In Ireland, the term social economy can be traced to the 18thC and the writings of utopian socialists such as Robert Owens, one of the founders of the Irish co-operative movement (Bolger 1977). The social economy is typically said to include charities, co-operatives, voluntary, mutual associations and non-profits. However, the label is not widely used to describe them collectively so that many organisations within the wider social economy do not identify themselves with, or even fully understand, the term. The concept of social enterprise first emerged in public policy discourse in the 1990s and, when it began to be viewed as a mechanism of job creation/integration and service provision in disadvantaged communities. In this context, in early 2000, the social economy was defined as that part of the economy, between the private and public sectors, which engages in economic activity in order to meet social objectives (FAS 2000). Social enterprises were identified as one type of enterprise within this part of the economy. This perspective on social enterprise has been significantly influenced by European policy. By contrast, in Irish academic discourse, the interpretation of social enterprise is more varied due to the different influences of the US and European intellectual traditions. These variations have contributed to ambiguity about the social economy as a sector, and social enterprises as distinctive forms, and this has compromised attempts to estimate the scale and potential of the sector in Ireland to date.
In 2013, as part of the policy response to the unemployment crisis of the economic recession, the Irish government commissioned an examination of the job-creation potential of social enterprise. The Forfás 1 report offered a new official definition of social enterprise, characterised by many of the features of the EMES 2 ideal type. Furthermore, the description and examples of social enterprises included in the report confirmed the dominance of one model of social enterprise in Ireland – the Work Integration Social Enterprise or WISE. The objective of this paper is to discuss how social economy and social enterprise are understood by academics, practitioners and policy makers in Ireland and to explain how WISEs have evolved as the dominant Irish social enterprise model to date. The paper is an analysis of relevant policy documents, academic publications and draws on the few empirical studies that have been published on the sector. 3
The influence of the US (Salamon and Anheier 1997; Dees 1998) and European/EMES academic traditions (Pestoff 1998; Borzaga and Defourny 2001; Nyssens 2006; Defourny and Nyssens 2010, 2012) and EU and national policy perspectives, since the early 1990s, on Irish academic and policy discourse is discussed in this paper. It is argued that the adoption by successive Irish governments of a labour market integration approach, to supporting the development of the Irish social economy, since the early 1990s, has shaped the sector and contributed to the emergence of one dominant social enterprise type, the WISE. Some of the characteristics and impacts of Irish WISE are then discussed together with the challenges they face.
Towards an Understanding of Social Enterprise in Irish Academic and Policy Discourse
Although Ireland has a long and rich tradition of social economy type organisations, they have not been the focus of academic attention as social enterprises. The role of Christian charitable organisations, most notably the Roman Catholic Church in fields of health, education and welfare has been documented (see Ruddle and Donoghue 1995; Powell and Guerin 1997; Jaffro 1996), but they have received relatively little attention as social enterprises, per se. Since the 1980s the decline in the numbers of religious personnel has led to their gradual withdrawal from these services with the state taking a more proactive role in developing partnerships with the broader voluntary and community, or charity, sector for the purpose of delivering services and tackling social and economic exclusion in Irish society.
The social economy has been subjected to increased levels of academic and policy attention since the early 1990s, with a particular focus on the concept of social enterprise. Use of the term social enterprise in Irish academic discourse tends to reflect either US work on the non-profit sector (e. g. Salamon and Anheier 1997; Powell and Guerin 1997; Donoghue 1998; Acheson et al. 2003; Donoghue, Anheier, and Salamon 1999; Prizeman and Crossan 2011) or be influenced by the European tradition, particularly that of the EMES network (O’Hara 2001; O’Shaughnessy 2008; Curtis, O’Shaughnessy, and Ward 2011). Both the US and European traditions have also shaped attempts to define and/or map the Irish social economy. In policy discourse the social economy, and more specifically social enterprise, has been viewed more pragmatically as a way of responding to social and economic exclusion and is associated with the provision of services and employment opportunities in disadvantaged communities (NESF 1995; PLANET 1997a; PLANET 2005; WRC, 2003; Forfás 2013). These different academic and policy perspectives have contributed to a general ambiguity about what constitutes the social economy and to a variety of approaches to identifying and mapping the sector.
