Social Entrepreneurship in Partner Countries

Current Situation in the United Kingdom, Bulgaria, Cyprus, Germany, Lithuania, and Sweden

JANUARY 2012

CONTENTS

Executive Summary.............................................................................................3

Social Entrepreneurship in the United Kingdom.................................................6

Social entrepreneurship in Bulgaria....................................................................9

Social Entrepreneurship in Cyprus....................................................................15

Social Entrepreneurship in Germany.................................................................17

Social Entrepreneurship in Lithuania.................................................................20

Social Entrepreneurship in Sweden...................................................................24

The individual country reports were prepared by partners of the Ignite Europe project:

South Sefton Development Trust (United Kingdom) Euro Training (Bulgaria) SYNTHESIS Center for Research and Education Ltd (Cyprus) Kolping-Bildungswerk Wuerttemberg e. V. (Germany) Social Innovation Fund (Lithuania) Emmerce EEIG (Sweden)

The compilation and executive summary of this report was prepared by the Synthesis Center of Research and Education Ltd, Cyprus.

Disclaimer: The information and views set out in this report are those of the authors and do not necessarily reflect the official opinion of the European Union. Neither the European Union institutions and bodies nor any person acting on their behalf may be held responsible for the use which may be made of the information contained therein.

EXECUTIVE SUMMARY

Social enterprises are an important part of the social economy.1 They have social objectives, and usually, do not pay dividends and reinvest their profits in order to achieve their goals. Their role is crucial for Europe and its economy. These enterprises exist in most sectors of the economy, and the overall social economy provides more than 11 million 2 jobs in the European Union. Many social enterprises have played an important part in supporting the active inclusion of disadvantaged people. They significantly contribute to job creation and often provide services that are socially useful.

As part of their aim, social enterprises combine economic performance with the achievement of social and/or environmental objectives. In so doing, they contribute to key EU policies and objectives not only in respect of employment but also social cohesion, regional and rural development, protection of the environment, consumer protection or social security.

One point that is clearly evident in the field of social entrepreneurship and social enterprises is that there are neither clear nor comprehensive definitions for the sector; in addition, the understanding of the sector varies country by country.

Despite that, it is generally accepted that one of the main characteristics of a social enterprise is combining of a social objective with business methods, thus making it a special category within the social economy sector.

Besides the different definitions of social entrepreneurship found in each European country, the field of social entrepreneurship goes through a different development process, and faces different challenges, needs but also opportunities.

In U.K, the sector of social enterprise is significantly developed although no legal “social enterprise” structure yet exists. A social enterprise functions under a number of different legal structures – charities, companies limited by guarantee, community interest companies, co-operatives and Industrial and Provident Societies. The general accepted term is of “a business with primarily social objectives whose surpluses are principally reinvested for that purpose.” Social enterprises are an engine for growth for the U.K economy: approximately 62,000 social enterprises exist today in the country, contributing an estimated £24bn to the national economy. More social enterprises are present in the deprived communities than standard businesses, with around a third of all social enterprise start-ups working in the most deprived communities, tackling problems and improving their local communities. The sector of social entrepreneurship could receive a significant boost in the near future with the adoption of bills that plan the transfer of large-scale public services (such as local health services and children support) to the private sector.

1 As defined by the European Institutions http://ec.europa.eu/enterprise/policies/sme/promoting-entrepreneurship/social-economy/#h2-2 2 http://ec.europa.eu/enterprise/policies/sme/promoting- entrepreneurship/social-economy/index_en.htm

In Bulgaria, social enterprises can be defined as business activities conducted by social service non-governmental organizations (NGOs) with the goal of generating income that is reinvested in the NGOs to support their social missions. The concept of social enterprises is thus related to the NGO sector. The concept of social entrepreneurship is known since the times of communism, as special factories were designed to provide work to people with disabilities. During the time of democratic reforms, however, a number of these factories closed. The prospect of the sector is positive as the country faces deep problems, such as poverty and social exclusion and is needed for social services. Among the biggest challenges for social enterprises is combining social objectives with business liability.

In Cyprus, social entrepreneurship is still at its infancy. Although there’s a lack of formally accepted term, the definition adopted by the persons researching or working in the field is that “social entrepreneurship is the work of a social entrepreneur; while a social entrepreneur is a business entrepreneur who primarily aims to further social or environmental goals.” Although the field is new, there are efforts to develop it through research, training, and promotional events but also through the development of “work integration social enterprises.” Those efforts are based on private initiative with no government or public support. The prospect of the sector is positive as the country faces a number of deep challenges, including a fast rising unemployment. The lack of awareness of the sector and the potential it has to alleviate social problems prohibits its growth. Social entrepreneurs need government support, especially access to funding, and also there’s a need for establishing a public - private cooperation for the sector to grow.

In Germany a social entrepreneur is defined as a person using an innovative approach and entrepreneurial methods to solve a social problem. The primary goal of social entrepreneurs is not the monetary profit, but the long-term societal impact on the target groups. 3 Social entrepreneurship has been gaining a growing momentum although it is also relative new. Incubation centres for social entrepreneurs have emerged in Berlin and Hamburg; scientific departments of universities have started to deal with the theme and university courses have been developed. The field has been gaining support particularly from politicians who now better understand the important role in can play. However this support is yet to materialise in concrete results and still funding possibilities for social enterprises, especially start ups, are still rare.

