Social Economy in Europe: Estonia
Table of contents
Note: The data presented in this table derive from the OECD country factsheets and the European Commission DG GROW studies. Variations in scope, methodology and most recent available years may lead to differences in the headline figures across countries and with other sources.
Source: Data for Estonia relates to 2021 (CIRIEC; Euricse; European Innovation Council and SMEs Executive Agency (European Commission); Spatial Foresight, 2024[1]) (OECD CFS, 2023[2]), except data on revenue generated by social enterprises (relating to 2021) (OECD CFS, 2023[2]) and the involvement with any social economy organisation as a volunteer relating to 2020-2025 (European Commission, 2025[3]).
There is no current unified legal framework that defines social economy or social enterprise in Estonia. However, there are several acts which regulate the activities of specific types of social economy entities, notably the Foundations Act (adopted in 1995 and most recently amended in 2005), the Non-Profit Associations Act (1996) and the Apartment Associations Act (adopted in 1995 and updated in 2018).
Institutions
The Ministry of Interior (Citizenship Policy and Civil Society Department), the Ministry of Social Affairs and the Ministry of Financial Affairs are responsible for policy relevant to social economy activities. The oversight of these bodies is complemented by schemes in other governmental departments and national institutions. These include the Ministry of Economy and Communications, the Ministry of Education and Research and the Ministry of the Environment, as well as other national bodies such as the National Foundation of Civil Society (NFCS, also Kodanikuühiskonna Sihtkapital (KÜSK)) and the Estonian Business and Innovation Agency (the newly merged organisation, previously Enterprise Estonia and the KredEx Foundation) (OECD CFS, 2023[2]).
Competence
There is no current unified legal framework that defines social economy or social enterprise, nor a designated certification process for social economy entities. The Ministry of the Interior, the Ministry of Social Affairs and the Ministry of Financial Affairs design and enforce frameworks relevant to social economy activity. These include several acts which regulate the activities of particular organisations such as the Foundations Act (1995, most recently amended in 2005), the Non-Profit Associations Act (1996) and the Apartment Associations Act (1995 updated in 2018) as well as legal frameworks more generally for commercial activity such as the Commercial Code (1995, new Commercial Register Act that came into force on February 1, 2023) (Republic of Estonia, 1995[4]; Republic of Estonia, 1995[5]; Republic of Estonia, 1996[6]).
Since 2015, several national strategies and plans have referenced the social economy and social entrepreneurship. The National Development Plan for Civil Society 2015-2020 launched by the Ministry of Interior, for example, included social entrepreneurship as a priority. The ongoing development and revision of these strategies are supported by previous focus on this theme in the Welfare Development Plan 2016-2023 (Minstry of Social Affairs, n.d.[7]). Estonia 2035, a government-led initiative with the Ministry of Finance, is the primary national development strategy and involves social entrepreneurship as a fair, innovative and responsible business model. Alongside this, there are several national strategies which overlap to suggest prioritisation of social economy and social enterprise, such as Cohesive Estonia Strategy 2030, which aims to make Estonia a more cohesive and inclusive society with social entrepreneurship playing a role in achieving these objectives. Furthermore, other strategies such as the Youth Sector Development Plan (2021-2035) (Ministry of Education and Research, n.d.[8]) and the Estonian Research and Development, Innovation and Entrepreneurship Strategy (2021-2035) include social entrepreneurship and social enterprises as part of its objectives (Estonian Business and Innovation Agency Foundation, 2022[9]).
There are several national financing programmes and opportunities for social economy organisations. The National Foundation of Civil Society, established by the government in 2008, offers financial support to social economy entities through publicly funded grants and entrepreneurship grants are available through the Estonian Business and Innovation Agency. These opportunities for funding are supplemented by EU structural and investment funds, as well as more targeted programmes like the Estonian Unemployment Insurance Fund (Incorporate, 2023[10]). While this suggests extensive opportunities it should be noted that access may vary depending on the legal form of the social economy entity. For instance, social enterprises registered as non-profit associations (which comprise about 93% of social enterprises in Estonia) face challenges in accessing public business support programmes and financial schemes (OECD, 2020[11]).
Institutions
Estonia is a unitary republican state with a single‑chamber parliament with exclusive legislative power. Although there are counties, there is no regional government. Legislation and administration occur at a municipal level (European Committee of the Regions, n.d.[12]).
