Tracking Relief and Development Trends
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Seeding New Philanthropy: Mobilizing internal resources for development in Ukraine
By Barbara Felitti, Ukraine Country Director, Institute for Sustainable Communities
Tapping into support from the corporate sector has become increasingly important in countries where international donors are decreasing their funding. In Ukraine, as in other transitioning countries, the ability to mobilize internal resources for development is essential to sustaining its peaceful democratic transition and to fueling continued economic growth.
In late 2005, corporate philanthropy began to gain momentum in Ukraine, creating the promise of significant support for community service organizations. One impetus was international investment following the Orange Revolution in late 2004, as international businesses brought an ethic of corporate social responsibility, influencing both policy and practice. In 2005, for example, Avon Cosmetics of Ukraine held its first “One Day Walk for Life,” an annual event to promote early cancer detection and support for breast cancer survivors that raised funds for the purchase of portable mammography machines. Another important motivation for this trend was the emergence of two funds established by Ukrainian business leaders, the Fund for the Development of Ukraine, founded in 2005, and the Victor Pinchuk Foundation, founded in 2006.
Other efforts to seed new philanthropy in Ukraine have not garnered as much attention, but are worth examining for the lessons they may yield for international development practitioners who seek to encourage corporate giving in the countries in which they work. Six such lessons are distilled below.
1. Find out what businesses are already doing. In Ukraine, giving by business was common, just not visible.
When the Institute for Sustainable Communities (ISC) began to look into fostering corporate participation in 2003, we soon discovered that the perception that Ukrainian businesses were not giving was mistaken. Studies we sponsored found that small to large businesses had been contributing to various causes, but were doing so quietly. One reason is cultural, dating back to the tradition of the “metsenats” - wealthy businessmen who, in the 1800s and early 1900s, supported public projects and social needs as part of their responsibility to society. This tradition is reflected in the comments of businesspeople who reported giving to a variety of social and cultural activities because “it is the right thing to do,” not for recognition or marketing purposes.
2. Know the legal environment and how this affects giving.
The legal environment presented another obstacle to getting an accurate read on corporate giving. Current legislation allows businesses to receive a tax credit for charitable giving of two to five percent of a company’s profits. However, many businesses still operate in the informal economy, preferring not to report profits. This results in “shadow philanthropy” - giving that is not officially reported.
3. Find strategic opportunities to build alliances among businesses and spread the word.
Business alliances have proved invaluable in encouraging new corporate giving. In 2004, ISC teamed up with the American Chamber of Commerce in Ukraine to provide matching grants to charities, social service organizations and social enterprises throughout Ukraine. In 2005, this partnership, which is also supported by USAID, was formalized as the Ukrainian Fund for Corporate Citizenship, enabling members of the business community in Ukraine to donate to causes that are important to them and to demonstrate the vital role that corporations can and should play in promoting corporate social responsibility within the larger Ukrainian community.
4. Build confidence and enthusiasm for corporate partnerships through support of causes that offer a natural fit.
The Ukrainian Fund for Corporate Citizenship created a groundbreaking program to support the development of social entrepreneurship in Ukraine. Helping socially conscious entrepreneurs and nonprofits to create a “social purpose business” was a great draw for businesspeople who instinctively understood the power of helping nonprofits expand their impact while increasing their financial self-sufficiency. Pilot projects they have funded include employing the homeless to renovate furniture, training the mentally disabled to provide printing services, and the production of audio books for the blind. These and other projects provide important therapeutic support and job training as well as income for the participants and the nonprofit organizations.
5. Encourage best practices by bringing existing corporate giving initiatives into the context of the global corporate social responsibility movement.
As corporate social responsibility gained ground in Ukraine, businesses began to formalize their programs, entering into partnerships with community service organizations and making their giving more transparent. The larger context encouraged Ukrainian businesses to begin to embrace globally accepted best practices. For example, ISC helped the Public Relations League of Ukraine to develop and publish guidelines for social reporting in cooperation with its members, which include national businesses such as Kyivstar, a mobile phone company, as well as multinationals such as the Coca-Cola Company. Another example is USAID’s Global Development Alliance program, which, with ISC’s help, is bringing major organizations and leading businesses together to promote good practices and transparency in corporate philanthropy.
6. Test new models of corporate philanthropy such as workplace giving.
In western Ukraine, ISC is working with the Princes-Benefactors Ostrozky Foundation to promote workplace giving based on the Community Shares USA model. This initiative makes it possible for many nonprofits to reach out to a number of businesses through a single workplace giving program. Since employees are able to select the types of activities and organizations to support, this type of program gives social justice and other nonprofits that do not typically receive corporate funds the chance to gain support. Other efforts are underway to help leading businesses such as Nadra Bank and NIKO Trade House to develop or expand workplace giving. We are also helping to introduce new models of mobilizing local resources that could provide a consistent source of support for targeted communities or issue areas.
Businesses, particularly Ukrainian businesses, have begun to take over the role of international development programs in providing financial support for meeting social needs. Indeed, recent surveys report that charitable giving is on the rise in Ukraine. Improving philanthropy’s transparency and effectiveness will help sustain this trend.
Barbara Felitti is the Institute for Sustainable Communities’ country director for Ukraine, where she runs the Ukraine Citizens Action Network, known as UCAN.