In Lithuania, the legislative process of social entrepreneurship is much ahead of other European countries. The Law on Social Enterprises which was passed in 2004 details the process of receiving the social enterprise status, defines target groups of the persons employed in a social enterprise, and sets the rights and duties of a social enterprise. In addition, it defines the boundaries between “social enterprise” and “social enterprises of the disabled” which also exists in Lithuania and is also described by this Law. Although there’s plenty of room for sector growth, there are already many good practices of social enterprises that work to alleviate social problems.

In Sweden, social entrepreneurship has existed for many decades ago through different forms but has received a growing attention in the last seven years. In Sweden, social enterprises operate as businesses; conduct business with the goal of integrating people into

3 Documentation of the conference: Barbara Roder, Lena Lütjens: “Ein Reporting-Standard für Social Entrepreneurs” p. 147

society and working life; and empower their employees. Any profits are reinvested in the business to carry out those or similar activities. Although there’s still a lack of formal legislation for Swedish social entrepreneurs, the Swedish government is perhaps the most active party in the efforts to develop and promote the field. A recent plan, adopted in 2010, aims to promote social enterprises by emphasizing special regulations and introduction of opportunities for public procurement for social enterprises.

Social Entrepreneurship in the United Kingdom

What do we mean by Social Enterprise?

The generally accepted UK definition accepted by government:

“A business with primarily social objectives whose surpluses are principally reinvested for that purpose.”

They are businesses which are operating with an eye not just on the financial bottom line, but the social and environmental, too. There are a number of different legal structures in the UK – charities, companies limited by guarantee, community interest companies, co-operatives and Industrial and Provident Societies – there is no legal “social enterprise” structure. In many but not all cases they are run by independent boards.

What do Social Enterprises look like?

A recent survey of social enterprises undertaken by the national co-ordinating body, Social Enterprise UK, found that, overall, social enterprises:

Are most likely to start-up and work in Britain’s most deprived communities Reinvest in the communities where they are based Are run by younger people than traditional SMEs, with a high proportion of Black and

Minority Ethnic directors, as well as female directors Are accountable to their customers and communities, involving them in business decisions Are increasingly trading with consumers and with private companies Are turning away from public sector markets, in favour of consumers and private companies

Economic impact of UK Social Enterprises Nationally

The social enterprise sector is both out-pacing and out-innovating comparable SMEs. There are estimated to be 62,000 social enterprises in the UK contributing £24bn to the

national economy 14% of all social enterprises are start-ups, less than two years old – more than three times

the proportion of start ups among mainstream small businesses. Median annual turnover of social enterprises has grown from £175,000 in the 2009 Social

Enterprise UK survey to £240,000 in the 2011 survey. Social enterprises employ more people relative to turnover than mainstream small

businesses. Women in social enterprise leadership teams are challenging the glass ceiling, with 86% of

leadership teams boasting at least one female director, 27% of leadership teams have directors from Black and Minority Ethnic communities and 7% have directors under the age of 24. Only 13% of the Institute of Directors’ membership is female and only 1% of its members are 29 years or under. Further, 41% of small businesses have all male directors.

39% of all social enterprises work in the 20% of most deprived communities in the UK compared to 13% of standard businesses. The more deprived the community, the more likely you will find a social enterprise working there.

Around a third of all social enterprise start-ups are in the most deprived communities, where they can have the greatest impact.

Social enterprises are tackling problems and improving their local communities. The proportion of social enterprises reinvesting profits back into the communities where they are earned to further their social or environmental goals stands at 82%.

74% of social enterprises actively involve their beneficiaries in decisions about their business – a proportion that rises to nine out of 10 social enterprises in the most deprived communities in the UK.

88% of social enterprises seek to minimise their environmental impact. This compares well with small businesses, 44% of whom say they have taken no action whatsoever. Social enterprises mainly trade with the general public, not the state

Social enterprises are outstripping SMEs for growth - 58% of social enterprises grew last year compared to 28% of SMEs. Social enterprises are outstripping SMEs in business confidence, with 57% of social enterprises predicting growth in comparison to 41%10 of SMEs. Social enterprises are outstripping SMEs innovation, with 55% of social enterprises launching a new product or service last year, as opposed to 47% of SMEs. The social enterprise revolution in public service delivery can’t happen when social enterprises have low confidence in public service markets and are turning away from them.

The single largest barrier to the sustainability of social enterprises is access to finance, with 44% of respondents saying that they are still hampered by the availability and affordability of finance.

Mutual sector grows by 21% last year

Social Enterprises on Merseyside (Liverpool City Region)

Merseyside network established in 2000 and has over 300 members It is estimated that there are 740 social enterprises on Merseyside Social enterprises contribute £3b to the Liverpool City Region Economy 25% of Merseyside

social enterprises work in health and social care 39% work in the 20% most deprived wards

Opportunities for social enterprise growth in the UK

There are two major new pieces of government legislation launched under the current administration which may offer opportunities to the “not-for-profit” or social enterprise sector in the UK. Only time will tell if the Public Services (Social Value) Bill or the recently passes Localism Act, will in fact boost the social enterprise sector or will result in large-scale contracts to the private sector to deliver services previously provided by the state, such as commissioning local health services through doctors, provision of support to children or vulnerable adults, etc.

