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Financial sustainability of social enterprise in Central and Eastern Europe

Abstract

Recent years have seen a burgeoning interest in social enterprise across Europe. In Central and Eastern European countries, the transition to a market economy stimulated civil society initiatives, and opened new pathways for entrepreneurial initiatives, including the pioneering establishment of the first social enterprises. Eight of the Central and Eastern European countries studied acknowledge the functioning of approximately 24000 social enterprises ‘hidden’ among a variety of existing legal forms, out of which 15172 associations and foundations undertaking some economic activity. Relatively little consideration has been given to the longer-term growth and performance of these hybrid organizational forms. To succeed, these ventures must adhere to both social goals and financial constraints. It implies that common forces from multiple actors - government and other public bodies, banks, corporations, investment funds as well as individuals join efforts. Business failure among social enterprises has been attributed to various difficulties related to size, a lack of resources, and finance and funding issues. It is essential to understand which revenue streams ensure financial sustainability in the case of the social enterprise. This paper analyzes the entrepreneurial dimension of social enterprise activity in eight Central and East European countries: Bulgaria, Croatia, the Czech Republic, Hungary, Poland, Romania, Slovakia, and Slovenia, addressing the question of social enterprise revenue streams. Most social enterprises examined are aware of the need to insure financial stability to their social mission and are actively securing and combining a blend of income streams, in order to avoid overdependence on one source of income and insure sustainability. None of the countries are solely depending on market sources. Research limitations were encountered when analyzing the variety of revenue streams due to the fact that some country reports presented also the dimension of a specific revenue, whereas others do not comprise specific numbers.

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