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SESP Research Study on Social EnterprisesAnalysis of Social Enterprises in Austria, Bulgaria, Lithuania and Portugal Project Title SESP (Social Entrepreneurship Strategy

Planning) Deliverable Type Research Study Date of Delivery 21/03/2012 Author SARETAS – International Cooperation and

Research Network Related Work Package WP2

Abstract

providing the assessment of training needs.

The research study was implemented simultaneously in four countries: Austria, Bulgaria, Lithuania and Portugal. It was conducted in the period from December 2011 to February 2012.

The general aim of the SESP Project is to contribute to the development of Social Entrepreneurship across the EU by transfer of innovative products and processes and exchange of good practice. Therefore, during the SESP project, will be identified the driving forces for the development of Social Entrepreneurship in participant countries.

The SESP Research Study aimed at obtaining a clear picture of the state of the art of social enterprises in participating countries and of the conditions on EU level affecting their development, and

The sole responsibility for the content of this publication lies with the authors. It does not necessarily reflect the opinion of the European Communities. The European Commission is not responsible for any use that may be made of the information contained therein.

CONTENT

I

II RESEARCH METHODOLOGY

III DESK RESEARCH3.1 Definition on social entrepreneurship and social enterprises3.2 Legal framework3.3 The Case of Austria3.5 The Case of Lithuania3.6 The Case of Bulgaria3.7 The Case of Portugal3.8 Desk research conclusions

IV REPORT ON SURVEY OF SOCIAL ENTERPRISES4.1 Overview on the demographic data of social enterprises 4.2 Funding4.3 Meeting objectives 4.4 Support, advice and training

V

EXECUTIVE SUMMARY

CONCLUSIONS

VI ANNEX Social Enterprise Mapping Research Questionnaire

SESP Research Study on Social Enterprises 2

I EXECUTIVE SUMMARY

A positive aspect for the potential of social enterprise in studied countries is the high local social capital available, presented by the vibrant civil sector and relations with the local communities.

The opinion of the research provides clear image on the perception of the real capacity of the social enterprises and motivation for support and recognition of social enterprises conditions. The starting point of this study was to compare the different countries and discover the results that contribute to the direction of measuring the conditions and interest of the social enterprise sector, to investigate their participation in the activities and the problems they face during these activities.

Therefore, the SZREDA from Bulgaria in partnership with the MERIG from Austria, LearnAid from Portugal and SARETAS from Lithuania by the financial support from the European Commission took the challenge to examine the best practices of social enterprises' in 4 countries (Austria, Bulgaria, Lithuania and Portugal) and to investigate the potential support for further promotion of the social enterprise as innovative business model with social aim in the economies.

The specific goals of the research process were to:� Review relevant literature related to the issue of social enterprise;� Analyze the key characteristics of the social enterprises by taking general

experiences from Austria, Bulgaria, Lithuania and Portugal;� Assess the level of understanding among the social enterprises in� Austria, Bulgaria, Lithuania and Portugal about the concept of social enterprises

as well as their attitudes, perception and opinions about the relevant laws and problems they are facing related to the social enterprise or commercial activities;

� assess the types of problems and difficulties in the realization of the social enterprises;

� contribute to creating potential model for social enterprises training by providing detail needs of the social enterprises;

� Discuss conclusions and provide recommendations for further development of the social enterprise training.

It should mainly serve as background document to SESP project to tailor the activities within transfer of innovation framework and to plan the further transfer of knowledge in the social enterprise sector.

Additionally, the research study could be used by the policy makers for the purpose of better exploitation of the economic and social potential of the social enterprise sector, as foundation to the academics to further investigate the issue and contribute to the improvement of the findings with their valuable recommendations, as handbook to the representatives of the civil society sector while making their strategic decisions related to the sustainability of their organizations, as information source to businesses that would like to focus on social problems and explore the potential of a new business model and to all potential entrepreneurs that would like to serve the community.


II

III

RESEARCH METHODOLOGY

This study contains qualitative and quantitative information collected through the desk analysis and online questionnaire research conducted in a period of 3 months, from December 2011 to February 2012.In the final third phase all gathered data were synthesized into a single study about the social enterprise concept with recommendations that should improve the environment for operating social enterprise.

DESK RESEARCH

3.1 Definition on social entrepreneurship and social enterprises

As the concept of social entrepreneurship is spreading around the world, it attracts increasing attention from both academics and practitioners which are creating various definitions to further explain its meaning. The lack of a clear, concise and universally accepted definition (European Commission Enterprise and Industry, 2010), creates confusion and opens a debate whether this concept should be associated with the traditional model of not-for-profit organizations, civil society organizations running economic activities (for-profit or earned-income ventures) or the companies integrating social value creation in their business operations.Additionally, the lack of common understanding obstructs the comparison across Austria, Bulgaria, Lithuania and Portugal, and creates difficulties while trying to identify the best practices of enabling environment and existing best examples.

While in Austria the social enterprises have been developed and promoted by the civil society organizations as a response of social initiatives that have been founded in Austria since the early 1980s explicitly focus on three main objectives: offering employment opportunities, promoting (re)integration by means of training, achieving a good economic performance through a market-oriented approach, In Bulgaria and Lithuania the social enterprise concept arose as reaction to limited welfare provision by the state and high unemployment rate especially related to the disadvantaged and vulnerable groups as people with disabilities, ex-prisoners, poor, disadvantaged persons and etc also during the economic downturns.

This has further on influenced the definition and mission of the social enterprises in all countries. For example, in Austria there is no official definition in use but defined in a broader sense connected to the engagement in various fields of activities and have at their core, interests which are traditionally associated with the nonprofit sector. Similarly, Portugal social enterprise definition is closer linked to a third sector in economies between the private sector and business or, the public sector and government and is referred as Social economy rather than social enterprise unit.