Public Services (Social Value Bill)Promotion of social enterprise and mutual societies in the Public Services (Social Value) Bill where a UK government specifically recognises the contributions of social enterprise as a distinct sector for the first time. The bill will require the Secretary of State and local authorities (local municipalities) to publish strategies in connection with promoting social enterprise and social value. If passed, the bill will enable communities to participate in the formulation and implementation of those strategies and it will require that public sector contracts include provisions relating to social outcomes and social value.

Localism Bill This is now law, and encourages communities to challenge traditional way of delivering frontline services and giving them a real opportunity to shape and influence their communities, to take on the planning system, to take over failing services and to take ownership of land and buildings that matter most to them.

The core principles of the Localism Act are:

General Power of Competence – The Act will give local authorities a General Power of Competence, allowing them to do anything which is not specifically prohibited by law. This will set them free to innovate in response to local needs.Community right to buy – The Act will give communities powers to save local assets threatened with closure, by allowing them to bid for the ownership and management of community assets. Local authorities will have to list “assets of community value”. If these assets are up for sale, local authorities will also need to provide a moratorium period of six months, during which time, provided that a local group expresses interest, the asset cannot be sold – giving local groups the opportunity to put together a bid to take over the asset for community benefit.

Neighbourhood plans – The Act will radically reform the planning system to give local people new rights to shape the development of the communities in which they live.

Community Infrastructure Levy – The Act will require local authorities to allocate a proportion of Community Infrastructure Levy revenues back to the neighbourhood from which it was raised. This will allow those most directly affected by development to benefit from it.

Social entrepreneurship in Bulgaria

The term “social entrepreneurship” has gained popularity in Bulgaria during the past years. These are mainly enterprises employing people with disabilities, providing them with opportunity to feel useful and confident. The term ‘social economy’ has also appeared in the European Union, as experts say this type of economy is rapidly developing. This is also related to the economic crisis, which limits the abilities of governments to cope with growing social problems through other means.

Actually, social enterprises are not a novelty in Bulgaria. During the times of socialism, there existed factories, especially designed to provide work to people with disabilities. During the time of democratic reforms, however, a number of these factories closed. Now new social enterprises have started to emerge in the conditions of market economy.

State of art

The concept of social enterprise is not integrated into policies, laws and public debate in Bulgaria

Most close are: NGOs, especially social service providers, training organizations, cooperatives (of disabled)

A lot of “germs” (opportunities) for future development.

In Bulgaria we have operational program “Human resource development”

NGOs are beneficiaries under all the priorities:

1. Promotion of sustainable employment and development of inclusive labor market

2. Raising of productivity and adaptability of the employed persons

3. Improving the quality of education and training in correspondence with the requirements of the labor market

4. Better access to education and training

5. Social inclusion and enhancement of social economy

6. Improvement of the efficiency of the labor market institutions and social and healthcare services

Main concerns

Increasing needs for social services Dysfunctional and inefficient system for provision of social services Low “absorbing capacity” of labor market. Underdeveloped local economies Large-scale poverty and social exclusion

Very important is Priority 5. Social inclusion and enhancement of social economy

Operation 5.1. Supporting social economy Operation 5.2. Social services for provision of employment Operation 5. 3. Employability through better health

What we see is important to foster: Value of Social Enterprises – inclusion of disadvantaged groups and communities More effective participation of civil society in decision making Create enabling environment for social enterprises Knowledge base for social enterprises International networking and collaboration

Social enterprises in Bulgaria can be defined as business activities conducted by social service non-governmental organizations (NGOs) with the goal of generating income that is reinvested in the NGOs to support their social missions. Typically, the profits from such businesses are either directed to social causes or reinvested in the businesses to increase employment and/or other opportunities for individuals who are socially marginalized.

The Bulgarian concept of social enterprises is based on the goal of enhancing the sustainability of the Bulgarian NGO sector. While most social-service organizations typically focus on the socio-economic integration of marginalized members of society, social enterprises seek both to provide these individuals with the employment opportunities they need to advance themselves economically and also to ensure that NGOs generate sufficient income to support their social objectives.

In Bulgaria, a number of social-service NGOs were created in the last 10 to 15 years. Under the Law on Non-profit Legal Entities, these NGOs were granted the right to perform related business activities that generate financial support for the achievement of their missions. However, successful social enterprises are far and few between, so most NGOs continue to rely on outside funding to carry out their work.

There is no shortage of ideas on how to help the marginalized population. However, practical ideas and the ability to successfully translate ideas into sustainable models are definitely in short supply. The availability of financial resources alone will not solve the problem.

Moreover, the social-enterprise model demonstrates its value by creating a job market for marginalized groups, working toward their social inclusion and building social capital, which are within the overall objective of achieving social and economic development of the country.

Still there is a lack of appropriate skills and knowledge:

To build and develop a business, it is important to know how to evaluate the feasibility of a new venture idea, develop a business plan and manage finances and people.

Most social enterprises are managed by one person who often does not have any business background. Furthermore, the staffs of social-service NGOs are mostly composed of social workers and philanthropists, and the science of making money is completely foreign to them.

