ECNL is a leading European resource and research center in the field of policies and laws affecting non-profits, based in Hungary, but with team members in several European jurisdictions.
For over five years, ECNL has been active in creating the knowledge base and providing technical assistance to local stakeholders on the regulation of social entrepreneurship. For example, Eszter co-authored a Comparative Paper on the Legal Framework for Social Economy and Social Enterprises which presented existing models of social economy in five select countries of the EU (Austria, Italy, Slovenia, Spain, and the United Kingdom), accompanied with an analysis of experiences and practices.
Building on this comparative knowledge, ECNL has been supporting local partners in creating enabling legal environments for social entrepreneurship. The concept is still relatively new in many jurisdictions of the Eastern European region where we focus our work.
We were really pleased to partner with ESELA to advance the legal thinking and framework around social enterprises and exchange experiences across regions.
One of the main actors in the social entrepreneurship sphere is non-profits. The first requisite of social entrepreneurship is to allow NGOs to engage in economic activities, and to create enabling ecosystems for this.
While there are more non-profits carrying out entrepreneurial activities and enterprises that pursue social causes, there is no common understanding of key concepts between the key stakeholders, including CSOs, state authorities and businesses. First, there is a lack of understanding on what a social enterprise is and to what extent it is different from an NGO engaging in certain economic activities on a case by case basis. In addition, there is a debate on how the legal framework can support social enterprises: what the direct and indirect barriers of social entrepreneurship are, if there is a need for special legal regulation, what a definition should include, whether there is a need for a separate legal form or special status, and what the supportive measures could be.
Legal recognition and a supportive legal and fiscal environment can facilitate the growth of the social enterprise movement to reach its full potential. However, it should always be preceded by an assessment of local needs and broad consultation with all relevant stakeholders to make sure that it encourages, rather than discourages, social entrepreneurship in the country.
Non-profits in the countries of Eastern Europe are important players that help solve some of the society’s most pressing problems, in diverse fields, such as social sphere, education and health. At the same time, non-profits have access to limited resources – they recognise that income from grants or public funding are not sustainable sources to achieve lasting social impact, whilst the philanthropic culture is not well developed in all of the jurisdictions. Therefore they increasingly need to generate sustainable sources of revenue to deliver long-term impact. Hence, they are turning to new models of social businesses to be able to maximise the impact; in parallel, governments are also becoming more open to reviewing the new models and creating ecosystems for the social businesses to flourish.
Perhaps one example is the “Nem Adom Fel” café and bar in Budapest, Hungary (in English it means Never Give Up), which is the first Café to be founded and run by people with special needs. It is set up as a social enterprise that provides an alternative workplace for the disabled. It is also an integrated public place for cultural events.
We don’t think that the legal practice around social enterprises is developed in Eastern Europe. ESELA and its members can facilitate its development and could create programs to help build the legal network, and provide the support that social enterprises in the region require.