Regional activity is framed by network organisations that collaborate strongly with national bodies, rather than by designated regional programmes. The Network of County Development Centers (NCDC) (also called Maakondlike arenduskeskuste võrgustik (MAK)) is the primary regional actor. It is an umbrella body for the 15 county development centres which administer the various programmes of the organisation. It collaborates with national bodies, such as the National Foundation for Civil Society and government ministries such as the Ministry of Interior. Since 2019, it’s the official partner of the Ministry of Economic Affairs and Communications. In 2023, regional activities were transferred to the administrative area of the Ministry of Regional Development and Agriculture.
Competence
The Network of County Development Centers (NCDC/MAK) has several competencies. It provides dedicated consultancy to civil society organisations at the local level, implements national strategies, facilitates the development and application of public sector investments and engages in awareness building and training activities. Strategically, NCDC currently supports activities relevant to the community-centred approach in 2023–2026 and the Union of NGOs in 2021-2024 – two programs of the Ministry of the Interior.
National and regional bodies have also collaborated to facilitate the development of knowledge sharing and training opportunities. NFCS/KÜSK, NCDC/MAK, the Ministry of Culture and the Integration Foundation support platforms like MTÜabi which collate information about events, advice and financing for NGOs (MTÜabi, n.d.[13]). The NCDC/MAK also drives Entrepreneurship Week (annually in October since 2006) and Entrepreneurship School (launched in 2021) (Ettevõtlusnädal, n.d.[14]; Network of Regional Development Centres, n.d.[15]). Both of these are nationwide initiatives that are administered locally by the relevant county development centres.
Institutions
The development of the social economy is driven by national policies, foundations and networks rather than by local government initiatives. Implementation of the national strategy is enacted by county development offices as described above. Some notable municipalities that have contributed to the landscape of support in the past include Setomaa Municipality.
Competence
While strategy, funding and programming are concentrated at a national level, some municipalities run initiatives that encourage social economy activity. In Setomaa, a project to promote entrepreneurship in the municipality based on local cultural traditions was run between 2006 and 2007 and Võru County, which comprises a collection of municipalities, runs a “social hackathon”, launched in 2018, which aims to address societal challenges by adapting the traditional hackathon model for rural community engagement and social innovation (EUArenas, n.d.[16]). Beyond this, however, action is limited and local governance systems traditionally focus on managing territory and physical infrastructure rather than actively participating in social and spatial leadership (Kangro and Lepik, 2025[17]).
There is a strong network of partnerships between government activity across national bodies as well as between national and regional bodies. There are also a number of organisations which work to connect private and public programmes and initiatives.
Across multiple public authorities and/or levels of government
At the national level, there are examples of co-operation between different bodies to support the social economy. In 2023, the Ministry of the Interior, in co-operation with the Civil Society Foundation, launched the Civil Society Innovation Fund, the strategic goal of which is to encourage local governments and communities to create and develop inclusive forms of co-operation and engagement (Ministry of Interior, 2024[18]).
The Network of County Development Centers (NCDC/MAK) collaborates with several national government bodies to implement relevant strategy on the social economy and enterprise. NCDC/MAK has or has had partnerships with the Ministry of Economic Affairs and Communications, the Ministry of Regional Development and Agriculture and the Ministry of the Interior. It has also collaborated with national bodies like the National Foundation for Civil Society and the Foundation for Civic Associations.
With social economy representatives
The Good Deed Foundation (Heateo Sihtasutus) is Estonia's first strategic philanthropy organisation, established in 2003 (Good Deed Foundation, 2023[19]). It provides a directory of social enterprise and related initiatives and advisory services for organisations, collates resources to support community building, and set up two funding programmes and an incubator to accelerate “impactful initiatives”. Both funds, the Impact Fund and the Education Fund, are supported by a variety of corporate partners and the Nula incubator is a collaboration with NFCS/KÜSK.
The Estonian Social Enterprise Network (ESEN, also Sotsiaalsete Ettevõtete Võrgustik (SEV)) is a non-profit association founded in 2012 to support and promote social entrepreneurship in Estonia. The network provides programs for social enterprise development and works closely with stakeholders in formal and non-formal education in Estonia. The host workshops and consultations, provide a platform of useful information and knowledge sharing and have led an agreement of co-operation in social entrepreneurship and innovation for cross-sectoral co-operation (Ministry of Social Affairs, n.d.[20]). ESEN were noted as one of the three contracted civil society partners for the Ministry of the Interior, helping to achieve the objectives of National Strategy for Civil Society 2015-2020 (Euclid Network, n.d.[21]).
