Anna Kucinska
06 December 2014

Identity and visibility: Social balance in Italy

Cluster: identity & visibility

Title: Social balance in Italy

Cluster: Identity & visibility

Authors and organizational affiliations:

Sara Depedri and Flaviano Zandonai – Euricse (European Research Institute on Cooperative and Social Enterprises)

Sabina Bellione – Light Social Consortium


1. Context and history of how the good practice has been developed

The Italian context and the development of SEs in Italy has been shortly but efficiently described in the ‘Country paper’. As reported, << Italy has been historically characterized by a strong ability in terms of self-organisation of citizens and civil society. This has created, throughout the years, a peculiar richness of social enterprises (in terms of numbers but also types and quality). Therefore, Italy has traditionally enjoyed the presence of a rich social fabric made up of non-profit organisations widely disseminated in all its territories.

Starting in the late 1970s, in Italy groups of people began establishing initiatives in order to answer the unsatisfied needs of people in need, by promoting welfare services or by employing vulnerable people. They developed as a bottom-up process and most of them assumed the legal form of cooperatives, since in comparison to other third sector organizations they were allowed to conduce productive and commercial activities. The government recognised these organizations with Law n. 381 promulgated in 1991, which institutionalised the so called ‘social cooperatives’, the first and most representative form of social enterprises in Italy. The law explicitly distinguishes social cooperatives into two types: ‘A-type’ social cooperatives are devoted to the production of general interest services (i.e., education, healthcare services, social services, etc.), while ‘B-type’ social cooperatives provide work integration services for disadvantaged people.

The rapid development of the sector of social cooperatives in general (with a huge increase in number and services supplied by both type A and type B social cooperatives) has brought to the elaboration, in 2006, of a new law concerning social entrepreneurship. The legislative decree n. 155/2006 on social entrepreneurship is the result of a tentative to recognize also to organizational forms different from social cooperatives a possible social role and entrepreneurial dimension. Therefore, the law does not introduce a new legal form but rather it introduces a “qualification” that can be acquired by a number of entities that are normally part of the so-called “Third Sector” such as: associations, foundations, religious bodies but also private companies and cooperatives. Even though of a significant political importance, this law has not had a strong practical impact yet. >>

While both legal provisions on social cooperatives and social enterprises promote a clear understanding of the main traits, social aims, economic structure, and boundaries to the action of the organizations, the laws do not explicitly provide for scheme of identity and for enriching the visibility of social cooperatives and enterprises in the community. Therefore, single social cooperatives/enterprises, consortia, or simply social enterprises networks is delegated the definition and promotion of their identity and visibility. Many are the tools promoted to enrich both identity and visibility. Among them, one of the most representatives for Italian social enterprises is the social balance.

Social balance represents one of the format for social accounting, that means it is a document able to identify social impact dimensions and to explicit in general the social role covered by social enterprises, the social activities conduced to satisfy social needs, the social outcomes produced. This type of accounting is not regulated by law 381/91 on social cooperatives. On the opposite, legislative decree 155/2006 provides for social enterprises the oblige to yearly deposit a social balance to the Register of enterprises. The legislative decree also claims that “the social balance must follows the guidelines provided by the Labour and Welfare Ministry in accordance with the Agency of nonprofit enterprises”.

In 2008, the Ministry has published the guidelines to the social balance; the guidelines establish: (i) the structure which the social balance must follows and the minimal contents; (ii) the oblige for the social bodies of the enterprise to approve the social balance (in line with the approval of the financial statement); (iii) the oblige to deposit the approved social balance to the Register of Enterprises and to publicize and diffuse the social balance through different channels (eg: by having both printed and electronic documents).

Although the social balance is a mandatory document for those organizations only acquiring the qualification of social enterprises, social balances are also very frequently written by many social cooperatives. In fact, organizations themselves recognize the importance of the social balance as an instrument for communication and formalization of some of their main traits. It is an instrument for identifying their role, their activities and their impact and for giving visibility to their action.



Within the national context just described, an exception is represented by Lombardy. The region has a specific regulation for social cooperatives, as specifically provided by the national law. In fact, the national law on social cooperatives provides that “Regions shall issue implementing the national rules. To this end, they establish the regional register of social cooperatives and determine the method of connection with the activities of social and health services, as well as the professional training and development of employment. Regions adopt conventions for relations between social cooperatives and public administrations that operate in the region, providing, in particular, the requirements of professional operators and the enforcement of contractual provisions. The regions also emanate rules designed to promote, support, and develop social cooperatives.”

