Social economy: let’s put intangible value back at the heart of things

Social organisations issue calls for proposals; foundations and public authorities respond by applying as beneficiaries and competing with one another. It is a world turned on its head, in which foundations and public authorities compete for the ideas and projects generously made available by organisations in the third sector and the social economy, humbly offering their financial or property resources.

After all, what is the most important, scarcest and most valuable resource in the relationship between public policy, philanthropy and social innovators? Money, or the ability to solve problems and meet needs? Certainly the latter: so why on earth should the most valuable resource have to compete with the least valuable one? This is a matter of concepts and values even before it is a technical one: restoring the focus to the intangible value of the social sphere and de-emphasising the importance of financial resources. A redefinition of roles that has, first and foremost, political significance, reshaping the structures of local governance, which are all too often in the hands of political and philanthropic actors who are poorly representative.

By an unspoken convention, foundations and public authorities, hiding behind ambiguous consultation processes involving representatives and stakeholders, issue calls for proposals, define priorities and set criteria, often without being the most informed or competent parties regarding the objectives and methods of implementation. Non-profit organisations and social enterprises respond, adapt, compete on the quality of their narratives, squeeze their margins to the bone, and lose any real opportunity to articulate medium-term strategic visions or to invest in significant human and technological resources. This is the mechanism that has led to the impoverishment of social organisations and lies at the root of the dramatic problem of low-paid work in the third sector. This phenomenon not only creates vulnerability amongst social sector workers but also makes these organisations unattractive to young people – even those with high levels of education – who are increasingly expressing a strong desire to pursue career opportunities within so-called ‘meaningful organisations’.

If the social economy is to become a genuine option in development policy, then the first step is to help its key players to grow, by radically and permanently changing market conditions, the way services are procured and grants are awarded, through the promotion of ‘reverse tenders’. These represent, of course, a challenge, but also a guiding light for genuine change.

In recent years, trust-based philanthropy has charted a similar course, proposing a shift in mindset on the part of funders, fundamentally based on trust: multi-year, unrestricted grants; simplified application processes; and open, two-way dialogue. This represents real progress, which some Italian foundations are adopting with excellent results. There are also numerous examples of this philosophy being trialled in management and administrative contexts: demand-driven procurement in industrial policy, participatory budgeting in the public sector, Anglo-Saxon models of community wealth building in which institutions respond to needs defined by communities, pay-by-results schemes and reverse procurement.