From Margin to Mainstream: Institutional Signals from the OECD Legal Guide on the Social and Solidarity Economy

From Institutional Blind Spot to Policy Consensus: Why the OECD Developed Legal Guidelines for the Social and Solidarity Economy

When a cooperative in Berlin or Montreal considers expanding its childcare services, when a fair trade network tries to secure financing to build warehouses, when a social enterprise centered on employing people with disabilities wants to enter the government procurement market, the first question they must answer is often not about their business model, but a more fundamental one: how does the law define us?

This is precisely the challenge that the OECD's *Policy Guide on Legal Frameworks for the Social and Solidarity Economy* (2023) seeks to address. On the surface, it is a legal technical guide; at a structural level, it represents the global policy community's belated recognition of the "Social and Solidarity Economy" (SSE).

An Economic Sector Long Treated as an "Exception"

The social and solidarity economy is a concept that can easily be reduced to vagueness. It encompasses cooperatives, mutual societies, nonprofit organizations, and enterprises with a social mission. It is distinct from pure charity, and also from traditional corporations whose goal is maximizing shareholder value. The defining feature of such organizations is that they embed commitments to serving the community, democratic governance, and constraints on the use of profits into their operating logic.

Yet in many countries, legal systems still apply 19th-century corporate law logic to the 21st-century "mission economy." The result is that nonprofit organizations face legal dead ends when they scale up operations, cooperatives find that capital expansion may dilute member governance, and social enterprises are forced into a private company template to balance market efficiency with social goals. The law is no longer just a registration issue; it becomes an institutional threshold that determines whether an organization can obtain financing, enjoy tax treatment, or bid on public services.

The OECD's approach is not to argue once again about "what good charity looks like." Instead, it treats legal frameworks as key infrastructure for determining whether social innovation can take root. The guide integrates issues previously scattered across labor, welfare, fiscal, and small- and medium-sized enterprise policies, prompting countries to examine their definitions, organizational forms, governance requirements, financial rules, and regulatory coordination.

The Role of the State: From Controller to Builder of an Institutional Ecosystem

The publication of this policy guide in 2023 was no accident. After the pandemic, many governments found that public finances alone could not bear all social risks, while relying on platform-based business models or pure market competition did not automatically bring inclusive growth. At this point, cooperatives, community land trusts, social housing providers, and care cooperatives re-entered the policy spotlight.Several countries are already establishing benchmark practices. Through its Social and Solidarity Economy Act, France has devolved local public policy tools to this sector; South Korea’s Social Enterprise Certification Act has pushed social enterprises into the public service delivery chain; Quebec, Canada’s cooperative networks and patient capital system show that financial supply can be compatible with members’ interests. The OECD guidelines attempt to systematize these experiences, making the legal system no longer an adversary of social innovation but its collaborator.

The deeper significance of this shift is that the state is no longer merely the “last resort” for solving market failures, but has become the designer of “mission-driven markets.” When public procurement sets social standards for suppliers, when company law provides legal variants for “asset locks” and “stakeholder governance,” and when statistical systems begin to measure the economic contribution of social-purpose organizations, the social and solidarity economy is no longer just a voluntary moral activity by civil society, but a manageable, replicable, and sustainable mode of production organization.

A More Important Question Than Quotas: How to Avoid Institutional Erosion

The social and solidarity economy also faces the risk of being “co-opted” by the system. If certification systems overemphasize KPIs, enterprises may use a public-interest shell to win contracts without achieving genuine participatory governance; if legislation merely adds a “social label” without resolving the underlying contradictions among accounting, taxation, and financing, new institutions may be reduced to paper certificates.

The writing of legal frameworks is therefore more like coding an organization’s DNA. How is “social purpose” defined? What is a non-distribution constraint? How should the balance between members’ rights and outside capital be maintained? Who owns the assets upon dissolution? How can governments exercise accountability without stifling the spirit of experimentation? These details determine whether institutional innovation can go far.

The OECD policy guidelines cannot offer a single universal answer for the world, but their value lies in sending an important signal: institutions are no longer to be treated as an exogenous variable, but must become an intrinsic component of social innovation strategy. For city governments, this means that recognition of cooperatives and social enterprises should not stop at annual awards or special grants; it must be embedded in zoning regulations, public procurement contracts, tax rules, and land policy.

From “Developing an Alternative Economy” to “Restructuring the Mainstream Economy”

As global discussions turn to supply chain resilience, the scarcity of public services, and the youth employment crisis, the social and solidarity economy offers a pathway that is underappreciated yet concrete and workable. It does not seek to displace the market or the state, but to reintroduce social choice between them.

The United Nations views the social and solidarity economy as a driver of the Sustainable Development Goals; the European Union is also refining its action plan on social enterprises; and more countries in the Global South are using cooperative networks to address agricultural infrastructure and financing for small producers. The appearance of the OECD guidelines lifts this field from “social innovation showcase” to “legal and governance challenge.”In the next phase, what is worth watching will no longer be how much financing a few star social enterprises can raise, but a more ordinary picture: whether a care cooperative opened in a community can legally absorb small amounts of public funds; whether a mission-locked company can obtain the same financing status as ordinary enterprises; whether a platform founded by a group of workers can legally become a competitor to existing digital platforms.

A truly mature system should make "doing the right thing" no longer require extraordinary heroism, but instead become the default option in everyday economic activity.

Reference source: OECD - Policy Guide on Legal Frameworks for the Social and Solidarity Economy