Which of the following economic activities was the least successful of the following choices

The COVID-19 crisis has exposed the vulnerabilities of individuals, societies and economies, calling for a rethink of how economic and social activities are organised. The crisis calls for strong responses based on solidarity, co-operation and responsibility. Social economy organisations (associations, co-operatives, mutual organisations, foundations and social enterprises), whose business models are built around such principles can help reshaping the post-crisis economies and societies. This note presents the role the social economy and its actors have played in the COVID-19 crisis. It further explains the current challenges faced by the social economy and highlights selected policy instruments and recommendations to support social economy actors in their efforts to “repair” and “transform” societies.

Social economy organisations put social and environmental concerns at the heart of their business model, prioritising social impact over profit maximisation. They are driven by a mission of serving the common good, protecting the general interest1 and increasing individual and community welfare by organising their activity in a different way (Figure 1).

Social economy business models are unique in a number of ways:

• Mobilise multiple resources: Social economy organisations can mobilise various types of resources (revenues from sales, public subsidies, donations, volunteering) coming from different sources (public sector, enterprises, foundations, individuals). By gathering various supporters around their projects, they strengthen their sustainability. Their capacity to mobilise financial and non-financial resources from different sources can be explained by the double mission of the social economy (economic and social) that is valued by diverse actors for the different benefits it produces (public and collective benefits, direct individual benefits, indirect benefits) (Young, 2007[1]).

• Apply sustainable operating practices: Social economy organisations implement sustainable practices that are respectful of the primacy of human needs and natural ecosystems in the environment.

• Adopt inclusive and democratic governance: Social economy organisations involve and empower diverse stakeholders in their decision-making processes. Such governance models facilitate informed decisions about economic and social impact as well as increase the degree of democracy in society.

• Are locally anchored: Social economy organisations typically operate at the local level, understanding what works and what doesn’t in the local context, and are particularly well-suited to respond quickly to issues that arise in their local areas.

• Facilitate co-operation and social innovation: Social economy organisations expand the potential for collective social innovation by collaborating with local stakeholders (citizens, civil society, policymakers, entrepreneurs, and researchers). They experiment with new and co-operative ways of working to develop place-based solutions, building on collective goals and the complementary assets of different types of actors.

While sharing common principles and practices, social economy organisations show a great diversity in terms of legal forms, size, outreach and sectors (Figure 2). The field brings together not-for-profit and for-profit entities, the former focusing more on the social component while the latter are more economic-oriented. A majority of social economy actors are small and medium-sized entities, but the field also counts numerous examples of large entities and groups of social economy organisations able to compete with multinationals in some cases. Social economy organisations are active in a wide range of sectors. While traditionally they have been involved in the provision of social services and healthcare, social economy organisations are present throughout the economy.

The social economy is a significant economic and social actor in its own right, and one that has proven resilient in past crises. In the EU, there are 2.8 million social economy entities, accounting for, on average, 6.3% of EU employment (see Box 1 for further figures on social economy). The social economy was resilient in economic downturns following the Global Financial Crisis in 2008. For example, in countries such as Italy and Belgium, employment in the public and private sectors decreased sharply during the period 2008-2010 just after the crisis, while employment in social enterprises actually grew (11.5% growth in Belgium and 20.1% growth in Italian social co-operatives) (European Union, 2016[2]). In France, between 2000 and 2014, employment in the social economy registered significant and continuous growth (25%), while employment growth in the private sector was much lower (6%) (R&S, 2015[3]).

The social economy contributes to social and economic resilience2 given the nature of its activity and the business models that are more equipped to resist shocks. First, the activities and services that a range of social economy organisations provide – for example in the health sector, social services and work integration – mitigate the direct impacts of the crisis, especially for the most vulnerable groups, helping society to cope with the crisis. Second, some specific features of the social economy business models increase a social economy organisation’s ability to overcome difficulties during a crisis, such as the inclusive and participatory governance structures, the embeddedness in local communities and economies, and the mobilisation of a range of mixed resources. These elements have been extensively discussed and analysed in several reports published after the Global Financial Crisis in 2008 (see for example (CIRIEC, 2012[4]) (Birchall and Ketilson, 2009[5])).

This capacity to increase economic and social resilience is linked to the two main roles that the social economy plays in the economic system: repair and transform (Mertens, 2020[9]). First, it may address social needs that are often not covered by the market economy and also complement public action. For example, in the area of work integration, the social economy creates employment opportunities for individuals who are excluded from the labour market. Second, the social economy designs, experiments and implements innovative ways to organise economic activity in a more inclusive and sustainable way, resulting in responsible practices which transform the economic system. For example, identifying and developing niche opportunities, and consequently unlocking new sectors that were subsequently taken up by traditional enterprises. While these functions have been particularly visible during the current crisis, there is a potential for the social economy to play a stronger transformational role during the recovery to help communities “build back better”.

