The International Journal
of Not-for-Profit Law

Volume 3, Issue 3, March 2001

By Alceste Santuari

This article draws significantly on a previous paper written with Carlo Borzaga. I wish to thank him for his suggestions and input, without which the present article would not have been drafted.

1. Introduction

On 18 October 2000, the Italian Senate passed the Social Care Reform Act.[1] This law will fundamentally change the entire Italian social welfare system. This system was originally created in 1890 with the passage of the so-called “Crispi” Act (named after the then Prime Minister), which served as the basis and framework for the Italian Welfare State until last year. Therefore, after 110 years, a new Act of Parliament provides the new rules according to which future actions in the field of social services will be implemented in Italy.

The new act places itself within a context of a long-established history of state intervention in the field of services to people and as well as a context of the widespread presence of charities. Against that background, this article intends to provide an account of the historical and legal evolution of the not-for-profit sector in Italy. This evolution is closely intertwined with the establishment and development of the modern concept of the Italian Welfare State.

Part 2 of the article will focus on the development of Italian charities during the nineteenth century; Part 3 will be devoted to underlining the period 1900-1950, in which both the Civil Code and the Constitution were passed; Part 4 will deal with the evolution of the Welfare State from the ‘50s through the ‘70s; Part 5 will describe the situation after the ‘70s; Part 6 will include the main legislative acts concerning not-for-profit organizations passed in the ‘90s. Finally, Part 7 will depict the main contents of the new Social Reform Act 2000 and in Part 8 some concluding remarks will be made.

2. The Historical Evolution of the Not-for-Profit Sector in Italy

2.1 Premise

In Italy, despite the picture of a relatively weak and generally underdeveloped not-for-profit sector, this sector has recently (‘80s and ‘90s) evolved in a very dynamic way. As opposed to an almost absolute disinterest of the past, the sector has indeed gained a lot of attention over the last decades.

How can both this situation and evolution be explained? There are several aspects worth considering:

1. the peculiar structure of Italian capitalism, which consists of a considerable number of small- and medium-sized enterprises, as well as a few large companies owned by a few industrial families (from whose wealth foundations are created);
2. the strong and meddling presence of the state not only in the provision of social welfare but also in economic activities, both at the national (electric and oil companies) and the local level; and
3. the robust role of co-operatives and the (legal) weakness of associations.

However, the aforementioned causes are to be better stated and more deeply analysed by looking at them from a historical point of view. Indeed,

• until the nineteenth century, the not-for-profit sector was well developed. On the one hand, there were numerous charities linked to the Catholic Church, especially engaged in the field of education and social care; and, on the other hand, there were many societies, such as co-operatives and mutuals, which were connected with the Socialist movement and trade unions;[2]
• from 1890 on, the sector underwent a series of shocks due to:
• the incorporation into the state of most of the then existing charities, as a consequence of the ideological position that the authorities of the state had to interfere with the carrying out of not-for-profit initiatives;
• the Fascist régime (the 1920s-1940s period), which fought against all local initiatives and intermediate bodies (e.g., the co-operative movement), in which most not-for-profit organizations had developed, because these initiatives were regarded as dangerous to the national state;
• the ideology of public and state welfare, which took place after World War II and reached its peak in 1978 when the National Health System was established.

These factors may help explain why the not-for-profit sector was reduced to minimum size at the beginning of the 1970s, when:

1. There was a restricted supply of social services (both public and private) compared with other European countries with similar levels of income. The only two exceptions were in education and the health services, which covered the whole population and were mainly public. The limited supply of social services was due to the large role of the family in providing social support and the inefficiency of the public administration, which was theoretically responsible for the management of such services.
2. There was a small third sector, whose functions were confined to advocacy and to ‘mutual’ ends (to the sole benefit of its members). The only well developed organizations were large associations and co-operatives. Particularly important among the associations were those lobbying for invalids and two other national associations, namely, ARCI and ACLI, which had political ties with the Communist party and with the Christian Democrats, respectively. Co-operatives were regulated by a law passed in 1947, which, in spite of the “social aim” recognised by Section 43 of the Constitution, confined them to operating only in the interest of their members. There were few foundations– those that existed were small in size and were mainly operating foundations. The few not-for-profit organizations engaged in the production of social services (mainly for the elderly) were tied to the Catholic Church and depended on public subsidies– all the others had been transformed into public agencies in the nineteenth century.[3]

During the 1970s, the sector began to re-emerge again largely as a consequence of the crisis of the welfare model and due to a reawakening of civil society, in which the Catholic Church and extra-parliamentary movements played a major role. Accordingly, the development has followed three stages:

• the emergence of the sector;
• the public and legal recognition of the sector; and
• the strengthening of the sector (both legally and financially).

2.2 The Development of Not-for-Profit Organizations During the Nineteenth Century: The Act of 1862 Relating to Charities

Until the end of the eighteenth century, charities and voluntary organizations freely developed according to the changing social needs of the community. Social work, health care, alms, housing, and education were all areas in which charities evolved.[4] Human and material resources were invested in charities, which in turn distributed them to the community or a significant part of it.[5] As long as a charity was established to achieve a beneficial purpose, it could continue on without being checked or even prevented from existing just because of legal and political hindrances and hurdles.[6]

After the Unification of the Reign of Italy, the Parliament passed the so-called “Great Act” on charities, which represents the very first enactment relating to not-for-profit organizations in Italy. Despite a general aversion to charities that was to gain more and more consensus as time went on, Law n. 753 of 1862 was an attempt to preserve and respect the reality of Italian charities. Indeed, at that time, there was a remarkable number of not-for-profit entities engaged in education, training, schools, kindergartens, almshouses, hospitals, institutes for the poor, the sick, the deprived, and child care centres. However, along with carrying out indoor and residential care activities, the charities of the time were particularly active in terms of providing for the financial and monetary support to widows, ex-prisoners, orphans and so forth.[7]

The Act of 1862 acknowledged a certain degree of freedom for charities, sanctioning the independence principle of benevolent institutes, which were to be free of any state meddling and interference. This meant that many charities were allowed a link to the Church, so as to carry out different activities. The inspiring criteria of the Act of 1862 were defined by rules of freedom and people’s control over charities so as to take them away from the control of the state. The authorities of the state intended to maintain charities in the condition in which they had been established within the scope of the law and abiding by their own by-laws and regulations.[8] The Act of 1862 extended the concept of charity to credit, savings, securities, and co-operative organizations, though not necessarily those addressing the poor.[9] Thus, the Act was largely based on the devolution principle, and it lacked any detail that would collide with the different customs and uses of the Italian counties. Furthermore, the Act proposed the highest respect for the will of the founders of charities, when not contrary to the public interest. The general supervision of charities’ activities was entrusted to county authorities.

