Ten million businesses prioritise people over profit: what impact does this have on us?

Lithuania currently has around 200 social businesses, but the potential is at least ten times higher, even if social enterprise models run by individuals are omitted. Viktorija Bražiūnaitė, Head of LiSVA:

In December 2023, the Seimas of the Republic of Lithuania adopted a definition of social business, incorporating it into the law on the development of Small and Medium-Sized Enterprises (SME). This change in legislation has obliged the Government to create an official procedure for granting social enterprise status, and the law itself has recently entered into force.

According to V. Bražiūnaitė, this step reflects the LISVA’s continuous effort to strengthen the social business ecosystem in Lithuania. LiSVA has actively sought a clear legal definition to promote sustainable growth of the sector. In addition, a comprehensive policy review document by the Organisation for Economic Co-operation and Development (OECD) highlights the importance of a coherent legal framework and better involvement of social enterprise in public procurement and funding opportunities. By implementing these measures, Lithuania will be well positioned to raise the standards of the social business sector, encouraging innovation and addressing societal challenges through entrepreneurial and innovative solutions.

V. Bražiūnaitė explains further:

In November, the Ministry of Economy and Innovation published a procedure for granting and revoking social business entity status. The procedure introduces several innovations that will strengthen the social enterprise ecosystem. An official register and clear criteria for status will increase the visibility of social businesses, allowing them to monitor their impact, activities and contribution to the country’s GDP. Defined social impact criteria will encourage businesses to pursue specific social or environmental objectives, thereby increasing their efficiency and long-term impact on society. Clear criteria and official status will make it easier for financial institutions and investors to identify these businesses. Until now, social enterprises have faced inconsistent standards and definitions, leading to unequal conditions within the sector.

To mark International Social Business Day, representatives of social businesses were honoured in Vilnius for their learning, growth and outstanding achievements through participation in Impact Academy ʼ24. V. Bražiūnaitė commented that this year, nearly 50 candidates applied with ten selected based on specific criteria, as planned. Over almost three months, the participants attended four training sessions, gaining insights into impactful communication, financial sustainability, impact measurement and using artificial intelligence tools in their operations. They also had the unique opportunity to receive guidance from over twenty mentors – well known experts from various fields. This initiative enriched their knowledge and equipped them with practical tools to amplify their social and environmental contributions.

The awards are a form of recognition and a source of inspiration for others, emphasising the tangible economic and societal benefits social businesses create. Diana Kačanauskaitė, Head of Small Business Development, Luminor Bank Lithuania:

We are delighted to be a partner in this project for the second consecutive year. We appreciate the participants’ commitment and the opportunities that Impact Academy ʼ24 has offered them. For Luminor Bank, social business development is an area of focus, and we need to ensure that social businesses have all the tools they need to grow and create benefits for society. We are proud of our partner LiSVA’s courage to make a difference in social business and to inspire others.

This year, the winner of Impact Academy ʼ24 is VšĮ Unikalus Šokis, who received a cash prize of EUR 3,000 from Luminor. Other winners were granted with valuable prizes – second place winner CupCupas has received, third place to Mamos Linija, fourth place to Rokiškio tautodailininkų asociacija (Rokiškis Folk Art Association) and fifth place to Gerų Patirčių Namai.

The 2nd place winner CupCupas, VšĮ, gained access to advertising on JCDecaux's digital screen network Auksinis Pėsčių Ratas, located in the heart of Vilnius, with a prize value of EUR 2,500. The 3rd place winner, Mamos Linija, VšĮ, was awarded a private consultation package worth EUR 1,000, sponsored by WIDEN Law Firm. The 4th place prize was a consultation package valued at EUR 950, offered to Rokiškio tautodailininkų asociacija by the research and design agency The Critical. In contrast, the 5th place winner, Gerų Patirčių Namai, VšĮ received a membership package worth EUR 450, provided by LISVA. The most popular among the audience was Trys Dienos, VšĮ ('Social Experiment').

Many of the societal and environmental challenges we face today will only increase in the future. Social businesses in Lithuania and other countries can react quickly in times of crisis, using innovative solutions and mobilising their resources to help vulnerable groups, strengthen social cohesion and contribute to crisis management together with public authorities.

V. Bražiūnaitė concludes:

We are currently witnessing the growing importance of social business in Lithuania and Europe. Social enterprises are becoming increasingly important in the economy, and their influence is growing as they create value in local communities and address global challenges. I hope that in the near future, we will also see ‘impact unicorns’ – companies that not only achieve outstanding results, but also win international recognition for their impact on people and the planet.

According to the Head of LiSVA, to ensure that this potential continues to flourish, we need to work together with our partners – NGOs, state institutions, business and academia – to create more favourable conditions for social business development. Strengthening the legal framework, access to finance and the younger generation’s involvement are just some ways how social business in Lithuania could become more robust now and, in the future, become an integral part of our economy and society. Socially responsible public procurement is another way to accelerate this growth, stimulate social business development, and enable more remarkable and sustainable change. Such practices could act as a catalyst for the sector, helping to achieve the goals that will strengthen our country.