Dreamers With Their Eyes Open: Social Enterprise Movement in EstoniaEstonian Social Enterprise Network.




e-Estonia is a nickname for the most Northern of three Baltic States: Estonia. Over the internet, its entrepreneurs can register a new company in as little as 18 minutes and all the citizens are able to file their income tax return in just five minutes.
Also, they can sign a legally-binding contract over the Internet, from anywhere in the world, via the mobile phone.
In the following article, Jaan Aps from Estonian Social Enterprise Network explores SE-Estonia and the cooperation potential with Danish stakeholders.


„"The dreamers of the day are dangerous men, for they may act their dreams with open eyes, to make it possible."
― T.E. Lawrence


About Estonian Social Enterprise Network
Let´s get introduced! Estonian Social Enterprise Network´s (ESEN) strategic objectives are concerned with increasing the number, capacity and impact of social enterprises in Estonia. We are simultaneously a membership based association and an advocacy think tank. Currently, we have 38 of top Estonian social enterprises as our members. The number of members is growing steadily. As an advocate representing the social enterprise sector, we have become an officially recognized (if not always a convenient) partner for the Ministries of Interior, Social Affairs, Finance and Economic Affairs.

Estonian Association of Blind Masseurs

Example 1. Estonian Association of Blind Masseurs helps visually impaired people to find a job, achieve financial independence and participate fully in societal affairs. The social enterprise offers trainings, which enable its target group members to acquire massaging skills. It has also developed a comprehensive support system to assist them to enter into or return to open labour market.


Burning issues – let´s cooperate!

1. Standardisation of impact analysis and communication
We have developed a format for specifying and communicating the outcomes / impact of social enterprises using theories of change, basic indicators and story-telling. Please find some examples here on this link. One of the most interesting reports belongs to MTÜ Avitus, as it combines theory of change (page 2), story-telling (page 3) and financial calculations (page 4) to illustrate various aspects of their impact objective. Compiling the report will be a standard obligation for our members.
By the way, the process of creating the document is at least as important as the final product! It is a real journey of learning for each of the social enterprises.


You can:
• read a longer description of the structure and content of the report from the web page of Stories For Impact;
• learn more about the grand vision of the process from the blog of Social Impact Analysts Association (article "Impact Reporting – simple, practical and inspiring?").


Dream for cooperation: jointly developing further the standardised approach to specify, analyse and communicate impact of all social enterprises in the Nordic-Baltic region. Based on the standard, establishing a web solution for inserting, verifying and publishing impact-related data (numbers and stories) of social enterprises (and – why not – other social purpose organisations).
The web solution would help the social enterprises as well as their clients and investors.


2. Increase in entrepreneurial capacity of social enteprises
Most of the organisations who identify themselves as social enterpises have a clear social purpose. Often, they also produce something that is (at least potentially) valuable for customers. However, in most cases there is a serious lack of skills of product or service design as well as of branding, marketing, sales, and related financial management. The main reasons are the non-business background of social enterprise leaders and their inability to bring in respective expertise. The low level of entrepreneurial capacity of social enteprises is among the crucial factors that prevent them from fulfilling their potential in creating positive change individually and becoming a strong sector collectively.
Our project „Regional networking on social entrepreneurship development“ financed by Nordic Council of Ministers in 2013 – 2014 showed that similar problems exist in Finland and Latvia, probably also in other Nordic countries. For example – in Finland, establishing the Social Enterprise Mark has failed to increase the sales income of entrepreneurs. It shows that many efforts to increase the sales volume of social enterprises are actually not entrepreneurial enough themselves. „Raising general awareness among customers“ is usually not nearly sufficient.


Dream for cooperation: to work out together creative solutions for product / service design, branding and marketing for social enterprises. To test those approaches in our respective countries and exchange experience. In longer term, to establish the regional social enteprise acting as an intermediary for marketing and sales of products and services of other social enterpises. Its activities would not be just about „general awareness of consumers“. It would target other social enterprises´value proposition to specific client groups - to increase the sales, investability and scalability of social enterprise – and, of course, finally their impact.


3. Impact- and financial sustainability-oriented public sector
Public sector decision makers have got much power to create the conditions where social enterprises can thrive... or not. The burning issues include "How the European Commission new public procurement rules will be implemented?" and "In which ways is the social enterprise sector supported as an integral part of entrepreneurship ecosystem?"


