Corporation
of New York
Vol. 3/No. 1
Fall 2004
Literacy Coaches: An Evolving Role
Philanthropy in Russia: New Money Under Pressure
The International
Reporting Project:
Giving Journalists A New Perspective On the News
Also in this issue:
The PASS Act Would Fund Literacy Coaching and other Literacy Efforts
Past Issues:
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Philanthropy in Russia: New Money Under Pressure
The Vladimir
Potanin Charity Fund
Vladimir Potanin, president of the holding company Interros that owns
Norilsk Nickel—as well as Rosbank, and companies in other sectors
of the economy, including insurance, publishing, real estate and agriculture—was
the first to create a private charitable foundation that is structured
and operates somewhat similarly to a western philanthropic foundation.
The Vladimir Potanin Charity Fund was established in 1999 and began work
in 2000. Potanin, who was born in 1961, graduated with a degree in economics
from Moscow’s prestigious Moscow State Institute of International
Relations, long a training ground for top Soviet cadres, in 1983. He is
one of Russia’s wealthiest men (estimated by Forbes to be worth
$4.9 billion), and considered one of the top ten businessmen in the country.
On average, over the last three years, Potanin has given $10 million of his personal funds through his foundation, to projects and programs in education, culture and the arts. Potanin’s flagship programs are scholarships and grants to university students awarded in two-stage, open competitions. Currently, over 1,400 students from over 60 Russian universities—“Potaninists” as they are called—are receiving stipends of 1,500 rubles (approximately $500) a month—quite a decent salary in much of Russia today. The foundation also awards scholarships to 20-30 pupils who place in international academic Olympics, seeking to continue Russia’s tradition of excellence in education. Additionally, Potanin’s foundation provides scholarships to students at military academies and to the Russian Orthodox University (a secular university, rather than a seminary, which provides degrees in many rare subjects, such as ancient languages.)
Almost uniquely among Russian businessmen, Potanin has sought to position himself as an international cultural philanthropist and patron as well. In 2002, he made possible the purchase of one of Kazimir Malevich’s Black Squares by the Ministry of Culture for the Hermitage Museum, which has little of the Russian avant-garde in its collection. The same year, he became a member of the board of trustees of the Solomon R. Guggenheim Foundation and chairman of the board of directors of the new Hermitage-Guggenheim Charitable Foundation established to support joint projects by the two museums. In 2003, Interros and Potanin’s foundation were major sponsors of the large Russo-French exhibition in Paris “When Russia Spoke French,” in honor of the tercentenary of St. Petersburg; and Potanin was elected chairman of the board of trustees of the Hermitage Museum. In addition to the high profile support of the Hermitage, the Potanin foundation has just completed a pilot grant competition for smaller, innovative projects from museums across the country.
The lines between giving by Potanin’s foundation and the Interros group itself are somewhat blurred—Interros public relations director Larisa Zelkova oversees Interros giving and is executive director of the Potanin Foundation as well, a merging of duties not uncommon in the Russian corporate world. A total lack of tax breaks and regulation of charitable giving provides no incentive to separate corporate and charitable foundation interests. No Russian charities or philanthropies as yet have endowments because the interest on endowments, even when that income is devoted exclusively to charitable events and projects, is taxed at approximately 40 percent. Donations of up to 25 percent of pre-tax income are allowed only if the recipient is a state institution; if the recipient is an NGO, the donor may not deduct anything. Furthermore, if money or even equipment is donated to a non-governmental organization that runs a children’s home or shelter, the organization is taxed on the value as though it were commercial income. As Kortunov and many others note, the lack of tax deduction may not be that important for the really huge, wealthy companies, but it is serious obstacle for small and mid-size companies wishing to become involved in corporate philanthropy.
To try and promote a culture of small and mid-size business contributions, CAF has worked hard with businesses and the authorities in the regions to establish a number of community foundations (there are presently 16 in all). This model allows businesses and individuals to pool resources with the local authorities, and to receive additional funds for projects through grants from larger foundations, whether foreign or Russian. In this model, the crucial issues of equitable grant-making practices, accountability and effectiveness are addressed, and the political pressure is spread across a variety of donors. At present, given the highly charged, political atmosphere of business-government relations, community foundations may prove a particularly fruitful model for support of at least some aspects of Russia’s civil society.
The Fund for Cultural
Initiatives
Despite the potential hazards, the example of leading philanthropists
such as Potanin and Khodorkovsky has clearly had its effect on their associates
and other businessmen. In March 2004, a new type of private foundation
was launched by Mikhail Prokhorov, general director of Norilsk Nickel.
Prokhorov, not yet 40, is himself estimated by Forbes to be one of Russia’s
wealthiest individuals, next in line after Potanin. The Foundation for
Cultural Initiatives (The Mikhail Prokhorov Foundation), supported by
$1 million annually of its founder’s personal funds, is the first
non-commercial philanthropic (or charitable) organization in the Norilsk
region, an area of permafrost located north of the Arctic Circle. Adding
to the inhospitable climate is the fact that Norilsk Mining Company—which
has one-third of the world’s nickel, and produces copper, platinum,
palladium, cobalt and gold—has been one of Russia’s most serious
air polluters. Nor is the city’s history a source of comfort: founded
at the height of Stalinist forced industrialization, Norilsk, like many
areas of Siberia, was home to the Gulag.
Prokhorov’s foundation focuses on modernizing and stimulating Norilsk’s cultural and intellectual environment. The five priority areas include structuring municipal spaces (clubs, galleries, Internet cafes, etc.); science and education (support of education programs, scholarships for gifted children, library acquisitions, museums, publications on local history, schools for non-native Russian speakers, research, etc); sports and health, which includes scholarships for young athletes, recreational facilities for children, support of drug rehabilitation centers; support for print and Internet press development; and artistic initiatives such as festivals, exhibitions, literary evenings and theater. The foundation will run both operating programs and grant competitions in all five areas.
Not only does the Foundation for Cultural Initiatives have an extremely cogent mission statement and well-articulated series of priorities, its structure is well balanced and clear, designed to minimize pressures on the decision making process by rival local constituencies. There is a president (Mikhail Prokhorov), director (Norilsk inhabitant Irina Prokopenko), an advisory board consisting of eminent Muscovite and Norilsk professionals in a variety of disciplines and an expert council consisting of four very well known Moscow experts in the cultural field.
One of these, who no doubt had much to do with the overall concept of the foundation, as well as its thoughtful structure, is Prokhorov’s sister. Irina Prokhorova, an important cultural figure in her own right, founded the Moscow publishing house New Literary Review, which has published hundreds of serious scholarly and academic books, as well as two of the most highly respected academic cultural journals. Prokhorova, a philologist by education, has had a great deal of experience working as a program expert in Soros-funded translation and publishing programs; she is a former president of the Russian Booker Prize Committee and is on the advisory board of Potanin’s personal foundation. “We want to have a real impact on the city,” says Prokhorova. “In part because it was artificially created, Norilsk has a very highly educated populace, and despite all the difficulties of living there, many people either do not want to leave, or have no other place to go. They love their home. We feel it is very important to create a real cultural infrastructure in Norilsk, create conditions in which different communities and groups can express their interests by having an active influence on the look of the town, and the content of the social and cultural processes that take place in it.”