Meet the Partners | Social Entrepreneurship Association of Latvia

Please tell me a bit more about the organization? When was it founded and why? How does it work? 

We were created in 2015 by 5 organizations that were the first ones to start working in the field. It is an important part of our story that we actually were created by the doers. All of them are still our members and we work closely together. 

Our goal is to develop social entrepreneurship for a long-term change in Latvia. SEAL - Social Entrepreneurship Association of Latvia - is a member organization, with around 136 members at the moment. The member organizations are both social enterprises, NGOs, other types of organizations like limited liability companies without social enterprise status, and also individuals who want to develop their ideas or are just interested in the field.

In terms of activities, what do you do with and for your members? 

We have 3 main areas of work. The first one is advocacy. We work closely and consult the Ministry of Welfare who is the responsible ministry for social entrepreneurship in Latvia. That is why it is important for us to have a big base of members to understand their needs and the situation they are working in, so that afterwards we can present real-life examples and genuine concerns when talking with the Ministry of Welfare. We are also collaborating with other governmental institutions and ministries for example at the moment discussing the possibility for social entrepreneurs to help with food waste. So there are a lot of fields where we can get involved more, but we always need to consider our limited human resources, as we are a small team. We're very happy with our collaboration with the ministries as we see that they value our recommendations and very often we see that they implement our suggestions although it takes a lot of time. 

Another area of work is member capacity building. According to the needs of our members, we organize different seminars, workshops, and networking events. We promote our members in our communication channels as well as national media. For example, recently we created an exhibition of social entrepreneurs, to raise awareness of good case studies. This exhibition is traveling to different regions of Latvia, but it is also available on our website. It is really cool to show what we have and also to learn from others. We try to bring social entrepreneurs together with other parties. If a mainstream enterprise  is interested in collaborating with a social entrepreneur in a specific field, we try to connect them. We also organize exchange visits in Latvia and abroad. At the end of May, our members went to Poland to visit social  entrepreneurs there. It’s very valuable for them to get out of their daily routine, see something else and get inspired. 

And the third area is informing the public, raising awareness about social entrepreneurship in general. We go to schools, organize different seminars, conferences and workshops, and visit municipalities as well. And of course we use our own channels of communications, webpage and social media, to showcase and highlight the activities in the field. 

Two years ago, we did a survey to understand how many people know about social entrepreneurship and 60% said that they know what it is. Well everybody has their own interpretation of the definition. But at least it's good to know the number of people who have heard something about social entrepreneurship. That is encouraging.

So you had over 100 members in 9 years, right? That’s a really great result for not such a big market!

Indeed! The numbers are actually going up and down. When I joined the organization, we had around 150 members. But it is really important for us to keep those who actually want to get involved. For some of them it is important to be a member just to get useful information or to be part of the community. It is nice to see that our reputation gives a stamp of quality. 

Two years ago, I was asking why they want to be our members to better understand what we can offer. Most of them said it was because of the community feeling. They might not need  anything from us but they know that we are there for them. So it is mainly the feeling that you have a helping hand out there. I was surprised that many members don’t actually want anything practical from us, but just to have someone who understands them. 

How would you define the term “social entrepreneur”? Is there any official definition used legally?

In Latvia we have a social enterprise law. The official requirement is that the organization should be a limited liability company. This often leads to a lot of discussions, because our social entrepreneurs consider profit  as important as the social mission. 

When the law was created the decision was to use the legal form of a limited liability company with economic activities aimed at generating a broader social impact. According to the law, there are three ways to create a social enterprise. So it is either by employing people from the target groups, focusing on work integration; or by providing services or producing goods specifically designed to improve the quality of life for specific target groups. The third broader approach addresses issues of significant importance to society as a whole, such as environmental concerns or the preservation of cultural heritage and so on. 

When we talk about a specific target group, do we generally mean people at risk, people with disabilities, people in poverty? Is there a list of these target groups?

There is a list of 14 target groups for work integration social enterprise, that includes people with disabilities, at the risk of poverty, people from Ukraine, different minorities like Roma and others. So these 14 official target groups are fairly broad but might miss some categories or aspects. For example youth doesn’t fall into these groups. .

