sofyan
30 December 2014

ITALY. Country profile

  1. General context (definition, recognition, partnerships)

1.1 Brief history and legal framework

Italy has been historically characterised 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 for 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. This law (n. 381) is still one of the most interesting and innovative laws on social enterprises in Europe (and in fact, other European countries -for example Poland- have taken it as a model for elaborating their own national legislation).

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 (so that we will call them WISCs hereinafter). These latter organizations configure as the first world experience of work integration social enterprises (WISEs).

The Italian model of WISCs assumes by law specific traits. First, WISCs are required to have 30% of the entire workforce composed of disadvantaged persons as defined by the law. The definition of disadvantaged workers is quite extensive in comparison to previous (but also to other international) legal definitions, since it includes people with physical and sensorial disadvantages, people with mental disorders and psychiatric problems, and also drug-addicts, people suffering alcoholism, convicts and ex-convicts who qualify for alternative solutions to prison and young people with family problems. Second, disadvantaged workers must be ensured a wage and also a contractual relationship that follows the normal rules in force for ordinary workers. Third, the law requires that disadvantaged workers be made members of the cooperative (barring a few exceptions). At the same time, and with the aim of ensuring disadvantaged people a real work experience and training, the law allows WISCs to conduct any activity in any industry, with the exception of services provided by A-type social cooperatives. Moreover, it leaves WISCs the freedom to choose their objectives, and specifically to decide how they aim to re-integrate disadvantaged workers back into the open labour market rather than keeping them perpetually in the social cooperative. In order to support their activity, the law also ensures WISCs some financial benefits and specifically exonerates them from the payment of some corporate taxes, payroll taxes, and social security costs for each disadvantaged employee.[1] Finally, Law n. 381 ensures easier access to public tenders, although this channel has not been pursued much to date.

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 (the number of organizations assuming this qualification today is very restricted - 500 in 2010). Organisations have been reluctant to apply to this qualification because it would bring additional bureaucratic burdens (e.g. producing official balance sheets) without bringing significant advantages. Nonetheless, this law is currently being revised and in the future it may play a greater practical role in supporting the social entrepreneurship sector in Italy.

1.2 Main figures

According to EURICSE data, at the end of 2011 active non-profit organisations in Italy amounted to 301,191 (i.e. 28% more than in 2001). Also very important is the contribution of the sector in terms of human resources: 4.7 million volunteers, 681,000 employees, 271,000 external workers and 5,000 temporary workers. Within the Italian productive fabric, the non-profit sector represents 6.4% of the active economic units and 3.4% of employees. As far as the specific economic activities are concerned, it is important to notice that, the non-profit sector represents the key productive entity within the social assistance area (with 361 non-profit entities every 100 enterprises) and the cultural, sports and entertainment areas (with 239 non-profit entities every 100 enterprises).

During the last twenty years, the growing importance and role of social cooperatives in Italy (between 2001 and 2011 the number of social cooperatives has grown by 98% reaching 12,264 units in 2011 while the number of employees has grown by 115% reaching more than 365,000 employees and 42,000 associates volunteers), has widened and legitimised the cultural, scientific and political debate around social cooperation itself and has promoted new ideas and visions.

After the legal recognition, the number of social cooperatives grew exponentially. By looking to WISCs only, the national institute of statistics (ISTAT) calculated in 2005 the presence of 2,419 work integration cooperatives in Italy (on a total of 7,363 social cooperatives) employing over 30,000 disadvantaged workers, but they grew at over 5,200 units (against more than 8,000 type A social cooperatives), according to the national Chamber of Commerce (Euricse, 2012). WISCs are mostly small to medium sized firms (43% of them employ between 15 and 50 ordinary employees), while volunteerism represents a very important resource available to more than 60% of WISCs. Looking to other national data, interesting to note is the strong involvement of WISCs in networks: 96.7% collaborate with other social cooperatives, 85% with local administration (mainly municipalities, but also the Province or the Region), and 79.4% with for-profit organizations (for selling their products or for supplying trained disadvantaged workers future job opportunities).