The Influence of the US Academic Tradition
In general, academic approaches to identifying and mapping social enterprises can be broadly characterised as either US or European depending on the weight given to individualistic and hierarchical organisational structures, on the one hand, or collectivisation and democratic ownership on the other (Teasdale 2011: 102). Studies of the Irish non-profit sector grounded in the US tradition (Salamon and Anheier 1997; Donnelly-Cox 1998; Donoghue 1998; Donoghue, Anheier, and Salamon 1999; Donnelly-Cox and O’Regan 1999; Donoghue 2002; Acheson et al. 2003; Donoghue et al. 2006) were based on the Salamon and Anheier (1997) definition of non-profits, while Prizeman and Crossan’s 2011 mapping exercise of social entrepreneurial enterprises was influenced by the US emphasis on social innovation and social entrepreneurship (Dees 1998; Dees and Anderson 2006).
Even though the term social enterprise had been used in public policy discourse from the early 1990s, it did not appear in any academic mapping exercise of the Irish non-profit sector (influenced by the US non-profit approach) until a philanthropic-sponsored study of the sector was published in 2011. Earlier mapping exercises of Irish non-profits (e. g. Donoghue 1998) used a structural/operational definition of the non-profit sector (Salamon and Anheier 1997) and pointed to the long history of the field of activity, the absence of a specific policy milieu and a reliance on public funds and volunteering. Concerns were also raised about accountability within, and regulation of, the sector. A mapping exercise in 2006 4 used the International Classification of Non-Profit Organisations and did not refer specifically to social enterprises. In Prizeman and Crossan’s (2011) study social enterprises were included but in an all-encompassing term – social entrepreneurial enterprises – which was intended to capture a broad continuum ranging from individual social entrepreneurs to social entrepreneurial enterprises. 5
Prizeman and Crossan defined social entrepreneurial enterprises as enterprises, businesses or projects that are run to provide products and services which generate social and environmental return, emphasising the change maker or social entrepreneur, social mission and innovation (2011: 5). Their survey of 194 social entrepreneurial enterprises provided an insight into the entrepreneurial behaviours of these individuals/enterprises; their role in public service delivery, their networks, relationships and stakeholders, financial and human resources, measurement of impacts, values and governance. They noted in particular the social entrepreneurial enterprises’ relationship with public sector organisations and the importance of social mission. Forty-two per cent of all social entrepreneurial enterprises were involved in the provision of some State service, all enterprises were driven by social mission and had applied some form of innovation to achieve their social agenda. The study demonstrated the highly diverse and multifaceted nature of the Irish social economy and the complex missions, organisational structures, networks and entrepreneurial behaviours that characterised individual Irish social entrepreneurs and social enterprises (Prizeman and Crossan 2011: 33).
The Influence of the European/EMES Tradition
While the term social enterprise was not used in US-influenced academic studies of the Irish non-profit sector until 2011, studies influenced by the European/EMES tradition, date back to 2001. The first academic attempt to provide a working definition and typology/categorisation of Irish social enterprises according to the conceptual framework of the European EMES Research Network was undertaken in 2001. This typology was constructed using a set of nine indicators developed by the EMES Research Network. 6 O’Hara (2001) delineated five broad categories of Irish social enterprises by focusing on objectives, activities and operation, rather than organisational forms. These categories were: (a) work integration social enterprises, associated with insertion of members of excluded groups into the labour force; (b) credit unions; (c) social enterprises concerned with housing provision; (d) social enterprises providing personal and proximity services; (e) local development organisations.
Work integration social enterprises provide work and labour market integration primarily for people with disabilities in what were conventionally referred to as workshops or sheltered employment. There is a long tradition in Ireland of using voluntary organisations for the provision of services to people with intellectual and physical disability, which dates back to the early 1900s and was formalised in the 1953 Health Act. Typically run by voluntary, religious-based and non-profit organisations, sheltered workshops provide on the job training, temporary and longer-term re-integration opportunities to persons with a registered intellectual and/or physical disability. One of the largest Irish organisations in this field is Rehab. Rehab, originally founded in 1949 (known then as the Rehabilitation Institute) and it’s partner organisations, provides support, learning and training opportunities to an estimated 64,000 clients in over 200 locations including Ireland, the UK, and Poland. Rehab also oversees one of the largest Irish non-governmental employer of people with disabilities, Rehab social enterprises. These enterprises provides integrated employment opportunities to 313 persons with a disability, out of a total 530 jobs, across a range of sectors including: logistics, recycling and retail (Forfas, 2013). 7
Structured as co-operatives, credit unions provide financial services and have a membership in Ireland of almost three million, representing a greater proportion of the total population than in almost any other country. The number of credit unions has remained relatively stable over the last two decades with very little contraction in the sector due to amalgamations, transfers or liquidations. Social enterprises concerned with housing provision, including housing co-operatives and voluntary/philanthropic housing associations, are significant providers of Irish social housing and recognised as such by government. 8 Similarly, social enterprises that provide personal and proximity care are an important element of the Irish care sector, particularly in the provision of childcare and services to older persons. Local development organisations or community-based service organisations emerged in the 1990s as part of the state response to the persistence of long-term unemployment and disadvantaged communities and gave rise to a new generation of social enterprises in the context of state support for labour market integration.