Box 2 presents an example of a social economy initiative illustrating how social economy organisations rely on their unique features to provide rapid solutions during times of crisis. What is particularly interesting about the creation of this local production line of masks is that it initially relied on volunteers to sew the masks but this should soon transition into an economically viable project. It is envisaged that the work integration social enterprise partner will continue to be involved in the production of masks, while the initiative will also aim to create employment opportunities for individuals who lost their income due to the crisis.

Historically, during periods of crises, there is a rise in the value placed on co-operation and solidarity. In recent public health epidemics including the current one, financial crises including the 2007-2008 financial crisis, and natural disasters such as the 2004 tsunami, co-operatives and wider social economy organisations were key in helping to reconstruct their community. Social economy organisations are particularly successful in reaching out to the vulnerable groups and re-integrating them into the society, thus filling some of the voids left by the state and the market (see Box 3). This is because they are locally anchored and their core purpose is socially driven.

The social economy is also seen as favouring preventive approaches to save future costs or explicitly reduce the negative externalities4 of economic activities. Such costs savings often concern public expenses, for example in healthcare (by preventing disease or injury) or unemployment benefits (through the action of work integration social enterprises). The social economy permits a better allocation of resources in the provision of some services and goods. This is one of the reasons why regional development approaches and strategies are increasingly leveraging the potential of the social economy (OECD, 2020[16]). Because of the specific features of social economy business models (Figure 1), the social economy produces additional positive effects on public expenses (e.g. savings of costs), on individuals (e.g. empowerment), on territories (e.g. co-operation in local ecosystems) and on society (e.g. social cohesion). These mitigating and prevention functions make the social economy a natural and trusted partner of government and civil society more generally. They collaborate to complement public action in specific areas (health, social services, education, fight against poverty, work integration) (Noya and Clarence, 2007[11]) (Mendell, 2014[17]) (OECD, 2013[18]). This partnership is especially appreciated during times of crisis, wars or epidemics, because the social economy can act rapidly, develop partnerships in an effective manner though their networks, and act as a trusted partner.

The social economy reacted quickly to address the urgent social needs arising from the COVID-19 crisis, helping mitigate crisis effects. A recent survey of social enterprises in the United Kingdom has confirmed that, despite intense difficulties to keep operating for many social enterprises, 96% of respondents said that they are actively supporting their community, staff or beneficiaries to deal with COVID-19 on top of managing their social enterprise. The main actions of the social economy across OECD countries have included:

• Providing a range of crucial services related to health and social services. Since medical capacity was stretched supporting the influx of patients, organisations such as SOS Medecins in France were alleviating the pressure on the health service. This service provided doctor home visits for those who needed assistance and medical checks, reducing the number of unnecessary hospital visits. In the United Kingdom, during the crisis, over 30% of all National Health Services community nursing and other services were provided by social enterprises (Social enterprise UK (SEUK), 2020[19]).

• Adjusting their operations to serve those in need during the crisis. Many social actors adjusted their operations to respond to immediate needs (e.g. food, health, assistance) of vulnerable and isolated communities, or ensured continuing employment for vulnerable individuals. Organisations like La Cantine pour tous in Quebec, Canada, which previously provided healthy food for kids in schools, has worked with partners to serve 1 500 dishes per day to relieve hunger of vulnerable groups such as the elderly during the lockdown period in Canada. Progetto Quid in Italy shifted its operations from sustainable fashion into production of reusable face masks, and continued to employ vulnerable women, providing them with income opportunities. Initiatives like these have supported the government with the provision of essential services (such as the provision of food, health services or social support for the elderly and isolated individuals), but these services have been provided in a socially responsible manner.

• Developing partnerships with local authorities to help provide services and mitigate the direct impact of the crisis, especially for the most vulnerable groups. Reliable partnerships have been built between social economy organisations and governments to help mitigate the impact of the crisis, particularly at the subnational level (regions and municipalities) which is often responsible for critical aspects of containment measures, health care, social services, and local economic development. Many municipalities were under pressure to provide assistance to at-risk groups, including a large share of the elderly population. For example, the Swedish Association of Local Authorities and Regions together with the Swedish Civil Contingencies Agency entered into an agreement with social economy organisations to help the elderly, and other at-risk groups, with grocery shopping and collection of medications during the COVID-19 crisis. This partnership helped to ensure the provision of essential services to all 290 Swedish municipalities, many of which are in rural areas.

