Дорогой. Очень. Для профессионалов, конечно. Просто никто этого не расскажет и не объяснит. И не потому, что пожадничает. Просто не знает. Ну разве только кое-что.
Заранее приношу извинения перед теми, кто испытывает трудности с английским. Выберу время - подготовлю и добавлю версию на Русском.
PRIVATE SECTOR FUND RAISING IN RUSSIA FOR SOCIALLY ORIENTED NCOs
Author Alexander Fesenko
1. Evaluation of current situation.
Professional FR in Russia, especially in private sector (PSFR), is at the infancy level with all the clearly expressed illnesses of growth: disregard of mass public campaigning for donations and of appropriate technics; donor driven approach; highly commercialized character of partnering with Corporate sector, neglect of brand building and FR ethics, public communication, advocacy and development of more or less comprehensive strategy. These difficulties enforced by relatively widespread dishonest practices (especially in 90s and beginning of 00), high “For profit” sector influence on NCOs, etc.
Very few any reliable official and/or published statistics and sources of data on PSFR exist, researches and studies on the issue are occasional, analyses used to produce more questions than answers because of data, methodology weaknesses and high controversy, even in terminology.
In some publications (CAF, for.ex.) we could meet gross amount of donations for NCOs (all kind of, not just focused on social support) in Russia at the level as high as 140 bln. RUR per year (close to $ 2,5 bln. at current exchange rate). This could be more or less realistic, would we summaries direct donations to NCOs by public, donations to Church, corporate grants to corporate and undependable NCOs, “social investments” by corporations: direct financial support of regional (“native”) social projects in cooperation with regional administrations, social programs for local employees (health, education etc.).
This last section (“social investments” by major local enterprises) is traditionally extremely big in Russia, covers regions of these enterprises and branches presence and businesses and these “investments” in the essence are closer to indirect taxes or compensations, than to donations, not mentioning charity. This kind of “investments” are “donated” directly or through corporate or affiliated NCOs and easily build well over 70% of the gross amount of “donations for NCOs”, mentioned above in CAF publication. There are practically no chances for non-affiliates to be among these “donations” recipients.
More or less realistic evaluation of actual annual volume of direct donations to non-corporate, non-affiliated NCOs in Russia by public, corporate sector and state in the form of grants could build 15-20 bln. RUR. Of this amount grants from federal and regional budgets could build over 2 bln. RUR. And corporate donations compose considerably more the half of the rest. In any case public support for NCOs is extremely law.
It worth to consider, in respect to character and volume of PSFR by socially oriented NCOs (mainly focused on children), the results of analysis on the basis of data, collected and published (deleted later on) by leading PSFR NCO in Russia RusFund with annual gross volume of funds raised from private sector over 1,5 bln. RUR. The NCO has unprecedented presence in federal and regional media and huge regional representations network. Theme – emergency medical care to children with severe diseases.
The data has been provided by NCOs on voluntary basis upon RusFund request and it is possible to assume with high probability that:
· NCOs provided data with hope to build capacity by partnering in any form with RusFund;
· NCOs participated are proactive and run their main activities in the children in need support field;
· there are no any reasons for misrepresentation of the data by NCOs in this case.
430 non-affiliated NCOs, provided data, incl. country leaders among any kind of NCO (except Church) in gross volume funds raised from private sector (2-3 NCOs – over 1 bln. RUR; 3-5 – more than 100 mln. RUR). Presented data on annual volume of funds raised and fields of activities in 2013 were analyzed by the author of this paper.
Some results are as follows:
· the overall amount of funds raised in 2013 by 430 leading “social” NCOs 8,9 bln. RUR
· the average amount of funds raised in 2013 per an NCO 20,6 mln. RUR
· the overall amount of funds raised in 2013 by NCOs for medical
care of children with severe diseases, incl. transfer and medical
care abroad 5,7 bln. RUR
· share of NCOs for children medical care in overall amount of funds
raised by 430 NCOs 65,0 %
Below there is a visualization of the average volume of funds raised per an NCO in 2013, mln. RUR:
Obviously, the outcomes of the analyses are quit approximate, being extrapolated on the hole non-commercial sector, but fit, in general, the long term empirical experience of the author of this paper in PSFR and in consultancy and trainings for “socially oriented” NCOs.
