1. Types of social economy entities (legal forms), number of entities by each legal form
THE FEATURES AND THE THIRD SECTOR’S INSTITUTIONS At the Third Sector belong the no profit private institution, which operate outside both of the first two sectors the Public ( First Sector)and the Private Profit (Second Sector).The no profit organization perform activities without a lucrative purpose and they are allowed to:
manage an asset,
carry out output activities, along with the purchase of the goods and services that come from their own performances,
generate incomes, profits or some other kind of financial gain, included the necessary income to remunerate all those people that work for the organization itself. Profits( difference between the sale’s price of a good or a service and the production cost ) can not be distributed among who found it, control it or finance it.
On a legal (juridical) level the concept of no profit organization doesn’t correspond entirely to a structure not able to make an economical gain, which can be generated on a economical/managerial level it only can not become a profit, meaning that can not be distributed among the organization’s members. The in force discipline states a partial exception to this general rule that allowed a profit distribution within some pre-defined maximal limits established by the law itself.
The third sector in Italy is not properly identifiable with the third sector of the rest of the western countries. While abroad seem to prevail the no-profit purpose of the activities carried out by the organization , consequently remaining the pro-social scope of the activities on a lower level, in Italy ,instead the most followed aspect it’s the solidarity one which create different forms of organizations subsequently listed:
- Association: they are characterized from a organizational structure that consist of two bodies: the assembly and the administrators. The assembly is the sovereign body: any associate, with his vote, contributes to the deliberations making process, which is based on a majority and they define the association’s activities.
By law there is a distinguishing between association with recognition or without recognition. The recognized associations are endowed with a patrimonial autonomy (the association’s asset remain separate to the asset that belongs to the associates and the administrators).Furthermore, in the recognized association, the administrator’s liability is limited to the obligations taken on the association’s behalf.
-Foundation: they are made around a “ patrimony of scope” (called endowment fund) and not around a plurality of individuals. The asset is given by the founder. There are several subtypes of foundations: private family foundations, university foundations, army foundations, creed foundations, lyric foundations and “ participation foundation ”. These last kind have the following features:
presence of a open structure destination’s patrimony, which can be subscribed, also subsequently, from private or public subjects,
presence of several category of subjects which participate in the foundations through their own representatives in the institution’s Board of Directors,
presence of founders category, which have their own body (General Board) that deliberates on main deeds,
presence of a surveillance body.
Several foundation have recently assumed a pro-social attitude in pursuit of purposes of social solidarity or purpose or utilities. The charitable purpose binds the assets. These foundation very often present a organizational and functional complexity and they mainly perform in a cultural, sportive and recreational fields, but also in the research and secondary instruction.
Committee: They present similarities to both of the previous features, the association (considering the pluralities of individuals) and the foundation ( since the necessary presence of an asset that needs to be bound to a specific purpose.). Essential requirement for the committees it’s the temporary length. They can be constituted for the most various motives such as collect fund in order to assist people hit by natural calamity, charity, promote social causes, exhibition and so on.
Voluntary organization: they are one of the most dynamic social phenomena of the Italian reality. They vary from the other organizations belonging to the third sector because of the meaningfulness of their pro-social purpose: centrality of the gratuitousness, altruistic and mutuality trend. These voluntary organizations are deep-rooted upon the whole national territory and theirs activities are directed to fight situation of social deprivation.
Social Cooperative: their goal it’s to pursuit the community’s public interest to human promotion and social integration through:
management of social – health care and educational services,
performance of various activities – agricultural, industrial, commercial/trade – directed to insert underprivileged people.
Social cooperative are endowed with juridical personality but the benefits of it undergo to some statutory limitations. There are two different types of social cooperative:
social cooperative type A, they perform social – health care and educational services
social cooperative type B, they perform all those productive activities up listed directed to insert underprivileged people (disabled, drug addicted, former detainee, etcetera.)
Social cooperatives combine the typical features of the pro-social activities, which pursuit solidarity purposes, with the typical features of commercial activities which pursuit efficiency. What comes out from this combination is a productive structure and services that carry out educational and socio-medical performances with a marked relational profile based on a highly complex structure. This social cooperatives succeeded in areas where it was necessary provide services that needed professional competences and structure complexity characterized by a solidarity inspired to ideal of justice and equity action code . These social cooperatives reached these two parameters through the employment of remunerated workers.
The statute of this social cooperative allow the presence of volunteer partners whom give their work for free.
In application of the statutory rules, in the socio-medical and educational fields, the performances of volunteers are allowed since they are given along with the professional one and since they don’t substitute them.