• Helping governments cope with the crisis with concrete bottom-up solutions. Social economy actors are experts of what works and what doesn’t at the grassroots level and are driven by the desire to improve the socio-economic system for the better, which makes them a valuable source of information. Many governments organised events to identify new solutions to COVID-19 related issues. In Germany, the #WirVsVirus (translated as “we against the virus”) hackathon was held virtually on 20-22 March 2020 organised by Germany’s federal government in partnership with social economy organisations. Over 40,000 participants spent the weekend working on projects that tackled one of 48 different challenges around the COVID-19 crisis. After two days of coding and conference calls, over 1,500 projects were proposed to the jury. The social economy, like other actors, benefitted from opportunities provided by digitalisation to mobilise stakeholders and help in the provision of goods and services (see Box 4).

Over the last two decades, the social economy has intensified its efforts to “transform” society by implementing innovative and value-driven economic practices and models that are built around a social purpose or citizen-based. Moreover, the social economy has created new alliances involving citizens, policy makers, SMEs, universities and other stakeholders, focussed on socially innovative projects that support local economies and communities. Social economy organisations have identified and developed niche opportunities, and consequently have unlocked new sectors that were subsequently taken up by traditional enterprises.

Social economy organisations have pioneered alternative ways that enterprises create, capture and share value, as well as develop collaborative, circular and inclusive practices and models. By successfully demonstrating these alternative ways of conducting economic activities, social economy organisations inspire other economic actors to act differently, “mainstreaming” these practices. Examples of this include organic and local food or fair trade products, which are now found in mainstream supermarkets.

Social economy organisations can help transform society and the economy by:

• Exploring alternative business models and inspiring sustainable and inclusive practices: Social economy actors have emerged in sectors where the mainstream economy was traditionally dominant. In Europe, renewable energy community initiatives (REScoops) are playing an important role in the energy transition by fostering renewable energy sources and promoting citizen-based energy systems. Co-operative supermarkets (such as Park Slope Food Coop in New York, La Louve in Paris or BEES Coop in Brussels) are member-owned food stores where consumers are also owners of their co-operative. This alters the traditional shop owner-consumer relationship and results in the promotion of local and organic food, affordable pricing for the local community, as well as encouraging local participation and empowerment. Non-profit cinemas (Cinéma Beaubien in Montreal or Les Grignoux in Liège) provide cultural offerings beyond traditional mainstream offerings by supporting art and independent films without excluding commercial (local) films to sustain the business model. Instead of focussing on profit maximisation, these organisations provide: a local cultural institution that fosters social cohesion; events that are affordable to the local community; educational activities to schools; local employment; and the promotion of local culture in their communities.

• Unlocking new sectors: Social economy actors identify economic opportunities in niche sectors, demonstrating the sector’s economic potential and helping to structure this sector of activity. In Belgium, social economy organisations have been pioneers in developing the textile recycling sector since the 1960s, combining the development of the green credentials of this sector by selling the best pieces, and utilising the worst pieces for other purposes such as insulation, while also running a work integration programme that creates and maintains employment for vulnerable groups. These organisations work together as a federation to streamline textile collection and exchange best practice. The success of these actors in developing this sector is demonstrated by new economic actors entering this field, including private for-profit actors, strengthening the sector and intensifying competition.

• Providing services in remote areas and revitalising territories: The values of the social economy actors, such as being locally based and serving their members or the community, make them valuable partners to revitalise territories or develop activities that are less attractive to mainstream economic actors. Electricity and telecommunications co-operatives played a significant role during the 1930s in transforming the rural economy of the United States. The co-operative group Mondragon has been a partner in revitalising the Basque Region and maintaining employment after the Spanish Civil War and during the second half of the 20th century. During the COVID-19 crisis social economy actors also played an important role in providing services in remote areas. For example, in Italy, some cooperatives provided free delivery services for the seniors in remote areas; in the USA, the associations supported the Government by delivering meals to students in a limited number of rural schools closed due to COVID-19 (see the OECD policy note Policy implications of Coronavirus crisis for rural development (OECD, 2020[20])).

Interest in the social economy has increased in recent decades, spurred by changes in consumer habits that pay more attention to the origin and manufacturing process, and demand products which are produced sustainably and ethically. Indeed, some citizens are questioning all their economic choices, not only as a consumer but also as a saver, worker, entrepreneur or volunteer (Mertens, 2020[9]). The social economy provides an opportunity to make alternative economic choices, be actively involved in the economic sphere and help reshape societies.

