THE SOCIAL ENTREPRENEURSHIP NETWORK PROJECT: The experience of consortia supporting growing enterprises in Italy

THE SOCIAL ENTREPRENEURSHIP NETWORK PROJECT: The experience of consortia supporting growing enterprises in Italy
Sabina Bellione and Floriana Nappini, Consorzio LIGHT
December 2013

Summary of main characteristics of good practice approach

While the success elements already described have indeed represented a growth factor for social enterprises in Italy and in Lombardy, there is another very important factor that needs to be considered (and which is the subject of this paper) i.e. the ability of social enterprises to work together and create specific collaborative structures (such as consortia, networks etc.).

It is important to notice that, if on the one hand, the creation of consortia has indeed supported the rapid growth of social enterprises (as the following paragraphs will describe); on the other hand, they cannot be regarded as the only factor of growth. Moreover, the creation of consortia should be seen within the larger context of Italian social enterprises sector (as already described) because, without such context the creation of consortia may not have had the impact it has had up to now.

The practice described relates to a specific type of social enterprise working in Italy i.e. social cooperatives. As already mentioned, social cooperatives represent, within the Italian third sector, the most widespread type of social enterprise and, at the same time, the organisations with the greatest economic and social role. This importance can be deduced by comparing the data already provided concerning the non-profit sector and the social cooperative specific sector: in 2011 social cooperatives represented around 4% of total organisations within the non-profit sector in Italy but employed more than 50% of total workers within the sector. Moreover, while the non-profit sector grew by 28% from 2001 to 2011, social cooperatives grew by 98% within the same time span.

Together with the relevance of the sector there is another very important reason why the present paper concentrates on consortia of social cooperatives. Compared with other types of organisations within the sector, social cooperatives have always shown a strong tendency towards structured forms of collaboration and in fact they have created the most interesting and the best working collaborative structures (and consortia are one of them).

In general terms, social cooperatives’ collaborative structures are of two main kinds (within which they can take different forms):

a) Political (e.g. federations, confederations etc.)
b) Economic (e.g. consortia, joint groups, network contracts etc.)

The paragraphs below briefly describe the characteristics and functions of the most important collaborative structures (among which we find consortia). This is to show how rich the support system is in Italy and clarify that, while consortia and networks have indeed a key role in social enterprises development, the overall support structure should not be underestimated and the synergies of this type of system should be well understood.

Federations and confederations are characterised by the following functions:
1) They have a watchdog function (e.g. they carry out external audits on behalf of the public national authorities; they watch on the implementation of the mutualistic objectives of cooperatives etc.)
2) Represent the voice of cooperatives and their needs towards public authorities at different levels as well as other type of entities (e.g. trade unions)
3) Promote the creation of new cooperatives
4) Promote restructuring and merging processes among cooperatives,
5) Provide legal, administrative and fiscal advice
6) Support cooperatives in accessing credit and funding

In general terms, the aims of cooperatives’ networks include:
1) Collaborating in specific segments of the relevant markets (as defined by the cooperatives themselves when signing the network contracts);
2) Exchange information or services (industrial, commercial, technical or technological);
3) Carry out one or more activities that are part of their daily life together
4) Share services

Consortia are the main tool used by Italian cooperatives to create economies of scale and sustain their growth. Even though their objectives may seem similar to those of cooperatives networks, their scope is in practice much wider and they represent a more stable structure with a greater impact on growth. In general terms (i.e. not specifically for social cooperatives), the creation of consortia has three main economic functions:

1) Productive integration
2) Joint purchasing of goods and services on behalf of the members
3) Participation and access to tenders and contracts

However, consortia of social cooperatives are different from other types of consortia. On the one hand, they have, as other types of consortia, a marked service function (e.g. procurement of raw materials to increase purchasing power etc.). On the other hand, they have a significantly greater impact on the development of activities. Consortia of social cooperatives are themselves social cooperatives however made up of legal entities (cooperatives) and not physical persons. Therefore they are legal entities themselves and they can use their legal form to act directly on markets (for example by participating directly to tenders or by concluding contracts and other operations for themselves as well as in the name of their members).
Hence, consortia of social cooperatives do not simply deliver services to their members but they act as economic and legal actors.

The key features of consortia include:

– Strong territorial identity
Consortia are in fact built by cooperatives working within the same geographical area (usually at provincial or regional level but also national);
– Mutuality
The actions of consortia (like those of social cooperatives) need to have a social utility function for the local community;
– Cross-sector composition

As already mentioned, consortia bring together cooperatives from different sectors so that they avoid being over-specialised, they can create synergies among different types of cooperatives and can experiment activities in new sectors.

The main activities of consortia are:

– Promoting collaboration between cooperatives;
– Providing support services as well as technical and administrative consultancy;
– Promoting training activities;
– Supporting activity development for their members by helping them sell their products or by offering services to third parties (public and private entities);
– Promoting and managing relations with public authorities;
– Acting as a general contractor in public tenders (which means that consortia can participate in public tenders in the name of their members and then manage the contract directly however involving the members of the consortia in the activity);
– Promoting access to credit and funding of their members

It is important to notice that not all consortia carry out all the above activities. there are in fact two type of consortia:
– “Light” consortia
These provide only basic services and support to their members (i.e. training opportunities, administrative support etc.).
– “Heavy” consortia
These have a more structured approach and have many key functions (including the general contractor function).

In the Italian experience, both type of consortia have proved to be effective in delivering their objectives and in supporting the growth of social cooperatives.

These consortia represent in Italy a real tool for increasing the critical mass of social cooperatives allowing for a better and more effective placement on relevant markets. In practice, consortia have, in many cases saved social enterprises (particularly the smaller ones) and have allowed for greater (and at the same time more equitable) competition among cooperatives and between cooperatives and other types of enterprises.

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