In Lombardy Region the LR n. 16/1993, subsequently amended by LLRR n. 21/2003 and n. 1/2008 "Consolidated Law on volunteering, associations, social cooperation and mutual aid association", has established the Lombardy Register of Social Cooperatives.


The register allows social cooperatives:

1. To access to the economic benefits provided by the Region

2. To proceed at providing employment for disadvantaged people (type B cooperatives)

3. To enter into agreements with public authorities as an exception to normal procedures for the allocation of services.

The Regulations for the management of the Register is published on the Official Bulletin no. 45 of 13 November 2009 - 2nd ordinary supplement.


Furthermore, the regional law (LLRR 1/2008) has also imposed social cooperatives the preparation of balance sheet. Since 2008, social balance is therefore a compulsory requirement for social co-operatives in Lombardy (as Friuli Venezia Giulia) who want to maintain enrollment in the regional social cooperatives register. The social balance gives the opportunity to the social cooperatives to offer an account to their stakeholders about the projects and the activities implemented in the previous year, and about their investments in terms of human and economic resources.

In Lombardy, there are about 1800 cooperatives (1300 type A and type B 500) which are enrolled in the regional social cooperatives register. Therefore, Lombardy Region can compare study or analyze their social balance to capture the added value of the social work of co-operatives in Lombardy.


2. Summary of main characteristics of good practice approach

The structure of the social balance established by the national decree presents this form:

Introduction – Information on the methodology followed to write the social balance.

This section should report: timing of the analysis; principles and guidelines followed in filling in the social balance; steps of the accounting process and internal and external stakeholders involved in the social accounting; list of the activities included in the social balance; list of the topics of interest in the analysis of the social and environmental accounting and of the topic included in the social balance; methodology in terms of used data, indexes, data analysis, ecc.; improvement targets of the social balance for the following years; communication plan and strategies for the dissemination of the social balance.

A – General information on the social enterprises and on its board of directors and CEO

This section should report information on the institutional members, on board of directors, other than on the organization itself in terms of sector of activity, services offered and social usefulness of these services.


B – Structure, governance, and administrators

This section acts as a check of the meeting of the requirements to be defined social enterprises. It includes information on the social aims, on the legal form, on the control system, on the delegation process and on the procedures followed for the appointment of directors, main characteristics of the membership for composition and number, rate of participation to the general assembly and involvement of the members in the decision process; remuneration schemes for the main governance figures, profit destination, remuneration schemes for workers, managers, and consultants; participation of the enterprise to other enterprises or to groups; composition of the workforce for gender, contract types, presence of volunteers; characteristics of the users of the organization and indirect beneficiaries; evaluation of the financial and economic risks of the organization. 


C – Aims and activities

     The section should present the main aims, medium and long term strategies, policies, activities, and outcomes achieved by the social enterprise. In respect to the provision of the law on social enterprises, it must explicit the rules and processes applied to involve users and workers in the decision making process. Furthermore, the section should show the relevant factor for the achievement of the strategic aims of the organization, by distinguishing them into under-control and out-of-control variables. This section also presents the evaluation of the outcomes achieved by using both quantitative and qualitative indicators and by distinguishing the outcomes for each branch or activity of the organization; the evaluation process must also involve users and employees of the organization in order to present their point of view.


D – Financial situation and description of the main financial aspects

The section musts include: the analysis of revenues and income of the enterprise, by also indicating the percentage of revenues generated from the principal activity in comparison to the secondary or additional activities supplied; the analysis of costs and charges, of founds, donations and contributions; the analysis of investments and ways of financing. Special attention is devoted to the fundraising policy.


E – Other additive and facultative information

This section can be implemented by the social enterprises with information on other specific activities and all information omitted in the previous paragraphs. The aim is to illustrate with further detail the impact on the main organizational stakeholder, on the community and on the environment.

