“Who are you? How are you different from others? What is this social business? You are too commercial! If you are a business, then live by market conditions! What kind of business are you if you don't make any profit? Once again, you are reaching out with an extended hand for support!”, - such and similar remarks still accompany the social entrepreneurs in the country, although there is certainly an increasing amount of information about the benefits of social business for sustainable societal development, especially in recent years. There are indeed many positive examples in foreign countries because many nations have long recognised the beneficial nature of this business sector, not only in creating jobs but also in addressing a wide range of social gaps that various levels of government cannot fill.
Why was there a lack of ambition?
Unfortunately, in Lithuania, social enterprise development is still supported more with words than actions. We don't have a law for social enterprise development, not even a clear definition, so each institution can evaluate whether a particular company is a social business based on its own made-up rules. Yet, this determines whether it will receive support or not.
In the outgoing term, the government has not done much to strengthen the ecosystem and increase the number of people willing to start new social businesses. Having inherited the Social Business Concept adopted in 2015 from the previous governments and repeatedly promised publicly that this critical area must have a legal basis underfoot, Lithuanian Ministry of Economy and Innovation will, unfortunately, return to a cosmetic updating of the concept only at the end of its mandate. Regrettably, in several consultations with the ecosystem, there was no willingness to listen to the social entrepreneurs themselves and to hear that it was far from enough. Today, we need more ambitious decisions, as in many advanced countries, this business model is valued and actively promoted by the government. For example, in Latvia, the social business law was adopted six years ago, and today, the country counts two per cent of GDP created by social businesses.
Minister of the Economy and Innovation of the Republic of Lithuania Aušrinė Armonaitė, who participated in two social business forums, emphasised the importance of social business to the Lithuanian economy. She promised to collaborate with the social business ecosystem to refresh the vision for social business. Therefore, it remains entirely unclear why the decision was made to update the concept rather than establish a legal framework that facilitates social enterprise's sustainable and coherent development.
The feedback loop has been broken
It remains unclear what prevented the implementation of the tasks outlined in the Social Business Concept, which seem truly fair and necessary. The first task is to create a legal environment
favourable to social business. The second is establishing a financial and tax support system for social business. Equally important is the third task – to increase awareness of social business.
It was often emphasised in discussions that this document needs to be given weight. However, when the Ministry of Economy and Innovation was asked to take the lead by inviting other ministers to sign or perhaps even elevate that document to the level of a Lithuanian government resolution, the feedback loop seemed to break...
Let's lay the foundations for a legal framework!
Since our voices are not being heard, we have to publicly present our arguments for why more ambitious decisions need to be made regarding the sustainable development of social business. This ensures that social business, which creates the necessary changes for all of us, thrives and proliferates.
Over the past two years, thanks to the Lithuanian Social Business Association, the issue of social business has returned to the political agenda despite it needing to be added to the government's list of priorities. Two years ago, political leaders, guided by the Minister of Economy and Innovation, publicly acknowledged that social business is a significant part of the economy and that laws should regulate essential issues for the state. These thoughts were expressed during the Social Business and Innovation Forum.
Declarative documents without legal consequences are no longer sufficient, especially since, after a year, with a possible change in government, such documents, such as concepts and similar-level legal acts, may no longer matter to the new political authority.
Therefore, it is necessary to organise the legal framework to bring more clarity and ensure consistency in promoting social business. Additionally, it would provide an opportunity for social businesses to participate in public procurement and strengthen their positions in delivering public services. Third, it would help municipalities understand the value social businesses create for the community and enhance their collaboration in addressing local issues. Fourth, it would help Lithuania become a more attractive destination for investments from the European Union/international funds, programs, and the private sector. Fifth, it would encourage business-to-business social procurement. As Jaime Paiva from Zurich Insurance said in one of our meetings, it is impossible to do this "without a clear definition of what we call social business, from which traditional business would want to buy goods. We need to know what lies behind it."
The first small step could be quite soon – the Seimas must approve the draft law defining social business and including criteria in the Small and Medium Business Development Act. That would be the beginning of creating the legal framework for social business. It's right around the corner – November 16th, when the world celebrates International Social Business Day. Perhaps soon, in Lithuania, we will have a reason to celebrate it rather than commemorate it?