In late 1995 CAF Russia began work on an ambitious project: to help create a first community foundation in Russia. But it is hard to establish a community foundation in a country where there is no sense of a community. Two years on the prospects seemed almost hopeless. Despite the initial setbacks, a community foundation has now been established in Togliatti and steps have been taken towards establishing one in Moscow.

The first place we tried was Togliatti, a young city on the Volga about 1,000 kilometres south-east of Moscow. We organized a series of training seminars for non-profit organizations there and made efforts to attract interest among the local business community. Togliatti City Hall seemed supportive from the very beginning. Almost two years later we brought a group of foreign funders to the city to finalize long-term negotiations and to establish a community foundation with the endowment capital donated by foreign foundations, the City Hall and local businesses. It ended up with a drunken evening when some important local people, glasses of vodka in their hands, expressed their views on the future of Russia and on foreign support for social change. There was no place for a democratic community foundation in their picture of things. We left depressed, feeling no confidence in our own country.

Progress in Togliatti

Three months later we received a call from Togliatti, from the small team of supporters who had helped us over the past two years: ‘We have launched a promotional campaign among the public about the community foundation concept. We have organized more negotiations with business representatives. Local companies have promised to donate about $50,000 for the first round of grants and then we will think about an endowment. But first we must prove to the local community the value of community foundations. And, most important of all, the first Board meeting is scheduled for mid-January 1998!’ I thought I was dreaming.

The board meeting on 15 January was attended by representatives from banks, other local companies, local government, the project team and CAF. The community foundation was officially launched, and documents signed, on 19 March.

Who controls the new organization?

Ultimate control of the organization will rest with the Founders’ Council – the founders consist of four banks, a car manufacturing firm and CAF. The board, largely advisory, will include representatives of the founders plus the mayor and other local government officials and a non-profit sector representative. Day-to-day decision-making and grant-making will lie with the Grants Committee, which will include representatives of local government, local non-profits, community groups and the general public as well as the founders.

The missing players

For the first two years at Togliatti we had tried to keep the interest of all the key players (local government, local businesses and foreign foundations), to make them agree on the concept and give money for the foundation, and we had tried to avoid any compromise with the foundation’s basic principles in this hard process. But we had forgotten about two other key players: the public and the local non-profit sector. The whole process had not been as public as it should have been. Most people in Togliatti did not realize that we were struggling to help them create their community foundation. We assumed that there was a community in Togliatti but we did not know that community. We thought that we knew the local non-profit organizations and failed to notice the small community groups. We did not realize what an impact on the whole process these ‘missing’ players could make.

After the collapse of negotiations at the drunken party, the local project team realized that they could not rely on the ‘big fish’; they decided to ask for public support. This is what we should have done from the beginning.

Bringing in the public

The public campaign started by the local team attracted great attention from local people. It made full use of the local media. Items on community foundations appeared in the local press and on TV; anyone who was interested was invited to come along to the project team office, ask questions and find out more; anyone interested in running a community project was invited to contribute their thoughts.

The campaign made the whole process of trying to set up a community foundation open and publicly controlled, which helped to stall any possible efforts of local businesses or local government to bring the foundation under their personal control. The public discussion revealed how many small community groups already existed in Togliatti. And it proved to local businesses that giving to the foundation would be a good thing not just because it would please local government officials but because it would be a good way for businesses to become a real part of the local community.

Starting small-scale, and local

Another important mistake we had made was wanting to put a large amount of money into the foundation from the very beginning. We felt that this would ensure that it was taken seriously and that a community foundation was not just another small, poor Russian fund. But we did not take into account that the main difference between our model and existing Russian foundations lay not in the size of the capital but in the principles on which the capital was to be obtained and managed.

The second time round it was generally agreed that there should be no endowment initially, as those running the foundation would not have the experience to manage a large sum of money. After the first grant round local businesses and local government would be encouraged to provide endowment funds, and only then would foreign funders be asked to contribute. Experience suggests that potential local funders will not come forward if they feel that foreigners will provide instead. A decision was made that local funders should supply at least 50 per cent of the endowment.

The difficulties of setting up a community foundation in Russia

The idea of starting a community foundation in Russia seems idealistic in the extreme. Russia does not have a ‘community’ in the Western sense of the word. People living together in one place (a street or a city or even a country) do not consider this place as their own, do not have a tradition of caring about their surroundings. Even the word ‘community’ is impossible to translate into the Russian language. The Russian non-profit sector can be characterized by its lack of links with the wider population and by its poor management. Russian philanthropy is based largely on business donations which are unplanned and unstructured and in many cases dependent on local government opinion. If the mayor or local governor considers a project worthy of support, local companies will come up with the money. It is a safe and ‘politically correct’ way of doing good – called by the public ‘a charitable racket’.       

