1. Assess the need for and relevance of legal frameworks

Legal frameworks deeply influence the development of the social and solidarity economy (SSE) and can be helpful in a number of ways. They can help raise visibility and expansion of SSE entities, support them to enter new markets, access finance and gain public recognition such as in France and Spain. Just as they can help to unleash the potential of the SSE, legal frameworks can also create constraints that impede its development such as restricting the SSE to specific sectors, activities or types of business models. They can also stifle the development of the entire SSE ecosystem if they do not adequately meet the needs of SSE entities and do not consider the specific conditions of a given country or region.

Policy makers need to assess if, why and when it may be beneficial to adopt/revise legal frameworks for the SSE and the impact that legislation, or lack thereof, can have for its development. This assessment corresponds to the scoping phase. The need to develop legal frameworks for the SSE depends on local context, legal traditions and culture. This makes it important for policy makers to independently identify the right moment to develop them (OECD, 2022[1]).

This section equips policy makers with concrete guidance to better identify why and when it could be appropriate and/or relevant to develop legal frameworks for the SSE. It also helps them identify stakeholders that need to be consulted and involved.

Across countries the following success factors and pitfalls to avoid can help to better capture, if why and when to develop legal frameworks for the SSE.

Determining why and when legal frameworks are needed is influenced by many factors. In most countries, the structure and purpose of legal frameworks for the SSE are conditioned by local histories, institutional organisation and even global and local crises (OECD, 2022[1]). Legal frameworks also evolve differently in countries with centralised or quasi-federal and federal systems of government where both national and subnational levels can legislate (e.g., Brazil, Canada, Spain and the United States). In addition to those geographic and jurisdictional boundaries, there are other conditions that can affect the decision to adopt SSE legal frameworks or not. This includes the perceived role and function of the economy in addressing social issues, which in turn will influence the role that legislatures and courts play in establishing and responding to SSE initiatives. Several of these conditions may be more prevalent in some forms of administrative organisation than others.

The maturity of the SSE ecosystem affects the development of legal frameworks. The timing for the introduction of legal frameworks with respect to the level of development of the SSE ecosystem components matters. Existing legislation on the diverse components of the SSE can already be enabling and allow to harness its potential. Legislation that is introduced too early can be displeased by SSE entities.

It can also stifle innovation and constrain the development of the SSE. Countries can also decide that a legal framework is not always necessary to support the SSE.

For example, the following elements, among others, might help to assess the maturity of the SSE ecosystem (OECD, n.d.[2]) :

Depending on the maturity of the SSE ecosystem, positive implications and potential secondary effects of legislation weigh differently.

Legal frameworks for the SSE can support a wide range of policy objectives (Box 1.1). Countries and regions often introduce legal frameworks for the SSE to enhance the recognition and visibility of the SSE (France, Spain, Portugal, or at a subnational level in the province of Québec (Canada) (Almeida and Ferreira, 2021[3]). Additional policy objectives may include welfare state development, reducing informality, and creating jobs for specific groups.

  • Improve clarity and recognition. Most countries often make the decision to develop legal frameworks by the need to enshrine a definition of the SSE in the law, including its purposes and principles, as well as to define ownership and governance rules related to SSE entities. For example, the 2015 Law of Social Economy (no. 219) of Romania was adopted because of the lack of a clear legal framework for the SSE, as well as to facilitate access to funding opportunities offered by the EU (Box 1.2) (European Economic and Social Committee, 2018[7]). In Spain, article 1 of the Law on the Social Economy (5/2011) refers to “the establishment of a legal framework common for all the entities that are part of the social economy, and the promotion measures applicable to them.” In Portugal, article 1 of the 2013 Social Economy Framework Law indicates that the law aims to establish “the general bases of the legal system of the social economy, as well as the measures to encourage its activity according to its own principles and purposes” (OECD, 2022[1]).

