В Кремле объяснили стремительное вымирание россиян
Endowments in Russia are entering a new era Назад
Endowments in Russia are entering a new era

Endowments in Russia are entering a new eraClear legislation on giving money for social purposes will create a real revolution in Russian philanthropy

Igor Semenikhin
A PARADOX: there"s a lot of money in Russia, except there isn"t... at least, not when it comes to investments in education, healthcare and science. In the past two years the state has finally begun to face these issues, and started to realise projects of national priority.
But there"s just one element clearly lacking. As in all civilised countries, any philanthropy requires an endowment... an unusual word for Russian ears.
The advantage of an endowment is the transparent nature of its activities. Since an endowment"s resources can only be directed towards that organisation for whose support it was founded, it is not possible to use it as a tax write-off (when taxes are lessened due to expenditures supposedly spent on charitable donations).
In Russia, one of the first endowment funds is being created to support The Graduate School of Management at the St. Petersburg State University. First vice premier and trustee of national projects Dmitriy Medvedev has long urged the implementation of an endowment system in Russia. To all intents and purposes, it is precisely thanks to his reformer"s approach that endowments are becoming a reality for Russians.
At the end of last year, the State Duma passed the law On the System of Organising and Using Specific Capital by Non-profit Institutions, or endowments - one of the most popular forms of financial support in the world.
As Medvedev, who was supervising the drafting of this legislation, emphasised: "this means a real revolution in Russian philanthropy".
The subject has been brewing for a long time. The issue is that legislation turned philanthropy in Russia into a complex and onerous business. First, the current Tax Code stipulates practically double taxation on contributions.
First they tax the donor"s profits, then the recipient pays tax on the profit or revenues, even if the recipient is a charitable organisation. Second, the development of a "market" for philanthropy in Russia is held up by the relative irresponsibility of donation recipients.
A charitable organisation is not obliged to report to the donor on the money it has received - or on how wisely or effectively it has spent the money. The charity does have to make an account to the tax inspectors, of course, but this is completely different.
Direct contributions are a complex, troublesome matter, requiring special knowledge and qualifications which the donor, generally, doesn"t have.
As a result, corporate social responsibility - so consistently encouraged by President Vladimir Putin - comes up against insurmountable obstacles. This is despite the fact that a significant part of Russian enterprises are prepared to donate sizeable sums for social purposes. The On the System of Organising and Using Specific Capital by Non-profit Institutions law promises to remove many of the problems that have developed in the sphere of philanthropy. Its main innovation is to free from taxation contributions to endowments, revenues from investing the fund"s resources, and resources received by targeted institutions from the endowment. However, the donating commercial institution does not receive any tax breaks whatsoever. Medvedev, commenting on this provision of the law, said: "Clearly, the central question was whether or not to give donors tax breaks. A wide set of dangers was connected with such breaks, and so we managed to agree that the donor would not receive any. But this is a question of judicial culture, a question for the future.
"I hope that we will see a time when we can make allowances for such tax breaks without having to panic about the basis of our system of taxation."
The law stipulates a mechanism for control over the use of donated resources. Monitoring is carried out via a Council of the Use of Specific Capital, which is formed from the specialised organisation that holds the specific capital, and representatives from the donor firms, the institutions receiving the funds, and public representatives.
In this way, the new law largely removes the two main impediments to developing widespread philanthropy in Russia: double taxation of the donor and lack of control over the use of donated

The central question was whether or not to give donors tax breaks...but this is a question for the future"
- Medvedev


resources. It is worth noting that the circle of potential recipients under the new law is broad, but limited. These will be organisations and institutions active in the spheres of education, science, healthcare, social assistance, culture, art, and archival work.
Such a choice seems logical, for it is precisely these activities - more than all others - that form the social climate in society. And it"s no accident that in education and health, projects of national priority are being realised.
The minimum amount of capital has been established at 3m roubles (about #163;58,700), with a year allocated for collecting it. Specific capital accumulated in this way is subject to investment, which should provide a regular income. Within three months of accumulating the determined sum, the fund must choose a management company.
"We are going the same way as the legislation on pensions, which sets limits on the management company participation," explained one of the developers of the law, Economic Development and Trade Ministry department director Said Batkinbekov. "Most likely, it will be those management companies, who at present are allowed to investing pension savings".
One of the main problems in the non-profit sector is the non-transparency of its activity. This is often what drives companies from investing. According to expert opinion, the new law will make it easier to monitor investments in the social sphere.
It includes serious conditions to enable the transparency of non#172;profit social organisations holding specific capital, so that the donor can always get information on what his resources were spent on.
The chairman of the Russian Union of Industrialists and Entrepreneurs, Aleksander Shokhin, also suggests that this is the effective mechanism that business has long been waiting for.
The income received from the investment activities of the management company will have to be used for charitable purposes according to the donor"s demands.
The concept of endowment proposed by the law appears to be strict. But Medvedev said: "We simply don"t want to compromise the idea.
"We could have prepared a more liberal document, tried to use it to settle a host of completely diverse situations, add options that aren"t in the law. As a result we would have had a very complex document, on the basis of which abuses would be duplicated."
Nevertheless, the law itself assumes certain risks. Why would the authorities, knowing this, pass it? The First Vice Premier gave a clear answer: "The expected social effect of this document"s appearance should, in our opinion, override the possible budget losses and, for non-profit organisations, create Jong-term, planned sources of funding with all the attendant positive effects."
This testifies to the promising transformation of the Russian leadership"s entire political philosophy.
And with regard to specific mechanisms that allow the minimisation of losses to simple thievery, the law stipulates that the activities of the management company are under the close attention of the tax and financial organs.
According to Medvedev"s estimates, thousands of endowments will be working in Russia within a year, primarily in the spheres of education and healthcare.
Experts anticipate that the positive effect of the law coming into force will not be limited to the development of Russian philanthropy: it is hard to overestimate the precedent of freeing certain spheres of activity from taxes.
If the suggested innovations become established, there is a chance that in the near future the state will implement tax breaks for investors who are ready to put money not only into the social sector, but into production as well.
And this would give the Russian economy a new stimulus.


ROSSIYSKAYA GAZETA
26.04.2007
Igor Semenikhin

Rossiyskaya gazeta distributed with The Daily Telegraph


Док. 301523
Опублик.: 08.05.07
Число обращений: 1030

  • Медведев Дмитрий Анатольевич
  • Семенихин Игорь Васильевич

  • Разработчик Copyright © 2004-2019, Некоммерческое партнерство `Научно-Информационное Агентство `НАСЛЕДИЕ ОТЕЧЕСТВА``