The presented structure certainly shows both the completeness and the  complexity of the social balance provided by law. Nonetheless, it helps in understanding how the social balance is and must be conceived: as an instrument for communicating the social impact of the organization and for evaluating outcomes achieved on the whole stakeholders of the organization and the community itself, but also of the deviations from the prediction and the organizational aims. Furthermore, both quantitative and qualitative data are relevant in illustrating the activity realized: they are the two faces of the social accounting and of the social impact produced.



Notwithstanding the national decree on social balance for social enterprises, Lombardy Region has given its specific guidelines to draw up the social balance for social cooperatives. These regional guidelines are quite different from ministerial decree and provides that the social balance must be composed of eight sections:


Objectives of the social balance


Methodology adopted for social balance

Current regulation


Date and the terms of approving


Social object

Company details 

Members and boards


Business sector


Institutional purposes


Objectives and strategies of medium-long term

Objectives of balance sheet

Evaluation of the results

Policies of social enterprise

Territorial reference

History of cooperative


Decision-making and control


Appointment of directors and their mandates

Directors' remuneration

Report on internal management activities


Internal Stakeholders

External stakeholder

Methods of involvement and participation


Evolution and changes of the social base

Number of workers

Activities and services developed in relation to its purpose

Relations with their territory

Type and number of beneficiaries




Distribution of produced wealth 


8.  Vision 

The regional law does not conflict with the national decree, since co-operatives can follow the guidelines of the ministerial degree provided the inclusion of all information required by the regional decree.


On funding

The practice of social balance is not supported by any type of funding. Social enterprises find the economic resources to write and disseminate this document in their internal resources. Maybe the cost of the realizing the social balance is in any case lower than the benefit that this document produce: on the visibility of the organization, on trust development among stakeholders, on the opportunity to collect more resources (such as donations and voluntary work) from the local community thanks to a better communication of the social aims and impact produced. We therefore can claim that the social balance is effectively self-sustainable in social enterprises.


3. Evidence/Justification for Good Practice

It is important to try to provide convincing evidence that a practice is a good practice. This helps avoiding being self-referential.

However, this should not prejudice your choice of good practice cases in favour of the “safer” longer established cases with more evidence; less known, innovative models of good practices would be equally interesting, provided their longevity/sustainability seems reasonably assured.

3.1 hard evidence:

A first measure to verify the efficiency of the social balance is its usage among social enterprises. If for some social enterprise types and some Italian regions (such as Lombardy) the social balance is required by law, for most of the social enterprises it is a voluntary choice. How many are there the Italian social enterprises that prepare their social statements? In 2011, Iris Network (the Italian network of research institutes on social enterprise) carried out a survey on a representative sample of over 11 thousands social enterprises, the majority of them were social cooperatives but there was a presence of also other non-profit organizations (foundations, voluntary organizations, associations, etc.) with productive functions (i.e. which were producing welfare services and had therefore the main traits of social enterprises). Among the topics investigated by the survey there was also the social balance. Data show that 73% of social enterprises write a social balance. This is a quite high percentage, and the data highlights that many social enterprises invest resources in tools and indicators which are able to measures their social impact without having to comply with a legal obligation; legal constraints could instead flatten and standardize the quality of information produced, by decreasing the quality of communication also.

Social enterprises which declare to write a social balance are mainly located in the regions of northern Italy (the areas where social enterprise is more structured and included Lombardy and Friuli Venezia Giulia, where the social balance is mandatory for social cooperatives) (76.9% of northern social enterprises write a social balance) as well as those that operate in two main core business: health and social care (77.8%) and education (73%). Finally, the social balance is more diffused among the consolidated social enterprises, which were created between 1990 and 1999 (78.3%).


Table 1. Methods for disseminating the social balance


It is distributed among the workers.

It is distributed among the users.

It is published on the website of the organization.










Fonte: Iris Network – Unioncamere, stime indagine imprese sociali, 2011


There is also a second “hard evidence” from this research: the way in which the social balance is distributed among the different stakeholders. Data show that, despite the effort of social enterprises, social balances are moving in a "short range". Most of social enterprises, in fact, claims to distribute the social balance to their workers (44%), while few social enterprises usually sent or present the balance to the users of goods and services (6%) or have posted it on their website (12%).

In general, the social balance can be also seen as the right instrument to:

·         demonstrate economic and social measures of outcomes – e.g. it gets more people back to work than other approaches, or it is more cost effective

·         apply social measurement techniques, where these have been previously conducted (including SROI calculation).