Inspiring social economy initiatives that emerged during the COVID-19 crisis confirm the capacity of social economy organisations to adopt successful alternative business models, as well as cultivate the common good, social innovation and collaboration. Social economy actors were able to rapidly mobilise local stakeholders to co-design place-based and socially innovative solutions, relying on – or sometimes developing – local value chains (see Box 2). In France, in the rural area of Auberive-Vingeanne-Montsaugeonnais, one challenge was to implement solidarity channels for the most vulnerable and isolated individuals. Social economy organisations have been playing a significant role in providing healthcare, food supply and information services for these vulnerable groups, and identifying at-risk individuals. Social economy organisations have collaborated closely with local authorities, creating solutions, sharing experiences and information, demonstrating the value of these organisations’ local knowledge and networks (particularly important in isolated regions), and showing the positive results of dialogue and co-development of solutions at the local level.

The social economy can benefit societies both during and after the COVID-19 crisis in four spheres:

• Economy: The social economy contributes to economic development, especially to local economic development, by stimulating economic activity and creating employment, particularly for vulnerable people who are often excluded from the labour market, contributing to GDP growth. Social economy organisations instil responsible practices, as well as sustainable and inclusive models

• Society: The social economy contributes to social cohesion, particularly at the local level, by reducing inequalities through the provision of goods and services for the less well off, and fostering social capital and a sense of community by involving citizens in their activities, in different ways (e.g. as volunteers or members of co-operatives and associations).

• Citizens / Individuals: The social economy is also beneficial at an individual level, as it provides basic services, often as a back-up to government services, especially for the most vulnerable groups. It provides opportunities for citizens to participate in local projects that positively contribute to society.

• Territories: Social economy organisations are strongly rooted in the territory where they operate, which facilitates the rapid mobilisation of local stakeholders to address urgent needs. These organisations are also significant actors in local and regional economies as they create local jobs, reduce economic and social disparities in cities and rural areas, and revitalise communities (OECD, 2020[16]).

The social economy can reshape the post-crisis economic and social systems by inspiring socially and environmentally responsible practices among economic actors and by scaling social economy business models. Scaling strategies for social economy actors, such as co-operatives and social enterprises, increase social impact and include replicating activities in new geographical areas to reach new target populations, diversifying activities, and empowering individuals and groups to actively take part in social innovation processes.

Similar to traditional large and small enterprises, many social economy actors have been affected by the COVID-19 crisis and are having difficulty operating during this period. However, unlike many SMEs, social economy organisations often deliver essential services and help prevent future negative impacts of the crisis, working with the most deprived communities and employing those often furthest from the traditional labour market, notably disadvantaged and vulnerable groups.

The risk of the COVID-19 crisis is that many of the social economy actors who used all their resources in the emergency response, might not be able to continue to operate in the future due to short-term liquidity issues. As shown in various surveys, the majority of social economy organisations indicate that their situation will worsen without further support from the government. Differentiation should be made between social economy organisations whose primary source of income is based on commercial revenues (sales of services or goods) and those more reliant on public grants. The latter group is least likely to report high expected drops in turnover over the coming year.

Like firms in general, certain types of social economy organisations are experiencing notable drops in activity. A survey in Korea indicates that social enterprises were expecting a worsening of their situation due to reduced cash flows (85.1% of respondents), a drop in sales (83.7%) and disruptions with personnel management (49.5%) (International Labour Organisation (ILO), 2020[25]). In France, a recent study from the work integration enterprise association reported that 95% of their economic activity was affected by the COVID-19 crisis and that work integration social enterprises would lose around 27% of their projected revenues for 2020 (Ernst and Young, 2020[26]). In the New Aquitaine Region of France, around 75% of social economy organisations have reduced their activity and 45% report a turnover loss of at least 50% in March and April 2020. In the same region, 70% of social economy organisations mentioned that the COVID-19 crisis endangers their viability, and that for one in every three organisations, it happened immediately (Duforestel, 2020[27]). In Belgium, the crisis has hit the sector of work integration social enterprises hard, 85% of the workplaces have seen their activity reduced to 40% of normal capacity or lower, and 21% with no capacity whatsoever (EASPD (European Association of Service Providers with Persons with Disabilities), 2020[28]). In the United Kingdom, 59% of social enterprises that responded, expected demand for their business to decrease due to COVID-19, with 36% expecting an increase (Social enterprise UK (SEUK), 2020[19]).

The economic impact of the COVID-19 crisis on social economy organisations varies greatly depending on a number of factors including the sector of activity, as well as the organisation’s size, age, operational mode and financial structure. This diversity calls for differentiated support measures and creates a real challenge for policy makers to find relevant instruments. For example, survey data indicates that, in the New Aquitaine Region of France, social economy organisations younger than five years and having fewer than 10 employees are most affected by the crisis, while large social economy organisations cope better with the crisis (Duforestel, 2020[27]).

