Oct 16, 2007: Bureaucracy Puts Breaks on Charity

By Galina Stolyarova

Staff Writer

While businesses have seen profits shoot up as Russia’s economy goes from strength to strength, bosses have shown little inclination to share new wealth with the country’s poor, and charitable giving is hit by a tangle of bureaucratic obstacles.

Lev Paneyakh, general director of ASK, a large insurance company, uses the phrase “shadow charity.” This means that the intended benefit of charitable activity is not actually delivered.

“Our company made several attempts to launch charitable projects but we usually found that our potential partners’ enthusiasm soon evaporated because of ridiculous bureaucratic hurdles and absurd legal restrictions,” Paneyakh said. “Sometimes you must either help secretly — to avoid dealing with all sorts of inspectors — or not help at all.”

His company once offered to pay for a microwave oven for a children’s clinic, where the most gravely ill patients were on the top floor and food became cold on the journey up to the ward.

“In the end, the only legitimate solution was for the donors to buy the microwave and bring it to the clinic,” said Tatyana Dolinina, marketing director of ASK. “Not all sponsors will take the trouble to find a solution if they are told their money can’t be accepted.”

State-funded clinics are not allowed to manage the money they receive from donors and are barred from accepting medicines except from state agencies.

“In one clinic the management told me that a payment we offered for medicines for a sick child would be cleared by the state in six months’ time,” recalled Yelena Gracheva, of the St. Petersburg charitable foundation Advita, which specializes in helping children with cancer. “But it was at that very moment that the gravely ill child needed that medicine.”

Liberal politician Yury Tomchin, a member of the Public Chamber which reviews the activities of the legislature and administration, said the elaborate bureaucratic restrictions, meant primarily to catch cheaters, illustrate the level of mistrust between the Russian state and the people.

“It’s an open secret that Russians don’t trust the state, and the feeling is mutual,” Tomchin said. “Every ordinary citizen is treated as a potential criminal by officials, and people have to go to great lengths to dispel the unjustified suspicions of state officials.”

According to President Vladimir Putin, the problem is a lack of corporate responsibility. He first voiced this thought in early 2004 in a speech urging large Russian businesses to open their eyes to the needs of the rest of society. The incomes of Russia’s richest 10 percent are nearly 17 times those of its poorest 10 percent.

But what Putin called corporate responsibility, politicians were soon nicknaming “the Faberge syndrome.” This followed a public gesture by the oil and metals tycoon, Viktor Vekselberg, who paid $90 million for a collection of Faberge jewellery, which was then put on public display in the Kremlin’s Armory Museum.

Vekselberg was widely acclaimed for his patriotism by members of Russia’s political establishment.

Putin’s slogan, “Nado delitsya” or “We have to share,” is often repeated by members of his administration. But its repeated use has annoyed many oligarchs, who accused the Russian government of trying to saddle big business with alien functions. Many business leaders also insist they are entitled to get a return on their charitable actions.

According to the Charities Aid Foundation Russia, approximately half of Russian companies have charity budgets, although the size of those budgets varies enormously. A survey of 20 midsize and large companies by the independent ROMIR market research agency in St. Petersburg this year reveals a clear pattern, said the agency’s Anna Khmelyova.

“Businessmen feel charity is being imposed on them, like paying taxes, and at the same time private business is still widely regarded as dishonest by both average Russians and the authorities,” which hardly puts them in a giving mood, she said.

“For these reasons they say they would rather not get involved in charity.”