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 isnt 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 37 rubles.
WE WANT TO STAY ABREAST OF MAJOR TRENDS IN IMPACT INVESTING
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 Associations 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 innovation. The Euclid Network makes it possible to find partners for joint research, and to share experiences at joint events.
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.
At the same time, Russia still lacks a unified system of indicators and methodology for measuring positive social impact. What do you see as the solution to this issue?
It is important for social entrepreneurs to be able to independently analyze social outcomes and ways to achieve them. Our Future Foundation uses complementary methods: assessing results per ruble of invested funds when comparing alternative investment projects in the same area, as well as a method for evaluating the social return on investment and a method for rating social enterprises after they receive funding.
The Social Return on Investment (SROI) method is well-suited for analyzing the entrepreneurial and social components. It takes into account the social results of the enterprise in monetary terms, includes a comparison of invested resources and results obtained. For a SROI of 3:1, every ruble invested in the project results in three rubles worth of social impact. Money, in this case, acts as a universal means of expressing value, so that a complete picture of impact can be presented. We do a forecast calculation for large investments, and then after the funding period is over, we summarize the results by comparing them to the forecast data.
The application of SROI makes it possible to visualize and analyze changes. At all stages, SROI serves as a tool for communicating with our customers, employees, communities, and the government. This kind of feedback helps manage risks, improve products and processes, and find new lines of business.
The Foundation uses a rating system for interaction with social enterprises after the funding has been provided. The projects are rated based on the promptness and completeness of the social impact plan, repayment our loans, readiness to cooperate on research and promotion of social entrepreneurship.
The regulation of social entrepreneurship varies from country to country. Some places have laws defining the status of a social enterprise, others dont. In Russia now, social entrepreneurs also have a special status, but it does not yet include, for example, NGOs. What is your view of the development of the social entrepreneurship model in our country in terms of legislation?
An important step is the expansion of the target groups specified in the law. Currently, the State Duma has passed a bill in the first reading, extending the list of social entrepreneurs to people with disabilities. Further adjustments may be possible in the future, it is important here to constantly analyze and interact across sectors in order to promptly identify the groups that may be added to the registry.
In addition, we continue working with social contractors, who, in fact, are also social entrepreneurs, but are part of a different registry. Combining these registries seems like a good idea, but so far it seems hard to implement.
How does Our Future Foundation assess its impact on the development of social entrepreneurship over the years of its work?
We have not conducted a full-scale assessment of the social impact of the Fund as a whole; rather, we evaluated the contribution of its educational unit the Social Entrepreneurship Laboratory. The study found that for every ruble invested by stakeholders, the Laboratory generates 7.62 rubles of social value.
Globally speaking, almost 900 projects all over Russia have received our help and support in various formats (financing, implementation of the project More Than a Purchase, franchising, educational loans, accelerators, etc.). The law on social entrepreneurship and the registry to count the number of businesses have appeared with our participation. Educational programs have started to appear in universities with the support of the Foundation, such as professional retraining courses at the Higher School of Economics. Thanks to the Social Entrepreneurship Laboratorys Training of Trainers program, 68 certified teachers are currently working in the regions, conducting their own Social Entrepreneurship Schools, which have already produced more than 1,500 graduates. We recently reformatted the course for university teachers, focusing on methodology, and posted it for public access on the Stepik platform. Thanks to Growth Formula accelerators (with more than 100 graduates), communities of ambassadors have been established in the regions. These active and successful social entrepreneurs are now joining into local associations (for example, in Astrakhan, Kaliningrad, Yugra). That is also an important part of social impact development.
Экспертные мнения / Expert Opinions
Откуда и как растут социальные предприниматели? Опыт инкубатора импакт-стартапов фонда «Навстречу переменам»
София Шагинян
DOI 10.55140/278258172022231317
Уже давно слово «инкубатор» в бизнес-среде перестало ассоциироваться с сельским хозяйством, а приобрело значение инструмента по развитию начинающего предпринимательского проекта (или даже просто идеи), позволяющего в пространстве системно-организованной экспертной помощи вырасти в устойчивый проект. Социальные предприятия также не остаются в стороне. Что дает им участие в инкубаторах и в чем особенности программы инкубатора для проектов социального воздействия?
София Шагинян
Руководитель программы поддержки для импакт-стартапов фонда «Навстречу переменам»
ИНДИВИДУАЛЬНАЯ ПРОГРАММА РАЗВИТИЯ ДЛЯ НОВИЧКОВ
Программа «Инкубатор» фонда «Навстречу переменам» предназначена для проектов на ранней стадии развития. Ежегодно ее проходят от 12 до 22 участников. При оценке социального воздействия мы выделяем две группы стейкхолдеров. Первая импакт-проекты, вторая дети и молодежь, на которых ориентирована деятельность импакт-проектов[1].
Для импакт-проектов краткосрочная цель по социальному воздействию заключается в укреплении их организационного потенциала, долгосрочная цель в выживаемости и масштабируемости.