The COVID-19 outbreak had a substantial impact on social economy actors, pushing them to adjust the way they operate to ensure cash flow, and to identify new opportunities (such as production of face masks) to stay afloat. Many social economy organisations had to revisit their business/operating models and for some, close down some of their activities in order to ensure the financial sustainability of their organisations. Some of the reasons why social economy actors were more impacted than firms in general by this crisis in particular given its scale and nature are:

• Limited security cash/reserves. Most social economy actors do not have large cash reserves due to the structure of their financial model, often only having reserves for a few months. For example, social economy organisations that are heavily reliant on public funding are unable to accumulate large cash reserves as public funds are generally dedicated to specific purposes/activities and are required to be used in their entirety. Cash reserves are often only possible when the organisation has revenue from other sources (sales and/or donations). Even when such reserves are possible, social economy actors may favour the achievement of their social purpose over significant accumulation of reserves.

• Difficulty accessing particular skill sets. Many social economy organisations do not require or have not developed the same advanced skill set as similar private sector organisations, such as skills for financial forecasting, internationalisation or digital communication.

• Operating model dependent on volunteers. Measures taken by many governments due to the COVID-19 crisis often prevented volunteers from continuing their support of social economy organisations. Social economy organisations had to find new ways to source volunteers to ensure their essential operations were maintained during the crisis and beyond.

• Inability accessing government support programmes due to specific legal frameworks. Social economy organisations have a variety of legal forms or status ranging from not-for-profit organisations, that may not distribute profits to their members and founders (e.g. associations or foundations,) to organisations that may distribute a portion of their profits (e.g. co-operatives or social enterprises). This diversity of legal forms and status has hampered the ability of some social economy organisations to access governmental support programmes.

Policy makers are paying increasing attention to the social economy and how to support it, especially during the COVID-19 crisis when its contribution has been essential. Governments rapidly put in place measures for all economic players, including social economy organisations, to respond to the immediate economic impacts of the crisis. However the specific measures adopted to support small and medium enterprises (SMEs) (see OECD policy note Coronavirus (COVID-19): SME Policy Responses (OECD, 2020[29])) sometimes overlooked social economy actors, despite the fact that some of these actors have the relevant organisational and financial models to act as SMEs. Many countries have addressed the ineligibility of social economy organisations to specific measures by enabling their access. A number of relevant measures applied by local authorities, such as the provision of information in the early days of the pandemic, has also been detailed in the OECD note From Pandemic to Recovery: Local Employment and Economic Development (OECD, 2020[30]). Specific policy measures were needed to address the needs of social economy actors and support them in providing rapid and place-based solutions to overcome the crisis.

Table 1 provides a summary of the main measures applicable to social economy organisations since the COVID-19 crisis began. The initial response in the first few weeks was focused on the survival and strengthening of such organisations. More recently, measures have focussed on supporting further development of the social economy in its transforming role.

During the first few weeks of the crisis, government efforts focused on ensuring the survival of social economy organisations and developing new partnerships crucial for the delivery of basic services. Most countries applied an approach involving one or more of the following elements:

• Financial support to help with fixed costs via grants and easily accessible loans. Although many social economy actors benefited from general support measures provided to organisations, some governments implemented special access schemes to ensure that all types of social economy organisations could access support measures. For example, in the Italian region of Basilicata, a fund with a cap of EUR 350 000 per co-operative was created to support their capitalisation and maintain employment levels. In France, a number of funds were created at the subnational level to provide facilitated access to loans – in the region of New Aquitaine, Banque des Territoires and France Active created a EUR 2 million Solidarity and Proximity Fund for social and solidarity economy organisations to provide short and medium term loans with a deferred repayment mechanism. There are also numerous examples at the national level, such as the Canada Emergency Business Account (CEBA) interest-free loan of up to CAD 40 000 for small businesses and not-for-profit organisations to help cover their operating costs while their income is temporarily reduced.

• Deferral schemes for taxes, social security contributions and rents for public space. Schemes which improve the cash flows of social economy organisations has been critical. Many countries allowed organisations to delay local taxes, VAT, income taxes as well as social security contributions, typically for three or six months (see the OECD policy note Coronavirus (COVID-19): SME Policy Responses (OECD, 2020[29])). Governments have also provided flexibility in relation to deadlines for the submission of administrative documents and allowed deferral of tax declarations, for instance.

