Response to the Crisis

Paulina Filippova, Director for programs and donor relations / CAF Russia

Research to determine the impact of the economic crisis on philanthropy has recently been conducted by the Charities Aid Foundation, Zircon Research Center, PricewaterhouseCoopers and the Donors Forum. The organizations have united their efforts to determine the damage already caused to the sector and to find out how different players — nonprofit and non-governmental organizations, corporate donors and private foundations — plan to respond to it.

The first findings were a bit discouraging: many companies and private foundations approached either refused to participate in the survey or refused to disclose their financial data. This might indicate a lack of clarity or they might still be waiting for further economic developments in order to determine their charitable commitments. In any case, it indicates that transparency has not yet become an integral part of business practices. On a more positive note, more than half of the respondents intend to continue their charitable activities and some are even considering an increase.

NGOs have demonstrated a robust attitude. Though 61 percent of respondents have experienced a reduction in funding, they are aiming to survive and intend to apply different strategies to achieve this goal. They are working on diversifying their sources of income. Unlike the donors, NGOs do not intend to cut staff numbers and, whenever possible, are willing to invest in staff training and professional growth.

Fifty-one percent of NGOs intend to expand the scope of their services, and 34 percent intend to expand their client lists. On the one hand, this is a response to the increase in the demand for their services (as reported by 59 percent), on the other hand it is a strategy to improve sustainability.

One of the goals of the survey was to improve the dialogue between the main players. There were some interesting findings there. Both nonprofits and corporate donors talk about efficiency as the main strategy in crisis. But while NGOs plan to introduce more modern and effective technologies and to retrain their staff, corporate donors look to reduce costs by cutting out professional providers and give money directly to the beneficiaries.

It might be a good approach if the goal is to put a tick in the corporate social responsibility column, but can hardly increase efficiency when it comes to long-lasting effects in the improvement of the lives of these beneficiaries.

Both NGOs and donors mention more active involvement of volunteers as one of their main strategies (49 percent of NGOs). It sounds great — volunteerism is far from well-developed in Russia. Unfortunately, some of the companies plan to fully replace their charitable donations with volunteers. Volunteers can be a valuable recourse for a charity but only when they are trained, or at least briefed, and supervised by the charity’s professionals. If there are no additional funds provided for this work, NGOs often do not have capacity for it. Recent experience shows that sometimes corporate volunteers become a source of misunderstanding and mutual frustration between NGOs and corporate donors: the former do not want to be a free team-building mechanism, the latter feel unappreciated. With good will from both parties the situation can be resolved, existing partnerships between NGOs and companies improved, new ones formed.

There is full understanding and unanimity between all parties when it comes to one issue — the role of the state in assisting the sector. Both companies and foundations see tax advantages as the most effective way for the state to support further development of philanthropy. This opinion is supported by NGOs, who also see a crucial role in the development of state, regional and municipal grants and competitive procurement of social services.

It seems that the state has been thinking in the same direction. On July 30 the government approved a concept paper on the development of philanthropy and volunteering in Russia and a working plan for its implementation in 2009-2010, which sets up a timetable for new legislation development and ministries in charge.

The paper reflects appreciation of the importance of charitable activity of citizens and organizations for social development, and the necessity of creating a favorable environment for its development by the state. The paper sets out a number of priorities, which include tax benefits for donors and NGOs, as well as individuals — recipients of charitable assistance. NGOs will be able to take premises on lease from state and municipal institutions at a discount price. There are many other important provisions, which if implemented, will give a boost to philanthropy in Russia. Let’s hope that these intentions will soon turn into new legislation and other actions. One of the main conditions to secure success is a continuous conversation of all the players, their mutual respect and willingness to find a common ground. Then philanthropy will become what it should be in a healthy society — an integral part of our everyday life.