O’Hara’s (2001) five categories were not seen as mutually exclusive but to be viewed as being at different points on what Defourny and Nyssens (2012) later referred to as the galaxy of social enterprises, with the first four more typical of the nonprofit/voluntary sector or established social economy. However, this EMES-type approach was not applied to any systematic mapping of the Irish social economy until a European Commission (EC) sponsored study was undertaken in 2014, as part of a mapping exercise of social enterprise activity and eco-systems in 29 EU countries. The operational definition of social enterprises used for this latter exercise was based on that used in the 2011 EC Social Business Initiative (EC 2011) 9 and closely mirrored the widely accepted EMES definition of social enterprise. Six types of Irish organisations that might be considered as social enterprises were identified. These included: community-based organisations grant funded to provide temporary employment and job training; charities and voluntary organisations delivering public services on a grant or contract basis; friendly societies; socially-entrepreneurial individuals launching socially motivated businesses; entrepreneurial sports, cultural and community organisations; credit unions and cooperatives. These types closely resembled the categories originally outlined by O’Hara (2001) with the exception of the inclusion of socially entrepreneurial individuals. This inclusion reflects the influence of the US social innovation school of thought. The 2014 mapping exercise also referred to the interchangeable use of concepts such as social enterprise and social entrepreneurship in Irish discourse, reflecting the general vagueness surrounding the concept in Ireland.
Irish academic discourse, and Irish studies of the social economy and social enterprise, reflects what Teasdale (2011: 99), referring to the UK, described as an array of definitions and explanations, constructed by different actors promoting different discourses that draw upon different academic theories. The results of this have been a limited understanding of the meaning of these concepts, an unreliable assessment of the true scale and potential of the sector, and a situation where many of the practitioners within it are confused about, and do not identify with, the social economy (Curtis, O’Shaughnessy, and Ward 2011). By contrast, in Irish policy discourse, conception of the social economy has been more vigorous and less confused, having been strongly influenced, since the early 1990s, by a European policy perspective that promoted the social economy and social enterprise as a community-based strategy to tackle unemployment and social and economic exclusion.
Social Enterprise in Irish Policy Discourse
The terms social economy and social enterprise first emerged in Irish policy discourse in the 1990s. Reflecting a European policy 10 trend, the initial national policy debate on the sector was influenced by the National Economic Social Forum (NESF) study of the job potential of the service sector which identified social enterprises as having the potential to provide goods and services to disadvantaged communities in the instance of market and public failure, and to facilitate local labour market integration (NESF 1995). The NESF suggested that the activities of organisations operating in the social economy have certain distinguishing features: a local focus – in terms of market, ownership and operation of the enterprise; an income focus, with priority given to the generation of adequate and sustainable levels of income for those involved; the pursuit of social, cultural and environmental goals with an emphasis on improving the quality of life; and different forms of organising economic activity (NESF 1995).
The NESF recommended that government action be taken to develop the social economy by creating support structures for social economy enterprises and providing subsidies to those enterprises that would recruit from the unemployed (NESF 1995). These recommendations were subsequently supported by advocacy groups for the unemployed. By 1997, PLANET 11 – the Partnership Network for Irish area-based partnerships – had published two position papers on how the sector could be developed and supported to provide community-based services and tackle unemployment and social exclusion (see PLANET 1997, 2005; WRC 1999).
The Irish government 12 responded by establishing the Partnership 2000 Working Group on the Social Economy. The brief of the working group was to undertake a detailed examination of the potential of the social economy to provide employment and services in disadvantaged communities. In its report, published in 2000, the Working Group reiterated the NESF’s earlier call for government support and reinforced the association between the social economy, labour market integration and service delivery to disadvantaged communities. The Group defined the social economy as that part of the economy, between the private and public sectors, which engages in economic activity in order to meet social objectives. They identified three types of social enterprises as targets for government support. These were: Community Businesses: which should ultimately be financed from trading income alone; Deficient Demand Social Economy Enterprises: where the demand for particular goods and services within a community was not matched by resources to pay for these, due to disadvantage or low density of population; and Enterprises Based on Public Sector Contracts: which dealt with the potential for subcontracting public sector expenditure to local Social Economy Enterprises in disadvantaged communities.
