Between traditional sheltered work (which has poor outcomes and increasingly few advocates) and competitive employment in the open labour market (which is the goal but not always immediately reachable) lies an interesting third option: the social firm. Sometimes called a work-integration social enterprise (WISE), a social firm is a real, market-trading business — a café, a bakery, a print shop, a cleaning service — that is structured so a substantial proportion of its workforce are people with disabilities or serious mental illness, paid the same wages as anyone else doing the same job.
A social firm is a business that competes in the open market and intentionally builds its workforce around people who face barriers to mainstream employment, paying competitive wages and treating employees as employees rather than service recipients.
Where the idea came from
The social firm model emerged in Italy in the 1980s alongside the country's de-institutionalisation movement. As large psychiatric hospitals closed, communities had to find ways for former long-stay patients to participate in economic life. Italian "Type B" social cooperatives were given a legal framework: the cooperative had to employ at least 30% of its workers from disadvantaged groups (including people with mental illness), and in return received certain tax and procurement advantages. The model spread to Germany, the UK, Scandinavia, parts of Asia, and Canada and the US.
The European Union now estimates there are tens of thousands of WISEs across member states, employing hundreds of thousands of people who would otherwise face significant barriers to work. The European Commission's Social Economy Action Plan includes WISEs as a strategic priority.
How a social firm differs from a sheltered workshop
The difference is not subtle. A sheltered workshop is a special programme; a social firm is a business.
- Wages. Social firms pay at least minimum wage and typically prevailing wages for the role. Sheltered workshops historically paid sub-minimum wages under special exemptions.
- Customers. Social firms compete for real customers. Their products and services have to be good enough for the market.
- Identity at work. Workers in a social firm are employees with employment contracts, not "trainees" or "clients."
- Sustainability. A meaningful share of revenue (typically more than half) comes from market trading rather than grants.
Who works in social firms
A typical social firm has a mixed workforce — some employees with disabilities or mental illness, some without — working alongside each other. The ratio varies by jurisdiction. Italian Type B cooperatives require at least 30% disadvantaged workers. UK social firms historically aimed for 25% to 50%. The mix matters: too few disabled workers and the firm loses its identity; too many and it begins to feel like a sheltered programme again.
Examples in the wild
Well-known social firms include:
- Pacific Coffee Cooperative in California, employing people with serious mental illness as baristas.
- The Big Issue in the UK — a magazine sold by vendors who have experienced homelessness and often serious mental illness.
- Le Pain Quotidien's social bakery franchises in several European cities.
- Specialisterne, originally a Danish IT consultancy that recruits primarily autistic adults; the model has been licensed worldwide.
- Greyston Bakery in New York — known for "open hiring" and supplying brownies to Ben & Jerry's.
Many smaller social firms operate at a neighbourhood scale: catering services, gardening collectives, second-hand shops, packing and assembly contracts, recycling operations.
What the evidence says
Evidence on social firms is more limited than on IPS. The main findings, mostly from European observational studies:
- People who work in social firms report high job satisfaction, sense of belonging, and improvements in self-esteem.
- Job tenure is typically much longer than in mainstream entry-level work for the same population.
- Hospitalisation rates are lower among employed cooperative members in several Italian and German studies.
- Transition rates from social firms to mainstream competitive employment are modest — most members stay in the social firm rather than moving on, which is sometimes a feature and sometimes a limitation.
Strengths of the model
- Real wages and real work. Workers are not paid pity rates and are not doing make-work tasks.
- Predictable supports. Schedules, supervisors, and colleagues are designed with mental-illness realities in mind — quiet rooms, predictable shifts, allowance for medical appointments.
- Identity. "I work at a bakery" is a different self-description from "I attend a programme."
- Community visibility. Social firms often locate in busy public spaces, normalising contact between people with mental illness and the wider community.
Limitations and critiques
- Wages, while real, are often modest because the businesses run on tight margins.
- Some social firms struggle to compete on price with mainstream businesses; subsidies or procurement preferences are often needed.
- Critics argue social firms can become "soft sheltered" environments if they don't move people toward mainstream employment.
- Geographic access is uneven; rural areas have far fewer options.
Wages from a social firm are still wages and will affect SSI, SSDI, and Medicaid in the same way other earnings would. A benefits counsellor through SAMHSA's Ticket to Work programme can help model the impact.
How to find one
In the UK, Social Enterprise UK and Social Firms UK maintain directories. In the US, the Social Enterprise Alliance and many state-level networks can point to local options. NAMI affiliates often know which businesses in town hire people with serious mental illness or operate as social firms. Italian regional consortia of Type B cooperatives publish member lists.
Where social firms fit
For some people with schizophrenia, IPS-supported competitive employment in a mainstream business is the right path. For others, the structure, predictability, and built-in understanding of a social firm makes work sustainable in a way that mainstream jobs do not. Both are legitimate. The best vocational systems offer both, and treat the choice between them as a personal one rather than a hierarchy of "real" versus "fake" work.
This article is for educational purposes only and is not medical advice, diagnosis, or treatment. Always consult a qualified mental health professional. If you or someone you know is in crisis, call or text 988 in the US, or your local emergency number.