2.3 Suspicion and Discouragement

2.3.1 The Act of 1890

As has been stated above, beginning at the end of the eighteenth century when the French Revolution broke out, except for suspicion about and aversion to charities began to grow in Europe (with the exception of England[10] They were mainly regarded as belonging to extraneous powers, especially the Catholic Church. Thus, the theory developed that charities should be destroyed because they represented a third party, interfering in the relationship between the government and individuals. Indeed, the ideology of the Enlightenment suggested that the state was the highest and supreme interpreter of the people’s will and no other established body should exist. Citizens were supposed to strengthen the authority of the state in order to widen and protect their individual rights. The liberal form of the state, which the French Revolution affirmed, implied the isolation of individuals in relation to the state.[11] Accordingly, the legitimacy of intermediate bodies was to be denied. Freedoms belonged only to single individuals and not to social groups, such as corporations, foundations and associations, which were consequently excluded a priori from any active role and welfare function. In continental Europe, therefore, the role which had been always peculiar to charities and voluntary organizations was replaced by the authorities of the State.[12]

In those countries, like Italy, where the ideology of the French Revolution rooted itself in the thinking of the civil service, the government did not hesitate to pass legislation that prevented religious and charitable organizations from owning property, from developing their resources and finally from carrying out activities without a specific state authorisation.[13] The suspicion towards not-for-profit organizations contributed to fostering the isolation of those organizations, which had been regarded as having a residual role in economic relations. [14] Where this was not the case, the authorities of the state passed legislation aimed at incorporating the functions of private charitable organizations into public bodies that were directly controlled and managed by the government. In Italy, this process occurred with the passage of the Act of 1890 relating to Welfare and Benevolent Public Institutions (IPABs) – still presently in force – by which the government institutionalised benevolent and philanthropic organizations that traditionally had been the expression of individuals in social groupings.

The supervision of not-for-profit organizations, which had been introduced by the Act of 1862, was replaced by a more stringent form of regulation, by local representatives of the central government. From the administrative, legal, and political points of view, the new legislation made charitable institutions subject to the very rules and provisions concerning municipalities. The Act of 1890 thus made a radical change in the concept of charity and social care, which had been provided for in the previous Act of 1862. Indeed, whereas the latter included all pious, religious and public utility organizations, the Act of 1890, on the contrary, affirmatively required the secularisation of charity, which moved from being entrusted with the local community into a becoming function of the state.[15]

From a legal point of view, it is with the Act mentioned above that the terms “State” and “public” started to be regarded as synonyms and were to be considered as such even later. “Public,” therefore, came to be identified with “state” provision of social services and not with the purpose that the organizations, both public and private, pursued.

3. From 1900 to 1950

The first years of the century witnessed the birth of the modern Welfare State in Italy. In 1903, the Act relating to popular and economic housing was passed; in 1904, the Parliament enacted the law on industrial accidents and the relevant insurance; in 1910, the maternity national fund was established. Such progressive expansion of state functions in the field of social service provision was to be strengthened even more during the Fascist period (e.g. 1922-1943).

3.1 Fascism

Although one might think that Fascism as such could represent the most difficult time period as far as the existence of not-for-profit organizations is concerned, that was not clearly the case. Although it was affected by authoritarianism and an anti-freedom ideology, the Fascist régime regulated the not-for-profit sector in much the same manner as the regulation produced by the liberal thinking that had defined the foregoing decades. Accordingly, on the one hand, Fascism tended to hamper and include most not-for-profits and co-operatives[16] within the corporatist State. On the other hand, it expanded the spectrum of Government action in the social field:

1. by passing, in 1925, an act that introduced the compulsory insurance for invalidity and aging;
2. by establishing, in 1926, the National Institution for Maternity and Childhood, by which pre- and post- natal health and social care was introduced; and
3. by passing, in 1937, an act that extended social provisions “to all individuals and families whom found themselves in particular needy conditions.”

3.2 The Civil Code of 1942

During the first decades of the twentieth century, the reform process of the codes enacted during the previous century also began. In this respect, the creation of a general and unified legal regime for associations and foundations is the outcome of the reform of the Civil Code of 1865, which began after World War I and resulted in the passage of the Civil Code of 1942, still in force at the present day. The Code of 1942, like all the other codes deriving from the Napoleonic Code, was particularly interested in fostering and supporting those organisational forms, i.e., companies, whose objective was to produce wealth and profits. Therefore, organizations pursuing objectives other than the foregoing ones were to be treated as marginal and of less importance.

The Civil Code did not repeal the acts that had been passed during the nineteenth century. Rather, the provisions of the Code added a more clear-cut distinction between state-controlled entities and companies. Associations and foundations were (and are still) addressed in the First Book of the Civil Code, most of the provisions of which are concerned with the control that the authorities of the state have to perform over not-for-profit organizations. Although a certain degree of freedom of association was granted, the First Book of the Civil Code of 1942 was characterised by the incorporation procedure that associations and foundations had to accomplish in order to gain legal personality. Simultaneously, the Code’s intention was to state that these organizations were to carry out non-economic aims. This was also confirmed in Section 13, which reads: “Companies are provided for by the Fifth Book” (i.e., the one concerning commercial entities), thus explicitly excluding any mix of company forms and the pursuance of social aims.[17]

3.3  The Constitution of 1948

The passage of the Constitution of 1948 marked, at least from a theoretical point of view, an outstanding step in the history of not-for-profit organizations. On the one hand, the Constitution recognised the dignity and role of these entities as free expressions of the human personality within civil society (s. 2). On the other hand, it was exactly associations that the Charta of 1948 entrusted with almost all the functions and actions concerning the community at large.

The affirmation of the democratic and liberal ideals, which were to inspire the new civil order and the willingness to radically cut off the experience of the former Fascist regime contributed to grant and guarantee the inviolable rights of individuals not only as individuals but also within not-for-profit organizations. Therefore, the proclamation of a pluralistic society was to imply the defence and guardianship of some essential, social liberties, such as freedom of care, education, association, the social function performed by co-operative societies, as well as the relevance of citizens’ participation in the decision-making process and in the political life in general. The Copernican revolution that the Constitution brought about meant to mark the shift from an era in which suspicion and fear of non-economic organizations prevailed into a phase of recognition and support of these entities.

