Breaking news on Social Enterprise in Italy

Yesterday saw the Italian Parliament (Senato) announce a last minute amendment to the draft proposal of the financial law which, if ratified on the 18^th December, will allow social enterprise to redistribute up to 50% of profits to any stakeholders. This includes private for profit companies and public institutions – something which has raised some angry eyebrows in the sector.

There has been some immediate criticism to the proposed amendment, especially with regards to the lack of consultation with civil society organisation before the amendment was made public yesterday. Some larger cooperatives in Italy have come out against the move, arguing that the Italian government is trying to replicate a UK method without any regards to the cultural and contextual differences faced in Italy.

However, the move has also brought some positive comments, with some saying it will make social enterprises more commercial and thus more able to compete with private companies. It also shows that social enterprises are becoming a more and more recognised part of the economy. The change may have implications the sustainability of welfare service provision delivered by social enterprises. The need for change in health and public service provision was raised by PM Mario Monti last week.

Whatever your view may be, the move has definitely heightened attention on social enterprises and brought out a debate on what the government should, or shouldn’t, be doing to support the development of this growing sector.

Access the draft proposal here (in Italian)

The changes in a bit more detail - the technicalities

Traditionally being a social enterprise in Italian means there must be absolutely no redistribution of profits. However, the implementation of the new proposal would be able to distribute to social other legally identified social enterprises, as well as being able to distribute a maximum amount equal to 50% of the profits for shareholders that are public bodies or for profit enterprises.

Relevant case studies

CGM

A joint venture between consortium of social coops and the private sector.

CGM Social Coops Consortium, which aims to support the development of third sector associations and cooperatives towards social enterprise, has already been experimenting with mixed capital venture (private and social coops) to provide health services and renewable energy. As one of the more important network of social enterprises in Italy, CGM promoted several new ventures that innovate the panorama of social enterprise in Italy. For example, Welfare Italia is a national franchising of health services promoted through a joint venture with Banca Intesa and other shareholders. From a juridical point of view Welfare Italia is not a social enterprise, but a for profit with a statue that distributes the power of control considering not only the economic capital invested but also the know-how about services contributed by CGM. In this way CGM maintains the control of the ventures.

SHARING

Sharing represents a new business model for temporary social housing, operating in Turin, Italy since 2011. Thanks to the partnership with several local territorial entities, Sharing has realized in Turin the most important temporary social housing project ever realized in Italy. On 1st September, 2011, after two years of construction, Sharing has started managing a building composed by 183 apartments for a total of 470 accommodations destined to different users (students, relatives of in-patients coming from other cities, single mothers with children, young couples that cannot afford to pay rents at market level). It currently has two other projects in pipeline for more than 800 beds, for temporary housing and student housing, located in Turin.

PERMICRO

PerMicro is the first Italian microcredit experiment. Its business model has been recognised and rewarded also at European level and won the “Fondazione Giordano dell’Amore” award. PerMicro set up 10 branches in northern and central Italy, and thanks to the entrance in its capital structure by BNL (BNP Paribas Group), some branches are being set up also in southern Italy, currently 2 of them are already open. PerMicro represents a unique attempt on the Italian territory to combine economical sustainability with the supply of financial inclusion to non bankable people. Since inception, it has given loans for circa 14 million euro.

Articles in Italian:

La legge di stabilità rivoluziona le imprese sociali - Paolo Venturi e Flaviano Zandonai - Linkiesta

Impresa sociale, si accende la Lampadina -  di lampadina - Vita Blog

Imprese sociali, l'attacco finale  - di Gabriella Meroni

Impresa sociale: siamo al dunque - Avanzi

DDL Stabilità: Ritirato L'emendamento Su Imprese Sociali - Forum Tezor Settore