sofyan
30 December 2014

FINNLAND. Country profile

  1. General context (definition, recognition)

In Finland we can see the social economy building from these actors:

  • In Finland we have traditionally strong third sector which provides different kind of voluntary and non-profit activities for citizens. During last decades third sector associations have also offered more services for public and private sector. Some strategic partnerships have arisen between third sector associations and public sector. In third sector organizations there has also been some movement toward more entrepreneurial actions and some associations have altered their activities as businesses. They are also considered to be companies for the taxations point of view. These new and more entrepreneurial actors of third sector can be considered as a part of social economy.
  • In Finland we have also strong co-operative movement and from the mid 1990s we have had vivid wave of new co-operatives. These new co-ops are a definite part of Finnish social economy. In the beginning of 2014, our legislation will facilitate co-operative entrepreneurship for instance by enabling incorporating a co-operative for one person.
  • In Finland we have few big foundations and mutual societies which could be considered a part of social economy.
  • In 2011, the Ministry of Employment and Economy created a High Level Working Group which represented various stakeholders, including social entrepreneurs, to examine and define social entrepreneurship and its model of action and make proposals for developing it.   Besides setting a definition, the Working Group launched an idea of a Social Enterprise Mark to promote the special characteristics and visibility of the social enterprises. This contained promising elements for the development of social economy. At the end of 2011, The Social Enterprise Mark was published by the Finnish Work Association, and today they also grant and manage the Mark. In summer 2013, there were 37 enterprises which had received the right to use the Mark, and the number is increasing. These companies can definitely be considered as a part of Finnish social economy.
  • Since 2004 we have had special legislation on “social firms” (work integration social enterprises; Act on public employment and business services 916/2012; Act on social enterprises 1351/2003, 924/2012; “sosiaalinen yritys”). A social firm has to fulfil specific requirements, for instance employ a certain percentage of people with disabilities or illnesses or long-time unemployed.  The social firm is entered in the register of social firms maintained by the Ministry of Employment and the Economy (23.8.2013 there were 54 social firms; they do not necessarily overlap with those 37 which have got the Mark after applying for it and having fulfilled its criteria).

The definition of social economy in Finland was first made by Niina Immonen in her thesis on the Finnish social economy. “In the Finnish context, social economy can be briefly defined as follows: “Social economy is economic activity carried on by co-operatives, mutual societies, associations or foundations in an effort to enhance socially and financially sustainable welfare among their members and the surrounding society through democratic co-operation.”

The challenges promoting social economy in Finland are:

  • General knowledge of social economy and social enterprises is weak (both in wider public and among business advisors).
  • The language/definitions are unclear and a little bit confusing (at least in Finnish).
  • Still quite few (visible) social enterprises (“yhteiskunnallinen yritys”) in Finland.
  • Social enterprises can perform in any form of enterprise, also as limited companies or sole proprietors. Social economy actors usually perform in enterprise forms which emphasize democracy and participation (in Finland mainly co-operatives) There is a lot of confusion about concepts regarding to social economy, social firms and social enterprises. There are not any national statistics or other comprehensive data/information about social economy or social enterprises.
  • There aren´t any social investment markets or special financial tools for aimed especially at social economy or social enterprises (even though the general instruments are available).
  • Partnership between the social economy and public sector actors may be undeveloped even though e.g. at the local level new ways of co-operation and service production can be tested.

Some good news about social economy in Finland:

  • Knowledge about co-operative model and new models of entrepreneurship is spreading, and business advisors are more eager to promote also co-op start ups. Promoting entrepreneurship (and at the same time employment and the sustainability of the economy) is one of the strategic objectives of the Government.
  • General opinion is positive about co-operatives and social economy and responsible business in general. Entrepreneurship is seen as a positive option for gaining livelihood.
  • Arvo-liitto ry, the umbrella association for social enterprises and a member of the influential employers´ organization, has been launched in 2014. It gathers some prominent Finnish social enterprises and is gaining new members.
  • The Social Enterprise Mark was launched, and new social enterprises (with a Mark) are born.
  • Co-operative model is developed and used also in social enterprises. New legislation is being drafted also for foundations.
  • in addition to new ways of self-employment and entrepreneurship, also new means of funding the start-ups and other enterprises are spreading and sparking interest like crowdfunding, impact investing and ethical banking; hubs for social enterprises etc.
  • Various policies as well as national funding instruments, ERDF and ESF do not exclude promoting social economy but look e.g. for social innovations.
  1. Support infrastructure