Would we expand the base for the analyses (number of NCOs) – (1), (2) and (3) will fall dramatically but share of NCOs for children medical care in overall amount of funds raised by socially oriented NCOs will be stable or even grow.
Basing on the experience – a couple of millions of RUR per year, raised from private sector by an average socially oriented NCO, dealing with children, but not involved in emergency medical care, normally used to be considered as a success.
Important to notice: these facts demonstrate not the law level of propensity to donate or “market size” but the absence of philanthropy culture and any experience of professional PSFR with NCOs.
2. Propensity to donate.
Absence or law level of public propensity to donate and “culture of philanthropy” (meaning public) and insufficient state support in the form of tax incentives (for companies, first of all) usually are pointed by NCOs and business community as main obstacles for effective PSFR and corporate “philanthropy”.
Meanwhile, outcomes of researches, executed by solid international specialized companies in 1st decade of the century, professional tests run by some prominent international NGOs in Russia FR teams and practice of professional PSFR disclose quit a different picture:
· there are no any considerable differences between local and “western” public in respond rates while professional public appeals and campaigning (Direct Mailing, F2F etc.) are executed with average one-time donation even bigger in Russia;
· traditionally and emotionally most “reactive” themes for local public to support are: (1) emergencies and medical care for children with severe diseases, (2) orphans and disabled children (public “attention” to disabled children has stable many years tendency to grow). There are some signs to assume that support to elderly people, youth and middle-age people in difficult life situations, incl. as a sample, pregnant girls and women or women with small children in difficult life situation, have the tendency to grow. Contrary to wide spread opinion practice also demonstrates that in many cases and especially in emergencies local public positively respond to the appeals for donations for foreign countries. Any problems for which mass culture and individual opinions could blame the persons with the problems themselves are still the most difficult to raise public support for (HIV, narcotics, alcoholism, conflicts with the law and any consequences);
· fluctuations in respect to gender, age, social and income groups have nothing extraordinary in comparison to “western” public. Geographical fluctuations in public propensity to donate to NCOs exist, obviously, but their understanding is basing just on occasional empirical experience: we note them, quit considerable sometimes, but we can just speculate on the roots. For example, Direct Mailing acquisition campaigning, donors data base building, development and conversion into pledge executed using the same approach and technics in Moscow and St. Petersburg demonstrated strong success in first case and close to “0” result in St.Pet. Any solid reasoning for that was not noted. With high probability one can assume that technics (communication package, first of all) should be different.
Corporate “philanthropy” really has some important specifics in Russia. To better understand them for practical FR reasons it worth to start with grouping of companies, working in Russia:
- “traditional” local major companies: mining, oil and gas, electricity, metallurgy, chemistry, machine building, transportation etc.: state participation in governance, huge cash flows and gross incomes, cross-regional diversification, great involvement in “social investments” in regions of presence and in support of national programs and projects under the governmental roof (culture, sport, social support etc.). Practically no chances for independent NCOs to raise financing as all “social investments” are channeled directly or through affiliated NCOs. Furthermore, social burden on these companies is actually extraordinary and, up to some estimations, “social investments”’ share in corporate income 10-15 times exceed such a share of corporate “philanthropy” investments (grants, donations etc.) with western companies. Extremely law chances for corporate FR by independent NCO.
- small and medium size companies with local roots. No or at developing stage “philanthropy” policy and strategy. Donations and grants for NCOs are relatively small and often spontaneous. Two extremes prevail: (1) decision on charity activities is made by owner or majority of employees on case by case and “emotional” basis or (2) company is attempting to use “philanthropy” as direct sales promotion (On-product CRM is the most popular). Few chances to get more or less considerable support for NCOs. The tendency is positive and growing number, especially medium size companies, are moving towards “partnering ability”.
- companies with foreign roots. Today - the best corporate partner for an NCO in respect to professional corporate FR. This category of local companies often follows and try to replicate mechanisms and policies of Mother Companies. In case a Mother Company has some kind of global partnership with an international NCO chances to establish local partnership for local NCO – member of international NCO network, - are the best. If there are few or no strings attached to a local company by Mother’s HQs – there are good chances for an NCO to start partnering by preparing and offering a “good solution” for the company’s objective to build their own policy and to launch corporate “philanthropy” projects. And as a rule such companies have such objectives and try to follow mechanisms and ethics of Mother Company at the same time.
