Entering the module
One sentence: a social enterprise is a business that keeps its money not to hand it out to its owners, but to solve a problem — and so it has to be able both to earn and to prove that it helps.
Chapters:
- What a social enterprise is — and what it is not
- The legal forms
- Register and classes
- How impact is proven
- The money of a social enterprise
- Where the money comes from — and how not to depend on one source
- Honestly: risks and temptations
- How we track it in the wallet → The iron principle of the module
For the youngest · ages 6–7
🐣 The youngest: Some shops and cafés sell things like all the others. But the money they have left goes to a good cause. That way they help people find work, or animals have a home. Their piggy bank has two slots: "for us" and "for helping".
Play together (5 minutes): Put out two cups: "for us" and "for helping". When the child "sells" a drawing at home, they decide themselves how many coins go into each. At the end of the week, choose together what the "for helping" coins will help with — for example, food for the birds in winter.
A question for the evening: "Who would you like to help if you had your own little shop?"
Chapter 1 · What a social enterprise is — and what it is not
👧 Child A café where young people work who would otherwise find it hard to get a job. They sell coffee like the others, but the money left over goes into more jobs. It is a business that helps.
🧑 Teenager A social enterprise has two things at once:
- a business — it sells goods or a service and pays its own way;
- a purpose — it solves a social problem (work for disadvantaged people, care, the environment, culture).
The profit goes back into the purpose instead of being handed out to the owners (or it is handed out only by rules that are clear in advance).
🧔 Adult The approach generally accepted in Europe has four features [F]:
- the main aim is measurable social impact, not profit for the owners;
- profit is reinvested first of all in the purpose; any distribution follows rules set in advance;
- governance with accountability and transparency, with the participation of those affected;
- real market income — not only donations and grants.
There is no single legal definition of a social enterprise in the EU. The European Commission has described the idea in its Social Business Initiative (2011) and in the Social Economy Action Plan of 9 December 2021: in short, enterprises that trade in goods and services with a social or environmental objective as the reason for their commercial activity, reinvest most of their profits in that objective, and are organised in a democratic or participatory way or focus on social progress ✔ (a summary of section 2 of the action plan, COM(2021) 778: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:52021DC0778). On 27 November 2023 the Council adopted a Recommendation on developing social economy framework conditions, which guides the Member States in building policies and laws for the social economy ✔ (OJ C/2023/1344, https://eur-lex.europa.eu/eli/C/2023/1344/oj). The legal forms and the statuses themselves are national.
A note on honesty: the definition in Regulation (EU) No 1296/2013 (the EaSI programme) used to be widely quoted. That regulation was repealed with effect from 1.01.2021 by Regulation (EU) 2021/1057 (ESF+), Article 41, but ESF+ gives its own definition of a "social enterprise" in Article 2(13) ✔ (EUR-Lex).
Example: Bulgaria — The rules are in the Social and Solidarity Economy Enterprises Act (). Its Article 3 defines the social and solidarity economy* as a form of entrepreneurship aimed at social activities or social objectives, including through the production of goods or services. Which enterprises are social enterprises and what conditions they meet is set out in Articles 5–8 ✔ (State Gazette No. 91/2018: https://dv.parliament.bg/DVWeb/showMaterialDV.jsp?idMat=131143, in Bulgarian).
Check in your country — Does your country have a special law or status for social enterprises (some do, some only have policy strategies)? Look on the website of the ministry for labour, social affairs or the economy, or on the European Commission's Social Economy Gateway.
🏗 Organisation: the question is not "what is the form called", but "where does the money come from and what do we do with what is left".
Myth → truth
- Myth: "Social enterprise = an NGO that collects donations."
- Truth: a social enterprise sells and earns — but not for its owners. An NGO that lives only on donations is not necessarily a social enterprise.
Who profits? The people it was created for — work, a service, dignity. Society — lower costs of support. Whoever expects "quick money" loses.
→ Continue at the source
- European Commission — the Social Economy Action Plan: https://employment-social-affairs.ec.europa.eu/policies-and-activities/eu-employment-policies/social-economy-and-inclusive-entrepreneurship/social-economy-action-plan_en ✔ · the Social Economy Gateway: https://social-economy-gateway.ec.europa.eu/eu-initiatives/seap_en ✔
- EUR-Lex — Council Recommendation on developing social economy framework conditions (27.11.2023): https://eur-lex.europa.eu/eli/C/2023/1344/oj ✔
- EUR-Lex — Regulation (EU) 2021/1057 (ESF+), Article 2(13) (the definition) and Article 41 (the repeal of No 1296/2013): https://eur-lex.europa.eu/eli/reg/2021/1057/oj ✔ · the repealed Regulation (EU) No 1296/2013 — for history only: https://eur-lex.europa.eu/eli/reg/2013/1296/oj
- European Commission — "Social economy in the EU": https://single-market-economy.ec.europa.eu/sectors/proximity-and-social-economy/social-economy-eu_en ✔
- Bulgaria: Ministry of Labour and Social Policy — website on the social economy: https://seconomy.mlsp.government.bg (in Bulgarian) ✔
Chapter 2 · The legal forms
👧 Child The same good idea can wear different "clothes". The clothes depend on who takes part and who makes the decisions.
