Social value creation and innovation in Hungary – social entrepreneurship focusing on disadvantaged children and young people

Citizen-led initiatives with both social and economic objectives can be described by several overlapping, yet distinct, concepts, such as “civil society organization”, “third sector organization”, “non-profit organization”, “social economy organization”, “solidarity economy entity”, “social enterprise” or “social and solidarity economy entity” (Defourny, 2014; Kiss and Mihály, 2020). The initiatives these relatively new terms describe are rooted in long-standing historical traditions of addressing social, environmental and community-related issues, occupying important roles in various areas of the welfare system, such as education, health, housing or poverty alleviation (Borzaga and Spear, 2004). Their economic weight remains significant today: the social economy in the European Union comprises more than 4.3 million organizations, including over 246.000 social enterprises, active in diverse fields such as health, social care and education (European Commission, 2024).

In Hungary, the terms “civil society” and “non-profit sector” were primarily used after the regime change in 1989, as they were considered the most suitable descriptions for the organizations involved (Fekete et al., 2017a). Following EU priorities, the concept of the “social economy” – used in this paper to encompass both the social and economic aspects of the initiatives and the diversity of the field – gained traction in the 2000s. The term “social enterprise” received greater recognition in the 2010s (European Commission, 2019). A growing body of Hungarian research has also examined these organizations. However, beyond providing a general description, publications have primarily focused on their role in rural development and work integration, aligning with national and EU policy directions, whereas other fields (e.g. education, sports or community development) have received less attention (Kiss, 2024). Despite this narrower research and policy focus, non-profit organizations have been active across various welfare areas, primarily in culture (16.6%), sports (16.5%), leisure and hobbies (15.8%), education (12.5%) and social services (8.6%) (Hungarian Central Statistical Office (HCSO), 2024). Among social enterprises, 20% focus on children as a primary target group (Fekete et al., 2017b).

Children and young people face many difficulties in Hungary, the most prominent being uncertainty and an unpredictable future, financial problems and poverty, aimlessness and lack of friends and communities (Kiss-Kozma and Székely, 2023, p. 54). Disadvantaged children and young people face even more severe hardships, including those related to family, school, employment and housing, that the public welfare system cannot adequately address (Mentesné, 2016; European Union, 2024). Improving their situation has been a crucial focus for citizen-led social economy organizations, which, through social entrepreneurial activities, have often been the first to offer solutions to long-standing or newly emerging challenges, thereby exemplifying social value creation and social innovation. However, their roles in this field have been little investigated in Hungary so far, a research gap this paper aims to address. Based on six primary qualitative case studies, the research contributes to understanding how Hungarian social economy organizations that focus on disadvantaged children and young people engage in social value creation and social innovation by examining their organizational characteristics and institutional environments. After discussing the theoretical, contextual and methodological background of the research, the case studies’ main findings are elaborated.

The research is rooted in neo-institutional theory, in particular, the theory of institutional isomorphism (Dimaggio and Powell, 1983) and institutional enterprise (Nicholls and Cho, 2006). According to these theories, once an organizational field – such as the child protection or education system of a country – is established, the opportunities and barriers faced by organizations within it are heavily influenced by the approaches and interests of powerful, resource-rich actors like the state, other authorities, professional networks or already successful organizations. At the same time, organizational fields can also be influenced by competent grassroots actors, such as citizen-led social economy organizations, which address issues that the existing institutional environment has not resolved, and often deliberately aim to alter or improve dysfunctional structures through social value creation and social innovation. Therefore, to understand how social economy initiatives contribute to a specific organizational field, it is helpful to examine both the characteristics of the organizations themselves and those of their institutional environments in relation to social value creation and social innovation.

The concept of “social value creation” (SVC) has several definitions, all grounded in social value, which must first be clarified. According to Dixit and Moid (2022, p. 2), social value “mostly signifies the wellbeing of people and communities, built on a set of basic values.” It can also be defined as alleviating social problems and addressing social needs, manifesting in increased customer value or societal surplus (Hietschold et al., 2021). Based on this, SVC can be understood as a process that uses opportunities and resources to produce valuable results for society (Lorenzo-Afable et al., 2023), or as “the creation of benefits or reductions of costs for society – through efforts to address social needs and problems – in ways that go beyond the private gains and general benefits of market activity” (Phills et al., 2008, p. 39), a definition adopted for the present paper. In addressing social problems and needs, SVC is closely linked to the concept of social innovation.

The concept of social innovation (SI) lacks a single, unambiguous definition and different approaches can be categorized into two main schools of thought (Hunt, 2025; Moulaert et al., 2017). The more practical, “Anglo-American” stream emphasizes the entrepreneurial potential of SI, as it “focuses on identifying and promoting solutions that are practical within the framework of the existing economic order” (Moulaert et al., 2017, p. 25); viewing the concept as a new solution to social problems, or, more pragmatically, as the intentional and targeted recombination of social practices (Schröer, 2021). At the same time, the rather normative and critical “euro-Canadian” approach focuses directly on social justice, solidarity and providing alternatives to neoliberalism (Moulaert et al., 2017) and understands SI “as aimed to change the social structure to empower the disadvantaged” (Schröer, 2021, p. 2). Despite the apparent differences, according to van der Have and Rubalcaba (2016), there are two core conceptual elements found in most SI definitions:

1. a change in social relationships, systems or structures; and

2. this change serving shared human needs or solving a socially relevant problem.

