Over the past few years, investments in the social sphere have not been a popular area of the economy, particularly in the Russian Federation. Domestic entrepreneurs characterize this phenomenon as a senseless waste of their own funds that does not matter. Despite everything, there are investors who are ready to invest in the public sector and develop this area in practice. For this purpose, the latest strategies and social programs for investment in modern conditions are being developed.
The essence of social investment
Many experts consider this type of investment as a tool for corporate social responsibility of the company. In essence, this is how it is. Social investments are all kinds of resources and financial resources of an enterprise aimed at implementing external or internal social programs. The purpose of these investments is to improve the standard of living of citizens and reduce social tension.
Some people confuse this concept with charity, which is a one-time donation. Investments in the social sphere must be considered as a long-term, clearly planned action.
What goals do social investors – enterprises and companies – pursue?
The basic goals of an enterprise that engages in social investment:
- Increased sales and brand awareness
- Improving indicators and quality characteristics of personnel work
- Increased labor productivity
- Increased profitability
- Cost reduction
- Creating opportunities to attract new staff and retain existing ones
- Expanding access to capital
- Reduced need for audit and supervisory functions
- Attracting clientele and entering new markets.
The social activity of a business directly affects the growth of share capital. Analysts and investors, assessing the attractiveness of a company as a whole, pay considerable attention to its activity in the field of social change. As a result, the real market price of the company's assets increases. And although it is impossible to directly measure the impact of social programs on stock price dynamics, there is a direct correlation between social activity and the company’s demand in the market, and it tends to constantly increase.
The generation of people born in the 1900s-2000s think about choosing companies to fulfill their career aspirations, not only in terms of financial growth, but also the additional benefits that the company can provide.
Accordingly, the importance of such companies in the market is higher, the level of wages is higher, and the requirements for personnel are commensurately increased.
The greater the flow of social investment, the higher the return on assets, sales and capital.
What are these investments for?
To answer this question, you need to turn to the practice of foreign companies. Social investments provide the following benefits:
- advertising. The company increases its level of recognition, improves its image, regardless of the level: local or all-Russian;
- quality of the organization's brand. The company begins to be associated with prestigious charitable events, which has a positive impact on the company’s status;
- the social investment fund involves supporting educational institutions at various levels, which will attract highly qualified specialists to the company;
- tax benefits. Many countries are loyal to organizations making social investments. The legislation also provides for exemption from certain taxes.
Types of companies making investments
There is a certain classification of organizations that divides them into groups in terms of interest in this matter:
- Big ones. Here we mean all the large companies that have been established in the market for a long time. They understand that times change, and along with them, people's needs. Therefore, they often change their strategy by providing assistance to the social sphere.
- Careful. As a rule, these are companies that are afraid of problems with the authorities. And the current administration requires the active participation of enterprises in the social life of society.
- Socially charged. This group of organizations is overloaded with social infrastructure. They cooperate with the government, offering their methods for its development.
- PR people. Here the social efficiency of investments comes to the fore. Such companies try to engage in self-promotion and PR. They use investments to cover up their business insolvency.
- Politicians. These are the companies that want to help solve global problems of humanity by adding something of their own. These organizations can fully count on dividends.
It can be noted that different companies have their own motives for supporting the currently popular topic of social investment.
Tailor shares to your company profile
Volunteer activities in a particular company can be tailored to its capabilities and profile. For example, in the DIY segment (home and garden stores) they often hold charity events using their product range. Thus, one international company from the DIY segment launched the “Energy of Good Deeds” project in 2021 for the emergency departments of the hospital named after. G. E. Sukhareva, where children with mental illness are treated. Employees of one of the chain’s stores used building materials provided by the company to assemble tables, chairs, benches, busy boards and much more for little patients. The idea was immediately picked up by other regional offices. There, the employees also chose who and how to help: paint equipment in a kindergarten, help equip an orphanage, a rehabilitation center, a nursing home, assemble furniture, plant flowers and trees, and carry out engineering and construction work in animal shelters. Moreover, people did all this on weekends and New Year holidays, that is, in their free time.
Attitude to the type of activity
The company's strategy and scope of activity are directly related to social investment. The size of the business, type of ownership and other factors do not affect this in any way. According to statistics, labor-intensive industries are aimed at domestic investment, while material-intensive ones - at external ones. This is due to the fact that such companies are forced to spend a large amount of money on environmental protection due to the specifics of their activities.
