Defending social enterprises in Europe

A few years ago, the concept of social enterprise was rarely discussed in Europe, however it is now making significant breakthroughs in European Union (EU) countries. The union can not escape the pressure of the current awful economic position so it has no way out to see the task of social involvement under eyes.

An orthographic projection of the world, highl...

An orthographic projection of the world, highlighting the European Union and its Member States (green). (Photo credit: Wikipedia)

We could see some positive development in legal frameworks, public policies, supporting structures, public procurement policies supporting the development of social enterprises in the different EU countries. Relying on collective dynamics involving various types of stakeholders in their governing bodies, they place a high value on their autonomy and they bear economic risks linked to their activity, but some of them dared to stick out their neck, though they are still poorly understood in several of the EU countries.

The notion of social enterprise first appeared in Italy in the late 1980s, but it really began to be used at the European level in the mid 1990s, especially through the works of the EMES European Research Network. (EMES) {1}

Until recently, the notions of “social entrepreneur“, “social entrepreneurship” and “social enterprise” were used more or less along the same lines: simplifying a little, one could say that social entrepreneurship was seen as the process through which social entrepreneurs created social enterprises. In the last decade, however, a fast growing literature has produced various definitions and approaches of each of these three notions.

The concept of social enterprise is still fuzzy in Belgium, but it is more and more frequently used to stress the entrepreneurial approach adopted by an increasing number of organisations in the third sector. {2} The introduction of the “social purpose company” legal framework, in 1996, is clearly linked to this trend. This framework is not, strictly speaking, a new legal form; in fact, all types of business corporations can adopt the “social purpose company” label, provided they “are not dedicated to the enrichment of their members”, and their statutes comply with a series of conditions. {3} However, this
legal status (revised in 2007) has been adopted by no more than 400 enterprises between 1996 and 2006; this may be accounted for by the fact that it brings with it a considerable number of requirements, in addition to those associated with the traditional company legal form. Most initiatives that meet, to some extent, the criteria of the EMES definition of social enterprise have adopted the legal form of ASBL or VZW (Vereniging Zonder Winstoogmerk = Association without lucrative purpose or Non-Profit Association); this very flexible form allows developing commercial activities, provided that these activities are subordinated to the organisation’s social mission.

Moreover, the legal form of ASBL/VZW is necessary to qualify for several forms of public support.  However, some public schemes, such as the “work integration enterprises” scheme in the Walloon region, require that the organisation adopt the legal status of a social purpose company.

In Belgium we still face the problem that there is not enough seen forward in the future and that they do not enough work on preventive measure but have to look for solutions when the problems have gone far too deep. The emphasis has also been much more often put on the collective nature of the social enterprise, as well as on its associative or cooperative form, although the US approach is gaining some influence.

The conceptualisations of the “social entrepreneurship” have stressed the social innovation processes undertaken by social entrepreneurs. But a wide spectrum of initiatives can be seen, ranging from voluntary activism to corporate social responsibility. {4}

In Belgium, the “social purpose company” (société à finalité sociale, or SFS, in French; vennootschap zonder winstoogmerk, or VZW or VSO, in Dutch) legal framework, introduced in 1996, does not focus on the sole co-operative tradition, although it is often combined with the latter. More precisely, this framework is not, strictly speaking, a new legal form, as all types of business corporations can adopt the “social purpose company” label, provided they “are not dedicated to the enrichment of their members”. Therefore, the company must define a profit allocation policy in accordance with its social purpose and provide for procedures allowing each employee to participate in the enterprise’s governance through the ownership of capital shares.

Social enterprise association

Social enterprise association (Photo credit: Wikipedia)

Many people do think those legal innovations for the social purpose companies do  not bring any real added value for the concerned organizations. Unlike the concepts of social economy or solidarity-based economy, which have inspired coalitions of actors for the last twenty years, from both the world of associations and that of co-operatives, and which are increasingly characterised by a social entrepreneurial approach, the notion of social enterprise itself is far from having achieved general recognition in Belgium.

Although the work integration of disadvantaged people is often seen in Europe as a major field for social enterprises, the latter also experienced a significant development in a wide range of other areas. Yesterday it was announced that males born in 2010 will reach the age of 76 and females would reach the age of 83 and with the population getting older we shall need more healthcare workers.

In certain countries we have seen that  “A-type” social co-operatives”, providing social and personal services, underwent a rapid development and hired thousands of highly skilled professionals in the fields of health care, psychology, mental health care and training. Indeed, the number of enterprises and jobs created in such services has always been much larger than in “B-type” (work integration) social co-operatives.