🧑 Teenager In most EU countries a social enterprise can wear one of these "clothes" [F] (*) (a general overview):
- a non-profit organisation (association, foundation) — can carry out economic activity under certain conditions;
- a cooperative — the members own and run it together;
- a company (e.g. a private limited company) with a social purpose in its articles;
- work integration enterprises and cooperatives for people with disabilities — with a set share of employees with disabilities, often entered in a special register.
Example: Bulgaria — ✔ Under the Social and Solidarity Economy Enterprises Act, Article 5, the actors of the social and solidarity economy are cooperatives, non-profit legal entities for public benefit and social enterprises; a social enterprise may have any legal form (Article 7). The most common forms: a non-profit legal entity (association, foundation, chitalishte — a community cultural centre); a cooperative; a commercial company (single-member or multi-member limited company) with a social purpose in its articles; specialised enterprises and cooperatives of people with disabilities — registered under the Commerce Act or the Cooperatives Act, with a set share of people with permanent disabilities among the staff and entered in a register (People with Disabilities Act, Article 48) ✔ (text on lex.bg, opened 21.10.2026).
Check in your country — Which legal forms may carry out economic activity for a social purpose, and is there a special form or label (for example a social cooperative or a company with a social purpose)? Ask a notary, a lawyer or the business register.
🧔 Adult Questions when choosing a form [P]:
- Who makes the decisions? (members, manager, board)
- What happens to the profit? (is it distributed, and by what rules)
- What happens on closure? (who gets what is left)
- What taxes and reports does the form have?
- Can it apply to programmes (many programmes accept only NGOs or registered social enterprises)?
There is no "best" form. Sometimes an organisation starts as a non-profit and later also chooses another form for its economic activity. The decision is legal and financial — a notary or lawyer and an accountant, not an article.
🏗 Organisation: write the purpose into the articles so that it can be checked (measurable results), not only so that it sounds good.
Myth → truth
- Myth: "An NGO can't do business."
- Truth: in most countries it can carry out economic activity that is linked to its purpose and whose income serves that purpose (). Example: Bulgaria* — Non-Profit Legal Entities Act, Article 3(3); non-profit legal entities do not distribute profit — Article 3(6) ✔ (text on lex.bg, opened 21.10.2026).
Who profits? Whoever chooses the form according to the purpose, not according to a fashionable term.
→ Continue at the source
- Bulgaria: Non-Profit Legal Entities Act, Article 3 — https://lex.bg/laws/ldoc/2134942720 (in Bulgarian) ✔ (opened 21.10.2026).
- Bulgaria: Cooperatives Act — https://lex.bg/laws/ldoc/2134696966 (in Bulgarian) ✔ (opened 21.10.2026).
- Bulgaria: Commerce Act — https://lex.bg/laws/ldoc/-14917630 (in Bulgarian) ✔ (opened 21.10.2026).
- Bulgaria: People with Disabilities Act, Article 48 — https://lex.bg/laws/ldoc/2137189213 (in Bulgarian) ✔ (opened 21.10.2026).
Chapter 3 · Register and classes
👧 Child Like a school with a sign on the door: when there is an entry in a register and clear rules, everyone knows it is real.
🧑 Teenager Some countries keep a public register or label for social enterprises; entry gives a status and access to support measures (*) (a general principle — the rules differ from country to country). Others have no special status, and the enterprise works in an ordinary legal form.
Example: Bulgaria — The Ministry of Labour and Social Policy keeps a Register of Social Enterprises (Social and Solidarity Economy Enterprises Act, Articles 10–11) ✔. The register is public and is published on the ministry's website (Article 11). Entry gives a status and access to support measures.
🧔 Adult Where a country has a status, the law usually sets conditions (a social purpose, how much of the profit goes to it, how many people from vulnerable groups are employed), classes or levels, a register and support measures, often as state aid within the EU de minimis rules (Regulation (EU) No 1407/2013, since 1 January 2024 replaced by Regulation (EU) 2023/2831 — up to €300,000 per undertaking over 3 years, Article 3(2), Article 8 ✔: https://eur-lex.europa.eu/eli/reg/2023/2831/oj).
