as collaborations (Mulgan et al., 2007[3]) (see Box 1.1). Several frameworks have emerged to conceptualise social innovation, such as the "Social Innovation Spiral" (Phills, 2008[4]) or the "Social Impact Framework", which highlight the importance of measuring social value.
While there is no globally agreed definition of social innovation, the OECD first defined the concept of social innovation in 2000 as “creating and implementing new solutions that entail conceptual, process, product or organisational changes, with the ultimate goal of enhancing the welfare and well-being of individuals and communities” (OECD, 2010[5]). Building on this work, the 2022 OECD Recommendation on the Social and Solidarity Economy and Social Innovation includes social innovation as one of nine distinct building blocks that provide the conditions for the social economy to thrive.
The European Commission defines social innovation through its ESF+ Regulation as “an activity that is social as to both its ends and its means and, in particular, an activity which relates to the development and implementation of new ideas concerning products, services, practices and models that simultaneously meets social needs and creates new social relationships or collaborations between public, civil society or private organisations, thereby benefiting society and boosting its capacity to act” (European Union, 2021[6]).
While invention may trigger traditional innovation, a social need is often the starting point for social innovation. What separates social innovation from traditional innovation is that it does not start with the intention, but rather with the “problematisation” (Neumeier, 2017[7]). A driver for traditional innovations is often profitability, while in contrast, social innovations often emerge despite the lack of commercial markets in which they can be sold to customers.
Similar to traditional innovations, social innovations follow a non-linear process. They are experimental and can benefit from digitalisation and technological developments (OECD, 2021[8]). Social innovation can play a role in both urban and rural areas, and it can be a powerful tool to fill public service gaps, experiment with new business models and create a stronger sense of community, particularly in rural areas (OECD, 2024[9]).
Social innovation is distinct from technological and business innovation. Technological innovation has traditionally been measured and advanced using a linear model, and typically connected to commercial ends (Adro and Fernandes, 2020[10]). Business innovation is profit-seeking in nature (Pol and Ville, 2009[11]) or geared towards competitive advantage (Dawson and Daniel, 2010[12]). However, recent crises have underscored the importance of flexible and responsive innovation systems, revealing gaps that need to be filled to improve system resilience and preparedness (OECD, 2021[13]). Thus, social innovations emerge despite the lack of commercial markets in which these innovations can be sold to customers. The value created by social innovation benefits society as a whole, rather than private individuals (Borzaga and Bodini, 2012[14]).
Interest from countries in social innovation has been driven primarily by three factors: i) the rise of “wicked” problems; ii) the lack of trust in both the market and the state to provide solutions for socioeconomic and environmental challenges; and, iii) the recognition that solutions must be locally embedded to be successful and sustainable (Suarez-Villa, 2012[15]). “Wicked” problems refer to complex challenges, such as ageing populations, skills shortages, loneliness, climate change, and migration. Solutions to address them often depend on local perceptions, practices, as well as cultures and might require collaboration, mobilisation of social capital and engagement, as well as social innovation.
One of the key benefits of social innovation is its ability to address gaps in public services, especially in underserved areas. Many rural communities face geographic isolation, limited infrastructure, and dependence on a single industry. These challenges often result in inadequate public services, such as poor healthcare, education, or transportation. Social innovation helps fill these gaps by bringing together different stakeholders – local authorities, businesses, and non-profits – to co-develop solutions that improve residents’ quality of life (OECD, 2024[9]). For example, mobile clinics provide healthcare to rural populations, allowing access to medical services that might otherwise be unavailable.
Social innovation also introduces new and more effective ways of delivering essential services. For instance, innovative educational models like blended learning and community-led tutoring help address disparities in education by leveraging technology and local partnerships. Similarly, alternative education methods, such as the Montessori approach, have transformed traditional learning structures to better suit students' needs. These innovations not only improve service accessibility but also enhance their quality and impact.
Another crucial aspect of social innovation is that it empowers those most affected by social challenges to take part in decision-making processes. When citizens contribute their knowledge and experience, they help shape solutions that directly impact their daily lives (Avelino et al., 2020[16]). This participatory approach was particularly evident during the COVID-19 pandemic when communities, businesses, and governments worked together to develop new service models, such as local support networks for vulnerable populations and innovative healthcare delivery methods (OECD, 2024[9]).