Business practice as such is developing only in mechanical engineering companies and a little in the service sector. Local communities receive support only from the financial sector and forestry industry. The social investment program in a systematic form is inherent only in large diversified enterprises.
The essence of social investment as an economic category
Kharaeva Maria Sultanovna,
postgraduate student of the Department of Economics and State Regulation of Market Economy at the Academy of Public Administration under the President of the Russian Federation.
The Constitution of the Russian Federation has assigned Russia the status of a social state. The priority of the new economic system is everything for the person, through a person who is healthy, educated, armed with knowledge, constantly developing and self-realizing. From proclamation to real practical transition to a social state, a long-term social policy of the state is needed, focused on the implementation of the rights of society and individuals to development, their participation in this development and ensuring opportunities for appropriating the results.
It becomes important to improve the socio-cultural sphere, which is part of the social sphere and includes such sectors as healthcare, education, science, art, culture, sports, etc.
By the early 1990s, Russia had a fairly developed network of social and cultural facilities (health care, education, science, culture, etc.) funded by the state. However, the general level of their material and technical base and availability of modern equipment were very low in comparison with countries with developed market economies. The reason is the lack of financial investment in the socio-cultural sphere.
The current state of the country's socio-cultural sphere is characterized as a crisis. The state of public health, the educational and intellectual level of Russian science, the decline in scientific and technical potential, and the cultural level of citizens have acquired the status of a national threat.
To change the situation in a positive direction, it is necessary at the state level to reassess the role of investments in the socio-cultural sphere, considering them as profitable investments.
The systematic implementation of the state’s social functions is associated with large-scale investments that do not bring obvious commercial returns to the investor, but create conditions for rapid economic growth. Social investments, like material benefits, contribute to the formation of a national product, since the goal of any economy is to satisfy human needs with the help of material, spiritual or other benefits.
The study of social investment processes occupies an important place in economic science and socio-economic practice. This is especially necessary for modern Russian society, which is faced with the solution of two strategic tasks: building a socially oriented market economy and the transition from industrial to post-industrial, predominantly innovative path of development.
Social investment is a new stage in the relationship between society, business and government. However, it is very important that they are relevant, in demand, reflect the expectations and take into account the priorities of all participants and, most importantly, improve the level and quality of life of the population.
[1]
Social investments are long-term investments in the social sphere with the aim of improving the quality of life of people through the creation of new technologies and mechanisms for distributing the generated GDP among various groups of the population, taking into account their needs. Within the framework of the limited funds allocated for social development, in specific socio-economic conditions, the ultimate goals of the social security system can be considered the achievement by various groups of the consumer society at a level that ensures not only existence, but also social and spiritual progress, satisfaction with the quality of life with an optimal combination of forms and methods of providing for each person.
Social investments, by analogy with stock investments (investments in securities) or real investments (investments in the real sector of the economy), involve investments in the social sphere. The branches of the social sphere satisfy the material, spiritual and social needs of the population.
In our opinion, the social sphere in a broad sense includes: education; healthcare; housing construction; basic science; public administration and social services, insurance and pensions; corporate sector services; activities related to the provision of utility and personal services; activities to disseminate information, culture, art, sports, recreation and entertainment; retail trade, repair of personal cars, household appliances; hotel and restaurant business; passenger transport; communication services; as well as activities related to running private households with hired services. The main part of the social sphere sectors is the non-production sector
.
Issues of the theory and practice of social investment were addressed in the works of a number of domestic[2] and foreign[3] scientists. Thus, at the micro level, the concept of “ social investment”
” in world practice was formed relatively recently, about 40 years ago. [4] Before this period, there were standards in various areas of corporate governance related to employee relations, corporate ethics, and approaches to environmental protection. At the same time, standards and rules have not been developed in the field of social policy of companies.
Within the framework of a planned centralized system, the main concept, identical to social investments, was the concept of “ capital investments in the social sphere”
", which meant all the costs of reproduction of fixed assets, including the costs of their complete restoration.
The incorrectness of identifying social investments only with capital costs, in our opinion, requires clarification of the substantive basis of the category “ social investment
”.
