The third edition of the Enterprising for Tomorrow conference brought together local and European social entrepreneurs, politicians and third-sector workers to share best practices and explore ways to grow the social economy. Held in Iași, Romania, on 17 April, it attracted over 200 in-person participants from 16 countries. Over 700 participants followed the proceedings online via Zoom, Facebook live and YouTube.
Discussions revealed that Romanian and European social economy actors face similar challenges when it comes to access to finance, public procurement bidding and competing in the market.
Angela Achiței, president of event host ADV Romania, encouraged participants to drive change by buying from social enterprises. “What we do every day can define our future,” she said.
With it being an election year, Achiței also mentioned several recommendations ADV would like to see featured in local, national and European policies. These include: creating a package of fiscal and non-fiscal measures to support the sector; enabling social economy actors to gain access to the market, with public sector bodies as the first to acquire products from social enterprises; and raising awareness about the social economy. She also called for the establishment of the National Social Economy Commission stipulated in the national Social Economy Law.
Plan of action
Exploring the European Action Plan for the Social Economy and the role of European and national networks in boosting the sector, Ana-Maria Coscotin, team leader for Romania at the European Commission’s Directorate General for Employment, Social Affairs and Inclusion, said the lack of financial sustainability is the biggest challenge for the sector.
Although Romania receives around €235m in grants and financial instruments for social enterprises, she warned against creating a sector reliant on grants, that hits trouble when those grants end. And national authorities choosing projects for Next Generation EU funding should engage with social economy actors, she added.
Romania’s labour minister Simona Bucura Oprescu said her ministry is open to this, and urged social enterprises to acquire the government’s official certificate for the sector. Only 158 have signed up so far, and some audience members said they could not see the need, as the social enterprise certificate brings no specific benefits or tax exemptions.
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“Romania is not sufficiently informed with regards to the social economy,” said Bucura Oprescu, who sees its potential for sectors including craft-making and repairs.
With the adoption of the action plan in 2021, EU member states have to develop national strategies and allocate funding for the social economy to thrive. But Bucura Oprescu did not provide any insights into what measures her government’s upcoming social economy strategy might include.
Learning from other countries
Víctor Meseguer Sánchez, from Spain’s Ministry of Labour and Social Economy, gave an overview of the Spanish sector – one of Europe’s strongest with 43,000 enterprises contributing 10% to the country’s GDP and providing 2.8 million jobs.
The ministry coordinates the country’s social economy policy, with support from 10 other ministries. In addition to the Next Generation EU funding, social economy actors in Spain will be eligible for a forthcoming social economy fund which will offer access to credit.
Romania has some catching up to do, as revealed by OECD’s 2023 mapping of the global social economy. This found that associations are the predominant form of social economy organisations in most countries, followed by co-ops and foundations. Amal Chevreau, policy analyst at OECD, said these tend to be micro and small enterprises with fewer than 10 employees. They account for up to 12% of employment in France and only 2% in Romania.
To develop the social economy, said Chevreau, Romania should focus on training and mentorships; collaboration between the sector, the government, the public sector and others; raising consumer awareness; and better access to the market including public procurement.
Election wishlist
Juan Antonio Pedreño, president of Social Economy Europe, set out the sector’s priorities as the European elections draw near: the renewal of the Social Economy Intergroup in the new European Parliament, the full deployment of the Social Economy Action Plan and Council Recommendation on Developing Social Economy Framework Conditions, and the appointment of a commissioner for the social economy.
Patrizia Bussi, director of the European Network for Social Integration Enterprises (Ensie) and vice-president of Social Economy Europe, said that while EU member states are not obliged to do everything in the council’s recommendation, they need to monitor what they are doing in response to the recommendation.
Implementation at national level will be key to the plan’s success, added Timothy Ghilain, chief of staff at the European Association of Service Providers for Persons with Disabilities (EASPD). Referring to the wider social economy, he said organisations in different states face similar challenges and can learn from each and push together for reform.
