Across Europe, a vast and often underestimated ecosystem of organisations is changing the way economic value is created and distributed. These organisations, known together as the social economy, include co-operatives, mutual societies, associations, foundations and social enterprises. Though diverse in structure and mission, they share a characteristic: they run economic activities, but their main goal is social and their revenues are reinvested into community needs.

A new joint report by the OECD and the European Commission places this ecosystem at the centre of Europe’s future social and economic model. The social economy already includes millions of organisations that employ more than one in twenty European workers. What the report makes clear is that these organisations do not simply complement the market and the state; they actively strengthen social cohesion, foster innovation and respond to structural challenges that traditional actors struggle to address alone.

The role of the social economy in local communities

One of the report’s strongest messages concerns the social economy’s contribution to inclusive growth and community well-being. Because these organisations are anchored in their territories and guided by missions rather than shareholder returns, they tend to be well positioned to deliver services that are affordable, accessible and tailored to local needs. This is particularly visible in sectors such as affordable housing, long-term care, disability support and neighbourhood-based social services. In many places, social-economy actors fill critical gaps: providing assisted living for older people, community-based childcare for working families, or housing solutions that prioritise stability and affordability rather than speculation.

Equally central is the social economy’s ability to innovate. Because they are mission-driven and deeply embedded in local communities, many social-economy organisations have a unique flexibility to experiment with new service models, governance arrangements or partnerships. This kind of bottom-up innovation thrives especially in moments of crisis or rapid change, when conventional public or private actors may lack the agility to respond.

What is needed to strengthen the social economy

Yet, despite its scale and contributions, the social economy still operates with structural constraints that limit its impact. The OECD and the Commission emphasise the need for stronger institutional recognition and better coordination across levels of government. Policies relating to the social economy are often fragmented, inconsistent or confined to specific ministries. Greater clarity in legal frameworks, along with formal mechanisms for involving social-economy actors in policy design, would help unlock their full potential.

The report stresses that visibility and reliable data are also essential. The diversity of legal forms across countries makes it difficult to quantify the sector properly, limiting effective policymaking. Better registers, clear eligibility criteria and transparent reporting systems would strengthen both accountability and public trust.

The overarching message of the report is that the social economy is not an alternative to economic competitiveness: it is a pathway to a different kind of competitiveness, one that is more sustainable, inclusive and resilient.

Ultimately, the report argues for a shift in understanding: supporting the social economy is about recognising a strategic pillar of Europe’s future. If governments at all levels create the right enabling conditions, the social economy can help deliver high-quality services, decent jobs, empowered communities and stronger territorial cohesion.

Learn more about the report here: https://www.oecd.org/en/publications/social-economy-in-europe_3432de93-en.html