Dmitry Medvedev: “Our task is not to bury NGOs”
On 21 April, Dmitry Medvedev, Chairman of the United Russia party held a virtual meeting with representatives from non-profit organisations on additional measures to support NGOs during the pandemic.
What measures are already being explored?
“Almost every type of NGO has been hit, including those providing social services. Many are, understandably, unable to carry out their work virtually. This can cause difficulties for organisations when submitting their accounts for audit, especially if they receive state subsidies. Many NGOs commit violations when carrying out their work without registration. We will discuss this with the Ministry of Justice”, said Dmitry Medvedev.
According to Medvedev, the benefits which the government is introducing for small and medium sized businesses must in some way be extended to NGOs. Medvedev said that the party has already sent a package of suggestions to the government for providing support to the non-profit sector, these include:
- Deferral of rent payments for the use of state property
- Moratorium on fines related to non-fulfilment of state contracts in full
- Moratorium on fines related to failure to report grants in full
This package is however still insufficient, says Medvedev. “There have been suggestions that a moratorium should be introduced on all inspections of NGOs, except for work that is related to people’s lives and health. The government has already passed a decree of this nature, but it only affects NGOS that had fewer that 200 employees in 2019. I believe that this limitation is not justified and the law should be extended to all NGOs regardless of how many people they employ. My colleagues and I will discuss the issue”, said Medvedev.
The party’s Chairman noted that the authorities are working on delaying loans and reducing insurance premiums on extra-budgetary funds (During the meeting it was revealed by the Ministry of Economic Development that Russian NGOs pay 30 billion roubles a year in insurance premiums. Ed.)
Delaying tax payments and advanced loans for certain NGOS (those eligible will be confirmed by the government) is being discussed. “It may make most sense to extend these measures to all NGOs. This will need to be considered and discussed”, said Medvedev.
A federal law imposing a moratorium on collecting fines and penalties for housing and utilities services as well as a deferral on financial reporting has already been passed. It is essential, Medvedev stressed, for government to introduce bylaws as soon as possible and so that these changes are implemented.
What is being considered
Amongst the measures “worth considering”, Medvedev outlined the following:
- Subsidies for paying salaries of NGO employees;
- Soft loans for paying salaries of NGO employees;
- State subsidies for maintenance costs;
- Recommendations that government employment bodies consider organisations that carry out social work.
Medvedev clarified that the last measure was essential to avoid “increasing the level of unemployment”.
Insurance premiums for NGOs
Elena Topoleva, Chairman of the Russian Federation Public Chamber Commission for development of the non-profit sector and support for socially oriented NGOs and Director for the Agency of Social information noted that NGOs are the “sector with human values at their core” and social organisations are now in great need of support.
Topoleva stated that insurance premiums for NGOs must be reduced. She said that currently fewer than 5% of NGOs are covered, but all socially oriented non-profit organisations now need to be insured.
According to research carried out by the All Together Foundation, regional NGOs would benefit most from a 20% reduction in the rate of insurance premiums (this has been calculated against the minimum wage). This is linked to the fact that employees of regional NGOs receive such low pay, noted All Together’s director Kira Smirnova.
“Moreover, any reduction must be introduced on a long-term basis and not just for a few months: NGOs will not be receiving the same quantity of donations any time in the near future” – added Smirnova.
The All Together Association’s research showed that 95% of the NGOs surveyed had witnessed a 30% fall in donations on average. This is due, amongst other reasons to the fall in the number of individual donations and the amount donated. The number of repeat donors has also decreased. “Long term projects are under threat: people are choosing to donate towards combatting coronavirus. When donations dry up, costs rise and the number of people needing care increases,” said Smirnova.
The state is not funding NGOs for the services they provide in society
Anna Bitova, Director of the Special Childhood Foundation, a centre for medical pedagogy, drew the party Chairman’s attention to the following issue: the state has now ceased funding for the social services NGOs provide and is even delaying paying compensation to organisations who have provided these services.
“It had been agreed that the city would fund our rehabilitation services. We are continuing to provide these services, but payments have stopped. Refunds are not happening in time – in short it is a disaster. This must be resolved, at the very least for those organisations that are providing essential social services”, – said Bitova.
The Chairman of the National Foundation for the protection of children from abuse, Aleksandr Spivak, agreed that there is an “issue around removing subsidies and payments when it is not absolutely essential to do so”.
“Moscow is currently limited to a very tight budget: Sobyanin has implemented extraordinary financial measures. Deputies must treat each organisation on a case by case basis, rather than automatically cutting off funding,” said Spivak.
Medvedev confirmed that he was aware of the problem: “In many cases, buying public services from NGOs has indeed stopped completed”. He added, “it is always a question of difficult decisions”, and it is a decision being made by regional authorities. The party Chairman promised that he would tell those authorities “not to cease buying public services unless absolutely necessary, as otherwise NGOs will not retain their employees and the organisations themselves will not survive”.
Business being rewarded for charitable activities
Ekaterina Shergova, Director of the charitable foundation Life’s Gift raised the question of tax relief for companies that are involved in charitable work. NGOs have been discussing this for some time but the authorities “remain wary”, said Shergova.
“One proposal we have suggested is that donations are registered as part of a company’s expenses, as oppose to the current situation where donations come from a company’s net profit. Another possibility might be that if a company is willing to provide an NGO with free sponsorship, this would be attributed to advertising expenses (and not therefore a charitable donation). Moreover, a partial reduction in the rate of income tax could be introduced. This already takes place in the Samara, Pskov and Perm regions. We would seek to roll it out across the whole country”, said Shergova.
These benefits could not be exploited by fraudsters given the transparency of the non-profit sector as NGOs “could not function” without reporting to the Ministry for Taxation and the Ministry of Justice, Shergova added.
Medvedev responded that this proposal “would not be met with enthusiasm by his colleagues in government”. “Additional methods for governance and transparency would have to be introduced alongside this proposal.”, said the party chairman.
Support for organisations protecting employees
Marina Shilkina, director of the Philipp, a network of private nurseries and schools in the Greater Moscow area discussed the problems that the private education sector is facing and requested assistance in paying employees’ wages. The network has 20,000 employees, 80% of which are women.
“I am still paying all my employees. I have not fired anyone. We are trying to take out loans, but we have been turned away everywhere. There is no reason whatsoever why we have been refused loans. We are not included in any of the support given to small and medium sized businesses because we are an NGO and now holidays are approaching: 56 days for those working in schools, and 42 for those in nurseries”, said Shilkina.
According to Aleksandr Spivak it is essential that the organisations that have retained their work force are supported. “NGOs can only function when they have a team of like-minded and motivated individuals. This does not leave them in a strong position in the labour market.”
Spivak suggested a rethinking the support provided to the sector: “Perhaps, we could introduce a bidding system for state grants for supporting key personnel that play a crucial role for their employer”.
As the meeting concluded, Dmitry Medvedev remarked that the system of NGOs in Russia was now “developed”.
“Our task is not to bury the system. It is essential that the fight against the pandemic does not lead to an end in NGO activities. NGOs are now the most vulnerable institution in society. Big business will survive, small businesses and NGOs cannot do so without support.” – said the party chairman.