Social enterprises and their ecosystems in Europ : country report : Cyprus.
Date: 2019-03-31
Institutions: Directorate-General for Employment, Social Affairs and Inclusion
Subjects: Cyprus, European undertaking, entrepreneurship, financial aid, investment, market access, public-private partnership, social economy, social impact, social policy, voluntary organisation, voluntary work

SOCIAL ENTERPRISES 
AND THEIR ECOSYSTEMS 
IN EUROPE

Country report
CYPRUS
George Isaias 

Social Europe

This report is part of the study “Social enterprises and their ecosystems in Europe” and 
it provides an overview of the social enterprise landscape in Cyprus based on available 
information as of October 2019. It describes the roots and drivers of social enterprises 
in the country as well as their conceptual, fiscal and legal framework. It includes an 
estimate of the number of organisations and outlines the ecosystem as well as some 
perspectives for the future of social enterprises in the country.

This  publication  is  an  outcome  of  an  assignment  financed  entirely  by  the  European 
Union  Programme  for  Employment  and  Social  Innovation  "EaSI"  (2014-2020).  For 
further information please consult: http://ec.europa.eu/social/easi

Manuscript completed in October 2019

1st edition

Neither the European Commission nor any person acting on behalf of the Commission 
is responsible for the use that might be made of the following information.

Luxembourg: Publications Office of the European Union, 2019

© European Union, 2019

Reuse is authorised provided the source is acknowledged.

The  reuse  policy  of  European  Commission  documents  is  regulated  by  Decision 
2011/833/EU (OJ L 330, 14.12.2011, p. 39).

For any use or reproduction of photos or other material that is not under the EU copyright, 
permission must be sought directly from the copyright holders.

Catalogue number KE-05-18-125-EN-N
ISBN 978-92-79-98072-5 | DOI 10.2767/29869

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SOCIAL ENTERPRISES 
AND THEIR ECOSYSTEMS 
IN EUROPE

Country report
CYPRUS

George Isaaias 

This report provides an overview of the social enterprise landscape in Cyprus based 
on information available as of October 2019. The report updates the previous version 
submitted  by  ICF  Consulting  Services  to  the  European  Commission  in  2014.  The 
current report has been prepared as part of a contract commissioned by the European 
Commission to the European Research Institute on Cooperative and Social Enterprises 
(Euricse) and the EMES International Research Network (EMES). George Isaias from the 
Synthesis Center for Research and Education was responsible for updating the report.

The  author  acknowledges  the  EU-level  coordination  team:  Carlo  Borzaga,  Giulia 
Galera, Barbara Franchini, Stefania Chiomento and Chiara Carini (Euricse) and Rocio 
Nogales, Sarah Waring and Teresa Bolaños (EMES). The author would particularly like 
to thank Dr. Stephanos Spaneas for his contribution to the development of this report 
and the following people, from a larger list of contributors, for their time, effort and 
useful feedback: Dr. Nicos Souleles, Dr. Kalypso Sepou, Marcia Trillidou, Constandinos 
Georgiou, Dr. Christopher Markides, Kalypso Apergi, Maria Georgiou, Dora Heracleous, 
Irini Anastassiou and Irene Kampa.

Recommended citation:
European Commission (2019) Social enterprises and their ecosystems in Europe. Updated 
country  report:  Cyprus.  Author:  George  Isaias.  Luxembourg:  Publications  Office  of  the 
European Union. Available at https://europa.eu/!Qq64ny

Countries included in the three social enterprise mappings by the European Commission

No

Country

TYPE

2014

2016

2018-19

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17

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21

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23

24

25

26

27

28

29

30

31

32

33

34

35

36

Albania

Austria

Belgium

Bulgaria

Croatia

Cyprus

Czech Republic 

Denmark

Estonia

Finland

France

Germany

Greece

Hungary

Iceland

Ireland

Italy

Latvia

Lithuania 

Luxembourg

Malta

Montenegro

The Netherlands

North Macedonia

Norway

Poland

Portugal

Romania

Serbia

Slovakia

Slovenia

Spain

Sweden

Switzerland

Turkey

United Kingdom

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6 | Table of contents

TABLE OF CONTENTS 

List of acronyms 

List of tables 

Executive summary 

8

9

10

1.  BACKGROUND: SOCIAL ENTERPRISE ROOTS AND DRIVERS  13

1.1.  Private driver 

1.2.  Association/foundation driver 

1.3.  Cooperative driver 

1.4.  Policy driver 

15

16

17

18

2.  CONCEPT, LEGAL EVOLUTION AND FISCAL FRAMEWORK  21

2.1.  Defining social enterprise borders 

2.1.1. The EU operational definition of social enterprise 

2.1.2. Application of the EU operational definition of social enterprise in Cyprus 

2.2.  Legal evolution 

2.2.1. Main characteristics of the draft law 

2.3.  Fiscal framework 

3.  MAPPING 

3.1.  Measuring social enterprises 

3.2.  Social enterprise characteristics 

22

22

22

25

26

29

31

32

33

Social enterprises and their ecosystems in Europe | Country report CYPRUSTable of contents | 7

4.  ECOSYSTEM 

4.1.  Key actors 

4.2.  Policy schemes and support measures for social enterprises 

4.2.1. Support measures addressed to all enterprises that fulfil specific criteria 

4.2.2. Support measures addressed to social economy/non-profit organisations 

4.2.3. Support measures specifically addressed to social enterprises 

4.3.  Public procurement framework 

4.4.  Networks and mutual support mechanisms 

4.5.  Research, education and skills development 

4.5.1. Universities and higher education institutions 

4.5.2. Research institutions and observatories 

4.5.3. Incubators/co-working spaces 

4.5.4. Prizes and awards 

4.5.5. Knowledge exchange and facilitation 

4.6.  Financing 

5.  PERSPECTIVES 

5.1.  Overview of the social enterprise debate at the national level 

5.2.  Constraining factors and opportunities 

5.3.  Trends and future challenges 

6.  APPENDICES 

Appendix 1. The EU operational definition of social enterprise 

Appendix 2. Data availability report 

Appendix 3. Exploratory case studies 

Appendix 4. Reference list 

Appendix 5. List of stakeholders engaged at national level 

35

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65

66

Social enterprises and their ecosystems in Europe | Country report CYPRUS8 | List of acronyms

List of acronyms

 > C4E 

Centre for Entrepreneurship

 > CARDET 

Center for the Advancement of Research & Development in Educational 
Technology

 > CCB 

 > CCCI 

Cooperative Central Bank

Cyprus Chamber of Commerce and Industry

 > CEDAR 

The Centre for Entrepreneurial Development, Alliance and Research

 > CIIM 

 > CSI 

 > CSR 

Cyprus International Institute of Management

Center for Social Innovation 

Corporate Social Responsibility

 > CYPEF 

Cyprus Entrepreneurship Fund

 > EBRD 

European Bank for Reconstruction and Development

 > EC 

 > EIB 

European Commission

European Investment Bank

 > ERDF 

European Regional Development Fund

 > ESF 

 > ESIF 

 > EU 

European Social Fund

European Structural and Investment Funds

European Union

 > EUC-PEAK  The  European  University  Cyprus  Performance  Enterprise  Accelerator 

 > FWC 

 > GP 

 > ICLAIM 

and Knowledge Innovation Center

Future Worlds Center

General Purpose

The  Interdisciplinary  Centre  for  Law,  Alternative  and  Innovative 
Methods

 > INNOVENTER  Innovative Vocational Social Entrepreneurial Training

 > MECIT 

 > MLWS 

 > NAP 

 > NGO 

 > NPO 

Ministry of Energy, Commerce, Industry and Tourism

Ministry of Labour, Welfare and Social Insurance

National Action Plan 

Non-Governmental Organisation

Non-Profit Organisation

Social enterprises and their ecosystems in Europe | Country report CYPRUS 
 
 
List of acronyms and tables | 9

 > PVCC 

Pancyprian Volunteerism Coordinative Council

 > RPF 

 > SBI 

 > SE 

 > SI 

Research Promotion Foundation, Republic of Cyprus

Social Business Initiative

Social Enterprise

Social Inclusion/Integration 

 > SMEs 

Small and Medium-sized Enterprises

 > SNP 

Statement  on  National  Policy  for  the  Development  of  the  Business 
Ecosystem in Cyprus

 > UAR 

Unit of Administrative Reform

List of tables

 > Table 1. 

Fulfilment of the EU operational definition by legal type

 > Table 2. 

Comparison between the EU and Cypriot definitions of social enterprise

 > Table 3. 

Estimated  number  of  social  enterprises  by  legal  type  in  Cyprus  as 
of 2017

 > Table 4.  Overview of key social enterprise ecosystem actors

Social enterprises and their ecosystems in Europe | Country report CYPRUS 
 
10 | Executive summary

Executive summary

Background

Cyprus  has  a  long  history  and  tradition  of  socially  oriented  activity  performed  by 
associations,  foundations  and  volunteer  groups.  Notions  of  altruism,  expressions  of 
kindness and the impulse to “help one another” are customary characteristics of the 
Cypriot  people  that  are  still  evident  today.  The  sense  of  solidarity  that  drives  social 
enterprise  can  be  found  within  Cyprus’  cooperative  sector,  which  began  almost  80 
years  ago  and  continues  to  this  day.  However,  “social  enterprise”  itself  is  a  recent 
phenomenon  on  the  island  and  the  sector  is  still  underdeveloped.  The  term  was 
introduced  in  2010  when  a  major  event  was  held  on  the  topic.  Thereafter,  several 
initiatives were initiated. Four main drivers have been identified as the primary roots or 
forces behind the country’s social enterprise development: 1) the private driver; 2) the 
associative/foundation driver; 3) the cooperative driver; and 4) the policy driver.

Concept, legal evolution and fiscal framework

Currently, the country does not have a specific legal framework for social enterprises; 
no minimum requirements or threshold criteria define and distinguish social enterprises 
from other types of entities. De facto social enterprises operate under existing legal 
forms without receiving any legal recognition or acknowledgement from the state. In 
accordance with the EU operational definition, the typologies that would most likely 
qualify  as  social  enterprises  in  Cyprus  are  private  companies  limited  by  guarantee, 
cooperatives and associations.

The Cypriot government has recently established several initiatives to formulate 
a policy in support of an enabling ecosystem for social enterprise development. 
New, forthcoming legislation and a National Action Plan (NAP) are particularly relevant. 
The draft law, which was developed in 2017 but has not yet been approved, provides 
a definition of social enterprises that classifies them into two types: general purpose 
(GP); and social inclusion/integration (SI) social enterprises. According to the proposed 
law, GP social enterprises will have to promote positive social and/or environmental 
actions in the interest of society as a primary aim and reinvest at least 70% of profits 
to fulfil their social mission; meanwhile, the primary aim of SI social enterprises will 
be the employment of persons belonging to vulnerable groups of the population, who 
constitute at least 40% of their workforce.

No fiscal measures currently exist that benefit social enterprises. Neither do the 
forthcoming legislation nor the NAP foresee any such benefits. The only provision that 
might advantage social enterprises concerns SI enterprises, which could benefit from 
exclusive public contracts after the draft law’s enactment.

Social enterprises and their ecosystems in Europe | Country report CYPRUSExecutive summary | 11

Mapping

Any attempt to estimate the number of Cypriot social enterprises is a challenge due 
to a significant lack of prior research and data. In accordance with the EU operational 
definition, the country’s social enterprise sector is extremely small and consists of about 
190  entities.  Forthcoming  legislation  anticipates  that  companies  already  registered 
under the Companies Law and the Cooperative Law will be eligible for social enterprise 
status  provided  that  they  satisfy  specific  criteria,  thus  enabling  the  registration  of 
private  companies  limited  by  shares.  Particular  prerequisites  will  include  the  limited 
distribution of profits and the reinvestment of any remainder into their social aims. It 
is not yet clear whether or not associations and foundations would also be eligible to 
apply for social enterprise status.

Ecosystem

Support measures for social enterprise development are envisioned in the NAP, which 
was  approved  in  January  2018  with  an  anticipated  budget  of  3.1  EUR  million.  The 
majority of funds are intended for social enterprise start-ups. The NAP is dependent 
upon legislative framework, which has yet to be finalised and ratified. Therefore, the 
NAP has been approved but not yet implemented.

Although no specific education and training programmes currently address the needs of 
social enterprises in Cyprus, a growing number of academic institutions and other 
organisations offer education, training and support on social entrepreneurship 
issues. Dedicated programmes for social enterprises are expected to be launched in 
the near future, including two incubator projects.

Perspectives

Cyprus’ social enterprise debate is primarily focused on the need for legislation that 
identifies  and  regulates  the  phenomenon.  Indeed,  stakeholders  consulted  for  the 
purpose  of  this  study  perceive  the  lack  of  a  specific  legal  framework  as  a  major 
restriction.  Other  constraining  factors  include:  a  lack  of  funding  and  specialised 
support; the absence of a specific governmental unit to implement social enterprise 
policies; limited public awareness of the phenomenon; and the absence of a network 
or  lobby  that  could  promote  the  sector’s  interests.  Even  though  the  government  is 
establishing relevant initiatives to boost social enterprise development (legislation 
and the NAP), significant, ongoing delays in their implementation hinder the Cypriot 
social enterprise ecosystem’s sustainability. According to stakeholders, the sector’s 
expansion primarily depends on the government’s next action, with all hopes placed 
upon the forthcoming legislation.

Social enterprises and their ecosystems in Europe | Country report CYPRUSCYPRUS

1

BACKGROUND: 
SOCIAL ENTERPRISE 
ROOTS AND DRIVERS

Cyprus has a long history of socially oriented activities performed by associations, 
foundations  and  informal,  volunteer  groups.  The  term  “social  enterprise”  was 
initially  used  in  Cyprus  when  the  first  conference  on  the  topic  was  organised 
in November 2010. From 2013 onwards, social enterprises have attracted the 
growing attention of policymakers, academics, practitioners, the general public 
and the government.

The private sector has been one of the main drivers behind the Cypriot social 
enterprise  ecosystem.  Private  companies  by  guarantee  (non-profit)  or  shares 
(for-profit companies that pursue social aims and distribute a limited share of 
profits) have been instrumental in raising awareness of social enterprises and 
the broader social entrepreneurship sector.

Associations and foundations are a second driver. Although they may not define 
themselves as social enterprises, specific organisations provide services for the 
wellbeing of vulnerable and socially excluded groups.

The cooperative sector is a third driver, which began almost 80 years ago and is 
still socially and economically influential.

14 | Background: social enterprise roots and drivers

Cyprus has a long history and tradition of socially oriented activities performed 
by  associations,  foundations  and  volunteer  groups.  Diverse  trends  have  been 
established  across  various  types  of  organisations  blended  with  notions  of  altruism, 
expressions of kindness, solidarity and collectiveness, which are still present today. The 
roots of this widespread tradition can be traced to the “Mediterranean” welfare system, 
when the state’s inability to respond to societal needs was addressed by civil society 
and the cooperative movement.