By fostering partnerships between governments, businesses, non-profits, and individuals, social innovation enables coordinated action to tackle complex social issues. Examples include community-driven initiatives like clean-up events, recycling drives, and volunteer mobilisation campaigns. These initiatives not only promote environmental sustainability but also raise awareness and encourage greater community involvement (OECD, 2024[17]). Additionally, microcredit schemes, which provide small loans to entrepreneurs who lack access to traditional banking services, exemplify how cross-sector collaboration can drive economic empowerment.
Social innovation also plays a pivotal role in addressing environmental challenges by fostering collaborative solutions that integrate both social and environmental objectives. By bringing together different stakeholders – authorities, local communities, businesses, non-profit organisations, social economy entities – social innovation facilitates the development of initiatives aimed at environmental conservation and sustainability. For instance, community-led projects focusing on reforestation and the restoration of natural habitats contribute to biodiversity preservation and enhance ecosystem services. Additionally, social enterprises that promote circular economy practices, such as recycling and upcycling, help reduce waste and mitigate environmental degradation. These initiatives not only address ecological concerns but also generate economic opportunities and strengthen community resilience, exemplifying the multifaceted benefits of social innovation in tackling environmental issues (OECD, 2024[9]).
There are two primary ways that social innovation can interact with policymaking:
Policies that seek to support and promote social innovation (policymaking “FOR” social innovation) and ;
Policies that seek to generate innovations themselves, solving social or environmental problems (policymaking “AS" social innovation) (Nicholls and Edmiston, 2019[2]) (see Figure 1.1).
Source: Reynolds, Gabriel and Heales (2017[18]).
Social innovations can serve as laboratories for testing new ideas that can inform public policy (Mulgan, 2006[19]). By providing solutions, social innovation initiatives can influence policy makers and contribute to more effective governance and trust. They can also encourage the adoption of innovative practices within the public sector. Public policy focuses on transformation to enhance the welfare and well-being of citizens. This dynamic approach parallels the principles of social innovation. When public policy engages with social innovation, partnerships and collaborations happen across various sectors. They often prioritise the process as much as the result and view participation as a means of empowering individuals (Hulgård and Ferreira, 2019[20]). More broadly, public policies that promote social innovation include enhancing competition among providers and supporting social innovation ecosystems, such as new funding sources inspired by market mechanisms like social impact bonds (OECD, 2016[21]).
Two ripple effects can be expected, through social innovations that influence policymaking:
Scaling up and sustaining through more permanent policies: successful social innovations can be adopted and expanded through long-term government policies, enhancing lasting benefits. For example, pilot programmes for community-based healthcare may become permanent public health initiatives.
Creating an enabling ecosystem with conditions that are conducive to social innovation initiatives and activities: policy makers can establish conditions that encourage social innovation, such as funding opportunities, regulatory support, and cross-sector collaboration. A strong social innovation ecosystem makes it easier for new innovative ideas to emerge and succeed.
The OECD Observatory of Public Sector Innovation (OPSI) has explored the role of social innovation in public administration. Public services must tackle complex societal challenges by fostering innovation in their action (OECD, 2015[22]). In addition, a structured approach is required to foster and sustain innovation within the public sector, allowing the participation of all relevant actors (OECD, 2020[23]). Recent studies analysing trends in different countries provide insights into the role of social innovation as a key factor in transforming governance, improving public service delivery and addressing policy challenges (OECD, 2023[24]).
References
[10] Adro, F. and C. Fernandes (2020), “Social innovation: a systematic literature review and future agenda research”, International Review on Public and Nonprofit Marketing, Vol. 17/1, pp. 23-40, https://doi.org/10.1007/s12208-019-00241-3.
[16] Avelino, F. et al. (2020), “Translocal empowerment in transformative social innovation networks”, European Planning Studies, Vol. 28/5, pp. 955-977, https://doi.org/10.1080/09654313.2019.1578339.
[14] Borzaga, C. and R. Bodini (2012), “What to Make of Social Innovation? Towards a Framework for Policy Development”, SSRN Electronic Journal, https://doi.org/10.2139/ssrn.2064640.
[12] Dawson, P. and L. Daniel (2010), “Understanding social innovation: a provisional framework”, International Journal of Technology Management, Vol. 51/1, p. 9, https://doi.org/10.1504/ijtm.2010.033125.
