Social Economy

Questions and Answers

1. What is the social economy?

   The social economy is a grass-roots entrepreneurial, not-for-profit sector, based on democratic values that seeks to enhance the social, economic, and environmental conditions of communities, often with a focus on their disadvantaged members.

2. Why is the federal government interested in social economy enterprises?

   In a world growing ever more complex and diverse, governments are increasingly turning to community-based processes and initiatives to address local problems with local solutions.

   In recognition of the social economy sector’s growing contribution to Canadian communities, Budget 2004 increased support for the sector by confirming that it will become eligible for a wide range of options currently offered to small businesses. These options include access to programs and agencies that provide financing and contributions to small businesses.

   Budget 2004 also provided new funding through pilot programs focused on strengthening existing support in areas that social economy and community economic development organizations have identified as their highest priorities, namely, capacity building, financing, and research.

3. How big is the social economy?

   The Government of Canada is just beginning to understand the power and potential of social economy enterprises and organizations. While more is known about the size of the social economy in Quebec, we need to map out the social economy across Canada. In Quebec, there are an estimated 6,200 social economy enterprises that together employ 65,000 people and generate annual sales in excess of $4 billion.

4. What are social economy enterprises?

   Social economy enterprises are run like businesses, producing goods and services for the market economy, but they manage their operations and redirect their surpluses in the pursuit of social and community goals. Typically, social economy enterprises grow out of broad-based community development strategies involving citizens, governments, the voluntary sector, businesses, learning institutions, and other partners.

5. What benefits does the social economy bring to communities?

   The social economy is important because it contributes to a range of community goals and has the potential to create collective wealth through the production of goods and services.

   Social economy enterprises provide a flexible and sustainable tool that can help communities to achieve their own objectives, such as:

   • stimulating job creation and skills development;
   • enhancing community capacity for social supports;
   • supporting economic growth and neighbourhood revitalization;
   • protecting the environment;
   • mobilizing disadvantaged groups.
     
   
   
6. Is the social economy important in other parts of the world?

   Several of OECD countries have developed strategies to promote social enterprises. The European Union includes the social economy in its entrepreneurship pillar. In 2002, the United Kingdom launched a strategy with the Department of Trade and Industry that is similar to the federal government’s budget 2004 initiatives to support the growth of the social economy.

7. What has the Government of Canada done to help the social economy develop?

   In the 2004 Speech from the Throne, the Government of Canada recognized the valuable and innovative work of those involved in the social economy and indicated its interest in supporting those engaged in this entrepreneurial social movement. In Budget 2004, the Government of Canada committed to making the social economy a key part of Canada’s social policy tool kit, building on the work it had already been doing to support community economic development and the social economy. An amount of $132 million was allocated for initiatives to support the social economy:

   • capacity building ($17 million over two years);
   • financing ($100 million over five years); and
   • research ($15 million over five years).

   The budget also committed to improving the access of social enterprises to programs and services for small- and medium-sized enterprises.

8. Who is leading the work on the social economy?

   Pilot initiatives on capacity-building and financing will be delivered by Industry Canada and regional development agencies (i.e., Atlantic Canada Opportunities Agency http://www.acoa.gc.ca  , Canada Economic Development for Quebec Regions http://www.dec-ced.gc.ca/  , Federal Economic Development Initiative for Northern Ontario http://fednor.ic.gc.ca , Western Economic Diversification Canada http://www.wd.gc.ca/ 

9. What role will Social Development Canada play?

   Social Development Canada is responsible for developing the federal social economy policy framework that will guide efforts of the federal government to support the social economy.

   Social Development Canada supports the Parliamentary Secretary to the Minister of Social Development with special emphasis on the Social Economy, who is providing federal leadership in the development of current initiatives, as well as the development of the framework.

10. How will the Government of Canada engage stakeholders and citizens?

    Social Development Canada is leading the National Roundtable on the Social Economy, involving leaders in the social economy. A key objective is to foster ongoing dialogue and engagement of key partners as they develop and implement initiatives to support the social economy.

    Regional roundtables were held by Industry Canada and the regional development agencies to engage stakeholders in identifying regional needs and priorities for the capacity-building and financing initiatives.