Позитивные изменения. Том 2, № 3 (2022). Positive changes. Volume 2, Issue 3 (2022)
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Would it be right to say there is a certain set of factors determining the success of social entrepreneurship in the country?
First of all, it is the overall economic climate. New challenges pave the way for social entrepreneurship for several reasons. For example, foreign manufacturers leaving. This opens up niches for import substitution, which small and medium-sized businesses can fill. In addition, the search for new economic models is often discussed as an alternative to the existing relations. The business needs to change its mindset: from the “sell fast and cheap” approach to the philosophy of meeting the needs of people, specific social groups, addressing specific social problems. People have become more active and courageous, the new generation is more empathic and more determined to change the world for the better. We have high hopes for them.
Second, cross-sector interaction is very important. The government is currently “probing” the field of social entrepreneurship at the legislative level. There is a potential for expanding the scope of the law on social entrepreneurship. Perhaps by increasing the groups it applies to. Or perhaps through unification and merging of different registries.
Thirdly, a rich information field, with high-tech services offered proactively, is of great importance as well. In simple terms, with the development of Big Data we need to identify potential social entrepreneurs and introduce them to the topics, possible models and ready measures of support. Our Foundation, for example, created an information portal for social entrepreneurs “New Business”, where you can find best practices, news, interviews and other useful information. This was done as much as 10 years ago. In addition, we are operating and regularly updating the Social Ideas Bank, where you can see how different business models work.
Social entrepreneurship is based on the most urgent social problems that differ from country to country.
“My Business” centers and the regional Social Innovation Centers have done a lot of work to identify and assist social entrepreneurs in Russia.
Are regional social entrepreneurship development strategies similar, for example, between the European countries or within the Asian region? Which one is closer to Russia’s way in the development of the institution of social entrepreneurship?
We have studied social entrepreneurship models in several developed countries. After studying various models, we borrowed the most from South Korea’s experience – which has a similar classification and key support measures for this category of business.
We also studied educational programs on social entrepreneurship abroad and concluded that they all focused on their respective national social agenda, education level and entrepreneurial culture of students, as well as generally on established educational practices and formats. In general, an academic approach to teaching social entrepreneurship is more prevalent in Europe, while a practice-oriented approach is more common in Asia.
What are the factors facilitating the development of social enterprises in Russia?
Social entrepreneurship in Russia has taken root and is developing gradually, but quite steadily. The main reason is that the existence of social enterprises benefits not only their owners and employees, but also the state and society. The society is interested in private enterprises intent on addressing social problems, in addition to the state and charitable organizations, as they offer extra options and additional opportunities for the people. The state benefits from support organizations that are self-financed and complement the government’s social infrastructure. Both the state and the society benefit from the existence of organizations that develop and test innovative methods of addressing social problems. They make the social system more flexible and allow the tried and tested solutions to be massively implemented in public practice.
New challenges pave the way for social entrepreneurship. The search for new economic models is often discussed.
Among other key factors for the success of social entrepreneurs in Russia, we should also mention inherently different level of social infrastructure development in various regions and municipalities, which has been established over the years and was stimulated by regional, not federal financing of the social sector. Therefore, in places where a shortage of individual elements of social infrastructure does not require major investment, social enterprises can quickly and flexibly compensate. In addition, we see that social entrepreneurship is more actively developing in those regions that are ready to systematically support it, to see and discuss its problems and achievements, to introduce effective practices and ways of solving social problems in the operation of state social structures. Building a regulatory and legal framework for social entrepreneurship, development, financing and recording the results of its activities through the register of social enterprises allows this phenomenon to reach a fundamentally new level.
What hinders the development of social entrepreneurship in our country?
There are several factors slowing down the development of social entrepreneurship in our country. First of all, many social enterprises operate on the basis of personal connections, and not all of them were able to adapt and survive the COVID-19 restrictions. And now, each time the epidemic situation worsens, there is more uncertainty in terms of business planning, so we have to make provisions for a significant drop in the number of clients and revenues.
Secondly, we should mention the fact that the growing sector of cooperation between social enterprises and the state in terms of outsourcing a number of social services under Federal Law 442-FZ, as well as in the pilot testing under 189-FZ, tariffs are often the same for state (or municipal) and non-state providers, or higher in favor of the former. This model is not economically fair because it does not take into account a number of items included in the cost of service for a non-state provider (such as rent and maintenance of buildings of state enterprises, or equipment costs), which is often critical for a non-state provider and is a barrier preventing the decision to take on such obligations. Thus, nongovernmental enterprises find themselves in an inherently losing situation.
Insufficient training, economic and legal literacy of entrepreneurs also have a significant impact on the development of social enterprises. Various organizations exist that try to mitigate this factor, such as, for example, the Social Entrepreneurship Laboratory, which conducts trainings for beginners and accelerators for existing social entrepreneurs. And perhaps the last and most objective obstacle is the refinancing rate and the high cost of credit, which hinders the development of enterprises that have low and medium profitability.
What other development strategies and tools that are used elsewhere in the world are not yet present in Russia?
In Russia, there is no special organizational and legal form for social enterprises, no national association of social enterprises, no common marketing platform and no e-commerce platform for goods made by social enterprises. The need for a separate legal form is arguable in our legislative field. Rather, what we lack is a mechanism and opportunity to recognize both commercial and non-profit organizations engaged in income-generating activities as social enterprises. Separate branding of the social enterprises’ products, and setting up special sections on existing online marketplaces to trade their goods is a matter of the future, when such products become more commonplace. The National Association is a thing of the future, too. Meanwhile, regional associations have been created in some parts of the country. The national association can be created “bottom-to-top”, once regional associations get stronger and decide they need to reach a new level, or “top-to-bottom” if one of the social enterprise development institutions takes on the role of “gatherer” and works hard to achieve the goal. Unfortunately, there isn’t a single place in the world with a clear-cut, objective and comprehensive methodology for evaluating the social performance of social enterprises. It should be created using the existing developments.
Besides, a unified mechanism for impact evaluation of social investments is being discussed in Russia but has not yet been developed. “Our Future” Foundation has been working on this problem for a long time; we have implemented an evaluation of those projects that we have helped with interest-free loans. The analysis carried out according to our methodology allows us to say that every ruble invested in the project of social entrepreneurs brings a social impact of 3–7 rubles.