Lithuania is one of a number of countries that has a national definition on social enterprise and in a broader meaning it is defined as providing employment opportunities especially for the disabled and the long-term unemployed who produce goods and services according to commercial principles.

Besides the country differences in definition of social enterprise, there can be identified some general characteristics that are describing the social enterprises in Austria, Bulgaria, Lithuania and Portugal:- Social mission/goal-Targeting people/groups in need- Various legal forms- Voluntary social work- Non-profit driven- In some cases, use the public funds

The legal form under which social enterprise are operating in the researched countries will not be taken as part of the working definition since the practice shows that they are operating under various legal structures. This will be discussed in more detailed in the chapter defining social enterprise characteristics.

3.2 Legal framework

It seems that Austria has the most vibrant social enterprise sector and the most supportive institutional structure for their development. Given the social, cultural background of Austria - and apart from sheltered workshops – right now there are no specific legal regulations with respect to organisations that are active in the sphere of social inclusion. The existing organisations in the social sector help to maintain the social cohesion, to reintegrate special target groups into work and/or society, to cover areas in which merely market-oriented organisations are not active and to offer complementary response to statutory measures¹.

As there are basically no restrictions or incentives to take a specific legal form, Austrian social enterprises may choose their legal form according to their requirements. Nevertheless, the following legal forms are commonly used by social enterprises in Austria:

• Associations• Private limited liability companies (Ges.m.b.H.)• Registered societies (Gesellschaft bürgerlichen Rechts)• Co-operatives

A special legal status for enterprises with a social aim has been developed in Austria only for sheltered workshops. These workshops offer regular employment to persons with disabilities (according to defined eligibility criteria) and function as special forms of limited liability companies within the framework of the Disabled Persons Employment


¹ Study on Practices and Policies in the Social Enterprise Sector in Europe, Austria, Austrian Institute for SME Research and TSE Entre, Turku School of Economics, Finland, Vienna 2007.

Act. Thus, additional subsidies for these companies are guaranteed directly by the state².

The Portuguese SE is legally present as: mutual, cooperatives, foundations, Particular Institutions for Social Solidarity (IPSS), charities, other non-profit association. The legal framework of SE sector is inadequate, including pioneers companies of social economy, particular firms for social insertion. There are missing legal figures more appropriate.Following the example from Lithuania, it has adopted the Law on Social Enterprises and which predetermines the legal form of a social enterprise. This Law made base for legal persons seeking to obtain the status of social enterprise and also defined the target groups of persons who can be employed in that kind of company. Social enterprise is not a new legal form of companies, rather it is a legal person which is established in the Republic of Lithuania, has acquired this status in accordance with the procedure laid down by Law and fulfils certain conditions to receive the benefits.

However, Bulgaria is lacking behind with no legal definition of social enterprise, nor are there any rules that regulate their status, form and activities. A Bulgarian legal act where the term “social enterprise” is used still does not exist.The policy actions across these countries are showing that the supportive legal structure is one of the core drivers for development of the social enterprise sector. In most cases there are regulations affecting specific legal forms of social enterprises as “sheltered workshops” or “work-integration initiatives”, but there are also cases where the laws are targeting social enterprises as a concept as:

- specific legal framework on social enterprises has been established in Lithuania (Law on Social Enterprises)

- legal measures that are supporting social entrepreneurial work or specific forms of social enterprise as in Austria (Law on Sheltered Workshops that offer work integration of disadvantaged persons), Portugal (Sheltered employment aims a social and economic integration of disabled people).

In the legal context it is worth mentioning the legal acts that smooth the progress of socially entrepreneurial activities as:

- tax exemptions (exemptions from income tax or payroll taxes) as in Austria (entities operating in specified fields as healthcare, care for old and etc are tax exempt), and further on in Bulgaria (the Law for the Integration of People with Injuries where exemption from the corporate income tax can be granted, depending on the share of disabled workers among the employees), Lithuania (companies that employ disabled persons are exempted from payment of tax on paid salaries).

- direct financial support in a form of institutional grant as in the cases of Austria ( N a t i o n a l c o f i n a n c i n g ( P u b l i c E m p l o y m e n t S e r v i c e , province/cities/municipalities, State Office for Social Affairs), Portugal (Government gives subsidies to private institutions of social solidarity which in most cases cover 60% of the operating costs)


² Study on Practices and Policies in the Social Enterprise Sector in Europe, Austria, Austrian Institute for SME Research and TSE

Entre, Turku School of Economics, Finland, Vienna 2007.

- indirect financial support linked to the wage subsidies as in the cases of Lithuania (support granted by the State to the employer that must be a non-for-profit organization in a form of wage subsidy and social security contribution according to the Contract for the future and Contract for the Work).

3.3 The Case of AustriaSocial economy has become a major economic sector in Austria³. In 2008 about 6,000 companies worked in the social economy sector. It provided jobs for 138,000 people and generated € 4 bn. in revenues, a figure that is steadily growing . The social and health sector is on the fifth place concerning aggregated value added in Austria, its share being 6,24 %. 8.8 % of all employees work in this sector. The share of women is very high amounting to 77 % .

The two types of social enterprises in Austria (socio-economic enterprises, SÖB and non-profit employment projects/companies, GBP) share same characteristics. The target groups of SÖB and GBP in Austria are people experiencing discrimination on the labour market: long-term unemployed, disabled people, young people with social handicaps, women above 45 and men above 50, women after a family break, groups like the homeless, alcoholics, drug addicts, released prisoners etc.

In their organisational purpose and conceptualisation SÖB und GBP are very similar, but they focus on different target groups and are mainly financed by other governmental agencies. The main target group of SÖB are long-term unemployed people; that of GBP are (physically and/or mentally) handicapped people. There exists a variety of other, more or less similar or different programmes in Austria, which are intended for (unemployed) people with considerable difficulties (former drug addicts, the homeless, ex-prisoners, psycho-social disadvantages, disabilities), but they have a less high degree of “business character” and/or differ in organisational and legal forms from SÖB. All SÖB and most GBP are continuously producing goods and/or selling services.

