The Social Business Initiative: social enterprises into the foreground

The Social Business Initiative: social enterprises into the foreground

Social Business InitiativeWe often hear people talking about them, but still there is not a definition upon which scholars and experts agree. However, when the discussion is about social business and social enterprises, we should take into consideration Muhammed Yunus, the Bangladeshi entrepreneur, pioneer of the microcredit and awarded the Nobel Prize for Peace. It goes without saying that his credentials are astonishing and he succeeded in listing a set of characteristics common to all social enterprises.
They are not-for-profit legal persons providing goods and services on a permanent basis, whose social element is intrinsic and they can either serve the community’s interest or the interest of its members. They are independent entities that are democratically managed through participatory models, which involve also the civil society.
We can easily imagine the benefits this kind of enterprises might bring both to the labour and product market and to the European community as a whole, and these benefits were thoroughly analyzed in May 2011, when the European Commission first launched the “Social Business Initiative (SBI)”. The aim was that of recovering the citizens’ confidence in the Single Market and to meet the expectations of the social business community throughout Europe. Not only. There were and still there are great expectations as regards the job-creation potential, the improvement of the work integration and the creation of sustainable models of business in an innovative way. Without the need to read between the lines, the SBI is directly linked to the goals of the 2020 Strategy.
For this reason, a series of workshops and roundtables were organized with a two-fold mission. On the one hand, they had to define the phenomenon of the social business and to present the advantages of fostering its economic presence in the marketplace. On the other hand, they had to list concrete proposals to be submitted to the European Commission. All this represented the preparatory work that led to the adoption of the “Social Business Initiative” in October 2011.
Surprisingly, most of the proposed solutions were embraced by the final text of the initiative and all the aspects that are related to the universe of the social business were tackled. Among them, we should recall the financial aspect, micro-finance, the European regulatory framework, the need for better visibility of social businesses and the education and capacity building topic.
First, in fact, the action plan of the SBI provides for the improvement of the access to funding. One of the most important hindrances for the social entrepreneurs is the mismatch between the supply and the demand sides, which obviously makes them less attractive when we speak about access to credit. Moreover, an insufficient clarity on both the European and the State laws on the matter and the continuous difficulty in setting up new microfinance institutions (MFIs) add big hurdles for the social enterprises willing to enter the marketplace and to offer innovative and useful services. Therefore, the SBI provided for a € 90 million financial instrument able to respond to the needs of the European social business community, together with the creation of a European regulatory framework for social investment and of the Progress Microfinance Facility, which was launched in 2010 and increased the availability of microcredit – loans below € 25 000. The funding will be allocated in the European Union programme for Social Change and Innovation and the European Social Fund (ESF) and the European Regional Development Fund (ERDF) will support the SBI’s projects in the Member States.
Furthermore, as usual when we talk about social innovation, the compelling need that everybody faces is to increase the visibility of the best practices. The SBI, thus, promotes the creation of a European platform and database, where social entrepreneurs and in general, the civil society might exchange replicable models of social entrepreneurship, fostering this way a mutual learning practice and transparency as a value.
Finally, from a legal point of view, the European Commission detected the need to review and reform the then-existing regulatory framework, with regards to the social business at large, in order to improve the capacity of individuals to orientate among the numerous and sometimes overlapping rules. The consolidation and simplification of the European laws has then become the fil rouge of the SBI, which moreover had the aim of enhancing the element of quality in awarding contracts, especially in the case of social and health services.
In sum, the Social Business Initiative represented in 2011 a courageous attempt of tackling a deficiency of the economic system that never promoted social businesses or even threatened their existence, because of the market rules. In this sense, the SBI might be the driving force for a drastic change that might put the social enterprises into the foreground. Doing this at the European level gives an added value to the whole initiative, because “public policies at the European level can help ensure that there is a real Single Market with a level playing field for all economic actors, including social businesses. EU level action represents a cost-effective way to collect in a structured way information on the nature, scale and dynamics of social enterprises and thus provide a basis for an unbiased political dialogue with Member States and stakeholders”.