Currently, social investment is understood by most domestic authors as investing in objects of the social environment. In particular, social investment refers to long-term investments of funds “with the aim of improving the quality of life of people through the creation of new technologies and mechanisms for distributing funds among various groups of the population, taking into account their needs
".[5]
In an expanded interpretation, social investments are identified with investments aimed at strengthening the social orientation of the economic system: achieving environmental safety, stimulating economic growth, expedient distribution of benefits, ensuring a guaranteed level of education and medical care, nutrition, issuing transfers to those in need of a minimum guaranteed income. [6] In other words, the key characteristic is social investment as the activity of subjects of investment relations aimed at obtaining a certain “ beneficial effect
” for society.
Social investments are investments of monetary and other resources into social facilities to generate income or other social effect, aimed at improving the level and quality of life of the population through the creation of new technologies and mechanisms for satisfying their material, spiritual or social needs.
The world around us is complex, multifaceted, characterized by economic uncertainty, and such a phenomenon as social investment can be represented as a subject-object, purposeful and organizationally formalized process.
Social investment has the basic characteristics of investment, with the exception of the criterion that distinguishes these concepts - the object of investment. Similar to investing, the main goal of social investment is to generate income, or other “beneficial effect” for the social environment. The social environment in a broad sense is understood as the totality of material, social, spiritual and moral conditions in which the life of the population takes place.
Subjects of social investments
may act as: bodies of state power and municipal self-government, state and municipal enterprises, Russian and foreign private commercial and non-profit organizations, individuals.
For the state,
the goals of social investment can be to increase national income and the level (quality) of life at the same time, for
commercial structures
,
foreign investors and individuals
- income, for
non-profit organizations
- to increase the level and quality of life by satisfying material, spiritual and social needs.
Social investments are determined by the investment climate in the region (the presence of regional investment legislation, investment potential, level of investment risk), the parameters of the implemented and planned macroeconomic and microeconomic policies (long-term government programs for economic modernization, patent policy, product certification system, provision of tax incentives and subsidies, system of government orders, etc.), the state of social development of society (standard of living of the population, lifestyle, health and life expectancy) and budget restrictions (the presence of a well-functioning mechanism of budget priorities).
Social investment management has a complex subject-object organization. A social investment project as an object of management is characterized by specific features:
1) expenses are not commensurate with income in terms of size and form of manifestation;
2) the period from the beginning of investments until the receipt of benefits is longer compared to investments in physical or financial assets;
3) social investment projects are highly sensitive to time (temporality); in every social investment project there is a time interval during which investments provide the highest return on the project;
4) social investment projects have the property of enhancing effects.
The main social investor is the state, which has a priority role in managing social investment projects; co-investors in social projects can be federal subjects, municipalities, commercial organizations, social institutions, extra-budgetary funds, socially responsible funds, households, and foreign investors. Co-investors manage social investment projects at the micro- and meso-level of their implementation. Increasing the efficiency of social investment management is achieved through a variety of forms of public-private partnership in the financing of social projects, implemented within the framework of targeted programs.
Among the qualitative criteria on the basis of which socially-oriented investment projects are selected, there are also criteria for improving investment characteristics and criteria for accumulating human capital. In particular, the following are taken into account as positive social effects associated with the implementation of such investment projects:
a) increasing the level of employment of the population;
b) increasing the level of healthcare (quality of services provided and their accessibility to the population);
c) preservation and development of scientific and technical potential;
d) increasing the level, quality of education and its accessibility for the population;
e) development of social infrastructure;
f) increasing the level of housing provision for the population;
g) creation and improvement of transport infrastructure;
h) improving the environmental situation, using technologies that ensure minimal negative impact on the external environment.
State regulation of social investments
State regulation of social investment must follow two state principles: the principle of social justice and the principle of socio-economic efficiency. The economic meaning of state regulation of social investments lies in the performance of four main functions of the state and its structures: production and redistribution of necessary social goods, works or services; financing social investment activities; stimulating the social investment process and information support for social investment.
The goal of state regulation of social investment activities is to achieve the optimal option for interaction between the state, investors and consumers in the process of improving the level and quality of life in the country.
The production and redistribution of social goods, works and services has been carried out by the state for a long time and with varying degrees of efficiency. The same assessment (“different degrees of effectiveness”) can be assigned to the performance of the function of stimulating the social investment process. The function of information support for social investment does not have a system for implementation; often the information presentation of relevant materials to the media, especially those controlled by regional authorities or large corporate structures, is biased. Particular attention should be paid to the function of financing social investment activities
.