·         Carry out research and apply to survey data – based on user satisfaction questionnaires; data on stakeholder views, etc.

As a conclusion, we can claim that the social balance represents a good and diffused practice in Italy, but social enterprises must work more on it especially in terms of dissemination and visibility of this important instrument of evaluation of their social impact.


3.2 soft evidence:

There are many indirect indicators that can be offered regarding the effectiveness of social balance as an instrument of social affirmation and promotion of the social enterprises’ identity. These indicators refer to the spread of a culture and practices related to the involvement of different stakeholders. From this point of view, the social balance can be considered a tool not only for communication but also of interaction between stakeholders. If theoretically, social enterprises can be considered "participative enterprises," what are, in practice, their strategies and their behavior in this regard? To answer these questions, we can propose, once again, some results of the Iris Network’s survey on social enterprise. The survey focused on the methods of involvement of two classes of stakeholders: workers and the users. They are primary stakeholders also from the legislative point of view. The social enterprise law, in fact, mentions them explicitly in order to be properly "involved" through "information, consultation or participation" mode to the business.


Table 2. Workers' participation

  v.a. %

in the strategic decisions of company in the services’ s management

in advisory committees or meetings on the services’ management

in strategic decisions concerning human resources

in advisory committees or meetings concerning human resources

in institutional bodies

as partners















Fonte: Iris Network – Unioncamere, stime indagine imprese sociali, 2011


In the case of workers, social enterprises tend to involve and communicate them in different ways, although none social enterprise the threshold of significance represented by more than half of social enterprises. In addition, 28% of social enterprises say that workers do not expect any form of involvement, although social enterprises are typically labor-intensive organizations and therefore they call themselves “participatory organizations”. Policies for workers’ involvement are concentrated especially on the side of the production processes and, in particular, on the strategic plan of the organization. For example workers tend to participate to planning, monitoring and evaluation of production processes. Workers’ participation in those issues more related to their activity, i.e. the management of human resources, are instead less diffused. In this case it is more prevalent an approach centered on consultations, meetings, and other informal procedures rather than on the adoption of the strategic guidelines. Moreover, there is a spread of formal participation of employees in administrative bodies and, especially, as members of the company by exercising property rights.

In the case of users, participative strategies undertaken by social enterprises are less widely used, never exceeding the 10% threshold. Furthermore, 85% of social enterprises say that they do not perform any action to involve their users. In any case, for social enterprises that have invested in the relationship with their users, these stakeholders tend to be involved in the production process only. The chosen approach is to focus on consultation through regular meetings, rather than the contribution to the definition of the strategic orientation. Finally, the formal involvement in the administrative and corporate structure is residual, indicating a low propensity for social enterprises to operate with its users outside of the service relationship.


Table 3. Users’ participation

  v.a. %

in the strategic decision of services’ management

in advisory committees or meetings on the management of services

in the strategic decisions related to human resources

in advisory committees or meetings concerning human resources

in administrative bodies

as members















Fonte: Iris Network – Unioncamere, stime indagine imprese sociali, 2011


A further exploration on the role of the users concerns the evaluation of users’ satisfaction and perceptions. Data show a certain distribution of social enterprises among organizations which are equipped with the classical instruments for the measurement of costumer satisfaction (questionnaires) and organizations that do not frequently follow the traditional practice of regular meetings between clients and managers.


Table 4. Do users take part in evaluation of the results?

  v.a. %

Yes, through satisfaction questionnaires

Yes, they are called annually by the firm 

Yes, they have meetings with the leadership of the company

Yes, other











Fonte: Iris Network – Unioncamere, stime indagine imprese sociali, 2011


A final important aspect of the propensity for the involvement and participation of social enterprises concerns the impact on the effectiveness of their activities and, on the consequence, on the benefits of a collective nature generated in favor of social groups (often disadvantaged) and local communities. These are activities whose relevance depends not so much on the value generated in economic terms, but rather the propensity to pursue a mission to improve the well-being of the community and in particular to improve the living conditions of the most vulnerable individuals, redistributing their own resources.


