Something Old, Something New: Social Innovation Tiptoes Into Russia

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Student Reporter

 

MOSCOW, Russia – Moscow just hosted its very first social innovation conference. Held between Stalin’s gothic skyscrapers and the city’s brand new financial district, where they’re throwing up twisted glass towers three at-a-time, the organisers did well for symbolism. Old and new, as we found, is what social innovation in Moscow is and will be.

Organised by Vagit Alekperov, long-time president of Russian energy giant, Lukoil, the conference has serious political and business weight behind it. The former Soviet oil minister, Alekperov is both very wealthy and very well-connected, with a direct-line to Putin. Russians like to talk about the need for a powerful protector when doing business (or anything else) – it’s called a “Krysha” (a “roof”). And judging from the conference, social entrepreneurship may have a very serious one.

“Russia is a very paternalistic country in the ways it’s set up,” said Mikhail Denikhov of Street Art Moscow, who was attending the event as a participant. “People wait for signals from the authorities. This [conference] is a signal.”

This being Russia, there was a high level of suspicion towards the State and its intentions for social business. Most had been skeptical before they arrived, expecting long, empty speeches, all form and no substance.

“Myself, I was a bit troubled at first when I heard that it was being organised by the head of Lukoil. I thought it would just be a sort of corporate get-together. But actually it turned out to be completely the other way round – it’s from the bottom-up,” one participant said.

Vagit Alekperov (right) addresses a full crowd.

Photo courtesy of Social Innovations International Conference

Vagit Alekperov (right) addresses a full crowd.

Russia’s small community of social entrepreneurs have been doing things themselves, often isolated from each other and often with little official recognition. At the conference, they moved cautiously into the space built for them by the state, suspicious, wary of their government’s motives, but eager to see who else would be there.

Others saw it as a signal from big business, that they were ready to begin collaborating with social entrepreneurs. Interestingly, most did not want the state to establish a social enterprise fund like that in the UK, preferring that the state fix the legal basis and then stay at arm’s-length.

Still others considered the conference a sign the government considers the field as possible outlet for socially active citizens’ urge for reform:

“Politically they realised they have to do something. Also, they’ve seen that people have started doing social entrepreneurship themselves,” said Alexei Larisa of Ecopad, a social enterprise which makes notebooks from the leftovers at a paper factory.

The entrepreneurs’ suspicion of the state is apparently mutual, according to Mikhail Mamuta, one of the conference organisers and head of Russia’s leading microfinance fund, the Russian Microfinance Centre. Mamuta told our reporters that, in his experience, most local governments initially assumed the social business initiatives were a con on the part of big business.

“It’s important to get them interested. But many of them are looking for some kind con trick. This is why we need the law. Once we have the law it will be a clear concept.”

Russia currently has no law recognising social enterprise. Mamuta and many others at the conference felt a legal basis would was important for establishing the field, as a clear sign from the top that social entrepreneurs were to be trusted. Mamuta is advising on the law, which is currently being developed by the Ministry for Economic Development and he expects it to be on the books within the next two years.

“They don’t know that we’re doing it. We’re practising illegal economic activity,” laughed one entrepreneur. “That’s why we need a legal basis!” shouted another.

All this suspicion reflects not only the newness of social enterprise as a concept in Russia, but also the complex ideological baggage tied up with civil action in the country. The newness of the social business concept in Russia was clearest in some of the, frequently heated, disputes over terminology.

“Russia is the country where definitions are important things. For example in Europe, there is some kind of community agreement on what is social business,” says Mamuta. “What is the main challenge now is we don’t have definition.”

An eager audience at the conference.

Photo courtesy of Social Innovations International Conference

An eager audience at the conference.

And, as Mamuta said, it was true many participants became fixated on the phrase “social business”, arguing that all businesses were social, as they inevitably involve people. This sticking point frustrated some of the more experienced speakers, eager to move onto considering what they saw as the real question of whether philanthropy can be combined with profit.

There seemed also to be a common confusion in separating doing philanthropic grant-work and social business and investment. Others felt that the idea of social business often just masked simple greed. Some participants- including the CEO of Samsung Russia- were distressed by the claims that Russia has never seen social enterprise before.

“To say that Russia doesn’t have social business – I completely disagree. Just because this is the first conference doesn’t mean there is not social innovation in Russia,” said Anna Virabova, head of the Samson school, specialising in social education. She argued that her organisation had been backing playschools for two decades.

For others, the idea seemed to dangerously recall the Soviet project: “We’ve already seen it in the Soviet Union, and what does it lead to? Inner demotivation and a country of bureaucrats,” Igor Ivanov, an independent finance analyst told our team.

Many of the Russian entrepreneurs and officials at the conference liked to ground their current work in a much older tradition, reminding reporters that before the revolution, Russia was the world leader for cooperatives and that efforts to solve problems communally has a very long history in the country, where peasant communes formed the basic social unit for most of the population until the mid-20th Century: “It’s a very deep part of Russian culture,” OPORA’s Mamuta said. “The USSR damaged it, for sure, but we can get it back.”

Many we spoke to worried that Russia’s population is still not entirely ready to support social enterprise, with the country’s capitalism still too ruthless and consumerism too radical following its release from Communism.

The demand for profit, however, isn’t necessarily an obstacle to the development of social enterprise in Russia, potentially making profit-with-purpose organisations an ideal model for the Russian philanthropic market.

“In Russia it has to have more money impact,” said a PhD student from St. Petersburg, focusing on social innovation. “For Western people it’s doing good just for good, not for the money. In Russia, it’s about social effect, but it’s more based on the business effect.”

And it was the idea of impact investing that caused the most ears to prick-up. Moscow-born founder of JBJ Consult in Switzerland, Julia Balandina’s presentation on the topic was watched avidly, cameras and questions all shooting out. The notion that you can make profit while doing social good was definitely interesting news to many in Moscow.

The disagreements, occasional hostility, and odd overwraught questions seemed healthy though – the debate on social enterprise in Russia has begun. The Russian state still dominates the discussion, but as the day wore on at the conference, it became clearer and clearer that the event was being run largely by the entrepreneurs themselves. Looking around, to their pleasant surprise, they realised that for the time-being, the state had set up the room and then more or less left them alone.

Social Innovation fair showcasing projects around Russia.

Photo courtesy of Social Innovations International Conference

Social Innovation fair showcasing projects around Russia.    Correction: An earlier version of this post wrongly named Mikhail Mamuta as “Mikhail Mamut”. In the same version Mr Mamuta was mistakenly described as the head of OPORA Rossii, he is in fact the president of the Russian Microfinance Centre.

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