In Austria there exist also sheltered workshops for persons with disabilities. Sheltered workshops are profit-making organisations which employ disabled workers with the aim of integrating them in the labour market.

In the area of social service provision, social welfare associations have a longstanding tradition in Austria, in particular those large voluntary organisations that are affiliated either to political parties or to the churches. Apart from the general reimbursement and/or subsidies they receive from regional governments, these organisations have used the opportunity of the Public Integration Allowance (GEB, Gemeinnützige Eingliederungshilfe) offered by the Employment Service (AMS) to co-finance additional or new kinds of services. Smaller initiatives and new associations have also been given the chance to develop innovative services by means of the GEB.


³ So sozial wie wirtschaftlich: Sozialwirtschaft in Österreich, Dokumentation über den 1. Kongress der Sozialwirtschaft in Österreich und die Kampagne des Netzwerk Sozialwirtschaft, Vienna 2005.

http://www.statistik.at/web_de/statistiken/index.html

Volkswirtschaftliche Gesamtrechnung, Hauptergebnisse, Daten für 2008, Statistik Austria, Vienna 2009.

Close to all non-profit social service providers in Austria receive public funds. The three most important types of public funds are grants, reimbursements from the social insurance agencies and - becoming more important in recent times - revenues from service contracting.

In 2000 there were 59 SÖB offering 1,700 temporary workplaces; in the course of the same year, a total of 3,888 workers belonging to the target groups were employed and trained in these workplaces. SÖB employed 455 professionals and generated an own income of € 21.6 mio. Public funding accounted for 63 % of resources.

In 2000 there were also 120 GBP, offering around 1,900 workplaces for temporary employees; in the course of the same year, 2,720 workers belonging to the target groups were employed and trained in these workplaces. The GBP employed 475 professionals and generated an own income of € 14.4 mio. Public funding accounted for 73 % of the resources.

Quantitative information about Austrian social services is very scarce, given that most of their activities are not subject to the statistical reporting of the Federal Statistics Agency. Nevertheless available data states that social service organisations employ 53 % of all employees (approximately 100,000 persons) in the non-profit sector, contribute about a third to its total value added (32 %), while only 14 % of all organisations were engaged in this field.

3.5 The Case of LithuaniaIn former communist countries, during the socialism era, the development of the voluntary sector has been stopped and private co-operatives substantially lost power. The former communist countries today see the establishment of social enterprises as a possibility to fill the vacuum that has been left after the state rapidly withdrew its responsibility of the social sector after 1989.

In Lithuania social enterprises are social mission driven organizations which apply market-based strategies to achieve a social purpose. The movement includes both non-profits that use business models to pursue their mission and for-profits whose primary purposes are social. Many commercial businesses would consider themselves to have social objectives, but social enterprises are distinctive because their social or environmental purpose remains central to their operation.As in most Europe, in Lithuania rather than maximizing shareholder value, the main aim of social enterprises is to generate profit to further their social and or environmental goals. This can be accomplished through a variety of ways and depends on the structure of the social enterprise. The profit from a business could be used to support a social aim, such as funding the programming of a non-profit organization. Moreover, a business could accomplish its social aim through its operation by employing individuals from disadvantaged backgrounds or lending to micro-businesses that have difficulty in securing investment from mainstream lenders.

Many Lithuania non-profit organizations see social enterprise as a way to reduce their dependence on charitable donations and grants while others view the business itself as the vehicle for social change. Whether structured as nonprofits or for-profits, social


enterprises are simply launched by social entrepreneurs who want to improve the common good and solve a social problem in a new, more lasting and effective way than traditional approaches.

In Lithuania, the social entrepreneurship concept is yet very new, but a number of innovative projects already tackle social problems applying market-based strategies. The most prominent are the salad bar Mano Guru, Not a Shop (a charity store), ) (a food charity organization), aukok.lt (a donations portal) and a number of other initiatives.

In 2010, the Commission for the Affairs of Social Enterprises under the Lithuanian Labour Exchange analysed 37 applications of legal entities for the status of a social enterprise. The status of a social enterprise was granted to 28 companies, out of which 14 were granted the status of a social enterprise, and 14 – the status of a social enterprise of the disabled. Social enterprises are administered by 9 territorial labour exchanges. The majority of companies are established in Vilnius, Kaunas and Klaipėda. At the end of 2010, 130 social enterprises operated in Lithuania, out of which 90 enterprises were social enterprises of the disabled. A total of 3,600 employees worked in social enterprises, out of whom 2,500 (68.6 percent) belonged to target groups. By applying state social support funds, social enterprises subsidised wages of 128 assistants, who assisted 709 disabled persons in performing their job functions. These enterprises received LTL 24,200,000 of the state support, out of which LTL 6,700,000 were allocated by the state budget and LTL 17,500,000 originated from the European Social Fund.

Throughout Lithuania, social enterprises that (re-)integrate disadvantaged persons into the labour market or provide work places for people with special needs (disabled, long-term unemployed etc.) seem to be the type of social enterprise that receives most attention by policy makers. The measures under the activities of this type of social enterprises can be categorised as follows:

• o income transfers in form of subsidised services targeted to the persons of low income or bad labour market position • o sheltered work in various forms • o subsidising work in the open labour market (subsidies allocated either to the disabled or to the employers)

Social enterprises seem to be of rather small size and most often act at a local level (often under regional or local competency). There is also variation between those groups to whom these measures are targeted (disabled, unemployed, ex-prisoners, poor, disadvantaged persons etc.). Thus, the promotion and development of social enterprises concerns both the sectors of social policy, employment policy and industrial policy.

Over a period of two and a half years, six business encouragement centres for disabled people have been established in the main cities of Lithuania. Specially trained consultants provide a range of services in these centres. The counselling service includes business planning, development of social enterprises, information on financial sources for business and advice on the physical adaptation of premises for people with disabilities. The centres also offer administration services and training courses, as well


as job-searching techniques and mediation regarding employing people with disabilities.