• Job retention and unemployment support schemes, were put in place by the majority of OECD governments (see the OECD Economic Outlook 2020 (OECD, 2020[31]) and the OECD policy note Job retention schemes during the COVID-19 lockdown and beyond (OECD, forthcoming[32])), enabling organisations to implement short-time work schemes seeking to preserve jobs at organisations that experienced a temporary drop in demand for services or products. Access to unemployment benefits and related income support schemes was also adjusted in most OECD countries to provide more financial support to those who lost their job because of the COVID-19 consequences. These support programmes are typically limited in time and last for a period up to one year. In the United Kingdom, the Coronavirus Job Retention Scheme covered up to 80% of staff “furloughed” due to COVID-19 to dissuade employers from making workers redundant. In France, a temporary layoff programme allows employers to register their staff for a COVID-related temporary unemployment indemnity programme. However, the variety of legal forms of the social economy has sometimes created a need for an urgent reaction. For example, the Spanish Confederation of Social Economy Enterprises (CEPES) collaborated with the Spanish government to allow all social economy organisations to apply for the ERTES (Spanish short-term/temporary unemployment scheme) under the same conditions as other companies.

• Provision of information on support schemes. Governments have facilitated access to information, allowing them to better understand available support schemes and eligibility criteria. Korea has developed leaflets on health-related issues concerning COVID-19 for workers in social enterprises as well as available economic support packages and programmes for enterprises (including social enterprises) to help cover expenses. In addition, Korea also included an action plan if social economy employees contract COVID-19.

• Tools for collaboration. Governments have supported the development of tools to promote collaboration between the social economy and other stakeholders such as the private sector and citizens. They have also helped with tools to link volunteers with social economy organisations. Governments in Spain, Germany, Belgium, France, Canada and Slovenia have supported the development of volunteering platforms, various hackathons as a way to solve challenges created by the COVID-19 crisis, as well as support social economy actors in their digitalisation process.

• Distribution of personal protective equipment such as hand sanitizers and face masks to social economy organisations, prioritising those working in the health and care sectors. In some countries, social economy organisations were excluded from receiving personal protective equipment as decision makers did not associate them initially as actors of the healthcare system.

Measures and instruments in the consolidation phase promote organisational changes and offer assistance to adjust operations to the new realties. This phase is also characterised by the need to develop new skillsets (for example digital skills/ trainings) to be able to operate in the changed environment with new sanitary and socio-economic measures. This is accompanied by the need for closer collaboration between different levels of government to ensure consistency and the need to develop partnerships with social economy organisations. In order to address these issues, governments are implementing the following initiatives to support social economy organisations:

• Continue the process of easing access to finance for the social economy, by providing grants, loans and other financial services for the provision of funding to support social economy organisations to overcome the crisis and reshape their business models to prepare for the post-crisis environment. For example, in May 2020, the Bundestag in Germany approved a proposal to define social enterprises, develop a cross-departmental plan to promote social innovation and social enterprises, remove potential access barriers to funding opportunities, and establish a programme for research and development of social innovations.

• Support with access to market. Given the difficulty to sell products or services, especially for some sectors of the social economy such as hospitality or consulting, public procurement is being used as a way to engage the social economy as a supplier under exceptional circumstances. For example, Montreal has launched a dedicated CAD one million fund to finance calls for proposals from social economy organisation providing support to small enterprises in the city struggling due to the COVID-19 crisis.

• Develop the necessary skills in social economy organisations. The COVID-19 crisis calls for new skills that social economy actors need to operate given the new reality. This support covers a variety of areas, such as assisting organisations to better use teleworking, developing new business models, and ensuring that support and advice is available to social economy actors. All around France, France Active in partnership with its 40 local associations, and with support of the government, promotes the provision of loans and provides advice to social economy organisations to improve their financial management skills.

• Better co-ordination between various governmental agencies to avoid duplication and improve the efficiency of initiatives, including those covering social economy organisations. Since many government agencies had to develop support programmes in a very short period of time, there has been duplication of efforts which creates confusion for applicants. To address this issue, in Spain an inter-ministerial commission was set up to ensure co-ordination within the government, while an inter-territorial commission was established to support co-operation among different levels of government.

• Improved visibility of the social economy. Governments have a role to play in educating consumers about supporting local firms and the solidarity economy. A number of governments, especially at subnational level, have developed initiatives to promote local consumption. Le Panier Bleu, an initiative of the Quebec government, provides online links to local producers, encouraging Quebec residents to buy local. In Korea, the government supported the online sales of products developed by social economy organisations and promoted their private consumption.

One of the assets of the social economy is its potential to bring systemic change. Social economy actors are close to grassroots communities and are among the first to spot changes in society, including behavioural changes. Social economy actors have proven their ability to spot early trends such as the demand for fair trade products as well as organic and green products or support for waste recycling. They have worked to mainstream these concepts over time. The COVID-19 crisis provides an opportunity to scale-up the social economy so it can play a greater role in transforming societies. Such actions would contribute to fulfilling the Sustainable Development Goals (SDGs). There is also a high expectation by citizens that the recovery should be fairer and greener compared to the recovery following the 2008 Global Financial Crisis, but it would require better collaboration and changing priorities.