Strengthening collaboration
In terms of collaboration, Manuela Iftimoaei, manager of Accelerator of Social Enterprises Cluster at ADV Romania, said clusters play a key role in developing social economy programmes.
In 2021 ADV set up the first social economy cluster in Romania, which was registered on the European platform for clusters. Working this way, social economy organisations can secure EU funding to join international networks, access training, and exchange experience with organisations in other EU member states.
Local chambers of commerce can support the sector by promoting events and bringing businesses together, said Paul Butnariu, director of the Iași Chamber of Commerce and Industry. He sees Iași as the key to connecting Romania, Moldova and Ukraine with the rest of Europe.
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To further boost the competitive potential of social enterprises in Romania, ADV runs the project Seeding – Enterprising for Tomorrow in partnership with Norwegian NGO Unikum. By forming partnerships with for-profits, public authorities, and universities, social economy enterprises can lead gain opportunities for sub-contracting, capacity building and training programmes, said Unikum’s Geir Ebbesen.
Boosting innovation
Delegates were presented with a number of European projects to support the sector’s capacity to innovate, including Socialtech4EU managed by the GiacomoI Brodolini Foundation (Fondazione Giacomo Brodolini) from Italy. Project officer Elisabetta Secchi said the two-year project aims to boost the resilience and innovative capacity of social enterprises. Around 100 social enterprises across Europe were given digital development grants. Enterprises selected had to carry out a feasibility study to develop an innovation project and were offered up to €20,000 to bring their ideas to life.
Public procurement
Alin Izvoran, a public acquisition expert, said more social economy actors are chosen by public institutions in Romania than in the past, with 600 direct acquisition participations from sector representatives – but more collaboration within different public departments is needed.
ADV’s Angela Achiței wants public authorities to take into account social value instead of going automatically for the lowest bidder.
“The social economy does not want something for free, it pays tax while reinvesting 90%, sometimes 100% of profits. It’s not normal to tax doing good,” she said, adding that social economy actors do not enjoy tax exemptions.
ADV runs the campaign Buy Social to encourage the public to buy from social economy organisations. This is part of a European-funded initiative aiming to strengthen partnerships between work integration social enterprises and mainstream businesses to improve the market for social enterprises’ products and services.
Fabiana Pompermaier, project manager at the DIESIS Network, which manages the project, said it also works to address the lack of knowledge and mutual understanding between traditional and social enterprises, the lack of match-making opportunities, the lack of training and capacity building and misconceptions about the sector.
The conference featured a Buy Social expo showcasing products from 26 social economy actors in Romania and Moldova, including Ateliere fără Frontiere (AfF), an association helping vulnerable workers in Romania join the job market – with two million (10%) Romanians currently excluded from the job market. AfF CEO Damien Thiery told delegates how the association provides personalised social support services, integration counselling, psychotherapy and pedagogical support over skills training for disadvantaged people.
Participants need special assistance, said Thierry, with many absent from the job market for health reasons. AfF runs a social assistance department, provides access to job coaches and hires people over 24 months after which they have the skills required to apply for other jobs. Authorities can help convert passive benefit receivers into active contributors to the social system by supporting such projects, he added.
Urtzi Uribetxebarria Andres, research professor of the Department of Mechanics and Industrial Organization of Mondragon University, presented the findings of a survey on the skills and competency needs of social economy workers. The research is part of the Base Project (Blueprint for Social Economy) funded by the European Commission.
Designed to identify the essential skills and competencies needed for the transitions to a greener, digital and inclusive economy, the survey found the sector would benefit from modernised vocational education and training that responds to industry needs. An improved competitiveness and employee mobility within the social economy is also needed, added Uribetxebarria Andreas.
