EESC Meeting EESC, Brussels, November 14, 2014 Social Enterprise and the Third Sector: an International Comparative Perspective Prof. Jacques DEFOURNY University of Liège (Belgium) EMES International Research Network 1
OVERVIEW 1. Major steps in social enterprise development 2. Three major SE schools of thought and their relations to the third sector 3. A typology of social enterprise models: dynamics and key challenges 4. Conclusions 2
1. Major steps in SE development A. EARLY DEVELOPMENT IN THE UNITED STATES US: Appearance of SE notions around 1990 Around Ashoka, pro-active foundations supporting social entrepreneurs NPOs becoming more entrepreneurial EU: Promotion of social enterprise in 2 pioneering countries Italy: social coops (types A and B)Around Ashoka, pro-active foundations supporting social entrepreneurs UK: Strategy of the whole government to promote social enterprise 3
The concept of social enterprise is double-sided: Social enterprises can be NEW ENTITIES OR ALREADY EXISTING ORGANISATIONS reshaped by a new dynamics 4
B. KEY FACTORS On both sides of the Atlantic, new entrepreneurial behaviours driven by a primary social purpose mainly took place within the third sector - In the US, Third Sector = Non Profit Organizations - In Europe, Third Sector = Not For Profit Organizations (include cooperatives) => Quest for economic democracy In Eastern Asia: combination of pioneering initiatives of the civil society and top-down public policies - SE with a mixed identity: third sector under strong public control 5
Changes in public funding have played an important role: In the US, shortcuts in the volume of public grants to NPOs In Europe, forms - rather than the volume - of public funding were transformed: quasi-markets, second labor programs In Eastern Asia: financial crisis in the 90 s and move of public policies toward more active labor market policies 6
New legal frameworks related to the "cooperative model": Italy (1991): "social cooperative" Portugal (1998): "social solidarity cooperative" Spain (1999): "social initiative cooperative" France (2001): "cooperative society of collective interest " Hungary (2004): " social cooperative " Poland (2006): "social cooperative" New legal frameworks based on a more "open model": Belgium (1995): "social purpose company" United Kingdom (2004): "community interest company" Finland (2004): "social enterprise " Lithuania (2004): "social enterprise " Italy (2006): "social enterprise" 7
2. Three major schools of thought Two conceptions rooted in the US context: (Dees, Anderson, 2006): 1. The Earned Income school of thought 2. The Social Innovation school of thought One onception rooted in the EU context 3. The EMES approach 8
A. The Earned Income school of thought First, focus on earned-income strategies for NPOs Later, any kind of undertaking: not only NPOs, also for-profit companies, public sector entities reshaped by such an entrepreneurial endeavor toward a social aim. Here the relation to the social economy fades out. Social Business may be seen in this school: a non-loss, nondividend company designed to address a social objective 9
B. The Social Innovation school of thought In line with Ashoka s promotion of the entrepreneur for the public good since 1980, Dees (1998) stresses social innovation processes undertaken by social entrepreneurs. Systemic nature of innovation Emphasis on outcomes rather than on incomes Celebration of heroic individuals 10
C. The EMES approach of social enterprise An economic project Continuous production with some paid work Economic risk (mix of resources) At least some paid jobs Primacy of social aim Explicit aim to benefit the community Limited profit distribution Initiative of civil society members or organizations A participatory governance High degree of autonomy Stakeholders involvement Decision-making power not based on capital ownership 11
The EMES definition as an ideal-type SE 3 categories (economic, social and governance) of 3 indicators which are rooted in the social economy However, the nine indicators are not conditions to be strictly met to deserve the label of social enterprise They rather define an «ideal-type» (abstract construction) that enables to position oneself within the «galaxy» of social enterprises A methodological tool rather than a normative framework (although it clearly takes the social economy as the key reference 12
Pole Star Social mission Participatory governance Economic sustainability
3. SE Models Dynamics/driving forces A. Trading NPO NPOs looking for other sources of income & financial sustainability through delivery of B. Work Integration SE C. Social cooperative D. Non-profit / forprofit partnership E. Community Development Enterprise social services (other than work integration) Provision of (stable or temporary) job opportu- nities with training and/or employment services Collective self-employment and innovative responses to unmet needs based on cooperative tradition Involvement of private companies ( or company foundations) to support NPOs or joint initiatives for a social mission Multi-stakeholder partnerships (NPO, FPO and public) to promote participatory local development 14
A. Major risks for most SE Models SE as a simple tool of public policies risk of losing autonomy SE as organizations fully dependent from external funding ( ex: 1 st goal: meeting requirements of foundations or EU funds) risk of isomorphism Search for financial independence through sole market incomes risk of subordinating initial social goals to market constraints (creaming out effect) 15
B. How to balance economic viability & social objectives? - By preserving a significant degree of autonomy - through an autonomous governance structure & - diversified resources - By promoting federative bodies - which can advocate for the specificities of SE & - organize various types of support (technical support, marketing => Economies of scale ( ex. Italian consorzi) & In such perspectives, social enterprises would have many advantages finding their place in an enlarged social economy 16
E. SOCIAL ENRERPRISES AND THE SOCIAL ECONOMY Social economy (third sector) STATE (public agencies) Not-for profit For-profit Public Private (Informal networks) CIVIL SOCIETY (households, families) MARKET (Private Companies) Informal Formal 17
A hypothesis to be discussed for Poland Public policies: - innovative policies - partnerships - appropriate legislations - consultative bodies Co-operatives EU EA.. US Associations (NPOs) Initiatives of for-profit companies: - joint ventures - CSR - foundations supports 18
CONCLUSIONS The experience shows that pluralism and the diversity of expressions are essential in many areas (politics, culture, philosophies, environment, etc.) In the economy: - Major risks of domination by schools of thought just fostering virtues of free markets and behaviours motivated by the only pursuit of profit - Major need to revitalize economic pluralism in order to feed real debates on globalization 19
The social economy and social enterprises are major vehicles for ensuring or reinforcing economic pluralism at other, more fundamental levels at the level of economic activity s goals (mutual interest, public interest ) at the level of the stakeholders rights (limits to rights linked to capital ownership, multi-stakeholders governance ) at the level of the types of resources mobilized for production (market-based resources, public subsidies, donations, volunteering) Now more than ever, understanding social enterprise and the social economy and bringing them into the limelight are essential, both at the local level and at the global level. 20
Thank you for your attention 21