The Working Group recommended the establishment of a national social economy programme that would use existing resources wherever possible to support the sector, particularly the existing Community Employment (CE) programme. 13 This appealed to the state’s preference for a labour market integration approach to the development of the Irish social economy in general – and social enterprises more specifically – and resulted in the establishment of the Social Economy Programme (SEP) in 2000, which was re-modelled as the Community Services Programme (CSP) in 2006. These state programmes became the key stimulus and support for the development of Irish social enterprises. Thus, it is not surprising to find that the work integration social enterprise (WISE) is the dominant SE model in Ireland.
State Programmes of Support for Social Enterprise – Social Economy Programme (SEP) and Community Services Programme (CSP)
The objective of the Social Economy Programme (SEP) was to support social enterprises with specific characteristics including community ownership, a local development focus, and the provision of work integration opportunities for the long-term unemployed. These features reflected key elements of the EMES social enterprise ideal type and the European policy focus on linking development of the social economy to tackling unemployment (Nyssens 2006; Nyssens et al. 2012). The SEP was introduced at a time when Ireland was experiencing virtually full employment and attracting significant inward migration to fill the jobs available. Thus, participating social enterprises were required to have a specific focus on funding local services and providing employment opportunities for particularly disadvantaged groups (including those distant from the labour market), or to be addressing market or public service failure in communities, usually as a consequence of either geographical or social isolation. In this way the establishment of new social enterprises was linked explicitly to government objectives of local and community development, the provision of local services and labour market re-integration.
An evaluation of the SEP, published in 2003, found that the programme had limited capacity to support the development of social enterprises and that there was insufficient start-up support and enterprise training. The evaluation also questioned the long-term sustainability of the social enterprises supported under the programme (WRC 2003). In light of the perceived inadequacy of the SEP, PLANET made a further policy submission to the Irish Government in 2005 in which they called for a mapping of the sector and the development of a new national policy to strengthen and support the Irish Third Sector.
PLANET articulated a definition of social enterprise, which closely resembled the EMES ideal type. Social enterprises were argued to be typically launched by local citizens and characterised by: an explicit aim to benefit the community; a continuous activity producing goods and/or offering services; a high degree of autonomy, i. e. not managed by public authorities or other organisations; a significant level of economic risk; a minimum number of paid workers; a decision-making power not based on capital ownership; limited or no distribution of profits and a participatory nature which involves people affected by the activity, e. g. consumers, workers (PLANET 2005).
By 2006, responsibility for the SEP had transferred from the government department concerned with enterprise and employment to that with responsibility for community and rural affairs, was given more of a service orientation and was renamed as the Community Services Programme (CSP). This change of name, and transfer of departmental responsibility for the programme, strengthened the association of social enterprises with locally based community development rather than with enterprise and entrepreneurship.
The Community Services Programme (CSP)
The CSP was launched just two years before the 2008 global recession and the subsequent collapse of the Irish banking system that necessitated a Programme of Financial Assistance from the European institutes and the International Monetary Fund (IMF). Thus the CSP has mainly operated in an era characterised by high national unemployment levels (CSO 2012), 14 increased household poverty, deprivation and indebtedness, and a 48 % cut in government funding to the community and voluntary sector (Harvey 2012; NESC 2013).
Organisations supported through CSP are expected to secure sufficient income from trading and other sources to deliver properly resourced and viable services and are termed social enterprises by the programme promoters. Funding is in the form of wage subsidies to workers and, in some instances, a manager. CSP the social enterprises are not required, or expected, to become financially sustainable and therefore most remain dependent on state funding. In a 2009 study of the programme Curtis, O’Shaughnessy, and Ward (2011) revealed that, for a third of those in the programme, trading accounted for less than 20 % of total income with fewer than a quarter (22 %) generating more than half their income from trade.
It is clear that a very significant share of organisations that participate in the CSP are not enterprise driven, exhibit an extensive reliance on, and operate simply as conduits for, state funding programmes (WRC 2003; Curtis, O’Shaughnessy, and Ward 2011; Clann Credo 2011; Forfás 2013). 15 However, the CSP continues to be the main state scheme supporting Irish social enterprises. The programme, and its predecessor the SEP, reflects the labour market integration approach (to the development of the social economy) followed by successive Irish governments since the concept of social enterprise first emerged in policy discourse in the early 1990s. The social enterprises that have emerged from this type of state support are typically engaged in community service provision and labour market integration, and can be generally categorised as WISEs
Emerging from a Recession – Re-exploring the Job-Creation Potential of Social Enterprise
In response to a crisis in public finances, and continued high unemployment levels, the Irish Government re-focused attention on social enterprise. The 2012 Irish Government Action Plan for Jobs set out a series of concrete actions to maximise employment creation and contained a working definition of social enterprises as business models set up to tackle social, economic or environmental issues and engaged in trading or commercial activities to produce social and community gain (2012: 67). It also included a commitment to a review of the job-creation potential of social enterprise which was completed by Forfás in 2013.