1.3 Partnership with public authorities

Italy is characterised by a very long tradition in terms of social enterprises development. This tradition is based on the endogenous creation of social enterprises (particularly in the form of social cooperatives) which have developed throughout the years as a bottom-up phenomenon. The central and regional governments have subsequently created specific regulations for the sector. This process has taken several decades and, as a consequence, has created a rather sophisticated and complex system in terms of both policy and legal frameworks.

Therefore, as far as the Italian case is concerned, the difficulties concerning policy co-ordination are not so much linked to the lack of policy or legal frameworks but rather to the co-existence of different systems (at regional and local level) and the plurality of practices and experiences developed in different territorial realms.

In spite of the complexity of the national system of social enterprises, public authorities at different levels have established, throughout the years, intense relations and collaborations which of course include the more practical service delivery function but have increasingly touched the programming of such services and the wider policy elaboration.

The institutional framework has managed to adapt to and support the evolution and the growth of the social enterprises sector in Italy for example through the Law n. 328 of 8 November 2000 “Framework law for the implementation of the integrated system of social interventions and services”. This is a key law which has favoured the implementation of the subsidiarity principle (both horizontal and vertical) and the promotion of actions for the support and qualification of non-profit organisations and social enterprises.

In this context, a very important role has been played by the Constitutional modification of 2001 which has revised the competences of State bodies and public authorities and has changed the distribution of competences and powers. In particular, the Constitutional changes have introduced the principle of vertical subsidiarity (attributing to the Regions and the local  authorities specific competences within the social policy area) and of horizontal subsidiarity (promoting the involvement of civil society organisations in the programming and management of services).

At national level, social enterprises have historically been involved (through their official associations at national level) in the elaboration of inclusion policy through a number of tools such as the Inter-ministerial Group on inclusion policy (which involves different national level ministries, employers organisations and trade unions). Also, the Third Sector Forum is a well-established structure which participates to different national tables. Recently, new forms of policy co-design have been established also as a consequence of the implementation of the partnership principle contained in the Structural Funds and, more in general, of the attention currently increasing at European level in relation to social entrepreneurs and entrepreneurship. For example, the Ministry for Employment and Social Policy has recently created a Multilateral Group on Social Entrepreneurship which involves not only other ministries but also social enterprises representatives and representatives from European non-profit networks working in the field.

Innovative public-private partnerships have been then experimented to deal with complex social challenges  as a multidimensional and crucial aspect to be tackled from different point of views starting from social cooperatives but including also a number of entities that share the same competences and objectives. This approach has been used in Italy and it has brought to the creation of innovative forms of public-private collaborations. For example, the renovation of public spaces and public real estate through joint investments from the public sector itself and social enterprises has allowed for the creation of new social activities (social services, cultural initiatives etc.). These collaborations have represented true management challenges (for both social enterprises and public authorities) but have proved to be forward-looking approaches producing very positive impacts for local communities who benefit from new social or cultural initiatives and at the same time see reduced public spending (for example in maintenance of unused real estate).

At the Regional level, there frequently exist strong cooperation between public authorities and social enterprises in all relevant fields from service actual delivery to programming and organisation of such services to the programming and elaboration of actual policies.

As far as the Lombardy Region is concerned, collaboration between the two sectors is intense and largely fruitful. The Region in fact has established a structured dialogue with the non-profit sector through the organisation of periodic round tables. The main aim of such round tables is not only to plan and program the services but also to prevent difficulties. Such round tables are organised as follows:

1- Secretarial Table on the Development Pact

This round table is responsible for the overall programming of all Regional Development Policies. It is held and organised by the Regional Presidency and involves all relevant Regional DG, Employers organisations (including social enterprises) and Trade unions.

2-Structural Funds Tables

Both the ESF and ERDF have a specific regional table for programming and monitoring the elaboration and implementation of Structural Funds in Lombardy. As far as the ESF is concerned, the round table involves regional as well as local authorities and employers and workers associations. Social enterprises are largely represented.

3-Thematic Tables

These tables represent very practical opportunities for programming and where necessary re-programming of specific policies. Social enterprises are very important actors within the tables that are relevant to them such as those concerning disability, services etc. As far as services are concerned, it is important to underline that there are two separate tables i.e. one made up of Management agencies and then separate content tables for each type of service (even though they are not organised very often).

