Social Economy in Europe: Lithuania
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 Lithuania 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 the involvement with any social economy organisation as a volunteer relating to 2020-2025 (European Commission, 2025[3])
In Lithuania, there is no dedicated framework law defining the social economy. Instead, a set of specific laws regulates relevant activities and entities, namely Law No. IX-1969 on Associations (2004), Law No. XII-717 on the Development of Non-Governmental Organisations (2013) and numerous legislation for co-operatives dating from 1997 to 2025. In 2015, Lithuania released a “Conception of Social Businesses” to define them, along with “Guidelines for Social Enterprise Projects”, which provides operational criteria to be considered a social enterprise.
Institutions
In Lithuania, social economy policy is overseen by several national institutions. Since 2015, some ministries have become particularly important to the oversight of social enterprise – the Ministry of Economy and Innovation (especially the Innovation Agency), the Ministry of Agriculture and the Ministry of Interior. The Ministry of Social Security and Labour is responsible for social economy policy related to non-governmental organisations (OECD, 2019[4]). The Research Council of Lithuania also follows developments in the social economy.
Competence
While there is no specific framework law defining the social economy, a collection of laws has developed to regulate relevant activities and entities. There is a Law on Associations (originally No. I-1231 (March 14, 1996) with an updated version, No. IX-1969 (January 22, 2004)) (Republic of Lithuania, 2004[5]); a Law on Development of Non-Governmental Organisations (No. XII-717 (December 19, 2013)) (Republic of Lithuania, 2013[6]), and numerous legislation for co-operatives dating from 1997 to 2025 (Republic of Lithuania, 1993[7]). In 2004, a Law on social enterprises (no longer valid as of 2023) recognised the specificities of social enterprises and permitted the development of financial support matching the specificities of social enterprise models, with the Ministry of Social Security and Labour assessing annual summary reports of their activities (Republic of Lithuania, 2004[8]). There is also a “Conception of Social Businesses” to define them, along with the “Guidelines for Social Enterprise Projects”.
The Ministry of Social Security and Labour in Lithuania oversaw the social economy through policy development and support for particularly work integration social enterprises (WISEs). This includes creating and implementing legal frameworks and financial mechanisms that support the establishment and operation of WISEs, particularly those focused on integrating disadvantaged groups into the labour market. The Ministry also provided financial support, such as grants and subsidies, to help WISEs with their operational costs and the creation of jobs for marginalised individuals. While these activities are listed, there is limited available information on the specific mechanisms or programmes through which they were enacted.
In 2015, a decree on a "Conception of Social Business" was adopted (No. 4-207) (Republic of Lithuania, 2015[9]). It provides a political definition of social enterprises, and through the "Guidelines for Social Enterprise Projects" which provides operational conditions to be considered a social enterprise. A framework law on social business is still under discussion, with slow progress and concerns over conceptual clarity and policy alignment (OECD, 2019[4]; LiSVA, 2023[10]). In 2023, Lithuania amended its Small and Medium-Sized Enterprises Development Law to formally recognise social businesses. The reform grants official social business status to micro, small and medium-sized enterprises combining market activity with clear social or environmental aims and re-investing more than half of their profits into their purpose, making them eligible for financial and non-financial support from the state (Lietuvos Respublikos ekonomikos ir inovacijų ministerija, 2024[11]). The Ministry of Social Security and Labour and the Ministry of Economy and Innovation are currently preparing a national social economy strategy.
The funding of social economy entities is supported by a variety of national bodies. The Ministry of Economy and Innovation has several mechanisms to support the financing of social economy (directly and indirectly) (National Development Bank, n.d.[12]; National Development Bank, n.d.[13]; Sweden-Lithuania Cooperation Fund, n.d.[14]). The Innovation Agency under the Ministry of Economy and Innovation provides consulting services to de facto social enterprises as part of their efforts to promote entrepreneurship in the country. Enterprise Lithuania, under the Ministry, also provides support to business development, including for social entrepreneurship. The Ministry of Agriculture, implementing the Lithuanian Rural Development Programme measure "LEADER Programme", was the first national institution to invest funds in social businesses in rural areas. The Ministry also contributed to updating guidelines for the Programme’s implementation (Republic of Lithuania, 2022[15]) .
The Innovation Agency also oversees the registration of social businesses and maintains a list of social businesses on its website. In addition to these competencies, the agency provides both training resources and general knowledge on the ecosystem and meaning of social businesses in the country.
