By Vlada Zahoruiko – Cohort 1
As the world slowly tries to embrace a more sustainable and community-centric approach to economic growth, more and more local impact entrepreneurship initiatives emerge. Besides the developed global trend and rising popularity for social and impact businesses, governments started recognizing the benefits and opportunities impact initiatives bring and adapting legislation systems accordingly. All those factors make observing the dynamic development of local initiatives in various countries captivating. In this article, we will compare two countries with unique socio-economic landscapes and historical backgrounds: Germany and Ukraine, and get to know more about local initiatives created there. Just a quick note, since most of the social and impact entrepreneurship initiatives listed in the researched countries do not differentiate between impact and social enterprises, we are going to explore both of them.
Ukraine
First, let’s have a look at the governmental initiatives and regulatory environment. Ukraine has been making attempts in adopting a supportive policy framework for social and impact entrepreneurship, however, until now no special legal status or tax incentives and subsidies have been approved. Despite that, the overall income tax for businesses is rather low in comparison to most European countries, varying from 15% to 16% in 2023 [1]. To support business in times of war, multiple tax reduction models were introduced. Eventually, having to carry a double mission of generating a profit and making an impact, such enterprises struggle to compete with for-profit ones.
Nevertheless, the government introduced multiple non-policy-related initiatives to support impact entrepreneurship by running accelerator programs in cooperation with foreign organizations and creating a free consultation portal to get answers to questions about your business from professionals. Good examples are the Impact Business acceleration program and business.dia governmental platform for all related issues. Another interesting initiative to have a look at is the Investment Attraction Platform for impact businesses to tell about themselves and find investors.
In addition to the governmental program, there are multiple organizations that supported impact entrepreneurship for the last 5-10 years actively by giving free support, organizing all types of incubators, running events, and cooperating with main foreign social impact-related organizations like USAID and EVPA among others. SiLab is one of them, being the main platform providing various free resources and competition-based programs for social impact projects. An interesting initiative that started as a response of the Ukrainian professional community in the U.S. to the Russian invasion back in 2014 is the non-profit organization Razom. Firstly they appeared just as a volunteering project to send humanitarian help to Euromaidan protesters in Kyiv and organize demonstrations in New York and later on grew into a massive organization with numerous projects connected to social impact in Ukraine, including the development of impact entrepreneurship.
Even though the awareness of impact entrepreneurship is only appearing gradually in Ukraine and not that many local initiatives were created until now, there has been a huge growth in the popularity of social and impact projects and numerous amount of Ukrainians both in Ukraine and abroad as well as local companies are willing to support such impact initiatives voluntarily. Additionally, the country is known for the quick adoption of new technologies and innovative practices, which is why the situation might change in the upcoming months.
Germany
On the contrary, Germany has been actively supporting impact entrepreneurship through various national and local initiatives for many years. First of all, essential to notice, social and impact enterprises receive various incentives from the government, such as corporate tax exemptions for retained profits, VAT exemptions or reductions, and tax deductions depending on the registration form. Although, the available business registration forms do not always fit the newly-emerged diverse types of impact businesses, sometimes grouping them with for-profit ones or non-governmental organizations, due to the particular specifics of their operation. Also, important to notice that Germany has much higher competition and stronger monitoring mechanisms than most countries. Nevertheless, let’s dive into the broad pool of initiatives that support impact entrepreneurship in Germany.
First, the Federal Ministry for Economic Cooperation and Development (BMZ) in Germany runs numerous projects focused on international development and sustainable entrepreneurship. For instance, the develoPPP.de program provides funding and support to companies engaging in sustainable business activities in developing countries. Another promising project, Diaspora2030, focuses on civilly active immigrants of all origins in Germany to support them in leveraging their gained international network and expertise to create an impact in their country of origin. The project is a part of the 2030 Agenda and is associated with the Sustainable Development Goals of the United Nations.
Let’s move on to the national level hub for social entrepreneurs, impact investors, and other stakeholders in the social entrepreneurship space called SEND (Social Entrepreneurship Network Germany). Additionally to resources, free support, and networking events they also specialize in monitoring of social enterprises. Another project is Social Impact Lab, which is a co-working and incubation space designed specifically for social entrepreneurs. Being aimed at the support of early-stage impact entrepreneurs, it is present in multiple bigger cities across Germany, including Berlin, Frankfurt, and Hamburg.
Since Berlin gathers around 20% of all impact and social startups in Germany [2] and due to the local cultural peculiarities, it is no wonder that it’s the heart of social initiatives in Germany. One key player is the Impact Hub Berlin. While being a part of the international network of Impact Hubs around the globe, it offers daily events, workshops, and accelerator programs for anyone willing to get engaged in development. They also serve as a co-working space to gather a network of bright people determined to create a positive impact with their projects.
Another initiative, TBD, is a digital jobs hub and social impact platform working not only as an impact jobs search platform but also as an organizer of the Purpose Fellowship. It is a preparation program for anyone willing to connect their professional life with the impact field, however, needs empowerment and tools to be able to switch to an impact career or start an impact enterprise.
As the country is known for its strong policies for environmental protection and with environmental issues being a major public concern, there is a whole class of organizations and funds that focus particularly on supporting startups and businesses in the green sector. One of the key ones is the GreenTech Alliance, an initiative that connects entrepreneurs with industry partners, investors, and research institutions to drive innovation in sustainable technologies. Through events and matchmaking activities, they aim to facilitate collaboration and growth opportunities for green tech startups.
In conclusion, social entrepreneurship initiatives in Ukraine and Germany have demonstrated a significant impact on popularizing entrepreneurial approaches to address social and environmental challenges. Both nations, with a bigger prevalence in Germany, have numerous government and inspiring enthusiasts-based initiatives that offer access to knowledge, consultations, and network which shows positive trends on the global level. Nevertheless, some issues such as access to funding, bureaucratic hurdles, and scaling efforts remain common major obstacles not letting many enterprises grow. With a belief that impact and social entrepreneurship is the best so far created way to tackle current local and global challenges, we hope for the development of the field and the spread of social impact culture further.
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