Together with these regional tables, it is important to highlight that the policy co-ordination structure is also based on provincial round tables that are organised regularly by each Province in relation to the specific themes they are also responsible for i.e. Training, Employment and Disability. Social enterprises are largely represented at these tables too.

In the province of Trento, the so called Action 9—re-named in 2012 “Intervento 18”—regulates in a specific way the relationship between the Employment Agency of the autonomous Province of Trento and local WISCs.

Intervento 18 characterizes by the decision to include WISCs as actors of active labor policies and for supporting their activity by distributing financial supports depending on the employment impact and on the innovation of the work integration practices and procedures (expressed in training activities and investments in tutors and individual programs).

By looking to the action in detail, the relationship between the local Employment Agency and WISCs is more structured than a simple supply of subsidies from the public administration, since there is a frequent exchange of information and somewhat co-planning on the integration projects. Specifically:

  • Subsidies are assigned after an attentive evaluation of the cooperative and of its work integration project.
  • The evaluation ex-ante of the WISCs’ projects is then integrated by a final evaluation of outcomes achieved and by annual monitoring;
  • In the case of disabled workers (having a certification of psychiatric disability according to national law 68/1999) the Employment Agency co-plans with the WISC itself and with some local social services the individuation of vulnerable people to be integrated, although the cooperatives can (and frequently do) propose the name of the person to be integrated;
  • The Employment Agency helps WISCs in individuating possible partners for the hiring of trained disadvantaged workers, especially on the open labor market and among local business firms.

The tools supported by the Employment Agency to finance WISCs are:

(1) the availability of individual additional subsidies for the first three years of employment of disadvantaged workers in the cooperative; individual subsidies can be extended to six years more for those workers with psychiatric problems who are evaluated as not employable in an ordinary position after the three years period. Individual subsidies cover 60% of the total labor costs in the first year of employment in the WISC, 40% in the second year, the 30% in the third year, while for people with psychiatric problems the coverage is of 20% of the labor costs for the following six years;

(2) a subsidies for the coverage of the labor costs of tutors (for a total of max 50% of their labor costs when the number of employed people is over 3 persons) and of the so called social responsible (for the 60% of their labor costs);

(3) general subsidies to social cooperatives which are also provided for specific activities, such as feasibility study and business plans for new social cooperatives start-ups, training activities for ordinary workers in social cooperatives, investments in new products and procedures necessary to innovate the social cooperatives’ action.

The total amount of subsidies supplied to social cooperatives is as a consequence quite huge: they were about 300thousands Euros in 1994 and they rised progressively to 1,5million Euros in 2010, with an increasing impact also in terms of number of beneficiary social cooperatives.

  1. Support infrastructure

For a long time both the Italian movement of social enterprises/social cooperatives and the legislator have developed policies to support the growth and development of social enterprises:

(1) there are many consortia and umbrella organizations that support the start-up of new social cooperatives by providing them knowledge, experience, training, services and these same services are supplied by consortia to all their social cooperative members in order to strengthen their entrepreneurial traits and help the achievement of some economies of scale;

In general terms, social cooperatives’ collaborative structures are of two main kinds (within which they can take different forms):

a) Political (e.g. federations, confederations etc.)

b) Economic (e.g. consortia, joint groups, network contracts etc.)

Federations are characterised by the following functions:

  1. They have a watchdog function (e.g. they carry out external audits on behalf of the public national authorities; they watch on the implementation of the mutualistic objectives of social cooperatives etc.)
  2. Represent the voice of social cooperatives and their needs towards public authorities at different levels as well as other type of entities (e.g. trade unions)
  3. Promote the creation of new social cooperatives
  4. Promote restructuring and merging processes among social cooperatives,
  5. Provide legal, administrative and fiscal advice
  6. Support social cooperatives in accessing credit and funding.

Consortia of cooperatives do not simply deliver services to their members but they act as economic and legal actors.

The key features of consortia include:

  • Strong territorial identity (Consortia are in fact built by cooperatives working within the same geographical area (usually at provincial or regional level but also national);
  • Mutuality (The actions of consortia need to have a social utility function for the local community);
  • Cross-sector composition (consortia bring together cooperatives from different sectors so that they avoid being over-specialised, they can create synergies among different types of cooperatives and can experiment activities in new sectors).

