Social Economy in Europe: Latvia
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 Latvia relates to 2021 (CIRIEC; Euricse; European Innovation Council and SMEs Executive Agency (European Commission); Spatial Foresight, 2024[1]) (OECD, 2023[2]), except data on the involvement with any social economy organisation as a volunteer relating to 2020-2025 (European Commission, 2025[3]).
Latvia adopted the Social Enterprise Law in 2017, which defines social enterprises and their eligibility for state support. There is also a Law on Associations and Foundations (2003) and a Public Benefit Organisation Law (2004), which outlines what constitutes public benefit activities and regulates public benefit organisations.
Institutions
The Ministry of Welfare is the main national authority responsible for social economy policy. The Ministry of Economics plays a role by supporting entrepreneurship, including social enterprises, through the Investment and Development Agency of Latvia (LIAA), as does the Ministry of Finance through the Development Finance Institution ALTUM. Additionally, the State Employment Agency contributes by promoting employment opportunities within the social economy.
Competence
Many institutions collectively support the sector through legal frameworks, funding mechanisms, and strategic initiatives. The Ministry of Welfare is responsible for legislation and regulation of the social economy, particularly through the Social Enterprise Law, which was adopted by the Parliament in October 2017 and came into force on 1 April 2018. The law defines social enterprises (as LLCs) and their eligibility for state support with a focus on promoting employment for groups at risk of social exclusion. In 2014, the Ministry of Welfare designed the “Concept paper about the implementation of social entrepreneurship in Latvia” focused on the implementation of social entrepreneurship (OECD, 2023[2]).
The Social Enterprise Law established the Commission for Social Enterprises (Regulation No.101/2018) to act as an advisory body to the Ministry of Welfare (Republic of Latvia, 2018[4]). It provides monitoring and compliance support. The ministry also oversees certification and registration of social enterprises, ensuring compliance with legal requirements (Republic of Latvia, 2017[5]). This is outlined by a specific regulation following the 2017 law (Regulation No. 173/2018) (Republic of Latvia, 2018[6]). Additionally, it develops policies to promote social inclusion and employment within the social economy. These legislative frameworks are approved by the Cabinet of Ministers but administered by the Ministry of Welfare.
The Ministry of Welfare supports financing for the development of social enterprise and awareness-raising measures for the social economy through partnerships with other national bodies. In 2016, the ministry started implementing the ESF co-funded project “Support for Social Entrepreneurship”. The project aims to build awareness of the contribution of social enterprises and develop support frameworks to facilitate their activities. Between 2016 and 2023, the state invested almost EUR 17 million in social entrepreneurship. During this period, Development Finance Institution ALTUM, through the Social Entrepreneurship Support Program, has concluded 204 grant agreements with social enterprises for the total amount of EUR 12.2 million (Ministry of Welfare, 2020[7]).
The Ministry of Economics plays a role in strategy and action plan setting for entrepreneurship and economic development, including support for social enterprises. It works on improving the business environment and fosters innovation, including for socially responsible businesses. The primary mechanism through which the ministry provides support is the Investment and Development Agency of Latvia (LIAA). LIAA administers general business incubator programmes, provides export assistance for social businesses looking to expand internationally and administers EU structural funds and other grants (Republic of Latvia, 2019[8]). These incubators are open to social businesses, but they are not specific to the social economy (Investment and Development Agency of Latvia, 2021[9]; Republic of Latvia, 2016[10]).
The State Employment Agency contributes to the social economy by implementing labour market policies that encourage employment within social enterprises. It provides wage subsidies and training programs to help vulnerable groups integrate into the workforce through social economy initiatives.
Institutions
Latvia is a unitary country with a centralised public administration system. The country is divided into 43 municipalities and the capital city, Riga, which have local governments responsible for implementing national policies at the local level (European Committee of the Regions, n.d.[11]).
Social economy policy in Latvia is primarily overseen at the national level. At the municipal level, local governments play a role in supporting social enterprises and co-operatives, but there are no specific regional authorities with a designated framework law on the social economy. Kurzeme, Zemgale, and Vidzeme Planning Regions focus on EU-funded programs, rural development and employment initiatives to promote social entrepreneurship.
Competence
A number of planning regions in Latvia have developed EU funding programmes to support awareness, partnership and network building, engage in scoping activities and develop training and educational material. Vidzeme has developed the Social Ecosystem Leads the Future (SELF) project with international partners to create, consolidate and develop a new and transnational network of regional authorities, experts and entities of the social economy (Vidzeme, 2024[12]). In Zemgale and Northern Lithuania, the RE:IMPACT project aims to empower the regional social entrepreneurship ecosystem. In Kurzeme in 2024 (Interreg, n.d.[13]), the Kurzeme Planning Region organised the first regional strategy laboratory as part of the “Social Innovation and Social Entrepreneurship Ecosystem” (RESIST) project to discuss the Latvian Social Economy Action Plan for 2025–2029 (Interreg - Baltic Sea Region, 2025[14]).