The social enterprise phenomenon itself is quite new in Cyprus and still underdeveloped. 
The  term  “social  enterprise”  was  initially  used  in  November  2010  when  the  first 
conference on the topic, Connecting Social Innovation, was organised in Cyprus by the 
Synthesis Center for Research and Education Ltd. Since then, several initiatives have 
been established by organisations pursuing a social and/or environmental purpose in 
conjunction  with  economic  activity,  mainly  motivated  by  the  private  sector.1  Several 
seminars  and  conferences  have  been  held  to  inform  the  public,  policymakers  and 
potential  social  entrepreneurs  about  the  sector.  Academia  has  also  contributed  to 
the  dissemination  of  information,  launched  promotional  events  on  the  theme  and 
subsequently introduced social entrepreneurship into its course curricula. In a similar 
vein, certain associations and foundations have used income generated from economic 
activity to introduce and develop further systematic, economic efforts to help support 
the  sector’s  sustainability.  Some  other  initiatives  that  can  be  broadly  regarded  as 
social  entrepreneurship—albeit  unofficially—have  also  been  observed;  although  they 
do  not  currently  qualify  for  legal  social  enterprise  status,  these  initiatives  could  be 
institutionalised as part of the sector at some point.2

From  2013  onwards,  social  enterprises  have  slowly  yet  steadily  garnered  growing 
attention  from  policymakers,  academics,  practitioners  and  the  general  public.  More 
intentionally,  since  2015,  the  Cypriot  government  has  established  several  initiatives 
to  formulate  a  policy  in  support  of  an  enabling  ecosystem  for  social  enterprise 
development.

Some development has occurred since “social entrepreneurship” was introduced and 
certain sectorial organisations have begun speaking about more sustainable economic 
models with a social mission that sidelines philanthropy. The social enterprise debate 
has been enriched by the government’s decision to initiate a public funding plan for social 
enterprise start-ups, which was initiated in December 2013. Discussion has focused 
on  acknowledging  those  enterprises  that  facilitate  the  employment  of  people  with 
disabilities or provide welfare services within a sustainable economic model. A number 
of legal and policy initiatives such as the draft law and NAP were also encouraged by 

(1)  Private  sector  or  private  initiatives,  including  conventional  companies  (private  companies  by 

shares) and non-profit companies (private companies by guarantee).

(2)  See appendix 3.

Social enterprises and their ecosystems in Europe | Country report CYPRUSBackground: social enterprise roots and drivers | 15

the discussion, which, unfortunately, have not yet been implemented. Nevertheless, it 
is expected that state support of social enterprise development will pave the way for 
a  growing  number  of  organisations  to  deliver  general-interest  services,  especially  in 
social services, culture, sport, recreation, research and health.

The following sections examine the roots and drivers behind the emergence of social 
enterprises within the Cypriot context.

1.1. Private driver

A number of enterprises that combine economic activity with a social purpose, including 
tackling environmental challenges, have emerged in Cyprus since 2010. The so-called 
“private  driver”  includes  private  companies  by  guarantee  and  private  companies  by 
shares. Private companies by guarantee can be referred to as “non-profit companies” 
(see section 2.1.2. for details), whereas private companies by shares are conventional 
for-profit companies by law. They are regarded as social enterprises when they pursue 
explicit  social  goals  other  than  the  maximisation  of  profits  and  their  distribution  to 
founders. These entities often register as conventional companies out of necessity as 
it is the quickest and most efficient way to start a social enterprise in Cyprus. If they 
return a profit, it tends to be marginal and they can voluntarily decide not to distribute 
them to their owners. Importantly, with the exception of cooperatives, no other hybrid 
legal form exists that allows the limited distribution of profits.

Nevertheless, even if they pursue explicit social aims, these socially oriented enterprises 
are  rarely  conceived  as  social  enterprises  by  the  general  public.  The  lack  of  general 
awareness about social enterprises and the absence of a specific legal framework in 
Cyprus  raise  several questions about the real  motivations  behind  these  entities;  the 
widespread  assumption  is  that  an  enterprise  must  be  profit-oriented  by  definition. 
However, once a legislative and operational framework has been established, a number 
of these entities may well choose to conform to the criteria outlined in the law and 
register as GP social enterprises.

Private  companies  by  guarantee  and  the  “socially  oriented”  companies  by  shares 
mentioned above operate in a broad range of fields, including: recycling, education and 
training, and welfare (mainly through the provision of home care services).

The private sector has also been a driving force in raising awareness of social enterprises 
and the broader social entrepreneurship sector.

Social enterprises and their ecosystems in Europe | Country report CYPRUS16 | Background: social enterprise roots and drivers

1.2. Association/foundation driver

The  notably  different  terms  “voluntary”,  “non-profit”  and  “non-governmental 
organisation”  (NGO)  are  quite  often  used  interchangeably  and  all  associated  with 
philanthropy in Cyprus.

A  small  number  of  Cypriot  associations  and  foundations  have  recently  developed 
economic activities to generate income that support their sustainability. Although they 
cannot define themselves as social enterprises, these entities often focus on providing 
services  for  the  wellbeing  of  vulnerable  groups  and/or  socially  excluded  groups  and 
generate  a  significant  portion  of  their  income  by  engaging  in  economic  activities, 
including  recycling,  the  production  of  organic  products  and  operating  secondhand 
shops.  Activities  and  projects  related  to  the  social  and  work  inclusion  of  vulnerable 
or marginalised groups are also performed by associations and foundations; although 
these activities do not qualify as social enterprises, they do have the potential to be 
institutionalised and become social enterprises at a later stage (see appendix 3).

Foundations  and  associations  are  regulated  by  the  1972  Societies  and 
Foundations Law, which was updated in 1997 and further amended in 2017. The law 
outlines the following provisions:

 > Associations—organised unions of at least 20 persons focussing on a social aim 

(excluding political parties and trade unions).

 > Foundations—entities that usually have premises whose use is intended to serve 
the  implementation  of  a  particular  social  objective;  the  minimum  value  of  a 
property dedicated to establishing a foundation cannot be less than 1,000 EUR.

 > Federations  and/or  unions  of  organisations—three  or  more  associations, 
foundations,  companies  limited  by  guarantee  or  other  relevant  non-profit  legal 
entities, either based locally or abroad, may form a federation or a union. 

 > Companies  limited  by  guarantee—subject  to  the  same  requirements  as 
conventional  for-profit  companies  (e.g.,  audited  accounts  and  annual  levy)  yet 
not allowed to distribute dividends and follow a different legal framework than 
associations and foundations.

 > Organisations that are registered abroad and yet active in Cyprus—subject to the 
provisions of the European Convention on the Recognition of the Legal Personality 
of  International  NGOs.  Such  federations  or  unions  can  be  established  with 
respective foreign organisations on the condition that their articles of association 
specify that the applicable law governing their action shall be the same law that 
applies in the Republic of Cyprus.

The legal framework does not recognise any informal groups (groups of citizens with 
no legal status).

Social enterprises and their ecosystems in Europe | Country report CYPRUSBackground: social enterprise roots and drivers | 17

1.3. Cooperative driver

Cyprus’  cooperative  sector,  which  began  almost  80  years  ago  and  continues  to  this 
day,  expresses  a  similar  sense  of  solidarity  that  drives  social  enterprises.  Due  to  its 
longstanding influence on Cyprus’ societal and economic life and values, the cooperative 
movement is an essential contextual reference.

The first cooperative effort started in the 20th century. In the national archive 
records,  reference  is  made  to  the  then  Director  of  Agriculture’s  attempts  to  set 
up  cooperative  credit  societies  in  the  villages  of  Peyia,  Chlorakas,  Kissonerga  and 
Mesogi  in  1904.  However,  they  were  soon  dissolved  due  to  several  administrative 
and financial difficulties.

During the period 1936–1974, the Cypriot cooperative movement experienced 
significant  growth.  Poor  living  conditions,  increased  unemployment  and  a  lack  of 
access to financial credit institutions resulted in the rapid development of cooperative 
initiatives aimed at meeting these needs. In 1937 the Cooperative Central Bank (CCB) 
was founded due to the large expansion of cooperative credit societies, which required a 
central body to facilitate their work. Furthermore, it was tasked with creating cooperative 
capital funds and self-financing. The CCB accepted surpluses from affluent cooperative 
societies as deposits and lent their investment to weaker cooperatives on favourable 
terms, which they subsequently granted to their members in the form of short-term 
credit. In addition to accepting deposits and granting loans, the CCB supplied farmers 
with funding to meet their various needs and acted as a government representative to 
finance various developmental agricultural programmes, which are still ongoing.

The  Turkish  invasion  of  1974  resulted  in  the  Cypriot  economy  collapsing 
alongside  the  enforced  displacement  of  one  third  of  the  island’s  total  population 
from  the  north  to  the  south.  During  that  era  the  cooperative  movement  contributed 
decisively to the reduction of housing problems by offering loans to the population at 
low interests and accepting relinquished properties in the north as guarantee. This shift, 
along  with  the  island’s  subsequent  financial  prosperity,  led  cooperative  societies  to 
become financial institutions on a par with banks with more lenient rules on lending for 
cooperative members in the 1980s. All other activities were eliminated or abandoned.

The global financial crisis that hit Cyprus in 2013 revealed a high proportion of 
unsecured debts within the cooperative sector indicative of mismanagement and a 
lack of proper supervision on lending. The state, in its effort to keep the system running, 
lent money and assumed the management and supervision of cooperatives. However, 
as more than 50% of its sudden responsibility were non-performing loans covered by 
inadequate security, policymakers decided to split the sector in two according to positive 
or negative performance. The former half was sold to another banking institution and 

Social enterprises and their ecosystems in Europe | Country report CYPRUS18 | Background: social enterprise roots and drivers

the latter was retained by the Cypriot government, which set up a loan management 
company to manage assets.

The Cooperative Bank’s collapse does not mean that the Cypriot cooperative society 
has been relinquished. Efforts are being made to plan strategically and improve the 
cooperative  sector’s  performance.  Today,  75  cooperative  companies  are  estimated 
to still be active. Whether or not all or only some of them can be considered social 
enterprises  forms  part  of  current  debate.  Forthcoming  legislation  makes  explicit 
reference  to  cooperatives  as  eligible  for  social  enterprise  status  upon  the  fulfilment 
of  established  criteria.  This  provides  an  opportunity  for  cooperatives  with  a  broader 
social mission, which goes beyond serving the interests of their members, to become 
social cooperatives similar to those already present in other European countries. Such 
an evolution would contribute to regenerating the cooperative sector and become a 
driving force for the social enterprise sector.

1.4. Policy driver

The state’s first steps to promote a policy that could support the creation of an enabling 
ecosystem for social enterprises in Cyprus began after the launch of the Social Business 
Initiative (SBI) (European Commission 2011). During the economic and financial crisis, 
social enterprise development was promoted higher on the policy agenda. In 2013 the 
government decided to initiate a plan to develop the sector by reserving public 
funds to support social enterprise start-ups. The President of Cyprus announced 
a  series  of  measures  to  combat  unemployment  and  social  exclusion:  6  EUR  million 
would be made available to create 180 social enterprises. The decision was focused 
on  developing  an  alternative  way  of  integrating  socially  excluded  groups.  A  working 
group, which consisted of members of the Ministry of Finance, was established to build 
a coherent strategy for the initiative.

In  2015  the  government's  support  was  formally  announced;  social  entrepreneurship 
was identified as a complementary form of entrepreneurship that could contribute to 
addressing social or environmental challenges (MECIT and UAR 2015). The role of social 
enterprises was acknowledged as a means of eliminating labour market discrimination 
and inequality, strengthening and promoting the employment of vulnerable groups, and 
creating new jobs and entrepreneurship activities in rural communities across Cyprus. 

In 2017 the European Commission (EC), following a suggestion by the Ministry 
of  Finance,  contracted  external  experts  to  develop  a  policy  paper  on  the 
development  of  Cyprus’  social  enterprise  ecosystem  (Synthesis  2017).  Certain 
elements  of  the  policy  report  have  been  incorporated  into  the  draft  law  On  the 

Social enterprises and their ecosystems in Europe | Country report CYPRUSBackground: social enterprise roots and drivers | 19

development and maintenance of a registry of social enterprises and the NAP for social 
enterprises. Although the NAP has been approved, its implementation is dependent on 
the draft law being passed, which is yet to happen.

The  NAP  places  emphasis  on  support  measures  aimed  at  the  work  and  social 
integration of disadvantaged or vulnerable people. Furthermore, it includes several 
support  measures  and  funding  schemes  to  initiate  social  enterprise  start-ups 
and  financial  services  that  could  contribute  to  the  sector’s  short  and  long-term 
development and sustainability.

The draft law’s approval and NAP’s implementation are anticipated to provide impetus 
to the sector and clarify required developmental actions.

Social enterprises and their ecosystems in Europe | Country report CYPRUS2

CONCEPT, LEGAL 
EVOLUTION AND 
FISCAL FRAMEWORK

Cyprus  does  not  have  a  specific  legal  framework  for  social  enterprises. 
Currently, the draft law On the development and maintenance of a registry of 
social enterprises, which was approved by the Council of Ministers in 2018, is 
awaiting assignment to the relevant ministry before being sent to the relevant 
committee for discussion.

However, once a legislative and operational framework has been established, 
a number of entities (including companies limited by shares) may choose to 
conform to criteria outlined in the law and register as social enterprises.

According to the draft law, two types of social enterprises will be recognised: 
1)  general  purpose  (GP)  social  enterprises,  whose  primary  purpose  is  the 
achievement  of  a  social  mission  through  the  promotion  of  positive  social 
and environmental actions in the interest of society; and 2) social inclusion/
integration (SI) social enterprises, whose primary purpose is the achievement of 
a social mission with a workforce at least 40% composed of persons belonging 
to vulnerable groups.

The two social enterprise typologies envisaged by the draft law are not new 
legal forms but a “qualification” or “status” that could be awarded to entities 
with different legal forms.

22 | Concept, legal evolution and fiscal framework

2.1. Defining social enterprise borders

2.1.1. The EU operational definition of social enterprise

This  report  draws  on  the  organisational  definition  included  in  the  Social  Business 
Initiative (SBI) of 2011. According to the SBI, a social enterprise is an undertaking:

 > whose primary objective is to achieve social impact rather than generating profit 

for owners and shareholders;

 > which uses its surpluses mainly to achieve these social goals;
 > which is managed in an accountable, transparent and innovative way, in particular 
by involving workers, customers and stakeholders affected by its business activity.

This definition arranges social enterprise key features along three dimensions:

 > an entrepreneurial dimension,

 > a social dimension,

 > a dimension relative to governance structure.

