Select Language

Introduction

From a standing start at the fall of the Soviet Union, contemporary Russian philanthropy has made great strides forward and continues to grow in scale and maturity. The year 2013 saw a significant increase in the number of million dollar donations – with corporations clearly playing a major part in the landscape of Russian philanthropy.

Today’s generation of Russians is the first with significant wealth for almost a century. Many wealthy individuals and families see philanthropy as a key purpose for their wealth. Some also see it as an important factor in wealth succession and in creating a lasting legacy for themselves and their families.

While the data we have gathered does not convey the full scale of Russian philanthropy, it does underline the fact that giving is gathering pace.

In addition to our analysis of the data, there are a number of observations we can make about major philanthropy in Russia. For example, the number of foundations has increased markedly as wealthy individuals or families look to establish their philanthropy for the longer term. Some are also creating endowments or hiring professional staff. Many are also starting to be more open about their philanthropy, as evidenced by the increasing number of major donors willing to share data with us for this report.

Institutionalisation

Institutionalisation of giving

While philanthropy by individuals is significant, institutionalised giving through foundations has become a key feature of Russian philanthropy.

In 1999, Vladimir Potanin created the first Russian private philanthropic foundation, with the aim of establishing long-term educational and cultural projects with a social purpose. Significant not only as the first in its field, it was also one of the first Russian foundations to have an endowment[1].

Since the establishment of the Vladimir Potanin Foundation, the number of Russian foundations of all types – corporate and private – has grown steadily. As of 2013, there were around 70 private foundations in Russia, and the largest among them give away as much as $10m a year[1]. Many Russians have also established private foundations abroad, whilst retaining the geographic focus of their philanthropy on Russia.

While many philanthropists in Russia focus on supporting non-governmental organisations (NGOs), it is not uncommon for philanthropic organisations to implement programmes directly as opposed to giving grants to others; for example, by building schools, renovating hospitals, developing palliative care services or publishing books. This feature of Russian philanthropy may well be the result of a vacuum or the lack of maturity of NGO activity in some fields, or due to a donor’s desire to retain an element of control.

As illustrated by our findings, there is little doubt that corporate giving in Russia represents a major proportion of the philanthropic landscape. What is distinctive about corporate philanthropy in Russia is that large companies established in what were originally relatively uninhabited or remote areas have played a pivotal role in developing the local area.

As with philanthropy from individuals or private foundations, much corporate philanthropy in Russia has emerged in a piecemeal and ad hoc manner. But at the turn of the century, Russian companies began to embrace the notion of corporate social responsibility (in part influenced by their western counterparts) and developed more focused and sophisticated philanthropic programmes.

The findings in this report suggest:

• The Central geographic region (which includes Moscow) is the most significant location where corporate million dollar donors are headquartered
• An increasing number of businesses are institutionalising their corporate philanthropy programmes through the establishment of corporate foundations
• Individuals in 2013 gave higher-value donations, whilst donations by corporations were the most numerous

Marketing and PR, or the strategies of local or federal governments often shape or encourage corporate philanthropy. However, it is worth noting that in some cases major shareholders who are philanthropists in their own right sometimes play a key role in introducing corporate philanthropy to their business (as in the cases of OMK-Uchastiye in the interview with Anatoly and Irina Sedykh, and Troika Dialog, referenced in the interview with Ruben Vardanyan and Veronika Zonabend). A further example would be the corporate social responsibility programme of Norilsk Nickel, owned by Vladimir Potanin. Sometimes the distinction between corporate and individual philanthropy can be blurred as some major philanthropists choose to channel their personal philanthropy through their business.

Finally, it’s worth noting the important role the government plays in philanthropy in Russia. In some cases, the government is known to influence the focus of an individual or corporation’s philanthropy. But more significantly, recognising the important role of private giving, the government has begun to help pave the way for a more enabling environment for philanthropy to grow and flourish. For example, in 2007, the Endowment Law was passed, making the income earned from endowments tax free. And in January 2012, tax incentives were introduced for individual donors, a provision that came into play in 2013 when the tax declaration for 2012 began.

The future

What does the future hold for philanthropy in Russia?

