Page 89 - Social Enterprise A New Business Paradigm for Thailand

1) Types of Social Enterprises in Europe

Social enterprises differ from conventional businesses in that they are subject to restrictions on
profit distribution and are generally required to reinvest profits back into socially beneficial
activities. These conditions often make it difficult for social enterprises to access funding from
traditional financial institutions. As a result, access to financial resources, and the development
of new financial instruments tailored to social enterprises, is of critical importance.

A study examining the social enterprise ecosystem in Europe identified three major categories of
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funding sources and revenue models for social enterprises :
1.1) Social enterprises that provide services in areas such as welfare, healthcare, and education

typically receive either full or substantial funding from government subsidies and through service
procurement contracts with public agencies. This model is prevalent in many EU member states,
including Belgium, France, Germany, the Republic of Ireland, Italy, and the United Kingdom. In
countries where public support is insufficient, such as Greece, service users are required to pay
for services out of pocket, resulting in revenue generated through direct service sales.

1.2) Social enterprises whose main purpose is to promote employment among disadvantaged
groups tend to rely on a mixed funding model that combines public and private sources. Revenue
from the private sector is generated through the sale of goods and services to individuals or

companies, which helps partially cover employment costs for marginalized workers. The
remaining costs are subsidized by government agencies. Additionally, WISEs (Work Integration
Social Enterprises) receive financial support through public procurement contracts for services
such as cleaning government buildings or maintaining public parks and green spaces. This model
is most commonly found in Central and Eastern European (CEE) countries, as well as in Finland
and Italy.

1.3) Social enterprises that provide goods and services to the general public, outside the formal
social welfare system, comprise the third category. These include offerings related to recreation,
sports, cultural and educational promotion, recycling services, organic agricultural products, and

community shops. Enterprises in this group primarily rely on revenue from sales to private
customers and membership fees.
Such social enterprises are more common in countries where public agencies and traditional non-
profit organizations already provide effective social services, Germany being a key example.
However, this type of social enterprise is also growing in prevalence in other countries, such as
the United Kingdom.

19 European Commission, Social enterprises and their ecosystems in Europe: Comparative synthesis report, 2020,
Source: http://Europa.eu/!Qq64ny, pp.81-82.
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