Common principles and some nuances
The definitions used in recent policy documents generally align on core elements, although there may be slight variations in nuances. Below are some examples for you to compare and explore further.
Definition in the social economy action plan
"The social economy covers entities sharing the following main common principles and features: the primacy of people as well as social and/or environmental purpose over profit, the reinvestment of most of the profits and surpluses to carry out activities in the interest of members/users (“collective interest”) or society at large (“general interest”) and democratic and/or participatory governance.
Traditionally, the term social economy refers to four main types of entities providing goods and services to their members or society at large: cooperatives, mutual benefit societies, associations (including charities), and foundations. They are private entities, independent of public authorities and with specific legal forms. Social enterprises are now generally understood as part of the social economy.
Social enterprises operate by providing goods and services for the market in an entrepreneurial and often innovative fashion, having social and/or environmental objectives as the reason for their commercial activity. Profits are mainly reinvested with a view to achieving their societal objective. Their method of organisation and ownership also follow democratic or participatory principles or focus on social progress. Social enterprises adopt a variety of legal forms depending on the national context."
Source: Communication from the Commission ‘Building an economy that works for people: an action plan for the social economy’, COM(2021) 778 final, page 5
"The SSE encompasses enterprises, organizations and other entities that are engaged in
economic, social, and environmental activities to serve the collective and/or general interest,
which are based on the principles of voluntary cooperation and mutual aid, democratic and/or
participatory governance, autonomy and independence, and the primacy of people and social purpose over capital in the distribution and use of surpluses and/or profits as well as assets.
SSE entities aspire to long-term viability and sustainability, and to the transition from the
informal to the formal economy and operate in all sectors of the economy. They put into
practice a set of values which are intrinsic to their functioning and consistent with care for
people and planet, equality and fairness, interdependence, self-governance, transparency and
accountability, and the attainment of decent work and livelihoods. According to national
circumstances, the SSE includes cooperatives, associations, mutual societies, foundations,
social enterprises, self-help groups and other entities operating in accordance with the values
and principles of the SSE."
Source: ILO, Resolution concerning decent work and the social and solidarity economy, June 2022
"Social economy, also referred to in some countries as solidarity economy and/or social and solidarity economy, is made up of a set of organisations such as associations, cooperatives, mutual organisations, foundations, and, more recently, social enterprises. In some cases, community-based, grassroots and spontaneous initiatives are part of the social economy in addition to non-profit organisations, the latter group often being referred to as the solidarity economy. The activity of these entities is typically driven by societal objectives, values of solidarity, the primacy of people over capital and, in most cases, by democratic and participative governance."
Source: OECD, Recommendation on Social and Solidarity Economy and Social Innovation, 10 June 2022
The following glossary provides some explanations for key concepts and expressions related to the social economy.
A cooperative is an autonomous association of persons united to meet common economic, social, and cultural goals. Cooperatives achieve their objectives through the set-up of jointly owned and democratically-controlled enterprises.
The European Commission has been working to promote the development of the cooperative model and the greater use of cooperatives across Europe by:
- improving the visibility, characteristics and understanding of the business model;
- developing a European cooperative legislation in Europe;
- supporting cooperatives' place and contribution to community objectives;
More information on cooperatives can be retrieved here.
Associations are non-profit legal entities based on a membership model that can perform economic activities under condition that they do not distribute any profit to their members. Associations are active in all EU Member States and can serve a multitude of purposes including collective, social purposes and public benefit.
The European Commission is currently working on a legislative proposal to provide legal certainty and reduce administrative burdens for cross-border activities of associations.
More information on associations can be found here.
A foundation is a non-profit organization that supports charitable activities in order to serve the common good. Foundations are often created with endowments -- money given by individuals, families or corporations. There are 147 000 registered public foundations in Europe and with 511.3 billion assets and endowments.
The European Commission presented a proposal for a European Foundation Statute in February 2012 but the proposal was withdrawn in 2015 as unanimity is required and there was no consensus on this topic.
More information on foundations can be found here.
Mutuals are enterprises providing life and non-life insurance services, complementary social security schemes, and small value services of social nature. Their primary purpose is to satisfy common needs rather than making profits or providing return on capital. Mutual societies are managed according to solidarity principles between members who participate in its corporate governance. They are intended to be accountable to those whose needs they were created to serve.
More information on mutual societies can be retrieved here.
Social enterprises are entities that operate by providing goods and services for the market in an entrepreneurial and often innovative fashion and in accordance with the principles and features of the social economy, having social and/or environmental objectives as the reason for their commercial activity. Work integration social enterprises are a common type of social enterprise across Europe and specialise in providing work opportunities for disadvantaged people. Social enterprises adopt a variety of legal forms depending on the national context.
A legal definition of social enterprises is spelled out under Article 2 (1) (13) of the ESF+ Regulation. However, please note that this definition was needed for the implementation for the ESF+ funding programme and may not be relevant in all contexts.