Institutions
Lithuania is a decentralised unitary state with 10 regions (apskritis) serving as territorial and statistical units, and 60 municipalities (savivaldybė) as the only self-governing authorities. Regional administrations were abolished in 2010, and municipalities now handle local governance independently, including establishing local levies and budgets (European Committee of the Regions, n.d.[16]).
Competence
There are no regional-level authorities specifically overseeing social economy policy due to the absence of regional administrations. All activity is at the municipal level.
Institutions
Municipalities play a role in implementing local social and economic initiatives, often partnering with social economy actors for service in co-ordination with national policies. Municipalities in Lithuania are granted increasing autonomy to deliver specific social services for which social economy entities can be important providers. According to a survey undertaken by the Ministry of Social Security and Labour in 2017, 79% of surveyed municipalities believed the capacity of NGOs to deliver public services to be “mostly sufficient” or “more adequate than inadequate”. Some of these mentioned NGOs identify as social enterprises and 60% of the surveyed NGOs were already involved in public service delivery (OECD, 2019[4]).
Competence
Municipalities also play a key role in providing financial support to the social economy, mobilising part of their public-service provision budgets to provide grants to social economy actors as providers themselves. Furthermore, municipalities can define support measures for MSMEs with a social business status (Lietuvos Respublikos Seimas, 2023[17]).
Municipalities have promoted projects related to the social economy through EU-funded projects. For instance, the Support for Social Business in Vilnius County project (2020-2022) managed by Vilnius Chamber of Commerce, Industry and Crafts provides incentives for social business and start-ups through training, individual consultation and provision of equipment and facilities (Vilnius Chamber of Commerce, Industry and Crafts, 2020[18]). The northern municipality of Rokiškis has implemented the project “RE:IMPACT” focused on strengthening the capacity of social enterprises in collaboration with the local authorities of Zemgale (Latvia) (Interreg, 2025[19]).
Across multiple public authorities and/or levels of government
The Lithuanian Government is part of the Global Social Innovation and Impact (GCSI) Working Group under the remit of the Head of the European Competence Centre for Social Innovation (GCSI, n.d.[20]). The working group is a coalition of governments worldwide that aims to advance social innovation globally, primarily through greater visibility and collaboration (Sweden-Lithuania Cooperation Fund, n.d.[14]).
Local authorities have established their own mechanisms of co-operation with other stakeholders. Regional development councils (RDC), composed of mayors, municipal council members, and socio-economic partners, contribute to broader regional policy goals such as reducing disparities and promoting sustainable development.
While not specifically related to social economy issues, there are other mechanisms which support co-ordination across levels of government. The Association of Local Authorities in Lithuania (ALAL) represents and advocates for the interests of local governments in the country. It serves as a platform for collaboration, capacity building and partnership and it plays a key role in facilitating dialogue between local authorities and central government institutions (ALAL, n.d.[21]). Local Action Groups (LAGs), under the EU LEADER programme, are also operational in Lithuania. The Network of Local Action Groups (LAG Network) unites 49 of these action groups across the country to support collaboration between local government, business, and the non-governmental sector (LAG Network, n.d.[22]).
With social economy representatives
The national and municipal NGO councils are a mechanism for co-ordination both at a national and a local level. The National NGO Council is an advisory body to the government of Lithuania that represents the interests of NGOs on a national level. The Council consists of nine representatives of state institutions, ten representatives of NGOs and one representative from the Lithuanian Association of Municipalities. It helps facilitate dialogue between civil society organisations and government authorities. The municipal NGO councils operate at the local level (according to the Law on Development of Non-Governmental Organisations (No. XII-717 (December 19, 2013)) in each of Lithuania's municipalities. They serve as platforms for dialogue and cooperation between local authorities and NGOs.
The Lithuanian Social Innovation Cluster is an open network of socially responsible organisations and companies which aims to bring professional knowledge, skills, and competencies together through workshops and digital platforms (Lithuanian Social Innovation Cluster, n.d.[23]). It has partnerships with the Ministry of the Interior, the Lithuanian Police, the Ministry of Education, Science and Sports and the Lithuanian Social Business Association.
