Economy for the Common Good in Spanish legislation for the promotion of businesses

ValenciaPlaza_Rafa Climent_Paco Alvarez.jpgLocal Councillor for Industry and Commerce Rafa Climent and expert and ECG ambassador Paco Alvarez (Credit: ValenciaPlaza)

Blog contribution by Christian Felber

On 1 February, the Regional Ministry of Sustainable Economy, Productive Sectors, Commerce and Employment of the Valencia, Spain, n Community issued a decree (2/2017) for the promotion of social enterprise and the Economy for the Common Good.

The decree  ("orden"), published on 1 February 2017 in the official gazette ("Diari Oficial") of the Government of Valencia ("Generalitat Valenciana"), "sets out the regulatory basis for the allocation of grants for the promotion of a sustainable economy.

The decree is 25 pages long and comprises 28 articles. The term Economy for the Common Good ("Economía del Bien Común") appears in the text 41 times, the term Common Good Balance Sheet ("Balance del Bien Común") 11 times, the term Common Good Matrix ("Matriz del Bien Común") 3 times and the loose term "common good" a further 9 times.  In total, the term "common good" appears 64 times in the decree.

In the preamble, the order covers "the transformation of the economic model in the Valencian Community". It describes the Economy for the Common Good as "a model for the creation of a stable social and economic system, developing an ethical and sustainable market economy, and based on the same fundamental and constitutional values that are universally recognised: dignity, solidarity, ecological sustainability, social justice, transparency and democracy“.

It associates the Economy for the Common Good with Article 128 of the Spanish Constitution, whereby "the entire wealth of the country in its different forms (...) is secondary to the general good". The order further cites the resolution of the EU Economic and Social Committee in favour of the Economy for the Common Good. It also deals with the grounds for social enterprise and social economy. In conclusion: "For reasons mentioned, this order aims to strengthen the sustainable economy, through the promotion and sharing of cultures and practices of its two most important concepts, the Economy for the Common Good and social enterprise. “

The decree defines 12 terms, amongst them "Economy for the Common Good", "Common Good Balance Sheet" and "Common Good Matrix".

Three entities are defined as eligible for funding:

1. Organisations, foundations and other non-profit bodies that are committed to the promotion of social enterprise and the Economy for the Common Good.

2. SMEs that adopt the principles of social enterprise and the Economy for the Common Good.

3. Educational institutions, that research or teach sustainable economy, social enterprise and the ECG.

In organisations and foundations, meetings, conferences, lectures and panel discussions in particular will be funded (article 4.1.a), "activities which raise awareness of social enterprise and the Economy for the Common Good " (article 4.1.b), as well as supporting social innovation and social entrepreneurship.

With SMEs, sustainability reports will be funded, "for example, a Common Good Balance Sheet (…) that measures the ethical success of an organization and its contribution to the Common Good “(Art. 4.2.a).

At educational institutions "a basic study of the Economy for the Common Good, of social enterprise and innovation, as well as activities for application-driven research in these areas", will be funded, specifically:

  • "in-depth research on the concepts and values underpinning the model";
  • the "practical application of the instruments contained in the models, for example a methodology to measure an enterprise's contribution to the Common Good, the preparation of a Common Good Balance Sheet and other similar processes";
  • "Research and studies on the actual contribution of social enterprises and the Economy for the Common Good on the main macroeconomic aggregates, as well as its added value compared to other business models, their impact on the resilience, and their relation to, social innovation and entrepreneurship";
  • "Collecting statistics and developing indicators, that lead to more visibility and appreciation of social enterprise and social entrepreneurship";
  • "Specialist training in social entrepreneurship and the Economy for the Common Good“.

Articles 18-20 detail the exact expenditure for which the three funded entities may claim reimbursement (this comprises the funding).

For non-profit organisations and foundations (Art. 18), expenses included are, amongst others: rent, training materials, speakers' fees, consumer items, travel, handicraft, overheads (5%). For each claim, up to 120,000 euros may be reimbursed.

For SMEs (Art. 19), funding will be provided for the preparation and publication of sustainability reports "with special preference for the Common Good Balance Sheet".   At this point, the Common Good Balance Sheet is prominently defined as the reference standard of the decree. All of the reporting standards mentioned in the EU Non-Financial Reporting Directive are referred to only as substitute options.  For example, under Art. 19.1.d the audit of Common Good Reports is defined as eligible for funding. NB: in order to be able to prepare a Common Good Balance Sheet, the auditors must be certified by the Valencian Association for the Promotion of the Economy for the Common Good. (Art. 19.6). Each enterprise will be reimbursed for costs of up to 15,000 euros. 

For education and research facilities (Art. 20), up to 100,000 euros will be provided per claimant for specialist staff, mobile material, travel and accommodation costs, subsistence and other items such as newspaper subscriptions. 

The budget granted by the parliament for these promotion purposes amounts to 470,000 euros. The next decree is planned for June, this time for investments with a higher volume. The decree came into force on 2 February 2017. Claims must be settled within 6 months following submission.