Provided that the pursuit of explicit social aims is prioritised through economic activities, 
these three dimensions can combine in different ways; it is their balanced combination 
that matters most when identifying the boundaries of social enterprise.

Building  upon  this  definition,  the  Commission  identified  a  set  of  operational  criteria 
during the previous stages of the Mapping Study (European Commission 2015, 2016) 
and refined them again for the purpose of the current phase of the study (see appendix 
1 for further details).

2.1.2. Application of the EU operational definition of social enterprise in 

Cyprus

Cyprus does not yet have a specific legal framework for social enterprises. Currently, 
no  minimum  requirements  or  threshold  criteria  define  Cypriot  social  enterprises  to 
distinguish them from other types of enterprises. Therefore, social enterprises can 
operate under any existing legal form as outlined below.

1.  Limited liability companies can be:

a. A  company  limited  by  guarantee  without  shared  capital  formed  to  achieve  a 
shared  objective,  which  often  but  not  always  has  a  charitable  or  social  scope. 
They  can  generate  income  from  trading  goods  or  services  and,  by  law,  are 
prohibited from distributing profits. Profits are reinvested toward the continuation 
and  achievement  of  its  objectives.  Its  members  are  guarantors  who  agree 

Social enterprises and their ecosystems in Europe | Country report CYPRUSConcept, legal evolution and fiscal framework | 23

to  contribute  a  nominal  amount  in  the  event  that  the  company  is  wound  up. 
It should be highlighted that often companies by guarantee circumvent the non-
profit distribution constraint by paying excessively high salaries to their founders/
directors or by subcontracting other companies owned by their founders or directors.

b. A  company  limited  by  shares  that  pursues  a  social  aim  and  distributes  only  a 
limited share of its profits as decided by its shareholders. Although this typology 
is  not  envisaged  by  current  tax  laws,  it  is  regulated  as  any  other  conventional 
company limited by shares.

2.  Cooperative societies mainly serve the interests of their members in accordance with 
cooperative principles. They are market-oriented organisations managed through a 
democratic participatory process that permit a limited distribution of profits to their 
members. Cooperative society registration requirements are notably more complex 
when compared with those needed to register a conventional company.

A cooperative society can be registered in a sector where another cooperative does 
not already exist or operate and which does not have the same purpose of business 
activities.  Moreover,  a  feasibility  study  must  be  submitted  to  the  Cooperatives’ 
Commissioner  so  that  its  registration  application  can  be  examined.  At  least  half 
of the annual net profits of a cooperative society must be transferred to capital 
reserves. The distribution of remaining profits can be made after a decision is taken 
by the cooperative’s general assembly of members. At least 12 members who live 
in the same district need to be listed as founding members.

The  draft  law  on  social  enterprises  developed  in  2017  (see  section  2.2.)  makes 
explicit  reference  to  cooperatives,  stating  that  they  are  eligible  to  obtain  social 
enterprise status provided that they fulfil the envisaged criteria. Some cooperatives 
are expected to move from a mutual to a social orientation under the new law.

3.  Associations are formed by a minimum of 20 people who work in close collaboration 
to  achieve  a  shared  objective.  They  have  a  social  mission,  inclusive  governance 
and are prohibited from distributing profits to their members, founders, board of 
directors or officials that may arise from their activities. Instead, they can invest or 
use profits for the continuation and achievement of their objectives. However, very 
few generate more than 25% of their income from trading goods and services. In 
addition,  they  are  legally  prohibited  from  implementing  large  scale  commercial 
activities, even if the introduction of such activities could further support their social 
purpose. In essence, the law stipulates that associations may occasionally perform 
limited commercial activities (e.g., a bazaar, a paid event or an auction) but are not 
allowed to perform large scale commercial activities such as establishing production 
lines and factories. The legal framework for associations is not exhaustive on the 
above issue; therefore, in some instances, the legal situation for the commercial 
activities of these organisations is not completely clear.

Social enterprises and their ecosystems in Europe | Country report CYPRUS24 | Concept, legal evolution and fiscal framework

4.  Foundations  may  obtain  certain  property  (assets  and/or  funds)  to  promote 
they  can  be  charitable,  patrimonial  or  collective.  The 
their  purpose; 
founder  must  establish  a  fund,  which  acts  as  a  means  to  finance  itself. 
Clubs  were  a  fifth  type  of  legal  form  that  could  previously  operate  as  social 
enterprises. They had to include a minimum of 20 people with shared interests, 
mainly for the purposes of socialisation or entertainment. However, law 104(I)2017 
abolished clubs as a possible legal entity in Cyprus. Any club wishing to continue 
its operation must register as one of the four legal personalities listed above that 
are recognised in Cyprus. As a result, they are not further discussed in this analysis.  
According to the EU operational definition, private companies limited by guarantee, 
associations and cooperatives are the most likely typologies to qualify as social 
enterprises in Cyprus.

The table below summarises the fulfilment of the EU operational definition by legal 
type.

Table 1. Fulfilment of the EU operational definition by legal type

Legal types

Social dimension

Entrepreneurial /
economic dimension

Ownership/inclusive governance

Private companies 
by guarantee

Yes but often not 
clearly defined

Yes

Private companies 
by shares

Possible, but they 
are not required to 
pursue social aims

Cooperatives

Possible, but in 
principle they 
pursue the interest 
of their members

Yes

Yes

Associations

Yes

Possible

Foundations

Yes

Possible

Yes, distribution of profits/dividends is 
disallowed.

Inclusive governance is possible but not 
required.

Some private companies by shares decide not 
to distribute profits/dividends to owners.

Inclusive governance is possible but not 
required.

Yes, at least 50% of profits must be 
reinvested; the rest can be distributed to 
members.

Democratic decision-making process.

Yes, distribution of profits or dividends is 
disallowed.

Inclusive governance is possible but not 
required.

Yes, distribution of profits/dividends is 
disallowed.

Inclusive governance is possible but not 
required.

Social enterprises and their ecosystems in Europe | Country report CYPRUSConcept, legal evolution and fiscal framework | 25

2.2. Legal evolution

Cyprus does not have a distinct legal framework in place for social enterprises.

In December 2013 the President of the Republic of Cyprus announced a list of policies 
aimed  at  reducing  unemployment  and  social  exclusion.  Under  the  pillar  of  “social 
cohesion”, specific referrals and actions were identified regarding the social economy’s 
development that prioritised the creation of social enterprises (Press and Information 
Office  2013).  That  same  year,  the  European  Social  Fund  (ESF)  Unit  of  the  Ministry 
of  Labour,  Welfare  and  Social  Insurance  began  actively  participating  in  the  Social 
Entrepreneurship  Network,  an  international  group  that  included  the  ESF’s  managing 
authorities  and  social  enterprise  representatives  from  nine  EU  Member  countries 
and regions. The ministry’s involvement focused on gathering technical know-how of 
policy support for social enterprises in Europe and discussing their application within 
Cyprus. Its findings culminated in the organisation of a workshop on social economy 
and social entrepreneurship in Nicosia in May 2014, which was an eye-opener to many 
policymakers  and  industry  executives  on  the  island.  Participation  in  the  network  led 
to  increased  visibility  of  social  enterprises  within  relevant  ministerial  policymaking 
departments  and  provided  the  springboard  for  a  draft  social  enterprise  legal  and 
regulatory framework.

Cypriot authorities also developed a comprehensive reform agenda intended to create 
a new economic model in 2014. Beside this initiative, the Unit of Administrative Reform 
(UAR) and the Ministry of Energy, Trade, Industry and Tourism developed the Statement 
on  National  Policy  for  the  Development  of  the  Business  Ecosystem  in  Cyprus  (SNP), 
which was adopted in 2015. The paper outlines a comprehensive policy framework and 
targeted action plan for the integrated development of an entrepreneurial ecosystem 
in the country. Its resultant process is the first systematic approach to create a Cypriot 
entrepreneurial ecosystem with the right conditions to encourage successful business 
initiatives,  which  could  contribute  to  economic  growth.  A  number  of  different  pillars 
were announced, including the need to develop alternative forms of entrepreneurship, 
such as social entrepreneurship (MECIT and UAR 2015).

Efforts  to  boost  entrepreneurship  continued  the  following  year  when  actions  were 
intensified  at  a  policy  level  to  establish  a  social  enterprise  ecosystem.  The  UAR 
supported  the  necessary  preparation  of  a  draft  law  that  would  include  a  definition 
of  social  enterprise  and  the  creation  of  a  social  enterprise  registry  for  entities  that 
fulfil established criteria, irrespective of their legal form. The draft law is considered a 
fundamental step towards the differentiation of social enterprises from other business 
forms, along with the establishment of support measures that would help develop the 
sector and its long-term sustainability.

Social enterprises and their ecosystems in Europe | Country report CYPRUS26 | Concept, legal evolution and fiscal framework

The  government  recognised  the  importance  of  promoting  public  dialogue  and  the 
potential  contribution  of  citizens  and  decided  to  post  the  initial  draft  law  on  the 
presidency’s  web  site  and  launched  a  public  consultation  that  took  place  between 
March and May 2017. Following this consultation process, the draft law was approved 
by the Council of Ministers in January 2018 along with the NAP for social enterprises. 
At the time of writing, the draft law is still awaiting assignment to the relevant ministry 
before being sent to the relevant committee for discussion.

2.2.1. Main characteristics of the draft law

The current draft law’s main characteristics are displayed below, which may be subject 
to change before being approved and enacted.

Through  the  proposed  legal  document,  the  state  has  introduced  the  possibility  for 
enterprises  to  register  on  a  specialised  database,  which  is  currently  known  as  the 
Register  of  Social  Enterprises.  Organisations  will  be  entitled  to  register  if  they  have 
satisfied specific criteria, irrespective of their legal form. However, only explicit reference 
is  made  to  companies  and  cooperatives.  No  reference  is  made  to  associations  and 
foundations. According to article 3 of the draft law:

The purpose of this Law is to [allow] enterprises, with the exception of state-
owned enterprises, to register in the Register of Social Enterprises. Registration 
rights  in  the  Registry  will  have  registered  companies  under  the  Companies 
Law,  cooperative  societies  under  the  Cooperative  Societies  Law  and  other 
enterprises, regardless of their legal form, which are able to document to the 
competent  authority,  their  partners  and  their  clients,  that  they  are  intended 
to  have  a  positive  impact  on  society  and  meet  specific  transparency  and 
functioning criteria as defined in Article 5.

Article 4 specifically refers to companies and cooperatives as well as other legal entities:

Registered companies under the Companies Law, cooperative societies under 
the Cooperative Societies Law and other enterprises, irrespective of their legal 
personality,  which  cumulatively  meet  the  criteria  of  Article  5  are  defined  as 
social enterprises and may be registered in the Register of Social Enterprises, 
established under this Law.

Article  5  outlines  specific  criteria  that  must  be  fulfilled  by  legal  entities  in  order  to 
be awarded social enterprise status. Moreover, it classifies social enterprises into two 
types:

 > General purpose (GP) social enterprises are entities whose primary purpose is the 
achievement of a social mission through the promotion of positive social and/or 
environmental actions in the interest of society;

Social enterprises and their ecosystems in Europe | Country report CYPRUSConcept, legal evolution and fiscal framework | 27

 > Social  inclusion/integration  (SI)  social  enterprises  are  entities  whose  primary 
purpose  is  the  achievement  of  a  social  mission  with  a  workforce  at  least  40% 
composed of persons belonging to vulnerable groups of the population.

The main characteristics of a GP social enterprise are outlined below:

 > It provides services or goods on the basis of a business model; the firm is deemed 
to fulfil this condition if the majority of its revenue derives from a business activity.

 > It is registered in a public system/database for social enterprises.

 > It  invests  at  least  70%  of  generated  profits  to  promote  its  social  mission  and 
applies pre-defined procedures and rules regarding the distribution of remaining 
profits to members, shareholders and owners in order to ensures economic viability.

 > It  is  managed  in  an  entrepreneurial,  responsible  and  transparent  manner,  in 
particular with the participation of members and/or employees and/or customers 
and/or other interested parties affected by its business activities and is not a state 
business.

The main characteristics of a SI social enterprise are outlined below:

 > At  least  40%  of  its  workforce  is  composed  of  persons  belonging  to  vulnerable 

groups of the population (as determined from time to time by decree).

 > It provides services or goods on a business model basis; the entity is deemed to 
fulfil this condition if the majority of its revenue derives from a business activity.

 > It  is  managed  in  an  entrepreneurial,  responsible  and  transparent  manner,  in 
particular with the participation of members and/or employees and/or customers 
and/or other interested parties affected by its business activities and is not a state 
business.

Notably, the two above mentioned social enterprise typologies envisaged by the draft 
law are not new legal forms but a “status” or “qualification” that could be awarded to 
entities with different legal forms. In addition, the draft law prohibits the use of the term 
“social enterprise” by entities not registered in the Register of Social Enterprises, also 
stipulating that they would be fined up to 15,000 EUR if convicted.

Interestingly, the draft law also makes explicit reference to the eligibility of organisations 
registered  under  the  Companies  Law  and  the  Cooperative  Law  for  social  enterprise 
status provided that they satisfy specific criteria. Conversely, whether or not associations 
and foundations would be eligible for social enterprise status is unclear.

The following table compares the EU operational definition and criteria outlined in the 
forthcoming legislation.

Social enterprises and their ecosystems in Europe | Country report CYPRUS28 | Concept, legal evolution and fiscal framework

Table 2. Comparison between the EU and Cypriot definitions of social enterprise

Main 
dimension

Social 
dimension

Entrepreneurial/
economic 
dimension

Limited profit 
distribution

Europe

Cyprus - General purpose 
social enterprises (GP-SE)

Cyprus - Social integration 
social enterprises (SI-SE)

The social dimension is defined by 
the aim and/or products delivered.

Aim: SEs pursue the explicit social 
aim of serving the community 
or a specific group of people 
that shares a specific need. 
“Social” is intended in a broad 
sense to include the provision of 
cultural, health, educational and 
environmental services.

Product: When not specifically 
aimed at facilitating the social and 
work integration of disadvantaged 
people, SEs must deliver goods/
services that have a social 
connotation.

Primacy of social aim must be 
clearly established by national 
legislation, the status of SEs or 
other relevant documents.

SEs are engaged in carrying out 
stable and continuous economic 
activities and hence show the 
typical characteristics that are 
shared by all enterprises.

SEs must be market-oriented 
(incidence of trading should be 
ideally above 25%).

SEs explicitly limit the distribution 
of profits and have an asset 
lock. The non-profit distribution 
constraint is meant to ensure 
that the general-interest is 
safeguarded. The non-profit 
distribution constraint can be 
operationalised in different ways. 

The State’s philosophy emphasises 
“social benefit or mission” in 
relation to entrepreneurial 
character.

