Some Russian companies reducing charity budgets

Moscow 11 March 2015

Last month some companies reduced their budget for supporting charities by 20%

The Donors’ Forum are continuing to monitor developments in corporate charity in Russia against the background of the actual economic situation. The results of the February survey show that the majority of companies are trying to maintain their budget at 2014’s level but some have reduced their budget by more than 20% because of the unstable situation in the market and a serious reduction in profits.

Representatives of major companies, who are responsible for social policy, have been surveyed monthly since December 2014 as part of a project called Crisis Barometer. There are two sets of questions relating to financial and social policy respectively. In February, 30 companies replied. The number of respondents does not vary significantly from month to month. In December 2014 there were 30, in January 32 and in February, 30. The Forum has explained that the reason for the paucity of respondents might be the disinclination to reveal changes in process or the fact that final decisions have not yet been taken.

One of the most important questions on the form is about change to the budget in comparison to the previous year. The February survey showed the extent to which changes had been made. Additionally, respondents were asked to say what had caused an increase or decrease in corporate charitable spending.

30 respondent companies said that they were maintaining their budgets at the 2014 level. However, almost equal numbers of companies indicated that their budgets had changed positively or negatively (six had cut back and five had increased provision). Percentage increases in budgets varied significantly depending on the factors involved. Those associated with inflation varied from 1 to 5% whilst those associated with development of a company’s charitable programme could be 20% or more. However, decreases were really significant in five of the six cases – over 20% – which in all cases the companies attributed to instability in the market and a serious decline in profit.

Furthermore a number of companies pointed to the ongoing probability of their budget having to be revised mid-year depending on the financial indicators.

One of the ways of dealing with the crisis that companies are looking at is by way of partnership. The January survey revealed that a third of them are planning to develop partnerships with other business organisations active in the social field. In February, 28 out of 30 respondents indicated that they were implementing charitable programmes and projects in partnership. However, half of those surveyed were expecting an NGO to be a key partner (in 2014 over 60% of participants in a project, Leaders of Corporate Charity, observed that they worked with major NGOs). Second most popular option was partnership with government. Furthermore, 12 respondents commented that their partners were other companies.

Lately, the theme of partnership is being articulated more and more often at federal level and in the regions, and in business and other sectors. The eleventh annual conference on    charity in Russia sponsored by Vedomosti was totally devoted to partnership in the charity sector. Participants in the conference said that partnership was one of the most effective ways of combining resources to resolve problems. At the same time there are not enough examples of actual partnerships in the charitable field in Russia.  Specialists hope that the next stage will consist of a move from discussing complications and terms according to which partnership might be developed to concrete action.

Author: Yulia Vyatkina

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