Niina Karvinen, project manager and RDI specialist in social entrepreneurship and social innovation projects at the Diaconia University of Applied Sciences, described the European Social Innovation Campus (ESIC) project, which forms part of the Erasmus+Alliances for Innovation programme. The project aims to address the challenges of upskilling and reskilling 5% of the workforce and entrepreneurs in the social economy sector each year.
Funding opportunities
A sustainable sector needs social financing, from sources like the European Investment Fund’s Inclusive Finance team. Senior investment manager Cristina Dumitrescu told how it facilitates access to finance for micro, small and medium enterprises and start-ups, including those in the social economy.
Working through two lines of business – guarantee products and equity products – it has mobilised over €5bn for SMEs in the social economy, with more than 70% of these accessing their first credit product through the scheme.
According to Cyril Gouiffès, head of Social Impact Unit at EIF, the total investment volume of the equity team is €3bn, with €700m targeted at social and climate impact. Gouiffès encouraged Romanian social impact funds to take part in EIF’s call for expression of interest and thethe online application form.
Michał Radziwiłł, manager of Inpulse Investment, a fund manager for impact-driven funds, said social economy actors need simple products, such as loans, while Ștefan Buciuc, CEO at BCR Social Finance, argued the sector needs support beyond funding, through long-term relationships with finance providers to enable the latter to understand their needs and those of the communities they represent.
To address funding challenges, in 2022 ADV helped set up Alternative Financing Institution Dedicated to Social Enterprises (Afin), the first non-bank financial institution dedicated to the social economy sector. Afin is now part of an ecosystem and works with other organisations to enable them to grow, with 170 shareholders from Romania, said board president Bogdan Merfea.
Social enterprises are also eligible for funding through the European Regional Development Fund, said Gabriela Macoveiu of ADR Nord Est, an NGO active in regional development. Projects can receive higher points if applicants are social enterprises, she added.
Ways forward
In recent years, Romania has witnessed a growth in the number of social economy organisations. There are now 180,323 entities, 14,000 of them set up in the past year.
Ancuța Vameșu, vice-president of RISE Romania and founder of Solidarity Lab, said this is due to the growth of associations and foundations, which enjoy a favourable legal environment. This is not the case for co-ops, she warned: the number is in decline and the sector’s share of workers in the social economy has fallen from 25% to 15% since last year.
The Social Economy Barometer issued by the Solidarity Lab also shows that the number of mutual aid entities has decreased – with many of these merging in order to consolidate, as is the case with credit unions in Romania and many other countries.
Wage earnings in Romania’s social economy sector are below the national average wage earnings, according to the barometer. While those working in the non-profit sector tend to earn more than those in the private sector, in the co-operative sector pay is significantly below the average in the private sector.
Vameșu added that without support measures to accompany it, the social enterprise certificate is not appealing to most social enterprises. According to the Barometer, the social economy sector employs 171,500 people, 20,000 more than in 2022. “The sector needs more support,” she said.
Dorotea Daniele, head of EU partnerships, Diesis Network, said Romania had come a long way since ADV’s first conference in 2021, when the concept of social economy was unknown. To further boost the sector, she recommended an enabling ecosystem and legislation, supportive policies, coordination between different ministries, financial tools beyond grants, greater visibility, public procurement policies that support the sector and capacity building for social economy actors.
The conference concluded with the Social Enterprise Accelerator Gala, which awarded social enterprises, regular companies or providers of support services in the field of the social economy.
After the event, ADV, along with the Romanian Social Economy Network – RISE Romania and the Social Enterprise Accelerator Cluster, adopted a resolution featuring a number of proposals to be included in the National Governance Programme and Local Programmes.
Measures suggested include: allocating 0.5% of the annual procurement budget of public authorities to purchases from social enterprises of insertion; subsidising jobs for people from vulnerable categories employed in social insertion enterprises with at least the minimum wage in the economy for a maximum duration of 36 months; and exempting social enterprises of insertion from paying profit / income tax for the 90% of the profit allocated to the social mission or the statutory reserve.