There are a number of trends in play that will shape the future nature and scale of million dollar donations in Russia. These are:

Developing more strategic philanthropy. For many new donors, the early stages of a philanthropy journey often involve giving in a more emotive or piecemeal fashion. Indeed, some philanthropists will choose to continue to be reactive and relatively ad hoc in their approach, as it may be more desirable or appropriate given what they want to achieve. However, over time others may become more purposeful and focused in their mission and objectives, and look to make a more lasting difference with their philanthropy. Interestingly, in 2013 a number of foundations undertook a review of their programmes to ensure they remained relevant to the changing environment and the needs of their grantees and beneficiaries. This is a sign of the increasing maturity of foundations and the increasing importance founders are placing on maximising the results of their philanthropy.

Institutionalising philanthropy. As the number of wealthy individuals or families that engage with philanthropy grows, it is inevitable that they will consider institutionalising their philanthropy through the establishment of philanthropic trusts or foundations, either in Russia or abroad. They may also hire professional staff and establish effective boards.

Establishing endowments. Many major philanthropists are likely to endow the foundations they establish to sustain and develop their philanthropy. As in the case of the Dynasty Foundation, some endowments may be established in perpetuity, creating a source of philanthropic capital beyond the founder’s lifetime.

Raising the profile of philanthropy. As philanthropists gain confidence in their work, some will also choose to proactively talk about it and the causes or organisations they support. This may be driven by a number of factors, including a desire for the general public to better understand philanthropy and what it can accomplish, greater transparency, a desire to encourage their peers to give, or a wish to enhance their own reputation.

Creating a lasting legacy. The relative youth of Russian philanthropists means that in many respects they are at the beginning of their philanthropy journey. Nevertheless, creating a lasting legacy features prominently in their minds. As wealthy families begin to focus on succession planning and the inter-generational transfer or wealth, philanthropy will often feature in this process.

Building on progress to date, Russian philanthropists have a significant opportunity to grow and strengthen philanthropy in a manner that will make a real and lasting difference to culture and society at home and abroad.

History

What is the history of philanthropy in Russia?

Before the Bolshevik Revolution of 1917, there was a well-established tradition of giving. This tradition has re-emerged in a new guise since the fall of communism.

Historically, many Russians gave to charity, mainly through the Church, which was the principal instrument of charitable activity until the 18th century. It built and supported hospitals, orphanages and shelters for the homeless.

The Crown also set an example of charitable giving. From the time of Catherine the Great, the royal family often paid for the establishment of educational and healthcare institutions. Examples include the First Moscow City Hospital set up by Prince Golitsin in 1802, and the State Hermitage based on the collection of Catherine the Great, which opened to the public in 1852. By 1900, the institutions of Empress Maria alone included more than 300 such organisations.

Between the Revolution and the fall of communism – some 70 years – Russian philanthropy disappeared. The state was expected to meet all needs and philanthropy was neither recognised nor encouraged. But following the break-up of the Soviet Union, philanthropy re-emerged in Russia in the late 1980s and 1990s.

In the early 1990s, the first western philanthropists and development agencies appeared in Russia. One of the most significant of these was George Soros’s Open Society Institute (OSI). Soros was responsible for greatly influencing public perception of what an individual philanthropist could achieve. The Ford Foundation, Mott Foundation, MacArthur Foundation and Eurasia Foundation followed, along with international development organisations such as the United States Information Agency (USIA), the US Agency for International Development (USAID), the UK Department for International Development (DFID) and the World Bank. All these provided additional stimulus to philanthropy and the country’s NGO sector.

However, as was the case with pre-revolutionary philanthropy, giving by Russians in the 1990s was largely piecemeal and done on an ad hoc basis.

After the financial crisis of 1998, corporate philanthropy emerged with the first organised grants programme. Other companies began to follow with larger initiatives. In 1999, Vladimir Potanin created the first Russian private foundation.

Since then, the number of Russian foundations of all types – community, family and private – has grown steadily. In addition to the growing number of foundations, there are numerous ‘direct assistance funds’. Many of these are created by the media or by celebrities, often as an emotional response to an urgent need: for example, funding the costs of surgery for deprived children. By the end of 2013, Russian assistance funds had between them raised more than $50m. Not only have such funds raised significant resources, they have also played a key role in building a culture of charitable giving and philanthropy in Russia.

[1] Russian Donors Forum Report on the state of foundations in Russia, 2007.