Several regional incubator programmes exist through LIAA. These are not specific to social enterprise but focus more on business incubation. For example, the Liepaja Business Incubator and the Kurzeme Business Incubator are regional business incubators in the Liepāja region (Liepāja, n.d.[15]; Kurzeme Business Incubator, n.d.[16]). These provide capacity building, training, financial resources and physical network building opportunities for entrepreneurs. These are general incubator programmes offered to social enterprises.
Institutions
Although local authorities do not assume a special role in relation to social enterprises, there are some initiatives developing at the local level. For instance, the City of Riga offers grants to work integration social enterprises (WISEs).
Competence
The Social Enterprise Law allows local governments to design and introduce local support instruments. These can include a lower immovable property tax rate, free use of municipal property, special financial support schemes, and privileged public procurement procedures.
In 2016, for example, the city of Riga’s local government initiated, funded and implemented a grant programme for social entrepreneurs. The programme “Promotion of employment among groups at risk of social exclusion in Riga” provided grants of EUR 7 000 focused on WISEs. It aimed to begin, implement or stimulate the sustainable development of associations and foundations or businesses to ensure employment opportunities (European Social Network, n.d.[17]). This included creating new or enhancing existing jobs for groups at risk of social exclusion.
Across multiple public authorities and/or levels of government
The Commission for Social Enterprises serves as one mechanism of co-ordination for the Latvian social economy ecosystem. It consists of government representatives from the Ministry of Welfare, the Ministry of Economics, the Ministry of Culture, the Ministry of Finance and the Ministry of Environmental Protection and Regional Development, social enterprise experts, NGOs and business associations that assess and monitor social enterprises’ compliance with the law (Ministry of Welfare, 2024[18]).
The Latvian Association of Local and Regional Governments (LALRG) (Latvijas Pašvaldību savienība) primarily serves as a representative body for municipalities. It does not serve a specific purpose for the social economy, but it is a useful mechanism through which municipalities advocate for local government interests at the national level.
With social economy representatives
The Latvian Social Entrepreneurship Association (SEAL) offers advice, consultation and educational events for social entrepreneurs. It partners with the Ministry of Welfare and with the Agency for International Programs for Youth (Jaunatnes Starptautisko Programmu Aģentūra (JSPA)).
Reach for Change Baltics is an international non-profit organisation providing support to social entrepreneurs in the region. Within this organisation, Reach for Change Latvia, through its own local office, provides funding support and coaching to social entrepreneurs. Their action is supported by the Society Integration Foundation of the Republic of Latvia, the Ministry of Environmental Protection and Regional Development and the Ministry of Welfare (Reach for Change Baltics, n.d.[19]).
Universities and public higher education bodies throughout Latvia serve to co-ordinate some actors through the offering of specific training programmes on social entrepreneurship. These are designed with the support of the Welfare Ministry and experts. For example, the iSEE project is one such initiative – funded by the EU – which has developed social entrepreneurship courses at Riga University in collaboration with other universities in the Baltic region (iSEE, 2021[20]).
Source: An OECD survey on institutional arrangements circulated in 2024 with national and regional social economy representatives contributed to the findings of this country note.
Strategies, plans and legal frameworks
Although Latvia does not have a dedicated national strategy for the social economy, certain measures are integrated into broader national documents. For instance, the Sustainable Development Strategy of Latvia (Latvia 2030) promotes co-operation and public participation, encouraging institutions and the public to implement initiatives aligned with the United Nations SDGs (Saeima of the Republic of Latvia, 2010[21]). The National Development Plan of Latvia (2021-27) aims to drive economic growth, enhance social well-being and promote sustainable development across various sectors. It also aims to create a supportive environment for small entrepreneurs and non-governmental organisations, particularly in culture, recreation and creative industries (Cabinet of Ministers Republic of Latvia, 2023[22]).
A Latvian Social Economy Plan (2025-29) is currently under discussion, with ongoing consultations and regional engagements to ensure comprehensive and effective strategies. The draft proposal defines four main lines of action: developing a legal framework for the social economy; defining responsibilities and monitoring; involving social economy entities in promoting inclusive employment; and developing the ecosystem (Saeima, 2017[23]). In 2014, the Latvian government adopted the policy document “Promoting Development of Social Entrepreneurship in Latvia”, which acknowledges the potential of social enterprises and aims to establish a comprehensive support system and legal framework, including definitions, eligibility criteria and support directions (Providus, 2019[24]).
Support from the public sector
Latvia has expanded its national support for social enterprises through new multi-year programmes co-funded by the European Social Fund (ESF). An initial ESF-backed scheme (2017–22) provided EUR 12 million in grants via the development finance institution ALTUM to around 220 social enterprises, with a focus on employing disadvantaged groups. Building on this, the Ministry of Welfare launched a second phase “Support for Social Entrepreneurship” for 2023–29, co-financed by ESF+. This ongoing programme continues to offer grants and introduces complementary measures such as idea contests, business plan consultations and wage subsidies for social enterprises that employ people with disabilities or other at-risk groups (European Commission, 2025[25]).