In human-resource terms, the biggest challenge is to select the appropriate staff and to develop their business skills. Social-enterprise managers understand the value of business skills, but some find it difficult to move from theory into practice.

At that moment the key challenges facing social enterprises in Bulgaria are:

Balancing business viability and social objectives. Social enterprises require a careful balance between financial sustainability and social impact. In some cases, the business activity and social activity may conflict. For example, the people who deliver social services as a part of social enterprises’ business activity are still hesitant to request fees for these services, because this contradicts their belief that they should help socially marginalized people voluntarily. On the other side, the recipients of the social services are not accustomed to paying for these services, because for many years the provision of social services was basically the State’s responsibility.

With the decentralization of social services currently taking place in Bulgaria, the delivery of services is gradually being contracted out to local businesses and NGOs. As a result, the provision of social services will improve considerably, because 1) there will be strict guidelines and reporting systems, and 2) NGOs that have been providing these services at the local level are more experienced and much better able to deliver and be accountable for them.

Lack of awareness and understanding of social enterprises and their role in the community. Due to the lack of tradition in developing the third sector during the communist era, social enterprises still are not well-understood and often are misperceived by society at-large.

In Bulgaria, indications are that many NGOs and social-service NGOs already engage in income-generating activities because of financial necessity. In many cases, these activities are closely related to the missions of the NGOs.

However, social enterprises must overcome a number of challenges in order to gain public support and understanding. Better information and marketing are needed to inform the public about their work. In addition, strong partnerships must be forged with other businesses, organizations and institutions, with a focus on developing better network relationships.

Behaving like a business. A social enterprise is a business that is involved in some form of commercial activity, whether it is the sale of products or services. The key difference, however, is that a social enterprise is set up primarily for the purpose of meeting its social objectives, not producing income for individuals or companies. In other words, a social enterprise does not distribute profit but rather uses revenue to finance its social mission.

The key challenge is to get a social enterprise to “think” and “behave” like a business, not a charity. Only then can social-enterprise leaders focus their attention on improving their business operations and, consequently, the services they provide to marginalized groups rather than constantly searching for funding. The social enterprise has a stabilizing effect on the NGO, because by producing a revenue stream, it assures continuity of social-services delivery and job security for the staff. The key point is NGO managers need to change their attitudes and mentality so they think and behave like business people and operate their ventures in a businesslike manner.

Lack of appropriate skills and knowledge. To build and develop a business, it is important to know how to evaluate the feasibility of a new venture idea, develop a business plan and manage finances and people.

Most social enterprises are managed by one person who often does not have any business background. Furthermore, the staffs of social-service NGOs are mostly composed of social workers and philanthropists, and the science of making money is completely foreign to them.

In human-resource terms, the biggest challenge is to select the appropriate staff and to develop their business skills. Social-enterprise managers understand the value of business skills, but some find it difficult to move from theory into practice.

Being competitive on the market. Lack of competitiveness is one of the most difficult obstacles for the social enterprises to overcome. The quality of social-enterprise products is not always up to standards, for two reasons. First, the people from the targeted social-services groups, who lack appropriate skills, often are involved in the production process. Second, product or service quality is not usually uppermost in the minds of the social-enterprise managers, who tend to focus on the social aspects of their organizations. However, sales success in the commercial market requires consistently high standards.

Many social-enterprise managers believe the positive social impact resulting from the sale of their products or services provides sufficient incentive for people to purchase the goods from their organizations rather than from competitors. This is not necessarily the case

The difficulties NGOs experience in launching commercially viable enterprises to employ and/or support socially marginalized groups are not caused by a lack of financial resources. What is lacking is the capability of these organizations to turn their visions into reality. This is due to inadequate business skills, knowledge and entrepreneurial culture. Based on this assessment, the primary goal of the Counterpart’s Social Enterprise Program is to provide NGOs with the skills required to establish and operate a business. Although the program includes access to financing, the skills enhancement prepares participants to apply for loans at banks and other lending institutions as their businesses grow and they identify new needs or expansion opportunities.

Unemployment Statistics in 2010:

Indexes

I half of 2009г. I half of 2010г. Growth

number % number % number %

Registered unemployed 256061 100,0 364564 100,0 108503 42,4

- from them:

Young people less 29 46 110 18,0 66 434 18,2 20 324 44,1

Unemployed over 50 98 496 38,5 135 859 37,3 37 363 37,9

Unemployed without qualification and specialty

150 269 58,7 205 663 56,4 55394 36,9

Unemployed with low education 74 915 29,3 104 523 28,7 29 608 39,5

Long term unemployed over 1 year

78 316 30,6 103 648 28,4 25 332 32,3

Unemployed with disabilities 12 237 4,8 13734 3,8 1497 12,2

In the last years people with disabilities intensively drop out from the labor market. From unofficial data the number of people with different disabilities is about 350 000.

From the data of the Employment agency the registered in unemployment offices with reduced capacity are 13 734. The part of people with reduced capacity from all unemployed is 3.8 %. From them women are 50.2%. The part of unemployed with disabilities less than 29 is 6.1%. Over 50 year – is 60.7%. Without qualification amongst the people with disabilities are 44.1%, and with low education – 39.1%.

