Social enterprises and municipalities gradually finding one another

19/03/18

Plenty of opportunities for shared social objectives

Cooperation between social enterprises and municipalities appears to make sense, but has not really materialised in practice. For instance, social enterprises often struggle with the many different departments at municipalities. However, procurement policy at municipalities also needs to be modified, so more opportunities are created for social enterprises.

This was demonstrated by the PwC report entitled ‘Early opportunities: cooperation between social enterprises and municipalities in the Netherlands’ . Only forty percent of municipalities implement policy aimed at encouraging and supporting special enterprises. Even though municipal policy is still in its infancy, PwC believes cooperation thus far has been promising.

Do something good for society

Social enterprises are similar to regular companies and have their own earnings model and product or service. But these enterprises do not see revenue as an objective, but as a means for doing something good for society. ‘They are thus a logical partner for municipalities’, says Marloes Tap from PwC. ‘Both want to realise the same objectives, whether it concerns helping people with difficulties in the labour market, re-using waste or preventing loneliness among senior citizens.’

Cooperation appears to be tentative and difficult

However, cooperation still appears to be tentative and difficult, says PwC researcher Leon van den Dool. ‘Social enterprises can be a bit of an anomaly. Municipalities are accustomed to supporting foundations, but social enterprises are actually limited companies - and that takes getting used to.’

84 percent of municipalities said they acknowledge and appreciate social enterprises. But, in this case, it is telling that social enterprises do not share this feeling, with only thirty percent feeling acknowledged and appreciated by municipalities. However, municipalities with specific policy in this field seem to be more appreciative of social enterprises.

Number of municipal departments is a stumbling block

One of the things PwC examined was procurement policy. Municipal tenders awarded points for price and quality, but often not for social impact. As a result, the social value of social enterprises was not valued, thus reducing their chances of being successful. In addition, compartmentalisation forms an extra obstacle. For instance, the mission of many social enterprises is addressed by different municipal departments and policy domains; this means they often do not know which department they should approach. Tap: ‘Consider, for example, a recycling shop (economic affairs) that also collects household waste (environment) using people with a disability (social affairs).’

'Social enterprises are an ideal partner for municipalities. They both share the same objectives.'

Marloes Tap, PwC

Modify procurement evaluations

Researchers say the first step towards quickly removing barriers involves identifying which social enterprises are active within the municipality, like in Amsterdam, or creating a breeding ground for social enterprises, like in Utrecht. It also helps to be clearly approachable via a single point of contact, as in Rotterdam. In addition, municipalities must modify their procurement evaluations and bear in mind that the products and services of social enterprises generally require extra flexibility.

Clear story about social value

For their part, social entrepreneurs can do more to present themselves in a better light, says Van den Dool. 'If they have a clear story about their product or service and its social value, they will be more successful at convincing municipalities.' He says there are promising opportunities for cooperation, certainly now that municipalities have seen an increase in their activities due to decentralisation. 'Municipalities are important to social enterprises because they pursue the same objective and can be a major customer for their products. Social enterprises often devise new solutions for problems experienced by residents and local politicians.