The main activities of consortia are:

  • Promoting collaboration between social cooperatives;
  • Providing support services as well as technical and administrative consultancy;
  • Promoting training activities;
  • Supporting activity development for their members by helping them sell their products or by offering services to third parties (public and private entities);
  • Promoting and managing relations with public authorities;
  • Acting as a general contractor in public tenders (which means that consortia can participate in public tenders in the name of their members and then manage the contract directly however involving the members of the consortia in the activity);
  • Promoting access to credit and funding of their members

It is important to notice that not all consortia carry out all the above activities. There are in fact two type of consortia:

  • “Light” consortia (These provide only basic services and support to their members (i.e. training opportunities, administrative support etc.).
  • “Heavy” consortia (These have a more structured approach and have many key functions, including the general contractor function).

In the Italian experience, both type of consortia have proved to be effective in delivering their objectives and in supporting the growth of social cooperatives.

These consortia represent in Italy a real tool for increasing the critical mass of social cooperatives allowing for a better and more effective placement on relevant markets. In practice, consortia have, in many cases saved social enterprises (particularly the smaller ones) and have allowed for greater (and at the same time more equitable) competition among cooperatives and between cooperatives and other types of enterprises.

(2) both the national law and consortia themselves have supported the creation and growth of funds and institutions for the financing of social enterprises. For example, the law provides that when social cooperatives go bankrupt they are obliged to devote their assets to a common fund for the development of new social cooperatives (see following paragraph).

(3) in the last ten/twenty years some incubators have been created in order to support the development of single social enterprises and the networking and reciprocal support among them; these institutions have been called “Hub” and they emulate the structure and aims of the famous The Hub in London; the Hubs’ aim is to give space to entrepreneurial ideas with a considerable sustainable and social impact by providing services and creating vibrant communities. In the Trento province, The Hub Rovereto was founded some years ago as a space and network for supporting social innovation and it mainly supply services, diffuse knowledge, train young social entrepreneurs through events and seminars, ensure a peer-to-peer system;

(4) as a self-promoted initiative and a natural evolution of Italian social enterprises, Italy has experienced the continuous growth of the sector in terms of imitative processes and spill-overs; this phenomena has been known as the ‘strawberry field’, since social cooperatives diffuse more and more because supported by a network system but also by a ground in which social capital and willing to cooperate represents the fertilizer;

(5) the law also provides for the inclusion of some special clauses in public procurement, which ensure higher scoring to enterprises having the legal form of social cooperatives and to some characteristics achieved by social cooperatives (e.g., number of disadvantaged workers employed). Social cooperative representatives (e.g., consortia and umbrella organizations) work together with the public administration in order to define these clauses.

(6) training is promoted at different levels and schools or single courses for social entrepreneurs have been established in order to diffuse specific education and sensibility to the social enterprise topic. At national level, there are some universities degrees for social entrepreneurs (Master degree in Management of Social Enterprise in Trento, many single courses promoted in the academy, as the course in social entrepreneurship at the faculty of Sociology in Trento); universities and institutions are involved in networks and ESF projects for mobility and training in social entrepreneurship (e.g., Leonardo or Ariadne projects, Marie Curie projects, etc.), executives have been also planned by consortia or research institutes to supply training opportunities to managers of social enterprises in order to help them in innovating their activities and growing (e.g., training in the national consortia of social cooperatives CGM, promoted by the local Federation of cooperatives, or by the research foundation Euricse and in Bologna by the institute Aiccon).

(7) Research and knowledge are two fundamental aspects for the creation of social cooperation and social enterprises models. They have in fact supported the analysis of the phenomenon and the development of a deep understanding of its working and impact through specific studies of both theoretical and practical models. These processes have significantly supported the evolution and the development of the sector.

(8) In Italy there has been the development of both a strong theoretical framework as well as practical tools for the measurement of the social and economic impact of social cooperatives and social enterprises (for example through the development of social accounting models). The legislation in the field has supported this development by providing for a standard “social balance sheet” which contains the minimum requirements for social accounting process therefore allowing for a development of specific tools adapted to specific contexts and objectives.

