SONGOs should have same state support as SMEs

Socially oriented NGOs may be given the same rights as small and medium-sized enterprises


Moscow 3 June 2015

The Ministry of Economic Development is offering to provide socially oriented NGOs (SONGOs) an infrastructure of state support, which corresponds to that offered to small and medium businesses.

The Director of the Department of Social Development and Innovations at the Ministry of Economic Development, Artyom Shadrin, told the Agency for Social Information that nowadays there is still noticeable ‘discrimination’ in the use of mechanisms of state support for SONGOs in comparison to the wider support available for small businesses.

“For example, for small and medium businesses there are mechanisms providing subsidised interest rates, concessional lending and guarantees on loans. There are development institutions which work on this, for example, the subsidiary of Vnesheconombank “MSP Bank”, the Agency for credit and loans and regional guarantee funds. And almost all of these institutions work for SONGOs. In our view, in this regard, commercial and non-commercial organisations should have equal rights,” he added.

The Ministry of Economical Development proposes to amend the law on ‘Non-commercial organisations’ to include a norm for support infrastructures for socially oriented NGOs, which corresponds to the law on support for small and medium businesses. “This norm would become the basis for the authorities concerned to highlight a line, alongside the budget of support for entrepreneurship, regarding the support for NGO infrastructures, in particular, ensuring the provision of concessional lending and guarantees. In fact, in this way, we are making support for NGOs equal to the established practice of business support”, – said Shadrin.

In his words, today, the volume of direct subsidies for SONGOs is clearly insufficient and the number of organisations which have been forced to borrow at a commercial rate would have developed faster if concessional financing had been made available to them. This particularly applies to NGOs in the social service sector as well as non-commercial educational and medical institutions.  “For example, in accordance with the law on education, schools and universities can only be created in the form of non-commercial organisations. However, all of the instruments of state support lending now only fund according to the budget on support for the entrepreneurial activities of small and medium businesses and therefore they cannot be used to support NGOs. This means that we are discriminating against education in favour of commercial businesses,” Shadrin said.

The Ministry of Economic Development has developed relevant amendments to the law on NGOs, which have already been approved by the public council under the Ministry.

Author: Grigory Ivanushkin

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