Building on these core elements and also pointing out that most SI definitions have several flaws, including conflating the purpose and nature of innovation, requiring its diffusion, stipulating its positive impacts, or specifying the unit of analysis, Havas (2025) understands SI, a definition adopted in the present research as well, as “novel initiatives or novel combinations of known solutions, aimed at tackling a societal problem or creating new societal opportunities, introduced into practice” (Havas et al., 2024, cited in Havas, 2025, p. 11).

Although various actors can engage in SVC and SI, including individuals, for-profit businesses, public institutions and networks (Krátki et al., 2018), the role of civil society and social economy organizations in this area is often considered primary (Paczári, 2021). However, emphasizing local and bottom-up dynamics presents challenges, such as offloading public responsibilities to civil society or assuming that the local is preferable to larger scales (Campomori et al., 2023). Still, SVC and SI can be linked to several organizational-level characteristics of social economy initiatives, including their objectives, activities and operations.

As mission-driven organizations, SVC and SI are often central to the objectives of social economy entities, which aim to solve social problems that the other two sectors do not adequately address, “to improve individuals’ and communities’ lives and increase their wellbeing” (Dixit and Moid, 2022, p. 1). The social mission of these entities is usually more emphasized than profit generation (Wijayanti and Narsa, 2023). SVC and SI also connect to the activities undertaken to achieve these objectives, such as removing social barriers to service access or increasing beneficiaries’ autonomy (Deci and Ryan, 2000, cited in Jacobi et al., 2023). Beyond the value generated for specific target groups, these activities can also affect economies, create and develop industries, establish innovative business models and reallocate resources to benefit society. Thus, social economy organizations can often be seen as creating social value through social innovation.

Specific operational characteristics of social economy organizations can enable or constrain SVC and SI. One enabling characteristic is community engagement and civic involvement through participatory and collaborative management and governance structures, which fosters legitimacy and supports the generation of bottom-up solutions (Anheier et al., 2018). Another characteristic is flexibility that contributes to viability despite the general shortage of capacity and uncertain financial background (Fejes and Szűcs, 2018). Finally, the role of hybridity is also often emphasized (Schröer, 2021). Hybrid organizations combine logics from different sectors and draw on diverse income streams and human resources, thereby facilitating creative and innovative solutions (Hunt, 2025; Powell et al., 2018). However, problems and conflicts can also arise from these characteristics that undermine SI and SVC, such as tensions between social and economic goals, or the different values and expectations of various stakeholders, leading to eventual mission drift or unsustainable operations (Doherty et al., 2014; Smith and Besharov, 2017).

Beyond organizational characteristics, the institutional environment also significantly influences SVC and SI at both micro and macro levels (Henriksen et al., 2015). Important factors that can enable or constrain the activities of social economy organizations include regionality, historical trajectories and institutional arrangements (Hunt, 2025). According to Havas et al. (2024), open, accountable and transparent governance structures that support cross-sector cooperation, which are lacking in authoritarian states, are the most important enabling factors. When examining the educational system specifically, social innovations typically emerge as bottom-up processes but become successful and sustainable only under favourable environmental conditions, such as influential social innovation networks and a cooperative public institutional system (Schröer, 2021).

The present research focuses on SVC and SI by social economy organizations to account for their contributions to the organizational field of child protection and education, where socially innovative practices can be seen as creating social value by identifying and solving the limitations and deficits of the institutional system, thereby enforcing children’s rights and improving their well-being (Schröder and Kuschmierz, 2017; Sullivan, 2023). Specific examples addressing educational inequalities include initiatives that enhance formal education, create alternative educational opportunities and explore new approaches to non-formal education (Schröder and Kuschmierz, 2017). The analysis considers the organizational- and institutional-level characteristics that influence SVC and SI by social economy organizations focusing on disadvantaged children and young people in Hungary, aiming for a multi-layered and comprehensive examination of the topic.

The public institutional system for children’s well-being in Hungary comprises a diverse range of child protection and educational services. Child protection in a broad sense – primarily regulated by Act XXXI of 1997 on the Protection of Children and the Administration of Guardianship – includes institutions providing child welfare services, such as family and child welfare centres, nurseries and temporary homes, which offer basic preventive care available to families voluntarily. It also encompasses child protection services in a narrower sense, which involve specialized care for children in alternative placements, such as foster homes or children’s homes (European Union Agency for Fundamental Rights (FRA), 2023). Meanwhile, the education system – historically governed by Act LXXIX of 1993 on Public Education and, more recently, by Act CXC of 2011 on National Public Education – comprises institutions serving various age groups, including kindergartens, primary schools, secondary schools, halls of residence and pedagogical assistance services, among others.