Forfás set out an Irish definition of social enterprises as not for profit organisations, driven by social objectives, separate from government, where at least part of the income generated is from trading activity and the surplus reinvested in social objectives. However, unlike the diverse ‘galaxy of social enterprises’ (Defourny and Nyssens 2012), Forfás take a more linear economic view of social enterprises describing them as operating on an economic continuum with varying degrees of commercial focus and engagement with the public and private sectors. At one end are those who deliver core social programmes, such as services for people with disabilities or older people, and that are funded primarily by the state. These are driven by the need to generate enough income to maintain their viability and sustainability so that they can respond to social need. At the other end are those social enterprises that are seen to interface more closely with the commercial sector and who present themselves as businesses that aim at profit maximisation so as to fund their social objectives.
Forfás consider social enterprises to be rooted in local and community development and to play an important role in providing jobs to those most distant from the labour market both spatially and socially. Four types of social enterprises are distinguished, largely on the basis of their objectives and activities, rather than organisational forms.
Social enterprises that create employment opportunities for marginalised groups such as those with disabilities, or ex-offenders.
Local enterprises that are involved in local and community development and respond to a gap in infrastructure or services such as community enterprises or community shops.
Organisations that deliver public services such as childcare or eldercare services.
Organisations that trade in services or products that have a social good and a high-income generation capacity such as an environmental services enterprise.
These four types are not mutually exclusive and it is acknowledged that in practice there is overlap. However the first type can be seen to correspond to the basic definition of a WISE and, from what we also know, those social enterprises involved in local development and the delivery of childcare and eldercare services also have a high dependence on labour market integration programmes such as CE and CSP and so can also be characterised as WISEs. The fourth type of social enterprise is explained as an organisation that trades in services or products that has a social good and a high potential income generation capacity (Forfas 2013).
Furthermore, the Forfás report includes six case studies that were chosen to reflect the diversity of social enterprises in the Irish social economy continuum (Forfás 2013: 15). Five of the six case studies are WISEs, with a clear objective of job creation/training and/or labour market integration of the long-term unemployed and persons with intellectual/physical disabilities. The choice of examples serves to confirm the dominance of the WISE model in an Irish context to date. This prominence is in line with developments across Europe; where assisting the integration of unemployed individuals, and/or others at risk of social and economic exclusion, into the workplace has evolved as a key objective of European public policy (Nyssens et al. 2012).
Contextualising the Forfás Official Irish Definition of Social Enterprise
This most recent official definition of Irish social enterprises reflects the influences of the European policy perspective and EMES academic tradition. The European Union (EU) influence was demonstrated in a 2014 (European Commission (EC), sponsored mapping exercise of the Irish SE sector. This study, which reviewed Irish social enterprise activity, the policy and legal frameworks, public and other support schemes available to Irish social enterprises, revealed some of the similarities between the 2013 Forfás definition and the 2011 EC Social Business Initiative (operational definition of social enterprise). The Irish operational definition was suggested to fully meet three of the five core criteria of the EC operational definition: economic activity, social dimension and profit/asset distribution. It did not meet the criterion relating to inclusive governance and only partly met the requirement relating to independence 17 (EU Country Report Ireland 2014: 13). Credit Unions, because their profits are distributed to members with no profit cap, were discounted as a type of Irish social enterprise and that the Company Limited by Guarantee was regarded as the legal identity most likely to meet all the EU operational definition criteria (EU Country Report 2014: 14). Thus, similarities can be drawn between the 2011 EC and 2013 Irish operational definitions of social enterprise, but it should also be noted that both have been clearly influenced by the social enterprise definition developed by EMES.
Both the Irish and EC definitions comply with four of the dimensions of the EMES ideal type: two social (an explicit aim to benefit the community and a limited profit distribution), one participatory-governance (high degree of autonomy) and one of the economic and entrepreneurial dimensions (a continuous activity producing goods and/or selling services). Building on Table 3.1 of the 2014 EC SE Mapping Country Report: Ireland (p. 13), a comparison between the three definitions is shown in Figure 2.