3.6 The Case of BulgariaThe concept of social enterprise is not integrated into policies, laws and public debate in Bulgaria. The organizations that are mainly involved in community development and are the closest to the concept of social enterprises are NGOs with different profiles, social service providers, chitalishtas (public organizations that combine different functions, for example, library, theater, school for dancing, music, foreign languages, various interest-based clubs, etc.) and cooperatives. NGOs that are social service providers and training organizations, together with cooperatives of people with disabilities, currently form the community enterprise sector in Bulgaria.

Social service providers owned by NGOs have seen the opportunities for labour therapy, production of goods by their clients, combined with the need for additional funds and are now looking at social entrepreneurship as a way to improve the financial and integration performance of their organizations.

A division on structural, legal and organizational basis is made – the description of SE sector is divided into two main parts – SE-NGOs and SE-Cooperatives.

SE-NGOsThe most popular model of SE-NGO is the model of employment creation and development of work force. In this model the economic logic of the business initiative is based on the opportunity to create new work positions for the target groups. Frequently this model is related with the so called protected employment where the SE is employer of people with disabilities.

The main activity fields of SE-NGOs in Bulgaria are three: social services; health and prevention services and training and educational services. Except from that, often SE-NGOs transform to employer of people in vulnerable social position independently from the field of their activity.

According to the current data, 820 private providers of social services are registered and exist in the database of the Ministry of Labour and Social Services. There are no statistics about the number or the percentage of the organizations developing additional economic activity. This fact is due to the lack of official state policy in favour of social entrepreneurship which leads to lack of any official statistics about the development of this sector in the state. It is considered that the encouragement of the social services decentralization is the first step for promotion of social entrepreneurship. Nevertheless, according to all SE interviewed for the purposes of this research, still there is no state awareness and strategy for promotion of the social entrepreneurship and its definition in the national legislation.

The provision of training and educational services is among the key sectors for social enterprises in Bulgaria. This is becoming a major income generating activity for the social enterprises that have to constantly invest in improving the quality of their services. The “Open Society Club Training Center” in Ruse has added language training courses


to diversify their services. Recognizing the need for various language proficiencies and skills, as Bulgaria joins the European Union, the social enterprise training providers hope to increase their business competitiveness through diversification of the training courses.

SE CooperativesNot all cooperatives in Bulgaria have a social or an altruistic mission. The main function of the cooperatives is the promotion of the economic interest and the income of the members. Almost any kind of group is allowed to establish a cooperative with the purpose to protect certain common interest, to develop their field of activity or related activities.

SE Cooperatives have completely social character and support the prosperity, the interests and necessities of its members. The concrete activities of the cooperatives are aimed at:

� Labour readjustment of its members and creation of permanent employment of the members;

� Redistribution of dividends between the members; � Professional and financial support in starting own business, vocation, granting of

commodity loans and collaboration in finding trade building;� Support by provision of social services; � Provision of special services for people with physical or mental disabilities or with

financial problems;� Provision of legal, methodological, technical and medical help of the members in

relation to their rehabilitation and integration in the society as well as protection of their rights and interests.

Cooperatives may receive funds or incomes through different ways, most of them are even officially recognized by the law. According to Art.30 of the Cooperatives Act income sources of a cooperative are as follows:

- Admission payments of the members - Share payments of the members - Additional and specific payments of the members - Income of the activity - Loans - Other incomes

3.7 The Case of PortugalThe Social Economy is permanently looking for a balance between economic growth and social cohesion. The Portuguese's SE are presented as: mutual, cooperatives, foundations, Particular Institutions for Social Solidarity (IPSS), charities, other non-profit association. Social Enterprise in Portugal represents 4.5% of the GDP and 250.000 full-time workforces. In a total of 4090 Social Enterprises there is none registered as an association, 350 foundations, 400 charities, 80 mutuality associations, 3260 cooperatives.



Portuguese's SE acts (as similar in other countries) in the community sector (organizations active on a local or community level, usually small, modestly funded and largely dependent on voluntary, rather than paid, effort; in the voluntary sector (includes the organizations that are formal, namely having a constitution, independents of government and self-governing, not-for-profit and operate with a meaningful degree of volunteer involvement; the social enterprise (organizations which are business with primarily social objectives whose surpluses are principally reinvested for that purpose in the business or in the community, rather than being driven by the need to maximize profit for shareholders and owners).

The social economy spans economic activity in the community, voluntary and social enterprise sectors, including employment, financial transactions, and the occupation of property, pensions, trading. The social economy develops because of a need to find new and innovative solutions to issues (either they are socially, economically or environmentally based) and to satisfy the needs of members and users which have been ignored or inadequately fulfilled by the private or public sectors. Being so, Portuguese's SE achieves a high level of effectiveness in reaching the target groups and beneficiaries. This high level of effectiveness inhibits the conscience of the need either of dissemination or exploitation results and procedures once the SE are created to support the needs of a particular target group and achieve it. It seems possible to conclude that, in Portugal, the need of dissemination and exploitation of results and good practices are a present issue.

CEPs and Enclaves are juridically and economically autonomous but they are subject to the tutelage of the Ministry of Social security and Labour, namely in evaluation of the working conditions, fiscalisation and control of the initiatives as well as of the supports they receive and in the respect of the defined rules. Most Enclaves and CEPs have a high degree of financial autonomy, depending on state subsidies in an average about 30%, being the selling of products and services the main source of resources. Sheltered employment has a continuous activity producing goods and/or selling services. The main impact in the local community is the satisfaction of needs of local consumers (private people, schools, enterprises, etc).

