Łukasz Komuda
29 June 2017

Social economy in Poland – regulatory milestones

Lack of basic legal act creating legal framework for social economy does not mean that social economy in Poland is unregulated and unsupported. What are most important regulatory acts affecting social economy sector?
 
 
Legal forms of social enterprises in Poland
Apart from the traditional legal forms of enterprises focused on income but pursuing in parallel chosen social goals, there are legal forms in Poland dedicated and typically used by social economy entities’ founders. Among the latter are: foundation, association, non-profit company, social cooperative, workers’ cooperative, cooperative corporation, Social Integration Centre (Centrum Integracji Społecznej, CIS), Institution of Professional Activity (Zakład Aktywności Zawodowej, ZAZ) and Non-Public Health Care Institution (Niepubliczny Zakład Opieki Zdrowotnej, NZOZ).
Four specific forms need some clarification. A social cooperative is a specific type of a cooperative: it can be founded by and has to hire at least 50% of people at risk of social exclusion or being socially excluded. CIS, ZAZ and NZOZ do not have the legal personality and act as separate units controlled by institutions or organisations who founded them.
CIS helps people from the same target groups as a social cooperative, but it is designed as an educational unit helping people to return to the labour market. ZAZ was designed for the people with disability. Most NZOZs are nothing more than a business, but similarly to firms some of them could be counted as social enterprises.
 
 
Milestone regulations
Apart from the acts important for the Polish economy as a whole, there are particular regulations crucial for the social economy sector. Yet before the first non-communist government in Poland, Cooperative Law (1982), Foundations Act (1984) and Associations Act (1989) defined rules of creation and operation of – respectively – cooperatives, foundation and associations.
 
Another important reform was Mental Healthcare Act (1994), which equalized mental illnesses and disabilities with physical ones. That built the ground for the professional activation initiatives dedicated to people struggling with mental illnesses.
 
In 1997 Occupational and Social Rehabilitation and Employment of People with Disabilities Act created the legal framework for ZAZ.
 
The most important period for social economy sector started in 2003 and up till the present moment. In April 2003 Poland brought in the Public Benefit and Volunteer Work Act, which set the definition for public benefit organisation (organizacje pożytku publicznego, OPP). An OPP is a non-governmental entity that does not operate for profit but focuses on the benefit of society and performs public tasks defined in the Act. This regulation covers most legal forms of social economy entities such as foundations, associations, organisations founded by churches, sport clubs, as well as joint stock companies and limited liability companies and organisations created by unions of local self-government units. The most publicly visible outcome of the latter act is the register of the public benefit organisations. It collects entities eligible to receive 1% of the personal income tax. Every year each individual taxpayer can decide which OPP will get his 1%.
 
Social Employment Act (June 2003) founded legal base for CIS.
 
In March 2004 Social Welfare Act allowed to outsource chosen social welfare programmes to OPPs – at the central government or local self-government level.
 
Employment Promotion and Labour Market Institutions Act (April 2004) added non-government labour market institution (pozarządowa instytucja rynku pracy, PIRP) to the previously defined group of labour market institutions containing employment offices and private entities such as employment agencies. Some PIRPs can be treated as social enterprises and a few of them benefited from extensive supplement for this act implemented in May 2014. This reform allowed employment offices to outsource special programmes supporting vocational activation to labour market institution including PIRPs.
 
Two months after Poland joined European Union, in July 2004 Freedom of Business Activity Act refreshed basic rules and circumstances for all kinds of business entities, regardless of their ownership structure – including social enterprises.
 
Last brand new piece of regulation addressed to the social economy sector was Social Cooperatives Act (April 2006).
 
Most of mentioned acts were adjusted and corrected many times thanks to experience gathered by public institutions and according to current public policy.
 
 
The Polish Social Economy Manifesto
This document was developed as a proposal of a common stance of the Polish Social Economy Sector between 2006 and 2008. Manifesto was a subject of a broad consultations and finally presented for the first time at the Conference „Solidarity Economy” during the meeting in June 2008 in Gdańsk Shipyard – the birthplace of the Solidarity movement of 1980s.
 
