Philantropy in the context of the economic crisis

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In April-May 2009, CAF Russia, Zircon research group, Donors Forum and PricewaterhouseCoopers, in conjunction with the Royal Netherlands Embassy in Russia, conducted the Philanthropy in the context of the economic crisis survey. The aim of the survey was to collect information needed for analysing the current situation in the not-for-profit and charity sector in Russia.

The research focused on three key issues. In what way has the crisis already had an impact on charity organisations? What are the expectations of organisations in the current economic environment and how is the strategic response to these expectations being formulated? What are players in the sector demanding from both each other and external stakeholders (including the government) in terms of implementing charity-related anti-crisis strategies?

The crisis has had varying degrees of impact on companies’ charity budgets: 11 out of 36 companies did not change their charity budget, while 13 reduced it—with a reduction of more than 25% in many cases.  The majority of companies (29) expect corporate charity budgets in general to be cut by 30-50%. Even though the number of requests for aid has on the whole remained the same, over the past six months many companies have reduced the number of programmes and the number of recipients and changed their aid priorities.

On a more positive note, many companies are exploring the option to assess how effective charity programmes are and the effect that such programmes have on communities. Companies surveyed in general intend to continue with their charity initiatives, taking the view that it is important during difficult times to demonstrate resilience, as well as support those who need aid now more than ever. In many cases, companies will begin engaging their own employees to implement charity initiatives.

Survey respondents were practically unanimous in their view that tax incentives to encourage companies to give to charity would be among those measures that would help preserve and develop a corporate charity culture. Support from the government is also viewed by most companies as being a critical factor.

How prepared not-for-profit organisations were for the crisis varied—organisations either successfully diversified their sources of funding or did some serious thinking to devise strategies that would best enable them to attract funding. They also saw the government as being a key contributor during the downturn.

Amid a significant reduction in funding (reported by 61% of those surveyed, with a more than 25% decrease mentioned by 52% respondents) and further cuts expected (84%), the majority of not-for-profit organisations intend to continue with their efforts and develop further. The survey showed that funds were not entirely prepared for the challenges posed by the economic crisis.

Most funds maintain that they will not change their programme priorities (7), amounts of funding and the geography of their activities. They have already reported a reduction in their own budgets (5)—at least in with regard to the administrative component—and they do not rule out the option of future cost cutting on programmes; some organisations even mooted the possibility of closing down.