Finnish webinar on why municipalities should really pay attention to social enterprises

Written by Katja Rinne-Koski and Merja Lähdesmäki, University of Helsinki Ruralia Institute.

Social enterprises in Finland

Social entrepreneurship does not have a specific legal status in Finland; instead, it is understood as a way of doing business with a social or ecological mission. These enterprises reinvest most of their profits to advance their chosen societal goals and can operate as associations, foundations, limited companies, or cooperatives. Because there is no dedicated legal form, no official statistics exist. Estimates vary widely, from several thousand organizations following social enterprise principles to a few hundred businesses that meet stricter definitions.

One specific subtype of social enterprises is the community-based social enterprise. These are businesses owned or initiated by a local community, designed to meet local needs, and reinvesting any surplus for the benefit of that community. In rural Finland, village associations often provide small-scale services and use profits to strengthen local vitality. A village association can also operate as a business if it engages in activities independent of grant funding. In such cases, it can be seen as a community-based social enterprise, where profits are directed toward the well-being of the village. 

Opportunities to co-operation

For municipalities, social enterprises offer significant opportunities. They help maintain services and jobs even when market-driven providers withdraw, making communities more resilient to demographic changes or economic shocks. They provide or support welfare services (such as care, employment, and everyday support) especially in areas where public or private actors do not operate. Beyond service provision, they foster participation and community by involving residents not only as customers but as active contributors, volunteers, and decision-makers. Supporting social enterprises also enhances a municipality’s image, demonstrating renewal, responsibility, and values that priorities people. With employment services now under municipal responsibility in Finland, these enterprises can become key partners in integrating long-term unemployed and partially disabled workers.

What does municipalities think about social enterprises? 

Interviews with municipal leaders reveal that while the idea of social entrepreneurship is viewed positively, its concept remains vague and rarely integrated into strategies. Municipalities often see their role as enablers rather than service producers, but challenges persist, especially in public procurement, where social criteria are difficult to apply. Few municipalities use social considerations in tenders, and many call for clearer guidance and examples. There is also a lack of networks and forums for sharing experiences, and impacts such as inclusion and wellbeing are rarely measured.

Despite these gaps, municipalities recognize strong potential of social enterprises in areas like elderly care, environmental services, circular economy, youth inclusion, and rural vitality. Barriers include funding competition, unclear concepts, limited political support, and fears of market distortion. A previous national survey confirms fragmented awareness: while most municipalities know the term “social enterprise,” few understand its implications or recognize local actors as such. Only a minority have actively promoted community-based social entrepreneurship.

Different approaches to support

Municipalities in Finland have adopted very different approaches to supporting social enterprises. Some are only beginning to familiarize themselves with social enterprises as a business model and are exploring new forms of collaboration by offering local grants, communication and guidance, and supportive activities. Others have already recognized the benefits of cooperation and aim to deepen and develop interaction further by leveraging networks, public procurement, and various projects and pilot initiatives. For some municipalities, collaboration and partnership with social enterprises are already an established part of their operations, including cooperation in service provision, regional development, and active efforts to strengthen joint activities.

International comparisons conducted in MERSE show that in countries like Ireland and Sweden, social enterprises are already well integrated into public-sector collaboration. In contrast, Finland and other participating countries still need more knowledge, clearer structures, and stronger support to advance this cooperation. What is common, however, is that municipalities play a central role in this ecosystem.

Looking ahead, municipalities can take concrete steps: raise awareness through training and examples, act as connectors for local actors, integrate social criteria into procurement within legal frameworks, and use social enterprises as cost-effective tools for employment policy. Establishing networks, forums, and impact metrics would make their value visible. Practical measures include open communication about tenders, breaking large procurements into smaller lots, building partnership models, and piloting projects that demonstrate results.

Discussion: Are we losing the potential of social economy actors promoting employment? 

Despite all the supporting insights, recent analysis from the Centre of Expertise for Social Enterprises warns that this potential is at risk. Social economy actors play a vital role in promoting employment for people with weak labor market positions in Finland. However, their operating conditions have deteriorated markedly due to recent changes in employment regions and wage-subsidy regulations. Many organizations now face severe resource shortages and report difficulties in cooperating with authorities, who often fail to recognize the significance of their work. As a result, many organizations have already scaled down their activities, and most do not anticipate growth. On the contrary, many fear that their operations may cease altogether in the short or longer term. 

To make social entrepreneurship more recognized in municipalities, we need to connect them directly to the goals that local authorities already prioritize: employment, service availability, wellbeing, and local vitality. Municipal strategies rarely overlook these themes, but social enterprises are not always seen as part of the solution. By making their impact visible and by integrating them into existing cooperation structures could strengthen their role. It would be important that decision-makers see how social enterprises improve residents’ lives and support local services, so the concept would become less abstract and more connected to everyday municipal realities.

To make the concept of social enterprises less abstract and more connected to everyday municipal realities, it is important that decision-makers see how they improve residents’ lives and support local services—a purpose supported by the impact measurement tool we developed for rural social enterprises in the MERSE project.

Introducing a social enterprise

At the end of the webinar, we heard an introduction of Osuuskunta Kototuote, a social enterprise, that was founded in 1996 by a group of local women entrepreneurs working in handicrafts. Soon, the cooperative began offering care services, such as substitute caregiving for family carers, home care, and supportive household services like cleaning. Over the decades, demand for home-delivered services grew significantly and eventually surpassed the demand for handcrafted products. Today, Kototuote focuses exclusively on delivering practical, everyday assistance directly to people’s homes. Along the way, the range of home-delivered services has also grown, further strengthening the cooperative’s role as a flexible, customer-centered support in everyday life.

References

MERSE (2025). Transnational Knowledge Report of the Conditions for Rural Social Enterprises in NPA Regions 2025. Comparison between Finland, Iceland, Ireland, Norway and Sweden. https://www.interreg-npa.eu/projects/merse/home/