Social economy actors and policy makers will need to work together with other stakeholders (including academia, citizen-based organisations and private sector organisations) to bring about this transformation. This is especially important for the development of a strong local network, where local companies and the social economy could work together by experimenting and implementing new responsible practices. To help the social economy play its transformational role, policy makers could consider the following policy options:

• Provide financial resources for social economy organisations that promote social innovation and to adapt business models/operations. Policy makers should strive to create an environment that promotes social innovation and experimentation and help the most promising examples to scale up, including the internationalisation of relevant practices. This requires not only the right policy framework, but also dedicated funds which could absorb the risk of experimentation and promote collaboration and development of prototypes. While there are many resources for technological innovation, those for social innovation also merit notable investment. The Irish EUR 5 million Innovate Together Fund focuses on addressing critical social or environmental issues related to the COVID-19 crisis and provides grants to non-profit organisations.

• Increase public procurement schemes with a focus on sustainable and inclusive social procurement. Sustainable public procurement, as well as procurement with social impact, harnesses existing expenditure on public procurement and directs it towards green and inclusive growth and the attainment of sustainability objectives. This is in line with UN SDGs (goal 12.7) that promote sustainable public procurement practices. Many governments have encouraged their administrations to use it as a tool to support social economy organisations. Korea promotes its preferential procurement scheme with pre-purchase and direct contracts for relatively small amounts (under around USD 40 000) with social economy organisations. Germany has released a two-year EUR 130 billion coronavirus economic recovery programme which contains a number of measures to boost green or environmentally friendly development.

• Develop a common vision and promote collaboration with the social economy. Representatives of social economy organisations could be an asset in the development of a number of policies if involved from an early stage. An agreed vision of their contribution and role in development at national and subnational levels could be beneficial. This role should not be decided in isolation and a dedicated task force or a collaborative space involving policy makers, the private sector, the social economy, civil society organisations and academia could discuss their new vision, and where social economy organisations might be of most value to support that systemic change. Social economy organisations should be involved in strategic discussions to prepare for the period after the immediate sanitary crisis, such as representation at relevant meetings of the various ministries, subnational authorities or committees to see whether social economy actors could contribute to the various initiatives and bring their knowledge and experience. Such discussions are already taking place in several countries, for example the Resilience Management Group in Belgium composed of 100 researchers and representatives of 180 enterprises have developed an action plan (Plan Sophia) involving 200 measures to help transition the country towards more sustainable and inclusive growth. The plan was presented to the federal and subnational governments with a number of its actions adopted. The city of Amsterdam, in post-pandemic recovery plan, is shifting from a traditional model to a new approach relying on “doughnut economics” 5 that addresses poverty and social needs while also ensuring environmental sustainability.

• Continue to increase the visibility of the social economy through development of tools to help organisations evaluate their impacts as well as share data and best practice. The COVID-19 crisis has demonstrated the value of social economy organisations, yet relatively little data exists on the impact they have created. Supporting the development of appropriate tools and methods, as well as their adoption by social economy organisations, could help organisations better demonstrate their impact.

The COVID-19 pandemic has driven numerous changes to economic activities and the way societies function, bringing the role of the social economy to the fore. Addressing these challenges has prompted policy makers to rethink how to better protect citizens and deliver necessary services in a more efficient manner. The crisis accelerated the emergence and increased visibility of inspiring social economy and social innovation initiatives, showcasing their positive contributions in empowering people, reinforcing place-based dynamics and reshaping enterprises and territories.

Social economy organisations have proven to be an important element in mitigating the effects of the pandemic. They not only support governments by addressing sanitary issues related to COVID-19, they are also serving as a trusted partner ensuring a better allocation of resources in the provision of some goods and services sorely needed to address immediate concerns.

The current situation offers momentum to take bold, courageous decisions to build a more sustainable and inclusive future. The COVID-19 crisis calls for a rethinking of the balance of the objectives of efficiency and resilience in different areas of economic and social systems. Post-crisis efforts can be turned into an opportunity to improve people’s lives and stimulate innovation. This is where social economy organisations can release their full potential. More precisely, the social economy can reinforce the transition towards more resilient societies through its principles (solidarity, co-operation, social impact) and practices. The social economy can inspire responsible practices among mainstream economic players, showing that it is possible to reconcile economic objectives with environmental and social requirements. The social economy also expands collective social innovation and sustains new forms of partnerships, gathering diverse actors with their respective expertise and perspectives on current challenges. The social economy provides a credible and value-driven path to transition towards more inclusive, sustainable and resilient systems in a post COVID-19 world.

