Social enterprises hold the key to addressing pressing global challenges, from economic inequality to environmental degradation. By combining business principles with a mission for social good, these entities drive sustainable impact across communities. However, a significant hurdle they face is the lack of robust government support – a policy gap that limits their potential to create widespread change.
A critical challenge for social enterprises is access to public funding. According to the European Social Enterprise Monitor, over 41% of surveyed enterprises cited inadequate public support schemes, while 50% highlighted overly complex public financing processes. Without clear, accessible funding pathways, many social enterprises struggle to scale their initiatives. Governments must streamline funding mechanisms, offer grants tailored to social enterprises, and establish dedicated financial support programs to bridge this gap.
Social procurement, prioritising goods and services from social enterprises in government contracts, remains underutilised. While some countries have begun adopting policies to include social enterprises in supply chains, implementation is inconsistent. Governments must create comprehensive social procurement policies, setting clear targets and offering incentives to both public and private sectors to prioritise purchases from social enterprises. This would not only provide a stable revenue stream but also amplify their societal impact.
Another barrier is the lack of legal and policy recognition for social enterprises. Unlike traditional businesses or nonprofits, social enterprises often operate in a gray area, making it difficult for them to access the same benefits. Governments need to define social enterprises in legislation, ensuring they are eligible for tax breaks, grants, and other forms of support that reflect their dual mission of profit and purpose.
Collaboration between governments, social enterprises, and private stakeholders is essential to address these issues. Governments must engage in open dialogue with social enterprises, understanding their challenges and co-creating solutions.
References
Euclid Network (2023). European Social Enterprise Monitor 2023-2024: Executive Summary. Available at: https://euclidnetwork.eu/
Defourny, J. and Nyssens, M. (2017). ‘Fundamentals for an International Typology of Social Enterprise Models’, VOLUNTAS: International Journal of Voluntary and Nonprofit Organizations, 28(6), pp. 2469–2497. Available at: https://link.springer.com/
Social Enterprise UK (2021). Time for Action: How Public Procurement Can Power a Social Enterprise Recovery. Available at: https://www.socialenterprise.org.uk/
United Nations (2021). The Role of Social Enterprises in the 2030 Agenda for Sustainable Development. Available at: https://sdgs.un.org/