Table 5. Activities in favor of consumers and of the community

  v.a. %

The offer of free services to certain users or pay-differentiated

The promotion of awareness campaigns among the public

The creation of educational and cultural activities for the community

The response to community needs not satisfied by other companies











Fonte: Iris Network – Unioncamere, stime indagine imprese sociali, 2011


Research data show that a significant percentage of social enterprises offering free or pay-differentiated services (45%), produces educational activities for the community (47%) and promotes awareness campaigns (45%). They are in fact relatively few (20%) the organizations that are not engaged in any of the activities listed in the table. In summary, the proposed "soft evidences", reveal a significant degree of improvement in the effectiveness of the social balance.

If it is true that many social enterprises are equipped with this tool, it is equally true that they can best use it to enlarge and strengthen ties with both primary stakeholders (service users in particular) and with external stakeholders related to the various expressions of the territory in which they operate.

Finally, we can include among the soft evidence of the social balance the following consequences:

·         organisational changes/innovations that have been generated (participation of new actors, outreach to new target groups, etc)

·         congruence/synergy with related policies

·         recognition, for example in competitions/awards for excellence.


4. Outcomes (for different stakeholders)

            Describe its achievements (intended and unintended); and how it is seen by different stakeholders involved including government policy bodies (ESF), and social enterprise stakeholders (user organizations and representative bodies);

Although we have no data on the real perception of the real usefulness of the social balance by external stakeholders and local governments, some national case studies and interaction with social enterprises can help us in coming to some general thought.

Firstly, as described in the former analysis, social balance is a good instrument for coming to evaluations and indicators of social impact. Social impact is today in the core of European policies for supporting social enterprises development, of banks and financers for deciding the organizations to be financed, of public administrations and governments for deciding about subsidies to social enterprises and about subsidiarity and delegation processes, of the community for increasing their donation will, etc. It can be therefore claimed that social balance is an interesting and essential document today to answer the need of all these stakeholders. Furthermore, since the law establishes the guidelines of the social balance, data collected are comparable and external stakeholders can evaluate the efficiency and the effectiveness of diverse social enterprises by looking to and comparing their social balances. This opportunity must not be stressed too much, in any case. In fact, it must be considered that data collected in the social balance: (i) in many cases are self-esteem and self-evaluation of social enterprises and do not refer to objective data; (ii) organizations of different type (e.g., different service, different type of users, different localization, etc.) are difficult to be compared and therefore indexes in the social balance are not standard even if they are standardized in the approach.

Secondly, the social balance communicate to the community and therefore it represents a good instruments for enriching the visibility of social enterprises. Social balance reduces asymmetric information among parties with advantages for both the social enterprise itself and its stakeholders (users, donors, etc). A better knowledge of the social usefulness of the activity, of the aim of the organization and of its social values tend to increase trust and social capital. These are certainly indirect advantages for the stakeholders, and they represent outcomes of the social balance.

Thirdly, recent investigation on the perception of the social balance by clients of Italian cooperative banks have shown that they perceive the document as an important instrument for being informed about the social activities supported by the organization and about their social aims and outcomes. It therefore increases monitoring on aspects that are usually out-of-control or under-evaluated. Although the investigation refers to another type of organizations and clients, we think the perception by users of social enterprises is exactly the same. The social balance is seen by the majority of social enterprises’ stakeholders as the clearest instrument for social accounting.


5. Strengths and Weaknesses

            Briefly summarize its strengths and weaknesses from the perspective of different stakeholders involved including government, and social enterprise stakeholders.

The reflection on the outcomes of social balance certainly helps in underling some of the advantages of the social balance: increasing communication, giving some indexes of social impact, promoting trust in the organization and will of investment, increasing knowledge and thus social capital, etcetera.

Moreover, we can identify other strength and weaknesses when looking to the social balance in general and to the social balance in Lombardi as a specific case.

Generally speaking, we can identify in the social balance these main strengths:

-          The social balance can be an effective tool for the dialogue with external stakeholders but also a useful tool to engage internal stakeholder (eg workers) in its creation and dissemination. It can be a tool that promotes and monitors processes of change management.

-          The social budget enabled social enterprises to collect "big data" on their social functioning and to elaborate impact indicators that can be used also by other entities (eg in finance).

The main weaknesses of the social balance can be instead identified in:

-          The obligation of social balance and the presence of social reporting schemes too specific generate bureaucratization and do not help the promotion of the distinctive features of social enterprises.

