European social economy actors launched a report on the sector today at Social Innovation House in Davos, a side event at the World Economic Forum (WEF).
The European Social Enterprise Monitor (ESEM) 2023-2024 Report presents insights from 1,800 social entrepreneurs across 31 countries, exploring the barriers, challenges, and opportunities they face in shaping the future of the social economy.
The report is a survey-based biennial study on social enterprises (SEs), including co-operatives. In its third edition, it uses data from 2023-2024. Led by the Euclid Network (EN), the report saw 31 country teams lead the work at the national level.
While there is no single definition for social enterprise across European countries, the European Commission has classified the concept of SE as encompassing a social dimension, an entrepreneurial dimension and a governance dimension.
Speaking at the launch in Davos, Euclid president Neven Marinovic said the report sought to help the sector better understand where SEs are and what challenges they face. This, he said, could inform the development of better programmes and policy frameworks, encourage SEs to work across borders and ensure the social economy is understood and mainstreamed.
There are common traits among the SEs in the survey, he added; for instance, 62.1% are measuring their impact – usually to understand if the organisation is fulfilling its mission objectives.
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Education, healthcare and social work are the main sectors where SEs are active, and co-operatives account for 9.4% of the survey’s 1,800 respondents.
Around 71.6% of SEs in the survey have specific groups of people as target beneficiaries, within which children/young individuals in general are the most common group (targeted by 25.3% of all ESEM SEs).
Members, including those of co-ops, are the smallest individual target group of beneficiaries listed in the survey, with only 17.4% of ESEM SEs indicating them to be target beneficiaries.
The report also points out challenges faced by SEs in Europe, including a lack of public support schemes (much or very much hindering 40.8% of the sample), too complex public financing (41.9%) and a weak lobby for social entrepreneurship (40.2%).
At the national level, 69.8% of SEs in the survey consider there to be no, very low or low political support for social entrepreneurship.
With regard to profitability, while 51.8% of SEs told the survey they had increased revenues over the past 12 months, only 30.2% were profitable.
“ESEM 2023-2024 meets its mission to close the gap between social enterprises and EU decision-makers,“ said Dr Stefan Empter, senior advisor at Bertelsmann Stiftung, ahead of the launch. “This remains a much-needed task to ensure that policy makers recognise social entrepreneurs as a part of the solution and remove the political and legal hurdles in building up a thriving ecosystem of social entrepreneurs.”
The launch of the report featured a panel discussion with Johanna Mair, professor, Hertie School; and Murali Nair, senior project manager, Bertelsmann Stiftung.
Nair pointed out other similarities between the SEs in the report, such as having more women in leadership roles – but she also noted that these women pay themselves lower wages.
Another common feature is engagement in influencing policy and society ideas about how to deal with marginalised groups. SEs often step in and assume the role of policy advocacy when they witness injustices or cuts in funding for social causes, said Nair.
Strengths of the sector include diversity, added Nair, so that makes efforts to devise single, one-size-fits-all policy unwise. And while mainstreaming is important, this process should appreciate the diversity of social enterprises in terms of models as well as what they do.
Mair said that while there might be a backlash against the values of SEs in the US and some European countries, political deadlock means issues that need addressing will be left to SEs.
He also stressed the importance of data in informing policy makers and allowing the sector to see patterns – including in terms of different geographies and contexts. The sector is “sitting on a treasure of data” which could be leveraged to attract further investment, added Mair.
The Euclid Network is a member of the Schwab Foundation for Social Entrepreneurship, an initiative run in partnership with the WEF.
While the ESEM launch was not an official WEF session, it aligned with broader discussion at Davos around the role of social enterprises in driving sustainable and inclusive economies.
Earlier this month, the foundation published a report exploring how to unlock the social economy to drive equity in the green and digital transitions. The report argues the social economy has been helping to drive inclusive outcomes for decades, describing the sector as a set of distinct business models that prioritise social and environmental value and are organised or registered as associations, co-operatives, foundations, not-for-profit organisations, voluntary groups and social enterprises.
It also includes examples of how reduced taxation can boost the sector, referring to Italian social co-operatives, which are exempted from paying national insurance contributions for the disadvantaged workers they have integrated.
Image: Johanna Mair, Murali Nair and Neven Marinovic at the report launch