New Typology of Finnish Social Enterprises and Illustrative Examples

In this section, we present the new typology of social enterprises in Finland put forward by Kostilainen and his colleagues in a previous publication (Kostilainen et al. 2016). The different types of social enterprise identified in this new typology were (1) social enterprises providing public welfare services, which offer a wide range of social-welfare and health-care or employment services; (2) emerging alternative economic initiatives, which are part of the growing sharing-economy trend; (3) impact businesses and smart-ups, some of which are supported by the Slush Global Impact Accelerator programme5 and by -rlmpact by Danske Bank;6 and (4) socialimpact redistributors, that is, organisations that manage capital to create measurable social and environmental impact alongside financial return.

Between 2016 and 2018, we carried out a study using the analytical framework designed by the International Comparative Social Enterprise Models (ICSEM) Project: we used the ICSEM questionnaire to conduct interviews with the managers of 19 Finnish organisations and matched the interview data with publicly available data. For the purpose of the present chapter, we then chose four organisations (all presented under a pseudonym), each of which is representative of one of the categories of the new typology. The characteristics of these four organisations are summarised in table 3.2. We selected them because their activities adequately reflected the spirit of the category they represented. Moreover, at the time of the writing of the present chapter, they had all been granted the Social Enterprise Mark label; they were thus fairly stable and all belonged to the category of institutionalised Finnish social enterprises—so their SE status was clear.

Social Enterprises Providing Public (welfare) Services

Overall Description

Most institutionalised social enterprises—that is, organisations included in the register of work-integration social enterprises maintained by the Ministry of Employment and Economy and those that have obtained the Social Enterprise Mark label—belong to this category. Many noninstitutionalised enterprises can also be classified in this category, which has developed due to the transformation of welfare-service provision and to the emergence of a “welfare mix” in the provision of various public services. The public sector (and in particular municipalities) provide the

Table 3.2 Illustrative cases of organisations according to the typology

Typology categories

First type: public-service providers

Second type: alternative economic initiatives

Third type: impact businesses

Fourth type: social-impact redistributors

Illustrative cases

(pseudonyms)

Charitable Foundation

Wind Energy Ltd

Employee-owned

Interpreters’

Cooperative

Impact Investor Ltd

Year of establishment

1867

1998

1999

1940

Organisational form

Foundation founded by a philanthropist

Ltd owned by a group of citizens

Worker cooperative

Ltd owned by the Finnish government

Institutional support

Social Enterprise Mark

Social Enterprise Mark

Social Enterprise Mark

Social Enterprise Mark

Size

Large company

Medium-sized enterprise

Medium-sized enterprise

Large company

Social value

Output-related

Output-related

Output-related

Di stri bution-related

Mission, products and services and target group

Health and social services for those at risk of social exclusion

Housing, rehabilitation, employment support/ coaching

Drug or alcohol abusers, elderly people, voluntary workers

Production and promotion of wind energy

Crowdfunding shareholders/users of wind energy

Enhancing equality Interpreting and signlanguage services, online training in sign language

People with communication disabilities, interpreters

Organising gaming and lotteries in order to promote and finance Finnish social and health associations, culture and arts, sports, science, services for war veterans, youth work and horse sports

Total assets

- €275,000,000 (2017)

- €4,900,000 (2017)

€880,000 (2016)

€1,344,773,577 (2017)

Finland 59

60 Kostilainen, Houtbeckers & Pattiniemi

market for organisations in this category through public procurement, service vouchers and other types of contracting. These organisations work mainly in the field of welfare services, but also in work-integration and capacity-building activities.

An Example: "Charitable Foundation"

Charitable Foundation, established in the mid-1990s, forms, together with its subsidiaries, an SE group providing a range of social and healthcare services, as well as educational services. The social-value creation of the SE group lies in providing specialised social and health services to the public sector. The group has been granted the Social Enterprise Mark label and it identifies itself as an expert and leader in tackling difficult social issues in the major cities in Finland.

The group’s business model is based on the mission defined by Charitable Foundation’s owner—namely to create new solutions in parts of society where, for one reason or another, people are in danger of falling beyond the reach of conventional services. The social objective of the group is to uphold human dignity by providing help to people at risk of social exclusion.

The foundation operates in accordance with the Finnish Foundation Act (109/1930, amendments up to 487/2015) and its subsidiaries follow company law (Act 349/2017). The SE group is an active player in local, national and international networks, and these are important for the realisation of the group’s mission.

According to the company’s latest available financial statement (2017), the total assets of the SE group amounted to almost €275 million. The profits were around €87 million, mainly due to the fact that the foundation sold one of its subsidiaries to the largest health-care service company in Finland. The group employs about 1,000 professionals and over 2,000 volunteers and people providing peer support to clients.