  • Enlarge the scope of the SSE. This often relates to the development of social enterprises, where a number of countries provided a more comprehensive framework that allows these entities to operate. In France, the 2014 Framework Law on the Social and Solidarity Economy introduced the concept of social enterprises. In India, legislation enacted in 2003 enabled a new generation of cooperatives known as producer companies (UNSRID, 2016[11]). This legislation refers to the Indian Companies Act of 1965 that was amended in 2003 and superseded by the Companies Act of 2013 that was amended several times since then. In Italy, social cooperatives were active since the early 1970s without a specific formal legal recognition (Fici, 2015[12]). They pushed for a legal framework that was adopted in 1991.

  • Scale up the SSE. Legal frameworks could also contribute to scaling up SSE entities and their entry into new sectors (Hiez, 2021[13]). By raising the visibility of SSE entities, legal frameworks can be an important lever to help them overcome challenges that they face when deciding to scale up (OECD/European Union, 2016[14]). For example, in Portugal, the SSE has significantly grown, in terms of its weight in wealth production and job creation, since the adoption of the Portuguese Social Economy Framework Law in 2013 (Monteiro, 2022[15]). Between 2013 and 2016 an increase of 17.3% in the number of entities and 14.6% in gross value added has been observed (Monteiro, 2022[15]).

  • Support welfare state development. Consultations with stakeholders in some countries (e.g. Denmark) with mature welfare states have revealed a lower need to develop strong SSE ecosystems. In other countries, legislation for the SSE targeted entities with a focus on serving broader communities and/or able to fill certain gaps in the provision of public services (e.g. India). Another example is the United States where the private sector, both for-profit and non-profit, traditionally plays an important role in the delivery of welfare services (Elizabeth T. Boris, 2010[16]; Plerhoples, 2022[17]). In 2010, researchers estimated that over half of the social services provided in the United States were channeled through public-private partnerships whereby government funding reached intended beneficiaries through not-for-profit service providers (Elizabeth T. Boris, 2010[16]). This shifting role of the federal government has contributed to the considerable growth of the non-profit sector in the United States. Additional research from the Johns Hopkins Center for Civil Society Studies found that the United States’ nonprofit sector was the third largest employer in the United States’ economy, overtaking even the manufacturing sector (Salamon and Newhouse, 2020[18]).

  • However, the emergence of SSE ecosystems is not always linked to the welfare state development. The SSE is also active in other fields (e.g., consumption, circular economy). SSE ecosystems can develop from the bottom-up even in countries where the welfare state is developed (e.g., France, the province of Québec, Canada), and not all of the SSE entities provide goods and services that substitute or complement public services. For example, cooperatives serve their members in a variety of services and production activities (OECD, 2022[1]). Additionally, the perceived role that corporations and other economic actors in the SSE play in the delivery of important social services and/or in advancing larger social goals is also important (Box 1.3). Similarly, the role and level of government authority in ensuring the delivery or advancement of these services and goals also needs to be ascertained during the scoping and development phases. As suggested below, at each juncture in the scoping and development phases of an SSE framework are questions of whether and where government action is appropriate. Accordingly, an understanding of the authority, culture and tradition is useful to help ground these discussions and determinations.

  • Foster job creation. Countries have also adopted legal frameworks for the SSE or its components to address poverty and income inequality or promote job creation and employment of disadvantaged groups (Brazil, Mexico) (Gaiger, 2015[19]). In Mexico, SSE entities like cooperatives provide an instrument for employment and self-employment, and in doing so, offer an alternative for traditional firms. In Korea, the Social Enterprise Promotion Act (2007) aimed to stimulate work integration and reduce unemployment (ILO, 2017[20]). In Finland, the Act on Social Enterprises (2003, last amended in 2019) has strongly focused on creating employment opportunities by requiring that 30% of social enterprise employees have a disability or experience long-term unemployment. In Austria, Bulgaria, Croatia, Germany, Romania, Slovenia and Spain, statuses recognising WISEs specifically have been introduced to facilitate work integration of people with disability (European Commission, 2020[21]) In 2022, Poland passed the Act on Social Economy regulating the social enterprise status. This status is available to several legal forms, provided they operate for the purpose of reintegration (persons at risk of social exclusion will account for 30% of the employed in total) or for providing social services to the local community.