State financing of social investments should be carried out in those sectors of the social sphere where the presence of the state is necessary: in education, healthcare, physical education and sports, culture and art, in the field of social services and employment. Other sectors of the social sphere can get by with private investment; to develop social investment activities in these sectors, other, non-financial, government regulation options are sufficient: tax breaks, legal methods, information support. The main thing in public financing of social investment activities is to follow the selected performance indicators,
for example, reducing morbidity, increasing jobs, reducing payments from social insurance funds, and others.
Regulation of the social sphere, especially those sectors of it that are financed by the state, is a delegation of powers from an individual citizen to a public institution created, among other things, to perform such functions.
Along with government agencies, private corporations and organizations are subjects of the social environment,
forced to perform an institutionally unusual function of investing in social facilities.
Social investment of business -
these are material, technological, managerial or other resources, as well as financial resources of companies, directed by decision of management to the implementation of social programs developed taking into account the interests of the main internal and external stakeholders in the translation that in strategic terms the company will receive a certain (although not always and not simply measurable) social and economic effect.
In the field of social investment in Russia, there are problems associated with institutional imperfections: the state forms insufficiently effective legal and social institutions, and business structures are forced to neutralize the “mistakes” of the state by making significant social investments, and thereby partly “replace” the state in the social sphere . In the presence of an immature domestic business that has not yet had time to occupy its niche in foreign markets, such a line of development worsens the country’s competitiveness in foreign markets. This institutional imperfection also manifests itself on the other side: business, in turn, does not always strictly comply with the social and tax regulations established by law. obligations.
Social investments of companies, carried out through the implementation of internal and external social programs, have taken a fairly strong place in corporate strategy and are becoming part of the everyday management practice of Russian companies. At the same time, internal social programs, aimed primarily at their employees, are a priority area of social spending.
Social programs help build the image and reputation of a business and are thus a long-term investment in the company's intangible assets.
There is a clear shift in social investment towards local social community. This means that business interests are increasingly transferred from company personnel to the external social environment. In fact, it is already possible to diagnose centrifugal forces in the transformation of the social interests of Russian business, when companies try to go beyond the boundaries of their production activities. It is possible that this trend may develop into a long-term line of development of social investments in Russia.
Literature
1. Information openness of social policy of Russian companies / Ed. ed. Litovchenko S.E. – M.: Association of Managers, 2004.
2. Ivlev S.S. Socially responsible investments in the world and in Russia // World Economy and International Relations. – 2004. – No. 1. – P.80-88.
3. Soboleva I.P. Social policy as a factor of sustainable development // Economist. – 2003. – No. 3. – P.65-73.
4. Nidziy E.N., Romanenko N.M. Financial structure of social investments. – Volgograd: Author’s pen, 2004. – 154 p.
5. Strategic psychology of globalization: Psychology of human capital: Textbook. allowance / Under scientific. ed. Doctor of Psychology Sciences, prof. Yuryeva A.I. St. Petersburg 2006.
6. Yakunin V.I., Roik V.D., Sulakshin S.S. Social dimension of state economic policy. – M.: Publishing House Economics, 2007.
Received by the editor on May 6, 2009.
Problems of investing in Russia
In order to understand what difficulties a particular state is experiencing in terms of investments, it is necessary to evaluate it in terms of two aspects: qualitative and quantitative. The first of them involves assessing the complexity of social investments. The second is designed to count the money spent on the implementation of public programs.
The main problems of social investment specifically in our country:
- misunderstanding of the essence of the concept. There are no specific rules on how such investments should be made;
- lack of system. Often, goals and motives within a company differ, preventing them from reaching a common “denominator”;
- social reporting is not regulated by law.
Another problem is the publicity of enterprise activities. Each social program must be clearly outlined and made publicly available. Why is that bad? Because government agencies may have questions about the organization’s income, and in this case an audit cannot be avoided. Entrepreneurs believe that a company's social investments should be designated as a fact without further proceedings.
Major potential for solving investment problems
Individuals or legal entities who decide to invest in the social sphere must be provided with favorable conditions.