Emerging Alternative Economic Initiatives

Overall Description

Organisations in this group aim to introduce alternative economic models for providing services that have social impacts or contribute to social change. This group consists mainly of new cooperatives and associations with values related to community development, equality and ecological sustainability. The chosen organisational model is closely linked to the values of these initiatives, although some cooperatives have grown economically strong, compete with private-sector firms, and thus may have fewer connections to the grassroots actors than what used to be the case.

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An Example: "Wind Energy Ltd"

In the late 1990s, a group of environmental activists established Wind Energy Ltd, the first Finnish nationwide customer-owned green electricity company producing wind power. Today, it has more than 1,200 shareholders, including private citizens, companies, societies and local communities.

This social enterprise creates social value by producing green energy that is sold only to its shareholders. The company has been granted the Social Enterprise Mark label and it identifies itself as a forerunner promoting sustainable-energy solutions through its unique customerownership concept.

The development of the company’s ethical business model was made possible by the liberalisation of the Finnish electricity market. The company’s mission was to create new sustainable solutions to provide green energy. It was achieved by building wind generators and by raising awareness about and advocating for wind-energy experiences among the general public and decision-makers. The growth model has been based on a combination of different funding measures, including inter alia crowdfunding and bonds.

The enterprise operates in compliance with company law (Act 349/2017) and it is active in the national network of wind-energy producers. According to its by-laws, the company allocates its surplus to investments in new windenergy generators. According to the enterprise’s latest available financial statement (2017), the total assets of the social enterprise amounted to almost €5 million, and the profits were around €95,000.

Impact Businesses and "Smart-Up"

Overall Description

This group consists of organisations with a for-profit legal form—including limited-liability companies, cooperatives and sole proprietorships—that aim for social value or social impacts. While many of these enterprises’ values echo those of emerging alternative economic initiatives, organisations in this third group differ from those in the second category to the extent that they rely on models enabling the accumulation of wealth by a limited number of people, since they do not all have asset locks nor limits on the distribution of profits (the cooperative model being an exception in this regard). In practice, only few of these organisations have become economic success stories; most of them employ and thus support only a limited number of people. This model enables the emergence of new, experimental, and often cross-disciplinary professions via entrepreneurship; such positions would not be supported or would be limited in the public sector or in large organisations.

An Example: "Employee-Owned Interpreters' Cooperative"

Employee-owned Interpreters’ Cooperative enhances equality by producing interpreting, sign-language-related services to hearing-impaired people, who have a subjective right to receive these services covered by the government. The staff founded the cooperative in order to create a safe, pleasant and innovative working community, in addition to securing a regular income for themselves. All terms and conditions of work are defined in an extensive collective agreement. As one of the largest small-scale cooperatives in Finland, Employee-owned Interpreters’ Cooperative operates efficiently, employing over a hundred interpreters organised in teams.

Employee-owned Interpreters’ Cooperative strives for profitability and follows cooperative law. The enterprise invests in the training and welfare of its staff, and it aims to deliver the best possible quality of work. According to this organisation, decision-making in the annual general meeting is democratic, each member has one vote, and the company operates in accordance with the international cooperative principles, with the aim of actively and legitimately developing the entire interpreting field. Ever}' employee and cooperative member has the possibility to influence the company’s operations. The cooperative has obtained the Finnish Social Enterprise Mark label.

According to the latest available financial statement (2017), the turnover of the enterprise amounted to €4,662,000, and the profits were around €14,000.

Social-Impact Redistributors

Overall Description

Social-impact redistributors are income generators for social-impact-oriented social organisations belonging mainly to the category of social enterprises providing public (welfare) services (described in subsection 3.3.1). Social-impact redistributors operate solid businesses, generating profits which they re-invest into their other (innovation-oriented) social objectives.

An Example: "Impact Investor Ltd"

Impact Investor Ltd is a Finnish betting limited-liability company. It is owned by the Finnish state and is subject to regulations on limited-liability companies and to the State Shareholdings and Ownership Steering Act (1368/2007). The company’s operations are regulated by the Lotteries Act (1047/2001), according to which the company has an exclusive legal betting license on lotteries and sports betting in the country.

The company’s task is to operate betting in such a manner that the legal protection of those engaging in betting activities is guaranteed,

Finland 63 abuse and criminal activity are prevented, and any economic, social and health-related problems are prevented and reduced.

Betting is estimated to generate nearly €1 billion a year in Finland. The revenue is used for the benefit of Finnish society in its entirety. Beneficiaries are active in the fields of culture, sports, science, youth work, social welfare, health and the equine industry. The funds are distributed to the beneficiaries by the relevant ministries; for example, the Ministry of Social Affairs and Health operates the Funding Centre for Social Welfare and Health Organisations (STEA), which manages the funding granted to projects which are non-profit by nature and promote health and well-being.

The social enterprise creates social value by distributing profits to social-impact-oriented organisations. According to the latest available financial statement (2017), the turnover of the social enterprise amounted to €1,344,773,577, and the profits were around €1 billion.

 
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