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Lessons from Reformers: Latvia

Lecciones de los Reformadores: Letonia

Leçons à Tirer des Réformateurs : Lettonie

Beautiful Riga old town panoramic view from above

Committing funding to build its civil society

This case study was originally posted in the OGP Global Report.

As part of the Soviet Union, Latvia did not have a tradition of civil society organizations. After becoming an independent country in 1991, while the economy grew and developed, its civil society landscape did not mature at the same rate. In such situations, governments can effectively support the sector and organizations by providing the right mix of incentives. These often include reduced red tape, tax exemptions or reduced tax rates, seed grants, a dedicated financial window (fund) for CSOs, and capacity building through training and other channels. This is what the Latvian government decided to do. As a result, now setting up a CSO is a fairly easy process and is done in a few days.

Another area of concern was CSO funding and capacity. In its first action plan (2012–2014), a specific commitment was included to create an “NGO Fund” to build CSO capacity to engage in policy processes. Such a fund was important as private support to CSOs is low and government grants offer a financial lifeline to the voluntary sector. With support from the European Economic Zone, a fund of 1 million euros was established which included a dedicated financial window for CSOs to access critical capacity building resources.

Despite these successes, recent assessments of the sector suggest that it continues to face financial sustainability challenges. For example, in 2017, the NGO community was challenged following the implementation of corporate tax incentives. Tax breaks were given to encourage the reinvestment of money back into businesses, likely reducing the amounts set aside for charitable donations.

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