There have been few ESF funded projects for instance to support the establishment of social firms and social enterprises. Especially Community Initiative Equal was important in this respect, but also afterwards there have been a wide range of successful projects, even though their number has not been great. There has been e.g. projects to support the start up of new co-ops. During the period 2009-2013, Tampere Region Co-operative Centre was appointed by the Ministry of Employment and Economy to run a national ESF project called “Enterprising together!” The main aim of the project was to provide the regional/local business advisors nationwide with expertise in co-operative entrepreneurship. There have been also some other organizations promoting the social economy:

  • The HUB -network
  • The SYY (association for social enterprises)
  • The coalition for social enterprises (unofficial)

The Structural Funds OP for 2014-2020 includes no particular objective to support social economy. However, social firms or enterprises are eligible to apply ERDF funding to start or develop their business. Both ERDF and ESF funding are available to develop social innovations, which can be relevant for social economy. Funding is available in particular for measures increasing work ability and employment of disadvantaged groups, but also for improving the quality of working life e.g. by establishing more flexible methods or organisation of work.

In Finland, social economy has not acquired a special position but is promoted among the promotion of entrepreneurship which is one of the key areas in developing the competitiveness, growth and employment of the country.

In Finland the social enterprise sector and social economy in general are being developed under overall enterprising policy. During last few years some developing actions have occurred. One of the important ones is the Finnish Social Enterprise Mark. In addition to the Mark there have been some grass root actions among social economy actors and social enterprises themselves in order to improve their business activities. These action are carried out by the SYY Academy.

The Ministry of Employment and the Economy has published (5.11.2013) a guide to socially responsible procurement. This guide is the first national guide trying to develop the knowledge about the possibilities of the social clauses in public procurement.

Next summaries about these three support systems:

2.1The Finnish Social Enterprise Mark[1]

To promote public awareness of social enterprises there is a social enterprise mark created about two years ago by the Association for Finnish work. The Finnish Social Enterprise Mark is a registered collective trademark that is granted to enterprises who aim to bring about positive social or environmental change and work for the good of the Finnish society.

The new Finnish Social Enterprise Mark is granted to enterprises that try to find solutions to social and ecological problems. Their business operations have positive side effects that benefit society. The Finnish Social Enterprise Mark is meant for enterprises that aim to solve social and ecological problems and promote social efforts with the help of their business operations. They use most of their profits to benefit society according to their goals and values. Openness and transparency also characterise their business model.

A diamond model of social entrepreneurship

Social enterprises can be described and evaluated based on how much attention the company pays to the areas illustrated in the diamond model.

It has been estimated that there are thousands of social enterprises in Finland. Many Finnish social and health care enterprises, business models aimed at developing rural areas and local communities, companies employing persons unable to cope in the labour market, businesses working in the art and culture sector and companies promoting sustainable development can be described as social enterprises. Bu there are not any legal status for them and any official statistics.

The Social Enterprise Mark is granted by the Committee of Social Enterprises. The enterprises applying for the mark are assessed based on the criteria described in the rules. The assessment focuses on three primary criteria but other characteristics of social enterprises are also taken into consideration.

Primary criteria:

* The primary objective and aim of a social enterprise is to promote social well-being. A social enterprise acts responsibly.

* Limited distribution of profits. A social enterprise uses most of its profits for the benefit of society either by developing its own operations or by giving a share of its profits to charity according to its business idea.

* Transparency and openness of business operations. In order to assure transparency, the company applying for the mark must write down its social goals and limited distribution of profits in the company’s articles of association or rules.