-          The preparation of social balance outside of a broader strategy of communication and stakeholder engagement weakens the effectiveness of this tool to promote the identity and visibility of the social enterprise.

When looking to the specific case of social balance in Lombardy, some other points emerge as important in the analysis.

We can consider as strengths the following point:

  1. A lot of data about social and economical aspects about social co-operative social in Lombardy Regions
  2. The opportunity to study and analyze the added value of social cooperatives in Lombardy


While it represents some weaknesses the fact that:

1.      Lombardy Region does not commit social cooperatives to use the same scheme so it is not easy to compare the datas.

2.      Not every year the Lombardy Region provides the data and highlights developments or critical aspects


6. Comparisons with other experiences (alternatives or complementary - in same territory or elsewhere)

            Identify and briefly describe any alternative or complementary exemplary experiences that you think are worthy of further consideration in this cluster theme.

Other social accounting schemes and instrument should be analysed and compared with the Italian model of social balance, but we do not possess data on other countries.


Nonetheless, we think some other instruments must be considered as complementary to the social balance or as part of a complete social accounting:

- the presence of web sites of social enterprises and procedures for dissemination of the social balance; as described in the data analysis, sometimes social enterprises write social balances but do not diffuse them in the right (or in any) way; web sites can represent a good methodology for diffusing information and increasing knowledge among stakeholders and therefore are complementary (but not substitutes) of the social balance;

- a good social accounting strategy also need to collect objective data and subjective analysis; therefore, data collection requires to formalize instruments and to recur to validated methodologies; questionnaires on users wellbeing, on workers satisfaction and job condition, on public bodies perception should be for example formalized, as well as social enterprises and social balance would need of indexes and measures for the evaluation of their social impact.


7. Overall assessment and transferability

As a general reflection on transferability of the Italian model of the social balance, we want to sketch some general suggestions.

Firstly, by looking to the Italian model of social balance, we can claim that the dissemination and transferability of the social balance can only take place through guidelines and by building community of professionals able to promote them and to adapt them to different social enterprises. In addition, the social budget must become more and more an instrument consisting of a multilevel database that can process a set of performance indicators about social impacts that are communicated in different ways to the different stakeholders of the social enterprise.

Secondly, when looking to the specific case of Lombardy, we have to consider that the Region has decided, together with the cooperatives umbrella organization, to oblige social cooperatives to write up the social balance. The balance sheet do not provide comprehensive information about the purposes of the social cooperative. It is necessary that the social cooperatives writes up Social Balance to Balance Sheet to highlight the peculiarities of their type of business in which highlight other essential elements: a brief description of the results of the non-economic activities developed, the relationship with the territory and their mission and vision.

Thirdly, in order to adopt the social balance in social cooperatives:

- it is necessary to check and report on social and financial activities ;

- it can be taken, as well as a tool for internal and external communication, as a basis from which to develop the social strategy of the cooperatives;

- it can be considered a tool to involve important stakeholders for the cooperative

- if other regions at country level would follow the same example we could have every years Italian data about social cooperatives, so It can be a tool to study and analyze social cooperative in a perspective of development of the sector.

The comment papers by other partners help also in understanding the transferability and replicability of the transfer in each country. Whether in general we can claim that no country presents substantial difficulties in adopting the social balance model (and some of them already see the application of social accounting models) and that there are no boundaries at country-level or due to the status of cooperation and regulation at national level, some problems in the adoption of the social balance could emerge due to the characteristics of social cooperatives themselves.

Firstly, many partners observe that the model of social balance is too costly for organizations and especially for the smallest social enterprises. So, the obligation to draw up a social balance would increase the burden of reporting and be perceived as very negative if imposed by law or by public administrations. The consideration of a voluntary application of the social balance can be therefore the most replicable solution.

Secondly, due to the costs of the process of the social balance creation , this instrument should be, at least in some emerging countries, subsidized by national or European funding. The legislator has therefore to recognize the added value of the social balance, which can be seen as an instrument of social impact value, with the advantage of collecting both qualitative and quantitative data and of avoiding the rigidity of alternative indexes (as SROI).



LLRR n. 21/2003 and n. 1/2008

IRIS (2013) Annual report on social enterprise in Italy