4. The Consolidation of the Modern Welfare State

4.1 From the ‘50s Through the ‘70s

From the aftermath of War World II until the years of economic and industrial development, the history of the intervention of the state in the economy was much more like what had occurred during the previous decades than being a real novelty. In fact, despite the return to democratic governance, there did not develop a genuine and effective promotion of civil society. Social policies were defined by a twofold process:

1. on one hand, there was a progressive expansion of public intervention in service provision to certain sectors as well as to certain categories of individuals; but
2. on the other hand, there was an extension of public funding to private associations so that they could carry out social service provision.

The very choice for pluralism of the Constitution of 1948, within a political context that was too fragmented and rigidly structured, ended up being implemented as a mere clientelist and a low-profile social care system.[18]

Pension Funds, which were to be supplied according to a highly fragmented and corporatist system, remained the principal fundamental aspect of the social security system. The main objective was to preserve or integrate the socio-economic status accrued with one’s own job, with the intention of preserving instead of modifying the framework that caused great social inequalities.[19] The emerging middle class, which demanded better wages, was granted insurance policies and privileged services, with the evident aim of the government being to ensure a wide network of political consensus.[20]

4.2 The ‘60s and the ‘70s

During the 1960s and 1970s, the social security system was made more clearly universal and there emerged the necessity of overcoming the poverty criterion as the condition under which to access social services was made available. Social services shifted from being seen as a discretionary measure to support disadvantaged people to being seen as necessary resources of an integrated development program. This shift in approach was seen to create an opportunity for all citizens, including the strongest individuals and classes of the industrial society, to avail themselves of the social services provided by the state.[21] With reference to the re-distributive ethic, the universalist principle was connected to the principle of equality of service. This was interpreted as an opportunity for a territorial distribution of equal services to each local community and to each citizen, on the basis of centralized minimum and pre-arranged standards.[22]

5. The Situation after the 1970s

However, in the late 1970s, the traditional welfare model began to crumble. At that time, real signs of a change in the concept of not-for-profit organizations and of their role in society started to become more clear.

The role of the family in providing social support declined, following the growth of women’s participation in the labor market. At the same time, there was a growth of the elderly population and the emergence of new needs connected to the so-called “post-materialist poverty” (e.g. mental disability, homelessness, drug abuse, immigration, and long-term unemployment). These could not be tackled using traditional monetary transfer policies, and so there was a growing demand for both traditional and new social services. Moreover, the private and public firms which had participated in implementing the “welfare system” by financing unemployment insurance schemes and employing less productive workers had to face growing international competition after the oil crisis. This process resulted in the marginalization of a number of hard to place unemployed.

The public sector, mainly the local authorities, should have met this demand by increasing the supply of services, but the poor management of public agencies prevented them from doing so. Above all, the public sector was manacled by the ongoing financial crisis of the Welfare State. While transfers automatically grew, financial manoeuvres to curb public spending resulted in a freeze of recruitment in the public sector. This resulted in an inability to adapt to the demand for social services. It was in this situation that some groups of people, often connected with the Catholic Church[23] and reliant on volunteers, started attempting to bridge the gap between the demand for and the supply of some social services by inventing new provisions and new organisational forms, which subsequently were legally recognised and gained wider acceptance.

Legal recognition of the legitimacy of private initiatives in the social service sector began with the decision of 24 March – 7 April 1988, No. 396 handed down by the Constitutional Court. This decision declared Section 1 of the Act of 1890 (according to which the state and the local authorities were to give organizations providing social services a public status, thus recognising that only public bodies could carry on such activities) contrary to Section 38 of the Constitution of 1948, since the latter stated that “private care is free”. The Court stressed that

the requirements which the Act of 1890 had provided for were no longer to be regarded as adequate to the changed time situation and to the evolution of public agencies, given the direct responsibility taken upon themselves of certain categories of interests the accomplishment of which was instead assured, under the force of the Act of 1890, almost exclusively by the initiative of private individuals, which was then subjected to public control, so as to form a system of “legal philanthropy” that would have otherwise been wholly lacking.[24]

Consequently, Section 1 of 1890 was declared unconstitutional since it did not state the possibility that those charities providing social and health services could continue their activities using the form of private not-for-profit organizations. It followed then that the organizations that had been absorbed by the state were given the right to return to their original legal form (namely, charities), assuming they could meet the legal requirements demanded by the decision itself (i.e., being established by private individuals, being mainly managed by private individuals and having assets which are not derived from public funding). What is more important is that this decision gave full legitimacy to citizens who wished to establish and manage private organizations to provide social services. Furthermore, the decision of 1988 began to pave the way for a new form of participation of not-for-profit organizations in the supply of social services. Therefore, not-for-profit organizations would no longer be only a replacement for or be seen as marginal with respect to the actions of public agencies, but they would begin to develop partnerships with the latter.

6. Legislative Action During the ‘90s

This new phase of recognizing the importance of not-for-profit organizations began with the 1988 decision of the Constitutional Court. It has also been enriched by a series of laws passed by the Italian Parliament during the 1990s, namely, the Banking Foundations Act, the Social Co-operatives Act, the Voluntary Organizations Act, the Socially Oriented Nonprofit Organizations Act, the Social Promotion Associations Act and finally the Social Care Reform Act of 2000. This legislation is briefly described in the paragraphs that follow.

6.1 The Reform of Banking Foundations

In 1990, the Government began the process of reforming the entire banking system by privatising public and saving banks. This was achieved by dividing, on one hand, the actual banking company and, on the other, creating a new institution (a foundation) which was intended, at first, to own the majority of the bank’s shares.

After years of legislative enactments, which have not always been consistent in terms of general policies,[25] the evolutionary process of creating banking foundations was completed in 1999. Decree Law No. 153/1999 states that banking foundations:

1. are private not-for-profit organizations whose aim is to pursue social utility objectives and to foster economic development;
2. must progressively reduce their control over the bank’s stock within a four year period;
3. must direct the spending of all their profits to supporting actions and projects in not-for-profit areas, such as scientific research, education, fine arts, conservation and promotion of cultural works and activities, and environment, health, and social care for needy members of society; and
4. can carry out entrepreneurial activities only if these are directly ancillary to the foundation’s social aims.

This process of banking reform and the creation of the banking foundations has resulted in the presence of a number of grant-making foundations in Italy, whose corporate purpose is to support and fund not-for-profit initiatives.

