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Improving the conditions of social enterprises in Denmark: Insights from Charlotte Holmer Kaufmanas

In 2014, the Danish government decided to establish the National Centre for Social Enterprises with the purpose of creating more and better social enterprises in Denmark. The centre opened exactly 12 months ago, and we asked Centre Manager Charlotte Holmer Kaufmanas how the centre is doing and about the biggest successes and challenges in the work to improve the conditions of social enterprises in Denmark.

What role has the National Centre for Social Enterprises played in its first year in terms of improving the conditions for social enterprises in Denmark?

We have for instance strengthened the social enterprises' collaboration with public bodies and private enterprises. Moreover, we have set up a homepage where different players can find knowledge and tools about how they can work more effectively with the social enterprises, we have carried out an information campaign to boost the understanding of the area, given advice, and taught enterprises how to document their social value.

One of the most important things to highlight is that we have set up a network for a number of municipalities that have received grants to work with the promotion of social enterprises. We are collecting information on what is happening in the municipalities, and we are helping to facilitate partnerships between traditional enterprises and social enterprises.

What is the importance of social enterprises for employing vulnerable groups and remedying social challenges in a Scandinavian welfare model?

For many years, we have been used to the public sector solving the challenges related to employment of vulnerable groups through, for example, activation measures or transfer incomes. We have not been used to involving voluntary and private initiatives in this area – but there is so much potential in doing so – and our social enterprises demonstrate this.

However, social enterprises do not only create jobs. They can also become part of the solution to the social challenges we for instance are facing in connection with the many refugees currently coming to Denmark. The social enterprises see the resources in the citizens that we traditionally asked to stay at home, whether they were refugees, blind or people suffering from autism, etc.

Have there been any concrete improvements in the conditions for social enterprises since the establishment of the Centre for Social Enterprises?

The total amount earmarked by the government to improve the conditions of social enterprises was EUR 5.7m. A lot of these have been invested in a growth programme for social enterprises managed by the Social Capital Fund, where they learn to run a sound business and where highly professional business developers work to optimize each individual enterprise. This has improved the enterprises' access to assistance and sparring.

Moreover, a method of registration that is rather unique in a European context has been created giving the opportunity to be afforded a so-called protected title as a social enterprise. This gives the enterprises an opportunity to show their customers and collaborators that they are taking a social responsibility and managing their profits conscientiously. Now, we need as many enterprises as possible to register to make our politicians support the area and not least the need to give the social enterprises special advantages such as tax breaks or reduced VAT during the start-up period.

A working group has also been set up to look at a specific legal provision that currently prevents companies from employing larger numbers of vulnerable citizens.

What are the main obstacles to growth for social enterprises in Denmark today?

We have mainly seen a need for capital in the start-up phase. It particular, there is a need for low-interest loans with longer repayment periods that correspond to the nature of social enterprises (economic and social bottom-line). However, the willingness to provide credit relies on confidence, and the banks need to have confidence in the enterprises they lend money. Consequently, there is a need for professionalising the management and business practices in social enterprises – such as management training.

The EU is allocating millions to this area – are these funds finding their way to the enterprises?

It is true that the EU is allocating many funds to the area. However, there are some barriers in relation to channelling the funds to the enterprises. Many of the entrepreneurs behind the social enterprises are enthusiasts who may find it challenging to operate a business at all. Applying for EU-funds is an extra level that demands even more from the management. It is not that the EU is not sympathetic, but it takes skills in relation to coordination and knowledge of languages to be able to apply for the funds.

This is why we encourage social enterprises to enter into partnerships with each other, municipalities and other types of enterprises. This way, they can join forces when applying for the funds and exploit each other's resources.

What else can the EU do to improve the conditions for social enterprises?

As mentioned, the EU is already doing a lot and is allocating many resources. The EU has entered into a dialogue with the Member States and is listening to requirements and challenges. I do not know what more the EU can do. The EU-directive on new legislation on procurement also emphasises the importance of social enterprises, and the EU is making sure that the individual countries' implementation of the procurement legislation is monitored. All in all, the EU has focus on the area, sets up programmes and allocates resources. It is here in Denmark that we need to continue the development that the Centre for Social Enterprises has helped to initiate.

Interview conducted by Clara Siboni Lund, Danish Technological Institute on the 8th September 2015