Dramatic fall in foreign companies’ support for Russian NGOs

Olga Alexeeva

In spring 1998 CAF Russia conducted a survey of company giving by 115 foreign companies working in Russia. Two years later they carried out a second survey. One thing they discovered was a massive fall-off in the number of companies supporting NGOs, from 41 per cent to 5 per cent, and a correspondingly large shift towards supporting projects for the needy such as children’s homes and homelessness shelters.
The financial crisis of August 1998, the resignation of President Yeltsin and the start of a new Chechnya war all happened in the period between the two surveys. These events may at least partially explain these startling results.

How companies were selected

The surveys were conducted in Moscow and St Petersburg, where most foreign companies have their offices. The 115 companies came from 24 countries; 92 per cent had operations in different regions of Russia, while 8 per cent were based only in Moscow and the Moscow region.

With the aim of achieving as representative a sample as possible, companies were selected taking into account place of operation, nature of business, size of business, and how well known they are among customers/the general public in Russia. Companies were then divided into three groups on the basis of country:

  • First group: Group of Seven countries.
  • Second group: other West European countries.
  • Third group: other countries (from Central and Eastern Europe and Asia).

General results

The 1998 survey showed 32 out of 115 companies (28 per cent) supporting charitable activities in Russia. In 2000 this figure had decreased to 25 per cent. There were marked country differences. While 44 per cent of companies in the first group said they supported charities in Russia, only 21 per cent from the second group responded positively and none from the third group.

By 2000 just over 36 per cent of companies involved in the 1998 survey had ceased operating in Russia. These companies accounted for most of the companies that had stopped giving, with under 10 per cent stopping because of economic constraints or other reasons.
The survey showed no obvious connection between nature of business and level of charitable support. But personal interviews with company representatives showed that consumer companies prefer to donate their products rather than money and tend to link marketing of new products with their charitable activities. They start donating cash only after they open production in Russia. Cash donations are more often given by financial companies, banks, natural resources companies, computer companies and travel agencies.

Only two companies out of 115 have structured programmes for giving, and only three have a special officer responsible for the company’s charitable activities. In most companies this role is taken on by the PR Manager, whose main task is collecting and checking information on potential recipients of donations. Decisions are usually taken by a top manager or by an advisory board or board of directors.
Reasons for company giving

Why do companies give? In 1998 company traditions and marketing and advertising needs occupied first place in the list of reasons. By contrast, in a similar survey conducted in 1999 among Russian companies, first place in the ‘rank of reasons’ was occupied by ‘social responsibility – sharing wealth with the poor’ and second by ‘fear of another revolution’ (if we do not support the poor, they will make another revolution). Russian companies have no traditions of giving. Marketing and advertising needs came last among 20 reasons for giving.

But the reasons for giving appear to have changed in the two years. In 2000, responding to appeals from the needy occupies a higher place than marketing and advertising needs. The war in Chechnya and the 1998 financial crisis left many people poor and homeless. Requests from authorities also rank higher, which can be explained in terms of a general strengthening of the role of government in Russia and increasing government pressure on companies. 

While an increasing number mentioned ‘values’, it is interesting that no respondent mentioned tax benefits as an incentive for philanthropy.

Who do companies support?

Here too we can see major differences between foreign and Russian companies. The 1999 survey showed that most Russian companies do not trust NGOs, tending to give to municipal social institutions like orphanages or to individuals in need. Among foreign companies in 1998 the trend was completely different, with 41 per cent of international companies supporting NGOs and none supporting municipal institutions.

But in two years the picture has changed. Foreign companies have become more suspicious of NGOs, their views more like those of their Russian counterparts. Support for children’s homes and shelters for homeless people has increased dramatically, while support for NGOs has decreased equally dramatically.

The type of support also changed greatly over the two-year period. Cash giving declined from 31.5 per cent to a mere 5 per cent, while almost all forms of in-kind giving increased.

What can Russian NGOs do?

Distrust of NGOs must be one reason why international companies in Russia barely support them any more – unsuccessful experiences with some NGOs and the impact of public scandals highlighted in the press must have played a part here. But distrust is not the only reason for this shift in policy. 

Companies would like to support long-term social care, institutions where they can go any time and see what is being done with their money and how people are being helped. Unfortunately many Russian charities still work from event to event and do not provide long-term social services, and often if you visit an NGO without calling first you’ll find a closed door. In order to win back the interest of companies, Russian NGOs should take a look at how they work, and start long-term programmes even if only on a small scale.

And those who have such programmes must be more active in presenting them to the business community.

Olga Alexeeva is Director of CAF Russia.

For more information about CAF Russia, contact Director Olga Alexeeva.
Tel/fax +7 095 792 5929

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