Financial support for social entrepreneurship: development prospects

The Bank of Russia is going to take part in the development of the financial support system for social entrepreneurship. To that end, the Bank of Russia will separate out a special area of focus in its Working Group for the Development of Small and Medium Enterprises, so as to analyse banks’ interest in lending to social organisations, discuss the elaboration of requirements for issuing and offering social bonds, and study other financial support instruments with account for international experience. These issues were discussed at a special meeting held at the Bank of Russia on 19 November 2019 with financial market participants, representatives of legislative and executive authorities, sectoral associations, scientific and social organisations.

Companies whose activities conform to the statutory definition of the term ‘social entrepreneurship’ will be specially marked in the SME register in accordance with the admission procedure worked out by Russia’s Ministry of Economic Development. Federal Law No. 245-FZ, dated 26 July 2019, provides for special support measures for such companies, including financial ones that may encompass a wide range of financial instruments.

Participants in the meeting discussed international experience in the development of ‘green’ and social bonds (when investment income is conditioned on the achievement of a social goal), the role of exchange platforms in communication between investors and social entrepreneurs, Russia’s experience in financing social entrepreneurship by credit and non-bank financial institutions, as well as tasks performed by central banks – first and foremost, the creation of a favourable environment for raising mixed capital and developing various social impact investment models.

‘We are going to estimate the potential of the Russian financial market in social entrepreneurship financing and identify opportunities for encouraging this activity within the Bank of Russia’s competence,’ said Mikhail Mamuta, Head of the Service for Consumer Protection and Financial Inclusion of the Bank of Russia. ‘Moreover, it is essential to inform market participants of the positive experience in implementing social impact projects and their potential for achieving social goals’.

The meeting was organised with the active participation of the Foundation of Regional Social Programmes ‘Our Future’, the Ministry of Economic Development and the State Duma of the Russian Federation.