Poland: Equal program a mixed success, says third sector

On March 31st, 2008 the European Community EQUAL program officially ended in Poland, and with it the funds for the projects from the so-called ?theme D? that were to support social economy initiatives. One of the EQUAL program?s goals, apart from developing and encouraging the establishment of social enterprises and other social economy institutions, had been the creation of a legal environment that would support the social economy in Poland after the end of EQUAL funding.

Unfortunately, however, at the end of the 3 year EQUAL program and after numerous conferences, seminars and special bodies to discuss the necessity of comprehensively regulating social economy initiatives in Poland, all that has been created in this regard was the Act on social cooperatives, passed in July 2006, which proved inadequate for its purpose, and controversial guiding principles of the Act on social entrepreneurship.

Social cooperatives: the Act
The main goal of the Act on social cooperatives was to create work and integration opportunities for people left at the margins of society. According to the Act, social cooperatives must be made up mainly of unemployed and disabled people, and 20% of the total number of a social cooperative?s members can be people who are not marginalized but whose qualifications are necessary for the functioning of the cooperative. Social cooperatives can conduct commercial activities, as well as activities in the social, educational and cultural field for the benefit of their members and local communities. They can also be contractors of public tasks, commissioned by public institutions. Because of their social aims, social cooperatives are exempt from some fares and taxes.

The social cooperatives law?s main problem is that it assumes that it will be the very marginalized who will set up, run and take overall care of the cooperatives ? in fact, the regulations say that the Supervisory Board of a social cooperative can consist only of members of this cooperative. What this means is that if a person or an institution wants to set up a cooperative for the benefit of others, who are socially marginalized, even though they themselves are not, and even if they are prepared to put up the necessary capital to set up the cooperative, formally there is no way that they would be allowed to have real influence on the cooperative?s functioning. Therefore, only members of the cooperative, meaning mainly people who have been unemployed for a long time and/or disabled, can in fact manage the cooperative. The problem, is that they generally do not possess the necessary skills or experience to do so, if not they would probably not be at risk from social exclusion.

Another problem relating to Poland?s social cooperative law is that even though the unemployed and other members-to-be of a cooperative can avail of a loan from the Public Work Agency to finance their cooperative, they must provide a guarantor for the sum of money being loaned ? again, an asset that poor, marginalized people generally lack.

Social entrepreneurship Act
The guiding principles of the not yet passed Act on social entrepreneurship have also elicited a lot of controversies. The principles were developed by two Polish professors who have been in contact with the non profit sector for many years. But the social enterprise law will not create a social enterprise as a new legal entity, rather social enterprises will be a special status given to specific organizational forms, entitling them to various privileges or tax exemptions. However this is not what has provoked the controversies. The controversial issue that has been cause of much debate, regards the particular features that entities have to possess to apply for the social enterprise status. These features concern three aspects of the social enterprise?s functioning and they would have to be fulfilled together:

• Employment structure: socially marginalized people have to constitute at least half of the employees;
• Territory on which commercial activities are conducted cannot be bigger than three adjoining local authorities? units;
• Catalogue of products and services that can be the object of commercial activities are: social assistance, health care, environment protection and services of public utility for local communities.

What most observers do not accept is that the concept of social entrepreneurship be narrowed down to include only those entities that hire people who are excluded from the labor market. Nobody challenges the meaning of social entrepreneurship as part of the process of social and work reintegration, but according to many experts the status of a social enterprise should be given to all enterprises that are set up and work towards the fulfillment of important social goals ? enterprises that provide products and social services or act for the development of local communities, even without hiring the socially excluded.

The experience of many EQUAL projects has shown that social enterprises serve not only for the social and work reintegration of the socially excluded but also as an instrument of local development, both in the social and economic field.

The social economy problem
Social economy in its essence is directed both at the development of human capital ? through training and integration ? and at the development of social capital, that is, creating and strengthening networks of interpersonal and inter-institutional relations, which have an impact on neglected local communities.

Other questions have arisen regarding the range of products and services that entities would have to deliver to apply for social enterprise status. Some say that, given the Polish administration?s tendency to take regulations by the letter, any delivery of products and services from the fields not actually listed in the Act – that is to say: education, culture, social housing or transport – will not be considered as sufficient to receive a social enterprise status.

Social enterprise stakeholders in Poland have also said that although the idea of guaranteeing that social enterprises will act for the benefit of local communities is correct, law-makers should come up with a different solution that will ensure that more that just three ?gminas? (the smallest units of territorial division in Poland) will benefit from their activities.

More info:

• http://ec.europa.eu