  • Tackle informality. The SSE has been identified as a vehicle that could help to tackle labour informality, given its ability to reach disadvantaged groups, facilitate access to training and support the formalisation of work through its entities, such as cooperatives (ILO, 2018[22]; OECD, 2022[23]). In India, for example, informal entities remain widespread, in particular in rural areas. Internal migration from rural to urban areas has driven the emergence of newer forms of informality as well as the need for novel forms of co-operation to ensure the provision of basic social and economic needs (Box 1.4). In countries such as Brazil, these trends have led to the emergence of mutual help and economic co-operation in these urban areas (Gaiger, 2017[24]). Conducive and tailored legal frameworks can help unleash the SSE’s full potential for tackling informality and its impacts and provide solutions to support the transition to formal work in many economic sectors. In addition to that, novel multidimensional strategies that integrate a range of policies are needed to address informality holistically (OECD, 2022[23]).

The adoption of legal frameworks usually brings three major benefits for SSE development: i) definition of the SSE and SSE entities; ii) possible adoption of other policy measures to promote and support the SSE; and iii) raising its profile vis-à-vis funders and authorities (See infographic 1.5).

  • Definition of the SSE and SSE entities. Legal frameworks are approved by parliaments. As such, they carry more authority than other policy instruments such as strategies and action plans. On the other hand, legal frameworks cannot be easily revised in the event of political change, as this requires a formal process. In most cases, they identify and recognise the SSE as a field (for example through framework laws) and/or the main features, mission governance rules and activities of SSE entities (through specific laws).

  • Possible adoption of other policy levers to promote the SSE. Legal frameworks facilitate the adoption of differentiated legal regimes and a wide range of support measures for SSE entities: tax and fiscal arrangements; tailored access to public procurement; access to suitable and targeted public funding schemes; reduction of incorporation and registration costs; specific incentives to encourage employment of specific groups (e.g. disadvantaged individuals or persons with disabilities). In addition, entities also know what is legally required from them to qualify for public support.

  • Raising the profile of SSE entities vis-à-vis funders and authorities. Legal frameworks provide an opportunity to raise the profile of SSE entities towards other stakeholders. Clear labelling helps identify the potential benefits of investing in and/or collaborating with SSE entities while supporting their social mission. SSE entities are built for and prioritise their social/societal mission over profit-maximisation for personal enrichment, and this is secured in their legal form or statutes through various mechanisms (e.g. limited profit distribution, non-distributable profit reserves, asset-locks, etc.).

The need for legal frameworks can be spearheaded by public authorities or emerge through bottom-up processes led by grassroots movements. Stakeholder consultations are an effective way for policy makers to gauge the need and support for legal frameworks for the SSE. It is preferable to include SSE networks, umbrella organisations and federations in decisions to pursue legal frameworks for the SSE. Doing so helps to better capture the realities and needs on the ground by enriching policy makers understanding of the SSE with stakeholder perspectives and aligning SSE needs with strategic objectives of policy makers. For example, Denmark created a specific National Committee in order to prepare the Act on Registered Social Enterprises of 2014. Slovakia held a two-year long consultation process and collected input from academics, social entrepreneurs, (local) governments, etc. before adopting the Act on Social Economy and Social Enterprises in 2018 and defining the scope of SSE in the country.