Universities are also active in the development of initiatives which bring together networks of social economy actors, with a focus on innovation. sTARTUp Day is a community-organised business festival by the city of Tartu, the University of Tartu and other local partners (sTARTUp Day, 2025[22]). Tallinn University offers a Master's Programme in Social Entrepreneurship and runs a Social Entrepreneurship Incubator (Tallinn University, 2024[23]; Tallinn University, 2021[24]). There is mention of similar programmes but no specific information of the universities which provide them.
Strategies, plans and legal framework
While Estonia does not have a dedicated legal framework for the social economy, broader development plans offer some support. The Cohesive Estonia Development Plan 2021–30 acknowledges the sector's role in promoting social cohesion and equal opportunities. It includes measures to enhance the capacity of social enterprises and community-based organisations, and it outlines intentions to develop a legal framework for social enterprises. Additionally, it aims to extend both financial and non-financial business support (Ministry of the Interior, 2025[25]).
Recent efforts have also focused on establishing a national vision for social innovation. The Social Innovation Vision 2030 provides a strategic framework to guide Estonia’s approach to social innovation. Developed through a multi-stakeholder, cross-sectoral collaboration, it was coordinated by the National Foundation for Civil Society (KÜSK) in partnership with Tallinn University, Võrumaa Development Centre, the Estonian Social Enterprise Network, the Ministry of the Interior, and the Ministry of Social Affairs. The initiative was implemented as part of the EU-funded project Establishment of a Social Innovation Competence Centre (SIKK) (National Foundation of Civil Society, n.d.[26]). The vision document outlines key priorities such as the development of a suitable legal environment, capacity building for social innovation actors, impact measurement tools and flexible financial instruments. It also proposes the creation of a national competence centre for social innovation, the empowerment of municipalities to support local initiatives and the introduction of monitoring and evaluation mechanisms. While the strategy has been finalised, its implementation is currently ongoing (National Foundation of Civic Society, n.d.[27]).
Support from the public sector
Responsibilities are distributed across multiple ministries and existing business development bodies. The Ministry of the Interior holds primary co-ordination responsibilities, while the Ministry of Social Affairs and the Ministry of Economic Affairs and Communications also contribute through their policies. The latter oversees the Estonian Business and Innovation Agency (EIS), which provides training, funding and consulting, and manages programmes such as Start‑up Estonia (Estonian Business and Innovation Agency, n.d.[28]). In addition to high-growth technology ventures, this programme also supports social enterprises through incubation, acceleration, funding and advocacy. The agency’s flagship business idea competition, Ajujaht, includes special awards for social enterprises to advance impactful business models (Urmanaviciene and Praakli, 2021[29]).
Civil society infrastructure, supported by the state, plays a key role in strengthening organisations within the social economy. The National Foundation of Civil Society (KÜSK), established under the Ministry of the Interior, is the principal public actor supporting the social economy. KÜSK provides grants, training and strategic guidance to non-profit associations and foundations (National Foundation of Civil Society, n.d.[30]), and collaborates with County Development Centres (MAKs) to offer free regional consulting via the MTÜabi portal, covering topics such as organisational setup, management, funding sources, and accounting (MTÜabi, n.d.[31]).
Support from the private sector
The Network of Estonian Non‑Profit Organisations (NENO) serves as a key capacity‑building and advocacy hub for the social economy. Founded in 1991, this well‑established umbrella body supports other entities by analysing their needs, offering tailored training, consultancy and facilitating peer learning. Additionally, NENO engages in legislative consultations and maintains an information portal offering handbooks, guidelines and operational tools (Good Citizen, n.d.[32]). The Estonian Social Enterprise Network acts as a sectoral cluster that strengthens social entrepreneurship through training, expert advice, and resource-sharing. With over 50 member organisations, it organises workshops and consultancy sessions, and hosts a dedicated online platform with sector tools, databases, and impact measurement resources (Sotsiaalsete Ettevötete Vörgustik, n.d.[33]).
