‘People think we do it just for the subsidies’: CEO
LONDON (Thomson Reuters Foundation) — Dutch entrepreneur Jack Stuifbergen hires disabled and illiterate people who struggle to find work because he wants his cleaning company to have a positive social impact.
But many people think he does it to earn government subsidies, as businesses with a social mission are poorly understood and not officially recognized in The Netherlands.
The Dutch government promised measures to support social enterprises in an October agreement, which created a four-party ruling coalition after a record-breaking 225 days of post-election negotiations.
Six months on, Stuifbergen wants to see action.
"There is a stigma around social enterprises working with people with disabilities," said the chief executive of Breedweer, which employs about 600 people, many of whom have a physical or mental disability or are illiterate.
"If we had a legal definition, it (would) make things easier ... People think we do it just for the subsidies," he said, referring to the government policy of paying 40 per cent of the salaries of disadvantaged workers to boost their employment.
The Netherlands fared poorly in a poll of the best and worst places to be a social entrepreneur in a 2016 survey by the Thomson Reuters Foundation, due to limited public understanding of and state support for the sector.
In response, parliament voted to make The Netherlands one of the top 10 countries for social entrepreneurs, up from 25th out of 45 countries polled. But with no government for months after the March 2017 elections, the initiative stalled.
Eppo Bruins, a Christian Union party lawmaker in the new coalition government, is determined to see things change.
"It's the only way to do business in the twenty-first century," said Bruins, who brought the motion to support social enterprises to parliament.
Social enterprises are growing in The Netherlands, with about 6,000 companies using business to help solve social problems in 2016, up 70 per cent on 2011, according to the consulting group McKinsey.
But many Dutch people do not know what social entrepreneurs do, which makes raising funds difficult, and selling to the government is an uphill struggle, experts say.
"If there is a clear idea about what a social enterprise actually is, because they have adopted a legal form, it makes it easier," said Stefan Panhuijsen, policy director of Social Enterprise Netherlands, which is lobbying for reform.
While social enterprises aim to become financially independent, supportive policies, grants and tax breaks have proven vital in countries where they have flourished.
One example is Britain, where the number of social enterprises has grown to 70,000, according to Social Enterprise UK, an organisation which represents the sector, following strong government investment.
A 2012 British law encourages government procurement officers to consider the social and environmental impact of contracts they award rather than just going with the lowest bid.
Campaigners want the Dutch government to introduce a legal definition of social enterprises and to reform its procurement policy to benefit them.
Bruins said this would give social enterprises greater access to the 6 billion euros (C$9.7 billion) that the government of the euro zone's fifth largest economy spends on suppliers.
"At this moment, companies who employ people who are at the edge of the employment market — say handicapped people — every time they have to explain who they are to local government, what they do and why they are different," he said.
With no recognition and no definition, local governments often prefer to deal with charities or ordinary businesses rather than companies trading for a social purpose, experts say.
Social enterprises take a variety of forms. But all have a clear social or environmental mission, generate most of their income through trade and reinvest most of their profits to further their social goals.
In Britain, about one-fifth have registered as community-interest companies, a special type of limited company which exists to benefit the community rather than private shareholders.
Introducing a similar legal entity in the Netherlands could boost the sector, campaigners said.
"We think a community-interest company (status) would work for social enterprises that offer services that are close to the government, for example in healthcare," said Panhuijsen.
Most British social enterprises do business with the public sector, according to Social Enterprise UK, often supplying local governments with social care, transport, and nursing services.
Panhuijsen is keen to see progress on the government's October pledge to use its purchasing power in innovative ways to involve vulnerable groups.
"We can see this as a way to buying more from social enterprises," he said. "We are working on trying to get the government to explain it in a way we are happy with."
Bruins plans to raise the issue at an upcoming meeting with parliamentarians to discuss social enterprises.
"Politicians are slow. Sometimes it is a long road to making things easier," Stuifbergen said.