The draft law defines GP-SEs as 
entities whose primary purpose is 
their social mission through the 
promotion of positive social and/
or environmental actions in the 
interest of society.

In accordance with its constitutive 
and constitutional documents or 
other legal documents based on 
its establishment, the primary 
purpose/social mission of an SI-SE 
is at least the 40% employment 
of persons belonging to vulnerable 
groups of the population.

SI-SEs perform their operations 
based on sustainable business 
models and their income is 
generated from the sale of either 
services or goods.

The firm is considered to meet its 
specific condition if most of its 
revenue derives from business 
activity.

No reference to reinvestment of 
profits.

GP-SEs are set up adopting a 
sustainable business model. They 
provide services or goods and 
generate revenue as a result of 
business activity.

The forthcoming legislation defines 
predetermined procedures and 
rules for the distribution of profits 
to members, shareholders and 
owners in an effort to secure the 
financial sustainability of the 
enterprise. GP-SEs invest at least 
70% of their profits to promote 
their social mission and achieve 
their primary purpose.

Inclusive 
governance-
ownership 
dimension

To identify needs and involve 
stakeholders concerned in 
designing adequate solutions, 
SEs require specific ownership 
structures and governance models 
that are meant to enhance to 
various extents the participation 
of stakeholders affected by the 
enterprise.

It is managed in an entrepreneurial, responsible and transparent manner, 
especially with the participation of members and/or employees and/or 
customers and/or other stakeholders affected by its business activities 
and is not a state-owned enterprise.

In the event of dissolution, GP-SEs and SI-SEs must ensure that any 
assets are used to promote their social function and achieve their primary 
purpose through distribution to another social enterprise or other body 
promoting social and/or environmental purposes.

Social enterprises and their ecosystems in Europe | Country report CYPRUSConcept, legal evolution and fiscal framework | 29

2.3. Fiscal framework

No  specific  fiscal  incentives  currently  exist  for  de  facto  social  enterprises  in  Cyprus. 
Moreover, the government is apparently reluctant to introduce fiscal benefits even after 
the approval of the draft law to avoid the resistance of other competitive parties. The 
“still-in-progress” debate with stakeholders revolves around the possibility of applying 
a number of potential incentives:

 > A temporary, 3-year exemption of the annual 350 EUR company fee paid to the 
Registrar of Companies and Official Receiver for all enterprises registered in the 
Register of Social Enterprises;

 > Employment subsidies for enterprises that hire people who were previously reliant 
on public benefits, which could help introduce the new scheme to a larger section 
of the population and recruit people from vulnerable groups;

 > Adoption of tax incentives for natural persons investing in social enterprises. The 
NAP proposes a corresponding amendment in the Income Tax Law (effective from 
January 2017) that would grant a tax deduction to natural persons investing in 
innovative enterprises, either directly or through investment funds, equal to the 
amount of the investment made, limited to 50% of the taxable income. Furthermore, 
a discount cap of up to 150,000 EUR per year and the right to transfer the deduction 
for up to five years after its introduction has been suggested, which would function 
similarly for both social enterprise and innovative enterprise investors.

Social enterprises and their ecosystems in Europe | Country report CYPRUS3

MAPPING

As  no  legal  framework  is  yet  in  place  for  Cypriot  social  enterprises,  precise 
statistics  cannot  be  provided  regarding  their  size  and  the  sector’s  overall 
prominence. In addition, no documentation or up-to-date information regarding 
the  scope  and  range  of  activities  undertaken  by  associations,  foundations 
and companies by guarantee exist, which further hinders the identification of 
organisations whose social mission prevails over profit maximisation. Although 
only estimates can be provided at this time, Cypriot de facto social enterprises 
appear  to  be  active  within  personal  care  services,  education  and  training, 
the environment, animal protection and waste management. The prevalence 
of  social  enterprises  amongst  companies  limited  by  shares  also  cannot  be 
assessed due to a lack of public data.

Overall, the country’s social enterprise sector (excluding companies limited by 
shares) appears to be extremely small, consisting of about 190 entities.

32 | Mapping

3.1. Measuring social enterprises

As  no  legal  framework  is  yet  in  place  for  Cypriot  social  enterprises,  precise 
statistics cannot be provided regarding their size. Moreover, as the sector is at a 
very early developmental stage, no measurement efforts have been identified by the 
state, academia or experts in the field.

Given  the  lack  of  official  and/or  up-to-date  information  or  documentation  regarding 
the  economic  activities  of  associations,  foundations  and  companies  by  guarantee, 
and subsequent inability to measure the degree of prioritisation of social mission over 
the profit maximisation purpose of companies by shares, a rough estimate of the 
entities that can be considered de facto social enterprises has been performed 
using the following step-by-step procedure:

1.  All archives relevant to the legal types identified in section 2. have been identified 
and accessed to extract information about all of the organisations that might fulfil 
the EU definition of social enterprise (see footnotes 3–7).

2.  These archives only list organisation contact details and do not provide information 
that can be used to verify whether an organisation fulfils the EU definition’s criteria.

3.  Therefore, entities that do not perform economic activity by nature (e.g., professional 

unions) have been excluded.

4.  Remaining entities have been filtered based on their fields of activity. Information 
on their activity has been collected by analysing the names of organisations (which 
often enable the type of economic activity performed and/or modus operandi to be 
identified), performing internet searches and through direct contact. The following 
table illustrates the total number of active organisations and an estimate of the 
possible number of de facto social enterprises for each legal type.

Social enterprises and their ecosystems in Europe | Country report CYPRUSMapping | 33

Table 3. Estimated number of social enterprises by legal type in Cyprus as of 2017

Legal type

Total number

Number of SEs 
(estimate)

Notes

Companies limited by 
guarantee

377

100

This is a rough estimate of entities 
that are active, carry out an 
economic activity and genuinely 
meet the “non-profit distribution” 
requirement.

Companies limited by 
shares

217,588

N.A.

Estimation not possible.

Cooperatives

92

Associations

4,679

Foundations

388

20

50

20

Up to 20 cooperatives pursue social 
aims. 

It is estimated that around 10% of 
associations perform entrepreneurial 
activity based upon the information 
contained in the CSSDA. 

Estimate of foundations with 
economic activity.

Total

5,534

190

–

3.2. Social enterprise characteristics

Fields of activity

Organisations that can be considered de facto social enterprises in Cyprus are engaged 
in personal care services, education and training, environment, animal protection and 
waste management (i.e., reuse, recycling, recovery and disposal). Other legal entities 
also  implement  projects  that  have  the  potential  to  be  institutionalised  and  become 
social enterprises. Social enterprises could strengthen their development in fields where 
the state and conventional enterprises are less active due to either limited profitability, 
perceived difficulties or a small size of the market (Synthesis 2017).

Since the draft law refers to the eligibility of legal entities devoted to the social and 
work integration of vulnerable people for social enterprise status, it is expected that a 
number of social enterprises will be formed to integrate disadvantaged groups into the 
labour market.

Social enterprises and their ecosystems in Europe | Country report CYPRUS34 | Mapping

Labour characteristics

Overall, employment has been steadily growing in Cyprus since 2015 with a 
near  equal  balance  between  male  and  female  employment  rates  (52%  and 
48% in 2017, respectively).

Although no data are available on the scale of employment in Cypriot de facto social 
enterprises, data are available for social economy organisations. In 2014–2015 it was 
estimated that almost 7,000 people were employed in social economy organisations: 
3,906 were employed by associations and foundations, with the remaining employed 
in  the  cooperative  sector.3  Thus,  employment  in  the  social  economy  (associations, 
foundations and cooperatives) represents less than 2% of the country’s total workforce. 

(3)  https://www.eesc.europa.eu/sites/default/files/files/qe-04-17-875-en-n.pdf

Social enterprises and their ecosystems in Europe | Country report CYPRUS4

ECOSYSTEM

The  social  enterprise  ecosystem  in  Cyprus  involves  a  variety  of  key  actors, 
namely:  policymakers  (the  design  and  implementation  of  public  policies, 
support  instruments/measures  directed  at  social  enterprises  and  related 
infrastructures); a monitoring authority (the Ministry of the Labour, ESF Unit); 
higher education institutions; civil society organisations and research centres; 
and other institutions promoting social entrepreneurship education and training.

In addition to the above, co-working facilities for social enterprises also form 
part  of  the  country’s  developing  ecosystem,  as  do  organisations  that  can 
provide specialist business.

Although not specifically tailored to social enterprises, some support measures 
also  currently  exist  that  can  benefit  social  enterprises,  including  grants,  a 
Cyprus Entrepreneurship Fund, a facility for Advice for Small Business and 
the Restart 2016-2020 programme. Furthermore, the NAP envisages certain 
measures that will be tailored to social enterprises such as funding schemes, 
incubators and a favourable public procurement framework. Additionally, the 
sector has access to research, education and skills development.

36 | Ecosystem

4.1. Key actors

An  overview  of  the  main  actors  involved  in  Cyprus’  social  enterprise  ecosystem  is 
presented in table 4 below.

Table 4. Overview of key social enterprise ecosystem actors

Type of institution/Organisation 

Actor

Policymakers (design and 
implementation of public policies, 
support instruments/measures for 
SEs and related infrastructures)

 > Labour Department from the Ministry of Labour, Welfare 

and Social Insurance (MLWS)

 > European Social Fund Unit (part of MLWS)
 > Welfare Services Department (part of MLWS)
 > Ministry of Energy, Commerce, Industry and Tourism
 > Ministry of Education
 > Ministry of Finance
 > Ministry of Health
 > Treasury of the Republic, Department of Public 

Procurements

Monitoring

 > Ministry of the Labour, ESF Unit

Higher education

Civil society organisations, research 
centres and other institutions 
promoting social entrepreneurship 
education and training

 > Cyprus University of Technology
 > European University Cyprus
 > Frederick University
 > University of Nicosia
 > Cyprus International Institute of Management (CIIM)

 > Chamber of Commerce and Industry
 > NPO, Center for the Advancement of Research & 
Development in Educational Technology (CARDET)

 > Center for Social Innovation (CSI)
 > Synthesis Center
 > SEAL (NPO for competence development)
 > Youth Power
 > AKTI Project and Research Center

Co-working facilities for social 
enterprises

Hub Nicosia

Social enterprise networks

Cyprus Network of Social Entrepreneurship (informal network)

Organisations providing specialised 
business support for SEs

Although no specialised demand for business support for SEs 
is as yet required, organisations do exist that could provide 
the right structure

Financial intermediaries providing 
specialised services for SEs

Do not exist

Social enterprises and their ecosystems in Europe | Country report CYPRUSEcosystem | 37

Additional  key  actors  who  occasionally  express  their  views  and  contribute  to  the 
development  of  an  enabling  ecosystem  for  social  enterprises  are:  the  Pancyprian 
Volunteerism  Coordinative  Council  (PVCC);  the  Office  of  the  Commissioner  of 
Volunteerism; the Office of the Environment Commissioner; and commercial chambers, 
municipalities and other local authorities.

4.2. Policy schemes and support measures for social 

enterprises

No  publicly  funded  support  schemes  currently  exist  in  Cyprus  that  are  specifically 
designed for social enterprises. However, several other schemes and programmes are 
already in place that could be of benefit to social enterprises.

Support measures that specifically address social enterprises are envisaged in the NAP.

4.2.1. Support measures addressed to all enterprises that fulfil specific 

criteria (that may also benefit social enterprises)

Grants  to  strengthen  the  competitiveness  of  Small  and  Medium-sized 
Enterprises (SMEs) in the manufacturing sector (currently open)

The grants scheme supports, develops and promotes SMEs in the manufacturing 
sector  and  develops  specific  monetary  and  financial  instruments  that  favour  the 
expansion and modernisation of existing and/or the viable establishment of new SMEs.

Modernisation of units for the manufacturing and trading of agricultural and 
forestry products (Act 1.6 of the Program for the Development of Agriculture) 
(currently open)

The modernisation scheme provides incentives or investments to legal or physical 
persons or SMEs4 targeting the following fields of activity: a) the development of new 
products with high added value; b) the improvement of sanitary conditions that conform 
with necessary standards; c) the utilisation of agricultural and raw forestry material, 
and the improvement of the agricultural sector’s potential income; d) the promotion of 
traditional and biological products; and e) the protection of the environment.

(4)  As described by the recommendation of the EC Commission dated 6.5.2003/361/E.

Social enterprises and their ecosystems in Europe | Country report CYPRUS38 | Ecosystem

Cyprus Entrepreneurship Fund (CYPEF) (currently open)

The CYPEF facilitates access to finance for SMEs through the provision of financial 
risk-sharing products and loans with favourable financial terms. It is financed through 
a 70 EUR million loan provided by the European Investment Bank (EIB) to the Republic 
of  Cyprus  based  on  a  financial  agreement,  which  was  amended  in  May  2017.  This 
amount is supplemented by capital of an equal value from financial intermediaries/
commercial banks participating in the CYPEF programme, namely the Bank of Cyprus’ 
60 EUR million contribution and Ancoria Bank Ltd’s 10 EUR million contribution.

Advice for Small Businesses Facility (currently open)

In its attempts to strengthen SMEs, the Ministry of Energy, Commerce, Industry 
and  Tourism  (MECIT)  has  signed  an  agreement  with  the  European  Bank  for 
Reconstruction and Development (EBRD) to implement the Advice for Small 
Businesses  Facility  Programme in Cyprus, supported by the European Structural 
and Investment Funds (ESIF). The programme aims to improve the competitiveness 
of  SMEs  and  develop  their  know-how  in  Cyprus,  mainly  through  the  provision  of 
counselling and training.

4.2.2. Support measures addressed to social economy/non-profit 
organisations (that may also benefit social enterprises)

RESTART 2016-2020 Programme (Applications for Innovate, Pre-Seed and Seed 
are currently open)

All social enterprises, irrespective of their legal form, can submit proposals to 
the RESTART 2016–2020 Programme of the Research Promotion Foundation (RPF) 
for  Research,  Technological  Development,  and  Innovation.  The  RESTART  programme 
includes  a  dedicated  section  on  social  innovation  that  supports  the  development  of 
innovative ideas, products, services and technologies. It also encourages good practice 
models of organisation, governance and enhancement, the development of abilities and 
strategies for meeting societal challenges, and new relationships and collaborations 
between  social  partners  and  other  stakeholders.  The  first  call  for  proposals  was 
launched as a pilot in 2017 with a total budget of 600,000 EUR; selected projects are 
expected to begin at the end of 2019. An evaluation of its outcomes will be performed 
before any subsequent call for proposals.