Example: Bulgaria — What the law says [F] (✔ according to the text in State Gazette No. 91/2018 and the current version on lex.bg with the amendments of 2019 and 2020, opened 21.10.2026; ⚠ the implementing regulation has not been checked): - the law was promulgated on 2.11.2018 and entered into force six months later — from May 2019 ✔; - the implementing regulation governs entry in and removal from the register; - social enterprises are class A and class A+ (Article 6) ✔. Class A: a social activity with social added value, transparent governance and one of two more conditions — more than half of the profit (and at least BGN 7,500) goes to a social purpose, or at least 30 % (and at least three) of the employees are from vulnerable groups (Article 7). Class A+ meets both conditions of class A or adds one more — a municipality with unemployment at or above the national average, a larger profit for the purpose, or at least 30 employees from vulnerable groups (Article 8) ✔. Training aid is a measure for class A+ (Article 15) ✔ and is granted as de minimis aid under Regulation (EU) No 1407/2013 (Article 15(3)) ✔. The thresholds in the text of the law are in leva; from 1.01.2026, amounts in leva in legal acts are read as amounts in euros at the official rate of 1.95583 (Euro Introduction Act, Articles 11–12) ✔ — BGN 7,500 ≈ €3,834.69, BGN 75,000 ≈ €38,346.89; - there is a methodology for assessing social added value, issued by the Minister of Labour and Social Policy (Article 7(1)) ✔.
Check in your country — Is there a register or label for social enterprises? Who keeps it, what are the conditions, and what support does it give? Look on the website of the competent ministry; read the current text of the law and its implementing rules.
So: the primary source before the decision — the current text of the law, the implementing rules and the competent ministry's website.
🏗 Organisation: being entered in a register is not a goal in itself. Ask what it gives you (measures, programmes, trust) and what it requires (reports, share of employees).
Myth → truth
- Myth: "It is enough to call yourself a social enterprise."
- Truth: where the status exists, it is legal; without registration and proof of the conditions, you do not get the measures.
Who profits? The enterprises that prove their impact; society — more transparency.
→ Continue at the source
- Bulgaria: Ministry of Labour and Social Policy — Register of Social Enterprises and legislation: https://seconomy.mlsp.government.bg (in Bulgarian) ✔
- Bulgaria: the Social and Solidarity Economy Enterprises Act — the original text (State Gazette No. 91/2018): https://dv.parliament.bg/DVWeb/showMaterialDV.jsp?idMat=131143 ✔ · the current version — https://lex.bg/laws/ldoc/2137187968 ✔ (opened 21.10.2026) · the implementing regulation — Ministry of Labour and Social Policy ⚠ (not checked). All in Bulgarian.
- Bulgaria: Euro Introduction Act, Articles 11–13 — https://lex.bg/laws/ldoc/2137244903 (in Bulgarian) ✔ (opened 21.10.2026).
Chapter 4 · How impact is proven
👧 Child If you say "we help people", how will you prove it? You count: how many people, what changed, how much time has passed.
🧑 Teenager A simple chain, called a logic model or a theory of change:
- Inputs (what we put in: people, money, time);
- Activities (what we do);
- Outputs (what comes out straight away — for example, 12 people trained);
- Outcomes (what changes in their lives — they find work);
- Impact (what changes in the community for a long time).
The difference between "doing something" and "changing something" lies in steps 4 and 5.
🧔 Adult Three practical questions [P]:
- For whom? Define the target group clearly.
- What will change, and by when? Written, verifiable goals.
- Why will it work, and what could stop us? Assumptions that you test.
Methods: the logic model ✔, the theory of change ✔, SROI (social return on investment) — a monetary valuation of the benefits compared with what was put in ✔. Caution: figures for "social value" are estimates based on assumptions, not accounting facts — say where they come from.
An honest limit: do not confuse accountability with hope. "We will help" is not a result; "12 people are in work 6 months after the training" is.
🏗 Organisation: set 3–5 indicators that you can measure without tracking people too closely (personal data protection, GDPR).
Myth → truth
- Myth: "Good can be seen without numbers."
- Truth: without measurement you don't know whether it helps, and funders require evidence.
Who profits? The organisation that knows what works; the people — because what doesn't work is stopped.