Support from the private sector
Several private sector organisations aim to strengthen the capacity of the social economy sector in Latvia. ZINIS, a non-profit organisation, promotes a knowledge-based society by delivering educational activities that encourage creativity, critical thinking and entrepreneurial capacity. Its initiatives engage a wide range of participants, including individuals, businesses, public organisations and social economy entities (ZINIS Association, n.d.[26]).
Latvian organisations often take part in transnational projects that bring together various European partners. For instance, SEAL is part of the “Do Impact” European project – expected to continue until 2026 – which aims to empower social economy organisations by fostering digital and data-driven innovation. It also seeks to enhance awareness about opportunities, encourage stakeholders to digitally innovate and provide tailored upskilling and re-skilling opportunities to social economy organisations (Do Impact, n.d.[27]).
Financial entities, such as banks, support social economy entities through funding and by offering additional resources. SEB Bank, a Nordic financial group, offers a range of services to individuals and businesses, including support for entrepreneurial and community initiatives aligned with the United Nations SDGs. The bank also sponsors programmes such as the Growth Program, the eAcademy and the Grant Program (ie)dvesma. In collaboration with six Latvian municipalities, SEB launched the ‘Augsup’ grant programme (2022-24) in the Pieriga region to support social entrepreneurs, making it the only bank in Latvia to offer such tailored programmes for entrepreneurs (SEB, n.d.[28]) (Finance Latvia Association, 2024[29]).
Support from the public sector
Municipalities are instrumental in creating a local ecosystem that supports the growth of social economy entities, particularly through financial support, infrastructure and grants. Municipalities can also buy services from social enterprises or co-own them under specific conditions. However, since there are no national standard guidelines, each municipality decides how they engage with social enterprises. For instance, while some municipalities such as Riga and Sigulda actively support these entities, others remain hesitant (Ūlande and Līcīte, 2018[30]) (Licite-Kurbe and Gintere, 2021[31]).
The Zemgale region, which includes the Jelgava and Liepāja municipalities (southern Latvia), actively promotes social entrepreneurship. Through the Zemgale Business Centre and the Zemgale Planning Region (ZPR), the Zemgale region encourages various entrepreneurial projects, particularly those focused on social impact, and offers support for skills development and business growth. Meanwhile, Liepāja hosts the Zemgale Regional Skills Centre, which provides lifelong opportunities tailored to local needs and supports social entrepreneurship initiatives. In early 2024, the Zemgale Planning Region, together with partners in Latvia and Lithuania, launched the “RE:IMPACT” project (2024–26) under the Interreg Latvia–Lithuania Programme. This initiative aims to bolster the social entrepreneurship ecosystem in Zemgale and Lithuania’s Rokiškis district by building the capacity of local social entrepreneurs, increasing public sector commitment and introducing social entrepreneurship into education curricula. Planned activities include cross-border best-practice exchanges, training materials for schools, workshops to raise awareness among municipal officials and showcasing successful social enterprise stories in the region (Interreg, 2023[32]).
Support from the private sector
Private organisations at the local level also contribute to the growth of the social economy in Latvia. For instance, the Kurzeme NGO Centre, a public-interest organisation with over 25 years of experience, seeks to establish an active civil society throughout the Kurzeme region by enhancing civic competences and participation, and providing information, consultation and support to civil society organisations, associations and foundations. Kurzeme NGO Centre and the Ministry of Culture have signed a co-operation agreement (2022-25) which aims to support the development of civil society and promote minority NGOs in the region (Kurzeme NGO Centre, n.d.[33]). Another example is New Door, a non-profit organisation established in 2013 in Riga, dedicated to reducing poverty and promoting social and economic inclusion. As one of the first social entrepreneurship accelerators in the Baltic states, New Door offers tailored support to social impact enterprises and disseminates entrepreneurial knowledge.
Definition of public interest
According to the Public Benefit Organisation Law (Section 2(1)), public benefit activity refers to actions that provide significant societal benefits, particularly in areas such as charitable work, civil and human rights protection, civil society development, education, science, culture, health, disaster assistance, environmental protection and support for socially vulnerable groups (Republic of Latvia, 2004[34]). Public benefit organisations (PBOs) are prohibited from distributing financial or material benefits to founders, board members or other administrators.
Economic activities
Associations and foundations may carry out economic activities, provided they are complementary (not exceeding 50% of turnover) and serve the entity’s statutory goals (Republic of Latvia, 2004[34]). Breach of this condition results in loss of PBO status or imposition of corporate income tax.
All public benefit organisations must submit an annual activity report to the State Revenue Service (SRS) by 31 March each year, both in paper and electronic format (Republic of Latvia, 2004[34]). In accordance with the Associations and Foundations Law, associations and foundations must also prepare and submit income and expenditure reports and donation statements annually (European Commission, 2023[40]). These must be reviewed by an auditor. Reports are submitted to the SRS and published either on the website of the State Register of Enterprises (financial reports) or by the SRS (public benefit reports).
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← 1. Exemptions apply to specific services by registered providers, including social care, certain educational and sports services, and activities by PBOs aimed at child and youth protection (Republic of Latvia, 2012[37]).