We have had some successes like organising a study trip for Estonian public sector top level decision makers to Scotland in January 2014 with the help of British Embassy. Among others, Secretary Generals from four ministries, a Member of Parliament and the Head of Estonian Unemployment Insurance Fund were participating. But changing the culture in public sector from activity-based to impact-oriented takes much more than a single study trip. Social enterprise advocacy needs more resources – but first and foremost, more creative ideas to achieve systemic changes inside public institutions!


By the way, most of our advocacy activities so far has been financed by EEA Financial Mechanism 2009-2014. In near future, we will try out different solutions to become ourselves more financially sustainable and capable of funding advocacy work ourselves. One of the ideas has been mentioned in previous point 2 – establishing an intermediary for selling goods and services of other social enteprises. If such intermediary would become regional (e.g Nordic-Baltic), it would have the potential to fund the advocacy in all involved countries.


Dream for cooperation: to have joint advocacy activities to inspire, educate and pressure our respective public administrations to create conditions where impact-oriented and financially sustainable social enterprises can thrive.

Tagurpidi Lavka

Example 2. By bringing local and organic food produced by Estonian small-scale farmers to Estonian capital city Tallinn, Tagurpidi Lavka promotes local and environmentally friendly farming and eating. Moreover, its success naturally supports economic development in Estonia´s rural areas.


Background: social enterprises in Estonia
Currently, our network uses an inclusive and flexible interpretation of the concept of social enterprise. Clear social/societal purpose forms the centre of our definition while the other important aspect is having a financially sustainable business model. Also, we require social enteprises to reinvest their surpluses – but that aspect will most probably be hotly debated in coming years.


The diversity of social enteprises in Estonian is very big. Services provided vary from providing telemarketing jobs to the disabled... to activating local communities by renovating and finding new uses for old manor houses. Three other examples are shown with the help of photographs inside this article.


There is no special legal form for social enterprises in Estonia. Most of our social enterprises registered as non-profit associations or foundations. There are also a few limited liability companies identifying themselves as social enterprises. For achieving more favourable taxation conditions, a rather widespread solution is combining two organizations (e.g a non-profit association and a limited liability company) to form one social enterprise.

Solve et Coagula

Example 3. Solve et Coagula provides work rehabilitation for disadvantaged groups (mostly recovering addicts and other long-term unemployed). Wooden USB stick represents only one of the examples of creative business memorabilia that they produce.


What does the „hard data“ say?
In spring 2014, Estonian Social Enterprise Network in collaboration with Statistics Estonia and Network of Estonian Nonprofit Organizations (with the support of European Commission) compiled the results of first-ever statistical overview of Estonian social enterprise sector.


• In 2009-2012, the sector's total entrepreneurial income increased on average 18% per year and the number of new social enterprises increased on average 7% per year. Also, there has been a steady increase in the jobs provided by the social enterprises.
• Considerable part (66%) of the average total income of social enterprises is earned by engaging in entrepreneurial activities. (The real number might be much higher because some stakeholders are motivated not to show entrepreneurial activities fully. For example, some municipalities who delegate providing public services to social enterprises require the contract to be that of support grant, not service).
• Almost a third of social enterprises don't use donations and grants at all! In other words, ca 1/3 of social enterprises are fully sustainable based on their sales income.
• Approximately 1/3 of the social enterprises provide social welfare services.
• Social enterprises are situated all over Estonia but mainly in and around our two biggest urban centres (capital city Tallinn and university town Tartu).
• An average social enteprise is a micro-organisations (with 1-4 employees).


About the author
As an activist, Jaan Aps leads Estonian Social Enterprise Network as a voluntary chairman. He also runs a social business called Stories For Impact. It provides solutions for identifying, evaluating and communicating societal impact. Jaan Aps tweets @stories4impact. Naturally, he and his team look forward to feedback and proposal for next joint steps from Danish stakeholders! :-)


What about the pictures?
They are part of our pilot project to creatively market goods and services of social enterprises. The pilot has been supported by Nordic Council of Ministries, and EEA Financial Mechanism 2009-2014. The photographs were made by Ms Susann Kivi and graphic illustrations / design by Mr Mirko Aus. The graphic illustrations are humorously aiming at illuminating the humanistic aspects behind the facade of consumption.


Sociale Entreprenører i Danmark (SED)| Tlf. 40 11 86 40 | Email: mail@socialeentreprenorer.dk | CVR-nr. 34147981