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Infrastructure Development for Social Entrepreneurship and Innovation

May 26, 2017, 19:59 UTC+3
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Social enterprises are gradually developing into full-scale providers of social services, superseding those offered by the Government. It is now time to institutionalise these activities, while ensuring continued development of support infrastructure to foster social enterprises in view of what the businesses need most.

Since 2012, Russia’s social services sector has been undergoing a reform.

  • In 2015, Federal Law “On Fundamentals of Social Services for Citizens of the Russian Federation” came into force.
  • In June 2016, a road map to support access of private businesses to the social services market was approved.
  • April 2017 saw a kick-off by the Working Group for Social Entrepreneurship under the Ministry of Economic Development, which defined the concept of “social entrepreneurship” and produced a list of relevant services.

The whole point of this reform is about handing over some of the functions, delivered earlier by the Government, to private businesses. This is expected to improve the quality of social services and cut budget spending at the same time.

  • According to Maxim Topilin, the Russian Minister of Labour, the private share of the social services market is set to rise to 10% by 2018 up from 1.2% in January 2015.
  • The Government Procurement Law already provides that socially-focused non-commercial and commercial organisations shall receive no less than 15% of government contracts.
  • Corporate income tax holidays until 2020 are available to private businesses providing social services.
  • The Government has proposed amendments into the Tax Code to subsidise interest rates on loans raised for construction or renovation of social service facilities.
  • Dedicated infrastructure organisations are set up across the country's regions to support social enterprises nation-wide.

The Russian Parliament is working on a bill governing social enterprises. The bill is to define their role in the social services market and offer service providers, including non-commercial organisations, means of state support. Other means of support targeted at raising awareness, providing consultation, raising finance, etc. are already available today.

  • Regional Social Services Innovation Centres are involved to render support to regional businesses alongside with university-based centres of social development (Tatarstan is a good example).
  • In March 2017, the Agency for Strategic Initiatives working together with the Internet Initiatives Development Fund, Plekhanov Russian University of Economics and crowdfunding website launched a pilot programme to fast-track social projects.
  • The Ministry of Economic Development offers free grants of up to RUB 1.5 million to help implement social projects.
  • Our Future Foundation has launched its Social Entrepreneur competition to select best projects in the field.

Nevertheless, the current infrastructure is insufficient:

  • Market players report poor availability of funding: social investment infrastructure is still largely underdeveloped.
  • The market is missing a major operator to represent the social entrepreneurship community and ensure return on social projects.
  • Education and awareness in the field of social entrepreneurship are lacking, with no standards or quality assessment rules to judge educational programmes. This leads to talent shortages.
  • Drivers of demand for products and services offered by social enterprises are immature.
  • Stronger information support is required to raise awareness of success stories and business practices of social enterprises.
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