Case Study

Bergendóc a Social Enterprise^[1]: “Rise and fall to be born again”

The following case study was taken place in Hungary, where due to financial advantages a dynamic development of social cooperatives^[2] is detectable. Therefore bare in mind that although being instructive for any kind of social enterprise the case study is focused on social cooperatives.

In 2013, the Bergendóc Social Cooperative initiated its operation with 9 founding members and 112 EUR of capital ― which came from the contributions of the members. The aim was to create a stable and financially self-sustainable social enterprise that would create secure, local jobs and enable the economic and social development of the region to be coordinated. Bergendóc is a fairy tale nickname born from the names of three villages Pusztaszer, Ópusztaszer and Dóc. Following its establishment, the organisation received nearly 47 thousand EUR in funding from the Social Renewal Operational Programme providing aid for less-favoured areas (LFAs). The funding created the following opportunities:

1. Employment and training of 12 individuals,
2. setting up a workspace for the processing of local products,
3. establishment of a rest place and exhibition area for enhancing tourism,
4. promotion and sale of locally manufactured products.

In the first two years of the company’s operation, there was almost no market revenue. There were no attempts to generate income, as if the initial agenda of being financially self-sustainable had been forgotten along the way. Everyday activities were focused on infrastructure developments and events (e.g. free summer camps for children) financed by funds. The operation of the cooperative was therefore made possible entirely by grants, and they did not have a real financial plan without the implementation of the tender.

The following table displays the total income and expenditure of the first two years (2014-2015):

In the first two years of operation the company generated a small amount of market revenue in 2015, mainly from the lavender festival. Even after it was obvious that funds dried up, neither a business plan nor a financial plan were drafted. However, the enterprise tried to sale some of its newly developed products such as tea, soap and different kinds of jam made from local herbs ― chamomile, rosehip, elderberry etc. ―, also selling artisanal cheese of different flavours produced from local milk.

Since there were no adequate market research target groups for the products could not assessed by their needs causing a misuse of communication and marketing channels, all of which in the absence of real market access resulted in the halt of otherwise viable initiatives. At the same time a website was established as a non-objective result where those interested could gather information about the project, and which acts as a knowledge-sharing platform of social cooperatives and rural tourism in general. Also, a Facebook profile has been set up.

The enterprise overall did not operate as a business, it lacked entrepreneurial attitude and management of finances. Income from market activities did not even come close to the level of fixed costs, so it is no wonder that in 2016 the company could no longer keep its employees, since it could not pay wages. In the absence of self-generated income and funds, employment ended and the production of local products also failed.

As soon as the external financing of the cooperative came to a halt, the issues of market adaptation gravely influenced the future of the enterprise: the organisation was unable to become an independent operator. The costs of operation could no longer be financed at all, so the Bergendóc Social Cooperative was in crisis.

The case study shows that choosing the right agenda ― economic, social and cultural ― alone is not sufficient to be effective in the long run, and that no social enterprise can rely solely on grants. Since the cooperative was unable to develop the activities that could have ensured market operation, the organisation barely survived the next 2 years. As a result it could not live up to its socio-economic and cultural role in the local community.

In 2018, the co-operative was “borne again” thanks to successful partnerships and compliance with market demands. Nowadays, together with the municipalities of the surrounding settlements ― e.g. Dóc, Balástya, Pusztaszer ― and with the governance of their main attractions ― National Park of Kiskunság, Memorial Park of Ópusztaszer, Csillagösvény Labyrinth ― the cooperative carries out various events that vitalises the community and programs focusing on cultural inheritance.

^[1] Case study by Krisztián KIS (2017) on Researchgate: The role of social cooperatives in rural development.

^[2] Also written as „Co-op.”: a company that is owned and managed by the people who work in it. See more at the end of the chapter under definitions.

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