Public institutions in these fields have long faced significant challenges that impede their ability to provide high-quality services, and their current conditions are not guaranteed (Hungarian Child Rights Coalition, 2024). Some of the main challenges of the child protection system that cause both preventive and specialized care to be ineffective are shortages, low salaries, insufficient selection and support of professionals, deficiencies in the quality and capacity of the underfunded and overburdened services including lack of places, e.g. in foster care, limited representation of children’s interests and children’s rights education, and a lack of unified sectoral management (UNICEF Hungary, 2024). Regarding education, major issues include knowledge-centred, overcrowded, indicator-focused curricula, inadequate, outdated pedagogical methods and assessment, a shortage of teachers and other professionals (e.g. psychologists, school paediatricians or development experts), and the lowering of training and output requirements for initial teacher education (Lannert, 2018; Ritók, 2016; European Union, 2024). Key indicators of this situation are below the EU average and declining education outcomes, including rising rates of low-achieving 15-year-olds in reading, math, and science; higher than EU-average levels of early school leavers; increasing numbers of children with special educational needs; and deteriorating mental health rates, among others (European Union, 2024; Hintalovon Child Rights Foundation, 2024).

Disadvantaged children are the most severely impacted by the flaws of public institutions, as children from more favourable family backgrounds tend to achieve higher educational levels, which the public education system has been unable to compensate for and has even worsened (Kovai and Szőke, 2021; Hajdu et al., 2024). Its selective and non-compensatory nature can be explained by several factors, including the high level of territorial inequality in resource distribution, with some disadvantaged regions having limited or no access to services; linking eligibility for certain – especially early childhood – services to employment; free school choice and early separation options provided by the school structure, such as 8- and 6-grade secondary schools and an increase in church-run institutions; impassable school routes and differences in the quality of services available across various types of institutions (Keller, 2018; Lannert, 2018; Lőrincz and Antal-Fekete, 2022).

As a result, disadvantaged and multiply disadvantaged students in primary education are more likely to attend schools with lower-qualified teachers or teacher shortages, and the level of knowledge they can acquire in these schools is also lower (Hajdu et al., 2024). This negatively impacts the later educational and labour market opportunities of disadvantaged children, many from Roma backgrounds (Bihari, 2021). Extracurricular activities like academic catch-up classes, arts sessions or sports training are also rarely available to them, because of high costs, geographic inequalities and a shortage of specialized professionals (Mentesné, 2016; Laczkó and Rétsági, 2015). Recently, the transition to online education during the COVID-19 pandemic also proved challenging, as schools often could not meet the newly emerging needs of their students. This lack of support affects many: in 2022, the proportion of disadvantaged students in public education was 9%, and those in the multiply disadvantaged category was 5% (Hajdu et al., 2024).

At a policy level, although various strategies and measures have addressed the issue, no genuine political will has been expressed to reduce inequalities and selection in any government cycle since the regime change in 1989. Instead, soft, incentive-type programs were introduced, and even the more significant integration efforts of the 2000s only contributed to small advancements (Kende, 2018; Lőrincz and Antal-Fekete, 2022). Cooperation between the public sector and citizen-led social economy organizations remained limited, despite the third sector experiencing significant growth and institutionalization in the 1990s (Bocz, 2009). With Hungary joining the European Union in 2004, top-down public funding programs focused on strengthening the social economy, in some cases, specific legal forms (e.g. social cooperatives), primarily aimed at creating jobs for vulnerable social groups and fostering local economic development. However, other welfare areas received less attention (European Commission, 2019).

Since the 2010s, with family policy becoming a central focus of public policy, several measures have been introduced, mainly aimed at increasing the birth rate and supporting women’s employment (Fejős and Neményi, 2020). However, instead of reducing inequalities, the new measures facilitated redistribution toward the better-off (Szikra, 2018). New policy directions entailed the centralization of education management, school maintenance and content regulation, thereby reducing the autonomy of teachers, parents and students (Ferge, 2014). Additionally, government measures favouring church-run institutions significantly increased their share in public education (Hajdu et al., 2024). These changes contributed to the breakdown of previous integration efforts and the emergence or intensification of segregation mechanisms (Fejes and Szűcs, 2018). In recent years, particular attention has also been paid to child protection, with high-profile public scandals leading to several legislative changes, which, however, primarily focused on sanctions rather than substantive systemic development (Hintalovon Child Rights Foundation, 2024).

The inclusion of citizen-led social economy organizations in welfare service provision has also become more difficult since the 2010s due to the state’s centralizing tendencies, including in funding distribution (Kuti, 2017). New regulations decreasing the autonomy of social economy organizations, eliminating previous forums for cooperation, stigmatizing and attacking critical civil society organizations including those focusing on gender equality, while creating privileged positions for organizations aligned with the state’s policy directions have led to increasing polarization and the disappearance of clear boundaries between the third and the public sectors (Kövér, 2015; Csoba, 2020; Fejős and Neményi, 2020). At the same time, in line with European Union priorities, EU co-financed public funding became available specifically for social enterprises that contribute to the long-term employment of disadvantaged people, prioritizing economic sustainability through market-based income generation. This focus, however, neglected the country’s specific context and blurred the boundaries between the private and third sectors (Csoba, 2020; Kiss et al., 2021). Currently, social enterprises face several barriers, including a lack of public policy strategy and support programs, financing opportunities, awareness, unfavourable economic/political environment and weak advocacy (Hungarian Social Enterprise Coalition, 2025). Thus, instead of enabling, several characteristics of the institutional environment constrain the efficient operation of these organizations (Hubai, 2020).

