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Knights of the Vine RUSSIA


Cultivating a Tradition of Giving
Jamie S. Rich

Russia’s traditions form the very fabric of its culture. So why does the tradition of “charitable giving” leave few Russians celebrating their favorite causes? There are too many stories told — of disabled children without proper care, hospitals with inadequate technology, increasing numbers of HIV infections, education and arts programs closing down, orphans living in deplorable conditions — for Russia’s civil society to claim victory. Whether you take an optimistic or a pessimistic view of this transitioning country’s charitable sector, one thing is clear: Despite progress, Russia’s philanthropic culture remains underdeveloped.

An overwhelming cloud of distrust still lingers over charitable giving. For many Russians, charitable organizations conjure up images of crooks and thieves. In the post-perestroika period, charitable organizations were used many times as covers for embezzlement schemes and money laundering rackets. Everyday- people invested money into causes they thought were for the greater good, only to end up losing, in some cases their entire life savings. The distrust inherent in the sector during those years destroyed any tradition of giving that may have existed in pre- Soviet days. The Soviet-era suppressed the tradition of individual giving because the government, in theory, provided for all basic needs, including jobs, medical care, education and spiritual fulfillment. This idea still resonates with many Russians today who believe that social development is the responsibility of the government not the individual. But the suggestion that ordinary Russians do not give because they do not care is misleading. Rather, the majority of people are trying to meet their own basic needs before reaching out to others.

“I think Russians, like most other people in the world, are willing and indeed anxious to help other people. And, with increased amount of predictability and stability in their own lives and regularly increasing personal incomes, I think that we will see that Russians care about their communities and causes,” said Bernard Sucher, Chairman of Alpha Capital.

Unfortunately, for those in need, the prevailing ideology of the Soviet era also led to the elimination of the Orthodox Church as a charitable resource. In many Western cultures churches plays a primary role in social development. Although Russia’s Orthodox Church does sponsor charitable programs, the Church admits its impact is small compared with the country’s size and the scope of the issues being addressed. Despite its low profile among other charitable forces, the Church does serve as a source of information for those looking for help, acting as a liaison between the needy and other organizations that have the means to provide services.

Strengthening the Fabric

The holes in Russia’s charitable fabric began to mend at the end of the Soviet era when foreign foundations and grant-making agencies took interest the country’s development. These large-scale, government funded organizations (such as USAID, The MacAurthur Foundation, The British Charities Aid Foundation and the Ford Foundation to name only a few) provided infrastructure and support at a critical point in the creation of new-Russia’s charitable sector. These organizations and others still play a large role in galvanizing the country’s social development efforts, providing, in addition to funding, working knowledge of how programs have succeeded in the West and transfer of this knowledge to their Russian employees. International businesses also brought with them a developed corporate culture of giving back to the communities in which they operated.

Bernard Sucher, Chairman of Alfa Capital

“There is a rather low level of interest among Russian corporations. International companies, or Russian companies with strong international management, provide a lot of leadership. Most Russian companies look at charitable opportunities through the lens of sponsorships where there is a strong PR return. There’s nothing wrong with this; it just reflects the stage of Russian philanthropic development and corporate social responsibility,” said John Tedstrom, president, Transatlantic Partners Against AIDS, a non-governmental organization combating the spread of HIV/AIDS in Russia, Ukraine, and neighboring countries.

With the Russian economy booming, and with Moscow laying claim to the second highest number of billionaires in the world, it is hard to imagine why more money is not finding its way back into social development circles. From a business standpoint, giving to charitable organizations is not universally thought to be a positive thing. The fallout from Mikhail Khordokovsky’s tax evasion conviction and the freezing of ‘Open Russia’s’ bank accounts in March are only one factor in this. However, some of Russia’s other business leaders are forging ahead with their good deeds. Roman Abramovich, for example, has donated millions to improve living conditions in Kamchatka. Other companies like Russia’s SUAL are also known for their strong focus on social responsibility. But the charitable sector still needs more Russian businesses to take an active leadership role.

Corporate social responsibility remains en vogue in the Western world, with the corporate faction contributing largely to local and national charitable causes. For example, the United Way is America’s largest charitable organization in terms of funding, raising more than $3.86 billion from 2004 to 2005. Nearly $1 billion of that support came from the corporate sector.

So why are there not more Russian corporations ensuring the country’s future leaders will prosper by reaching deep into their hearts and bank accounts? Irina Menshenina is fundraising and marketing director for Downside Up, a charitable organization helping children with Down syndrome and their families. Menshenina thinks that Russia’s corporate sector has significant potential but realizes that businesses are less concerned with helping the community unless it also helps their bottom line.

“First, you must explain why you are doing this and why it is beneficial to the corporation to support a charitable cause,” said Menshenina.

To inspire donors, Downside Up has found unique ways to hook its supporters, including friendly corporate sports competitions that involve children with Down syndrome. Their message is, ‘doing good by doing sports.’ Menshenina has found this hands-on approach to be most effective in reaching people, instilling a desire to help, and exposing them to the true benefits of charitable giving. MORE THAN MONEY As evidenced by Downside Up’s sports programs, giving money is not the only way to make a difference. Although success primarily hinges on a generous stream of funding, many critical factors contribute to reaching the end goal.