In Belgium we are going to face many shortages in caring personnel. Childcare services are clearly a major field of activity for social enterprises, which more and more shall have to be  set up and managed by parents and professionals as a response to a public provision
shortage. We also are in urgent need of a fast growth of social enterprises in social housing and home care services, as well as in a wide spectrum of community and social services, including culture, arts and sports.

The contracting out of the provision of goods or services is a key channel for public authorities to support the mission of social enterprises. Indeed, empirical analysis highlights the importance of the sales of social enterprises to local public bodies. {5}

Under certain thresholds defined by European legislation, public bodies (usually at the local level) may simply “privilege” social enterprises they know in order to support the latter and their social mission; in the case of purchases over these threshold amounts, specific rules have to be respected, but these rules do not exclude the possibility to take into account social dimensions in the procedures for the award of public contracts. Indeed, two different types of award criteria are allowed: public authorities can award a contract to the tender with “the lowest price” (i.e. the bid with the lowest price, for the required level of quality, is chosen) or they can choose to award the contract to “the most economically advantageous tender”, i.e. take into consideration criteria other than price alone (such as
social or environmental criteria) in their purchasing decision. They can for example introduce social clauses regarding the integration of disadvantaged workers or a requirement to make services available for specific target groups or communities. {6}

Social Enterprise & CSR

Social Enterprise & CSR (Photo credit: sunitshrestha)

However, the practice of inserting social criteria into public contracts is not yet very common in the European Union.

At the Conference Social Enterprises and the Europe 2020 Strategy: Innovative solutions for a sustainable Europe, held on 3 October in Brussels, the Various Interest Group of the EESC analysed the present and future of social enterprises in Europe.

“Social enterprises have proven to be more resilient in the current crisis, and should therefore play a key role in Europe’s exit strategy from the crises while contributing to a faster and fairer recovery. We call on national and European policy-makers to politically support the social economy and social enterprises, and to create a level-playing field which will unleash the potential of this key economic sector”, stated Luca Jahier, President of the EESC Various Interests Group.

The social economy sector already employs more than 14 million people in the EU, which amounts to more than 6% of all workers. The social economy is a key element of the European social model, especially in times of crisis. However, social enterprises do not enjoy a level playing field with traditional economic operators. Without overcoming legal, administrative, financial and political obstacles, social enterprises will not be able to fully enjoy the benefits of the single market, despite the richness and the innovative leadership which exists at all levels of the sector.

“One billion people around the world cannot be wrong. One billion have chosen to run a cooperative business, and that’s something that must be taken into account in decision-making fora” added Pauline Green, President of the International Co-operative Alliance.

“We would like to help by providing a better picture of the situation of social enterprises in the EU. That is why we are about to launch a large project with the aim of mapping social enterprises. This is in fact in response to the Economic and Social Committee’s call for an EU-wide comparison of approaches to public financing that are particularly suitable for social enterprises”, stated László Andor, European Commissioner for Employment, Social Affairs and Inclusion.

The European Foundation Statute and access to public procurement

The EESC is determined to defend the role of social enterprises in providing services of general interest. According to the EESC, Member States should facilitate participation in public procurements to economic operators whose principal objective is the social and professional integration of disabled or disadvantaged workers, provided that a threshold of 30% of disabled or disadvantaged workers is respected.

The EESC also urges a rapid introduction of a European Foundation Statute, the adoption of a Statute for a European Association and a review of the value and usability of a European Social Enterprises label, that would definitely add value to the sector. These would help social enterprises to operate in different EU Member States without any extra administrative burden.

Finally, the EESC demands a mobilisation of the European Social Fund post 2014 to include “investment priority” for social enterprises and a better access to other funds such as capital for start-ups and growth, notably for young social entrepreneurs. “I am convinced that cohesion policy funds can be used even better in the future, especially if they would be employed in the context of a truly integrated strategy”, concluded László Andor, European Commissioner for Employment, Social Affairs and Inclusion.

It is important that the question of the value added of social enterprise models – which are driven by their explicit aim to benefit the community – be studied more thoroughly and that the local government spends more time and attention to this necessary group for the community.



{1} These research works, mainly supported by the European Commission’s Research Directorate-General, resulted in a first book entitled The Emergence of Social Enterprise (Borzaga and Defourny 2001), a wide series of EMES Working Papers (available on and, more recently, a second book, edited by Nyssens (2006), focusing on work integration social enterprises. The EMES Network has also extended its research area to Eastern and Central European countries, including some countries of the Community of Independent States, such as Ukraine (Borzaga and Spear 2004; EMES 2006).

{2} This interpretation of social enterprise can be linked to the “market social economy” concept, which is sometimes used in Belgium (see EMES European Research Network, 2007).

{3} Among other requirements, SFS statutes must stipulate that “the members seek little or no return on investment”. The articles must define a “profit allocation policy in accordance with the enterprise’s internal and external purposes”. The social purpose company’s articles must also provide for procedures allowing each employee to participate in the governance of the enterprise (as a shareholder or/and through a participation in the
management of the enterprise).