Nevertheless, throughout the years, some policy measures and programs have aimed to increase the quality of care and education that disadvantaged children and young people receive from early childhood (Husz, 2016; Kende, 2018). Socially innovative initiatives incorporated into policy programs include Sure Start children’s houses, which provide opportunity-creating services for disadvantaged families living in segregated areas and raising children aged 0–3 (Havasi, 2019), as well as after-school study halls (so-called “tanodas”) offering individually tailored social support activities for disadvantaged elementary or secondary school students (Szűcs and Fejes, 2024). Often initiated and operated by grassroots, citizen-led organizations, the number of these initiatives has increased through EU co-funded support, and they later became part of the public child protection system, receiving funding from the state budget (Kovai and Szőke, 2021).

Study halls, along with other community-purpose houses and spaces, have achieved significant results in disadvantaged children’s studies, skills, socialization and opportunities for mobility and inclusion by providing fair, motivating and flexible educational conditions based on individualized and community-focused development instead of a school environment burdened with failures (Ritók, 2016; Kiss and Vastagh, 2021). Sports initiatives have also had numerous positive effects on disadvantaged children, particularly with respect to health, socialization, skill development, academic success and workforce entry. Additionally, art-based development has brought joy and a sense of achievement to children, enhancing their learning performance and helping to prevent exclusion and stigmatization (Mentesné, 2016).

However, despite the positive results reported, several factors have hindered the efficiency and sustainability of these initiatives, often connected to being financed from project-based domestic and EU funding, e.g. short duration and lack of continuity of funding, and the problems of matching public welfare services (Szűcs and Fejes, 2024). It is also worth noting that grant opportunities have led to the establishment of organizations that primarily seek to access funds (Havasi, 2019). Besides, hybrid operations have created tensions as well, as economic sustainability has been challenging to reconcile with the pursuit of social goals, with issues including the availability of the necessary professional skills, problems with employing disadvantaged people, or the scarcity of market-based and alternative financial resources (Hubai, 2017; Tóth and Repisky, 2022). Additionally, although grassroots organizations have cooperated with public welfare institutions and some initiatives have become part of policy programs, they have had limited influence on the overall system (Kende, 2018). It is questionable, therefore, whether these alternative organizations developed in parallel to public institutions have successfully promoted educational and social inclusion (Kiss and Vastagh, 2021).

The research aims to examine how social economy organizations targeting disadvantaged children and young people in Hungary engage in SVC and SI by analysing the characteristics of the organizations related to their objectives, activities and operation (organizational level); and their institutional environment (institutional level). The main research questions are as follows:

To answer the research questions, primary qualitative case studies were conducted with six social economy organizations targeting disadvantaged children and young people. This multiple-case study method provided an opportunity to explore and understand the differences and similarities among the selected initiatives (Stake, 2006). The case studies were based on the analysis of the organizations’ publicly available documents (e.g. annual reports, website) and anonymous semi-structured interviews with the founders/managers – a method justified when the goal is to obtain new information or map opinions and experiences in the absence of previous research data.

Sampling began by preparing a database of social economy initiatives targeting disadvantaged children and young people, identified through mentions in funding or professional training programs, competitions and research documents. From the database, initiatives were selected using purposive sampling (Patton, 1990). The primary aspect of variation was the type of activity, such as development related to academic school subjects, sports or the arts, to account for the diversity of the field (Hungarian Central Statistical Office (HCSO), 2024). Additionally, the sample varied according to target group, location, legal form, size and age, thereby enabling the exploration of similarities and differences among organizations. Still, all initiatives in the sample conformed to the definition of social economy organizations and social entrepreneurship. Additionally, all organizations have non-profit legal forms and are citizen-led; therefore, they can also be considered non-profit organizations and civil society initiatives.

The concept of social economy organizations was defined following the approach of the European Commission, according to which “the social economy covers entities sharing the following main common principles and features: the primacy of people as well as social and/or environmental purpose over profit, the reinvestment of most of the profits and surpluses to carry out activities in the interest of members/users (“collective interest”) or society at large (“general interest”) and democratic and/or participatory governance” (European Commission, 2021, p. 3). The term was chosen to account for the field’s diversity and the dual presence of social and economic objectives and activities, without overemphasizing market-based sustainability associated with social enterprise definitions. Although all organizations in the sample generate revenue from sales activities, in most cases, this revenue constitutes only a small share of their total income. Still, the initiatives can be regarded as examples of social entrepreneurship, encompassing “the activities and processes undertaken to discover, define and exploit opportunities to enhance social wealth by creating new ventures or managing existing organizations in an innovative manner” (Zahra et al., 2008, p. 118).