Over the past 15 years vocational training centers perform tasks and re-qualify the unemployed in Bulgaria. National Agency for Vocational Education and Training (National Agency) Council of Ministers is an institution licensed vocational training centers.Training in social entrepreneurship is one of the best innovations in higher education. But

existing jobs at the moment do not reflect the extent necessary, the specific nature and content of social entrepreneurship. Now discusses the need to be regulated profession a “social entrepreneur”.

Specialized enterprises and cooperatives for people with disabilities are the main and preferred employer for people with disabilities in the work environment they feel physically and morally protected.

Today, the number of specialized enterprises of people with disabilities is 124 according to the Agency for Persons with Disabilities, but their employees do not exceed 5000, including people with disabilities more than 2500, its production is much reduced - works mainly sewing products and materials, paper containers and plastic products.

Social Entrepreneurship in Cyprus

Although Cyprus has a long history of social cooperatives, the specific field of Social Entrepreneurship is largely unknown and efforts to develop it depend on the individual goodwill, persistence, and patience of the people who hold the vision of bringing social or environmental positive change to their country.

There’s no recognised legal structure of social enterprises in Cyprus; social enterprises can be operating under any scheme (profit, non-for-profit, charity, cooperative).

Although social enterprises do exist (even in small numbers), there’s a lack of awareness of the general public, the government, but also of the social entrepreneurs themselves; thus, the social entrepreneur nor the social enterprise is identified as such.

The experts of the field very much adopt the definition of the sector applied in the U.K; thus, define “social entrepreneurs as business entrepreneurs who primarily aim to further social or environmental goals, and social entrepreneurship as the work of a social entrepreneur.”4

Currently there are efforts of establishing work integration social enterprises. One of the efforts is led by IEEN (Youth Employment & Training Foundation) which aims to become a bridge towards employment for young people and people from vulnerable situations. A second effort, led by the Synthesis Center, aims to create a work integration social enterprise which will be active in the environmental field. Both efforts are at their initial stage.

Although social entrepreneurship is a new phenomenon in Cyprus, there are efforts to promote the field through research, trainings, and conferences. An annual event on Social Entrepreneurship is already taking place every autumn and a network of social entrepreneurship has been already established.

Synthesis Center for Research and Education Ltd, the partner in the Ignite Europe partnership, is the only organisation dedicated to the promotion of social entrepreneurship in Cyprus.

Challenges & Opportunities

Acquiring funding for social enterprises in countries, such as Cyprus, where the understanding of social enterprises is limited becomes a real challenge. Not only there’s no government support, bank loans can be only secured provided of adequate personal guarantees.

Other challenges include the lack of awareness of the field which adds extra barriers to people who want to become social entrepreneurs.

Ironically, the recent global economic crisis which started to affect Cyprus as of 2009 increases the opportunities for social entrepreneurs as social problems worsen.

The Cypriot jobless rate has continued to climb, reaching 9.1 in November 2011 (up from a 6.5 a year earlier, and double from a mere 3.8% in October 2008. (Eurostat, 2008; 2011)

4

A review of the unemployment situation (Table 1) in Cyprus since 2000 reveals the magnitude of the problem in the current three year period, 2008–2011.

Table 1: Unemployment in Cyprus (January 2000 – June 2011)

Source: European Central Bank (Statistical Data Warehouse)

The biggest unemployment problem is faced by young people aged 25 and below with unemployment at 20.6% with males facing higher challenges in entering the labour market as male unemployment is 22,2% compared to 19,1% for women (Statistical Service, 2011).

Needs of Social Entrepreneurs

The key needs of social entrepreneurs can be summarised in the following:

Start up capital for social enterprises and/or provision of a bank guarantee for the company’s initial loan

Development of business incubators for social enterprises Establishment of legislation framework for social enterprises, separate from commercial

companies or non-for-profit companies Adoption and implementation of EU legislation that gives social enterprises priority in public

tenders Establishment of cooperation between the public and private sector which is absent

Isaias, G and Kaufmann, H.R (2011). Social Entrepreneurship: A new paradigm that can help Cyprus to address its challenges. Paper presented at the conference “Russia’s Integration into the World Economy: the New Paradigm of the Economic Culture” at the Ural Federal University, Yekaterinburg, Russia, 1-3 December 2011. Conference proceedings.

Social Entrepreneurship in Germany

First of all it is important to mention that publications on Entrepreneurship in Germany state that the there is a need to further develop in general the sense of entrepreneurship within Germany, particularly bearing in mind that in Germany contrary to other countries the general conditions for start-ups (infrastructure, funding programmes and intellectual property rights) are very good. 5

According to the international comparison “business start ups in times of crisis” of the Research Institute of the Federal Employment Agency, Germany holds the 15th place of a group of 20 similar countries. It states that there were statistically significantly less start-ups in Germany in 2009 than in the Netherlands, the United Kingdom and Switzerland.

Furthermore the comparison shows that the share of people in Germany who are planning to set up a business in near future has dropped continually over the period 2006 – 2009. This goes along with a low percentage of Germans in the age group of 18 – 64 who thought that they have the adequate skills and experience to set up a business (45% in 2009, rank 13 of 20). 6 Hence experts call for improvement of entrepreneurial education in order to enhance the entrepreneurial motivation and skills of the citizens.