In addition to the above-mentioned key characteristics, one or more of the following features are related to social entrepreneurship: promoting the well-being of employees and developing ways for the personnel to get their voice heard, customer-oriented approach in developing the business and tight relations to local communities, minimising health and environmental hazards caused by the business, developing local economy, paying special attention to those belonging to vulnerable groups and demonstrating the company’s social effects.

2.2 Social Entrepreneurship Academy of Finland co-operative[2]

There is an umbrella organization for social enterprises, the Social Entrepreneurs’ Association of Finland (SYY ry). The members of SYY ry have established a co-operative to help promoting the growth of social enterprises. Social Entrepreneurship Academy of Finland co-operative, established in 2012, is a social enterprise that helps other social entrepreneurs and enterprises to start and build their responsible, financially sustainable, value- and impact –creating businesses.

Their concept for social enterprise start-ups:

Right connections (networking and peer support) + social entrepreneurship skills (training and coaching)

+ lobbying power (through one of the founding members, Social Entrepreneurs Association in Finland)

=  A complete program that helps the social entrepreneurs take their idea forward.

Their concept for growing social enterprises, Kasvuhuone© (Growth Room)

Identification of enterprise and impact growth potential “Best practices” (Kasvuhuone© Social Enterprise Analysis) + selection of training modules (coaching + business / impact assessment advise) + connections  (negotiation power with new local partners)  =  Complete program that helps the social enterprises to grow and establish chain models/social franchises.

Their team consists of diverse, experienced individuals that are motivated to build the social enterprise sector in Finland. The team has experience in social business, training and coaching from various fields as well as vast networks within Finland and abroad.

  1. The guide to socially responsible procurement[3]

The purpose of the guide is, in as practical terms as possible, to describe the benefits of responsible public procurements and to discuss the contracting authorities’ possibilities of taking social considerations into account in their procurement procedures. These possibilities are significantly affected by the valid legal provisions on public procurement.

The tendering procedures of Finnish government units are subject to the Act on Public Contracts (348/2007) and the act on public contracts of units operating in the water and energy supply sectors and transport and postal services sectors (laki vesi- ja energiahuollon sekä liikenteen ja postipalvelujen alalla toimivien yksiköiden hankinnoista,349/2007). The guide also highlights the possibilities offered by the public contracts legislation and case law to make socially responsible procurements.

Government units can take into consideration the societal impacts of their purchases in a broader sense than merely looking at the purchasing price or the price-quality relationship. The guiding influence of public procurements, which is of key importance in society, is associated with corporate social responsibility. By promoting socially responsible public purchases, the authorities can provide companies with genuine incentives to develop corporate social responsibility in their activities.

Government Resolution of 22 November 2012 contains the following statement on social corporate responsibility:

”Socially responsible procurement aims to set contract conditions that encourage suppliers to ensure that during the contract period goods and services have been produced in conditions where human rights and core labour standards are respected. In effect, suppliers must comply with international human rights conventions, such as the ILO conventions, the UN Convention on the Rights of the Child, legislation on minimum wages and working hours in the production country, and general environmental, health and safety requirements.”

In the European Commission Guide to Taking into Account of Social Considerations in Public Procurement, socially responsible public procurements are defined as:

”...procurement operations that take into account one or more of the following social considerations: employment opportunities, decent work, compliance with social and labour rights, social inclusion (including persons with disabilities), equal opportunities, accessibility design for all, taking account of sustainability criteria, including ethical trade issues and wider voluntary compliance with corporate social responsibility (CSR), while observing the principles enshrined in the Treaty for the European Union (TFEU) and the Procurement Directives.”

The guide was prepared by the officials of the ministry of employment and the economy. The guide does not include any specific point of view about the social enterprises or the social economy, but for example ideas about social integration through work and employing disadvantaged or long –term unemployed are included in the guide.

Minister of Labour, Mr. Lauri Ihalainen made an appeal 20.11.2013 in the press release of the publication of the guide to the public sector that it would pay more attention to the social responsibility of its procurements, for instance supporting employment, working conditions and human rights. The present legislation offers several opportunities for this. The Ministry of Employment and the Economy has launched a total review of the public procurement legislation. For instance employment, health and social aspects are going to be taken better into account in procurements. In addition, the purpose is to improve the participation of the SMEs in the procurement, examine the national thresholds and build a monitoring mechanism for procurements.