Regarding target groups, all organizations focus on disadvantaged children and young people; however, the age ranges covered only partially overlap. This heterogeneity is a limitation of the research, but reflects the characteristics of the analysed organizations. Two initiatives specifically targeted the broadest possible age range (0–24) to achieve significant social impact through long-term support, whereas other organizations focused on narrower age ranges (see Table 1). To describe the target group, the United Nations definition was adopted, which states that “a child means every human being below the age of eighteen years unless, under the law applicable to the child, majority is attained earlier” [United Nations (UN), 1990]. For young people, the UN approach was again applied, referring to individuals aged 15–24 [United Nations (UN), 2020]. The concept of disadvantaged and multiply disadvantaged was based on the definition provided in Act XXXI of 1997 on the Protection of Children and the Administration of Guardianship, according to which a disadvantaged child or a young adult experiences one of the following circumstances: his or her parent or guardian has a low level of education or is underemployed, or he or she lives in an inadequate living environment. A multiply disadvantaged child or young adult experiences at least two of the circumstances defined as disadvantaged, or is a child who has been removed from their family and placed in institutions providing specialized care, or a young adult receiving aftercare (Hungarian Central Statistical Office (HCSO), 2023).

The interview guide included questions about the motivations and circumstances of starting the initiative; its history and current situation including objectives and activities, also touching on the topic of the target groups’ problems and needs, the social value created and the socially innovative aspects of the initiative; operational characteristics such as human and financial resources, governance and management and opinions and experiences about the institutional environment. Data collection took place between July 2024 and January 2025.

For the analysis of the interviews, following the interpretive paradigm, thematic coding was employed by inductively deriving codes from the empirical material (Bell et al., 2023; King et al., 2019). Altogether, 20 first-level descriptive codes were identified, grouped into nine interpretive code categories, and subsequently into four overarching themes (see Table 2). In the following section, the main research results will be discussed.

In this section, the organizational characteristics and institutional environment of the social economy organizations under study are examined in relation to SVC and SI. First, at the organizational level, the addressed needs, social objectives and created value are analysed, followed by summarizing the common characteristics of the activities, including their innovative aspects. Subsequently, the organizations’ operations are examined with respect to their human and financial resources and management characteristics. Finally, the role of the institutional environment is assessed by accounting for the organizations’ connections to other actors within the organizational field, as well as for the opinions and experiences regarding the overall system.

The initiatives primarily focus on disadvantaged children and young people, including those living in deep poverty, disadvantaged areas or state care institutions. The target group’s age range is diverse, spanning organizations that cater to a broad spectrum of participants from 0 to 24 years old, which is true for organizations present in villages, as well as those with a narrower focus – organizations operating in bigger cities or the capital, probably reflecting the differences between urban and rural areas in the availability of support. Still, as even with organizations targeting wider age ranges, most activities of the initiatives focus on children and young people of school age (6–18); therefore, the analysis of the results also focuses on this age group in more detail, occasionally providing information about the organizations’ activities for other age groups. Additionally, parents and other family members often serve as target groups, and organizations also direct activities toward the broader society, whether as volunteers, potential donors, institutional partners or members of the public. Nonetheless, the organizations primarily address problems and needs related to their primary target group, the disadvantaged children and young people.

The needs and problems of the children and young people as expressed by the interviewees are broad and complex, relating to their disadvantaged family background (including living in deep poverty, parents’ low education levels, sometimes illiteracy or unstable employment), social exclusion due to being Roma, refugees and/or in state care and weak community ties, contributing to significant disadvantages regarding knowledge, skills and opportunities in several areas of their lives, including education. “Not just because of the war, but because of where they were born, what they lived in, because of them being Roma, because of their poverty, because of exclusion.” (Interviewee 2) Public institutions were often perceived as failing to address these issues or even exacerbating them; thus, the support provided by these organizations was considered gap-filling.

To address these issues, the social objectives and potentially created social value, as described by the interviewees, encompassed several key areas. One important area is personal development, empowerment and well-being. The initiatives play a significant role in academic improvement (e.g. better school grades and reduced drop-out rates), skill development (e.g. problem-solving, self-control, responsibility, planning, communication, cooperation) and enhancing mental and physical health (e.g. self-confidence, self-expression, sense of structure). Connected to skill development, career opportunities also open, e.g. through the continuation of studies or excelling in sports. “The most visible thing is always communication, that is, self-knowledge, so that they understand that they are responsible for themselves, who they are, what they do will happen, what they do not, will not.” (Interviewee 5)

Another important area is creating new opportunities, providing new perspectives and opening the world, so that participants do not lose their dreams, begin to shape their future and see themselves as equal to other members of society. Organizations help young people spend their free time in fulfilling and valuable ways. They expose them to stimuli they would otherwise not experience. By getting to know other cultures, for example, through international travel or through connections with volunteers from diverse backgrounds, their perceptions and knowledge of the world expand. At the same time, much joy can be seen on their faces as they gain lifelong experiences: “We can give life-changing experiences by travelling all over the world.” (Interviewee 4)

