Stimulating social investment in voluntary sector


14 January 2015

Moscow.   During 14 and 15 January an All-Russian Forum has been taking place in Moscow on the theme “The State and Civil Society: Cooperation in the Name of Development”. The latest changes in the law on non-commercial organisations have become the principal theme for discussion at this forum. The  Council of the President of the Russian Federation engaged in a round-table discussion regarding the development of civil society and human rights, and there participants in the forum discussed the question of how to encourage non-governmental agencies to support non-commercial organisations.


At the present time, and in the context of their own social responsibility, many companies are investing not only in non-commercial organisations, but also in

projects and programmes in the social sphere, both governmental and non-governmental.  Such investments, which are oriented towards obtaining both social and economic results, are called social investments.  However, today, as participants in the forum observed,  there is no understanding as to what these social investments actually are, nor which groups of potential investors they could benefit.  Moreover, there is an insufficient legal basis for this, insufficient support on the part of citizens and institutions, and, furthermore, the infrastructure for this is lacking.

Tax incentives are one of the most effective means of stimulating companies, business generally and private foundations to invest their own resources in non-commercial, that is to say, voluntary sector, organisations.

“The state has allowed donors, private individuals, to count donations in the form of capital endowments against tax. To me it seems very timely indeed to create such a system of counting donations against tax in the case of other potential donors as well. For example, a company might want to donate money to a university, not for its day-to-day running costs, but to form an endowment. Or that company might seek to make a similar kind of investment in a local cooperative or society in the form of a directed capital fund.  In those cases the company would gain a tax exemption equivalent to the amount of the donation. This is a very productive and effective means of operating, and one that is easy to administer.”  This view was expressed by Larisa Zelkova, President of the V. Potanin Charitable Foundation and Deputy General Director for Social Policy and Relations with the Public at “Norilsk Nickel”.

This viewpoint was also endorsed by Yulia Mazanova, Director of Social Policy and

Corporate Communications at the company “Metalloinvest”.

“The proposal to lower the tax threshold is a priority issue and an important one which, today, defines the relationship of the state towards business’s social investments”, says Mazanova.

She considers that the state should also support those voluntary sector organisations which have already completed particular projects with an input from business. Already now business itself finds it necessary to create and develop non-commercial organisations in those regions where they are lacking. Mazanova points out that in doing this, business in effect fulfils the function of state institutions. “Today we are creating voluntary sector organisations which are essential to us for our work in the  regions, we are investing in the training of specialists, investing in progress. We don’t see any infrastructural support essential for the functioning of local voluntary sector organisations that will assume the role of solving the main key problems.”

According to Elena Feoktistova, Director of the Centre for Corporate Social Responsibility and Non-Financial Accountability, the money spent by business on educational programmes for voluntary sector organisations must be exempt from taxes.  She emphasizes that in making available such concessions, it is necessary to  make available to businesses the kind of conditions in which they can truly take advantage of the concessions under discussion.

As participants in the forum believe, in order to attract to voluntary sector organisations a greater volume of private financial means, the state must make more appealing the concessions which already exist for those legal entities which make donations. Maria Chertok, the Director of Charities Aid Foundation (CAF), Russia, says, that almost nobody knows about the concession relating to property deductions.  Besides this, Chertok draws attention to the fact that everywhere in the world voluntary sector organisations have resources to draw on other than just donations.

When voluntary sector organisations engage in commercial activity, this is a sign of their being effective and that their services are in demand.   It shows that they’re able to work and that their management is set up for action.  However, in her country, says Maria Chertok, there are huge obstacles in the way of voluntary sector organisations engaging in commercial activity.  For example, there is a separate accounting system,   which, in real terms, wholly cancels out all the advantages of a simplified system of tax.

Participants in the forum have suggested keeping – and possibly even extending – the Ministry of Economic Development’s competitive applications for support for infrastructure projects.

Resource centres are the most powerful, effective hubs for development, and here basic training can be pursued and specialist meetings or supervision can be organised, linking voluntary sector organisations to social services and to the development of social entrepreneurship. The most fundamental problem is that projects connected to the cultivating of resource centres require long-term financing, principally to cover administrative costs and salaries. Marina Mikhailova, Director of ‘Garant’, the Arkhangelsk Centre for Social technologies, says that there needs to be a resource centre in each region.

By Yulia Vyatkina

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