Association of social promotion:their distinguishing features are less marked then the other organizations forms belonging to the third sector. Their specific duty is to encourage the development of mutuality actions, without selling their performances and with a minimum usage of remunerate employees. The share of ideals and interests is the source of this kind of association. They mainly perform in cultural, sportive and recreational fields, but also in a socio-medical environment.
No governmental organization (NGO):they essentially perform in developing countries and they are recognized by the Ministry of Foreign Affair. They must neither have any dependence on lucrative enterprises/organization nor links with interests of profit or private institution. Their projects range from supporting local entrepreneurship, cultural or developing educational initiative to humanitarian assistance in case of emergency.
Public assistance institute and private charity.
Ecclesiastic catholic institutions.
Religious or other creeds institutes.
Vocational Training Centres.
Patronage institute and charitable institute: set up to perform activities of information, charity and tutelage, also on behalf, of dependent or self-employed workers, retired persons, Italian citizen, foreigner and stateless upon the national territory and their survivors and assigns in order to pursuit in Italy and abroad performances of any gender related to areas such as charity, immigration and emigration , allocated by administrations and public institutions, institution that manage complementary social security funds or foreign State. Among theirs activities we also find information and consulting to workers and respective assigns about the fulfilment , by the employer, of employee’s contributions and civil liability also for industrial accident events.
THE ORIGIN OF THE SOCIAL ENTERPRISE
Until the eighties the European no profit organizations of the third sector were characterized from a marked financial dependency and a limited decisional power. Two main factor contributed to change this situation: the increasing cost of the welfare state and an increasing request of the performances related to it with subsequent enhancement of professionalism.
This new scenario put the basis for a crescent autonomy of these kind of organizations from the public administration, therefore the range of performable services and the method of execution became grandly larger. This new trend and the no profit organization that followed it are the source of a new concept called “Social Enterprise”.
SOCIAL ENTREPRISES IN THE EUROPEAN UNION
A significant proportion of Europe’s economy is not organized solely to make profits for investors. The so-called social economy, including co-operatives, mutual societies, non-profit associations, foundations and social enterprises, provides a wide range of products and services across Europe, and generates millions of jobs. When policy-makers work to improve the business environment in Europe, they need to ensure that their efforts take account of the specific characteristics of enterprises, particularly SME’s, in the Social Economy.
Companies set up to make a profit for their owners are not the only form of enterprise. In many areas of economic activity, a group of individuals have got together to set up their own structure to promote their own or general public interests. The basis of such structures is membership and solidarity. Members vote on the direction the enterprise takes, and it then acts in their common interests.
From the village farmers who set up a co-operative to market their produce more effectively to the group of savers who set up a mutual to ensure they each receive a decent pension, by way of charities and organizations offering services of general interest, the social economy touches a huge range of individuals across Europe. There are around 10 million jobs in the social economy across Europe, but
membership of social economy enterprises is much wider, with estimates ranging as high as 150 million.
Millions of members therefore depend on such enterprises in areas such as healthcare.
Different Member States have different traditions, so the forms of enterprise and the fields in which they are active vary across Europe, but there are few areas where the social economy has no interest. Co-operatives are prominent in fields such as banking, craft industries, agricultural production and retail. Mutual societies are found in the insurance and mortgage sectors, whilst associations and foundations are active in health and welfare services, sports and recreation, culture, environmental regeneration, humanitarian rights, development aid, consumer rights, education, training and research.
Whilst some social economy enterprises provide services on behalf of or instead of the public sector, for example healthcare and social services, others produce products or services sold on the open market in competition with investor-driven companies. In such circumstances, the social economy is an important player in ensuring effective competition and it is therefore vital that regulation takes full account of the specific characteristics of such enterprises.
The European Commission recognized the importance of the social economy many years ago, and has worked to ensure that EU policy and legislation does not disadvantage the social economy unintentionally. It has also encouraged members of different types of social economy enterprises to learn from each other’s experiences across Europe. In particular,through the European Social Fund, it has supported projects to develop training in the specific management skills needed to enable social economy enterprises to flourish. It has also sought to identify good practice in supporting the social economy from amongst the Member States and their regions, and to promote these examples across the Union.
More recently, recognizing the important contribution that such enterprises will make to realizing the goals of the Lisbon Strategy – fostering economic growth and creating jobs in Europe – the Commission has sought to promote the various forms of social economy enterprise, and ensure that Member States do not put barriers in their way. In parallel with the 2001 adoption of a European company statute, the EU also developed a statute for European co-operatives, adopted in 2003.