  1. Specific support measures in the Province of Trento

The Trento province is experiencing different approaches and diverse strategies for supporting the growth and development of social enterprises. We can specifically mention two main projects:

(I) Linked to the European Regional Development Funds, during the summer 2013, the Autonomous province of Trento has opened an invitation to tender for projects promoted by young people aged under 35 in order to support the start-up of new enterprises in the province; one of the main comma of the tender provides that a part of funds will be dedicated to new social enterprises and social innovation, that means, to new ideas for enterprises working in the fields of social services and having consistent social impact. On a total of 180 projects submitted, about the half concern social services provision and the creation of not-for-profit social enterprises. The funding refers to the so called ‘seed money’ project and will allow selected new social enterprises to access the funding for covering their start-up costs. Furthermore and interestingly, the announcement also provides for the financing and the creation of special incubators supporting the development of these new enterprises. Incubators will work together in a network in order to support with specific training, knowledge, and services the new enterprises. Therefore, they are not generic and all-encompassing incubators, but each one will be dedicated to specific sectors and activities so that the social enterprise may access to more than one hub depending on the need and activity promoted.

(II) The Employment Agency is for many years supporting the growth and development of work integration social enterprises not only by providing financing to their activity and by co-planning the integration processes (as described in the previous cluster), but also by working together with the local consortia of social enterprises (Consolida) and financing some training activities and special projects for a better development [we remember that the Employment Agency is financed by the funding of the Autonomous province of Trento, which in part comes from ESF]. Among these projects, interestingly in the last months the Employment Agency has supplied to local work integration social enterprises and to Consolida some guidelines to be respected for a better growing process. On these guidelines new activities are evolving in the social enterprise network. First point in the guidelines, each social enterprises is invited to write its own guidelines for a good work integration process; the guidelines represent in the strategic planning of the enterprise the ideas to be developed and therefore are useful instruments for a better understanding of aims and gaining awareness of its own role. Training activities are therefore suggested to social cooperatives and the local consortia. Second point in the guidelines, social enterprises should adopt the social reporting and specifically this document should include some self-evaluation of the efficiency of the activity promoted; social cooperatives are asked to adopt some methodologies for evaluating the work integration process in terms of benefits for the public administration and the local consortia is asked to train its cooperatives and to share with them a cost-benefit analysis to be implemented yearly in the social accounting system. Third and last point, social enterprises should work together for a collective strategic plan; social enterprises working in the same municipality should share ideas and planning to better answer local social needs and to also coordinate their activity with the local public administration.

  1. The financial eco-system

In the Italian experience, an important contribution to the development of the sector has come from the specialised finance and the ethical finance that has grown around the sector. Specialised actors (both private and public) have in fact created a number of specific tools and innovative financial solutions dedicated to the support of entrepreneurial projects particularly within the credit sector, the fundraising and the workers-buy-out of enterprises hit by the crisis mechanisms. These financial solutions have significantly helped the growth of the sector by bringing venture capital and investments which, by selecting projects where to invest on the basis of sustainability criteria aimed at evaluating the objectives, the feasibility and economic viability of initiatives, have helped the implementation of innovative projects.

Moreover, social enterprises nowadays enjoy the same accessibility of funding of other types enterprises (particularly SMEs) from both the public (procurement, grants etc.) and private (access to credit from the banking system).

In relation to the criteria used in to evaluate the capacity of social enterprise to get access to financing and credit, it is important to underline that, in general term, the Italian banking system and its system of financial institution uses, for social enterprises, the same system as for other SMEs even though there are small differences in some of the terms (i.e. interest rates etc.) due to the nature of the enterprise and its normally low capitalisation. Therefore, even though some banks (particularly those from the ethical banking sectors), do tend to evaluate the social added value produced by social enterprises in their evaluations, they have to comply with the rather rigid regulations of the sector (i.e. BASEL III) which do not leave significant room for manoeuvring in terms of social impact evaluation.

3.1 Main sources of financing for social enterprises in Italy (national level)

- System of Mutualistic Funds

Social cooperatives contribute directly to the creation of these Mutualistic Funds by paying in 3% of their profits each year. These Funds then re-invest the funding collected with the aim of helping new and existing social cooperatives develop, supporting innovative social projects and opening up new markets to social cooperation.