The main external factors affecting the outputs and results of the social enterprises are related with Technical/professional skills and also to socio/legal/institutional questions as absence of supportive services in the market targeted to the social economy enterprises needs, like in the following areas: Management and work organisation consulting, financing, juridical, marketing, discovering new markets; tailor made training; structured offer addressing the specific profiles of the social economy, in particular at leaders, intermediate leaders and technical staff levels; contacts and partnership with key-actors; relevant information on programmes and incentives for specific publics.

3.8 DESK RESEARCH CONCLUSIONS

Austria:There is a good chance for growth of social enterprises in the area of social service delivery if both sides - social enterprises themselves and the state - agree on their


mutual benefits and shortcomings. On the one hand, the evolution of a regulated “quasi-market” equal for all actors would be necessary to reduce bureaucracy, hierarchical dependencies and financial constraints. On the other hand, a debate on social enterprises with respect to their specific status, e.g. a debate about a legal regulation for social enterprises, could help to develop common strategies and guidelines. The fist steps have been taken in Austria in both directions but it will still take time, organisational learning and political will for social enterprises to find their identity in a well-balanced welfare triangle in Austria.

Bulgaria:To wind up, despite all difficulties, it is plausible to assume that there is potential and future for community enterprises (be it social firms, cooperatives or other forms of enterprise) to thrive. When the legal and tax issues have been solved, and when the states agrees on state policy for social enterprises, and when the NGOs actually become more business oriented, then we have a good basis for fast growth of social enterprises. The reasons for this conclusion are as follows:

� High capacity of NGOs and human capital � Evolving coordination of activities in the field� Diversification of community social services� Evolving experience of entrepreneurship� Good European practice for truly sustainable social services� EU funding available� Some good examples of successful social businesses

Moreover, good European practices are fast in reaching the Bulgarian non-for-profit organizations, setting an example of sustainable social businesses, inspiring people from Bulgaria to venture into this new business model themselves. All this backed up by right legislation and state policy, plus EU funds and other income sources, starts to shape a better looking future for community firms in Bulgaria.

Lithuania:Lithuania may serve as an example of the restructuring process that the new EU Member States and some candidate countries currently undergo and of their political position towards social enterprises. In Lithuania, the state seems to have a rather narrow view of social enterprises, focusing on small businesses which employ people from the target groups, as reflected in the Law on Social Enterprises. In the case of NGOs, some of which are similar to social enterprises as they are defined in other EU countries, their relations with the government are rather weak. This causes a lack of favourable legislation regulating NGOs activities. Due to the weak links with the public, Lithuanian people lack awareness and understanding of the NGOs' role in dealing with social problems.

Portugal:It should be noted that these organisations do not feel much need for social marketing because they are based to respond to needs in the community and usually cannot respond to all. The managers of organizations of ES often expect to obtain recognition for their social work. In some places there are problems in keeping the managers


because they do not feel this recognition inthe community. The training is scarcely used and when performed is organized by someone external. Programs with strong components of individual consultancy and training along with some workshop / seminars seeking global areas of the management are desirable. Train SE business coaches so that they can be able to assess to specific needs and know the main barriers to change before the training is delivered. We first have to unlock the way of thinking so that managers can effectively change management skills. As many of the workers involved in social economy organizations, sounds not only poorly paid but have few qualifications (academic and professional) is desirable to allow the establishment of bridges with the new opportunities centers, where possible and desirable.

REPORT ON SURVEY OF SOCIAL ENTERPRISES

4.1 Overview on the demographic data of social enterprises

The overview on the current conditions is focused on those that are influencing the work of the organizations in the third sector, are regulating the work of the enterprises or address some area of interest for the social enterprises.

IV

Who owns the organisation?

Are the majority of the organisation's members/management (i.e. more than 50% of the members) from the following groups?

The survey results acknowledge the diversity among social enterprises. Among all interviewees, the most common management group is referred to women or could be characterised as service users led.

0% 20% 40% 60% 80% 100%

Community

Individuals

Local Authority

Members

Partners

Shareholders

Trustees

Austria (12)

Bulgaria (19)

Lithuania (19)

Portugal (25)


Who are your beneficiaries?

The survey from 4 European countries reveals how they defined the end beneficiaries of their social enterprises. Not surprisingly given the current choice on the subject, their responses varied, offering an illustration on a scale of the fragmentation in the sector. What follows is a summary characterizing the types of responses members gave.


Which of the following services do you deliver (main services only)?

The report shows that social enterprises frequently operate across sector lines and fuse values and methods from different sectors. Indeed, these hybridized enterprises have contributed to dissolving the boundaries between the for-profit and not-for-profit sectors and range in variety of activities across different sectors as shown below. It seems that Bulgaria, Lithuania and Portugal have the most vibrant service in community development and mutual aid, closely followed by education and lifelong learning.

4.2 Funding

It is difficult to distinguish the most dominant form of formal financing of social enterprises in the countries, however the top 3 are central government funding, European funding and membership fees. Bulgaria and Portugal stand out with other important financing form – loans, most likely from the banks which are focused on financing of micro, small and medium-sized enterprises. In the last couple of years, there is a flow of credit lines that are distributed through their own facilities or through commercial banks.

Low support from financial institutions for social enterprises, forces entrepreneurs to look for alternative sources of finances at the non formal market as its own resources, finances from the close friends and family, joint ventures etc.(percentages given on the chart below).


So far, social enterprises have been unknown to the financial institutions. Therefore this form of enterprises will be treated as the same as other businesses, which means can get a bank loan at commercial interest rate by submitting a business plan for a great business idea that minimizes the investment risk (to promise high return on investment) and a guarantee (collateral) that covers the requested loan. For example in Lithuania if the social enterprise is established as non-governmental organization that doesn't have a property it would hardly be considered by the banks as eligible client for a loan to start a business. As we will see later in the report, only majority of Austrian organizations hold the business plan.