A mix of policy measures is needed to help social economy organisations survive in the short term and help shape our societies in a more sustainable and inclusive way for the future. Governments can use this opportunity to develop a shared vision of their future to “build back better”, and social economy actors should have a seat at the table. An action plan to implement that vision would help set a roadmap to which social economy organisations can actively contribute. Policies which promote social innovation and co-operation can assist social economy innovations to scale up impact. To achieve this, social economy organisations will require continued and diversified financial resources, and support to professionalise as well as become digitally savvy in exploiting relevant tools (open source, co-operative platforms). Finally, the development of shared data and information on impact will help keep track of this progress and redirect efforts towards areas with the most fruitful results.

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[38] Ellen Macarthur Foundation (n.d.), What is the circular economy?, https://www.ellenmacarthurfoundation.org/circular-economy/what-is-the-circular-economy (accessed on  2020).

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[36] Helbling, T. (2010), “What Are Externalities?”, Finance and Development, Vol. 47/4, https://www.imf.org/external/pubs/ft/fandd/2010/12/basics.htm.

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[34] McCarthy, A. (2018), The Macroeconomics of the Circular Economy Transition: A Critical Review of Modelling Approaches, OECD Publishing.

[17] Mendell, M. (2014), Improving Social Inclusion at the Local Level through the Social Economy: Designing an Enabling Policy Framework, OECD.

[9] Mertens, S. (2020), “L’économie sociale tient le bon rythme”, Libre Eco week-end Interview by Vincent Slits, pp. 2-3.

[11] Noya, A. and E. Clarence (eds.) (2007), The Social Economy. Building Inclusive Economies, OECD.

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[29] OECD (2020), Coronavirus (COVID-19): SME policy responses, http://www.oecd.org/coronavirus/policy-responses/coronavirus-covid-19-sme-policy-responses-04440101/.

[22] OECD (2020), COVID-19 and Responsible Business Conduct, http://www.oecd.org/coronavirus/policy-responses/covid-19-and-responsible-business-conduct-02150b06/.

[31] OECD (2020), OECD Economic Outlook, https://doi.org/10.1787/0d1d1e2e-en.

[20] OECD (2020), Policy implications of Coronavirus crisis for rural development, http://www.oecd.org/coronavirus/policy-responses/policy-implications-of-coronavirus-crisis-for-rural-development-6b9d189a/#figure-d1e543.

[16] OECD (2020), Regional Strategies for the Social Economy. Examples from France, Spain, Sweden and Poland, OECD Publishing.

[7] OECD (2018), Job Creation and Local Economic Development 2018. Preparing for the future of work, OECD Publishing.

[18] OECD (2013), Job Creation through the Social Economy and Social Entrepreneurship.

[24] OECD (2011), Update of the OECD Guidelines for Multinational Enterprises.

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[35] OECD (Caldera Sánchez, A., et al.) (2017), Strengthening economic resilience: Insights from the post-1970 record of severe recessions and financial crises, OECD Publishing.

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[8] Social Enterprise UK (SEUK) (2018), Hidden Revolution. Size and Scale of Social Enterprise in 2018.

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[1] Young, D. (2007), Towards a Normative Theory of Nonprofit Finance, AltaMira Press.

← 1. Services are considered of general interest when they are essential to the lives of the majority of the general public and, therefore, subject to specific public service obligations (such as public transport, postal services, education and healthcare). They can be provided either by the state or by the private sector (European Commission, n.d.[33]).

← 2. Economic resilience can be defined as the capacity of an economy to reduce vulnerabilities, to resist to shocks and to recover quickly. It can be strengthened by exploring the role of policies that mitigate both the risks and consequences of severe crises (OECD (Caldera Sánchez, A., et al.), 2017[35]).

← 3. While there is no single accepted definition of a circular economy, it is generally understood that the “transition to a circular economy” entails a reduced demand for natural resources, and the materials that are derived from them (McCarthy, 2018[34]). Breaking with the “Take-Make-Waste” linear economy, a circular economy is based on the principles of designing out waste and pollution, keeping products and materials in use, and regenerating natural systems (Ellen Macarthur Foundation, n.d.[38]).

← 4. Externalities are among the main reasons governments intervene in the economic sphere. Externalities are the indirect effects that have an impact on the consumption and production opportunities of others, but the price of the product does not take those externalities into account. As a result, there are differences between private returns or costs and the returns or costs to society as a whole (Helbling, 2010[36]).

← 5. Kate Raworth’s “doughnut economics” focuses on meeting the needs of all within the means of the planet. It ensures internationally agreed minimum social standards (social foundation) are met without exhausting the planet and causing unacceptable ecological degradation (environmental ceiling) (Raworth, 2017[37]).

This paper is published under the responsibility of the Secretary-General of the OECD. The opinions expressed and the arguments employed herein do not necessarily reflect the official views of OECD member countries.

This document, as well as any data and map included herein, are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area.