[1] European Commission (2023), EU Cohesion Policy: European Structural and Investment Funds supported SMEs, employment of millions of people and clean energy production, https://ec.europa.eu/commission/presscorner/detail/en/ip_23_389 (accessed on July 2024).
[6] European Union (2021), “Regulation (EU) 2021/1057 of the European Parliament and of the Council of 24 June 2021 establishing the European Social Fund Plus (ESF+) and repealing Regulation (EU) No 1296/2013”, Official Journal of the European Union, Vol. 64, pp. 21-59, https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=OJ:L:2021:231:FULL&from=EN.
[20] Hulgård, L. and S. Ferreira (2019), “Social Innovation and Public Policy”, Howaldt J., Kaletka C., Schröder A., Zirngiebl M.(eds), Atlas of Social Innovation. 2nd Volume – A World of New Practices.
[19] Mulgan, G. (2006), “The Process of Social Innovation”, Innovations: Technology, Governance, Gobalization, Vol. 1/2, pp. 145-162, https://doi.org/10.1162/itgg.2006.1.2.145.
[3] Mulgan, G. et al. (2007), Social Innovation: what it is, why it matters, how it can be accelerated, Oxford: Skoll Centre for Social Entrepreneurship.
[7] Neumeier, S. (2017), Social innovation in rural development:, The Geographical Journal, https://doi.org/10.1111/geoj.12180.
[2] Nicholls, A. and R. Ziegler (eds.) (2019), Social Innovation Policy in the European Union, Oxford Academic.
[9] OECD (2024), “Assessing the framework conditions for social innovation in rural areas”, OECD Local Economic and Employment Development (LEED) Papers, No. 2024/4, OECD Publishing, Paris, https://doi.org/10.1787/74367d76-en.
[17] OECD (2024), “Unleashing the potential of volunteering for local development: An international comparison of trends and tools”, OECD Local Economic and Employment Development (LEED) Papers, No. 2024/11, OECD Publishing, Paris, https://doi.org/10.1787/deab71bd-en.
[24] OECD (2023), Global Trends in Government Innovation 2023, OECD Public Governance Reviews, OECD Publishing, Paris, https://doi.org/10.1787/0655b570-en.
[8] OECD (2021), “Building local ecosystems for social innovation: A methodological framework”, OECD Local Economic and Employment Development (LEED) Papers, No. 2021/06, OECD Publishing, Paris, https://doi.org/10.1787/bef867cd-en.
[13] OECD (2021), “OECD Science, Technology and Innovation 2021: Times of Crisis and Opportunity”, https://www.oecd.org/en/publications/oecd-science-technology-and-innovation-outlook-2021_75f79015-en.html (accessed on 26 March 2025).
[23] OECD (2020), “The public sector innovation lifecycle: A device to assist teams and organisations in developing a more sophisticated approach to public sector innovation”, OECD Working Papers on Public Governance, No. 37, OECD Publishing, Paris, https://doi.org/10.1787/0d1bf7e7-en.
[21] OECD (2016), “Social impact bonds: State of play & lessons learnt”, OECD Local Economic and Employment Development (LEED) Papers, No. 2016/05, OECD Publishing, Paris, https://doi.org/10.1787/3064b396-en.
[22] OECD (2015), The Innovation Imperative in the Public Sector: Setting an Agenda for Action, OECD Publishing, Paris, https://doi.org/10.1787/9789264236561-en.
[5] OECD (2010), SMEs, Entrepreneurship and Innovation, https://doi.org/10.1787/9789264080355-en.
[4] Phills, E. (2008), Rediscovering Social Innovation.
[11] Pol, E. and S. Ville (2009), “Social innovation: Buzz word or enduring term?”, The Journal of Socio-Economics, Vol. 38/6, pp. 878-885, https://doi.org/10.1016/j.socec.2009.02.011.
[18] Reynolds, S., M. Gabriel and C. Heales (2017), Social innovation policy in Europe: where next?, https://media.nesta.org.uk/documents/social_innovation_policy_in_europe_-_where_next.pdf.
[15] Suarez-Villa, L. (2012), Technocapitalism: A critical perspective on technological innovation and corporatism, Temple University Press.