The importance to the European economy and society of co-operatives, mutual societies, associations, foundations and social enterprises (which together are sometimes referred to as the Social Economy) is now receiving greater recognition at Member State and European levels. Not only are they significant economic actors, they also play a key role in involving their members and European citizens more fully in Society. Social Economy enterprises are helping to meet the demands of a changing Europe. They are important sources of entrepreneurship and jobs in areas where traditional "investor driven" enterprise structures may not
always be viable.
[…] The Social Economy is found in almost all economic sectors. […] Some Social Economy bodies work in competitive markets while others work close to the public sector. Cooperatives, for example, which are formed on the basis of fulfilling the interests of their members (producers or consumers), play an important role in several markets and contribute to effective competition.
The Social Economy is important because it:
contributes to efficient competition in the markets,
offers the potential for job creation and new forms of entrepreneurship and employment ,
is largely founded on membership-based activities ,
meets new needs,
favours citizen participation and voluntary work,
enhances solidarity and cohesion,
contributes to the integration of the economies of the candidate countries.
THE MAIN CHARACTERISTIC OF THE SOCIAL ENTERPRISE IN ITALY
The basis of such structure are identifiable with social economics needs of their members.
The main characteristic of social enterprises in an Italian environment are:
Hiring of liability trough resolution: the “social” nature is based on the ethicality and liability of these performances rather then the type of goods/services carried out.
Their primary purpose is not generate income that can not be distributed among the members. Members are part of a market called stakeholder where enterprises are created from and for members with common needs and are liable toward the users of their goods and services.
The resolutions follow the principle of “one member, one vote”.
Goods and services are made for the community. Since march 26 2006 ordinance nr. 155 a definition of goods and services of social utilities was missing. Afterwards are considered of social utilities those made or exchanged in the following areas:
welfare health care,
tutelage of the environment and ecosystem,
improvement of cultural heritage,
college and post-college education ,
research and allocation of social services,
extra curricular education,
auxiliary services to the social enterprises.
They have entrepreneurial characteristic because of:
the prevalent continuative activity of goods and or services production
presence of business risk, which means that the promoters assume the enterprise risk trough the usage of personal finance and personal work as well
presence of recompensed work next to unpaid
They are created to face social financial situation in course of transformation.
They can get resources of various provenance with inferior costs compared to the resources available for the private or public profit organizations. The social enterprise’s activities can be financed from the purchasing of social utility services or other sort of goods and services, subsidies, not commercial
resources of public provenance and public donation. Furthermore, the capital cost and the labour cost are normally inferior to the one of public or private profit rival enterprises, because the social enterprises can count on capital that doesn’t require remuneration and on volunteer labour. A balance between supply and demand can’t be properly realized only with the market instruments because of different reasons. First of all because of the impossibility of the potential consumers to purchase this good or services at a market price. Second of all these type of good/services can have different sizes which are not precisely identifiable and measurable, which make hard an evaluation of quality, allowing different consumer’s evaluation. In an European context these problem have been solved binding the production strictly to the resources coming from the welfare, that’ s why in our continent these social enterprises compete only with public productive organization, but compared to them they have some advantages, coming from:
their ability to cut the costs for each unit of product
the difference modality of remuneration of the productive factors
the highest adaptability and sensitivity at the demand
The social enterprises have developed themselves in sector where goods/services were needed to be offered at lower prices, this was possible thanks to financial resources and productive factor given for free or at least cheaper than the current market price by donators workers and volunteers. The social enterprises were also able to reduce the labour cost and enhance the productivity levels by hiring workers willing to produce quality services and receive part of their salary in other forms rather than the monetary one. The constitution of these enterprises was done trough incentive’s procedure that brought the workers to share the enterprise’s mission pushing firmly the ethical and relational aspects of this mission such as:
direct involvement of the staff in the enterprise’s management,
taking care by the management of the staff’s capacity and expectations,
granting a certain level of autonomy to the staff in the execution of their duties.
Even more that for the other enterprises, rating a social one is not easy thing ‘cause next to all the tangible values (financial asset, book-value) there are the intangible values such as the intellectual and ethical patrimony, that are the basis of its social qualities other than the economic performances. This intangible values are a group of elements and factors not findable in the accounts books but instead grandly present in the enterprise, and they have a determinant role in the future success of the enterprise’s activities:
enterprise’s mission, consisting of the enterprise role and identified with its strategic purposes, including an orientation directed to assume social responsibility
structural asset, represented by the process, the inner structure and the intellectual belonging
human patrimony, represented by the individual competences, managerial and organizational skills
relational patrimony, represented by the relations with the shareholders and stakeholders, by the communication’s procedures and by the enterprise’s trademark
2. Key statistics on social economy (number of entities, budgets, number of employees (on average, by legal entity type etc.), percentage of GDP they constitute)