Other countries have institutionalised the participation of civil society organisations in their legislative process. They have done so through formal mechanisms such as official participation and consultation periods, through informal mechanisms or through general customs (advocating or lobbying by civil organisations or federations). For example, the implementation of the SSE in the Province of Québec (Canada) has shown that strong institutional participation by civil society groups such as trade unions, employer organisations, and the public can improve SSE-related policy making (Mendell, 2008[30]). The Québec 2013 Social Economy Act recognises privileged interlocutors, namely the Chantier de l’économie sociale and the Conseil québécois de la coopération et de la mutualité,and establishes a partners’ table on the social economy to be consulted on social economy affairs. In France, the 2014 Framework Law on the Social and Solidarity Economy established biennial stakeholder consultations on the SSE, helping to ensure regular bottom-up feedback (OECD, 2022[1]). Additionally, the National Council of the Social Economy, a policy shaping body, brings together diverse stakeholders such as practitioners, experts and academics to discuss the SSE in France (OECD, n.d.[31]).

In certain instances, consultations have made it clear that stakeholders prefer that policy makers do not pursue certain legal options. This is best highlighted by the case of Ireland (Box 1.5) in which stakeholders preferred not to establish a specific legal form for social enterprises.

The SSE and its related concepts include a range of diverse entities. It merges two notions: the social economy and the solidarity economy. The social economy encompasses associations, cooperatives, foundations, mutual societies and social enterprises, while the solidarity economy refers to more spontaneous, grassroots-level initiatives (OECD, 2022[23]). There are many types of SSE entities, with various social objectives, business models and legal forms that have emerged worldwide, which can make it challenging for policy makers, practitioners and academics to develop a common definition or clear boundaries for the SSE.

Policy makers need to develop a clear understanding of the SSE (or, in certain countries, the social economy or third sector) and its respective entities. The SSE shares common underlying principles and practices. SSE entities pursue societal objectives, often at the local level, in a manner that prioritises people over the pursuit of profit for personal enrichment. They also implement distinct ownership and decision-making practices. Additionally, collaboration and co-operation are central values for SSE entities that enable them to partner with other SSE entities, public and private sector actors to achieve social objectives and access resources (OECD, Forthcoming[34]). This can help to develop coherent policy objectives or co-ordinate efforts related to the SSE. It can also enhance public engagement with the SSE and ultimately accelerate the development of the overall SSE.

Multiple approaches can be used to defining and demarcating the SSE. Such approaches have evolved at different moments and were conditioned by distinct cultural, economic and social conditions, as well as the needs and viewpoints of stakeholder groups, including academics, practitioners and policy makers (Galera and Chiomento, 2022[35]). They have typically described the SSE or related concepts as a set of initiatives that are not public or not-for-profit and utilise alternative business models to provide goods and services while achieving societal objectives. Similarly, private-sector business practices that promote societal goals can sometimes make it difficult to differentiate between SSE actors and initiatives and the rest of the economy (Box 1.6). Academics, policy makers and stakeholder groups have sought to define the SSE and related concepts for distinct reasons, which has contributed to varying definitions of the SSE, the social economy, the third sector, and the entities that comprise them (OECD, Forthcoming[34]).

By adopting a pragmatic approach, policy makers can distinguish SSE entities from others, often to implement targeted policy measures. As countries have adopted formal definitions and developed legal frameworks for the SSE and its entities, they have adapted their definition of the SSE to reflect their historical, economic and social context. Academic approaches to defining the SSE typically aim to clarify their area of study and identify the motivations of SSE actors. They can help inform efforts by policy makers seeking to demarcate SSE entities from other entities and practices that might seem similar.


[6] Adam, S. (2019), “Legal provisions for Social and Solidarity Economy Actors. The case of Law 4430/2016 in Greece”, International Journal of Cooperative Law, Vol. 97/103.

[8] ADV Foundation (2022), Registrul național de evidență a întreprinderilor sociale – date la zi!, https://alaturidevoi.ro/registrul-national-de-evidenta-a-intreprinderilor-sociale-date-la-zi/.

[9] ADV Foundation (2021), Barometer of the Access to Financing of Social Economy Enterprises from Romania, https://alaturidevoi.ro/wp-content/uploads/2022/03/the-barometer-of-the-access-to-financing-of-social-economy-enterprises-from-romania.pdf.