  1. The financial eco-system

3.1 General

The Ministry of Employment and the Economy (MEE; www.tem.fi) is responsible for enterprise strategies and policies and also acts as the Managing Authority of the Structural Funds (SF). MEE controls and manages the 15 regional Centres for Economic Development, Transport and the Environment (ELY centres; www.ely-keskus.fi). These i.e. grant support measures and subsidys either from purely national budgetary resources or EU funds (the rural/fishery/maritime policy funds, the ERDF and the ESF). The ELY centres steer and supervise the 15 Employment and Economic Development Offices (TE Offices; “employment offices”). Tekes (the Finnish Funding Agency for Innovation) is the most important publicly funded expert organization for R&D financing, partly acting in ELY centres. MEE is also responsible for the management and control of Finnvera plc, a specialist financing company owned by the State. Finnvera provides its clients with loans, guarantees, venture capital investments and export credit guarantees.

No new organizations have been established for managing and implementing the SFs but national authorities have taken care of the tasks according to their respective national competence. The ELY centres, Finnvera and Tekes as well as the Regional Councils have acted as Intermediate Bodies (IB) of the ERDF. The ELY centres have also been the most important IBs in the ESF. In the SFs, only grants and tendering have been used with the exception of i.e. the financial instruments of Finnvera which may have been co-financed by the ERDF (loans, guarantees, venture capital investments). Finnvera will not continue as an IB in 2014 - 2020.

Strategic objectives of Finland include promoting start-ups and growth and sustainability of the enterprises, especially SMEs. There are numerous various support systems funded and developed either by national or EU funds. All the systems are open for social enterprises (later called SEs) as well since they are treated like any other enterprises or organizations with a similar legal form. Finland has invested remarkably, also by using ESF funds, in developing multichannel and other services and support for entrepreneurs, i.e. the nationwide one-stop-shop “Enterprise Finland” (www.yrityssuomi.fi). The aims have been to promote the start-up and growth of the enterprises as an essential part of the Europe 2020 strategy and to reduce administrative burden. This has been done also for instance by revising legislation and procedures on incorporating an enterprise.

The alignment of the Working Group of MEE in 2011 noted that new solutions and production models that increase productivity and effectiveness were needed in order to meet the growing need and demand for public services, especially the welfare and care services. A SE can be a modus operandi which enriches manners of production in this respect. However, it operates in the service market according to the same conditions and prerequisites as any other enterprise. New or separate direct support systems or tax relieves were not to be created for SEs. These alignments have formed the basis of the policy of Finland.

3.2 Support measures for enterprises for starting-up and developing the business

Various enterprise consultants at the Enterprise Agencies (www.uusyrityskeskus.fi), business incubators or other regional business services, also directly with the support of the electric Enterprise Finland, can offer advisory services which are generally free of charge. They have often been ERDF developed. Also other important stakeholders incl. the Federation of Finnish Entrepreneurs and the Chambers of Commerce offer i.e. consultation and mentoring.

According to the Act 916/2012, a start-up grant (www.mol.fi) aims to secure the livelihood of a person who becomes an entrepreneur during the time that it is estimated to be necessary to start and establish full-time business activity (max. 18 months). The grant is discretionary social assistance provided by the State, and it is personal and taxable income. The applicant must have or acquire the sufficient capabilities for the intended business operations which must be full-time; and the requirements for continuous and profitable operations must be met. Earlier, the grant could be ESF funded if the applicant took part in an ESF project. In addition to the grant, i.e. a Finnvera loan or guarantee can be applied for and ELY centres/TE Offices may arrange entrepreneurship training and other capacity building. Generally, financing from Finnvera cannot be granted for agriculture, forestry or development in the field of construction.