6.2 The Act of 1991 Relating to Voluntary Organizations[26]

This Act acknowledged the role of organised voluntary work, regulated it (allowing these organizations to use a small number of paid employees), provided for the enrollment of such organizations on special registers, and granted them a number of tax benefits (although the main benefits were not actualized until 1997). This law has certainly given momentum to the voluntary movement in Italy, since voluntary action has been recognised as a fundamental and intimate part of the life of individual citizens. In this respect, for instance, it is noteworthy that the Act of 1991 provides for compulsory insurance policies for the volunteer employees of any organizations who are engaged in risky activities. Nevertheless, the law seems to envision a voluntary world that is still too dependent on public funds for its survival. Indeed, one of the main benefits for voluntary organizations to be enrolled in the regional registers is to be eligible to compete for social services contracts from the public authorities.[27]

6.3 The Act of 1991 Relating to Social Co-Operatives

This law defines the form of co-operatives operating in the field of social services.[28] The law changed some of the restrictions on traditional co-operatives, most of which had been involved with activities beneficial only to their members. With respect to the new form of social co-operative, the Act of 1991 states that:

• social co-operatives must operate “in the general interest of the community and for the social integration of citizens;” and
• social co-operatives may have voluntary members, but only up to a maximum of 50% of the membership.

Members could also include volunteers, workers, consumers and legal persons (including municipalities).

The law also grants tax benefits to social co-operatives, the most important of which is a reduction to 4% of valued added tax on sales of services.[29]

The law provides that social co-operatives can be of two types:[30]

1. co-operatives delivering social, health and educational services; and
2. co-operatives producing other goods and services, for private customers or for public agencies, with the objective of achieving the integration into work of disadvantaged or hardly employable workers amounting to the legally fixed minimum of at least 30% of the workforce (members and non-members).[31]

The law on social co-operatives allows the national and local public authorities and their agencies to contract out the production of services to social co-operatives. Nevertheless, the act does not specify the form that such contracts should take, and therefore it did not modify the rules that already regulated the contractual relations between private providers and public agencies in completely new fields like social services. The sole exception to this is the provision which authorises public authorities to reserve up to 20% of the public demand for goods and services for social co-operatives engaged in the integration into of disadvantaged persons into the workforce, without their being obliged to bid for the tender.[32]

6.4 The Act of 1997 Relating to Socially Oriented Not-for-Profit Organizations (ONLUS)

Despite the passage of the two acts of 1991, discussed above, the not-for-profit sector was still searching for a clear legal context in which to place its operations. Thus, debates on whether legislation was required to give sharper definition to the characteristics of not-for-profit organizations and to guarantee them support, above all fiscal in character, started to occur. In 1996, after years of debate, an enabling act authorised the Government to legislate on these matters. This led to approval of Decree Law No. 460 in 1997. However, although this law was supposed to bring about a general reform of not-for-profit organizations, it was thought of and actually drafted as a tax law. Undoubtedly, this law has played an important role, in the sense that it brought the Italian not-for-profit sector to the surface so that it came to be widely known by the public at large. The law also created many fiscal benefits, which have traditionally been provided for in numerous acts, in one legislative enactment.

Despite these merits, the Act of 1997 does not seem to have given new impetus to growth of the sector. In fact:

1. since it is a fiscal measure, it leaves intact – and perhaps aggravates – the problems created by gaps in the civil law;
2. in contrast to the legislation approved in 1991 which established new legal forms, the 1997 decree law has created a new organisational form (the ONLUS: socially oriented not-for-profit organizations) which cuts across the legal forms in existence, pointlessly increasing the fragmentation of the sector; and
3. by overlapping legal forms and activities, it attributes equal merit not only to different organizations, but also to different types of activities (for example, it grants the same tax relief to care-givers of the terminally ill as to sports clubs).[33]

After some years of being in force, one may state that the problems, especially of interpretations that the Act has introduced into the system, seem to have overwhelmed the benefits that had been foreseen.[34]

6.5 The Act of 2000 Relating to Social Promotion Associations

This act strongly affirms the importance of not-for-profit associations as a means to promote equal opportunities, solidarity duties, citizenship rights, culture, and research activities. The law does not actually provide for a new legal forms, but according to a long rooted administrative practice of establishing special registers for not-for-profit organizations, it introduces a new register for associations carrying out the aforementioned activities. Similar to the requirements for voluntary organizations, the act states that the activities of social promotion associations are to be performed almost exclusively by volunteers.[35] The act stresses once again the “preference” for not-for-profit associations by local authorities in contracting out services. By and large, this act restates many of the aspects of the Voluntary Organizations Act of 1991 and makes some jurisprudence[36] and court decisions legally binding.

7. The Social Care Reform Act 2000

Against this background and after years of parliamentary debates,[37] the Parliament passed the Social Care Reform Act.[38] Many provisions are included in the Act, not all of which are relevant here. For the purposes of this article, it is worth mentioning those legal provisions dealing with

1. the relationships between public authorities and not-for-profit organizations;
2. the position and the role of not-for-profit organizations;
3. the tasks of local authorities and the government; and
4. the reform of IPABs.

7.1. The parliamentary debates and the numerous seminars and conferences that have been held during the progress of the Act have consistently highlighted the necessity of better defining the relations between the national and local governments. They have also stressed the need to introduce a different way of interpreting the link between public authorities and not-for-profit organizations into the Italian legal and social system. In dealing with the relationship between the national and local governments in sub 3, the Act also clarifies that it is useful to deepen the ways and conditions in which the authorities of the state (and progressively the local authorities) relate to not-for-profit organizations. This is known as the “subsidiarity principle”.[39]

After stating that the Act provides for an integrated system of interventions and social services, promotes actions to ensure life quality, equal opportunities, citizenship rights, and prevents and eliminates disability conditions, the new law entrusts the programming and organisation of the whole system of interventions and social services to local authorities, regional, and central governments (section 1 (2)). Section 1(3) then calls upon those authorities to “recognize and promote” the role of not-for-profit organizations in the “programming, organisation and management of the integrated system.” But the Act also states that the management and supply of social services is assigned to public authorities along with not-for-profit organizations.

Along with not-for-profit organizations, the law provides for the involvement of families, self-help organizations, and trade unions, thus hinting at the intention of the legislature of extending the spectrum of organized bodies in charge of constructing the new social care system.

As to the actual relationships between public authorities and not-for-profit organizations, the latter appear to be regarded as stable and qualified partners, not only to supply social services but also to develop and organize them. In order to regulate the supply of services, the Act provides that the regional laws, which are required to implement the national law, will need to design proper contracting-out policies. These will have to allow for the full project implementation capacity of not-for-profit organizations, so as to respect their peculiar identity. In addition, city councils, on the basis of specific parameters, will be in charge of granting not-for-profit organizations operating in the field of social services the necessary authorization/formal evaluation that will enable them to run and manage housing for the elderly or residential care centers.

