Social economy -- also known as 'non-profit' or 'third sector' -- organisations have grown in number and relevance, contributing to employment, social inclusion, democratic participation and community building. Much remains to be done, however, to create the necessary enabling environment to support their creation and development and to mainstream the sector in economic and social policies. This publication offers new insights into the economic theory of social economy organisations, their role in an evolving political and economic context, and the links to local development and the empowerment of users. Building on theoretical and empirical developments in OECD member countries, the publication also presents the main challenges for the social economy in Central East and South East Europe. Recommendations for action are included.