Some of the social enterprises (Austria 36%, Bulgaria 41%, Lithuania 33%, Portugal 43%) are in development of commercial activities from the services that are already in practice towards their target groups (as training, courses, education, health services, legal aid, psychological support, rent of equipment etc), that can be sold and use the money for social purposes/programs. The detail list of the services offered is shown in the results table below:


4.3 Meeting objectives

Thinking back over the last 12 months, to what extent do you think your organisation has been successful, or not, in meeting its main objectives?

Country Do you have a product that you sell which generates you

an income?

Product

Yes ( 36% )

1. Only marginally (ca. 3 % of revenues) the following services are sold: evaluations, workshop conceptions and moderations 2. Construction and maintenance works, self-made products (bags, wood) 3. Workshop and training courses 4. Course fees

Austria

No (64%)

Yes ( 41% )

1. Knitwear and souvenirs 2. Honey and other bee products, training and consulting; IT services, social advertising and social marketing 3. Products of type "Patchwork" 4. Tailoring products and services and electrical repair services 5. Making traditional costumes and requisites

Bulgaria

No (59%)

Yes ( 33% )

1. Training costs 2. Jewellery 3. Clothing

Lithuania

No (67%)

Yes ( 43% ) Portugal

No (57%)


Thinking back over the last 12 months, has your organisation had sufficient or insufficient of the following resources to meet its main objectives?

The survey report shows the context what is needed by social enterprises to gain its value and credibility at the national level. A relatively large proportion of respondents mentioned the lack of financing as one of the main sources to build their capacity to operate effectively. Except for Austria, all other countries have stated the enquiry for a lot of hand-holding and that would work best in a form of training, facilitating advice and support or information and communication advice which is needed by the organisations to do the necessary work themselves. Support doesn't always need to be intensive, one-to-one and tailored to particular organisations. Resources targeting a particular phase of development can be designed for use by a variety of organisations. Working with teams, rather than individuals, helps social enterprises establish themselves as viable organisations from an early stage.

Austria:


Bulgaria:

Lithuania:


Portugal:

Looking forward over the next 12 months, how confident, or not, are you that your organisation will be successful in meeting its main objectives?

Regarding the capability to meet its own objectives, there is approximately equal level of consent among confident and not confident respondents. Namely, the major part of Austria representatives (more than 80%) examined, agreed that the organization is quite capable to achieve successfully its main objectives. Likewise, those that showed consent with the negative attitude (Bulgaria 40%, Portugal 52%) considered themselves to be in difficult position to achieve the social enterprise aims.


4.4 Support, advice and training

Overall, how satisfied or dissatisfied are you with the support available to your organisation?

How would you rate the support available from all bodies to help your organisation to do the following . . . ?

Austria:Austria deals mainly with a lack of support from all bodies in the area of the financial reserves but also human resources such as finding volunteers for the organization. Austria is the mostly satisfied country with the support available to the social enterprises to do work efficiently, compared to Bulgaria, Lithuania and Portugal.


Bulgaria:Bulgaria stands out with the highest proportion of the negative support from the bodies related to the social enterprises, if compared to other countries. The bodies that provide a range of support mechanisms are not sufficient, especially in the field of general advice and support, training and maintaining financial status. There is a high need targeting the specific organisational needs which can help social enterprises move towards greater social impact and financial sustainability. Such an approach could be facilitated by the focus on specific social sectors.

This is an important insight to support and provide continuity and carry the lessons from one stage of growth to another, helping ensure that the learning in the organisation is not lost once their support has ended. The overall support could help overcome resistance to change in social enterprises seeking to become more entrepreneurial; it can help it embrace a future that includes a lasting commitment to the principle of earning income.

Lithuania:In Lithuania, social enterprises are likely to need financial and non-financial support for significant periods of time. In countries like Lithuania, where there is no variety of funds to operate therefore a support addressing different methods of financing and applying for financing should be in a plans to support social enterprises. One of the support mechanism could be to set up social enterprises with revenue-generating activities, enabling them to better achieve social change, therefore to become less dependent on external fundraising.


Portugal:For Portugal, compared to other countries, finding the right people to fill roles in a growing social enterprise comes up as one of the challenges according to survey report. Outside consultancy advice and support can help fill gaps in expertise, but not indefinitely. In the longer term, business know-how needs to be a part of the organisation. Just as the inspirational social entrepreneur is key to the early days, the team is crucial as the organisation scales up. Education is needed to get good applicants coming through. There's a role for business schools in promoting this area.

What barriers to growth does the organisation face?

Although the access to funding remains at the top of barriers to achieve success, all other barriers might be influenced by lack of knowledge and capacities to run activities related to social enterprising, lack of education of the employees and volunteers about the possible ways for realization of such activities, lack of courage and integrity to operate in this area.


What types of support would you require?

Regarding the conclusions for support needed, the answers of the respondents' ranges across the options, however it is possible to notice the appearing trend for the knowledge and skills needed in social enterprise sector. Austria's respondents highly require funding advice and knowledge of policies; Bulgaria, Lithuania and Portugal have need of more business related support such as training or overall management practices involving marketing and operating skills. Moreover, there must be an in-depth support for the legal framework related to the possibilities to run commercial activities which have been highly selected by all countries.


What skills training would you need to achieve your goals and/or increase the performance of the organization?

Their perceptions of training need resonate among the respondents demonstrating that the development of social enterprises is influenced by a large number of enquiry factors such as social enterprise leadership, social enterprise marketing and finance, to name just a few. However, the need for business management principles training distinguishes itself among the other social enterprises training needs.


Drawing from the research results, Austria (82% of the social enterprises in Austria have a business plan vs 73% in Lithuania) and Lithuania is leading the example of encouraging social enterprises to have business plans. The support measures were adopted in Lithuania by creating the competition “Verslauk” to create business plans with social mission and was to motivate the young people to find new business models that will help them to become self-employed, to improve their entrepreneurship skills by practicing business planning and help them establish the business by providing small amount of seed money as a main prize. The creation of the centre or e-learning centre where people can get practical trainings to improve their skills and knowledge of social enterprises would be a highly valuable initiative.