Social enterprises and their ecosystems in Europe | Country report CYPRUSEcosystem | 39

4.2.3. Support measures specifically addressed to social enterprises

As previously mentioned, no public support schemes that explicitly or specifically target 
social enterprises currently exist in Cyprus. However, European Regional Development 
Fund (ERDF)/ESF support has been allocated to promote and develop the Cypriot 
social  enterprise  ecosystem  within  the  2014–2020  programming  period. 
Moreover, the NAP for social enterprise development includes the support measures 
listed below; however, details of the plan’s implementation and an eligibility framework 
have not yet been provided.

Funding (forthcoming)

The plan includes a grant for start-ups and existing social enterprises. Support, once 
initiated, will generally be offered up to 25,000 EUR. If the enterprise employs disabled 
people  or  people  from  vulnerable  groups,  an  additional  grant  will  be  available  as 
follows: 4,000–12,000 EUR per person for those with disabilities; and 3,000–12,000 
EUR  per  person  for  individuals  belonging  to  vulnerable  groups.  The  initiative  will 
support 80 social enterprises and cover various operational expenses. The Ministry of 
Labour, Welfare and Social Insurance / Department of Labour may also subsidise the 
employment of unemployed people for a specific period.

Support by Incubators (forthcoming)

From  2019  to  2021,  two  social  enterprise  incubators  will  support  social 
enterprise start-ups for a period of up to three years. After that period, enterprises 
will move to their own workspaces, as new entities replace them in the incubators. Newly 
established social enterprises supported by one of the two incubators will be offered 
the following services: the low rental cost provision of offices and workshops; financial 
mentoring  and  assistance;  secure  funding  sources;  business  development  services; 
consultation services and know-how; networking; and collaboration with universities.

Additional measures, which are subject to final decisions, may include:

a. a label and certification system, which will help social enterprises to distinguish 

themselves from other enterprises;

b. an electronic portal to inform the public and potential investors as well as new 
entrepreneurs  about  the  steps  for  creating  a  new  social  enterprise,  available 
funding sources and training opportunities;

c.  initial and advanced vocational and educational training for young and experienced 

social entrepreneurs to help them develop new ideas and social enterprises;

d. mentoring schemes.

Social enterprises and their ecosystems in Europe | Country report CYPRUS40 | Ecosystem

4.3. Public procurement framework

In  2016  Cyprus  incorporated  the  EU  directive  into  its  national  law  Public 
Procurement and Related Issues (73(Ι)2016), which is the basic legislation governing 
the  tender  procedure  for  public  contracts.  It  envisages  the  possibility  of  awarding 
reserved contracts to certain organisations operating in specific areas, after an executive 
decision by the Council of Ministers. More specifically, paragraph 7 denotes:

The  Council  of  Ministers  may  grant  exclusively,  rights  of  participation  to 
procedures  for  the  award  of  public  contracts  to  sheltered  employment 
programmes  and  organisations  whose  main  purpose  is  the  social  and 
occupational integration of persons with disabilities or disadvantaged persons 
or  to  award  the  implementation  of  contracts  from  sheltered  employment 
programmes or organisations, in the case of more than 30% of the employed 
persons being people with disabilities or from socially excluded groups.5

However, at the time of the writing, this relevant provision has not yet been utilised.

Given the current lack of knowledge regarding how public procurement contracts might 
be put to specific tender, it is anticipated that further action such as training may be 
required within the public sector and local government bodies.

4.4. Networks and mutual support mechanisms

Cyprus does not currently have a formally established network that coordinates efforts 
for the development of social enterprises. Although effort to set up an informal network 
of social entrepreneurs was initiated in 2010, no practical and/or systematic activity 
has yet been observed. However, the NAP includes provision to support the formation 
of such a network from 2018 to 2020.

(5)  Such tender should include an explicit referral to the above article.

Social enterprises and their ecosystems in Europe | Country report CYPRUSEcosystem | 41

4.5. Research, education and skills development

4.5.1. Universities and higher education institutions

Tertiary education has been activated to promote social entrepreneurship either as an 
independent area or as part of a wider entrepreneurship zone. Several universities 
and higher education institutions include courses on social entrepreneurship, 
especially within their study programmes for Business Administration. However, none 
of these programmes are specifically focused on social enterprises.

Cyprus  University  of  Technology  incorporates  an  Introduction  to  Social  Design, 
Innovation and Entrepreneurship course into its Management Bachelor Programme. 
The  course  informs  students  about  the  basic  theoretical  and  practical  aspects  of 
social  design,  innovation  and  entrepreneurship  through  an  interdisciplinary  and 
cooperative learning framework.6

Frederick  University  includes  an  elective  course  on  social  entrepreneurship  in  its 
Social Work Bachelor Programme, which familiarises students with techniques and 
social  intervention  strategies  for  creating  social  enterprises  at  local,  national  and 
European levels.7

University of Nicosia incorporates a course on social entrepreneurship in its Business 
Administration  Bachelor  Programme.  Emphasis  is  placed  on  analysing  theories  and 
tools related to social innovation, the social entrepreneurial spirit and characteristics, 
and developing social enterprises. In 2018, in collaboration with Synthesis Center, the 
university  developed  a  specialised  training  programme  for  social  enterprises  which 
applies  the  EMES/EU  definition  of  social  enterprise,  draft  law  and  NAP.  The  module 
is  part  of  the  Innovative  Vocational  Social  Entrepreneurial  Training  (INNOVENTER) 
programme developed by the Cyprus Chamber of Commerce and Industry and other 
European partners, which was launched in May 2019.8

Cyprus International Institute of Management (CIIM) focuses on developing sustainable 
value for society. Its Business Administration Bachelor Programme includes an elective 
module on social entrepreneurship.9

(6)  http://www.cut.ac.cy/studies/bachelor/bachelor-programmes/module-description/?languageId=1&

contentId=134410.

(7)  http://www.frederick.ac.cy/fu_documents/cips/4694.pdf.
(8)  https://www.unic.ac.cy/business-administration-entrepreneurship-and-innovation-bba-4-years-2/.
(9)  https://www.ciim.ac.cy/ciim_con/uploads/2016/09/CIIM-BBA.pdf.

Social enterprises and their ecosystems in Europe | Country report CYPRUS42 | Ecosystem

4.5.2. Research institutions and observatories

A  number  of  research  institutions,  mostly  affiliated  with  universities,  have  recently 
designed  and  implemented  a  number  of  research  initiatives  broadly  based  on 
entrepreneurship. Specific topics such as social entrepreneurship, social innovation and 
public policies are incorporated. However, due to a significant lack of data on social 
enterprises, social entrepreneurship has not yet been their primary focus.

Synthesis  Center  for  Research  and  Education  Ltd.  promotes  Cyprus’  social 
entrepreneurship  and  social  innovation  sectors.  It  was  the  country’s  first  institute  of 
this  nature,  which  has  been  organising  European  conferences  and  training  events 
since 2010. In 2012 the organisation piloted a self-financed, work integration scheme 
“Garden of the Worlds” focused on the training and employment of vulnerable people. 
In  2015  it  established  Hub  Nicosia  with  the  vision  of  providing  a  social  innovation 
incubator.10 Since 2013 it has offered consultation to various government departments 
on the country’s social enterprise ecosystem’s development. Its recommendations for 
the creation of a Registry of Social Enterprises and the development of a dual typology 
of social enterprises (GP and SI) have been adopted.

The Centre for Entrepreneurship (C4E) is a research and training centre at the University 
of  Cyprus.  It  provides  training  and  education  that  develops  an  entrepreneurial 
culture  within  the  academic  community  for  students,  young  researchers,  academics, 
administrative  staff  and  graduates.  The  C4E  promotes  educational  activities  at 
undergraduate  and  graduate  levels,  and  facilitates  interdepartmental  audiences 
through courses and empirical exercise workshops with teams of students from different 
disciplines  on  relevant  topics  to  start-ups,  entrepreneurship,  social  entrepreneurship 
and intrapreneurship (business entrepreneurship).11

The  European  University  Cyprus  Performance  Enterprise  Accelerator  and  Knowledge 
Innovation  Center  (EUC-PEAK)  is  a  research  centre  affiliated  with  the  European 
University of Cyprus. It researches, supports and accelerates entrepreneurship, business 
innovation  and  knowledge  transfer  in  Cyprus  and  nearby  countries.  The  centre  also 
acts  as  a  facilitator  of  change  and  a  partner  in  aiding  knowledge  transfer  between 
the  academic  community  and  local  and  regional  businesses.  It  envisions  becoming 
a  hub  for  the  research,  applications  and  education  of  Cypriot  start-up  companies, 
SMEs, the industrial and manufacturing community, social entrepreneurship and green 
entrepreneurship, stakeholders and public authorities.12

AKTI  Project  and  Research  Center  is  a  non-governmental,  non-profit  organisation 
(NPO)  based  in  Nicosia,  Cyprus.  It  was  established  in  2000  by  a  group  of  experts 

(10)  https://www.synthesis-center.org/.
(11)  https://www.c4e.org.cy/index.php.
(12)  https://www.euc.ac.cy/en/school-of-business-administration/research.

Social enterprises and their ecosystems in Europe | Country report CYPRUSEcosystem | 43

on  environmental  issues  and  has  succeeded  in  creating  an  extensive  network  of 
collaborators  and  volunteers  for  raising  environmental  awareness  and  promoting 
sustainable development. It runs “Tiganokinisi,” a social entrepreneurship activity, which 
collects used cooking oils and transforms it into biodiesel. The programme’s revenues 
provide resources for environmental education actions and support for environmental 
infrastructure for schools and students throughout Cyprus.13

4.5.3. Incubators/co-working spaces

 > Hub  Nicosia  is  a  co-working  and  educational  centre.  Its  vision  is  to  eventually 
become a social enterprise incubator and focal point for social entrepreneurship 
on the island. It currently offers co-working facilities to social enterprises, NGOs 
and freelancers.14

 > Future  Worlds  Center  (FWC)  is  an  innovative  NPO  for  social  entrepreneurs, 
which  aspires  to  harness  the  power  of  emerging  technologies  and  the  science 
of structured democratic dialogue to accelerate positive social change. As FWC 
mission statement indicates, “FWC is an incubator of social entrepreneurs designing 
humane and sustainable futures.”15

 > The  Centre  for  Entrepreneurial  Development,  Alliance  and  Research  (CEDAR)  is 
an  initiative  led  by  the  University  of  Central  Lancashire  in  Cyprus  (UCLan).  It  is 
the first interdisciplinary and pioneering not-for-profit centre for entrepreneurship 
in Cyprus. Its mission is to act as a catalyst for entrepreneurial development by 
building  synergies  between  different  areas  of  expertise  in  education,  training, 
research,  outreach  and  policy.  It  builds  cooperation  with  the  entrepreneurial 
economy of Cyprus and beyond. Panorama of Social Enterprise and Ideodromio 
are two of CEDAR’s various entrepreneurship initiatives. The first aims to showcase 
programmes and schemes operating in Cyprus and Europe geared to support social 
entrepreneurship and its impact in modern societies. And the latter aims to embed 
entrepreneurial spirit in young aspiring students (see below for more details).16

 > The  Interdisciplinary  Centre  for  Law,  Alternative  and  Innovative  Methods 
(ICLAIM)  is  an  interdisciplinary  not-for-profit  centre,  which  closely  works  with 
UCLan  Cyprus  on,  amongst  other  things,  responsible  research,  innovation  and 
enterprise  in  the  aforementioned  fields  through  educational  training,  vocational 
training,  engagement  with  the  legal  profession,  industry  and  the  public,  social 
entrepreneurship and services to the community.17

(13)  http://www.akti.org.cy/portfolio/tiganokinisi/.
(14)  http://www.hubnicosia.org/.
(15)  http://www.futureworldscenter.org/.
(16)  https://www.uclancyprus.ac.cy/wp-content/uploads/2018/06/Prospectus2018-2019.pdf.
(17)  Ibid.

Social enterprises and their ecosystems in Europe | Country report CYPRUS44 | Ecosystem

 > The  Center  for  the  Advancement  of  Research  &  Development  in  Educational 
Technology  (CARDET)  is  an  independent,  non-profit,  non-governmental  research 
and development organisation. Besides a training and education centre, CARDET 
contributes to the development of numerous innovative ideas and start-ups. One 
of  its  main  objectives  is  to  inspire  innovation,  entrepreneurship,  leadership  and 
social  change.  CARDET  has  also  recently  implemented  a  number  of  European 
projects in the social entrepreneurship sector.18

4.5.4. Prizes and awards

Digital  Championship  is  a  competition  that  has  been  operational  in  Cyprus  since 
2013. The competition is co-organised by Stelios Himonas, himself a Cyprus Digital 
Champion, the Ministry of Education and Culture, the Research Promotion Foundation, 
the Ministry of Energy, Commerce, Industry and Tourism, and the Representation of 
the European Commission in Cyprus. A special award is presented to the best social 
entrepreneurship proposal.

The Ideodromio competition was first held in 2017–2018. It is organised by the Cyprus 
Pedagogical Institute in cooperation with the Departments of Secondary General and 
Secondary Technical and Vocational Education, the CEDAR Entrepreneurship Center and 
UCLan. Ideodromio promotes student entrepreneurship through the creative, innovative 
thinking  and  skills  development  of  secondary  school  pupils  in  Cypriot  high  schools, 
lyceums and technical schools. Actions such as training sessions, a workshop and an 
additional competition on Concept Creativity, Innovation and Ideas are presented within 
the  programme’s  framework.  Two  prizes  are  given  for  the  best  business  ideas,  the 
Innovative Business Idea Award and the Prize for Social and Green Entrepreneurship. 

In 2016–2017 the Centre for Entrepreneurial Development and the Alliance Research 
(CEDAR)  in  cooperation  with  UCLan  Cyprus  launched  the  Business  Idea  Competition, 
which included a social enterprising award.

4.5.5. Knowledge exchange and facilitation

Cypriot organisations initiate or participate in a number of European projects funded by 
the EU (Erasmus, Interreg, and others), which promote knowledge exchange, develop 
capacity  building,  and  enhance  the  sustainability  of  social  enterprises  with  positive 
results. Such examples include:

(18)  https://www.cardet.org/who-we-are/about.