The Lithuanian Social Business Association (LiSVA), established in 2018, serves as the national umbrella organisation and engages in advocacy, capacity building, and ecosystem development activities to support its members (LiSVA, n.d.[24]). It represents the interests of social enterprises in state and municipal institutions, evaluates programs and measures implemented by state bodies, contributes to public policy formulation and provides specific proposals to municipal institutions regarding their involvement in decision-making processes. Municipalities can collaborate with the Lithuanian Social Business Association to support social businesses on a project basis. For example, the Rokiškis District Municipality Administration and the Lithuanian Social Business Association became project partners in 2024 under the “RE:IMPACT” project (European Commission, 2024[25]) It hosts events, such as the Social Enterprise Summit which was in operation annually from 2014 to 2020 and in 2025 (Social Business Lithuania, 2020[26]; Lietuvos Socialinio Verslo Asociacija, 2025[27]).
The Lithuanian Small and Medium-sized Business Council is a public advisory institution consisting of representatives of associations whose members are business entities. Established in 2008, by an article in the Law of the Republic of Lithuania on the Development of Small and Medium-sized Businesses (updated on 12 January 2017, Amendment No. XIII-192) (Republic of Lithuania, 2017[28]), it aims to foster a favourable business environment and develop dialogue and collaboration between the business community and government institutions (Republic of Lithuania, 2004[5])
Strategies, plans and legal frameworks
In Lithuania, there are implicit references across various governmental documents to the social economy, such as the Lithuania Progress Strategy 2030 and the National Progress Plan (2021-30). Another example is the Lithuania 2050, where the Government has committed to advancing the development and application of technology and innovation, including social innovation. It also seeks to create a regulatory environment and infrastructure favourable to development of social business activities (Office of the Committee for the Future of the Seimas Republic of Lithuania, 2024[29]).
In 2024, the Ministry of Social Security and Labour drafted the Action Plan for Strengthening the Activities of Non-Governmental Organisations (2025-27). The action plan seeks to strengthen the NGO sector by fostering long-term development, enhancing institutional capacities, and encouraging collaboration with the public sector. Key initiatives include funding for capacity-building projects, support for international non-governmental initiatives, campaigns to encourage volunteering, and efforts to improve public awareness and transparency about non-governmental activities. These measures are underscored by strategic goals to create sustainable, socially active and inclusive communities in Lithuania (Ministry of Social Security and Labour of the Republic of Lithuania, 2024[30]).
Lithuania’s 2023 reform of SME legislation formally recognised social businesses (socialinis verslas), granting them official status and access to state support mechanisms (Republic of Lithuania, 2017[28]). These legal reforms align with Lithuania’s strategic aim to expand its social economy beyond traditional work‑integration enterprises (WISE), facilitating a more diverse, impact-driven ecosystem. By formalising the social business status and accompanying support mechanisms, Lithuania is creating a more enabling environment for inclusive, sustainable entrepreneurship (Parliament of the Republic of Lithuania, 2024[31]).
Support from the public sector
There is a broad range of financing instruments for SMEs, which social economy organisations also benefit from (IBESI, 2024[32]). For instance, the National Promotional Bank, a state-established financial agency, provides funding to social economy entities, though not exclusively, to promote sustainable development in the country (ILTE, n.d.[33]).
Support from the private sector
Private sector organisations and programmes at the national level support social economy organisations. Based in Vilnius and Valencia (Spain), Katalista Ventures is a key player in the business support ecosystem, offering early-stage acceleration, funding programmes, start-up consultancy, access to networks, and personalised mentorship. One of its notable projects is the NGO Accelerator, a unique 1.5-year pilot initiative engaging in capacity building for NGOs across seven municipalities in Lithuania (Katalista Ventures, 2024[34]). LiSVA is another example, a national umbrella organisation for social enterprises, representing their interests at both national and local levels. It also evaluates programmes and measures implemented by the Lithuanian government, contributes to public policy formulation, provides proposals to municipalities regarding the involvement of social businesses in decision-making processes, and offers training programmes for social entrepreneurs (LiSVA, 2023[10]).
Cross-border initiatives and programmes are being implemented with neighbouring countries, reflecting a dynamic region that capitalises on shared strengths. Conducted by four stakeholders from the Baltic region, the Integrated Baltic Ecosystem for Social Innovation (IBESI) is a notable project for its focus on empowering social entrepreneurs and innovators. Running from 2023 to 2025, the programme enhances access to local and pan-European resources and innovation ecosystems to expand access to alternative funding and test current business models to enable scaling and replication (IBESI, 2024[35]).