In summary, any consideration of the social economy and social enterprise in an Irish context must take into account the two parallel narratives – academic and policy – that have contributed to a lack of clarity about how social enterprise is to be understood, its boundaries and how it intersects with other sectors. The existence of two distinct academic traditions and the pervasiveness of a European policy perspective in national policy discourse, has meant that the term social enterprise has a different meaning for different actors and this has made a realistic assessment of the sector as a whole difficult. The association between promotion of the social economy and tackling disadvantage and unemployment in European policy has influenced the Irish government in its design and delivery of support mechanisms for the sector to date. This is especially reflected in the prevalence of a labour market integration approach to the development of the Irish social enterprises and has resulted in the dominance of one particular Irish model of social enterprise – the WISE or Work Integration Social Enterprise – as confirmed in the latest official national review of the sector. However while this latest Forfás report acknowledges the growth potential for social enterprise, including WISEs, it is clear that realising such potential is dependent on appropriate policy and support measures that can enable the sector to build on its successes and overcome some of the challenges it faces. These are outlined in the next part of this paper.
Strengths, Weaknesses and Potential Opportunities
Many WISEs, along with the Irish social enterprise sector in general, have been shown to promote a strong sense of community spirit, build trust, encourage co-operation for mutual benefit and contribute to the mobilisation and replenishment of local repositories of social capital. 18 Previous studies have demonstrated their success in addressing problems such as: social and geographic isolation; provision of affordable and accessible services and housing to groups at risk of social and economic exclusion; job creation in rural locations with limited employment opportunities and employment re-integration opportunities for people with disabilities (O’Shaughnessy and O’Hara 2013). The strengths of these enterprises are reflected in: innovative fundraising strategies; a commitment to generating and combining market revenue with state funding; networking, a capacity to continuously diversify a portfolio of activities in line with changing market and public funding trends and the provision of training and employment opportunities to those most distant from the labour market. 19
Providing Jobs to Those Most Distant from the Labour Market
The Irish social enterprise sector is estimated to employ between 25,000 and 33,000 persons in over 1,400 social enterprises with an approximate total income of €1.4 billion (Forfas 2013; Clann Credo 2011). WISEs are credited with providing jobs to those most distant from the labour markets. A small study of thirteen Irish WISE, mainly providing child and elder care services in rural areas, demonstrated the important work and social integrative role of these social enterprises. Fifty-nine percent of workers were classified as long-term unemployed and 83 % were aged over 40. 20 Of those aged 30–35 years, 40 % were disadvantaged and faced particular social challenges. 21 Over half the workforce (51 %) had not progressed beyond the junior cycle of second level education, and almost one quarter was described by management as hardly employable. Rehab enterprises, one of Ireland’s largest WISE employs 313 persons with a disability out of a total workfoce of 530 (Forfas 2013).
Research (Clarke and Eustace 2009; O’Shaughnessy 2008) confirm the capacity of Irish WISEs to mobilise a diverse range of revenue and resources. In their study of 106 social enterprises, Clarke and Eustace (2009) found that 27 % benefitted from local and national fundraising and 21 % received donations from philanthrophic sources in addition to statutory grant assistance. The study highlighted a total number of 1,257 volunteers giving of their time and experience to the social enterprises; an average of 12 volunteers per enterprise. Similiarly, in her study of a sample of rural based WISEs, O’Shaughnessy (2006) found that approximately 10 % of the resource mix was derived through donations, gifts and voluntary activity, 30 % was derived from market resources with public sector resouces accounting for 60 % of the total resource mix.
However, despite the widespread acceptance of the contribution of social enterprise to national social and economic development and the enriched eco-system for the sector in the last decade through: the emergence of national support and advocacy groups; increased access to social and micro financial support mechanisms and recent changes to public sector public procurement opportunities, the future development of the sector is also constrained by a variety of factors. These include: the need for improved business and governance skills; the need for increased capacity to engage in future competitive tendering process for public sector contracts; sourcing alternative philanthropic supports, reforms in local government and avoiding the negative repercussions of scandals in the Irish charity sector.
Diminishing Philanthropic Sources
Access by WISEs to additional resources in the form of social finance/investment 22 and philanthropic opportunities is a relatively new development within the Irish social economy. The government first established the Social Finance Foundation (SFF) in 2007 (based on €25 million from Irish retails banks), and Ireland’s first social impact investment project in 2013. 23 This followed from the substantial philanthropic funding provided by Atlantic Philanthropies (AP) and One Foundations since the turn of the century. This funding which was unprecedented accounted for more than three quarters of philanthropic money provided to Irish non-profits since 2000. Their impacts of these new supports are evident in the increased visibility of, and advocacy for the sector. 24 However, AP closed applications for funding in 2013 and the One Foundation will close in 2020. This will likely cause a significant gap in the availability of non-statutory funding/supports for the sector into the future, which will compromise its ability to grow independently of the state.
