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European Union Definition and Statement on the Importance of Social Economy Enterprises

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The importance to the European economy and society of cooperatives, mutual societies, associations, foundations and social enterprises (which together are sometimes referred to as the Social Economy) is now receiving greater recognition at Member State and European levels. Not only are they significant economic actors, they also play a key role in involving their members and European citizens more fully in Society.

Social Economy enterprises are helping to meet the demands of a changing Europe. They are important sources of entrepreneurship and jobs in areas where traditional "investor driven" enterprise structures may not always be viable.

There are certain common characteristics shared by Social Economy entities:

bulletSocial Economy entities spring from the economic, social and cultural needs of their members.
bulletTheir primary purpose is not to obtain a return on capital. They are, by nature, part of a stakeholder economy, whose enterprises are created by and for those with common needs, and accountable to those they are meant to serve.
bulletThey are generally managed in accordance with the principle of "one member, one vote".
bulletThey are flexible and innovative - Social Economy enterprises are being created to meet changing social and economic circumstances.
bulletMost are based on voluntary participation, membership and commitment.

The Social Economy is found in almost all economic sectors. Cooperatives are particularly prominent in certain fields, such as banking, crafts, agricultural production and retailing. Mutual societies are predominantly active in the insurance and mortgage sectors, whilst associations and foundations figure strongly in the provision of health and welfare services, sports and recreation, culture, environmental regeneration, humanitarian rights, development aid, consumer rights, education, training and research.

Some Social Economy bodies work in competitive markets while others work close to the public sector. Cooperatives, for example, which are formed on the basis of fulfilling the interests of their members (producers or consumers) play an important role in several markets and contribute to effective competition.

The main characteristics of the Social Economy enterprises are:
bulletvoluntary and open membership
bulletequal voting rights - resolutions carried by majority
bulletmembers contribute to the capital which is variable
bulletautonomy and independence
bulletparticularly important is the sectors of agriculture, manufacturing, banking, retailing and services
Mutual Societies
bulletvoluntary and open membership
bulletequal voting rights - resolutions carried by majority
bulletmembers' fees based on insurance calculations (where relevant) - no capital contribution
bulletautonomy and independence
bulletmedical, life and non-life insurance; guarantee schemes; home mortgages
Associations / Voluntary Organisations
bulletvoluntary and open membership
bulletequal voting rights - resolutions carried by majority
bulletmembers' fees - no capital contribution
bulletautonomy and independence
bulletservice providers, voluntary work, sports and advocacy/representative
bulletimportant providers in health care, care for elderly and children and social services
bulletrun by appointed trustees
bulletcapital supplied through donations and gifts
bulletfinancing and undertaking of research, supporting international, national and local projects; providing grants to relieve the needs of individuals, funding voluntary work, health and elderly care.
Social Enterprises
bulletno universally accepted definition
bullethave a social and societal purpose combined with an entrepreneurial spirit of the private sector
bulletreinvest their surpluses to achieving a wider social or community objective
bulletare registered as private companies, as cooperatives, associations, voluntary organisations, charities, or mutuals; some are unincorporated.

The Social Economy is important because it:

bulletcontributes to efficient competition in the markets
bulletoffers the potential for job creation and new forms of entrepreneurship and employment
bulletis largely founded on membership-based activities
bulletmeets new needs
bulletfavours citizen participation and voluntary work
bulletenhances solidarity and cohesion
bulletcontributes to the integration of the economies of the candidate countries.

For further information contact:

European Commission, Enterprise and Industry Directorate-General
Unit E3 Craft, Small Businesses, Cooperatives & Mutuals

Fax: +32-2-295 88 35

E-mail: Entr-Craft-Small-Business@cec.eu.int

Website: http://europa.eu.int/comm/enterprise/entrepreneurship/coop/index.htm



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