Social enterprise in Spain: crucial for economic recovery according to survey by Esade

“Despite the challenges involved, the coronavirus crisis has been an opportunity for social enterprises in Spain: 78% successfully provided help during the coronavirus, of which 71% developed goods or services, 51% moved online, 31% helped other social entrepreneurs and companies, and 22% dealt with a new target group.” This is one of the findings of the report about Spain in the “European Social Enterprise Monitor (ESEM) 2020-2021”, a study carried out by the Esade Center for Social Impact with the participation of 106 social enterprises in Spain, presented today at the Impact Forum congress organised by Ship2B.

“The data in this report reflect the capacity of social enterprises to adapt to new conditions and thus contribute to a resilient, innovative economy committed to a better society”, said Guillermo Casasnovas, collaborator at the Esade Center for Social Impact and co-author of the study. “Social enterprises in Spain are an integral part of the third sector, are crucial for employing certain groups, and focus increasingly on the measurement and management of social impact.” Social enterprise in Spain is more important than ever because in times of economic reconstruction like today, “its work fosters both effective business practices and value creation for society,” added Casasnovas. However, many such enterprises are still too dependent on public funding, “so studies like this one are essential in order to drive and build a support ecosystem, in addition to encouraging the implementation of policies based on evidence and the specific needs of social enterprises.”

Need for visibility and support

One of the findings outlined by the report about Spain in the “European Social Enterprise Monitor (ESEM) 2020-2021” highlighted the need to make visible and build an ecosystem providing support for social enterprise in Spain. This is confirmed by the fact that when asked about the obstacles facing social entrepreneurs, companies emphasised the lack of funding and insufficient public support. As regards public funding, the study revealed that venture funding via crowdfunding, accelerators, business angels and impact investors is still minimal in this sector, which restricts the growth possibilities of start-up social enterprises. As for public support, 53% regard it as low, very low or non-existent. In addition, many social enterprises would like to have a specific legal structure and a more consolidated support network.

Nonetheless, the report’s authors also observed very positive factors including the involvement of many social enterprises in offsetting the impact of the pandemic (78% of those surveyed said that their entity provided help during the crisis), the financial robustness of most of the organisations (37% had a planning horizon of 10 to 12 months) and the expectation of 42% of these enterprises to recruit more staff the following year.

Clear focus on social impact

As regards business models, the society-oriented mission of these enterprises is also obvious in the way they distribute their profits: 80% of those surveyed reinvest their profits mainly or entirely in social ventures, whilst 6% earmark them mainly or entirely for private purposes.

This tendency was also observed in the importance attached by these companies to measuring their impact on society, a practice carried out by 75% of those surveyed. In addition, the social enterprises in this study span a wide range of different types of impact, the most noteworthy being reduction of inequalities (71%) and decent work and economic growth (69%); and groups of beneficiaries, mainly groups of vulnerable persons; and almost all take into account social responsibility (82%) and environmental criteria (76%) when ordering goods and services from their suppliers.

In this respect, the Esade Center for Social Impact underlines that social enterprises can be a benchmark for inclusion and diversity in other organisations, because they have more female managers (56% on the board of directors or trustees, 64% in management teams and 65% on the staff), and more than half employ persons at risk of exclusion for different reasons, such as ethnic origin, employed by 67% of the companies surveyed, or religious beliefs (61%), or with different capabilities (56%).  

The legacy of the traditional third sector

Unlike European social enterprises, many of those in Spain are well established in the traditional Spanish third sector, as revealed by the average age of the Spanish social enterprises surveyed: 15 years. In fact, more than 40% of the organisations surveyed were founded before the year 2000, when the concept of social enterprise was not yet used in Spain. The report also observed a high percentage of companies operating as non-profit entities or associations or foundations (28% in each instance), with just 25% as limited companies.

Another interesting element, according to the authors, is the innovative nature of social enterprises. However, although 92% describe themselves as innovative, only 9% innovate in technology, whilst the others innovate their goods and services (56%), their impact model (48%), their business model (46%) and their processes (28%).