Sheltered workshops in Germany cannot finance themselves. In Germany, people with disabilities are entitled to receive direct funding from the state. They are entitled to receive compensation payments for their disability as well as social security payments. Depending on the type and severity of the disability, they receive financial compensation from the insurance in charge. The responsible body can be the health, pension or accident insurance authorities, but also the federal employment agency (unemployment insurance). People with severe disabilities have a legal claim to vocational rehabilitation in Germany. The financial means for that purpose are distributed by the regional agency of public assistance.

The regional agency of public assistance is allowed to transfer the financial means for the vocational rehabilitation directly to the respective part of the support network for people with severe disabilities.

The support network consists of work opportunities in inclusive enterprises, the concept of supported employment, the “budget for work” and participation in working life through the services of a sheltered workshop.

With regard to training and education for people with disabilities after school, there are opportunities to obtain vocational training in so-called vocational training centres. Vocational rehabilitation centres and vocational training centres for people with psychological illnesses provide services for adults, in general for people who have already worked on the open labour market. People with disabilities who are more severely disabled can obtain vocational education in the sheltered workshops’ department of vocational education.

Sheltered workshops receive a reimbursement per workshop user which depends on his or her degree of disability . These ongoing payments in form of cost rates are calculated either per calendar day (365 days) or per working day (250 days). Generally, the sheltered workshop is in negotiation with the regional agency of public assistance once a year to define the cost rates for the next 12 months. In addition, sheltered workshops can obtain the financial means for their buildings and technical equipment, if they can prove the need and significance of the investment.

Sheltered workshops are non-profit-organizations. Their main goal is to enable participation in working life and not to generate a profit. However, they have to generate a minimum amount of profit because they are obliged by law to remunerate the workshop users according to their performance.

The income generated by sheltered workshops through their economic activity must be used as follows: a minimum of 70% of the income is used for the remuneration of the workshop users . The remaining 30% can be used for reserves. The reserves are not allowed to exceed the cost for staff for a period of six months.

The estimated average income by turnover is 26,7% and the income by subsidies 73,3%. It is important to know that sheltered workshops do not get subsidies for only providing work opportunities for people with disabilities. Sheltered workshops are highly specialised facilities of vocational rehabilitation.