Social enterprises and their ecosystems in Europe | Country report CYPRUSEcosystem | 45

 > INNOVENTER run by the Cyprus Chamber of Commerce and Industry (CCCI) in Cyprus. 
The programme establishes vocationally oriented social entrepreneurship training 
for SMEs so that they can innovate themselves, whilst engaging disadvantaged 
people as employees.19

 > The  MYNNOVA  project  which  offers  young  social  innovators  and  entrepreneurs 
flexible and freely accessible mentoring support. The service is provided by specially 
trained  youth  workers,  other  entrepreneurs  and  experienced  professionals  who 
are happy to share their time and knowledge. The platform also provides access 
to  information  on  the  state  of  the  art  for  social  entrepreneurship  in  all  of  the 
project’s partner countries (Bulgaria, Cyprus, Germany, Romania and Slovenia) and 
examples of existing inspirational social entrepreneurial practices.20

 > Social Entrepreneurship Support Europe which aims to improve the entrepreneurial 
competence within human resources departments of social enterprises, increase the 
knowledge and skills necessary to establish and manage social entrepreneurship 
entities and delivery tools for entrepreneurial competences development.21

 > WomenPRO  which  aims  to  enhance  and  promote  a  social  entrepreneurial  spirit 
among young women living in rural and remote areas of Cyprus, amongst other 
countries, by raising awareness and providing them with an integral training course 
tailored to their specific needs.22

4.6. Financing

As Cyprus’ social enterprise sector is at an embryonic developmental stage, no data 
is available that permits analysis of the financial demands de facto social enterprises 
may  have  for  operational  costs  or  investments.  Due  to  their  lack  of  recognition  as 
a  separate  legal  entity  and  absence  of  an  appropriate  legislative  framework,  social 
enterprises cannot access business support services provided by the general finance/
banking  system.  Banks  are  reluctant  to  offer  products  and  services  to  enterprises  if 
they cannot effectively assess their compliance and any financial risk; schemes with 
preferential  interest  rates  that  are  offered  to  SMEs  as  recognised  entities  are  not 
available to social enterprises, which is one of the major hurdles in their development. 
Social entrepreneurs commonly provide personal collateral to overcome this difficulty 
in securing loans (Isaias and Kaufmann 2011).

(19)  https://innoventer.eu/.
(20)  https://euromentor.eu/.
(21)  https://www.ses-project.eu/en/.
(22)  https://www.eurosc.eu/en.

Social enterprises and their ecosystems in Europe | Country report CYPRUS46 | Ecosystem

No specialised financial instrument currently exists for Cypriot social enterprises. As the 
majority of banks are not fully aware of the social enterprise concept and role, they 
have  not  developed  any  specific  financial  support  schemes  for  the  sector.  The  NAP 
includes the following support measures to assist the access of social enterprises to 
financing, which are expected to be implemented in 2019:

 > The establishment of a start-up funding scheme—priority access to micro-loans 
up to a maximum of 25,000 EUR with a favourable interest rate will be given to 
legal entities that have completed two years of operation. The indicative budget 
for this action is 500,000 EUR, of which 50% will come from the state and the 
remaining 50% from European initiatives or the credit institution’s funds.

 > The sponsorship of a study to identify financial instruments available at an EU level 
(through the European Investment Bank Group and/or competitive programmes) 
that  can  be  employed  to  support  social  enterprises  and/or  channelled  through 
intermediary financial institutions.

 > A study on the use of alternative financial instruments (e.g., social entrepreneurship 

bonds, equity funds and social impact bonds).

Social enterprises and their ecosystems in Europe | Country report CYPRUS5

PERSPECTIVES

The development of a sustainable Cypriot social enterprise ecosystem largely 
depends  on  its  comprehensive  legal  framework  being  established  and  all 
of  the  NAP’s  initiatives  being  subsequently  implemented.  Currently,  only  a 
limited  number  of  stakeholders  are  active  in  the  sector’s  development  and 
ongoing  disparity  exists  between  their  views:  one  group  considers  social 
enterprises as conventional enterprises with institutionalised, corporate social 
responsibility  and  another  prioritises  social  aims  over  profit  maximisation, 
clearly distinguishing social enterprises from conventional enterprises.

Prominent  factors  that  constrain  the  sector’s  development  include:  the  lack 
of  a  legal  framework;  low-level  public  awareness  and  understanding;  the 
inconsistent  application  of  policies  by  competent  governmental  units  and 
trained personnel; and conventional enterprises contrary to the emergence of 
a strong social enterprise ecosystem.

Nonetheless, the Cypriot social enterprise sector is in evolution and will likely 
gain further momentum once the legal framework has been established.

48 | Perspectives

5.1. Overview of the social enterprise debate at the 

national level

Despite steps being made towards greater recognition and sectorial development in 
Cyprus, social enterprises still face significant challenges. Although the government is 
developing a specific legal framework and NAP for the sector, serious and prolonged 
delays continue to impede their implementation. The promise of a sustainable social 
enterprise ecosystem is hindered as a result. For instance, the original 6 EUR million, 
which was announced as support for social enterprises start-ups in 2013, was reduced 
to 3.1 EUR million in the 2018 approved NAP.

The  lack  of  a  national  network  that  could  discuss  and  agree  coordinated  actions  to 
potentially influence policymakers, the scarcity of resources, an increasingly competitive 
environment  and  recent  economic  recession  do  not  allow  social  enterprises  to  drive 
public debate or actively lobby for their sector’s development.

Moreover,  the  conceptual  and  operational  shift  of  philanthropic  entities  integrating 
commercial activities into their provision to improve their financial sustainability is not 
interpreted positively by conventional enterprises.

The current debate is led by a small number of stakeholders and people committed to 
the sector’s development. However, even these discussions only happen sporadically 
within  the  broad  framework  of  conferences  and  are  not  driven  by  social  enterprises 
themselves.  The  ongoing  discussion  is  focused  and  limited  to  the  nature  of  social 
enterprises  and  their  legal  recognition  as  well  as  governmental  support  for  social 
enterprise development. Within the framework of the above discussions, the observation 
that  NPOs  often  pay  excessive  salaries  to  their  directors  or  founders  was  upheld  by 
stakeholders,  who  suggested  a  limit  should  be  established  between  low  and  high 
salaries in a ratio ranging from 1:4 to 1:7.

Different  opinions  were  expressed  in  relation  to  the  operational  approach  of  social 
enterprises. Some stakeholders, who perceive social enterprises as conventional 
enterprises with institutionalised corporate social responsibility (CSR) activities, 
advocate  for  the  “commercial/business”  aspect  of  social  enterprises.  In  their 
opinion,  social  enterprises  should  prioritise  the  entrepreneurial  dimension  over  the 
social dimension. Those advocating this view fear that too many legal constraints could 
hamper the sector’s development.

Conversely, other stakeholders emphasise the need to prioritise the social aim over profit 
maximisation with a view to clearly distinguishing social enterprises from conventional 
enterprises.  According  to  their  perspective,  social  enterprises  should  generate  social 
impact  and  economic  activities  should  only  be  instrumental  in  pursuing  their  social 

Social enterprises and their ecosystems in Europe | Country report GREECEPerspectives | 49

aim.  Whether  proponents  of  commercially  or  socially  focused  entities,  neither  group 
of  stakeholders  referred  to  the  democratic  governance  of  social  enterprises  nor  the 
provision of an asset lock framework.

5.2. Constraining factors and opportunities

Individuals who attempt to set-up social enterprises face several challenges. A survey 
was  carried  out  within  the  framework  of  this  report  with  experts,  practitioners  and 
policymakers  to  reflect  on  current  conditions  and  initiate  discussion  on  practical 
solutions  for  further  development  of  the  area.  One  key  conclusion  drawn  from  this 
survey identifies the state as a catalyst for the sector’s development. The success or 
failure of the development of a social enterprise-biased ecosystem is placed on the 
government and its forthcoming legislation in particular.

Opinion  suggests  that  a  key  constraining  factor  is  the  lack  of  public  understanding 
or  awareness  of  what  a  social  enterprise  is  and  how  it  can  contribute  to  societal 
wellbeing. Moreover, respondents indicated that existing social enterprises types are 
not  equally  recognised.  The  lack  of  a  specific  legal  framework  is  perceived  as  an 
additional  constraining  factor.  Indeed,  a  specific  regulatory  framework  is  considered 
the  main  way  to  facilitate  the  development  of  social  enterprises.  The  absence  of 
funding and specialised support are regarded as additional barriers to social enterprise 
development.

At a policy level, the lack of both a specific governmental unit that can implement social 
enterprise policies and trained public officials on procurement laws are considered 
to slow down the emergence of a supportive ecosystem. Conventional enterprises 
can also delay this emergence, especially the facilitation of social enterprise access 
to  public  procurement;  the  commercial  sector  has  the  lobbying  power  to  impede 
implementation, inhibiting social enterprise development and sustainability.

Stakeholders consider that social enterprises should be fundamentally home-
grown,  like  all  early-stage  investment  activity.  On  the  one  hand,  the  new  social 
enterprise status, as envisaged in the draft law, is considered a potentially imbalanced 
system  that  may  unintentionally  favour  well-educated  entrepreneurs  over  aspiring 
social  entrepreneurs.  The  former  group’s  capacity  to  submit  innovative,  well-written 
proposals from within a strong network is perceived as a possible threat to those who 
have less experience and networking skills. It is feared that established entrepreneurs 
will command the new situation and dominate funding opportunities. On the other hand, 
well-educated entrepreneurs could play a crucial role in modifying and accelerating an 
acceptance of social enterprises and the sector’s related legal framework.

Social enterprises and their ecosystems in Europe | Country report CYPRUS50 | Perspectives

Furthermore, light was shed on the need to promote educational programmes 
on social entrepreneurship and a range of training sessions and capacity building 
development  programmes  tailored  to  social  enterprises.  Current  training  schemes, 
which may seem abundant, focus more on general entrepreneurship and do not address 
the specific needs of social enterprises.

A  network  that  could  promote  the  common  interests  of  social  enterprises  and  lead 
public discourse is considered important. Similarly, funding and measures that could 
increase  the  competitiveness  of  social  enterprises  are  deemed  essential  for 
their viability and sustainability.

The absence of research and data on Cypriot social enterprises has also been 
identified as a limiting factor.

But an opportunity to resolve many of these issues is within sight as measures have 
already been proposed that would address most of them in the NAP and draft law.

5.3. Trends and future challenges

The following key observations may affect the sector’s development and/or the direction 
it takes in Cyprus:

 > The  term  “social  enterprise”  is  generally  unknown and rarely used in the 

country.

 > In  the  Greek  language,  a  single  word  is  used  for  both  “enterprise”  and 
“business”—  επιχείρηση.  Therefore,  the  language  cannot  distinguish  between 
the terms “social enterprise” and “social business”. Similarly, no distinction exists 
between the terms “non-profit” and “not-for-profit” in the Greek language. 

 > The  term  “enterprise”  is  not  perceived  positively  in  Cypriot  society. 
Previous studies (e.g., Eurobarometer 2008) show a negative perception towards 
entrepreneurs  and  entrepreneurship  in  general;  thus,  many  people  would  like 
to  avoid  labelling  their  activities  as  social  enterprises  and  prefer  to  place  their 
activities under the “non-profit” label.

 > Social enterprises in the form of associations and foundations prefer to use the 
informal label of “non-profit organisation” to promote their activities and often do 
not refer to themselves as social enterprises. Indeed, the term “social enterprise” is 
rarely used in their communication with the public. The term “non-profit” (or “not-
for-profit”) is closely associated with volunteering and equated with philanthropy; 
therefore, “non-profit” is capable of generating more empathy from Cypriot society 
than the term “social enterprise”. Associations and foundations occasionally identify 

Social enterprises and their ecosystems in Europe | Country report GREECEPerspectives | 51

themselves as social enterprises. This happens sporadically when they wish to be 
included within the framework of European projects under the general theme of 
social entrepreneurship. However, when it comes to direct, public visibility, these 
entities prefer to identify themselves as NPOs rather than as social enterprises.

 > Cooperative managers often advocate that cooperatives are social enterprises.

 > Conventional  enterprises  engaged  in  social  service  provision  or  education  and 
training  activities,  especially  for  disadvantaged  groups,  sometimes  identify 
themselves as “social enterprises” or “social companies”.

The Cypriot social enterprise sector is in evolution. Its trend towards socially-oriented 
businesses will likely gain further momentum over the next decade. Businesses that 
combine social or environmental goals, an economic activity and transparency criteria 
are expected to become the “social businesses of tomorrow” and fill the gap or absence 
of  today’s  social  enterprise  sector,  particularly  if  the  government  does  not  actively 
engage in the sector’s development.23

(23)  Several EU funded projects that present social enterprises as conventional companies with an 
increased  component  of  social  responsibility,  especially  those  focusing  on  young  people,  vulnerable 
groups or SMEs (such as those mentioned in section 4.5.5.), contradict the EU operational definition of 
social enterprise. An example of one such project is the Innoventer which also promotes profit-making 
ventures as social enterprises.

Social enterprises and their ecosystems in Europe | Country report CYPRUS6

APPENDICES

Appendix 1. The EU operational definition of social enterprise

The following table represents an attempt to operationalise the definition of “social enterprises” based on the Social Business Initiative (SBI) promoted by 
the European Commission.24

Appendices | 53

Initial minimum 
requirements 
(yes or no)

SEs must be 
market-oriented 
(incidence of trading 
should be ideally 
above 25%).

Examples/boundary cases 
comments

 > We suggest that attention is paid 
to the development dynamic of 
SEs (i.e., SEs at an embryonic 
stage of development may rely 
only on volunteers and mainly 
on grants).

Main 
dimension

Entrepreneurial/
economic 
dimension

General definition

Social enterprises (SEs) are 
engaged in the carrying out 
of stable and continuous 
economic activities, and 
hence show the typical 
characteristics that are 
shared by all enterprises.

Relevant Indicators (not exhaustive list)
(yes/no or range from low up to very high)

 > Whether the organisation is or is not incorporated (it 

is included in specific registers).

 > Whether the organisation is or is not autonomous 
(it is or is not controlled by public authorities or 
other for-profit/non-profits) and the degree of such 
autonomy (total or partial).

 > Whether members/owners contribute with risk capital 
(how much) and whether the enterprise relies on paid 
workers.

 > Whether there is an established procedure in case of 

SE bankruptcy.

 > Incidence of income generated by private demand, 
public contracting and grants (incidence over total 
sources of income).

 > Whether and to what extent SEs contribute to 

delivering new products and/or services that are not 
delivered by any other provider.

 > Whether and to what extent SEs contribute to 

developing new processes for producing or delivering 
products and/or services.

(24)  In accordance with Articles 48, 81 and 82 of the Treaty, as interpreted by the Court of Justice of the European Communities, “an enterprise should be considered to be any 
entity, regardless of its legal form, engaged in economic activities, including in particular entities engaged in a craft activity and other activities on an individual or 
family basis, partnerships or associations regularly engaged in economic activities.”

Social enterprises and their ecosystems in Europe | Country report CYPRUS54 | Appendices

Main 
dimension

Social 
dimension
(social aim)

General definition

Relevant Indicators (not exhaustive list)
(yes/no or range from low up to very high)

The social dimension is defined 
by the aim and/or products 
delivered. 

 > Whether the explicit social aim is defined at 

statutory/legal level or voluntarily by the SE’s 
members.

 > Whether the product/activity carried out by the SE 
is aimed at promoting the substantial recognition 
of rights enshrined in the national legislation/
constitutions.

 > Whether SE's action has induced changes in 

legislation.

