the mediator’s role is somewhat limited compared to the traditional expert mediators – nowhere does it say he/she is to conduct expert review or assist in the project design before the project launch. The Russian model also does not allow for a participant to guarantee the investor’s interests, other than by the investors themselves.

THE KEY AREAS OF IMPROVEMENT OF THE RUSSIAN MECHANISM FOR ASSESSING THE ACTUAL IMPACT IN SOCIAL INVESTMENT

When discussing the Russian experience of social investment, it is worth focusing on three ways in which they can be legally formalized:

• social impact projects;

• the status of a social entrepreneur;

• public-private partnerships for investment projects to establish social institutions.

In Russia, experts call one of the legislative initiatives to introduce social investments a pilot testing of social impact bonds (SIB). Within the corresponding state program[47], funds are raised from investors to finance social projects. The costs will be later compensated by the state if the projects successfully achieve the intended social impact.

The second tool being considered for the legal registration of social investment in Russia is the status of a social entrepreneur. A review of the existing benefits of social entrepreneur status examines the set of benefits conferred by this status (Umnov, Plyukhina & Matveev, 2018). In particular, the Tax Code of the Russian Federation establishes a preferential tax regime for organizations that carry out socially beneficial activities (exemption from value added tax or profit tax in different areas of activity). Social entrepreneurs are in the focus of a number of government programs (such as the “Social Support for Citizens” program), which are created specifically so that social entrepreneurs can be engaged in their implementation. In the final part of the article, the authors consider the peculiarities of the Russian social entrepreneur’s status in great detail, as one of the key areas for improvement.

The third way to legally formalize social investment is public-private partnership for the development of social infrastructure. Andrey Bednyakov, an expert at the National Center for Public-Private Partnerships and the Rosinfra platform, points out that only 8 % of the funding in Russian PPP projects go to the social sector (Bednyakov, 2022). At the same time, the share of private investment into infrastructure in Russia is 2 % of the total volume. He draws a general conclusion about the low evolutionary state of the respective development institutions, as well as the lack of an effective regulatory system in the form of transparent competitive procedures. The lack of an effective project evaluation methodology (for example, such efficiency metrics as Return on Investment are seldom used) can be identified as a fundamental quality of the Russian case. In contrast, the expert cites Canada, where PPP projects are legally required to have an evaluation methodology and an independent evaluator. The importance of metrics for the development of social investment will also be discussed below.

One major difference between social investment and mere charity is the mandatory measurement of the social results achieved.

One major difference between social investment and mere charity is the mandatory measurement of the social results achieved. This condition is used in a small share of publicly funded social projects. In particular, neither the status of a social entrepreneur, nor the public-private partnership mechanism for support of investment projects to create social institutions involves measuring social impact. This is the main disadvantage of the current mechanisms.

Social investment can be defined as investing into a positive social result. If an entrepreneur invests money and expects to generate revenue or even profit (as in the case of public-private partnerships), this is not social investment, but rather traditional commercial investment in the social sector. Social investment is different from investment in that the returns are not primarily economic but social, which must be proven through the assessment of social impact of the project. The absence of an evaluation mechanism creates a confusion between impact investment and commercial investment, as is the case in the Russian models of social entrepreneurship and public-private partnerships.

According to current legislation, these models interpret the very fact of working in the social sphere as, first, a socially oriented activity, and second, a successful activity. Turning to the Federal Law No. 245-FZ of 26 July 2019 “On Amendments to the Federal Law On the Development of Small and Medium Entrepreneurship in the Russian Federation”, which defines the concepts of “social entrepreneurship” and “social enterprise”, you can see that inclusion in the register of social entrepreneurs is possible on several equally important grounds.

Some of the attributes are of a substantive and judgmental nature – for example, providing employment to people from socially vulnerable categories[48], facilitating the sale of products produced by such workers, or producing the goods for socially vulnerable groups. It is true that any activity in this area would have above-zero social effect per se, but the question of its effectiveness would remain. On the other hand, the criteria used for including most businesses in the register, specify the areas of operations that automatically make your enterprise a social one. For example, these areas include services in the field of additional education, recreation and health improvement for children, cultural and educational activities. In this case social impact cannot even be confidently stated without further evaluation.

Since social investment requires proof of social impact, it seems reasonable to consider including the requirement for evaluation into the legislation. In particular, to introduce practices of social impact assessment for inclusion in the register of social entrepreneurs or confirmation of the status of a social enterprise. This way the legislative environment will stimulate a more informed and evidence-based approach to social investment using social entrepreneurship as an example.

Going back to the report by the European Parliament’s Policy Department for Economic, Scientific and Quality of Life Policies (Mackevičiūtė, R. et al., 2020) with an overview of best practices in social investment, we must mention that most of the measures listed in the report have been adopted in Russia,