Reforms in Irish Local Government and the Charity Sector
As previously noted the Irish local development partnerships play a prominent role in community development and in addressing unemployment and social exclusion and this is well recognised (OECD 2001; 2013: 25). Many WISEs operate as local development organisations, or were created by them. However, the Irish local development sector has been subject to increased scrutiny in the past five years, largely in the context of public sector expenditure reform and rationalisation, and reform of local government which has given local government a more central coordinating role in local and community development (Department of Finance 2009; Department of Public Expenditure and Reform 2011; OECD 2013). 25 Given that most WISES are typically embedded in the community and voluntary sector, there are concerns about the capacity of the local government (with limited knowledge and experience of social enterprise development) to shape and influence the future development of the sector (O’Keefe 2014).
As previously indicated, many Irish WISEs are registered as charities, and rely extensively on public fundraising, volunteering and donations to self-sustain (Prizeman and Crossan 2011; RSM and McClure Watters 2012). In 2013, the Irish Charity sector was hit with a series of scandals related to poor governance, undisclosed salaries and top-up payments paid to senior executives and board members. 26 One of the largest and oldest Irish WISE, the Rehab group, was one of a number of high profile social enterprises that faced controversies regarding such matters as remuneration of senior executives and corporate governance. The perceived light touch regulation of, and poor governance arrangements within, the sector led to a significant decline in public trust and this was reflected in reduced levels of volunteering and public donations. For instance, by early 2014 most of the leading Irish charities indicated that donations had fallen by approximately 40 % on the previous year while a survey of 150 Irish charities found 97 % believed the scandals had damaged public trust in charities (RSM and McClure Watters 2012). 27, 28 This crisis of legitimacy (which has resulted in both reduced public confidence and financial support), combined with the overall reduction of 48 % in government supports since 2008, present significant challenges to the mobilisation of these important resources for Irish WISEs. 29
The delivery of public services is a key and potential market for social enterprises and the Irish National Procurement Service has progressed a number of initiatives to improve social enterprise access to public procurement. Of most significance is the recent transposition of two new EU Directives into Irish law in May 2016. The two Regulations cover public procurement in the public service and in the utilities sector and specifically seek to assist the sector to overcome some of its current weaknesses, namely the introduction of new regulations which include: provisions to allow for the discretion to divide public contracts into smaller lots, and allow for particular contracts to be reserved for social enterprises under certain conditions. However, while this can be viewed as a potential opportunity to resource social enterprises, the associated competitive public procurement process also represents a challenge given what we know about SE’s weaknesses in business administration, competitive tendering, business development and marketing (Curtis, O’Shaughnessy, and Ward 2011; Clann Credo 2011; Forfás 2013; Brennan 2012). 30
This paper has provided an insight into how social economy and social enterprise are understood in Ireland, and has explained why WISEs have evolved as the dominant Irish social enterprise model to date. It has been argued that while there is diversity in the academic approaches to understanding and defining these concepts there is less ambiguity evident in public policy discourse. The Irish government’s strategy to develop the social economy in general, and social enterprise more specifically, is best described as a labour market integration approach. This approach dates from the early 1990s and is informed by a European policy perspective that promotes social economy and social enterprises as a civil society based solution to a range of localised social and economic problems, most notably unemployment and service provision to disadvantaged communities. Therefore Irish state support for the sector to date is in the form of community service/work integration schemes. As a result, WISEs have evolved as the dominant social enterprise type.
These WISEs are typically not for profit, community-based social enterprises, engaged in the delivery of labour market integration opportunities for the unemployed and a variety of community-based services. They mobilise a diversity of resources from the market, state, public and philanthropic donations, although mostly from the state via direct labour market integration schemes. However, while the contribution of these schemes to the overall development of the sector has been documented (OECD 2013) their suitability as a platform for the stimulation and support of a sustainable social enterprise sector requires further examination (Forfás 2010; McGuiness et al. 2011) 31
The future development of Ireland’s social enterprise sector will no doubt benefit from the increased clarity provided by the government’s most recent official definition published in 2013. This definition, and renewed government interest in social enterprise, is clearly influenced by a European policy agenda, a European/EMES academic perspective, and a desire, on the part of the Irish government, to tackle national unemployment levels and to compensate for the ongoing contraction of the Irish welfare state. However, there are considerable gaps in our understanding of social enterprises, including the scale, the social impact, and overall contribution of the sector to the national economy and society in general. Addressing these gaps is an important next step in improving understanding of the social economy and in assessing its significance, value and potential in contemporary Ireland.