Additionally, fostering a sense of belonging within a community is an important objective. Providing a safe space for community interaction and socialization, which are often lacking in the children’s lives, is crucial from early childhood through adolescence and beyond. Belonging to a community can facilitate exiting harmful life situations or peer groups that could otherwise lead to addiction or other dysfunctional behaviours, and it can also help individuals learn the rules of living together, thereby contributing to broader social inclusion, for example, in school or the workplace. “Community development for us is about building a community of values. An unwritten code of ethics. What we reject and what we can think along, supporting each other.” (Interviewee 6)

Most organizations also engage with parents and other family members, as they view this as vital to improving children’s circumstances. They facilitate community-building, provide skill development that fosters independence, planning and parenting skills, and, in some cases, contribute to employment. “The women had their own tasks, so they were not with us as beneficiaries, but as collaborators, each according to their abilities and knowledge.” (Interviewee 2) At the societal level, the initiatives aim to increase solidarity, assume responsibility for the majority society, and bridge gaps between different social groups by promoting diversity and cooperation.

The social objectives of the initiatives do not solely focus on academic advancement. Instead, based on individual needs, they encompass skill development and empowerment across several interconnected areas, aiming to create long-term, comprehensive social value for the target groups and beyond.

The activities undertaken to generate social value share several common characteristics. One such characteristic is a complex, holistic approach to development. Organizations targeting school-age children primarily offer free educational and developmental activities that are linked to academic subjects, sports, or the arts. These activities usually take the form of classes or sessions held after school on weekdays or on weekends (e.g. mentoring, training or study groups). Additionally, most organizations offer extra free programs, such as community events, trips or summer camps. Combining different educational classes with sports, leisure and art is common; playful group activities accompany individual study sessions, e.g. offering sports activities to participants after they have completed their homework with their mentors, or providing art-based personal development alongside employment- and mental health-related activities. One initiative employs a complex development approach that integrates education, family care, community development, employment creation and institutional collaboration. “We like to say that we build individual life strategies for young people through community empowerment.” (Interviewee 6)

Another common aspect of the activities is their needs-based, person-centred approach. Learning is usually shaped by participants’ individual, social or cultural differences. In most cases, one mentor or volunteer works with one participant, or small groups are organized to provide high-quality classes and intensive collaboration. “One of our basic principles is that the more disadvantaged someone is, the better conditions and professionals they need.” (Interviewee 2)

It is also important to consider the everyday practical difficulties faced by the target groups and to provide solutions tailored to their needs, e.g. free food, donations, or holiday gifts. In some cases, a key consideration is free transportation, as participants would otherwise have difficulty accessing the activities. In the case of a rural organization, small buses have been purchased to transport children from different villages, while an urban initiative has rented a sports field easily accessible by public transportation. “Services must be provided in an easily accessible location, free of charge, and of high quality.” (Interviewee 4)

The organizations also maintain a long-term, consistent presence in the lives of children and young people, fostering trust by working with them for many years and staying in contact even after they stop attending the program. Connected to this is having a building – buying or renting a community house or a sports club – serving as a safe place, where these children and young people can participate in the activities. “Reliability and predictability are the foundations of our program. If you come, we will be happy to see you. There is a place for you here.” (Interviewee 4)

Additionally, flexibility and creativity are essential, as organizations often need to replan and restructure their activities to account for changing circumstances or the needs of target groups. The interviewees are also prepared to support young people through problems not directly related to the primary educational or developmental activities, such as social assistance, mental health counselling or crisis management. “I believe that for children, for people, it does not matter who, if there is a problem, I will deal with it. Everything can be solved.” (Interviewee 3) The activities and methods typically evolve gradually as implementers gain more experience and understanding of the situation, or as the size or diversity of the target group increases. “So it was obvious that school was not enough…First with family care, then step by step we arrived at a complex opportunity-creating model that also includes employment for parents.” (Interviewee 6)

Some activities, therefore, also target parents or other family members, ranging from more informal connections, such as initiating discussions with parents about their children, to visiting families annually or implementing one program element (early childhood development) in their homes, and drafting written cooperation agreements. In some cases, services also target parents, such as social assistance or family therapy and community events are also organized for them. In some instances, employment opportunities are also provided. These activities foster strong connections with the local communities. Activities also target the broader society, including training volunteers and other educational or communication activities (e.g. participating in networks or providing training and methodological support to teachers or other professionals). Additionally, some initiatives specifically aim to involve children from diverse social backgrounds to foster understanding and cooperation. “The kind of approach of bringing people who are marginalized to the centre, we are the ones who are qualified to do this, because they will not come in.” (Interviewee 2)

However, the social value that organizations can create is limited by the number of children they can support and the intensity of assistance they can provide. “We saw that children were leaving school illiterate, and then the goal should be to teach them to read, write, and do math. This is not possible, because with the methodology we use and the opportunity to work with children on weekends, you cannot teach anyone to read and write, but what we can really do is supplement what the children receive at school.” (Interviewee 1)

Despite these considerable limitations, the summarized activities and methods provide gap-filling and valuable solutions to the needs and problems of disadvantaged children and young people. Their socially innovative characteristics, compared with public education and child protection institutions, primarily manifest in the comprehensive, needs-based, person-centred, skill-focused, community-building, and flexible yet consistent approach used.