7.2. From what has been discussed in the preceding paragraph, it follows that the role that not-for-profit organizations will play in the new social service provision scheme envisioned by the Act is quite significant. Not-for-profit organizations are called upon to actively participate in the definition of the new social care system and to implement it on the local level. In particular, not-for-profit organizations, given the experience accrued “in the field” and having a capacity for innovation, can actually play a crucial role in the planning and development of social services. Much will depend, of course, on the manner in which local authorities, at different levels, will consider the presence of not-for-profit organizations in the planning process. Indeed, if the latter are to be deemed as mere “passive” terminals of implementation, namely, as public office branches in disguise, their role will be insignificant. On the other hand, if their participation and potential are regarded as fruitful and highly relevant for the whole local community, not-for-profit organizations undoubtedly are going to experience a new era of development.

However, the new perspective provided by the new legislation – already tangible in some parts of Italy – requires a more thorough awareness on the part of not-for-profit organizations. In fact, they are often more oriented to act as operating units “on behalf” of public administration, rather than acting as a direct and organized expression of civil society. Such an orientation has a great deal of influence on the ways by which social services are contracted out by local authorities. The authorities are much interested in saving money and therefore, they tend to entrust the management of one service to the not-for-profit organization which offers the lowest price in a tender. The new law intends to overcome these tendencies by providing for specifications other than price alone as relevant to a winning bid (section 5 (2)), which should allow for a better allocation of services and a greater effectiveness of delivery by not-for-profit organizations. Finally, the Act make the public authorities specifically responsible for the promotion of actions to support and qualify not-for-profit organizations for social service contracts, also by means of training policies and favored access to European Funds.

7.3. In a political situation in which there has been much fierce debate about the necessity of approaching a completely federalist reform of the state, the Social Care Reform Act places itself at the heart of the question. Indeed, the government, since the presentation of its original bill, has strongly wanted to clarify that any social care reform would also imply a certain degree of devolution of powers from the central government down to local authorities. It is exactly with this perspective and direction that the Act provides for a number of interventions and actions, which are to be co-ordinated and managed jointly by different powers of the state. In particular, the legal framework of the new law provides that the central government be in charge of adopting some general and directing regulations, which are to be implemented by regional governments and city councils respectively.[40]

The text of the Act is replete with references to devolution of powers and direct responsibility on the part of local authorities. Although this is already reality in many parts of Italy, such a specific approach may create room for difficulties and misunderstandings. A rigid logic according to which the central government just “passes” its power down to other public authorities, often in the face of a previous government act that fixes and defines most of the rules which the delegated public bodies must follow, appears to be a fairly ineffective form of devolution. In fact, a mere devolution of power without a defined and clear framework in which not-for-profit organizations are required to be involved in the development and implementation of social service programs is bound to replicate, at the local level, the same flaws that have long characterised the intervention at the national level.

7.4. As has already been stated above, IPABs are a “peculiar product” of the Italian legal system. Historically established as private charitable organizations IPABs have, over the centuries, been subject to public control. This is especially true with respect to the power granted the state to replace the original members of the board of directors (elected or appointed by private meetings or donors) with public officers. Accordingly, over the years, IPABs have been managed as branches of local authorities, in particular with respect to the legal and administrative aspects (for instance, personnel recruitment procedure is based on openly public competition). But their management has been more akin to the management of private foundations. This confusion as to what and IPAB really is makes clear the long-needed reform of this peculiar kind of charitable organization.

In order to provide IPABs with a more effective and modern framework, the Act states that the Government is to enact a special decree within six months after the passage of the law. The Government’s new legislation should address the following points set in the Act (section 10):

1. the need to engage of IPABs in the regional planning of the integrated system of social services;
2. the legal transformation of IPABs as to enable them to be effectively and economically managed and to ensure them legal and budgetary autonomy;
3. where possible and if applicable, the legal transformation of IPABs into not-for-profit foundations or associations, complying with their original deeds of settlement and/or donors’ wills;
4. the possibility of dividing the management of social services from grant-making activities;[41]
5. the possibility of grouping more IPABs together so as to increase their capacity of effective interventions; and
6. the winding up of those IPABs that are inactive in the field of social services for longer than two years.

8. Other Proposals for Reform

The foregoing description of the historical and legal evolution of the Italian not-for-profit sector helps clarify that not-for-profit organizations have long been rooted in society and that they have been affected by many legal changes. Those changes have not always been beneficial for charities. In fact, in addition to the basic framework set out in the Civil Code of 1942 relating to associations and foundations, there have been a remarkable number of special acts, which have ended up complicating the legal context in which not-for-profit organizations are called to perform their activities. Over the years, such a legal situation has also led many scholars and the legislature to ask whether more comprehensive reform might be warranted. Indeed, it is clear that the existence of too many laws makes it now rather difficult to bring forward a general law on not-for- profit organizations. In addition, the tax law often is intertwined with and influences civil law to the point that in many cases the daily management and operations of not-for-profit organizations are heavily defined by the tax provisions.[42]

Several suggestions have been made for simplifying reforms. During the last ten years, three main proposals have been drafted to amend the present legal framework concerning not-for-profit organizations. Brief descriptions of those proposals follow.

Special Statutory Acts on Social Enterprises

This proposal intends to establish a new specific legal form of organization called “social enterprise” through a variety of special new laws. This new form is supposed to be regarded as an enterprise (i.e. company) pursuing an aim other than profit. Thus, the new legal form should be added to associations and foundations, on the one hand, and to companies, on the other. The proposed enterprise should be an organisational model in which associative and corporate characters are supposed to mix. The advantages of this legal solution may be summed up as follows:

1. the existence of a precisely drafted, standardized, and specific new legal form;
2. which is easy to use; and
3. which can be modified as needed for each circumstance.

The disadvantages that would be introduced by the proposal would be the following:

1. a certain rigidity, since the organizational form would be available for social enterprises only;
2. another category of organisation would be added to those already existing, thus increasing the confusion in interpreting and applying the new model; and
3. there might be problems in linking the new legal form to the legal forms provided for by the existing Civil Code.

Changes in the First Book of the Civil Code

Those who call for a review of the First Book of the Civil Code say that the legal provisions enacted in 1942, which were oriented to governing organizations whose aims were to be not-for-profit, altruistic, and ideal, need to be changed. They state that this change is needed so as to allow associations and foundations, which are characterised by the non-distribution constraint, to carry out economic activities, that is, activities involving the production and exchange of services on the market.