Social Entrepreneurship in Germany

The social entrepreneurship debate has arrived in Germany. Ashoka Germany and the Schwab Foundation for social entrepreneurship – both international renowned institutions – have awarded social entrepreneurs in Germany since some years. Since 2006 / 2007 incubation centres for social entrepreneurs have emerged in Berlin and Hamburg and scientific departments of universities have started to deal with the issue. University courses have been developed; final papers are written and current research projects in Germany deal with relevant issues. 7 In July 2009 took place a major conference “Social entrepreneurship: Status Quo 2009” in Berlin; the documentation states that from a German perspective “social entrepreneurship” is a young and dynamic research field. 8 In one of the mentioned research projects, a social entrepreneur is defined as a person using an innovative approach and entrepreneurial methods to solve a social problem. The primary goal of social entrepreneurs is not the monetary profit, but the long-term societal impact on the target groups. 9

In 2010, Dr Bernhard Lorentz, president of the Mercator Foundation states: “Research into the conditions for social entrepreneurship has so far been dominated by the Anglo-Saxon view of business, the welfare state and social order. There is an urgent need to add to this a viewpoint that draws on the experiences of the German welfare state, thereby exploring for the first time in Germany the systematic approach and influence of “social entrepreneurs” 10.

5 Global Entrepreneurship Monitor 2010 http://doku.iab.de/externe/2011/k110413r01.pdf) (13.12.2011)6 Udo Brixy, Christian Hundt and Rolf Sternberg: Business start-ups in times of crisis. 8/2010, http://doku.iab.de/kurzber/2010/kb0810_englisch.pdf (13.12.2011)7Thomas Leppert, Social Entrepreneurs in Deutschland - Ansätze und Besonderheiten einer spezifischen Definition Hamburg, 2008: http://www.socialstartup.org/downloads/Leppert_2008_Social_Entrepreneurs_in_Deutschland_2.pdf (13.12.2011)8 Documentation of the conference: http://www.botanik.uni-greifswald.de/fileadmin/getidos/pdfdownload/TAGUNGSBAND_SocialEntrepreneurship_Status_Quo_2009.pdf (10.01.2012)9 Documentation of the conference: Barbara Roder, Lena Lütjens:„Ein Reporting-Standard für Social Entrepreneurs“, p. 14710 http://www.stiftung-mercator.de/en/news/news/message-details/article/stiftung-mercator-founds-first-national-research-network-dedicated-

to-social-entrepreneurship.html

This gap is filled amongst others by the first national research network dedicated to “Social Entrepreneurship” and initiated by Stiftung Mercator. The research focuses on the topics of education, climate/environment and migration/integration. Theoretical analysis as well as the interpretation of empirical data will be implemented between 2010 and 1012. The results will lead to recommendations for sciences, economics, politics and society. Eight major Universities from Germany are member of the group: Ruhr University Bochum (Social entrepreneurship in the established welfare state: stopgap or innovation incubator?), Jacobs University Bremen and Leuphana University Lüneburg (Social Entrepreneurs as Evolutionary Agents in the German Institutional Landscape ), Zeppelin University (Friedrichshafen), Technische Universität München und University Heidelberg (Organization, communication, funding and markets of social entrepreneurs), University of Greifswald und Institut für ökologische Wirtschaftsforschung, Berlin (Social Innovation and Its Dissemination: Social Marketing and Social Entrepreneurship).

Social entrepreneurship in politics and economics

“Social entrepreneurship” comes to the fore as well in politics and economics. Recently, since January 2012 the KfW (the German government-owned development bank) supports SME that want to solve social problems with an entrepreneurial approach and with an innovative business model (social services or products for example in the fields of education, family, environment, poverty, integration). The social enterprises first need a partner investor (e.g. accredited companies, business angels, foundations, and other natural and legal persons of private law may be taking part in the social enterprises in turn). In common commitment, the KfW then takes a stake of up to 200,000 Euros.11. Overall, the KfW provides 30 million Euros within the framework of the programme.

Nevertheless funding possibilities for social enterprises start ups are still rare; social entrepreneurs claim more support from politics: Sina Trinkwalder, Social Entrepreneur of Sustainability 2011 states: “Normal” companies receive grants. We [social enterprises] do not, because we do not fit into any drawer. With adequate financial support we would achieve our goals – e.g. to create jobs – in a faster, more secure and more stable way. But at the moment politics promote "Measures for vocational reintegration" of the employment agency, but with rather less success, I think”.

Award-winning Social Entrepreneurship examples

Social Entrepreneur 2010 Germany (awarded by Schwab Foundation for Social Entrepreneurship Germany):Norbert Kunz (iq consult www.iq-consult.com): He helps young unemployed people to start-up companies. They lack qualifications or vocational training. He supports them in the financial planning and accompanies the period before and after the founding by coaching.

Social Entrepreneur of Sustainability 2011 Germany (awarded by the German Council for Sustainable Development of the German Government) Sina Trinkwalder (manomama GmbH), founder and Managing Director of manomama GmbH: manomama is a company of sustainable fashion. It processes exclusively controlled ecological and biodegradable raw materials, avoiding long transport routes and assumes social responsibility: Sina Trinkwalder hires disadvantaged persons; she qualifies them, pays on tariff and supports compatibility of work and family for their employees.

