Could Public Procurement Become an Incentive for Developing the Non-profit Sector in Russia?

Abstract

Non-profit organizations deliver a wide range of meaningful resources to communities in such diverse areas as education, arts, social services, etc. However, compared to the private sector, their funding potential is much more limited. The increasing social and economic impact of the non-profit sector is a reason why there is a need to persistently enhance these opportunities. State contracts have the potential to be regarded as one of the most essential sources of funding for non-profit organizations in the social sphere. In Russia, recently passed laws ensure substantial benefits for 'socially oriented' non-profit organizations that participate in public procurement. Nevertheless, despite the existence of norms allowing socially oriented NPOs to be granted preference in tenders, the presence of the non-profit sector in the Russian public procurement market is still insignificant. This study seeks to analyze the peculiarities of Russian public procurement legislation. The main question of the study is why state procurement failed to become a driver for the development of the non-profit sector in Russia? To answer this question, firstly we consider the functioning mechanisms of socially oriented NPOs in the public procurement market. Then, we analyse the results of expert interviews, which let us identify the following barriers limiting the participation of NPOs in public procurement: economic, financial, social, and organizational. Finally, we draw the conclusion that, for the majority of non-profit organizations, state procurements are an optional source of funding in view of the barriers identified above. This study is relevant for government and public authorities as it can serve as a starting point for improving the mechanisms of attracting the non-profit sector to the sphere of public procurement.