The establishment in the Civil Code of a new category of collective organizations (namely, not-for-profit organizations) seems to be aimed at acknowledging that associations and foundations, which represent traditional expressions of civil society, may extend their field of action to the extent of carrying out business or commercial activities, though keeping their fundamental characters unchanged. In this respect, the amendment to be introduced with respect to foundations and associations should imply the legally general definition of the non- distribution constraint. Indeed, such a principle has been accepted by some special acts relating to not-for-profit organizations[43] and by mainstream jurisprudence and court decisions. Furthermore, the proposal under consideration declares that in case of associations and foundations carrying on a business, they are to be subject to the same provisions as corporations at large, thus expressly referring to the laws included in the Fifth Book of the Civil Code.

The advantages connected to this legal solution would be as follows:

1. from an interpretational point of view, a clear criterion by which to distinguish for-profits and not-for-profits, namely, the non-distribution constraint, would be enacted; and
2. no special act would be required to be brought forward.

The disadvantages of this particular solution include:

1. the traditional framework of associations and foundations would remain the same; and
2. associations and foundations would not be acknowledged as having entrepreneurial status.

Changes in the Fifth Book of the Civil Code

In 1995 the Belgian Parliament passed an act relating to sociétés a finalité sociale, by amending the rules relating to companies, so as to allow the latter to carry out public and collective aims. In Italy some commentators have also proposed to deal with creating more flexibility for not-for-profit organizations by changing the provisions concerning companies. The intention of this proposal is to integrate the traditional legal framework relating to corporations. It follows that this proposal is defined by its business orientation. Indeed, a new organisational and legal type of company – which can pursue public purposes — is singled out among those established to pursue economic goals.

It is exactly by moving from this concept of a social company and not from the presence of any profitable aims that the idea of including this organizational type among companies arises. The aim would be create an organizational form in which the following principles find acceptance:

• promoting the development of new entrepreneurial entities, which are capable of meeting different social needs, such as the fight against social exclusion;
• addressing the necessity of balancing the search for effectiveness and efficiency and voluntary motivations;
• permitting the participation of a wide spectrum of stakeholders in the enterprise; and
• promoting along with the pursuit of profit, the willingness of being accountable to those stakeholders.

On the face of this economic and legal context, the proposal under consideration modifies the natural division between companies and not-for-profit organizations, by introducing an organisational form in which all the characteristics of companies exist, even though they are geared to social purposes. The peculiar aspect of such a socially oriented company form is represented by the fact that the shareholders’ profits would be replaced by the pursuit of a social goal. This would be a significant change in the causa societatis, which, traditionally, has been identified with profit distribution among a company’s shareholders. Thus, admitting a socially oriented company form within the legal system would imply acknowledgement of the possibility of having companies that ab origine are allowed to be set up for purposes other than profit-sharing.

The advantages introduced by this third proposal would include the following:

1. recognition of a clear entrepreneurial nature for not-for-profit organizations;
2. the proposal would not modify the legal framework of associations and foundations, which would continue to carry out their specific and traditional activities;
3. such an entity would have a greater capacity to obtain market capitalization; and
4. such an entity would have better access to public tenders for the provision of social services.

The foreseeable disadvantages would include the following:

1. the increased commercialization of not-for-profit activities;
2. the blurring of the distinction between associations with ideal purposes and associations with economic goals; and
3. the attaching to organizations with social purposes the difficulties connected with company control and governance.

9.  Concluding Remarks

In conclusion, it is useful to briefly focus on the three proposed changes mentioned above as a means to assess what legislative reforms might be useful for the Italian not-for-profit sector at the beginning of the 21st Century. Given the sometimes confusing legal and fiscal framework described in this historically focused paper, taking a principled look at reform proposals makes sense.

As to the first proposal, it could clearly have a greater chance of political success than the others. It is aimed at introducing one or more than one ad hoc laws for social enterprises, and this would better ensure a timely parliamentary answer to the numerous questions presently affecting the legal framework for the not-for-profit sector. Furthermore, it would introduce one or more than one standardized and easy-to-apply legal forms that could be used to establish not-for-profit organizations . In this respect, then, the new organizational and productive forms affiliated with the not-for-profit sector would find an adequate tool to develop their activities.

As to the second proposal, it is necessary to underline that such a legislative action would permit the extension of the traditional sphere of goals pursued by associations and foundations, to include the carrying on of businesses. It would follow that the non-distribution constraint would be provided for by the law, thus no longer being dealt with only by doctrine and jurisprudence.

As to the third proposal, the legal change in the Fifth Book of the Civil Code would acknowledge, in accordance with the latest innovation of the not-for-profit sector, the entrepreneurial character of some not-for-profit organizations. But this may not be such a good thing in the long run.

In my opinion, legal schemes and frameworks, at least in civil law systems, should be available to preserve, through an updating process, the peculiar characteristics of each organizational type and to reflect changes in perceptions about those types as they occur. In this respect, therefore, I believe that amending the First Book of the Civil Code, so as to allow associations and foundation to carry out economic activities is the most appropriate reform at this stage. It would acknowledge that these forms are entitled to have a full entrepreneurial capacity, but it would require the application of the non-distribution constraint to such activities when conducted by the traditional not-for-profit legal forms. In my opinion, this change would best promote the growth of the Italian not-for-profit sector and do so in a manner that provides for greater and more effective legal certainty.

Notes

[1] Law No. 328 of 2000.

[2] The Act relating to workers’ mutual societies was passed in 1886 and it is still in force at present, though these societies have been long incorporated in the public welfare and health system.

[3] The situation of the third sector in the ’70s helps explaining why the economic and occupational size of the sector was, also at the beginning of the ’90s, smaller than those of the United States and other European Countries (Salamon and Anheier, 1995; Barbetta, 1996).

[4] At the end of the thirteen century, in Milan, there existed 10 hospitals, among which the S. Stephan Hospital could supply 500 beds and welcome 350 babies and 1,000 adults. In 1624, in Rome, there were 8 hospitals, 21 confraternities, 11 colleges and 17 national hospitals, in the sense that these supplied services to people coming from Venice, Milan, Germany and other states. See A. COVA, La situazione italiana: una storia di non profit, in G. VITTADINI (edited by), Il Not-for-profit Dimezzato, Milan, 1997, pp. 31-32.

[5] In this respect, the case of the Milanese “Cà Granda” Hospital is paradigmatic: it was a huge “enterprise”, which every day provided 1,600 men (barbers, chemists, book keepers, tailors) with food, beside the inmates. During the eighteenth century, the hospital represented the largest land owner of the State. See E. VERGA, Storia della vita milanese, Milan, 1931, p. 174.