11http://www.kfw.de/kfw/de/Inlandsfoerderung/Aktuell_im_Fokus/ Dezember_2011/20111221_55069.jsp (10.01.2012)

Important Links:

http://www.socialentrepreneurs.de/: social entrepreneurs hip blog

http://www.socialbusinessacademy.de/: Social Business Academy is private training provider offering a training programme called “Social business entrepreneur“ (6 weekends over a period of 6 weeks, 2450 €), participants receive a certificate.

http://www.bonventure.de/: BonVenture is a social venture capital fund that was established by committed individuals willing to take responsibility for the community. BonVenture is a partner for social entrepreneurs who solve pressing social or ecological problems and wish to increase their social impact. BonVenture supports those organizations with advice, financing and networking.

http://sociallab-koeln.de/: Sociallab-Köln, incubation centre for social entrepreneurship in the sector of school & education.

http://social.biz/: Social Biz GmbH advises on construction, operation and development of projects - primarily in the field of social business.

http://www.nachhaltigkeitsrat.de: German Council for Sustainable Development

http://germany.ashoka.org/: Ashoka Germany

http://www.schwabfound.org: Schwab Foundation for Social Entrepreneurship

Social Entrepreneurship in Lithuania

In Lithuania, the discussion about social entrepreneurship and social enterprises is actively going on in different networks, between students, teachers and entrepreneurs; yet the term of social entrepreneurship is not very well recognized, and definitions are limited by one or few features of social entrepreneurship.

After researching Lithuanian web-sites on this topic we would like to suggest the following definition of social enterprise, which is in accordance with the objectives of ‘IGNITE EUROPE’ project and widely covers the sense of the social entrepreneurship:

“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.” (see http://www.sepc.lt/en/se).

It is remarkable, that even if the business seeks profit, but the social purpose remains central and profit is just a tool– they still could be called social enterprises. They do not seek just to maximize their profit, but to be financially stable and to gain money for solving social problems. As there is no universally accepted definition of “social enterprise” it is important to feel difference between social business and other business and to define the main features of the social entrepreneurial spirit (see in the graph below). (http://www.aiesec.lt/en/ism/se).

The Law on Social Enterprises was passed in Lithuania on 1 June 2004, No IX-2251. The Law explains how to get social enterprise status, defines target groups of the persons employed in social enterprise, rights and duties of a social enterprise. The difference between “social enterprise” and “social enterprises of the disabled” is also explained in this Law. According to the Law the social enterprise is a legal person that got social enterprise status by following all the procedures defined in the Law and fulfils all of the conditions mentioned in this Law as the following.

1. The number of employees who are attributed to the target groups listed in Article 4 of this Law accounts for not less than 40% of the annual average number of the employees on the staff list, and the number of the employees who are attributed to the target groups of persons is not less than four. A proportion of the employees who are attributed to the target groups to the average number of employees on the staff list shall be calculated in accordance with the procedure laid down by the Government or an institution authorised by it. The target groups listed in the Article 4 are the following:

the disabled with Group I, Group II or Group III invalidity or severe or moderate disability or the disabled whose capacity for work does not exceed 55% or who are rated as having high- or medium-level special needs (irrespective whether they are registered with a local labour exchange office or not);

the long-term unemployed who have been unemployed for more than two years since their registration with a local labour exchange office;

the perople for whom not more than five years are left until pensionable age, where they have been unemployed for more than one year since their registration with a local labour exchange office;

a mother or a father who alone takes care of and raises a child under eight years of age, where this person has been unemployed for more than six months since his registration with a local labour exchange office;

the peoples who return from prison, where they were imprisoned for more than six months and registered with a local labour exchange office not later than within six months from their release from a correctional institution, provided they are registered with the local exchange office for not less than six months.

2. Founding documents indicate the operating goals of this legal person relating to employment of the persons who are attributed to the target groups, development of their working and social skills as well as their social integration.

3. The legal person does not carry out the activities included in the list of non-supported activities of social enterprises as approved by the Government of the Republic of Lithuania or an institution authorised by it, or the income received from such activities over the tax period accounts for not more that 20% of the total income received by this legal person. The list of non-supported activities is defined as the following:

Hunting, trapping and sharing experience or related services to such activities. Mining and quarrying. Beverage production. Production of tobacco products Production of refined petroleum products and nuclear fuel. Production and repairing ships. Rent of construction or demolition equipment.

Selling vehicles, motorcycles and automotive fuel retail. Wholesale trade and commission trade, except of motor vehicles and motorcycles. Retail trade, except of motor vehicles and motorcycles; repair of personal and household

goods. Transportation and storage. Financial intermediation. Real estate, rent. Legal activities Investigation and security activities. Organizing gambling and betting activities.

Lithuania is still in first phase for discovering ideas and spirit of social entrepreneurship and its benefits for the society. Nevertheless, there are already many good practise examples of social enterprises that are solving social problems. Those, that according to the Law on Social Enterprises, are recognized as social enterprises (in total at 2011.12.19 there were 41 of them) might be found in Lithuanian Labour Exchange under the Ministry of Social Security And Labour webpage:

http://www.ldb.lt/Informacija/PaslaugosDarbdaviams/Socialins%20mons/Sarasas.aspx

A list of social enterprises for the disabled (in total at 2011.12.19 there were 110) is also provided:

http://www.ldb.lt/Informacija/PaslaugosDarbdaviams/Negalij%20socialins%20mons/Sarasas.aspx

Nowadays the Law of social enterprises in Lithuania is mostly oriented to one of the features of the social business defined above: “Innovative in the process, including vulnerable people on the production chain”. However, the phenomenon of social entrepreneurship in Lithuania is in the process of development and one of the recently introduced idea concerns the possibility of implementing the approach of social entrepreneurship into strategic planning of the non-governmental organisations having the social mission.