The financial resources used by the organizations are diverse. Donations from private citizens and companies are crucial in most cases. Campaigns are often successful because many people are willing to support initiatives serving disadvantaged children and young people. In addition to monetary support, volunteer work and in-kind donations play significant roles, including offering free real estate (e.g. training location). Two smaller organizations have limited budgets and almost entirely rely on volunteers to carry out their activities. For one bigger organization, corporate support accounts for over half of the total income, while for another larger organization, private donations constitute about one-third of the annual budget. These resources were regarded as providing flexibility for the organizations and thus fostering creativity. “We operate largely from donations; we do not apply for calls that do not fit our profile. This gives us the professional freedom to innovate something every year.” (Interviewee 1)

Public, especially project-based funding, is also important for most larger organizations. Receiving support from international donors, most notably the European Union, is also common. Several interviewees criticized these funding sources because of their short-term, fixed deadlines and strict, inflexible rules. More secure, long-term statutory funding is available only for one initiative to provide certain educational services, which, in turn, covers only 60% of the employees’ wages. Another initiative – financed by domestic public funding – was discontinued due to the suspension of funding. The organization continued to use the developed methodology with less intensity in another project. Thus, problems with public funding can have detrimental effects on the initiatives’ sustainability and the social value created. “The entire institutional system was familiar with the program, as we recruited participants from all over the country. They considered it very useful, filling a gap, and they wanted it to stay. And we received a lot of promises and encouragement that they would get involved and find the resources, but that did not happen.” (Interviewee 5)

Market-based sales revenues were also reported, e.g. fee-paying classes, professional counselling, charity shops, or web shops. However, as a characteristic typical of the specific organizational field, these revenues usually do not connect to the organizations’ core educational and development activities, constitute a small portion of their budgets, do not significantly reduce their dependence on other sources, or are not even profitable. As a result, in most cases, the financial resources available do not support long-term sustainability. Most interviewees, even from bigger organizations, could plan for only a few months or a year. “We can look ahead for a year. We will still be able to pay the salaries in twelve months, that is all I can say.” (Interviewee 4) This insecurity affects human resources, jeopardizes the social mission, may lead to reduced or discontinued activities, and thus negatively impacts the quality of the service and the social value produced.

With respect to human resources, the founders’ role was considered critical. By the time they launched their initiatives, most interviewees had accumulated many years of professional experience in their respective fields, enabling them to develop innovative solutions to the problems they encountered. Currently, the founders’ or managers’ roles are still essential in maintaining the organizations, as they represent professional quality, security and continuity for the target groups, while finding a replacement has been an issue not resolved in most cases: “I am the one who put my life on this.” (Interviewee 1)

The roles of employees and volunteers were also considered crucial. Smaller organizations primarily rely on volunteers and occasionally employ staff members. All organizations have large followings and can easily recruit volunteers, which also shows that many people support initiatives that help disadvantaged children and young people. Larger, more established organizations have several paid employees, but even in these cases, volunteers play an important role in mentoring or performing other tasks. However, for most organizations, additional paid staff or longer-term, more secure employment conditions are needed, as current conditions result in a high workload. Poor administration, due to a lack of qualified staff, was a common issue in smaller organizations, and challenges with long-term strategic planning and development occurred even in larger organizations. “We are in trouble because we do not have the apparatus to independently write applications, to handle the administration that arises during the implementation of the application. We do not have the energy or people to do this.” (Interviewee 2)

Management processes in smaller organizations can be characterized as participatory, with employees or volunteers regularly engaging in meetings and discussions. In larger organizations, decision-making has become more structured and hierarchical as the organizations have grown. However, many decisions remain decentralized and participatory, with senior colleagues determining strategic directions, other team members assuming responsibilities and feedback from volunteers and participants also considered. These management structures promote flexible problem-solving and the development of creative ideas. However, some interviewees stated that a lack of robust structures can lead to less effective work, and conflicts may arise from tensions between stakeholders with differing views on strategic issues.

The examined organizations employ diverse financial and human resources and primarily use participatory management approaches. While many operational characteristics associated with their specific organizational field or with being social economy organizations in general can be regarded as enabling, others constrain SVC and SI.

At the micro level, the influence of the institutional environment can be accounted for by examining the connections and partnerships between the initiatives under study and other organizations in the specific field. These include professional networks, local welfare institutions, municipalities and other relevant actors.