Does the organisation have a business plan?

YES NO Austria 82% 18% Bulgaria 37% 63%

Lithuania 73% 27% Portugal 50% 50% Do you monitor your social objectives?

Austria 100% -

Bulgaria 81% 19% Lithuania 47% 53% Portugal 50% 50%

Does your organisation have a Green Policy?

Austria 36% 64% Bulgaria 25% 75%

Lithuania 20% 80% Portugal 38% 62%


Would your organisation use a social enterprise support service/business advisor in the future?

The majority of respondents have interest to use service/business advisors on various topics that are going to stimulate further development of their business.

V. CONCLUSIONS

The desk research review has shown that there is no universal definition of social enterprises but there are some common characteristics that are combining the entrepreneurial, economic and social dimension of the social enterprise in four countries Austria, Bulgaria, Lithuania and Portugal:

� A growing activity to produce goods and/or selling services� Mainly independently managed� Combine monetary and non-monetary resources such as well as paid workers

and volunteers which means a minimum amount of paid work � Has an explicit aim to benefit the community � Launched by a group of people that have common aim or needs� The nature is participatory, which involves the persons affected by the activity� Limits are set on profit distribution

Further on, the practices from Austria, Bulgaria, Lithuania and Portugal are showing that social enterprises can have various legal forms and they can operate under any legal form (cooperatives, associations, foundations, private limited companies) each one with its own benefits and limitations. But in most of the cases where they are clearly defined as social enterprises therefore they enjoy recognition by the society.

Drawing lessons about various supporting measures for social enterprise practiced in Austria, Bulgaria, Lithuania and Portugal, it can be concluded that the support have a key role in the development of the social enterprise sector referring to governmental support as tax exemptions, financial support, local support structures (associations, agencies, incubators, start up support centres) and etc.

It should be noted that financial capacity of the social enterprises mostly depends on its members initiative and efforts to obtain and manage adequate resources.

To generalise the results, the below chart draws on the overall training needs in order to achieve organisation goals and/or increase the performance (the results are based on average calculations of Austria, Bulgaria, Lithuania and Portugal individual numbers).

Summing up, it is important to develop a learning structure that will provide relevant expertise and support to the social enterprises. For the purpose of making serious step forward systematic training should be developed:

� Simultaneous and parallel practice of more activities such as training, project preparation, lobbing in business, change in legal regulations, informing the public through media etc may in few years lead to bigger progress.

� Insufficient organized access, not having complete image and capacities built, deficit of assets for promotion of social entrepreneurship are stressed as problems, and therefore there is a need to develop marketing tools to strengthen the image of social enterprises.

� It is necessary to provide full analysis of the good practices from the social enterprises, development of programs and plans for implementation of the social entrepreneurship from more advanced countries such as Austria, understanding of social problems and efficient system functioning for the purpose of providing better life quality for the citizens.

� o provide technical training support on various grant competitions and how to get benefit from EU Funding opportunities



ANNEX A

Social Enterprise Mapping Research Questionnaire

Social Enterprise Mapping Research

Gaining insight from the data

These data should give you a good picture of what social enterprises in Austria, Bulgaria, Lithuania and Portugal are thinking. Some answers may be more revealing than others. Used alongside dialogue within the desk research (already implemented at the country levels) of knowledge of local context, this information can be used to understand the management style, problems, main issues and major training needs faced by social enterprises. Questionnaire content

The questionnaire consisted of 5 sections, as detailed below:1. About the organisation (questions on the organisation's users and clients, area of work, roles and areas of activity);2. Funding / income;3. Meeting the objectives;4. Support, advice and training;5. Relationships and partnerships.

QUESTIONNAIRE

ABOUT THE ORGANISATION

Do you consider yourself to be a 'social enterprise'?

Yes

No

1.


Who owns the organisation?

Community

Individuals

Local Authority

Members

Partners

Shareholders

Trustees

Other________

Are the majority of the organisation's members/management (i.e. more than 50% of the members) from the following groups?

Disability led

Ethnic Minority led

Men led

Women led

Gay / Lesbian led

Service User Led

Other 'community of interest group'

None of these

Other_______

Number of staff:

Full time staff ________

Part time staff ________


Women

Children (aged 15 or under)

Older people

Men

People with physical disabilities and / or special needs

People with particular physical health needs

People with learning difficulties

People from Black and Minority Ethnic communities

Young people (aged 16 to 24)

People with mental health needs

People with a particular financial need (including poverty)

Asylum seekers / refugees

Homeless people

Faith communities

People with addiction problems (e.g. alcohol, drugs)

Other charities, social enterprises and/or voluntary organisations

Offenders, ex-offenders and their families

Victims of crime and their families

Socially excluded / vulnerable people

Animals

Developing world beneficiaries

Carers / parents

The general public / everyone

Other (please write)_________

Who are your beneficiaries?


Community development and mutual aid

Cohesion / civic participation

Culture (including arts and music)

Leisure (including sport and recreation)

Economic well-being (including economic development, employment and relief of poverty)

Accommodation/housing

Education and lifelong learning

Training

Environment / sustainability

Equalities / civil rights (e.g. gender, race, disabilities)

Health and well-being (e.g. medical, health, sickness, disability, mental health, counselling5)

Heritage

International development (e.g. overseas aid, famine relief)

Religious / faith-based activity

Criminal justice

Animal welfare

Capacity-building and other support for other charities, social enterprises and/or voluntary organisations

Other charitable, social or community purposes

Delivery of public services (e.g. social housing, health care, day centre, counselling, community safety, education, childcare)

Delivery of other services (e.g. business services, financial services, manufacturing, community support, sports coaching/club, recreation)

Which of the following services do you deliver (main services only)?

What are the main roles your organisation undertakes?


