The law on social entrepreneurship and projects that fail to qualify
July 31, 2019
Incorporating: projects the state rejected on the grounds that they did not meet criteria for ‘social’ entrepreneurship; people categorised as ‘vulnerable’; and forms of state support regional authorities may offer social entrepreneurs.
On 26 July 2019, President Vladimir Putin signed a law on social entrepreneurship in the Russian Federation. The concepts of ‘social entrepreneurship’ and ‘social enterprise’ are now formally enshrined in legislation. Business relations in this sphere are subject to regulation and provision has been made for social enterprises to receive state support.
‘The concept of “social entrepreneurship” has been given legal definition which means that, throughout Russia, social entrepreneurs may count on support from both federal and regional authorities,’ says Natalia Zvereva, director of the “Our Future” Regional Social Programmes Fund. ‘Previously, this was possible only in regions that participated in competitions aimed at supporting the infrastructure of social entrepreneurship organised by the Ministry of Economic Development, and in regions which took an independent decision to develop social business and finance initiatives from the regional budget.’
‘Our Future’ has been engaged in developing social entrepreneurship since 2007.
As Zvereva notes, the law gives federal and regional executive authorities the right to support existing social enterprises and introduce new types of help that may be financial or advisory, and relate to tax, property, education, etc.
‘The adoption of the law should encourage regions that have not yet sought to develop social entrepreneurship to adopt good practice seen in areas of Russia with past experience in the support of social business,’ Zvereva says.
Registering social enterprises
The new law also introduces a procedure for registering social enterprises. ‘When we have gathered enough data from across the country, we will be able to draw conclusions on the number of existing social enterprises and their potential for growth. At present, however, accessible statistics are limited to the 13 regions where regional representatives of the ‘Our Future’ Fund operate. The availability of information is also reduced by the fact that internal accounts are mostly unpublished and that data from the Centre for Social Innovation (Tsentr innovatsii sotsialnoi sfery) is sent to the Ministry of Economic Development,’ Natalia notes.
The law gives broad definition to groups falling into the socially vulnerable category, she adds. It includes pensioners, those approaching retirement age, disabled people, and parents raising children with disabilities.
Project topics Zvereva notes the importance of the way the law has linked social business with vulnerable groups, as well as with educational activities, cultural entrepreneurship, the preservation of linguistic diversity in Russia, and businesses that provide services to strengthen families and support parents, especially mothers.
‘Nevertheless, legally recognised social businesses do not include environmental projects, initiatives to preserve Russian folk art, or projects related to the conservation and development of villages or rural areas,’ Zvereva says.
She also emphasizes that ‘large profits have never been the prime goal in social business’.
‘Social entrepreneurs aspire to have an interesting job which offers satisfaction and visible results. That is why people go into this field – though, as in any business, success can never be guaranteed. But, as my links with social entrepreneurs have shown over the years, this is no disincentive.’