- Tax relieves and tax incentives applicable to social enterprises

Social enterprises are exempted from paying the tax on company’s income (IRES tax in Italy). Moreover they do not pay taxes on profits if they are classified as indivisible reserve (i.e. reserves which cannot be distributed to the associates).

- Other support instruments

Law 460/97 establishes that social enterprises have to be “ONLUS” i.e. non-profit making and socially useful. For this reason, they are entitled to other special terms such as the exemption from the stamp tax (i.e. a tax normally paid to produce official documents and certificates) and other specific taxes such the tax on government concessions.

  • Asset lock

At individual or micro-level, SEs are themselves sources of self-financing. One of the main traits of Italian (and mostly European) SEs is the strong legal bond to accumulate profits totally or mostly to asset locks, with the consequence of increasing total equity and organizational solidity. Asset locks represent therefore a guarantee also to access to the debt market. Furthermore, in order to collect a higher amount of shares, in 1992 the Italian legislator enacted the law 52, which recognised the possibility for cooperatives to involve ‘financing members’, i.e. members who acquire specific shares that ensure them higher profit rights. So that social cooperatives can involve as members people interested also in the opportunity to make profits from the entrepreneurial activity and can skip the problem of under-capitalization that sometimes characterise small enterprises. Close to these self-financing strategies, social enterprises are searching for new partnership and for complementary solutions to answer their financial needs.

  • Private banks and foundations

At the macro-level, when looking to institutions and to the financial market, first of all microcredit and cooperative banks are increasing their role. Banca Prossima and Banca Etica are two important institutions for supplying loans to the third sector organizations; the mission of credit cooperatives is to supply financing mainly to families and local enterprises of small-medium size in order to support local development, and they have explicit social aims to support local social activity. While the attention to social enterprises by banks is therefore mature, these institutions are increasingly in need for methodologies that allows evaluating the social impact generated by SEs and therefore are able to select those project with higher positive impact on local economies.

Other institutions are supporting the development and financing needs of SEs. Bank foundations and national institutions are increasingly supporting SEs start-ups (as an example, Unioncamere, the Italian Union of Chambers of Commerce, Industry, Handicraft and Agriculture, proposes to new social entrepreneurs a compound offer of training programs, financial services and monitoring services through a complete supervision of their business plan in order to ensure long-term sustainability of financed organizations) and specific activities proposed by SEs (as an example, Fondazione Cariplo is supporting for several years the employment of disadvantaged workers in WISEs by providing grants and subsidies).

3.2 Funding at regional level (in the Lombardy Region)

- Regional law n. 1/2008

It provides for a tax break for NGOs (among which we find social cooperatives as well) which reduces workforce costs by 4.25%.

- Subsidies on newly created jobs

Work integration of disadvantaged people (particularly disabled) benefits, within the Lombardy region, from additional funding known as “Disabled Work Dowry”. The Dowry is distribute by the Region to the different provinces and the dowry allocated to each beneficiary can vary between €7.000,00 and €12.000,00 per year for each disadvantaged worker. The same Dowry system provides for a small grant for new social enterprises start-ups working in the field of work integration (in 2010 the maximum amount allocated to each new start-up amounted to €35.000,00).

 - Other subsidies related to social enterprises

The Lombardy Region has set up the so-called FRIM Cooperation fund (i.e. Entrepreneurship Rotation Fund) which provides funding for setting up new social cooperatives (max €250.000,00 for each new cooperative) or for widening and developing existing activities (max €1.000.000,00). Under FRIM, funding allocated may not cover more that 80% of the overall costs of the project or initiative.

  • Innovative financial tools

To further help social cooperatives working in the field of social and working inclusion of disadvantaged people, a few Italian regions (among which also the Lombardy Region) have activated the Jeremie ESF fund. The funding has operated during the past programming period (from 2009 onwards) and was open to cooperatives whose working force was made up of at least 30% of disadvantaged people. Yet, to allow for large participation from the cooperative world, the regions did not use the definition of “disadvantaged people” included in Italian law (which is rather restrictive) but the definition used by the European Commission which together with physical and mental disabled includes also immigrants, people over 50 years old who have lost their jobs and have difficulties in finding a new one and other categories of disadvantage.    