“For all NGO leaders, except the lucky few who enjoy a major endowment, resources are always the first thing we think about when we get up in the morning and the last thing we think about when we go to bed,” Tedstrom said. “And this is more than just finding someone who can write a check. Our strongest partners are those who fully appreciate what it’s like to run a non-profit organization and are there for you with guidance on programs, management challenges, and governance support in addition to fundraising.” Fundraisers contribute a large portion of charitable budgets in Moscow.

Fundraisers also offer the easiest way for ordinary people to get involved, by volunteering or simply attending an event. On the surface, charitable work looks like fun and games, with events ranging from craft bazaars, to glitzy balls, to worldclass concerts and sweaty sporting events. However, making a tangible impact requires a complex formula that goes beyond party planning and collecting money. In reality, hard work is at the heart of Moscow’s charitable community, and achieving goals and sustaining success comes only with the right mix of people, relationships, funding, business savvy, and respect for the cause and Russia’s culture.

Many Russian and International charitable organizations rely heavily on volunteers for their fundraisers, and when there are not enough hands to do the work, projects suffer. For Marta Lubeck, charities co-chair, International Women’s Club of Moscow, the formula for success is simpler, “plenty of volunteers, a desire to help, and understanding.”

John Tedstrom, president, Transatlantic Partners Against AIDS

In addition to a strong staff and board of directors, Tedstrom believes good business sense has its place in a charitable organization. “Solid, careful professional services —legal, accounting, etc. — are must-haves, especially when you’re committed to being fully compliant in multiple countries at all times,” he said. “Finally, I think a deep respect for the culture and history and potential of Russia itself,” are critical success factors.

Respecting Russian culture is a theme echoed by many expatriates working and volunteering with Russia’s charitable organizations. Undoubtedly, the international players involved in shaping Russia’s charitable sector share a deep appreciation for preserving all that is good in existing practices, but they also posses a strong desire to change some of the country’s harshest realities.

There is certainly an ugly side to philanthropic work. Most people do not want to deal with another’s misfortune, and as a result, some organizations face higher hurdles simply by the nature of their causes. For those organizations supporting unsavory groups or “outcasts,” changing people’s attitudes, not only with respect to giving help but also who deserves to receive it, is among the most difficult challenges.

“If we speak about Down syndrome. It has an enormous stigma in Russian society, unlike in the States, England or the Netherlands. That is the biggest obstacle. People feel very uncomfortable. They think Down syndrome is related to a serious sin you’ve committed, and that is why you have this child,” Menshenina added.

Sharing Responsibikity

History has positioned the government as the go-to source for civil service, in the minds of Russians; but today the government shares that responsibility with the non-governmental world. Recently, Russian officials have taken heat over a new law, which further regulates non-governmental organizations. The verdict is still out on how the law will impact the charitable sector, and this has some philanthropists expressing concern.

“We are closely watching how the law is applied. Many qualified experts have raised concerns that the law can too easily be misused. It’s important that NGOs are protected and that civil society is supported. If the new law becomes an obstacle to achieving those goals, everyone will lose,” Tedstrom said.

Government officials see the law as a system of checks and balances and stand firm on their position that it will have positive implications.

“Like in any other field of activity, situations may be different and, sometimes, they are not of a positive nature. However, in most cases charitable organizations play a positive role in society. Russia is no exclusion. Such organizations are driven by enthusiasm, true devotion to their cause, and eagerness to cooperate widely with different people to reach their socially important objectives,” said Duma Deputy Valery Zubov, an active member of the Russian Interfactional Deputies' Working Group on HIV/AIDS and member of the State Duma Committee on Credit Organizations and Financial Markets.

Despite criticism that Russian lawmakers are detached and stifling innovation, Zubov speaks openly about the benefits of charitable work. “Charitable organizations should continue their efforts aimed at ensuring more openness, and the government should become more tolerant towards these organizations and should express more interest in them,” he added.

“Charitable organizations accelerate the development of new social practices to solve long-existent problems that failed to be resolved through traditional approaches.”

Downside Up charity event

Zubov also spoke of “certain profit tax benefits” that Russia’s government offers as incentives for investing in charitable organizations. But international philanthropic leaders believe that more work needs to be done. Tight laws still prevent charitable organizations and Russians from realizing their full potential. Sucher, who founded the Tarusa endowment to assist a local hospital in Tarusa, hopes successful implementation of charitable investment programs will pave the way for a more open government policy in the future. (See article in April’s Passport ‘Let Hears Beat’.)

Under Russia’s current system, if a charitable organization invests its cash for the future, it must pay taxes. “The whole system is set up to discourage growing an asset base that would help support an institution or cause,” Sucher said.

If successful, Sucher hopes the endowment will serve as a positive example to the government of how charitable organizations can prosper, while supporting Russia’s overall economy.

The challenges, the history and the psychology surrounding the charitable sector in Russia weave a complex web that continues to ensnare victims. While significant progress has been made over the past decade in Russia’s civil society, the country has yet to revitalize the one tradition that could escalate its overall economic and social progress and create more success stories than stories of suffering.

Web sites for the organizations mentioned in this article will provide more information on how to get involved in furthering Russia’s civil progress.

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