 > Whether the product delivered—while not contributing 

to fulfilling fundamental rights—contributes to 
improving societal wellbeing.

Aim: SEs pursue the explicit 
social aim of serving the 
community or a specific 
group of people that shares a 
specific need. "Social" shall be 
intended in a broad sense so 
as to include the provision of 
cultural, health, educational 
and environmental services. 
By promoting the general-
interest, SEs overcome the 
traditional owner-orientation 
that typically distinguishes 
traditional cooperatives. 

Product: when not specifically 
aimed at facilitating social 
and work integration of 
disadvantaged people, SEs 
must deliver goods/services 
that have a social connotation.

Initial minimum 
requirements 
(yes or no)

Primacy of social 
aim must be clearly 
established by 
national legislations, 
by the statutes 
of SEs or other 
relevant documents.

Examples/boundary cases 
comments

 > The goods/services to be 

supplied may include social and 
community services, services for 
the poor, environmental services 
up to public utilities depending 
on the specific needs emerging 
at the local level.

 > In EU-15 countries (especially 

in Italy, France and the UK) SEs 
have been traditionally engaged 
in the provision of welfare 
services; in new Member States, 
SEs have proved to play a key 
role in the provision of a much 
wider set of general-interest 
services (e.g., from educational 
services to the supply of water).

 > What is conceived to be of 

a meritorial/general-interest 
nature depends on contextual 
specificities. Each national expert 
should provide a definition of 
what "public benefit" means in 
her/his country.

Social enterprises and their ecosystems in Europe | Country report CYPRUSAppendices | 55

Main 
dimension

Inclusive 
governance-
ownership 
dimension 
(social means)

General definition

Relevant Indicators (not exhaustive list)
(yes/no or range from low up to very high)

Initial minimum 
requirements 
(yes or no)

Examples/boundary cases 
comments

To identify needs and involve 
the stakeholders concerned in 
designing adequate solutions, 
SEs require specific ownership 
structures and governance 
models that are meant to 
enhance to various extents the 
participation of stakeholders 
affected by the enterprise. SEs 
explicitly limit the distribution 
of profits and have an asset 
lock The non-profit distribution 
constraint is meant to ensure 
that the general-interest is 
safeguarded. The non-profit 
distribution constraint can be 
operationalized in different 
ways.

 > Whether SEs are open to the participation and/or 

involvement of new stakeholders.

 > Whether SEs are required by law or do adopt (in 
practice) decision-making processes that allow 
for a well-balanced representation of the various 
interests at play (if yes, through formal membership 
or informal channels that give voice to users and 
workers in special committees).

 > Whether a multi-stakeholder ownership structure is 

imposed by law (e.g., France).

 > Whether SEs are required to adopt social accounting 
procedures by law or they do it in practice without 
being obliged to.

 > Degree of social embeddedness (awareness of the 

local population of the key societal role played by the 
SE versus isolation of the SE).

 > Whether the non-profit distribution constraint is 
applied to owners or to stakeholders other than 
owners (workers and users): whether it is short-term 
(profits cannot/are not distributed or they are capped) 
or long-term (asset lock); or both short and long-term.

 > Whether the cap is regulated externally (by law or 
defined by a regulator) or it is defined by the SE by-
laws.

 > Whether limitations to workers’ and/or managers’ 
remunerations are also imposed (avoid indirect 
distribution of profits).

SEs must ensure 
that the interests 
of relevant stake-
holders are duly 
represented in 
the decision-
making processes 
implemented.

 > Ownership rights and control 
power can be assigned to one 
single category of stakeholders 
(users, workers or donors) or to 
more than one category at a 
time—hence giving ground to 
a multi-stakeholder ownership 
asset.

 > SE can be the result of collective 
dynamics or be created by a 
charismatic leader (in principle 
a sole owner is admitted by 
some national legislations 
provided that the participation of 
stakeholders is enhanced through 
inclusive governance) or public 
agency.

 > Different combinations 

concerning limitations to profit 
distribution envisaged (e.g., most 
successful solution: capped 
dividends supported by total 
asset lock such as Italian social 
coops, CIC, SCICs).

Social enterprises and their ecosystems in Europe | Country report CYPRUS56 | Appendices

Appendix 2. Data availability report

Legal typology

Source of data
(name, type & link)

Data provider
(name & type)

Year of reference 
timeline of 
updates

N° of 
organisations

N° of workers

Turnover

Register Σωματεια

Associations and

foundations

Administrative register

Cyprus Ministry of Interior

Government institution

2018

Yearly

Cooperatives

Co-operative Companies 
Service

Statistical register & 
research project

Cyprus National Opendata 
Portal

Government institution

2018

Yearly

List of Organisations

Statistical register

Private companies 
limited by 
guarantee

Cyprus National Opendata 
Portal

Government institution

2018

Monthly

Private companies 
limited by shares

Company Statistics

Statistical register

Department of Registrar 
of Companies and Official 
Receiver

Government institution

2018

Yearly

-

-

-

-

N.A.

N.A.

N.A.

N.A.

N.A.

N.A.

N.A.

N.A.

Degree of reliability (1 to 4) and 
explanation

1 - No data exist that would allow a 
statistical estimation of the number 
of SEs. An independent estimate 
has been performed using the 
total number of associations and 
foundations provided by the register.

1 - No data exist that would allow a 
statistical estimation of the number 
of SEs. An independent estimate 
has been performed using the total 
number of cooperatives provided by 
the register.

1 - No data exist that would allow a 
statistical estimation of the number 
of SEs. An independent estimate 
has been performed using the total 
number of private companies by 
guarantee provided by the register.

N.A - No data exist to ascertain the 
number of SEs from this typology 
(estimation not possible).

Social enterprises and their ecosystems in Europe | Country report CYPRUSSocial enterprises and their ecosystems in Europe | Country report CYPRUS

Appendices | 57

Appendix 3. Exploratory case studies

Exploratory case 1
PASYKAF

The Pancyprian Association of Cancer Patients and Friends (ΠΑΣΥΚΑΦ)25 was founded 
in  1986  by  volunteers  and  ex-cancer  patients  to  provide  support  services  to  cancer 
patients and raise public awareness on related matters. The association’s initial scope 
has since been expanded to include additional support services, including home care 
for cancer patients, socio-psychological support services and free transportation to and 
from medical centres. All of the above services are provided for free and are funded by 
donations and charity events.

In 2013 PASYKAF launched a clothing recycling programme. The idea was initiated for 
two reasons: 1) the association needed to generate a source of income; and 2) clothing 
and shoes unsold in stores or used and no longer wanted are known to create waste 
that can be minimised. The pilot phase was successful. Over the years, the amount 
of  donated  items  kept  growing,  which  created  the  need  for  a  second  phase—the 
association decided to invest in recycling. As a result, PASYKAF now collaborates with 
a foreign company and, under its guidance, operates a clothing recycling programme. 
The programme was piloted in 2013 with 30 recycling bins; as of 2018, approximately 
400  recycling  bins  were  located  across  Cyprus,  showcasing  the  amazing  growth  of 
PASYKAF’s recycling initiative.

PASYKAF’s  recycling  process  begins  with  weekly  clothing  collections  performed  by 
paid  truck  drivers.  The  clothing  is  then  transferred  to  PASYKAF’s  warehouse  where 
paid employees and volunteers sort the clothing into different categories. Some of 
the  clothes  are  either  donated  to  the  families  of  cancer  patients  in  need  or  sold 
at  low  prices  in  the  association’s  charity  shops.  The  remaining  items  are  exported 
abroad for recycling.

All of the income generated from PASYKAF’s economic activities is used for funding 
free services for cancer patients. From 2013 to May 2018, PASYKAF collected, sorted, 
donated  and  exported  3,238  tons  of  clothing.  This  level  of  revenue  translates  as 
substantial income that partly funds PASYKAF’s Post-Treatment Support Center in the 
village of Moniatis. Although PASYKAF receives a small public grant every year, ongoing 
donations to its charity shops and clothing recycling programme provide vital support.

The association is governed by a management team, which includes district directors 
(in  Nicosia,  Limassol  and  Larnaca),  the  director-general  (chief  executive)  and  the 

(25)  https://pasykaf.org/.

58 | Appendices

board of directors. Its primary governance model has not changed over time but has 
been enriched by evolving services. PASYKAF’s business model is based on donations/
fundraising. Its budget amounts to around 3 EUR million, a significant amount of which 
derives from the association’s recycling service.

The recruitment of new volunteers has been one of PASYKAF’s main obstacles; however, 
raising  public  awareness  about  the  association’s  mission  helped  to  successfully 
overcome this challenge. Financial sustainability has been another challenge, particularly 
since the 2013 financial crisis; the lack of state support and supportive structures has 
been another main barrier for PASYKAF. This led the organisation to take initiative and 
expand  their  services  in  areas  other  than  primary  care  for  cancer  patients,  gearing 
towards services such as clothing recycling that could contribute, sustain and maintain 
their original mission. 

PASYKAF’s  key  partners/sponsors  include  several  local  and  national  conventional 
enterprises that financially contribute to its mission. PASYKAF has not entered into any 
contractual  agreements  with  public  agencies  nor  does  it  enjoy  any  fiscal  breaks  or 
privileges. Its estimated turnover of approximately 3 EUR million, generated through 
economic  activities,  donations  and  voluntary  work,  is  entirely  reinvested  into  the 
wellbeing and treatment of its beneficiaries.

PASYKAF  has  never  asked  for  loans  from  any  financial  intermediaries,  be  it  from 
traditional banks or any other dedicated financial institution. It has always solely relied 
upon people’s help, making PASYKAF still reliant on “traditional fundraising” to this day.

The organisation does not consider itself a social enterprise. According to the director of 
its charity shops and clothing recycling programme, PASYKAF should “not be considered 
a social enterprise, since its economic activities are a necessity for the financial support 
of all services the association provides towards its beneficiaries (i.e., cancer patients).” 

Social enterprises and their ecosystems in Europe | Country report CYPRUSSocial enterprises and their ecosystems in Europe | Country report CYPRUS

Appendices | 59

Exploratory case 2
Agia Skepi

Agia Skepi is a therapeutic community registered as a foundation that supports long-
term  substance  abusers  and  their  families.26  The  foundation,  which  was  founded  in 
1999, is located on the outskirts of Nicosia in 50 acres of land owned by local church 
organisation the Holy Abbey of Machaira. It is financially supported by the Association 
of Friends of Agia Skepi to help people with long-term substance abuse issues lead a 
life free of drug and alcohol use.

Vocational  therapy  and  reintegration  into  society  through  meaningful  employment 
is  a  key  part  of  Agia  Skepi’s  therapeutic  programme.  Members  of  the  community 
have been farming the land and producing a range of organic products such as fruit, 
vegetables, dairy products, eggs and bread since 2011. Although Agia Skepi produces 
substantial amounts, demand is often greater than supply. Therefore, Agia Skepi also 
imports dry food that is packaged by members of the community. Its products are sold 
commercially under the brand name Agia Skepi Bio through major supermarket chains 
operating  in  Nicosia  and  Limassol.  Organic  farming  and  rehabilitation  share  certain 
core values, including: sustainable and environmentally friendly development; reward 
through labour and perseverance; respect for nature and the environment; and taking 
pride in hard work and individual accomplishments.

Agia  Skepi’s  legal  status  as  a  foundation  pre-dates  its  current  economic  activities. 
However, no conflict exists between Agia Skepi’s new economic activities and its overall 
mission,  as  agricultural  work  functions  as  a  therapeutic  tool  for  substance  abusers 
enrolled  in  the  programme.  Agia  Skepi’s  economic  activities  serve  the  therapeutic 
community  first  and  foremost.  Its  dependency  upon  charitable  donations  or  public 
grants has greatly decreased. Although it still requires public grants for the successful 
implementation  of  its  rehabilitation  programme,  Agia  Skepi  aspires  to  become  self-
sufficient  through  its  economic  activity  within  organic  food  production  in  the  near 
future. Economic activity upgrades the rehabilitation programme’s offering, providing 
the centre’s clients with the necessary skill set for social reintegration and helping them 
develop the autonomy to re-enter society as active, contributing members. 

The initiative has led to new jobs for those who have been successfully rehabilitated. For 
example, several people now work at bakeries and restaurants due to the accumulated 
experience and qualifications they gained through the therapeutic community process. 
Given that most undertaking the programme have never worked before, daily organic 
farming, packaging and bread baking activities contribute greatly to preparing members 
of  the  community  for  employment.  The  therapeutic  community  currently  consists  of 

(26)  The  organisation’s  legal  name  in  the  Cypriot  government’s  registry  of  foundations  is  the 

Foundation of Therapeutic Community Agia Skepi. See: http://agiaskepi.com/index.html.

60 | Appendices

13 former users, who have completed the programme and now work as regular Agia 
Skepi Bio employees, and approximately 35 people who participate in the programme 
and serve as volunteers; the latter number often changes over time as it depends on 
admissions. Since stability and regularity are seminal characteristics of the therapeutic 
programme,  external  volunteers  are  rarely  included  in  community  activities.  Agia 
Skepi’s staff numbers 37 regular and part-time employees, half of whom are former 
community members.

Agia Skepi’s governance model follows that of “traditional” NPOs: its board of directors 
do not deal with the organisation’s day-to-day activities but is responsible for overseeing 
the  foundation;  a  management  team  handles  the  community’s  daily  tasks  and  is 
responsible for updating the board of directors on administrative issues; and it has some 
regular partners. Despite receiving financial aid from and closely collaborating with the 
Cyprus  Ministry  of  Health  and  National  Addictions  Authority,  the  management  team 
does not wish to cede managerial control to external collaborators and/or stakeholders. 

Agia Skepi has never applied for a loan to support its economic activities. Agia Skepi Bio 
initially required large investment capital, but the foundation implemented its action 
plan step-by-step, ensuring that the initiative itself was viable and successful enough 
to finance each next step. A lack of certain skills, namely any prior experience or training 
in farming, presented an additional challenge for community members and personnel. 
Despite often making mistakes due to inexperience, a proactive attitude has helped 
them overcome obstacles, mainly through self-education and learning “on the job”. 

During  Agia  Skepi  Bio’s  first  years  of  operation,  the  community  had  to  face  a  lot  of 
negative  reactions.  A  number  of  people  and  conventional  businesses  opposed  the 
initiative. They felt threatened by the broad scope of the community’s products and 
filed a formal complaint against Agia Skepi, claiming that the organisation’s economic 
activities  constituted  unfair  competition.  Furthermore,  they  accused  the  foundation 
of taking advantage of its members, since they were not being paid for their labour. 
In  retaliation,  Agia  Skepi  argued  that  its  members  did  not  pay  for  their  therapeutic 
treatment, which would otherwise cost much more than an average monthly salary. 
As  complaints  have  since  ceased,  it  would  appear  that  these  obstacles  have  been 
overcome. 