The community foundation concept does not fit within this environment. It is a model which is based on distribution of donations according to democratic principles, community cooperation and traditions of legal and above-board management of charitable money. But precisely for those reasons it is the model that holds out most promise of effecting real change in the current poor practices of the Russian non-profit sector and in Russian philanthropy.

Russian democracy lacks practice on the local level. Endless seminars and conferences, and study tours of local officials to Western countries, cannot establish democratic traditions in everyday Russian life. Only institutions whose existence and operation are based on democratic principles can create a tradition of democracy and prove its value. The Russian non-profit sector itself lacks any system of legal financial institutions which will not only concentrate and increase local resources but also serve as intermediaries between non-profits and donors. Existing indigenous foundations do not usually have any endowment; rather than distributing money on a competitive basis they fundraise for the programmes which they implement themselves.

Russian charitable organizations lack public support. They are like strangers: nobody in the community knows what they are actually doing. When they do become publicly known (usually through a scandal stirred up by the press), this tends to create only negative impressions.

A universal panacea?

Community foundations can begin to address all these issues. They can bring democratic traditions because they are based on wide community representation on the Board and a democratic system of decision-making; they create procedures for the control and distribution of money that are open to public scrutiny. They have endowment funds which allow them to serve as grant-making foundations and as intermediary bodies between local donors and charities.   

It would certainly be a great mistake do see community foundations as a universal panacea. But they can play a really valuable role in changing communities in places like Russia or Eastern European countries – where small, independent voluntary groups cannot rely on wide individual support because individual giving and volunteering are not developed; where charities cannot develop cost-effective paid services because of widespread poverty and an inappropriate tax system; where government support is not the best source of money because government has not yet learned how to support without controlling. 

The lessons of Togliatti

The lessons we have learned in Togliatti might seem obvious to an outsider, but to us –new to the field as we were – they were like landmines, although hopefully they could not stop our move forward. We did not see that the local businesses in Togliatti liked the idea of a community foundation just because the local government liked it. We were supporting a ‘charitable racket’ system without any intention of doing so. We did not want to see that the local government wanted to stick the community foundation in its pocket – a useful addition to the local budget – and control the distribution of money. Indeed, local government officials did not even see that there could be another way of viewing it. Even people from our project team, who seemed to know much more about the concept than the City Hall, assumed that decisions about grants would be made by the local government.

Moscow – the next attempt

In summer 1997 we started the process of trying to create a Moscow community foundation, and we are trying to keep in mind the lessons of Togliatti. Inevitably we began again from the top and began by talking to local government officials and the local business community. But as we became involved in the process, we understood that we were again in danger of missing an important point – that we were creating a community foundation.

The meeting in July 1997 involved mostly representatives from the banks, but since then a much broader-based working group has been formed. Meetings have been held with local companies, local non-profit organizations, community groups, local government officials. A Most Bank staff member visited the UK for a week in October to visit UK community foundations and see how they operate. We are working slowly, trying to prepare the ground, and at this stage we are keeping the process as local as possible.

The Mott Foundation and other funders have been approached for support for this development work. One strand of this is to run seminars on corporate philanthropy, with the aim of introducing companies to a new, more embracing vision of social responsibility. A study visit by the working group to New York Community Foundation is also planned. But, as in Togliatti, substantial endowment funds will be sought only once the foundation has acquired some experience of grant-making. The first round of grants is planned for December 1998.

The future?

I started this article by saying that it is hard to establish a community foundation in a country where there is no sense of a community. I can say now, after over two years of experience, that there is a community in Russia but it does not call itself a community and it does not understand itself yet. The process of creating of community foundations – in Togliatti, in Moscow, in St Petersburg ( where we hope to start this year) –  will help local communities to understand who they are and what they can achieve. This will be possible only if the process is open to the public and does not rely totally on goodwill and support from the big fish.

Moscow foundations surveyed

Since a Moscow community foundation was proposed, several companies have questioned the need for ‘yet another foundation’. So CAF Russia carried out a telephone survey of 35 Moscow foundations. The findings confirmed the need for a local foundation:

• Of the 35 foundations surveyed, only 18 were actually operating on a regular basis.
• Not one had any form of endowment.
• Not one had any funds to distribute as grants.
• Most were ordinary non-profit organizations providing services; some were self-help groups.

Olga Alexeeva is Co-Director of CAF Russia.