Finnvera has previously funded enterprises owned by non-profit organizations mainly in the sectors of tourism and health care. These enterprises fulfill the criteria of SEs, since the most of their profit is allocated to non-profit purposes.  However, there have not been many applications for support from SEs, and there are no special instructions. Financing would be given under normal conditions and products. In addition, the credit policy of Finnvera defines that funding cannot be allocated to organizations, the business of which does not fulfill the criteria of industrial and commercial activity.

Regarding Finnvera (www.finnvera.fi), the minimum amount is 5 000 euro. Finnvera can be the sole financier only when the amount which is applied for is less than 35 000 euro. For larger amounts, more providers of financing and adequate self-financing are required.

Finnvera assesses the chances of success of the enterprise on the markets: the targets, development plans, training and experience, market situation in the sector and competition in the region as well as the adequacy of the overall financing that is needed in the business. The expectation is that the enterprise is able to operate on a profitable basis. The need for collateral is examined case-by-case.

The biggest difference between financing from Finnvera and banks is in collateral practices. The banks base their financing decisions more on the available collateral whereas Finnvera is able to take bigger collateral risks than banks in a situation where an enterprise is considered to have reasonable chances of success. However, Finnvera is not competing with banks. The role of Finnvera as a financier is always temporary. In a long term, the enterprise should get its financing from the open market.

Finnvera always requires that the principal shareholders in a limited liability company provide absolute guarantees (= guarantors are liable for the debt in the same manner as debtors with personal liability for the sum). The guarantees must be limited in euro terms. Sole proprietors and general partners in general partnerships and limited partnerships are personally liable for the loans of their enterprises. Business mortgages or real property mortgages are often used as collateral in projects requiring more substantial financing. However, Finnvera does not use the apartment owned and used by the entrepreneur as collateral.

Besides i.e. banks and other financing institutions, enterprises may apply for loans from Finnvera for various other purposes than starting-up. The loans must be paid back in full, and they carry a price equivalent to the risk incl. the available securities.

The enterprise must have long-term opportunities for profitable business. A corporate analysis is normally conducted on the enterprise applying for financing. This analysis estimates the chances for success. Finnvera will normally fund about 50% of the project to be financed. In smaller projects, the portion can be larger.

Enterprises can use Finnvera's guarantees as collateral for credits received from banks, insurance companies or other lenders and for other bond guarantees, such as delivery collateral. Some examples:

  • Part-guarantees provided by Finnvera may help an enterprise to get financing from a bank. The bank will apply for guarantees on behalf of the enterprise when the guarantee requirement is less than 85 000 euro and no more than 60 per cent of the bank loan. In larger guarantees, Finnvera usually provides max. 50 per cent of the total.
  • Micro-guarantees help SMEs to obtain financing for different investment and working capital needs. They are intended for enterprises employing max. 49 persons. The enterprise applies for financing in a bank which makes an assessment of its prerequisites for profitable business and the collateral risks involved in the financing. The bank then applies for the guarantee electronically on behalf of the enterprise.

Tekes programmes (www.tekes.fi) is a key player in promoting research, development and innovation actions in Finland. It has also used ERDF funding. About half of the funding is programme/project based. Funding can be granted as a subsidy or a loan or a combination of the two. Loans are especially intended to create marketable products, service or business concepts. The enterprise must have the prerequisites to cover its proportion of internal financing. In 2014, Tekes is launching a new scheme on capital investment for private early phase capital funds. It is possible to get Tekes funding also for developing work organizations.

Tekes does not have special definitions of policy for SEs. Normal alignments on enterprise financing are followed: the essential criterion is the influence of the project to growth and internationalization of the business. From this point of view, the non-profit nature does not matter as such. A SE can employ and create export income as any traditional enterprise.  Business venture, at which development action and financing are aimed, has to be profitable.

Potential investors or “business-angels” normally search for profitable endeavours. The enterprises which limit distribution of profit may not be very attractive. As a consequence, it may be that an organization which promotes public good finds it difficult to raise capital from mainstream sources. The result may be a whole variety of funding sources including project activities. However, interest in ethical investing or saving seems to be growing. Also, new models of financing enter, i.e. crowdfunding. With the help of the Finnish pages www.lainaaja.fi  ordinary people are able to lend money to each other; and www.mesenaatti.me might give projects an opportunity to collect funding. The activities seem to have dealt with art and culture to large extent. Collecting funds without remuneration is regulated by law (255/2006), and it is not an option for enterprises.

