Bill to support social entrepreneurship goes to Duma

A Bill to support social entrepreneurship introduced in the State Duma


Moscow, 20.10.2014

This Bill for the first time sets out the definition and enhances the status of “social entrepreneurship”, as well as listing the activities that are covered by it. Social entrepreneurs will now be able to receive support from the State in their work.

Changes have been proposed to the federal law on the “Development of Small and Medium-Sized Enterprises (SMEs) in the Russian Federation”. The authors of the Bill are Duma deputies Rafael Mardanshin, Mikhail Terentiev and Igor Igoshin, together with Alexander Borisov, a member of the Federation Council.

A new clause in the Bill refers to social entrepreneurs as individuals within SMEs and the organisations that provide infrastructure support to them. This Bill will, in the view of the authors, afford equal rights and opportunities to social entrepreneurs under Russian law. Social entrepreneurship under the Bill includes activities undertaken by SMEs aimed at achieving socially useful outcomes and resolving social problems, including providing help to those who’ve fallen on hard times.

Another clause highlights the conditions that have to be met by businessmen to be classed as social entrepreneurs. For example, social entrepreneurship can include activities that promote social adaptation and rehabilitation for certain social groups (the disabled, orphans, the elderly, people suffering from drug, alcohol and solvent abuse, and those affected by other social diseases).

The Bill also proposes to establish various means of support that can be provided by State and local authority agencies to SMEs operating in the field of social entrepreneurship. This includes the creation of centres for social innovation, finance, property and information support, together with support for skills training and retraining for social entrepreneurs and their employees.

According to the Explanatory Note, adoption of the Bill will increase social responsibility on behalf of business towards society and provide effective help in solving critical social problems that exist within Russia. The Prime Minister, Dimitry Medvedev, authorised work on a separate Bill on social entrepreneurship back in October 2013 following meetings with businessmen working in the social sector and the organisations that support them.

Experts have more than once advocated the need for legislative regulation of the activities of social entrepreneurs. According to Natalia Zvereva, Director of the Regional Social Programmes Charity “Our Future”, the introduction of the term “social entrepreneurship” into Russian law is an extremely important stage in the development of this new sector within the economy and in the development of its infrastructure. Social entrepreneurship originated in the West during the 1980s, while Russia began using the term in 2007 with the advent of the Vagit Alekperov Charity “Our Future”, Zvereva added.

“Our Future” defines social entrepreneurship as innovative activities designed to resolve or mitigate social problems, based on principles of self-sufficiency and sustainability. A more general definition could be “activities undertaken by individuals working in the economic sector aimed at solving social issues, and achieving socially useful ends”.

Zvereva believes that it is important that the Bill limits the distribution of profits. Co-owners of social enterprises can utilise no more than 35% of their profits at their own discretion. The remainder should be spent on projects that bring social benefits, Zvereva added.

According to Natalia Larionova, Director of the Department of SMEs in the Ministry of Economic Development, resolving the status of the social entrepreneur is essential in helping to develop the support infrastructure.

Author: Yulia Vyatkina

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