Partnerships with local welfare institutions (e.g. schools, child protection services) and faith-based organizations were considered relevant, e.g. for securing a location or reaching participants. In some cases, connections amounted to only occasional cooperation due to a lack of interest or communication from public institutions and conflicts were also discussed connected to differing approaches and interests. However, examples of fruitful cooperation were also mentioned. “We had a straightforward, helpful, collegial relationship with everyone we met. They somehow immediately felt that we worked on a common cause.” (Interviewee 5)

Connections to municipalities were also regarded as important. However, in some cases, conflicts were reported, e.g. the local mayor attempting to stop the organization’s activities despite contractual agreements or problematic conditions related to the activity location prompting the organizations to seek less reliance on public actors. Still, local partnerships were, in most cases, regarded as crucial to create the intended social value: “What fills me with a positive feeling is that we have managed to establish a collaboration in the local context. What is negative is that we are not able to bring this to the systemic impact that I had imagined.” (Interviewee 6)

Regarding sectoral cooperation, the organizations often participated in professional networks and, in some cases, international alliances, and considered these forms of information sharing important for professional quality and sustainability. Still, closer cooperation with other domestic social economy organizations was not widespread, often attributed by the interviewees to the need to compete due to unpredictable and scarce funding sources.

At the macro level, the interviewees’ opinions about the institutional environment were, in most cases, negative, criticizing the shortage of qualified professionals, the low-quality infrastructure, the risk-averse, controlled nature of the system, the shifting policy directions and the absence of political or social will for substantial change. Due to these limitations, public institutions were regarded as failing to provide the needs-based, person-centred, flexible and innovative assistance required to improve the situation of disadvantaged children and young people. “The state invented that 30 people will come in, they will give them material, and then everyone will be smart and change. That is not how it works. You have to deal with everyone separately. Special cases need to be dealt with more.” (Interviewee 3)

These institutional shortcomings make the organizations’ gap-filling work even more relevant. Still, the public welfare system is scarcely open to novel, alternative methods and approaches. Civil society initiatives are often viewed as undesirable partners, and official channels through which organizations could voice their opinions and share their experiences are rare, thereby limiting the impact of professional networks. Additionally, the financial environment supporting social economy organizations (as described above) makes their work difficult to undertake.

In most cases, the activities of the organizations under study are constrained by multiple characteristics of the institutional environment. Therefore, the social value created often remains at a local level.

In Hungary, the public child protection and education system has struggled to address the disparities experienced by disadvantaged children and young people, a problem that many social economy organizations have sought to solve over the years by engaging in social value creation (SVC) and social innovation (SI). Analysing six primary qualitative case studies, the research examined the organizations’ social objectives, activities and operational characteristics, as well as the influence of the institutional environment on SVC and SI.

SVC can be regarded as central to the organizations’ objectives, which encompass several interconnected areas that extend beyond improving academic performance, including personal development, well-being, opportunities, perspectives, a sense of community and social inclusion. In addition to disadvantaged children and young people, parents and families, as well as the broader society, are targeted. By addressing social needs and problems comprehensively, the initiatives aim to create long-term societal benefits (Phills et al., 2008). SVC and SI are also integral to the main activities of the examined initiatives, as employing a free, complex, individually tailored, skills-focused, needs- and community-based approach provides solutions to societal problems that differ significantly from existing public institutional practices and that can be regarded as novel for the specific target groups (Havas, 2025). However, the activities provided have considerable limitations, and the organizations cannot, on their own, solve the complex problems experienced by disadvantaged children and young people.

Some operational characteristics of the organizations, that stem from their specific social mission in the field of children’s well-being or can be attributed to being social economy organizations in general, foster SVC and SI: using and combining alternative human and financial resources, including volunteer work, donations or international funding, contribute to flexibility and adaptability; long-term commitment of the founders, strong connections with the local community and partnerships with local institutions lead to reliability and embeddedness; and participatory management structures facilitate creativity and new ideas. However, dependence on project-based funding, low market revenues, low job security, high workloads and management deficiencies stemming from unclear structures or stakeholder tensions can limit professional quality and sustainability, thereby hindering SVC and SI.

Regarding the institutional environment, at the micro level, connections with municipalities and public welfare institutions are common; however, these typically do not take the form of long-term contractual partnerships and can involve conflicts stemming from differing approaches and interests, which affect sustainability. At the macro level, public institutions are regarded as failing to adequately respond to the needs of disadvantaged children and young people due to their centralization, inflexibility and shortages of qualified professionals and capacity. The existing shortcomings of the public institutional system and its lack of openness for collaboration also hinder the organizations’ operation and limit their influence on the overall institutional environment. Therefore, SVC and SI remain at the micro-level, as organizations create and deliver valuable and innovative solutions to their primary target groups that compensate for certain disadvantages, but do not affect long-term, substantial change in the wider institutional system. To increase cooperation between social economy organizations and public welfare services, and to improve their efficiency in addressing the challenges faced by disadvantaged children and young people, these issues warrant attention.

The research deepens understanding of social value creation and social innovation by connecting theory to practice. However, its limitations include a small sample size, a heterogeneous target group by age and a focus solely on the perspectives of the initiatives’ founders or managers. Future research could involve more detailed measurement of the social value generated and the exploration of social innovation processes through longer case studies and social impact assessments. Additionally, a more comprehensive analysis could be conducted through interviews with stakeholders and representatives from public institutions. It would also be valuable to examine the organizations’ economic data to evaluate their operational efficiency compared to public institutions.

The authors used Grammarly, a generative AI tool solely for copy-editing purposes, to improve the clarity of the language and grammar of the original existing work, adhering to the Journal’s principles of AI usage.