{4} See for instance Nicholls (2006); Nicholls, A. (ed.) (2006) Social Enterpreneurship. New Models of Sustainable Social Change, Oxford: Oxford University Press.

{5} Laville et al.( 2006); Lemaitre, A., Laville, J.-L. & Nyssens, M. (2006) “Public Policies and Social enterprises in Europe: the Challenge of Institutionalization” in Nyssens, M. (ed.) Social Enterprise, London & New York: Routledge, 259-271.; Evers, A. & Laville, J.-L. (eds) (2004) The Third Sector in Europe, Cheltenham: Edward Elgar.

{6} On the subject of the inclusion of criteria other than the price alone in public procurement, see Navez, F. (2005) “Marchés publics et évolution du droit européen : Quelles possibilités de soutien. pour les entreprises d’économie sociale ?” Presented at the 1st EMES-ISTR European conference, Paris, April 2005. Available at:


Please read also:

EMES European Research Network (1999) The Emergence of Social Enterprises In Europe. A Short Overview, Brussels: EMES.
EMES European Research Network (2006) Study on Promoting the Role of Social Enterprises in CEE and the CIS, Initial Overview Study for the UNDP-BRC (Bratislava Regional Centre).


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    However, Peter Holbrook, chief executive of Social Enterprise UK, said this showed that Salesforce “seems to fundamentally misunderstand what social enterprises are”.

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  • How to be Socially-Conscious and an Entrepreneur (
    Whether the objective is to generate profits or social capital, the common element for all entrepreneurs is the recognition that there is a problem which needs solving, or there is an opportunity to improve the status quo.The vision is always to be a change agent, to invent and popularize new approaches, and to persuade people to take a leap forward. In every case this requires a committed ultimate realist with the determination to persist in the face of daunting odds.

About Marcus Ampe

Retired dancer, choreographer, choreologist Founder of the Dance impresario office and archive: Danscontact-Dansarchief plus the Association for Bible scholars, the Lifestyle magazines "Stepping Toes" and "From Guestwriters" and creator of the site "Messiah for all". - Gepensioneerd danser, choreograaf, choreoloog. Stichter van Danscontact-Dansarchief plus van de Vereniging voor Bijbelvorsers, de Lifestyle magazines "Stepping Toes" en "From Guestwriters" en maker van de site "Messiah for all".
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7 Responses to Defending social enterprises in Europe

  1. Though I’;m not familiar with this concept, it seems to me to be one of the ways in which the grassroots can begin to change the old paradigms, and begin to create a new earth…which is the only way it’s going to happen…Thank you for this expert analysis


  2. marcusampe says:

    Every respecting community should be more aware of the importance of the “third sector” (i.e. the private, not-for-profit sector). We also shall have to promote social enterprises because lots of things would not be able to survive in an normal business of profit-making.

    It would be better to have people as long as possible in their own environment, at home. But to do that we shall need more basic homecare service, cleaning and food services. With both parents having to work, to be able to afford the family, we shall also need family coaches home help, more child-carers, day nurseries, and perhaps even night nurseries. Volunteer aid to the elderly and the sick, especially for those with terminal illness shall be more necessary.

    We also may not forget the ambulant caretakers, paramedics and ambulance personnel. Out-patient clinics also would not always fill the picture of a thriving economic business.

    The economic situation has to make place for shops and ateliers specialized in recycled goods.

    The social enterprises should indeed combine income from sales or fees from users with public subsidies linked to their social mission and private donations and/or volunteering. This clearly contrasts with a strong US tendency to define social enterprises only as non-profit organizations more oriented towards the market and developing “earned income strategies” as a response to
    decreasing public subsidies and to the limits of private grants from foundations.

    The Social enterprises being not-for-profit private organizations should provide goods or services directly related to their explicit aim to benefit the community, but it may also include judging organisations like theatres, community centres and social work organisations. They shall have to rely on a collective dynamics involving various types of stakeholders in their governing bodies, placing a high value on their autonomy (= also political neutrality) but also to bear economic risks linked to their activity. For that reason they shall also need to have a special tax assess.

    In both cases, having forms of social entrepreneurship found in the private for-profit sector and the public sector the tax rate should be taking in account the sort of work which is been done, and those social entrepreneur establishments should get some fiscal advantage or tax benefit.


  3. Those who proclaim following Christ should take care of the weaker ones. Their world should also recognise that it should not be a matter of gaining as much money as possible, but about being able to give everybody the worthy life.
    When people are cared for, they care for the things you care for, even more so than you ever could.


  4. Pingback: Everywhere in Europe the same – Some View on the World

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