For example, the government tax strategy should include the provision of incentives and subsidies to companies that financed the budget or made a contribution to a certain project. It can be said that by receiving preferential duties there is every chance of increasing socially responsible investments. Unfortunately, today there is no growth in the interest of private entrepreneurship in society, the reason for this is the reform of the tax industry. According to analysts, it is social investments that should become an important incentive in the upcoming changes to the tax system. The growth of national economic indicators must be carried out on a federal scale, otherwise the situation may lead to the decline of the country's economy.
It is worth noting that the social sphere more than ever needs to attract material resources that will be used for its development and improvement. Every year the state allocates a certain amount from the budget, but the funding is not enough, so the task of the area of activity under consideration is to create comfortable and profitable conditions for attracting owners of free capital. An effective impetus for the development of a social system can be the merging of public and commercial investments.
In conclusion, we can say that when starting an investment activity, an entrepreneur sets a goal that is known to everyone - making a profit. Before investing in a project or enterprise, the investor’s task is to conduct a technical and fundamental analysis of the market situation. This will help determine the level of risks and other circumstances to eliminate the possibility of losses or complete loss of capital.
A completely new and little-in-demand business in Russia is social investment. When refusing to finance public programs, entrepreneurs do not take into account the benefits of this form of investment. For example, by investing part of free funds and a social project, an individual has the opportunity to improve the image of his company or gain undeniable advantages over competing organizations.
Directions for the development of social investments
It is no secret that in the Russian Federation every employer is obliged to provide its employees with a full social package. This includes payment for vacation days, pension and health insurance, compensation for expenses when traveling on business trips. Compliance with these conditions will increase the level of social responsibility in our country.
A social investment agency is a relatively new concept. It is engaged in attracting investments in the public sphere for the implementation of specific programs, as well as developing projects to improve infrastructure. The development of such institutions will have a positive impact on society. The most famous such center at the moment is the Agency for Investment in the Social Sphere. According to his research, the most popular industry for attracting investment was healthcare.
Example of social investment
In addition to the well-known social package, the employer has the right to give its employees additional benefits and formalize this as a permanent policy. Thus, the well-known company made changes to the pension program, making participation in it equity.
The system of non-state pension funds began to take shape at the end of the 20th century and is currently an excellent manifestation of social policy. The employee prepares his future pension by accumulating his own funds, as well as contributions from the employer. The amount that was collected during the period of work in the company belongs entirely to the employee.
In addition, Lukoil makes social investments in the following areas:
- assistance to orphanages and educational institutions;
- development and support of educational programs;
- participation in a public projects competition;
- financing of medical centers;
- creation of scholarship programs.
How to choose an object for charity?
The choice of target, of course, should take into account the preferences of the participants in the action. Discuss with employees their capabilities and wishes. The company may not have enough resources to do all the good deeds in the world, but it can hold a competition for the best initiatives and help implement some of them. For example, we annually hold the “System of Good Deeds” competition. Charitable initiatives are proposed by the employees themselves. This year we received 69 applications from 23 regions with a total budget of more than 12 million rubles, and this is twice as much as last year. 11 projects reached the finals; employees of Binnopharm, Ozon, MTS, SegezhaGroup and others won. Grants totaling more than 2.5 million rubles were awarded. They went to implement projects to preserve cultural and historical heritage, raise children, develop a comfortable urban environment, protect animals and support sports.
However, the fund allocates grants not only for the development of projects, the volunteers of which are exclusively employees of the company group. Volunteers from other organizations, for example, theaters, cultural centers, and so on, can be involved in social and charitable activities. Thus, at the end of last year, the Sistema Charitable Foundation, together with the Sintez pharmaceutical enterprise, summed up the results of the grant competition for residents of the Kurgan region “System of Good Deeds - Kurgan”. The competition was won by the theatrical production project with teenagers who have problems with the law, “Own Road”. The production “Own Road” was organized by the studio of beginning theater-goers “Difficult Age”. The production involved teenagers who are registered with the juvenile affairs unit of the Kurgan region. Local volunteers from among cultural figures and employees of the socio-cultural center of the Lebyazhye district willingly helped with the organization. Several public organizations and individual entrepreneurs in the region provided assistance. Later, the recording of the production enjoyed great success on social networks, and the “difficult” teenagers temporarily became celebrities, many of them reassessed their life values, some became interested in theatrical art, leaving their dangerous hobbies in the past. When you work as a volunteer and see how your work helps people, you yourself change for the better.