[3] Almeida and Ferreira (2021), Social Enterprise in Portugal. Concept, Contexts and Models.

[36] Eilbirt, H. and R. Parket (1973), “The practice of business: the current status of corporate social responsibility”, Business Horizons, Vol. 16/4, pp. 5-14.

[16] Elizabeth T. Boris, E. (2010), Human Service Nonprofits and Government Collaboration: Findings from the 2010 National Survey of Nonprofit Government Contracting and Grants, https://www.councilofnonprofits.org/sites/default/files/documents/Full%20Report.pdf.

[21] European Commission (2020), Social enterprises and their ecosystems in Europe. Comparative synthesis report, Publications Office of the European Union, https://ec.europa.eu/social/main.jsp?catId=738&langId=en&pubId=8274&furtherPubs=yes.

[10] European Commission (2019), Social Enterprises and Their Ecosystems in Europe: Romania, https://ec.europa.eu/social/BlobServlet?docId=20959&langId=en.

[7] European Economic and Social Committee (2018), Best practices in public policies regarding the European Social Economy post the economic crisis, https://www.eesc.europa.eu/sites/default/files/files/qe-04-18-002-en-n.pdf.

[12] Fici, A. (2015), Recognition and legal Forms of Social Enterprise in Europe: A Critical Analysis from a Comparative Law Perspective., https://euricse.eu/wp-content/uploads/2015/12/WP-82_15_Fici2.pdf.

[24] Gaiger, L. (2017), The Solidarity Economy in South and Northern America: Converging Experiences, https://doi.org/10.1590/1981-3821201700030002.

[19] Gaiger, L. (2015), The legal framework for Solidarity Economic Enterprises in Brazil: backgrounds and perspectives, https://emes.net/content/uploads/publications/the-legal-framework-for-solidarity-economic-enterprises-in-brazil-backgrounds-and-perspectives/ESCP-5EMES-10_Lega_framework_solidarity_Economic_Entreprises_Brazil_Gaiger.pdf.

[35] Galera, G. and S. Chiomento (2022), “L’impresa sociale: dai concetti teorici all’applicazione a livello di policy”, Impresa Sociale, Vol. 1/2022, https://rivistaimpresasociale.s3.amazonaws.com/uploads/magazine_article/attachment/285/ImpresaSociale-2022-01-galera-chiomento.pdf.

[4] Gidron, B. and A. Domaradzka (eds.) (2021), The Social and Solidarity Economy in France Faced with the Challenges of Social Entrepreneurship, https://doi.org/10.1007/978-3-030-68295-8_7.

[26] Government of India (2021), Strengthening the Cooperative Movement, https://pib.gov.in/PressReleseDetailm.aspx?PRID=1776506.

[13] Hiez, D. (2021), Guide to the writing of law for the Social and Solidarity Economy, https://orbilu.uni.lu/bitstream/10993/50283/1/Guide%20ESS.pdf.

[25] ICA (2021), Mapping: key figures. National Report: India.

[27] ICA (2020), Legal Framework Analysis within the ICA-EU Partnership. National Report - India, https://coops4dev.coop/sites/default/files/2021-06/India%20Legal%20Framework%20Analysis%20National%20Report.pdf.

[22] ILO (2018), Women and men in the informal economy: a statistical picture (third edition), https://www.ilo.org/wcmsp5/groups/public/---dgreports/---dcomm/documents/publication/wcms_626831.pdf.

[20] ILO (2017), Public policies for the social and solidarity economy: towards a favourable environment. The case of the Republic of Korea.

[32] Lalor, T. and G. Doyle (2021), Research on Legal Form for Social Enterprises, https://rethinkireland.ie/wp-content/uploads/2021/12/Research-on-Legal-Form-for-Social-Enterprises.pdf.

[30] Mendell, M. (2008), The Social Economy in Quebec. Lessons and Challenges for Internationalizing Co-operation.

