Social and Solidarity Economy: Our common road towards Decent ...

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SOCIAL AND SOLIDARITY ECONOMY ACADEMY Thompson & Doherty (2006), social enterprises are “organizations seeking business solutions to social problems”. For the International Labour Office (ILO) SETYSA project in South Africa, social enterprises are defined as: having a primary social purpose, which is clearly stated as its core objective; using a financially sustainable business model, with a realistic prospect of generating sufficient income to exceed costs and of having a significant proportion of its income from earnings (as opposed to grants or donations); being accountable to its stakeholders, with an appropriate mechanism to ensure accountability to beneficiaries and to measure and demonstrate its social impact. Social enterprises differ from the other types described above because they are not necessarily collectively owned. They also differ from profit-making enterprises because they do not solely aim to make financial profits but also seek to generate social benefits by virtue of the type of products or services that are marketed, the profile of the workers involved (e.g. low-skilled workers or workers employed under vocational integration schemes) and the allocation of the financial profits that are generated. Social entrepreneurship stresses that the entrepreneurial mindset and behaviour can be manifested anywhere (Dees, 1998) and that economic activity combines profitability and social change. In that sense, they are often hybrid organizations since they are doing business while promoting social values. They also are often characterized by a multi-stakeholder governance and ownership (i.e. gathering users, founders, funders, local authorities, etc.) that somehow guarantee the social purpose of the enterprise. Social enterprises are also characterized by an economic democracy. This economic democracy is often translated into limits in voting power and limits in return on capital shares (i.e. cap on distribution of profit and asset locks) (Nyssens, 2006). Since the 1990s, social enterprises are recognized legal forms in various countries. Some of these legal frameworks are clearly inspired by the cooperative type (e.g. the pioneer Italian law on Cooperative Sociali in 1991). Other legal frameworks were developed, such as the Community Interest Company in the United Kingdom and the Société à finalité sociale in Belgium. In Italy, the Consorzio Gino Mattarelli (CGM) gathers 1,100 social cooperatives and 75 local consortia. Social entrepreneurship is promoted by many networks and organizations such as the Ashoka Network and the Schwab Foundation, which have been launching major initiatives for several years to identify and encourage social entrepreneurs and social enterprises. Their approach of social enterprises is, to some extent, more open than other approaches (e.g the European approaches) or legal frameworks since they mostly stress the role of individual social entrepreneurs and their social purpose without other criteria related to the collective ownership or the distribution of surpluses that are particularly important from a social and solidarity perspective. LE MAT 4 READER
SOCIAL AND SOLIDARITY ECONOMY ACADEMY 1.2.5 Foundations Foundations may be qualified partly as components of the SSE; however, not all foundations operate in such a spirit. Some countries distinguish public benefit or charitable foundations from private foundations (Gijselinckx & Develtere, 2006). Public benefit or charitable foundations pursue non-profit, public-value goals and thus serve community interests. Private foundations also pursue non-profit goals, although they can be of a private nature which may or may not fall within the realm of the SSE. Furthermore, some authors consider activities that generate resources which are partially invested in philanthropic aims to be contradictory to a certain extent (these are often activities carried out by major multinational enterprises). The absence of participatory governance of most foundations and the classical criticisms levelled at this sector (including the presumed motives behind the creation of certain foundations such as marketing, tax evasion and vanity) (Prewitt, 2006) could provide arguments against affiliating foundations to the social economy. especially the democratic nature of their decision-making process. 1.3 Common features of SSE organizations 1.3.1 Objectives Despite the diverse organizational forms, social and solidarity economy organizations and enterprises (SSEOs) have common features that distinguish them from public and private enterprises and organizations. Academics, practitioners and policy-makers have relied on these features to identify these organizations and enterprises around the world. The main distinguishing feature of a social and solidarity organization is that it produces goods and services. This feature is particularly important to differentiate some associations that, for example, may only gather some friends to play football from a non-profit sport club that is providing sport lessons and training facilities to the public. Yet, some foundations are considered to be part of the SSE. An example is the European Foundation Centre (based in Brussels), whose mission is to strengthen the independent funding of philanthropic organizations in Europe. It unites over 230 organizations in 40 countries and explicitly includes its mission in the social economy. Another example is Social Economy Europe, a European network of cooperatives, mutual societies, associations and foundations. Its mission is to strengthen political and legal recognition of the social economy at the European level, and it explicitly includes foundations in its understanding of the social economy. The affiliation of foundations to the social economy remains an open debate and there is probably no definitive answer because of the variety and sometimes contradictory nature of the different legal forms of foundations. To distinguish the ones belonging to the social economy from the others, we should refer to the common features of the social and solidarity organizations and enterprises, Some definitions stress the fact that the purpose of the social economy is more about producing goods and services than maximizing profits. The slogan of the World Council of Credit Unions sums it up in a nutshell: “not-for-profit, not for charity, but for service”. Profits are essential for the sustainability and development of organizations and enterprises. But in SSEOs, benefits are not the primary goal, and their use or distribution must comply with specific rules inherent in the legal structures concerned and/or negotiated collectively by the organizations’ members. Of course, there is nothing to prevent SSEOs from generating surpluses. On the contrary, surpluses are necessary for the viability of these economic enterprises and organizations. But the differences between SSEOs and for-profit-making enterprises include that this objective is secondary; the way in which these profits or surpluses are produced (“near cost”); and the rules for redistributing them among the people who have helped to generate them by contributing labour, capital or any other resources. READER 5
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