→ Continue at the source
- W.K. Kellogg Foundation, "Logic Model Development Guide" (updated edition, 2004): https://wkkf.issuelab.org/resource/logic-model-development-guide.html ✔
- Nicholls, Lawlor, Neitzert & Goodspeed, "A Guide to Social Return on Investment" (revised edition, SROI Network, 2012; first edition — Cabinet Office, 2009): https://ccednet-rcdec.ca/resource/a-guide-to-social-return-on-investment-revised/ ✔
- European Commission — GECES, "Proposed approaches to social impact measurement" (adopted June 2014): https://data.europa.eu/doi/10.2767/28855 ✔
- Module 11 — reporting to the funder.
Chapter 5 · The money of a social enterprise
👧 Child The piggy bank has two slots: one is "for us" (so that we can work), the other "for the cause" (so that we can help). Good enterprises fill both.
🧑 Teenager The money comes from:
- sales of goods or a service (the most stable source);
- grants and programmes (one-off or recurring);
- donations (voluntary, unpredictable);
- contracts with municipalities and institutions.
The money goes out on salaries, rent, materials, activities for the purpose. What is left (if anything) goes back into the purpose.
🧔 Adult Price and break-even point (Module 18) apply here too. Typical mistakes [P]:
- the price does not cover the full cost, because "we are doing good" — and the organisation drains its reserve;
- the grant is mixed up with turnover — when the grant ends, there is no business;
- the target group is not also the customer. A person you help for free is not a source of income — you need a second customer who can pay (so-called cross-subsidy) ✔.
The accounts of a social enterprise have two lines: the financial one (income − costs) and the social one (results for people). Both must be positive.
🏗 Organisation: keep grant projects and economic activity separate. That way the reports are clean (Module 9, Chapter 7; Module 11).
Myth → truth
- Myth: "A social enterprise shouldn't make a profit."
- Truth: if it doesn't make a profit, it doesn't survive. Profit is the means; the purpose is the good.
Who profits? Whoever has several sources. Depending on one is risky.
→ Continue at the source
- Module 18 — price, break-even point, cash flow.
- Module 11 — projects and public funds.
Chapter 6 · Where the money comes from — and how not to depend on one source
👧 Child If you have only one friend who brings you ice cream, you go without when they go away. It's good to have several.
🧑 Teenager Sources of funding for such organisations [F] ✔ (a general overview; the conditions depend on the specific programme):
- national and European programmes (e.g. the European Social Fund Plus, ESF+, through the national programmes of each country);
- municipal programmes and contracts;
- private foundations and corporate donations;
- loans and microcredit on softer terms;
- community funding (donations, membership fees).
Each has rules — eligible costs, reports, deadlines.
🧔 Adult Rules for choosing [P]:
- Choose the programme whose aim matches yours, not the other way round.
- Check the eligible applicants and costs before you write the project.
- Keep a reserve — grant money often arrives late (Module 8, principle 7).
- Do not bet on one big grant.
To find programmes: the national managing authorities of the EU funds and the European Commission's Funding & Tenders portal. Example: Bulgaria — our tool grants.varnahub.com (for NGOs; in Bulgarian); for companies — the relevant partner tool (Module 11).
🏗 Organisation: a schedule of "what is reported when" and "where the reserve comes from while we wait for payment".
Myth → truth
- Myth: "A grant = free money."
- Truth: a grant is a contract — with goals, deadlines, reports and penalties for breaches (Module 11).
Who profits? Whoever writes a realistic project and keeps a reserve.
→ Continue at the source
- Module 11 and grants.varnahub.com (for NGOs in Bulgaria; in Bulgarian).
- European Commission — ESF+: https://european-social-fund-plus.ec.europa.eu/en ✔
Chapter 7 · Honestly: risks and temptations
👧 Child If you say you help but you don't, someone will be disappointed. That's why we tell the truth about what we do.
🧑 Teenager Risks [F]:
- "social" as a label (social washing) — the word is used for advertising, but there are no results;
- dependence on grants;
- conflict of aims — pressure to earn more can push the cause aside;
- burnout in the team.
🧔 Adult Checklist [P]:
- Why do we exist? (one sentence)
- Who benefits, and how will we know?
- If the grant stops, how many months can we keep going? (Module 8, principle 7)
- Who makes the decisions, and who can stop us?
- What do we do with the profit? (in writing)
- How do we protect the personal data of the people we help?
And a link with Module 17: "social" does not mean "safe for the investor" — "communities" and "mutual aid" with promises of returns are well-known schemes.
🏗 Organisation: publish a short annual report — the money and the results.
Myth → truth
- Myth: "A good aim justifies any means."
- Truth: the aim is a reason for more accountability, not less.