Transnational alliances enhance social innovation capacities and ecosystem connectivity. The European Social Innovation Alliance (ESIA), enabled by ESF+ funding, unites Estonian, German, Luxembourgish and Dutch partners (26 organisations in total) to build national competence centres under the EU’s Social Economy Action Plan (The European Social Innovation Alliance, 2024[34]). Similarly, the Integrated Baltic Ecosystem for Social Innovation (IBESI) links Estonian, Latvian, Lithuanian and Swedish partners – led by the Baltic Innovation Agency – to provide innovation management, analysis and financing services (Baltic Innovation Agency, n.d.[35]).
Incubator programmes have emerged to accelerate social enterprise creation and implementation. The NULA incubator, created by KÜSK and the Good Deed Foundation, runs an intensive nine‑month programme offering mentoring, funding competitions and up to EUR 33 000 grants to help social initiatives develop and test sustainable business models (NULA, n.d.[36]).
Impact investment is also developing, with the Good Deed Impact Fund pioneering venture philanthropy. As Estonia’s first impact fund, it supports early‑stage social initiatives in areas such as education, health and environment. The fund provides not only financial backing but also mentoring and access to a network of pro bono experts (Good Deed Foudantion, n.d.[37]).
Support from the public sector
County Development Centres (MAKs) bolster local business ecosystems and increasingly support the social economy alongside entrepreneurship. Established in 2003, these 15 county-based centres operate as NGOs and have been funded since 2019 by the EU Cohesion and Internal Security Fund and the state budget (Tamsalu, 2024[16]). They offer free coaching, consultancy and training to start-ups, established businesses, non-profit associations and foundations. These centres work closely with ministries and regional actors to foster both economic and social enterprise development. In collaboration with the Ministry of Regional Affairs, the Ministry of Economic Affairs and Communications, and the Ministry of the Interior, MAKs actively raise awareness of the social economy and deliver tailored capacity-building programmes, strengthening local ecosystems (Maakondlikud Arenduskeskused Võrgustik, n.d.[38]).
Definition of public interest
The term public interest (avalik huvi) is not explicitly defined in Estonian legislation. However, it is interpreted in administrative practice to apply to non-profit associations, foundations and religious organisations that pursue charitable goals. To benefit from preferential tax treatment, these entities must be included in the list of non-profit associations benefiting from income tax incentives, maintained by the Estonian Tax and Customs Board. Eligibility is governed by Article 11(2) of the Income Tax Act (RT I 1999, 101, 903 – RT I, 20.12.2024, 5) (Republic of Estonia, 1999[39]).
Economic activities
Non-profit associations may conduct economic activities, but such activities must primarily serve charitable purposes. If the income is used for other purposes or reinvested into unrelated business activities, the entity becomes ineligible for the tax-exempt list (Republic of Estonia, 1999[39]).
All non-profit entities included in the Tax and Customs Board’s list must comply with detailed reporting requirements, including:
Annual Financial Report due by 1 July according to Article 36 of the Non-profit Associations Act (Republic of Estonia, 1996[43]) and Article 34 of the Foundations Act (Republic of Estonia, 1995[5]);
A Form on donations received due 1 February according to (Article 571(3), (6) of the Income Tax Act;
A form on use of funds and donations due 1 July;
Monthly VAT reporting if VAT-registered according to Article 27 of the Value-Added Tax Act
These reports are publicly available through the Estonian Business Register. Failure to comply may result in removal from the tax-exempt list according to Article 11(4)6), (71) of the Income Tax Act (Republic of Estonia, 1999[39]).
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← 1. According to Article 16(1) on the Value-Added Tax Act (RT I 2003, 82, 554 – RT I, 02.01.2025, 13) (Republic of Estonia, 2003[40]), several categories of goods and services provided by non-profit organisations are exempt from VAT. These include (1) services provided by non-profit associations to their members, either free of charge or against a membership fee (Article 16(1)3)); (2) use of sports facilities or sports equipment provided by non-profit associations or foundations (Article 16(1)3)); (3) social services funded from state or municipal budgets under the Social Welfare Act (RT I, 30.12.2015, 5 – RT I, 31.12.2024, 29) (Republic of Estonia, 2015[41]), e.g. § 8, § 17, § 20, and § 45¹; (4) shelter services for the protection of children and young persons (Article 16(1)5)); (5) educational services and related learning materials (Article 16(1)6)); (6) transport services for sick, injured, or disabled persons using special vehicles (Article 16(1)7)); (7) services provided by independent associations of persons to their members under certain conditions (Article 16(1)8)), provided the service is necessary for the main activity of the member, the fee does not exceed cost, and the exemption does not distort competition.