[28] Ministry of Cooperation (2022), List of Cooperative Societies / Banks registered under MSCS Act w.e.f. 1986 onwards, https://mscs.dac.gov.in/Proposals/ALL_REG_MSCS.pdf.

[29] Ministry of Cooperation (2022), Union Home and Cooperation Minister Announces Constitution of National Level Committee for Drafting the National Cooperation Policy Document, https://pib.gov.in/PressReleasePage.aspx?PRID=1857025#:~:text=The%20existing%20National%20Policy%20on,reliant%20and%20democratically%20managed%20institutions.

[15] Monteiro, A. (2022), The Social Economy in Portugal: legal regime and socio-economic characterization.

[1] OECD (2022), “Legal frameworks for the social and solidarity economy: OECD Global Action “Promoting Social and Solidarity Economy Ecosystems””, OECD Local Economic and Employment Development (LEED) Papers, No. 2022/04, OECD Publishing, Paris, https://doi.org/10.1787/480a47fd-en.

[23] OECD (2022), Recommendation of the Council on the Social and Solidarity Economy and Social Innovation.

[37] OECD (2020), OECD Economic Outlook, Volume 2020 Issue 1, OECD Publishing, Paris, https://doi.org/10.1787/0d1d1e2e-en.

[39] OECD (2018), OECD Due Diligence Guidance for Responsible Business Conduct.

[40] OECD (2014), OECD Guidelines for Multinational Enterprises. Responsible Business Conduct Matters.

[2] OECD (n.d.), Better Entrepreneurship Policy Tool, https://betterentrepreneurship.eu/.

[31] OECD (n.d.), OECD Local Economic and Employment Development (LEED) Papers, OECD Publishing, Paris, https://doi.org/10.1787/20794797.

[34] OECD (Forthcoming), Untangling the Complexity: A Conceptual Overview to the Social and Solidarity Economy.

[14] OECD/European Union (2016), Policy Brief on Scaling the Impact of Social Enterprises, https://doi.org/10.2767/45737.

[17] Plerhoples, A. (2022), Purpose Driven Companies in the United States,, https://scholarship.law.georgetown.edu/facpub/2440.

[41] Pollman, E. and R. Thompson (eds.) (2021), The shareholder-stakeholder alliance.

[38] Porter, M. and M. Kramer (2011), Creating Shared Value: How to reinvent capitalism -- and unleash a wave of innovation and growth.

[18] Salamon, L. and C. Newhouse (2020), The 2020 Nonprofit Employment Report, Baltimore: Johns Hopkins Center for Civil Society Studies, https://baypath.s3.amazonaws.com/files/resources/2020-nonprofit-employment-report-final-6-2020.pdf.

[5] Sarracino, F. and C. Peroni (2015), Assessing the Social and Solidarity Economy in Luxembourg, EMES Conference Selected Papers, https://emes.net/publications/conference-papers/5th-emes-conference-selected-papers/assessing-the-social-and-solidarity-economy-in-luxembourg/.

[33] Thomson Reuters Foundation and Mason Hayes & Curran LLP (2020), Social Enterprises in Ireland. Legal Structures Guide, https://www.socent.ie/wp-content/uploads/2020/11/Social-Enterprises-In-Ireland-TrustLaw-Guide-November-2020.pdf.

[11] UNSRID (2016), Promoting Social and Solidarity Economy Through Public Policy, https://cdn.unrisd.org/assets/legacy-files/301-info-files/7E583F050CE1D2A4C125804F0033363E/Flagship2016_Ch4.pdf.

Metadata, Legal and Rights

This document, as well as any data and map included herein, are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area. Extracts from publications may be subject to additional disclaimers, which are set out in the complete version of the publication, available at the link provided.

© OECD 2023

The use of this work, whether digital or print, is governed by the Terms and Conditions to be found at https://www.oecd.org/termsandconditions.