Buildings and/or facilities (e.g. community centres, village halls, religious buildings but NOT social housing)

Advocacy, campaigning, representation, information or research

Capacity building and other support to charities, social enterprises and/or voluntary organisations (e.g. acts as a coordinating or resource body)

Grant makers (e.g. make grants to individuals or organisations)

Provides other finance

Provides advice to individuals

Helps people to access services or benefits

Emotional support/befriending

Provides staff and/or volunteers

Advancing religion and / or spiritual welfare by supporting religious or spiritual practice

Advancing cultural awareness

Other ______________


2.

Please answer in percentages rather than actual figures.

FUNDING

What were the main sources of income in the financial year of 2011?

%

Business Donations

Central Government Funding

Charitable Trusts

Contracts / Service Level Agreements (Local Authority / Private

Sector)

European Funding

Grants

In Kind

Individual Donations

Loans

Membership Fees / Charges

Property Income

Sale of Goods / Services (direct trading)

Other (please specify)______________

Do you have a product that you sell which generates you an income?

If yes, please describe....................................................................................................

Yes

No


3.

Please put a cross in one box only

MEETING OBJECTIVES

Thinking back over the last 12 months, to what extent do you think your organisation has been successful, or not, in meeting its main objectives?

Very successful

Fairly successful

Not very successful

Not at all successful

Don't know

Thinking back over the last 12 months, has your organisation had sufficient or insufficient of the following resources to meet its main objectives? Please put a cross in one box per row

Sufficient

Insufficient Not

applicable

Overall level of income from all sources (including

grants, earned income and fundraising etc.)

? ? ?

Management and leadership staff ? ? ?

Paid staff ? ? ?

Volunteers ? ? ?

Training ? ? ?

Space to operate (e.g. office space) ? ? ?

Advice and support ? ? ?

Information and communication technology ? ? ?

Networking opportunities ? ? ?

Financial reserves ? ? ?


Looking forward over the next 12 months, how confident, or not, are you that your organisation will be successful in meeting its main objectives? Please put a cross in one box only

Very confident

Fairly confident

Not very confident

Not at all confident

Don't know

Not applicable

4. SUPPORT, ADVICE AND TRAINING

Overall, how satisfied or dissatisfied are you with the support available to your organisation? Please put a cross in one box

Very successful

Fairly satisfied

Neither satisfied nor dissatisfied

Fairly dissatisfied

Very dissatisfied

Don't know

How would you rate the support available from all bodies to help your organisation to do the following . . . ? (By support we mean advice, guidance, training etc. but excluding funding). Please put a cross in one box per row


Very

satisfied

Fairly

satisfied

Neither

satisfied nor

dissatisfied

Fairly

dissatisfi

ed

Very

dissatisfied

I wanted

this

support but

could not

access it

Not

applic

able

Recruit and

retain

management

and leadership

staff for your

organisation

? ? ? ? ? ? ?

Recruit and

retain paid

staff for your

organisation

? ? ? ? ? ? ?

Find

volunteers for

your

organisation

? ? ? ? ? ? ?

Ensure you

have enough

space to

operate (e.g.

office space)

? ? ? ? ? ? ?

Access advice

and support for

your

organisation

? ? ? ? ? ? ?

Access

training

? ? ? ? ? ? ?

Maintain

sufficient

financial

reserves

? ? ? ? ? ? ?

Apply for ? ? ? ? ? ? ?


What barriers to growth does the organisation face? Please tick all that apply.

Apply for

funding or bid

for contracts

Work together

with other

charities,

social

enterprises

and/or

voluntary

organisations

to influence

local

decisions

Work together

with other

charities,

social

enterprises

and/or

voluntary

organisations

to deliver

local services

Barriers (Please tick below)

Access to funding

Lack of and/or retention of volunteers

Lack of suitable premises


What types of support would you require? Please tick all that apply.

Available time resources of staff / volunteers

Level of income

Lack of staff

High expenditure costs

Range of activities offered by the organisation

Lack of specialist advice/support

Access to training

Lack of management skills

Lack of legal knowledge

Lack of need for products/services

Lack of involvement in partnerships

Other (please state)

Funding advice

Training

Volunteers

General Business Advice

Policies

Business Planning

Other (please state)

Property

Marketing / Publicity

Legal Status / Form


What skills training would you need to achieve your goals and/or increase the performance of the organization? Please tick maximum 3 boxes

Does the organisation have a business plan?

Do you monitor your social objectives?

Employees

Accounts

Characteristics of social enterprise

Business management principles

Introduction to social enterprise

Evaluating the social enterprise opportunity

Social enterprise leadership, creativity and innovation

Legal aspects of social enterprise

Social enterprise marketing

Social enterprise finance

Social enterprise management in a turnaround environment

Building and sustaining a successful social enterprise

Yes

No

Yes

No


Does your organisation have a Green Policy?

Would your organisation use a social enterprise support service/business advisor in the future?

Yes

No

Yes

No

Unsure

5. RELATIONSHIPS AND PARTNERSHIPS

To what extent do you agree or disagree with each of the following statements? Please put a cross in one box per row

Local bodies in your local area . . .

Agree

Disagree

. . . value the work of your organisation

. . . respect your organisation’s

independence

. . . understand the nature and role of your

organisation

. . . involve your organisation appropriately in

developing and carrying out policy on issues

which affect you

.. . inform your organization on issues which

affect you or are of interest to you

. . . consult your organization on issues

which affect you or are of interest to you

. . . act upon your organisation’s opinions

and/or responses to consultation


Overall, how satisfied or dissatisfied are you with your ability to influence local decisions that are relevant to your organisation? Please put a cross in one box only

Thank you for taking part in this questionnaire. Your input is greatly appreciated.

Very satisfied

Fairly satisfied

Neither satisfied nor dissatisfied

Fairly dissatisfied

Very dissatisfied

Not applicable

Don't know

SESP Research Study on Social Enterprisessesp-project.eu/doc/SESP_WP2_Final_report.pdf · Related...

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