Agia  Skepi’s  key  economic  partner  is  a  conventional  enterprise.  The  partnership  is 
bilaterally profitable: the parties can jointly set better prices and receive larger orders. 
The conventional enterprise buys all of its farming products from Agia Skepi. 

Agia  Skepi  plays  a  crucial  role  in  Cyprus's  National  Strategy  on  Illicit  Substances 
Dependence and the Harmful Use of Alcohol, which is operational from 2013 to 2020. 
As  a  result,  the  foundation  receives  several  public  grants  for  which  it  is  externally 
audited and deemed accountable. For reasons of transparency, its economic activities 

Social enterprises and their ecosystems in Europe | Country report CYPRUSAppendices | 61

are differentiated from therapeutic expenses, clearly proving that the grant has been 
spent on therapeutic expenses. Overall, its budget for therapeutic expenses amounts 
to about 800,000 EUR and its revenue from economic activities is about 180,000 EUR. 

Agia  Skepi  does  not  rely  on  public  financing  or  use  any  innovative  social  financing 
instruments.  It  has  tried  to  implement  some  participative  finance  tools  such  as 
crowdfunding, but the results were not encouraging. For now, Agia Skepi continues to be 
financially supported through the Association of Friends of Agia Skepi, an association 
that undertakes its fundraising initiatives and actions.

Agia Skepi considers itself a social enterprise to the extent that its mission is first and 
foremost a social mission. Its economic activity supports its social mission, since all 
revenue is reinvested in social causes.

Exploratory case 3
Anakyklos

Anakyklos  is  a  private  company  limited  by  guarantee  that  was  established  in  2010 
to actively encourage a clean, healthy and sustainable environment through research, 
economic  activity  and  social  intervention.  Its  main  economic  activity  centres  around 
textile collection and recycling. The company helps reduce landfill waste by collecting 
and recycling used clothes, shoes, linen, kitchenware, toys, books and other items. Up 
until 2017 Anakyklos also gave used items to those who could not afford new clothes 
and processed textiles that could not be reused into cleaning cloths, fibres, insulation 
and other materials.

In 2010 Anakyklos initiated a network of charitable organisations to collect clothing 
and facilitated a considerable number of workshops on the importance of appropriate 
recycling.  Since  its  beginning,  Anakyklos’  vision  has  been  the  creation  of  a  viable 
social enterprise. Its goal is waste reduction and job creation. Most people employed 
by Anakyklos were previously unemployed; their employment contributes towards the 
drive for more “green jobs”.

Up  until  2017  Anakyklos  served  the  entire  island  with  its  550  clothing  recycling 
containers in 20 municipalities and 110 communities and collected clothes from 400 
charities. Through this collaboration, a significant number of community projects such as 
public libraries and parks benefited from the process: about 203,000 EUR was donated 
back to Anakyklos’ network of organisations and tens of thousands of clothing items 
were donated to the poor. Any surplus income that Anakyklos generated was used to 
support  social  and  environmental  activities  and  the  company’s  projects  or  those  of 
other organisations.

Social enterprises and their ecosystems in Europe | Country report CYPRUS62 | Appendices

By  the  end  of  2017,  Anakyklos  began  facing  serious  financial  problems,  as  more 
charitable  organisations  became  active  in  the  clothing  recycling  sector.  Unlike  other 
organisations that often depend on voluntary work, Anakyklos had regular employees 
and,  by  extension,  higher  costs  to  cover,  which  created  problems  for  the  company’s 
economic viability. As a result, Anakyklos decided to sell its textile collection services to 
an external company. Anakyklos Textiles Ltd. now owns the clothing recycling containers, 
collects textiles and employs truck drivers, whereas Anakyklos Perivallontiki owns the 
remaining two shops and offers environmental services. The company currently employs 
15 workers. It maintains its non-profit characteristics and its initial environmental aims. 

The  organisation  believes  that  Cyprus’  lack  of  social  enterprise  legislation  was  the 
institutional barrier that led to the deterioration of its economic activities; no protective 
mechanisms  are  in  place  to  shield  social  enterprises  from  unfair  competition.  For 
Anakyklos,  the  proposed  legislation’s  implementation  is  extremely  important  for  the 
consolidation  of  Cypriot  social  enterprises.  Anakyklos  eagerly  anticipates  the  above 
mentioned law, as it believes it will provide access to public contracts, start-up funds 
and support structures, and protect organisations from unfair competition, all of which 
appear necessary for the sustainability of social enterprises in general.

Its governing body includes positions similar to a conventional enterprise: CEO, personal 
assistant, operations manager and public relations manager. No other stakeholders are 
engaged in its governance. Prior to 2017 no conventional company was operational 
behind Anakyklos’ clothing recycling programme; the sale of its clothing collection unit 
to an external company was made public knowledge.

From  its  inception,  Anakyklos  has  followed  the  social  enterprise  business  model;  all 
of  its  economic  activities  address  societal  needs,  have  social  impact  and  all  of  its 
revenue is returned to its social mission. Anakyklos considers itself a social enterprise 
and believes that social enterprises should be distinguished from charitable and non-
governmental organisations.

Social enterprises and their ecosystems in Europe | Country report CYPRUSSocial enterprises and their ecosystems in Europe | Country report CYPRUS

Appendices | 63

Exploratory case 4
Nicosia Dog Shelter

Founded  35  years  ago,  the  Nicosia  Dog  Shelter  is  a  private  company  limited  by 
guarantee. Located in the UN-controlled area of Nicosia airport, it provides care and 
temporary shelter for stray and abandoned dogs; around 80 dogs are currently housed 
on its premises. The shelter also educates the general public on basic animal welfare 
and care, and manages two secondhand shops in Larnaca and Nicosia, which contribute 
significantly  to  the  organisation’s  financial  operation.  Seven  members  and  about  10 
volunteers are currently responsible for the shelter’s daily onsite activities and manage 
all of the company’s other activities, including fundraising events, adoption procedures, 
facilitation of workshops in schools and the overall management of the shelter and its 
charity shops. At the time of writing, it is in the process of hiring a manager to supervise 
its entire range of existing activities.

The shelter has recently widened its fields of engagement by initiating new economic 
activities. Its two secondhand shops have been in operation from three to five years 
and are largely managed by volunteers. The stores sell a wide range of products such 
as jewellery, books, boardgames, clothes and kitchenware. Goods are also sold through 
various  other  channels  such  as  fundraising  and/or  awareness  raising  events  to  help 
financially  support  the  shelter.  The  revenue  from  sales  goes  directly  to  the  shelter’s 
activities, some of which is used to cover veterinary expenses that vary widely depending 
on  the  treatment  necessary  and  number  of  animals  in  need.  Although  the  shelter 
receives a modest amount of governmental aid, its activities are mainly supported by 
income generated from its two secondhand shops and fundraising activities.

In terms of governance, the shelter has two directors that supervise its overall operations 
and members who administer its activities. General meetings are conducted frequently 
as  they  help  members  of  the  shelter  to  better  coordinate  their  activities  and  reach 
consensual  decisions  regarding  acute  animal  welfare  issues.  No  other  stakeholders 
are engaged in the organisation’s membership and governing bodies. A clear division 
of labour is upheld amongst the shelter’s volunteers: different people are appointed to 
manage finances, operations, fundraising events, dog adoptions, etc.

The  shelter  currently  faces  several  challenges,  mostly  stemming  from  financial 
difficulties. The standard fee to adopt a dog does not necessarily include all of the costs 
for its veterinary care and, as a result, the organisation has to balance the desire to help 
as many dogs as possible against the need to run profitably enough to keep its doors 
open. The number of new dogs the shelter can accept depends on its monthly budget; 
if no adoptions take place, no new dogs can be received by the shelter.

Limited governmental aid—about 3,500 EUR per year—compounds this issue as it fails 
to cover the monthly expenses incurred through animal certification alone. The shelter 

64 | Appendices

has to pay for each animal’s health certificate before it can be sent abroad. The state 
fee  for  issuing  these  certificates  costs  about  300,000  EUR  per  year.  As  the  shelter 
receives  no  fiscal  benefits  or  allowances,  it  considers  that  the  government  impedes 
rather than assists its social mission.

The Nicosia dog shelter considers itself a social enterprise to the extent that its economic 
activities  improve  animal  wellbeing  and  raise  public  awareness.  It  believes  that  the 
foreseen  legislation  on  social  enterprises  in  Cyprus  could  strengthen  its  economic 
activities and future sustainability.

Social enterprises and their ecosystems in Europe | Country report CYPRUSAppendices | 65

Appendix 4. Reference list

 > Eurobarometer (2009) Entrepreneurship in the EU and beyond A survey in the EU, 
EFTA countries, Croatia, Turkey, the US, Japan, South Korea and China. Available 
at:  https://ec.europa.eu/commfrontoffice/publicopinion/flash/fl_283_en.pdf  (Last 
accessed on 7 November 2019).

 > European  Commission  (2011)  Social  Business  Initiative:  Creating  a  favourable 
climate  for  social  enterprises,  key  stakeholders  in  the  social  economy  and 
innovation. Available at: http://ec.europa.eu/internal_market/social_business/docs/
COM2011_682_en.pdf (Last accessed on 22 June 2019).

 > European  Commission,  Directorate-General  for  Employment,  Social  Affairs  and 
Inclusion  (2015)  A  map  of  social  enterprises  and  their  eco-systems  in  Europe. 
Luxembourg:  Publications  Office  of  the  European  Union.  Available  at  http://
ec.europa.eu/social/BlobServlet?docId=12987&langId=en.

 > European  Commission,  Directorate-General  for  Employment,  Social  Affairs  and 
Inclusion  (2016)  Social  Enterprises  and  their  eco-systems:  developments  in 
Europe.  Authors:  Carlo  Borzaga  and  Giulia  Galera.  Luxembourg:  Publications 
Office  of 
the  European  Union.  Available  at:  http://ec.europa.eu/social/
BlobServlet?docId=16376&langId=en.

 > European Economic and Social Committee (2017) Recent evolutions of the Social 
Economy in the European Union- Study. Available at: https://www.eesc.europa.eu/
sites/default/files/files/qe-04-17-875-en-n.pdf (Last accessed on 22 June 2019).

 > Isaias,  G  and  Kaufmann,  H.R.  (2011)  “Social  Entrepreneurship:  A  new  paradigm 
that can help Cyprus to address its challenges”, in Russia`s Integration into the 
World Economy: The new paradigms of the economic culture, proceedings of the 
V International Scientific Conference. Yekaterinburg:UrFU.

 > MECIT & UAAR (2015) Policy Statement for the Enhancement of Entrpreneurship 
Ecosystem  in  Cyprus.  Nicosia:  UAR.  Available  at:  http://www.crcs.gov.cy/crcs/
crcs.nsf/all/565EDA057F932898C2257F4D002EA7D7/$file/Εθνική%20
Δήλωση%20Πολιτικής%20Επιχειρημ_Δεκ2015.pdf?openelement (Last accessed 
on 22 June 2019).

 > SYNTHESIS Center for Research and Education Ltd. (2017) Έγγραφο Πολιτικής για 
την Ανάπτυξη Οικοσυστήματος Κοινωνικών Επιχειρήσεων στην Κύπρο (Policy Paper 
on the Development of an Ecosystem of Social Enterprises in Cyprus). Luxembourg: 
Publications Office of the European Union.

 > The Unit of Administrative Reform (2018) Policy document for the development 
of an ecosystem for social enterprises in Cyprus. Nicosia: Ministry of the Interior, 
Republic of Cyprus.

Social enterprises and their ecosystems in Europe | Country report CYPRUS66 | Appendices

Appendix 5. List of stakeholders engaged at national 

level

The set of 21 Country Reports updated in 2018 and 2019 included a “stakeholders 
engagement  strategy”  to  ensure  that  key  input  from  national  stakeholders  was 
incorporated. Four categories of stakeholders were set up: academic (ACA), policymaker 
(POL),  practitioner  (PRAC)  and  supporter  (SUP).  The  stakeholders’  engagement 
strategy  followed  a  structured  approach  consisting  of  a  questionnaire,  one  or  two 
stakeholders’ meeting (depending on the country) and one core follow-up group. Such 
structure enabled a sustained, diverse and committed participation of stakeholders 
throughout the mapping update process. The full names, organisations and positions 
of key stakeholders who accepted to have their names published are included in the 
table below.

Full name

Organisation

Role

Roulla 
Georgopoulou

Head

Multipurpose Nicosia 
Municipal Center

Nicos Souleles

Associate professor

CUT

Doros Michael

Director

Anakyklos

Executive director

Cardet

Stakeholder 
category

PRAC

ACA

PRAC

PRAC

Charalambos 
Vrasidas

Marina 
Georgiadou

Demetris 
Lambrianides

Occupational therapist

Mental Health Services

POL

PRAC

PRAC

POL

President

Organisation Paraplegic 
Cyprus

Demos Ioannou

Director

SPAVO

Alexandros 
Alexandrou

Director

Department of Labour

Constantinos 
Georgiou

Inspector of Secondary 
and Vocational Education

Ministry of Education

POL

Elias Mallis

Senior economic officer

Ministry of Finance

Michael Loizides

Member of board of 
directors

AKTI

Savvas 
Hatzixenofontos

Director

Fornelia Ltd.

Demetra 
Palaonda

Senior officer

CCCI

POL

PRAC

PRAC

PRAC

Natasa Ioannou

Project coordinator

NGO Support Center

PRAC

Social enterprises and their ecosystems in Europe | Country report CYPRUSAppendices | 67

Full name

Organisation

Role

Stakeholder 
category

Ninetta Kazantzi

President

Filios Savvides

Member of the board

National Network Against 
Poverty

Youth Training and 
Employment Foundation

PRAC

PRAC

Charalambos 
Theopemptou

Member of parliament

Movement of Ecologists

POL

Michalis Michael

Director

Sophia Arnaouti

Scientific researcher

S.A. at Home Support and 
Care Services

Migrant Information 
Center

Golfo Kateva

Member of the board

The Hub Nicosia

Charis 
Papadopoulos

Christophoros 
Markides

Administrative member

Productivity officer

Marcia Trillidou

Scientific officer

Agia Skepi, therapeutic 
community

Ministry of Labour, 
Welfare and Social 
Insurance

Research Promotion 
Foundation

Kalypso Sepou

Head, Strategic Planning 
Unit

Research Promotion 
Foundation

Elizabeth 
Kapakioti

Marinos Sakkou

Member of the board

Recycle Relief

Head of recycling services 
and charity shops

Cyprus Association of 
Cancer Patients and 
Friends (PASYKAF)

PRAC

PRAC

PRAC

PRAC

POL

POL

POL

PRAC

PRAC

Social enterprises and their ecosystems in Europe | Country report CYPRUS68 | Getting in touch with the EU

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