[6] In England, mostly, the relations between charities and the Government were defined by co-operation and mutual support rather than conflicts or antagonism. It was the Government’s interest to sustain and help charitable organizations to grow and develop not only because such intervention would take a certain number of responsibilities away from the Government itself but also because this approach was perfectly in line with the liberal culture of the time. Charities then performed their activities in several areas, such as education, elderly care, poor relief, and so on, especially in the big towns during the Industrial Revolution. The urban population, which consisted of workers living in cities like London, Norwich and Bristol, was considered to be “a sort of wild, savage, not welcomed people, whom nobody knew and nobody visited”. Thus, G.H. JONES, History of Charity Law 1530-1827, London, 1967, p. 178.

[7] G. BEMBO, Delle istituzioni di beneficenza nella città e provincia di Venezia. Studi storico-economico-statistici, Venezia, 1859, p. 109.

[8] M. MAGGETTI, La genesi e l’evoluzione della beneficenza, Roma, 1890, p. 102.

[9] As an example of the spirit of the Act of 1862, Sections 1 and 4 of it follow: Section 1: “According to the provisions of this Act, not-for-profit organizations are benevolent, charitable and any other legal person pursuing partly or totally the aim to help the least well off individuals both healthy or ill, to provide them with social care, education and professional training ”. Section 4: “The governance of charities is entrusted with legal persons, boards or specific institutions as provided for by the relevant articles of association or deed of settlement or by old customs. Should the governance of a charity be missing, it will be the duty of the public authorities to act accordingly”.

[10] The history of British charities and voluntary sector has always been defined by the search for a partnership with the state. “In the late nineteenth century, the voluntary sector took the lead in establishing the nature of the partnership; in the later twentieth century it is Government that has proposed a new ‘Compact’ on relations between the two sectors (Home Office, 1998)”. Thus, J. LEWIS, Reviewing the Relationship between the ‘Voluntary Sector’ and the State in Britain in the 1990s, mimeo, 1999, p. 1.

[11] The Napoleon Code of 1804 and most of the codes passed during the nineteenth century that were inspired by the former represented the legal implementations of the French Revolution. These codes were defined by a mercantile spirit, according to which State authorities were to support and foster the distribution of wealth and maximisation of profits. In other terms, the Napoleon legislation was characterised by: 1. an economic conception according to which wealth had to, in its turn, produce new wealth and was not to be immobilised; 2. the fear for the hypertrophy of intermediate bodies; 3. The conceptual, rather than practical refusal of the possibility of dividing the assets owned by one sole individual. Accordingly, those organizations which did not pursue a profitable aim were considered to be outside the productive dynamics and, therefore, were first opposed and then absorbed by the public administration.

[12] Conversely, in Great Britain, the frontiers between the voluntary and statutory sectors have been moving along the centuries. On the one hand, there have been parts of the British voluntary sector that have never been independent of the state, but rather have been linked by royal charter, patronage and networks of elite kinship, while others, such universities or the Medical Research Council are linked to the state in ways that smack more of ‘fusion’ than partnership. LEWIS, op. cit., p. 2.

[13] It was only in 1997, that Section 17 of the Italian Civil Code of 1942 was repealed. This sections provided for a specific authorisation on the part of associations and foundations in case they intended to purchase a building or to accept donations or bequests in the form of assets.

[14] It is noteworthy that the liberal ideology, which inspired the codes of the nineteenth century, advocated the role of the “invisible hand” of the market, which was to operate as a means for an effective production and co-ordination of companies.

[15] In this respect, the following words seem to account for the above stated shift: “[…] The poor are no longer Christ’s poor but potentially dangerous subjects”. Thus, E. BRESSAN, Azione caritativa e sociale nell’età moderna e contemporanea, in Chiesa e società. Appunti per una storia delle Diocesi lombarde, Brescia, 1996, p. 294.

[16] In particular, Fascism intended to strike the second-level organizations, since they were fundamental in defining the behaviour of their members and were the real powers of the whole co-operative system. In this respect, the Government of the time sought to crush local Federations and to concentrate the control and co-ordination activity of co-operatives in bodies at the national level. By Law No. 2288/1926, the Ministry of National Economy was entrusted with the supervision over all co-operatives, except for credit and insurance ones. Furthermore, by the same act, the National Agency for Co-operation was created, which was to be act as a kind of administrative branch of the ministry for all the control, development and co-ordination of co-operatives. The aim of such action was not either to paralyse or to destroy the co-operative movement, which represented a very important sector to the whole Italian society of the time, but rather to make the ideal motivations that supported the movement sterile. Such bias ended up with violating the principles of free association that had always inspired the co-operative movement, so much so as to jeopardise the natural development of co-operation, the basic origin of which was turned upside down. For further details on the Fascist period and the co-operative movement, see E. CORELLI, Il movimento cooperativo in Italia ieri e oggi, 1979; M. DEGL’INNOCENTI, Geografia e strutture della cooperazione in Italia, in G. SAPELLI (a cura di), Il movimento cooperativo in Italia. Storia e problemi, Torino, 1981; G. GALASSO, Gli anni della grande espansione e la crisi del sistema, in V. CASTRONOVO, G. GALASSO, R. ZANGHERI, Storia del movimentocooperativo in Italia; la Lega Nazionale delle cooperative e delle mutue, Torino, 1987.

[17]Such intention has progressively been defeated by the very practice of nonprofits, since they have more and more engaged in economic and commercial activities to achieve their social goals. This situation has make it clear that the historical division between organizations whose aim is to be only cultural or ideal and companies, whose motivation is to be found in the profit they make is no longer suitable to account for the action of either kinds of organisational forms. Indeed, it is evident that many not-for-profit organizations carry out their activities as proper enterprises and in doing this they do not jeopardise their social goal.

[18] Thus, G. REGONINI, La politica dei servizi nell’Italia del dopoguerra, in AA.VV., Contributo alla costruzione delle Unità locali dei servizi, Provincia di Torino, 1977, pp. 17-18.

[19] U. ASCOLI, Il sistema italiano di welfare, in U. ASCOLI (edited by), Welfare State all’italiana, Bari, 1984, pp. 23-24.

[20] A. PIZZORNO, I ceti medi nei meccanismi del consenso, in F. CAVAZZA, S. GRAUBARD (edited by), Il caso italiano, Milano, pp. 315-38.

[21]F. GIROTTI, Welfare State. Storia, modelli e critica, Roma, 1998, p. 285.

[22] Ibidem.

[23] During this period, the Church played an important and conscious role, especially since the Second Vatican Council gave support to the charitable and altruistic action of Church members. This observation is consistent with the results of the international research on not-for-profit organisation which states that “ideology and altruism are central to understanding the non-profit charitable sector” (Rose-Ackerman, 1997, p. 120).