Sales, volunteering, events, endowment funds.
Sales, volunteering and events as FR tools are applied quit often. Any commercial activities for NCOs are allowed by the Law in case income is invested in the NCO’s mission according to its charter. All these tools have common problems while being put in practice: ROI and ethics issues in case of events. Some of events being sometimes great success from FR, Coms and Advocacy points of view, however.
For the last 10 years endowment funds as a FR tool have been pro-actively lobbied by business community and government. Research executed by the author demonstrated extremely law effectiveness of such funds (at least for socially oriented NCOs) as a source of actual funds available for NCOs activities. In practice ROI is negative in all cases for such NCOs. Combined with critical ethical issues this fact leaves no perspectives for such form of FR.
4. Main obstacles for local NCOs to launch effective PSFR activities.
All classical PSFR tools are effective in Russia being implemented more or less professionally. DM, F2F, Pledge, Corporate partnerships, Major Donors, Legacy, Events, Sales, Volunteering, Internet – all of them can work with acceptable ROI and produce a considerable cashflow. The problem is that very few FR tools has been and can be approached professionally because of lack of experience, professionals, knowledge and, consequently, ability to establish realistic and comprehensive strategy and tools to implement it, supported by lack of investments in FR partly because of highly limited resources available, partly - because of highly fragmented and limited idea about what is professional FR at all.
Those, who tried DM in believe, that sending appeals on cool data base would bring them income stopped it after the first such campaigning “with losses”. Corporate and Major Donor FR is often considered as “find those, who have money, ask hard a little bit, get and forget…” or find a friend, a relative, an administrative lever (through governmental entities) to push company to make donation, or make as many and as often as possible calls asking for money. F2F (the most popular and effective FR tool in Russia before Soviet period) is not implemented at all today (with very few exceptions) because of often happened fraud and absence of knowledge on how to avoid it and not to be considered as fraudster yourself.
Such PSFR categories as donors and data base development, donor service, conversion into pledge, brand and brand awareness building, corporate partnerships, professional fundraising etc. are mostly out of vision at all.
Related to the above FR administering inside NCOs is below any critics. In most NCOs there is no FR position at all. FR is run by those who has “less working load for the moment”. One seldom could find an NCO with fixed FR staff. More often FR is considered as an additional among other duties of a staff member. Coms for FR are out of any question etc., etc. NCOs board members, being quit often good networkers, at the best are trying to be fundraisers themselves (partners, friends etc.) but have no idea on how to develop strategy, to establish system, what are tools to implement, who and how should do it.
FR staffing is another critical issue for independent NCOs to launch professional PSFR. The only source locally is to get people of appropriate qualification from corporate sector (Direct Marketing, B2B, sales, marketing, PR etc.). But limited recourses in combination with lack of understanding of FR as a business process make NCOs, in particular, to offer potential candidates compensation (salaries) at the level 3-5 times lower than that on the labor market for starting positions with companies. Does not work, obviously.
· The private sector charity giving potential in Russia is huge;
· Highly limited number of NCOs run professional FR;
· All proven (“classical”, incl. Internet) FR forms and techniques work (if applied more or less professionally);
· Keeping in mind the importance of NCO brand awareness for FR and advocacy, it is worth to notice that PSFR provides highly effective channels and tools to develop it a short time;
· Foreign connections of NCO, if any, could play controversial role, but being adjusted in Coms in a proper way can push up PSFR results considerably;
· The strongest public positioning of NCO in respect to PSFR – local entity with foreign participation, operating in the framework and supporting (developing) state social policy and programs or stepping out of the framework to make this policy and programs more comprehensive;
· PSFR for advocacy works badly in the Country. Advocacy can be packaged sometimes with corporate partnerships or inbuilt as a component in some more or less tangible project;
· Any NCO, supporting children and families with children in need and capable to launch professional FR (incl. governance, strategizing, appropriate FR and Coms staff, NCOs’ philanthropy culture building etc.) could not escape a success in the field. In case of no critical weaknesses in any of the conditions above NCO can realistically reach (from zero) level of 40-70 mln. RUR annual gross PSFR stable income in 2-3 years and secure further sustainable growth with increasing share of input from public donations.