Lithuania’s private sector, particularly foundations and private banks, also offers a range of funding and financial solutions for social economy organisations. The Kazickas Family Foundation (KFF), Lithuania’s largest philanthropic institution established in 1998, supports a range of projects in education, culture, social welfare and diaspora engagement. Similarly, the Marius Jakulis Jason Foundation (MJJ Foundation), founded in 2019, supports talented individuals who contribute to Lithuania’s economic growth in areas of business, knowledge and science. Through its Business Programme, the foundation offers financial support and mentoring to social entrepreneurs in Lithuania. Private banks, such as Finora Bank, Citadele and Swedbank, also often offer microloans to start-ups and small businesses, though not exclusively targeting the social economy (IBESI, 2024[32]).
In addition to the programmes already in place, a new cross-border initiative called “Impact Baltic” was launched in 2025 to bolster social enterprise financing. Co-funded by the European Social Fund+, this 30-month project aims to establish a dedicated impact investment fund for social enterprises across Lithuania, Latvia and Estonia, while piloting an upskilling programme to increase investment readiness of Baltic social entrepreneurs. The initiative – led by a consortium including the Baltic Innovation Agency and Reach for Change – is expected to expand access to tailored finance and strengthen the capacity of Lithuanian social ventures to scale their impact (Reach for Change, 2024[36]). This complements existing private-sector support mechanisms by specifically targeting the social finance gap in the region.
Support from the public sector
Support for the social economy at the regional and municipal level remains uneven across the country. Municipalities often adopt fragmented approaches, with varying levels of commitment and resources across regions (Bruschi et al., 2023[37]). The Rokiškis Municipality has established a Competence Centre to promote social entrepreneurship, which includes a coworking space for aspiring social entrepreneurs (Euclid Network, 2024[38]).
Support from the private sector
Local private actors and civil society are contributing to the social enterprise ecosystem in the regions. One example is the ChangeMakers’ON (C’MON) programme based in Kaunas, which provides a comprehensive pipeline of hackathons, “boost-camps”, incubators and training sessions for emerging social innovators. Run by a regional social entrepreneurship institute, C’MON has in a few years facilitated the launch of around 88 new social start-ups, connecting teams with mentors and investors in Lithuania and beyond (Interreg Europe, 2021[39]).
Similar grassroots initiatives – including co-working hubs like NVO Avilys in Vilnius – are cultivating local communities of social entrepreneurs by offering shared space, mentorship and networking opportunities. These subnational, privately led support structures play a critical role in nurturing early-stage social enterprises and complement the public sector’s efforts, although their reach tends to be concentrated in more pro-active municipalities and regions.
Definition of public interest
Public Benefit Organisations (PBOs) in Lithuania are governed by the Law on Public Organisations (Republic of Lithuania, 1996[40]), Law on Associations (Republic of Lithuania, 2004[41]), Law on Charity and Support (Republic of Lithuania, 1993[42]), and other relevant legal acts. These laws define public benefit as activities serving the general good, such as education, health, culture, and social services. To qualify as a PBO, an organisation must operate for the benefit of society rather than private interests.
Economic activities
According to the Law on Public Entities, PBOs may engage in economic activities, provided the income is reinvested into their public benefit objectives (Republic of Lithuania, 1996[40]). Income from activities directly related to the organisation’s mission is generally exempt from corporate income tax (CIT).
Social economy entities are subject to the general reporting and transparency obligations applicable to legal persons in Lithuania. These are governed by sectoral laws including the Law on Public Organisations (Republic of Lithuania, 1996[40]) and the Law on Associations (Republic of Lithuania, 2004[41]).
Key obligations include:
Social economy entities must prepare annual financial statements and activity reports as mandated by law;
If an audit is required by law, the organization must submit audited financial statements along with the auditor’s report;
Annual financial statements and activity reports must be submitted to Registrų centras (the public registry);
Social economy entities must comply with the Law on the Right to Receive Information from State and Municipal Institutions and the Law on Data Protection.
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← 1. Exemptions apply to goods and services directly related to the entity’s public benefit purpose, subject to approval by the tax authorities, according to the VAT Law, Article 20-33 (Republic of Lithuania, 2002[46]).
← 2. The general system of social insurance contributions applies. Special measures exist for vulnerable groups under the Law on Employment (Republic of Lithuania, 2016[47]).
← 3. Donations and legacies to PBOs are generally exempt, provided the entity is registered and serves charitable, social, or public-benefit purposes, according to the Law on Charity and Support (Republic of Lithuania, 1993[42]).