In Lombardy, Jeremie ESF was created in 2009 with an allocation of €10.000.000,00. In Septembers 2010 it was re-financed with an additional €10.000.000,00. The fund has loaned a maximum of €4.000,00 for each social enterprises’ associate (up to a maximum of €200.000,00 for each enterprise). If the associate stays within the social enterprise for more than 5 years the loan becomes a grant and it must not be repaid.

3.3. Funding at local level (autonomous province of Trento)

- Subsidies provided by provincial Public Administration

As discussed at Section 1.3, through the policy intervention called “Intervento 18”, the Employment Agency of the autonomous Province of Trento provides a series of subsidies to support the job integration of vulnerable workers within the cooperative system. It is interesting to highlight that these incentives are delivered for a three-year period with a “decreasing subsidy approach” with a view of supporting a parallel “increasing empowerment” of the vulnerable worker benefiting from them.

The Employment Agency also provides a second stream of incentives which support the labour costs of tutors/social responsible working in social cooperatives.

A third stream of incentives aims to cover the “research and innovation” dimension of social cooperatives i.e. it aims at supporting, inter alia, the development of feasibility studies, business plans and training activities.

According to the last available data, in 2010 social cooperatives based in the province of Trento benefited from 1,5 million Euro of incentives.

- Financial tools provided by the local federation of cooperatives

In the Trento province, Cooperfidi has been created by the local federation of cooperatives to supply loans and financing to members cooperatives, and Promocoop is the local fund for the development of cooperatives in the region and it collects the 3% of yearly profits of members cooperatives.

  1. Identity and visibility of social enterprises

Italian social enterprises are working in different directions to increase their identity and visibility and they are supported by a quite complete regulation, by their umbrella organizations, and by a long-time experience.

Firstly, since 1991 social cooperatives are regulated and they are recognised as a specific legal form. The term ‘social cooperative’ therefore helps these organizations in communicating to their stakeholders and the community in general that they respect the legal provisions of production of welfare services or integration of disadvantaged workers, and of non-profit distribution. The legal form therefore represents itself an instrument for visibility and identity. The same can not be said in general for social enterprises. While the intention of legislative decree 155/2006 was to offer all enterprises with social aims and bounded in profit distribution to acquire the qualification of social enterprise, the law has had several limitations and organizations have not recognised in it the opportunity to better identify their activity and make more visible their aims. Contrary to the intention of the legislator, the qualification of social enterprise does not represent today a ‘mark’ and it is adopted for a very small percentage of potential social enterprises. Furthermore, while the Ministry has provided for a public register where social enterprises are asked to register, no rigid controls are conducted on registered social enterprises to ensure that the qualification is effectively adopted by those organizations only answering to the requirement of the law.  A reform is thus in act to renew the law on social enterprises, but its consequences can be evaluated only in a few years. It can therefore be concluded that having an appropriate legal form (as the law on social cooperatives demonstrates) helps a better development and visibility, while qualification are too general and less accepted by organizations themselves.

Second, the evidence base is strengthened from both the presence of research institute on social enterprises and the attention of umbrella organizations to their members. In Italy, and in the Trento province specifically, the European Research Institute on Cooperative and Social Enterprises (Euricse) is carrying out annual investigations on social enterprises, which are aimed at both evaluating the trend in numbers and financial characteristics of social cooperatives (the so called Observatory) and studying in detail several topics (from governance system to members participation, from accounting to managerial strategies, from job satisfaction to managers traits, etc.). IRIS network is the other institute located in Trento that has the aim of connecting Italian experts of social enterprises and from some years it publishes an annual report on social enterprises in Italy (by estimating the number and characteristics of Italian social enterprises). Also the national umbrella organizations (Legacoopsociali and Federsolidarietà) have their research offices in order to investigate their social cooperatives members. And the National Institute of Statistics (ISTAT) is periodically monitoring the non-profit sector and social cooperatives. The attention to social enterprises is therefore quite diffused in research activities also, and the number of meetings, conferences, conventions, workshops per year supports the importance of this instrument. Nonetheless, other instruments for the dissemination of data among the society must be developed and therefore both the research institutes and the single social cooperatives must develop better instrument for dissemination to increase visibility for social enterprises.

