The start of pre-accession negotiations between the Republic of Croatia and the European Union and the acquisition of the status of a full member of the EU in 2013 has posed new challenges in front of civil society in Croatia, as organizational and operational barriers, but also opened up numerous opportunities for improvement of existing forms of actions and expansion of the area of activity, developing new activities and forms of networking, both with national and international organizations.
The social economy, which in Croatia includes CSOs, social enterprises and cooperatives is seen as a potential model to solve many social and economic problems and needs in the country.
Today, there are no legal or generally used definitions of third sector and social economy.
However, Strategy for the Development of Social Entrepreneurship in the Republic of Croatia for the period from 2015 to 2020, adopted in 2015 by the Croatian government for the first time brought the definition of a social enterprise: “Social enterprise is a business based on the principles of social, environmental and economic sustainability, in which profit generated is entirely or largely reinvested for the benefit of the community”.
The definition contains 9 criteria that all must be met for an organization to be considered a social enterprise:
- Social enterprise achieves a balanced social, environmental and economic goal of business;
- Social enterprise is engaged in the production and transport of goods or services or art that generate revenues on the market, and has a favorable impact on the environment, contributes to the development of the local community and society at large;
- Social enterprise creates new value and ensures financial sustainability in a way that three years after the establishment of business at least 25% of the income is planned to be or is realized by its entrepreneurial activities;
- Social enterprise uses at least 75% of the profit to invest in the development of its activities and the achievement of its primary business objective;
- Social enterprise is characterized by voluntary and open membership and a high degree of business autonomy;
- The Republic of Croatia, local and territorial (regional) self-government or a public authority may not be the sole founder of the social enterprise;
- Social enterprise is characterized by participatory decision-making process (involvement of stakeholders in transparent and accountable management), or the decision-making is not exclusively related to the ownership or membership structure but includes other stakeholders: employees, members, consumers, and other relevant organizations;
- Social enterprise monitors and evaluates its social, economic and environmental impact. Results of the evaluation are used in the planning and future steps to increase the impact of the business.
- In the case where social enterprise ceases to perform its activity the assets must be transferred to the ownership of another social enterprise with same or similar goals.