The experience of social solidarity co-operation begun in Italy in January 1963. It embodied the idea that solidarity could take the form of a not-for-profit entrepreneurial activity, more precisely the form of a cooperative.

In November 1991, the Italian Parliament approved the legal framework for social cooperatives, the founding law 381/1991, a milestone in the history of the sector worldwide.

This law was therefore a follow-up to existing experiences, which were not codified in the civil law and had developed into more structured forms which had spread across Italy, and eventually were given a legal recognition and regulation.

The Italian Law 381/91 defines two categories of social co-operatives: ‘A’ cooperatives and ‘B’ cooperatives.

Article 1 of the law 381/91 states that: “The purpose of social co-operative is the pursuit of the general community interest in promoting human concerns and in the social integration of citizens by means of:

a) the management of social, health and educational services;

b) the carrying-out of sundry activities - agricultural, industrial, business or services - having as their purpose the gainful employment of the disadvantaged (who must account for at least 30% of the business total headcount). Disadvantaged persons include people with physical or learning disabilities; people with sensory difficulties; people released from psychiatric hospitals or otherwise treated for mental illness; drug and alcohol addicts; people who have been given an alternative to custodial sentences.

Some features of the social cooperative model:

• It is a private, though non-profit entity, entrusted by the legislator to pursue the general interest of the community, and thereby support the public institutions (at its various territorial levels) in actions which had been thought as exclusive prerogatives of public entities;

• It is an entity which re-invests its own funds, with the aim to fulfil a specific public purpose, while compliant with full respect of equality, social inclusion and solidarity principles recognized by the Italian Constitution;

• This private entity’s purpose is “to pursue the general community interest in promoting human concerns and in the social integration” (article 1 of the law 381/91) through its involvement in projects and service provision. Though it is doing so within the boundaries of its subsidiarity role, it is asked to actually implement the core welfare strategies for individuals, families, the community and all public and private institutions which can thereby contribute to improving the local life quality;

• It has a democratic and participatory identity, it is multi-stakeholder and carries out a social enterprise project for and with the local stakeholders.

The Italian government, with legislative decree no. 112 of July 3, 2017, adopted a new regulation for the category of “social enterprise” for social utility objectives. The “social enterprise” denomination could be taken be any organisation (regardless of the legal form – it can be an association or a foundation, a cooperative society, and even a commercial company) that carries out commercial activity in order to pursue, mainly and permanently, “civic, solidarity or social utility objectives.”. All social cooperatives are recognised as social enterprises by the law (ope legis).

Social enterprises must reinvest net profits and surpluses in the corporate business or in the net worth (as is common in the social economy). However, a certain amount of net profits and surpluses can now be allocated outside of the organization. This new scenario has thus allowed limited distribution to shareholders.

The social enterprise is allowed to allocate part of its net profits, in an amount less than 50% (and after deducting possible losses), to:

1. Free capital increase; and/or
2. To distribution of net profits to the shareholders. These two options apply only to the social enterprises incorporated in the form of commercial companies; and/or
3. To free contribution in favour of organizations of the third sector other than social enterprises. Such free contribution shall be aimed at pursuing specific projects with social utility. This option applies to all social enterprises, regardless of the legal form of the organization (i.e. it applies to associations and foundations, to cooperative societies, and to commercial companies).

Social enterprises must involve workers and users in the governance of the organisation (including any information sharing, consultation or participation process through which workers and customers can at least have a say in issues relating to the working conditions and quality of goods and services provided).

Social enterprises must compile a social report every year, following the guidelines provided by the Ministry of Labour and Social Policy.