It is very important to encourage NGOs working on achieving the social purposes, to recognize themselves as social entrepreneurs and by this to ensure the sustainability of their social activities. They have to be trained on how to apply marked-based strategies to achieve their social purposes and to become self-sustainable. The social entrepreneurship is a new perspective for NGOs, thus there is a great need to develop the skill and competences of the NGOs leaders to run their organisations as social enterprises. Thus, the collection of good practices over the Europe is necessary and of great demand. There are already some good samples in Lithuania of NGOs who could name themselves as social enterprise in a bit broader sense then it is defined in the Law.

Examples of Lithuanian Social Entrepreneurs The partner of the IGNITE EUROPE project, the Social Innovation Fund (SIF), is one of the good samples of implementing the ideas of social entrepreneurship to achieve its social mission – ‘To ensure equal opportunities for disadvantaged persons through social innovations and educations’. To fulfil this mission, one of the main activities of SIF is training-retraining of unemployed or lower income women, and these activities SIF provides or for free, or for the lower price as usual training course. To ensure these free-of-charge or lower-price training courses for the vulnerable target groups, SIF provides training courses to ordinary clients and charge them on the normal price.

SIF also provides different kinds of consultation activities, which allow getting some income to sustain its social activities.

Another good practice of social entrepreneurship is developed by NGO “Food bank”, which is a charity and support non-governmental organisation that collects charity of food products and shares it with organizations that help disadvantage people. This NGO has a new business idea how to ensure the sustainability of its main activities by generating some income from offering coffee breaks to the companies (a service from NGO “Food bank”) and all the profit from this service will be used to continue “Food bank” initiatives. It is a new and creative way how to earn money for their main social activity, that is to say for achieving social purpose by implementing marked-based strategies. Those initiatives are the good practices to other NGOs and it is very important to develop further the idea of social entrepreneurship by sharing good practices around Europe and worldwide, by organising a good, professionally prepared training for people, who want to become the social entrepreneur.

Social Entrepreneurship in Sweden

In Sweden, as in many other countries, social entrepreneurship has existed for many decades through different forms. For example the organisation "The Natural Step" (aiming to enhance the well being of human life) still operates today.

However, the term social entrepreneurship as such became more known only around seven years ago. Since then, the number of social entrepreneurs in Sweden has increased, its importance is better understood, and the term is now well recognized by the government and institutions.

In Sweden, social enterprises operate as businesses. They also have the following characteristics:

• Conduct any business with the goal of integrating people intosociety and working life;• Empower their employees• Reinvest their profits in their own or similar activities;

The government in Sweden is actively engaged in developing and promoting the field. In 2010, an action plan was decided aiming to promote social enterprises by emphasizing special regulations and introduction of opportunities for public procurement. Although, the action plan, however, does not provide direct financial assistance for start up social enterprises, in recognising the financial issues that social enterprises face, the government intends to better to integrate more social enterprises into existing funding programmes and provide them more funding opportunities.

In order to develop and promote social entrepreneurship, several programmes have been initiated on different levels with the active involvement again of the Swedish Government, which is with no doubt the most effective party in the effort to promote social entrepreneurship in the country. In 2008, and for a period of 9 years, 120 million Swedish Crowns were allocated in order to reinforce the understanding of social entrepreneurship.

Of course the Swedish government does not act alone. Institutions are also instrumental in the development of the field. For instance, the Stockholm School of Entrepreneurship is offering courses on Social Entrepreneurship; many organisations and forums are present online offering a wealth of information for social entrepreneurs as well as tools for integrating social entrepreneurship in the Swedish economy, culture and living. Media are also contributing to this effort, with the field of social entrepreneurship has been receiving a growing coverage in the press.

Although the cooperation between social enterprises and the state is strong, efforts are underway to take this cooperation to a different level: by formalising this relationship through legislation.

Although the field is quite new in the country, it can be easily said that the role of social entrepreneurship in addressing social issues is well accepted and the sector is recognised both by the government and the institutions of the country. The role of the Government of Sweden in the development and promotion of the field is instrumental.

With efforts underway to increase the opportunities for social entrepreneurs and with the active support of the sector of the Swedish government, the prospect of growth for social entrepreneurship in Sweden is only positive.

Important Links

Publications on Social Enterprising http://www.sofisam.se/?get=content&action=view&id=127-84

Social Enterprises in Swedenhttp://www.sofisam.se/?get=files&action=download&id=14-145

Online meeting place for social entrepreneurshttp://www.samhallsentreprenor.se/

Social Entrepreneurship in Swedenhttp://www.kth.se/polopoly_fs/1.169298!/Menu/general/column-content/attachment/Roula%20Mecherkany.pdf

Non-profit Entrepreneurshiphttp://www.istr.org/conferences/barcelona/cd/pdf/abstracts/Andersson.Fredriik.pdf