[24] Decision of 24 March – 7 April 1988, No. 396 handed down by the Constitutional Court.

[25] The acts passed in 1994 and 1995 underlined that foundations were left free to opt for either grant-making or operating activities and even to take upon themselves public services contracted out to them by public administrations. Thus, “although the acts were consistent with the constraints set out in the Act of 1990, they did not set in motion a process by which foundations were to exactly define their objectives and accordingly their governance structure. Rather, the aforementioned enactments expanded the areas of intervention of foundations, thus increasing the risk of ineffectiveness and waste of resources”. C. BORZAGA, Da dove vengono e dove vanno le fondazioni di origine bancaria, in C. BORZAGA – F. CAFAGGI, Le fondazioni bancarie. Un patrimonio alla ricerca di uno scopo, Roma, 1998, p. 8.

[26]From a legal point of view, the term organizations here used is synonym of associations, especially unregistered associations. Indeed, the vast majority of associations in Italy are formed as unregistered entities. This fact has historical roots, namely, the legal provision included in the Civil Code of 1942 according to which foundations and associations were to be granted Government authorisation to act. Hence, although the very Code of 1942 stated that also unregistered associations were to be recognised at law, the preference for incorporated ones has always been very clear. Yet by specifically recognising trade unions and political parties, which were and are still presently unregistered associations, the subsequent Constitution of 1948 paved the way to the growth of a body of unincorporated organizations, which actually represent the majority of the not-for-profitphenomenon.

[27] This means that voluntary organizations are not subject to the general rules on call for tender and hence do not fall within the provisions concerning competition, which, on the contrary, apply to company forms.

[28] The choice made by organizations in the Italian third sector for the forms of co-operatives and associations, instead of other well known forms, underlines the differences between the European and the American model. From a theoretical perspective, the Italian experience seems to demonstrate that in creating relations based on trust (Hansmann, 1880; Ortmann and Schlesinger, 1997) the non-profit distribution constraint can be substituted by other organisational characteristics, such as the stakeholder participation and the democratic management. At the same time the Italian experience points out that in explaining the non-profit sector a major attention has to be devoted to the role of “non-profit entrepreneurs” (Young, 1983). and of the worker’s behaviour (Borzaga and Mittone, 1997).

[29] In order to understand this provision, which anticipated the recent proposal by the European Commission, one should bear in mind that in 1991, social co-operatives were the only private organizations producing and selling social services, so that the tax relief concerned more their sectors of activity than their specific legal form.

[30] Subsequent government circulars sharpened this distinction stating that a single social co-operatives can not perform both the activities. Lately, the possibility for social co-operatives of carrying out both activities has been reaffirmed.

[31] For these workers the co-operative is exempt from payment of social contributions.

[32]This provision has been modified following the criticism by the European Commission that it was inconsistent with the rule of fair competition. The public authorities still can reserve the same amount of public demand to enterprises which employ a fixed number of disadvantaged persons, but any enterprise, and not only the social co-operatives, can participate in the bid.

[33]These are only few of the many loopholes of the Act of 1997, which though aimed at improving the tax treatment of NPOs has resulted in practice to heavily influence, if not hamper, the organisational structure and behaviour of these organizations.

[34] For instance, the Act provided the establishing of a specific independent authority for NPOs. Three years have now gone, and the authority has not yet been operating. Apart from the delay of appointing the president and the members, the quarrel at present is on which functions and, thus what role this authority should have. Whereas the not-for-profit world has always asked for a supervisory and monitoring body aimed at supporting and directing the development of NPOs, the Government seems to have opted out for making such an authority a branch of the Ministry of Finance. As a matter of fact, this proves and corroborates the fiscal nature of the Act of 1997.

[35] The act does state that associations can also rely on paid work, but this has to be only marginal. In this respect, it is noteworthy that the act recognises that also members can be paid by the association. This is a completely new aspect and possibility, since being a member of an association has traditionally meant that he/she could not get paid for their work.

[36] For instance, the subsidiary pecuniary liability of the board of directors, once the association’s assets have been liquidated, is here underlined. In fact, the Civil Code of 1942 states that along with the association’s fund, also those people who act on behalf of the association are to be held liable for the association’s debts. This means, for instance, that if a member goes and buy a van for the association, he/she is to be deemed responsible for that specific contract. The new act reads something more than that: it actually identifies the people acting on behalf of the association with the board of directors.

[37] The early parliamentary bills relating to social care reform date back to the late 1960s. Indeed, over the years, many bills were brought forward in Parliament but none of them ever reached the final approval stage. As a matter of fact, the Act under consideration is also the result of some parliamentary bills, which were all united in the Bill that the Government brought in Parliament on 28 May 1998. Remarkable and reflecting the will of the Government, and especially of the Ministry of Social Solidarity, are the words written in the Introduction to the Bill: “The aim of this Bill is to establish in Italy an integrated system of interventions and social services, which may also serve as an opportunity for development, innovation, new jobs and new consumption”. The Government thus intended to shift from a situation in which actions and service provisions have always been scattered to a well defined and integrated system, in which the different actors, public and private, the different services and the different monetary transfers could be gathered together.

[38] To some extent, one can note that the passing of this Act has been defined by a bipartisan spirit within Parliament, perhaps because both left-of-centre and centre-of-right political parties acknowledged the importance to give Italy a stable and modern social welfare system.

[39] Here, thus, we only intend to refer to the horizontal side of the principle as opposed to the vertical side, which relates in fact to the connections characterising the different levels of public administration (Central government, regional governments, county and city councils). The two sides have been and are often overlapped and misunderstood.

[40] It is the case of authorisation for/evaluation of residential care centres to be run and managed by both public bodies and not-for-profit organizations, which has to be granted by city councils on the basis of a legal framework drafted by the regional government, which, in its turn, is to act within the general scheme provided for by an act of central authorities.

[41] In many instances, indeed, IPABs are simultaneously engaged in exploiting assets and in supplying social services. This provision is intended to make IPABs choose which activity they want to operate.

[42] In this respect, Law No. 460 of 1997 relating to ONLUS (socially oriented non-profit organizations), which was drafted as a tax act, provides for the obligation on the part of not-for-profit organizations intending to benefit from it to keep a balance-sheet and accounting system as the ones required by the law for corporations. This specific provision falls within the generally civil law framework as a total news since the Civil Code does not impose any such clause on not-for-profit organizations.

[43] See Law No. 266 of 1991 relating to voluntary organizations and Law No. 460 of 1997 relating to socially oriented not-for-profit organizations.