Service providers operating on the market have normally used equity type of crowdfunding. Financial Supervisory Authority has made alignments that if the service provider only gets the potential investors together with the one who is looking for financing by offering a service platform and does not make any actions concerning the investment of the capital, no licence is required.

However, crowdfunding has been considered to be somewhat grey area since it may have points of contact with regulations on financial market. In addition, it has connections with legislation on taxation (value-added, income, business and gift taxes), companies (i.e. managing a limited company with thousands of share-holders: share-holders´ meetings and exit –questions from the investors´ point of view), personal data (i.e. maintenance of personal data of thousands of investors) and money laundering (i.e. for service provider ensures that it complies with “know your customer“ - obligation). Insolvency may cause problems in a situation where investors have paid their investments to a service provider which goes into bankruptcy before finalization of the investment process. It is being discussed how to ensure the sustainable growth and support of the crowdfunding market so that diverging interests of the  various stakeholders in crowdfunding (i.e. legislators/regulators, consumer investors, service providers and target companies) are duly  taken into account.   

Sitra, a public foundation operating directly under the Finnish Parliament and anticipating the social change and its effect on the people, has promoted social enterprises and the related financing models. At the moment, Sitra is investigating the potential of impact investing in Finland.

In 2014 – 2020, entrepreneurship is to be supported with the ERDF, while earlier the ESF played an important role in developing i.e. various training and mentoring services; new models of entrepreneurship; and methods of measuring social impact and social criteria in public procurement. The EQUAL programme was an important initiator of SE. Later, social entrepreneurship was included in the ESF OP 2007 - 2013. Now, social entrepreneurship can be supported from the SF OP under the ERDF Priority “Enhancing the competitiveness of SMEs”:

the IP 1: “Promoting entrepreneurship, in particular by facilitating the economic exploitation of new ideas and fostering the creation of new firms, including through business incubators”; the special objective: “Creating new business”

the IP 2: “Supporting the capacity of the SMEs to grow in regional, national and international markets and to engage in innovation processes”; the special objective “Promoting growth and internationalization of the SMEs”.

Development aid for enterprises and aid for improving the environment of businesses (the Act 9/2014) are meant to promote especially creation of new firms, renewal of business, growth and internationalization of SMEs, low carbon activities and the environment of businesses. They are to be used among the main ERDF funding instruments of the ELY centres in 2014 – 2020 as during the previous periods, when they have played an important role in implementing the ERDF. Aid is granted primarily to SMEs when they start-up or develop their activities:

  • in developing new products, services and production processes and methods;
  • in developing business skills;
  • in developing skills and abilities for internationalization;
  • in adopting new technologies; and
  • in preparing new research- and development activities.

It is possible to grant aid also to non-profit enterprises for their venture capital projects under certain conditions.

The whole life-cycle of an SME is covered with various tailor-made support measures funded either from the national budget or the ERDF (or the agricultural/maritime/fishery funds) and complemented with the ESF funding on human resources. Previously, there has been a strong input from the ESF in the development services for SMEs (see the annex), offered by the ELY centres. From 2014, these services are mainstreamed into national budget funding. In the regions, ELY Centres have a major role in granting comprehensive support for SMEs together with Tekes and Finnvera, while Regional Councils can fund ERDF actions which are aimed at regional development.

3.3 Other support measures for enterprises

Joint Purchase Training, which has been mainly funded with national funds but also from the ESF,

  • is based on joint planning, purchasing and financing by the employer, the training institution and the ELY centre/other actors in the MEE administration;
  • can be planned in co-operation with several employers;
  • is tailor-made to meet the enterprise’s and/or participants’ needs (flexibility; no dependency on degrees)
  • may help to secure the availability of workforce;
  • may promote the employer’s operating conditions; and
  • can contribute towards prolonging working lives, maintaining jobs and preventing unemployment.