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These studies have generally been limited and/or based on surveys with relatively low response rates. There is no real consensus about the size of the sector or its likely parameters. Social enterprises are not included in official statistics and estimates vary greatly and can be easily contested.
Prizeman and Crossan (2011).
EMES is an international research network, established in 1996 with a focus on social enterprises. The Centre for Co-operative Studies at University College Cork (UCC) was a founding member of the network. EMES outlines nine indicators/criterion of social enterprise including: a continuous activity producing good and/or selling services, a significant level of economic risk, a minimum amount of paid work, an explicit aim to benefit the community, an initiative launched by a group of citizens or civil society organisations, a limited profit distribution, a high degree of autonomy, a decision making power not based on capital ownership, a participatory nature, which involves various parties affected by the activity.
In 2012 the charity was the subject of a number of an investigations regarding salaries for senior staff and the unsanctioned use of government funds for administrative and transport costs. By 2015, a new CEO was in place and the Irish Government had put in place a Charities Regulator was in place to provide oversight for the entire Irish charity sector.
Fahey (1999) describes Irish social housing, which dates back to the mid-1880s, as rented housing provided by voluntary/co-operative housing associations and local authorities. The Irish Council for Social Housing note that since 2011 non-profit housing associations, have been earmarked by Government for an enhanced role in the supply of new social housing.
In 2011 the European Commission published The Social Business Initiative of the European Commission. This provided an operational definition of social businesses/social enterprises. The core criteria of the EC definition suggest that the organisation must: engage in economic activity, pursue a social aim, have limits on distribution of profits/assets, be independent, and have an inclusive governance (European Commission 2011).
EC (1993) White Paper on Growth, Competitiveness and Employment, European Commission; EC (1995) Action to Turn Growth into Jobs, European Commission; EC (1995) Local Development and Employment Initiatives, European Commission.
Successive Irish governments have typically used community-based employment schemes as a response to employment support for the unemployed and indirectly funding the work of the community and voluntary sector in the provision of social and related services (Leigh-Doyle 2012; Harvey 2012). There is a notable link between periods of national unemployment and statutory discourse on social enterprises e. g. the rise in unemployment to 14.6 % by the end of 2011 (from 4.5 % in 2007) prompted the government sponsored review of the potential for national social enterprise development.
Community Employment was established by the Irish government in the 1970s. It is an active labour market programme (ALMP) that supports community-based projects. The aim of CE is to enhance the employability and mobility of disadvantaged and unemployed persons by providing work experience and training opportunities in their communities.
The Community Services Programme (approximately €45m per annum). Government contracts for public service delivery include: disability provision by non-profit sector €1bn plus other Health Service Executive (HSE) contracts, Rural Transport Programme €11m, Sustainable Energy Authority of Ireland €3m+ plus housing provision by community and voluntary co-operatives (Forfás 2013: 26).
The Forfas typology is based on objectives and activities rather than organizational form as there is no legal identify for social enterprises in Ireland. Rather a social enterprise is typically legally incorporated as a Company Limited by Guarantee (CLG) with charitable status, and will have a board of voluntary directors. Consequently, there is practically no diversity in organisational form within the sector.
Whilst the EU definition calls for independence the national operational definition refers to the need to be separate from the state. This could be argued to mean the same thing however the difference in language is used as a basis, in the 2014 report, for suggesting this slight difference between the two operational definitions.
See: O’Shaughnessy (2008).
Including addiction problems, difficulties with coping with parental responsibilities, poor social and interpersonal skills that has mitigated against the person in securing employment and/or pursuing education.
Social Entrepreneurs Ireland supports social entrepreneurs who can come up with innovative solutions to social problems. This organisation also received €3million from another philanthropic source, the Arthur Guinness Fund.
In 2012 the Irish Government published Putting People First, a major programme for fundamental reform of local government. Part 6 of the Local Government Reform Act came into effect on June 1st, 2014.
By 2014 the Irish government had enacted the 2009 Charities Act and appointed a Charities Regulator to implement new codes of practice, governance and ensure a full publication of all the financial expenditures of the sector.
Forfás (2013: 25) recommended the development of tendering skills as part of capacity building programmes of the wider social enterprise sector.
About the article
Published Online: 2016-11-15
Published in Print: 2016-12-01
Citation Information: Nonprofit Policy Forum, ISSN (Online) 2154-3348, ISSN (Print) 2194-6035, DOI: https://doi.org/10.1515/npf-2016-0015.
© 2016 O’Shaughnessy and O’Hara, published by De Gruyter. This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License. BY-NC-ND 3.0