Social enterprise

What it means

A social enterprise is a company or organisation whose main aim is a measurable positive social impact rather than maximising profit. The status of a registered social enterprise is granted by the Ministry of Labour under the Social Economy Act, and the enterprise has to keep meeting its conditions.

The best known type is the integration enterprise, which employs disadvantaged or vulnerable people such as the long-term unemployed or people with disabilities. There are also social housing enterprises and general social enterprises that address other social problems.

A social enterprise can be a commercial company, a cooperative, a sole trader or a non-profit organisation. What matters is not the legal form but that most of the profit goes back into its mission and that employees or other affected groups take part in its governance.

How it works in practice

A registered social enterprise can draw on various forms of support, such as investment aid, compensation for employing disadvantaged people or an advantage in reserved public contracts. Conditions vary by type of enterprise and programme, so they need to be checked for each call.

For ordinary companies a social enterprise is interesting as a supplier. Buying goods and services from an integration enterprise or a sheltered workshop can help meet the disability employment quota through substitute fulfilment, provided the statutory conditions are met.

In accounting terms a social enterprise is an ordinary reporting entity, but it must also track and report how it achieves its positive social impact. When it receives a grant, it has to record its use correctly and follow state aid rules so that the funds do not have to be repaid.

What to watch out for

The status also brings duties: limits on profit distribution, annual reports on social impact and state oversight. If the enterprise stops meeting the conditions, it can lose the status and, with it, entitlement to support it has already received.

A social enterprise is not the same as corporate social responsibility. An ordinary company can run charitable activities and remain profit-driven, whereas a social enterprise has its social goal written into its mission and subordinates its business to it.