But then how do you differentiate from a normal company?

For the social enterprise in the form of a limited liability company the main goal still must be the creation of social impact. When registering, the company must state it as its main purpose, unlike the typical goal of financial sustainability. There are also some specific administrative things. Profits are not distributed but reinvested, and the company must follow democratic governance principles. After the limited liability company is created, it can apply for the status of social enterprise from the Ministry of Welfare, which checks compliance with these requirements. The company operates like a regular business. But additionally it has to measure its impact and report it annually to the ministry. Usually the enterprise itself sets the target of what it wants to achieve every year and then reports on these targets.

What do they get? What is their benefit of having this legal title “social enterprise”?

The main purpose is that social entrepreneurship is at the core of your activities and social enterprise status is a quality sign.  Some of the benefits are tax deductions and refunds. For example, if a social enterprise rents a space, they might receive a lower rent fee, or if they own the property, they could get a property tax reduction. In some cases, if the building is municipal or government-owned, they may even get to use it free of charge. Additionally, if the company employs people from one of the 14 risk groups, they can receive tax benefits related to social contributions for those employees. There is also a special grant available exclusively for social enterprises with the status, offering up to 90% of grant funding additionally to 10% of co-financing. It is a great opportunity for such financial support.

Are there any common features you see in the local social enterprises? Also as strengths, but maybe as pitfalls, challenges that they face?

They are typically very small companies, often emerging from the NGO world, where it can be challenging to have the business-mind thinking. Their strength is knowing the field and stakeholders very well and motivation to achieve a social impact. One major challenge is to create a good business model that allows for flexibility when one revenue stream doesn’t work. It is more about capacity building in business. The other challenge is communication and pitching yourself. Although very often social entrepreneurs say that they know how to do it, it is not always the case and collaboration with PR professionals improves their communication. 

Additionally, cooperation with mainstream enterprises is a great opportunity for social enterprises as they have a deep understanding of their market sector, however, it presents challenges as well, primarily due to a lack of resources. For example, one entrepreneur mentioned that they would like to have a dedicated person to establish such partnerships with businesses, but they don't have the resources. Most of the social enterprises are run by one or two people. 

For social entrepreneurs, especially the founders, it can be difficult to let go. They often see their enterprise as “their baby” and feel the need to control every aspect. While some may be open to delegation, it typically requires capacity building and a mindset shift. Entrepreneurs need to learn that their social enterprise will likely evolve beyond their initial vision. This applies to both management and team leadership, where the ability to adapt and let others take responsibility is crucial.

From your experience, are most of the social enterprises in your portfolio B2C or B2B? You mentioned that some have this B2B model, but are there many of them? 

Not many have the resources to engage in such activities. But I think there is great potential. So, answering your question, it’s mostly B2C, but some do have success with mainstream companies. For example, a work integration social enterprise employing people with mental disabilities. They’ve created a very nice shop with various items created by these people. And they say that the interest from the mainstream enterprises is seasonal mostly around holidays - the Midsummer or Christmas. 

I think it is an emerging trend, but there is still not enough awareness. So it is another task for us to do, to inform the mainstream enterprises that such cooperation can be their corporate social responsibility, that can be communicated, marketed broadly so that their clients see all the impact they have created.  

Do you think, at this point, with the current level of the sector it will continue to be CSR rather than sustainable social procurement? 

I think for now it is more seasonal, unfortunately. So social procurement is at the early stage of development in Latvia. And the BuySocialEurope B2B project is a great opportunity for us to start raising awareness. 

When it comes to  social procurement, I don't see the progress from the mainstream enterprises. Instead we are now more and more talking about socially responsible public procurement. I believe the public sector should  set an example. From my experience, I would say we need more examples to show that it is achievable, that it is not too difficult and that it is a way to increase social impact. 

The recent examples of social procurement in Latvia are the case study 4 Vēji & MÁDARA Cosmetics and Sonido & Rimi. 

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