30 Nov 2011

How to define a social enterprise ?

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The 2nd Forum on the Social Economy (*), organised by the department “Economie sociale” of the ministry “Economie et Commerce Extérieur” was held in Luxembourg on the 24th november.
It is to outline the Luxembourg government’s policy and efforts in opening the debate with the opinion on how to move forward and at the end, how to adapt the legal and social framework to ensure this economic sector a viable future … as the mainstream economy tends to show growing signs of difficulties to create balanced wealth among the people.

Emmanuel Vallens, Policy Coordinator at the European Commission /DG Domestic Market reported the on-going reflections held in Brussels in order to achieve a common approach at EU level on the concept of “social enterprise”.

He first took stock of the current situation prevailing the EU space :

  • today the social economy is made up of 3 types of agents (legal entities) : the mutual companies, the cooperatives, the non-profit making organisations.
  • however, business practices tend to prove that the articles of incorporation are not reliable enough to certify whether an enterprise is actually run with a social purpose or not. At the end of the day, the point is “do we need to set up a special (european) entity for social enterprise ?”.
  • the process of recognising a social business has been considerably slowed down, as there are as many definitions of “social economy” as there are experts in the sector. What get “social economy”, “solidarity business”, “third-sector”, “non-profit sector”, “incluse economy”, etc … different one another ? It is the first question to go through before the EU can build a common view and definition.

Emmanuel Vallens wrapped up the intermediary results of the reflection in progress at the European Commission. 3 main criteria have been proposed to to distinguish a social enterprise from a conventional one :

  1. the focus on the common good. It means that the social impact is prior to the financial one
  2. no dividends to the shareholders in case profit
  3. gouvernance principles in line with the vision and mission of the venture

Emmanuel Vallens ended up with presenting what he has considered being obstacles against a prosperous development of the social economy :

  1. limited access to public financing
  2. difficulties to get private investors involved in the projects or in the incorporated enterprirse.
  3. lack of visibiliy and information about the concept of social economy, among projects owners
  4. regulatory framework getting an uneasy access to public tenders (government contracts)

Social innovation can be understood as being any solution addressing the social challenge whose ultimate goal is : the enhancement of everybody’s standard of living ; the quality of life, as a private person as well as a community’s member.

Corporate social responsibility, asset building among the poor, culture and local development or female entrepreneurship … are some further key-words to figure out what social economy is.

(*) the exact title of the Forum is “Développement et promotion de l’Economie solidaire au service d’un développement durable à Luxembourg”

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