A social enterprise combines entrepreneurial activity with a social purpose. Its main aim is to have a social impact, rather than maximise profit for owners or shareholders. Businesses providing social services and/or goods and services to vulnerable persons are a typical example of social enterprise.
Challenges and policy responses
Access to finance
Access to finance is one of the main obstacles to the growth of social enterprises, as identified in the Social Business Initiative (SBI) adopted by the Commission in 2011.
Therefore, the Commission:
- helps social enterprises access investments of up to EUR 500,000 via public and private investors at national and regional level, as part of the EU Programme for Employment and Social Innovation (EaSI).
- supports social enterprises through pilot equity investments under the European Fund for Strategic Investments (EFSI) Equity instrument, namely via funds linked to incubators/accelerators and co-investments with social Business Angels.
- complements equity investments with grants aimed at covering part of the transaction costs of intermediaries. The grant serves as an incentive for making investments of below EUR 500,000 in social enterprises. A call for proposals was launched in 2017.
- co-funds projects focussing on boosting the development of the demand and supply side of social finance markets in Europe: 21 pilot projects were selected under a call for proposals in 2013 and further 20 projects were selected under a call for proposals in 2016. The projects journey and experience served as basis for developing a practical guide on designing and implementing initiatives to develop social finance instruments and markets entitled A recipe book for social finance.
The Commission also supports social enterprise via the European Social Fund.
Measuring the social impact
Social enterprises aim to make a positive impact on society. One of their challenges is to make this impact visible and tangible and to measure it. There are plenty of measuring tools available, but the approaches are diverse and comparability is compromised. Therefore the Commission's expert group on social entrepreneurship (GECES) produced a report proposing key principles to be followed when measuring social impact:
Mapping social enterprises in the EU
In the Social Business Initiative, the Commission identified the need to obtain:
- complete information on the state and development of social enterprises in Europe
- evidence for further developing the policy framework
Therefore, the Commission launched an in-depth study on social entrepreneurship, mapping the reality of social enterprise in the 28 EU countries and Switzerland, using a common definition and approach. The study gives an overview of social enterprise ecosystems across countries, including factors constraining their development.
This study is a starting point for developing a comprehensive map of social enterprises in Europe. The situation changes rapidly and therefore an update was launched in 2016 with seven countries: France, Belgium, Spain, Italy, Ireland, Slovakia and Poland.
Mapping in 2013-2014:
- Executive summary in English, French and German
- Synthesis report
- Country reports
- Methodological documents
- Summary document: Developments in Europe (2016)
- Belgium, France, Ireland, Italy, Poland, Slovakia, Spain (2016)
- Austria, Germany, Latvia, Lithuania, Montenegro, North Macedonia, Serbia (2018)
- Croatia, Czech Republic, Denmark, Hungary, Iceland, the Netherlands, Norway, Portugal, Romania, Slovenia, Sweden, United Kingdom (2019)
Towards an enabling ecosystem
The Social Business Initiative invites EU countries to develop an environment which enables social enterprises to start and develop. In cooperation with the OECD, the Commission has published policy briefs, a compendium of good practices and in-depth country reviews, with policy pointers for those engaged in improving their national policy environments:
- Policy brief on Social Entrepreneurship
- Policy brief on Social Impact Measurement
- Policy brief on Scaling the Impact of Social Enterprises
- Compendium of good practices
- Country review: Croatia
- Country review: Czech Republic
- Country review: Netherlands
- Country review: Lithuania
The European Commission and the OECD have also jointly developed a Better entrepreneurship policy tool, which can act as a catalyst to improve entrepreneurship policies in a city, region or EU country. The tool covers the policies supporting entrepreneurship by people from vulnerable groups, as well as social entrepreneurship.