A Model for Directing and Modulating Public Interventions in Social Enterprises

Abstract

Abstract The world is no stranger to crises, and social enterprises struggle to both survive and deliver on mission. This study explores how public interventions can facilitate economic recovery through targeted assistance to social enterprises, specifically the Italian social cooperative. Despite their prevalence and beneficial impact on Italian communities, not all Italian social cooperatives are economically and/or financially healthy. So this study answers the following two research questions: what is the financial and economic condition of Italian social cooperatives, and how could scarce public resources be directed to social enterprises in order to further the goals of social policy? To assess financial and economic health, we conduct financial statement analysis based on data extracted from the AIDA database. This methodology makes it possible to analyze Italian social cooperatives with techniques designed to monitor the situation in terms of both financial balance (current ratio, warranty ratio, and equity multiplier) and of economic balance (ROA, ROI, and sustainability of financial charges). Using these ratios, we create a matrix of financial and economic health and then provide guidance on which level of public support in each classification is likely to provide the most overall societal benefit. Such analysis offers not only benefits to Italian policymakers and citizens, but is a topic of particular interest for researchers, policymakers, and practitioners around the world evaluating policy responses to crises such as COVID-19.