Who profits? Organisations that people trust.
→ Continue at the source
- Module 17 — Fraud.
- GECES (European Commission) — principles for measuring impact: https://data.europa.eu/doi/10.2767/28855 ✔
Chapter 8 · How we track it in the wallet
👧 Child Two piggy banks, two labels: "for us" and "for the cause". Every week you count both.
🧑 Teenager In the Pecuvo wallet, a social enterprise is a project space with two kinds of figures: financial (income, costs, what is left) and results (number of people, hours, events — entered as you choose, without personal data).
🧔 Adult A suggested layout [P]:
- a space called "Activity" (sales, cost, break-even point — Module 18);
- a space "Project:
" for each grant, with budget, deadlines and report (Module 11); - a space "Reserve" (Module 8);
- a note "Impact" — 3–5 indicators, updated every quarter.
The weekly balance (Module 9, Chapter 5) shows how many weeks you can keep going without new income.
🏗 Organisation: separating activity and projects keeps the report clean and saves disputes with the funder.
Myth → truth
- Myth: "A small organisation doesn't need a tool."
- Truth: small organisations most often miss the reporting deadline, not because they are unprepared, but because the money is not visible in one place.
Who profits? The organisation that sees its money and its results together.
→ Continue at the source
- Module 9 — managing cash flow.
- Module 18 — the small business.
The iron principle of the module
A social enterprise earns in order to help, and proves that it helps. One account without the other is incomplete.
- 👧 Child: two piggy banks — "for us" and "for the cause".
- 🧑 Teenager: business + purpose; verifiable.
- 🧔 Adult:
- a clear form that fits the purpose;
- several sources of income;
- 3–5 impact indicators;
- a reserve for grants that arrive late.
- 🏗 Organisation: separate spaces for activity and projects; an annual report.
Your step in Pecuvo: (1) Create "Activity" and "Reserve". (2) Add a project space for each grant. (3) Write down 3–5 impact indicators. (4) Set a goal of "a reserve for 3 months". (5) Check the weekly balance.
Check yourself (3 questions per level)
- 👧 1. What do the two piggy banks do? 2. Why is it important not to depend on one friend? 3. What does it mean to say "we help" and also prove it?
- 🧑 1. Which two things must a social enterprise have? 2. What are the five steps of the logic model? 3. Why is "social" no guarantee?
- 🧔 1. Which questions do you ask when choosing a legal form? 2. Why is a grant not turnover? 3. What is SROI, and why are its figures estimates?
Sources (summary)
- ✔ Regulation (EU) 2021/1057 (ESF+) repeals Regulation (EU) No 1296/2013 (EUR-Lex; secondary confirmation during the check on 19.10.2026).
- ✔ Social Economy Action Plan (European Commission, 9.12.2021) and Council Recommendation on social economy framework conditions (27.11.2023, OJ C/2023/1344) — ✔ dates and the action plan's description of a social enterprise (section 2) in the official texts (publications.europa.eu, CELEX 52021DC0778 "Brussels, 9.12.2021" and 32023H01344, 21.10.2026); ✔ Social Business Initiative, COM(2011) 682 (CELEX 52011DC0682).
- ✔ Bulgaria: the Social and Solidarity Economy Enterprises Act (State Gazette No. 91/2018; in force from May 2019) — Article 3 (the social and solidarity economy), Articles 5–8 (actors, classes A and A+), Articles 10–11 (the register at the Ministry of Labour and Social Policy), Article 15 (measures for A+) — according to the text in the State Gazette and the current version on lex.bg (amendments State Gazette No. 17 and 24/2019, No. 17/2020), opened 21.10.2026; ✔ Article 15(3) (de minimis); ✔ Non-Profit Legal Entities Act, Article 3; ✔ People with Disabilities Act, Article 48; ✔ the conversion (Euro Introduction Act, Articles 11–12) · ⚠ the implementing regulation has not been checked.
- (*) The general overviews of legal forms and registers in EU countries (Chapters 2–3) — not checked country by country.
- ✔ Regulation (EU) 2023/2831 (the current de minimis regulation) — Article 3(2) (€300,000 over 3 years) and Article 8 (in force 1.01.2024 – 31.12.2030), official text (CELEX 32023R2831), 21.10.2026.
- Checked on 19.10.2026 (the ✔/⚠ status is given on each line above): Bulgarian Non-Profit Legal Entities Act; Cooperatives Act; Commerce Act; Kellogg (2004); SROI Guide (2012); GECES (2014); Ministry of Labour and Social Policy — seconomy.mlsp.government.bg; ESF+ programme documents.