 
Social Enterprise and Social Economy Support Act
In December 2008 delegates from six Polish ministries and experts representing social economy founded System Solutions for Social Economy Task Group. This body spent more than four years defining new regulatory framework for social economy. Draft of Social Enterprise and Social Economy Support Act distinguished social enterprises from other NGOs and business entities. Each candidate for the social enterprise status should submit an application to the National Court Register and, if all requirements were met, it would get a desired status and obligatory became member of Social Enterprises Chamber. The chamber, as new institution designed in this draft, was described as an independent representative body for the whole sector.
 
The bill submitted to the government in the summer 2013 eventually was not passed to the parliament.
 
In 2016 r., the renewed Task Group started working on the Social and Solidary Economy Act. Currently an initial draft of this bill has been agreed on and will be further processed.
 
 
National Programme for Social Economy Development
The National Programme for Social Economy Development (Krajowy Program Rozwoju Ekonomii Społecznej, KPRES) is a development programme and, therefore, it constitutes an operational implementation document which was drawn up in order to implement the medium-term national development strategy – the National Development Strategy 2020 and Social Capital Development Strategy, Human Capital Development Strategy, National Strategy of Regional Development and other development strategies.
 
KPRES, adopted in August 2014, is not only a road map for Polish SE sector. For the first time in Poland it presents the official definitions of the social economy and social enterprise:
Social economy is an area of civic activity which, by means of economic and public interest activities, contributes to: professional and social integration of persons at risk of social marginalisation, job creation, provision of social services of general interest and local development.
A social enterprise is an entity conducting economic activities, distinguished in terms of organisation and accounting, and having features mentioned below:

  • the aim of their economic activity is social and professional integration of people at risk of social exclusion (in this case, employment of at least 50% of people from groups at risk of social exclusion or 30% of people with moderate or severe disability is required) or provision of social services of general interest; at the same time, they fulfil pro-employment objectives (employment of at least 20% of people from certain groups at risk of social exclusion);
  • they do not distribute profit or balance surplus among the shareholders. Instead, that money is used to strengthen the enterprise’s potential as indivisible capital and a certain part of the capital is used for professional and social reintegration (in the case of employment-targeted enterprises) or for public benefit activity conducted in favour of the local community in which the enterprise operates;
  • they are managed in accordance with democratic principles or, at least, consultancy principles with the participation of employees and other interested parties; the remuneration of the managerial staff is limited.

 
 
Public Support for the Social Economy
Just after accession to the European Union in May 2004 Poland had the chance to use the European Funds to nurture SE sector. Implementation of the EQUAL Community Initiative Programme (2004-2006) contained methodological guidelines for the development of the SE and specific solutions supported by regulatory activities of the state were developed.
 
From SE’s perspective the most important part of the programme was Theme D: Strengthening the national social economy (the third sector), in particular the services of interest to the community, with a focus on improving the quality of jobs. EQUAL’s operator in Poland was the Ministry of Regional Development.  
 
During the next financial perspective (2007-2013) minor part of the European funds dedicated to the SE sector was channelled to the social welfare centres (administered by local self-governments) and it could be used to create new and boost the growth of social enterprises.
 
Major part of funds was distributed among new entities: social economy support centres (Ośrodki Wsparcia Ekonomii Społecznej, OWES) founded by NGOs and supervised by macro-regional centres (Centra Ekonomii Społecznej, CES) founded by the government. On the top of this structure was a national centre (Krajowe Centrum Ekonomii Społecznej, KCES) controlled by the Ministry of Family, Labour and Social Policy (Ministerstwo Rodziny, Pracy i Polityki Społecznej, MRPiPS).
 
OWESs help to create new social enterprises and support growth of existing ones (all kind of legal forms) providing know-how, training, consulting etc. and funds needed for new work places.
 
The first period of operation of this system showed various OWESs’ approaches, but also differed level of service quality. To economize and professionalize OWESs (and NGO sector itself) and provide certain quality of support for social economy sector representatives of the OWESs’ founders prepared a set of standards for social economy support centres. This set is used by MRPiPS for the process of OWESs’ accreditation. New EU financial perspective 2014-2020 provided funds to be used only by accredited OWESs.
 
In 2017, at the basis of the former pilot project, the extended programme of loans and guarantees was launched. It is expected to support over 2 030 social economy entities and create more than 1 250 new jobs. In the same time the Guarantee Fund was established. In case the demand for this financial instrument remains, the Fund will continue its operation till 2021.

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