Third, Italy has not jet formalized any social impact measurement technique. Maybe the creation of standard indexes for estimating the social impact of social enterprises is impossible to achieve due to the variety of social cooperatives or social enterprises to be included in the evaluation process. Nonetheless, the presented case study of Italian social balance –instrument that is adopted today by many social cooperatives- represents a good example of social accounting and of finding in social cooperatives diverse information about their activity and structure. The social balance required by law to social enterprises includes a specific lists of information that must be transmitted from the organization to its stakeholders, and therefore it can be concluded that the social balance is effectively the most diffused and complete way for giving visibility to social enterprises and demonstrating their added value in the society. Furthermore, social balance has the advantage to be built by the single social enterprise without following standard indexes, but representing in a subjective way the social impact of the organizations.

Fourth, with regard to quality standards and brands, Italian social enterprises have well worked on the former but less on the latter dimension. Quality is certificated by different recognised standards, which have been developed by the government. Although quality standards and certification can represent an opportunity to formally recognise the added value of services supplied by social enterprises and to certify through objective parameters the quality of inputs, social enterprises supports high costs for achieving quality certification. Social enterprises must follows the rules imposed by the government and therefore the standardization have the characteristics of bureaucracy and centralization of control; the procedure to achieve the certification is time-consuming and some parameters are not included in the quality standards, with lack of information and inefficiencies. Therefore quality standard are only in some cases efficient instruments for increasing visibility of social enterprises. With regard to brands, Italian social enterprises have not jet adopted specific marks to certify that the organization comply with certain social criteria. The legal form demonstrates per se the social nature of the organization and the compliance with the law and its boundaries. Marks are in case perceived by social enterprises as instruments for increasing their visibility among citizens and in the community as a whole. Consortia are helping in developing these strategies and sometimes the logo of the Consortia represents for members social enterprises the way for increasing their visibility.

Fifth, Italian social enterprises support dialogue and collaborative relationships with their stakeholders by organizing open meetings and moments of discussion, by developing projects together with local public bodies and private enterprises, by formalising relationships in networks and ATI (temporary enterprise associations), etcetera. Frequently, Italian social enterprises have multi-stakeholders governances and therefore other organizations, citizens, representatives of different interests and stakeholder groups are members of the organization. By looking at the type of collaboration and dialogue, social enterprises usually works especially with local bodies and local governments than with the central governments, since local bodies have in Italy more power in deciding about contracts with social cooperatives. Consortia and representatives of the social enterprise movement (like national scholars) are instead working with the national government and ministries in order to support the development of social enterprises and to come to a complete and clear regulation of these organizations (since some gaps of decree 155/2006 on social enterprises).

Finally, as already claimed, social enterprises practice networking with other stakeholders, while it is mainly developed through individual relationships than thanks to formalised instruments. Social enterprises generally have their own websites, but websites mainly help the communication from the social enterprise to its stakeholder than the opposite also. Tools like digital social networks are not very diffused among Italian social enterprises, although the bigger organizations tend to use also these instruments to contact their stakeholders. Investments in these technologies is somewhat supported by consortia at national level, but Italian social enterprises have certainly the need to invest more on these tools.

Developing higher visibility for social enterprises thanks to modern tools and maybe some common marks can be therefore a challenge for the future years. And Italian social enterprises must certainly work more in order to give higher visibility and identity to the movement as a whole instead of their single organizations.

In this general view and context, structural funds have helped single cooperatives to develop their instruments for networking, implementation of standards, innovation of tools, etc. For example, in the Trento province the Regional structural funds managed by the Employment Agency has been partially used by local social cooperatives to develop websites and social accounting practices, and to innovate their activity thanks to better relationships with stakeholders. In other regions, single cooperatives have developed better visibility and identity thanks to the financing of their projects by public funds or European funds. Nonetheless, many social enterprises initiated their activities for increasing visibility and identity in total autonomy, with internal resources and private initiatives. Public (and European) funds should be instead intercepted to develop large-scale projects, like websites for all social cooperatives, national tools for consultancy and networking, standards of evaluation, etc.



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            It is important to consider that social security costs amount in Italy at more than 33% of the gross wage.

 

 

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