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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 co
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 begi
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.
Our Future” Foundation is one of the first Russian organizations that joined the Global Impact Investing Network, the Asian Venture Philanthropists Network, and the Euclid Network of Civil Society & Social Enterprise Leaders. What do these organizations do and how are they changing the landscape of social entrepreneurship development? What are the benefits of membership in such organizations?
Our Future” Foundation was the first Russian organization to become a GIIN member in 2013. GIIN and similar organizations accumulate information about the activities of their members, development and investment in social entrepreneurship around the world, analyze and organize this information, develop scientific and practical tools that can help create new organizations for impact investing, trying to organize communication between members at regular conferences. Sometimes it is possible to attract impact investment from other countries through such organizations, but this is not commonplace yet. For the most part, the Foundation uses membership in this organization to keep abreast of major trends and developments that are emerging in impact investing.
The Asian Venture Philanthropy Network (AVPN) is a Singapore-based social investor network aimed at building a community of social impact investment projects across Asia.
The Association’s main mission is to increase the flow of financial, human and intellectual capital into the social sector by uniting and empowering major shareholders. It uses such tools as capital pooling, community building, and organizing events to disseminate knowledge and best practices of the practicing network members.
AVPN has more than 600 members from 33 countries. “Our Future” Foundation was the second participating organization from Russia. Most participants are geographically located in Asia, but some come from North America and Europe.
Participation in AVPN provides the following opportunities: access to events organized by AVPN; opportunities to communicate with investors and make joint deals through the Deal Share platform; access to educational materials, case studies, and analytical materials.
The Euclid Network is a European network of leaders in social entrepreneurship and civil society that was founded in Paris in March 2007. It brings together organizations from 31 countries, including representatives of social organizations and associations of social enterprises, universities, non-governmental organizations, social enterprises, and social investors. “Our Future” Foundation became a member of the Euclid Network in 2019.
It is important for social entrepreneurs to be able to independently analyze social outcomes and ways to achieve them.
Membership allows access to members-only content, such as the Managing Positive Change webinar series, insider knowledge, advice and support on impact measurement and social i
In one of your interviews, you said that when providing financial support to social entrepreneurs, the Foundation pays special attention to such an indicator as the degree of social impact. How do you measure it?
Here I would like to mention that the Foundation has many different programs of financial support, and each program includes an individual approach to developing the criteria for evaluating projects. But, of course, social impact is always at the top of the list. If we talk about return on investment in existing projects, we need the evidence base of the declared social effects of the project, for example, laboratory-confirmed environmental friendliness of the products, scientific evidence of the usefulness of the applied methods of preschool development, the presence of reliable positive feedback on the work of the project, etc. We further analyze a number of the largest projects using the SROI (Social Return on Investment) methodology. If we talk about supporting projects at the startup stage, we rely on the predicted values of the effects, comparing them with the available results base from other projects in the same field.