In the first place when discussing the term social business it is important to clearly define the term itself. Latvian law does not legally consider the concepts „social business”, „social entrepreneur”, nor similar terms. However, in the Business law it is clear that business entities are the profit-making ones which is on the contrary to the principles of social entrepreneurship. So it would be inaccurate to use the term „social business”.

Despite the fact that from the law perspective the term can lead to the discussions, it is still necessary to explain what this term stands for. Social enterprise is a social economic operator that carry out economic activities addressing social and/or environmental problems. Social enterprises have a clear ”social mission”, which means that the social entrepreneur will clearly know what efforts it takes to improve the lives of the public, to whom it is trying to help and a plan how to do it. Its funding model may be a hybrid, but the bulk of their income comes from provided services or sold products. The Social enterprise statutes will clearly define how the profit is being managed and how it is utilized for the social or environmental problems solving, reinvesting in their social mission.

Depending on the country, social enterprises may have a variety of legal forms and sizes: they can range from large national and multinational companies to smaller organizations of some people, but they all have common features :

  • main form of income is sales of services or products rather than donations and grants;
  • are designed specifically for the process of change in a society, to drive a positive impact;
  • profits are invested in their social mission.

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