Social economy

A social economy is a third sector among economies between the private (business) and public sectors (government). It includes organizations such as cooperatives, nonprofit organizations, social enterprises and charities. Social economy theory attempts to situate these organizations into a broader political economic context. In particular it investigates the economic viability of cooperatives and the value of non-profit organizations and charities in traditional economic theory.

Social economy studies the relationship between economy and social behavior. It analyzes how consumer behavior is influenced by social morals, ethics and other humanitarian philosophies. The social economy examines activity that is related to economics amongst the community and exposes the information to the community, this includes the social enterprise and voluntary sectors.

A social economy develops because of a need for new solutions for issues (social, economic or environmental) and to satisfy needs which have been ignored (or inadequately fulfilled) by the private or public sectors. By using solutions to achieve not-for-profit aims, a social economy has a unique role in creating a strong, sustainable, prosperous and inclusive society. It is important for companies to be able to independently implement their own CSR initiatives as studies have shown that this will result be much more impactful than government-mandated CSR initiatives.

Successful social-economy organisations play a role in fulfilling governmental policy objectives by:

Defining the limits of a social-economy sector is difficult due to shifting politics and economics; at any time organisations may be "partly in, partly out", moving among sub-sectors of the social economy.

Organisations may be placed on the social enterprise compass, which measures enterprises and organisations on a continuum between the private and public sectors.

On the horizontal axis, each enterprise or organisation is categorized by its ownership. On the left side ownership is by public authorities, and on the right side it is private industry. "Private industry" encompasses all economic activity with the capital of one (or many) private owners, with a view to making a profit for personal benefit. The owners supply financial capital and bear any risk. “Public authorities” encompass all economic activity in which public authorities possess the capital at the European, federal, regional or local level; this includes nationalised and public industries.

On the vertical axis each enterprise or organisation is categorized by its primary objective, from "social purpose" at the top to "commercial purpose" at the bottom. Social purpose is the primary objective of the enterprise if it meets the following criteria:

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