However, vocational training and ordinary introductory and staff training are ineligible for financing.

The operating model of Change Security service in temporary and permanent lay-offs has been (and will be) developed with the ESF funds. The model is supposed to enhance cooperation between the employer, employee and the TE office as well as to improve and expedite the availability of a new job (or entrepreneurship) for laid-off or temporary employees. By developing and training the personnel further in corporate changes, an enterprise may improve its competence and competitiveness.

Work integration social enterprises (“wises”; the Act 1351/2003, revised 924/2012) provide employment opportunities particularly for persons with disabilities and the long-term unemployed.

A registered trader may on application be entered in the special register of social enterprises if inter alia it

  • produces goods and services on a commercial principle;
  • at least 30 per cent of the employees are persons with disabilities or at least 30 per cent of all employees are persons with disabilities and long-term unemployed (percentage of placed employees); and
  • pays to all its employees, irrespective of their productivity, the pay agreed in the collective agreement, and if no such agreement exists, customary and reasonable pay for the work done.

The employment authorities may, within the limits of the national budget, provide support for the establishment of a wise and the consolidation of its operations, if the specific aim of the trading is to employ people in a disadvantaged labour market position.

The TE Office may grant financial support to the employer for the wage costs of an unemployed person (“wage subsidy”; the Act 916/2012). In addition to the basic wage subsidy, an additional wage subsidy of 60 per cent of the basic wage subsidy will be granted, if a wise employs in an employment relationship an unemployed jobseeker, whose disability or illness hampers employment; or who has been an unemployed job-seeker 12 months straight or who has been unemployed in total 12 months in several periods and who can be compared to the former one on the basis of the frequency of unemployment and its total duration.

4. Identity and visibility of social enterprises

In 2011, the High Level Working Group of the Ministry of Employment and the Economy (“the MEE”) outlined the strategy and the policies for social enterprises. The WG stated that it is necessary to define the business model of the social enterprises to distinguish it from corporate social responsibility and charity. In addition to the general objective and the business idea, the characteristics for a social enterprise were listed as openness and customer-orientation; transparency of the activities; and social impact.  The WG did in practice recognize the social mission and the special characteristics of the social enterprises but stated that these enterprises should be in an equal position as other enterprises in granting support. 

The work and the definition made by the WG built the ground for the Social Enterprise Mark (“the Mark”). The WG proposed that a mark, representing the business model, should be adopted.  In December 2011, the Mark was launched.

The Mark is meant for enterprises that aim to solve social and ecological problems and promote social efforts with the help of their business operations. They use most of their profits to benefit society according to their goals and values. Openness and transparency also characterize their business model. The defined characteristics took the definition of the “Social Business Initiative” of the European Commission into consideration.

It has been estimated that there are thousands of social enterprises in Finland (5 000 – 12 000). Many Finnish social and health care enterprises; work integration social enterprises; business models aimed at developing rural areas and local communities; businesses working in the art and culture; and start-up companies for  instance promoting sustainable development can be nowadays described as social enterprises. Finland also has a long tradition of various kinds of co-operatives as well as associations and foundations doing business for social benefit. However, all of them do not necessarily fulfill all the criteria of a social enterprise.

Work integration social enterprises (“wises”) are regulated by special national legislation, but they do not necessarily have to be social enterprises fulfilling the criteria of the Mark or the EU.  The registered wises have a green butterfly –mark of their own. However, some of the wises have also received the Mark.

There has been an umbrella organization for social enterprises, the Social Entrepreneurs’ Association of Finland (SYY ry).

 A new association for social enterprises Arvo-liitto ry was launched in September 2014. Since it is a member of the Confederation of Finnish Industries (the employers´ organization in Finland), it has strongly added to the visibility and influence of the sector.  

This outline is based on the papers produced for SEN peer reviews by the Finnish partners (The Ministry of Employment and the Economy and Tampere region co-operative centre)



[1] Text about the social enterprise mark is from: http://www.avainlippu.fi/en/symbols/finnish-social-enterprise-mark

[2] Text by Elina Vanhapiha as a member of the co-op

 

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