FSE Project

A, B, C’s OF SOCIAL ENTREPRENEURSHIP

(prof. Jovan Pejkovski, EPTISA Senior Non-Key Expert on Social Entrepreneurship Issues)

Definition – social entrepreneurship is an organized activity with a view of creating opportunities, forms, organizations and measures that result in sustainable social values and usefulness, hiring people in manufacturing and selling of products or services and solving social problems. The profit is not the sole or main purpose of the activity, i.e. profits are used for employment of certain socially excluded or vulnerable social groups and for addressing the needs of general interest.

Goals – are strengthening social solidarity and cohesion, encouraging people to participate in matters of public interest and volunteer work, strengthen the innovative capability of enterprises to address social, economic, environmental and other problems, providing additional product range and services of public interest, developing new opportunities for employment, social innovation, providing additional jobs and social integration and reintegration of vulnerable groups on the market of labour.

Social entrepreneurs – are any individuals who with their entrepreneurial spirit and personality will act as change agents and leaders to tackle social problems by recognizing new opportunities and finding innovative solutions and are more concerned with creating social value than financial value. A social entrepreneur is someone who recognizes a social problem and uses entrepreneurial principles to organize, create and manage adventure to make social changes. Whereas a business entrepreneur typically measures performance in profit and return, a social entrepreneur assesses success in terms of impacts she/he has on society as well as in profit and return.

Social enterprises – are revenue-generating businesses aiming at social, cultural, economic and/or environmental outcomes, earning revenue for enhancing communities with sustainability and social impact.

Social cooperatives – are organizations or associations of natural or legal persons working for social integration of vulnerable individuals and groups delivering social, health and educational services, providing labour integration for disadvantaged persons. Members of cooperatives do not distribute profit – profit is earmarked for new employment and development of cooperatives.

Beneficiaries – of social entrepreneurship are usually persons at risk and socially excluded who need help and support for social inclusion.

SOCIAL ENTREPRENEURSHIP LAW BENEFITS, INCENTIVES AND OBLIGATIONS

(Keti Jovanova, EPTISA Senior Non Key Expert for Legal Issues)

A group of institutional, financial, legal and CSO experts is drafting the Law on Social Entrepreneurship with the aim of its final adoptation in the near future. The Law promotes job creation for marginalized groups of citizens (long-term unemployed  or homeless persons, refugees, Roma, single parents, youth, social welfare recipients,  former drug or alcohol addicts, HIV positive persons etc.) as well as aiding in the provision of social services. The Law is based on successful good practices from several European countries and promotes social solidarity employment models.

The DRAFT-LAW on Social Entrepreneurship (May 2017 version)  regulates principles,  activities, competencies , the terms and procedures under which legal entities gain the status of a social enterprise, registration rules, recordkeeping, reporting and supervision of operations in the area of social entrepreneurship, including the beneficiaries and their employment within social enterprises,.

Based on the current text of the draft law, Social enterprise shall mean any legal entity operating in the social economy whose primary objective is exerting social influence. A social entreprise can implement own activities under the National Classification of Activities for which the social enterprise will be registered in the Central Registry.

Companies, sole proprietorships, private institutions for social protection, cooperatives, associations, foundations, organizations and financial institutions can establish a new social enterprise or can acquire a status of social enterprise if they qualify under this law.

The conditions for obtaining the status of a social enterprise or establishing a new social enterprise are:

  • a legal entity to envisage a provision of public social services in accordance with this law (SP type A) or to employ / will employ at least 50% of persons belonging to the categories stipulated by this law of the total number of employees in the enterprise (SP type B)
  • a legal entity to include the non-profit aspect and to show it works in the field of social entrepreneurship
  • a legal entity to reinvest 100% of the profits in own social enterprise for increasing the workload of the enterprise, creating new jobs, improving working conditions
  • a legal entity to address the social, economic, environmental and other issues, meeting the needs of its beneficiaries, local communities and society
  • a legal entity to create a primary objective of achieving social impact
  • a legal entity to operate by providing goods and services to the market through innovative and entrepreneurial manner and to use its profits primarily for achieving social goals as well as creating new jobs for persons belonging to the categories listed in this Law
  • a legal entity to manage its social enterprise by the principle of equality – one person one vote of the founders or management bodies (which is regulated by the basic acts)

As recommended by the draft Law, a social enterprise is entitled to:

  1. Access to State fund programmes
  2. Right to engage volunteers
  3. An exemption from personal income tax for the beneficiaries in accordance with this Law that are newly employed but no more than the average of one monthly salary per employee in the country
  4. The exemption from payment of contributions over a period of 24 months after acquiring the status of a social enterprise for the beneficiaries, in accordance with the proposed Law that are newly employed but no more than the average of one monthly salary per employee in the country
  5. Exemption from payment of income tax and all profit taxes

It is perhaps interesting to mention that the new Law proposes financial support for job creation, purchase of equipment, instruments, apparatus, spare parts, tools and materials – such a support is envisaged to be offered via a Special Fund for Social Enterprises which should be set up within the Employment Agency. Those social enterprises that will create job opportunities for disabled persons will have access to the Special Fund for providing conditions for employment and work of disabled persons.

Within the Special Fund, the Employment Agency will be able to award non returnable grants to:

  1. cover the costs of food and transportation for beneficiaries in accordance with this law, involved in retraining and qualification and training-on-the-job for a period not exceeding 180 days
  2. payment of salaries – the amount and time frame for payment of salaries is still under discussion, together with the Employment Agency