The New Russian Philanthrophy

In the twentieth century, Russia performed two supremely difficult somersaults: at the beginning of the century, it cast off monarchism; at its end, it embraced capitalism. In both instances, the foundations of society, and therefore society itself, were fundamentally altered, not always for the better.

The new Russia, which has only existed since 1991, has created much from scratch, but has also resurrected many things from the Russia of old. And so it is not clear if the grand philanthropy we are now witnessing from New Russia’s oligarchs is a continuation of Old Russia’s traditions – of the Morozovs, the Rukavishnikovs and the Tretyakovs – or if it is a merely a vanity bazaar, unfolding on a grand scale in order that said oligarchs may insert their names into history.

More than likely, it is a bit of both.

According to the Charities Aid Foundation,* on average just 18 percent of adults in Russia engage in some form of charity. Only 6 percent of adults give money, and some 20 percent participate in volunteer work, while 32 percent give some type of direct assistance to those in need. In 2010, an estimated $3 billion was funneled to 107 Russian charities (not including long-term, multi-year support for projects).

There are 301 charity organizations in Russia, yet only 107 of them open their books for outside auditing. The turnover of these 107 organizations in 2010 was R23.4 billion. Their largest sphere of activity was environmental protection: R3.6 billion, followed by health and medicine (R1.3 billion) and education (R524.1 million).

Russian companies, according to CAF, donate from $15-25 million per year to charity. Yet it would be more accurate to call such donations, which are aimed at “ensuring social stability” in the companies’ respective regions, “compulsory expenditures” requested by local authorities, also known as the “charity racket” that state companies naturally cannot avoid.

On the whole, Russia’s humanitarian rating is woefully inadequate** and ranks it 138th in the world, just above Egypt and Turkmenistan. Yet we should not forget that, thanks to the Bolsheviks’ bizarre totalitarian experiment, the notion of humanitarianism was all but eradicated in Russian society. Thus, in modern Russia, philanthropy is really only in its infancy. For example, the belief that only the Abramoviches of this world should give to charity, because those less fortunate have not the means for it, is gradually fading away, thanks to the proliferation of examples to the contrary.

Today, many are starting to recall that Russia was once a country of humanitarianism on a grand scale. Urged on by the great reforms of Tsar Alexander II, between 1860 and 1914 the philanthropic movement in Russia reached a size unrivaled by any other European power. At the beginning of the twentieth century, there were 628 charity organizations in Russia, including 427 for adults and 201 for children, and some 239 almshouses.

Volunteerism in Russia today is also abysmally low. But that is changing, and rather rapidly. In just the last year there has been a spate of actions indicating a waking of civil society: the nationwide cleanup (15,000 persons in 120 cities) initiated by blogger Sergei Dolya; Alexei Navalny’s donation drive for Rospil – a grass-roots battle against corporate and governmental corruption; the defense of Khimki Forest; the public firefighting activity during the summer of 2010; the efforts of doctor Liza Glinka to aid the poor and homeless; and the activation of websites like together.ru. Each successful initiative of this nature becomes an example to others, encouraging yet more collective action.

As Denis Volkov recently noted, in his Levada Center report, “Prospects for Civil Society in Russia,” based on interviews with leaders of non-governmental and civil organizations in 2010-2011, “it is significant that the number of citizen initiatives is growing, that more charity, altruistic and volunteer organizations directed at helping people and animals are being started up and are developing.”

An important factor restraining the growth of humanitarian activity in Russia is the fact that Russians simply don’t trust non-profits. Nearly 64 percent of Russians are convinced that the money they give to charities will not be used as designated. This is the legacy of charity actions like “The Federation Fund,” which in 2010 and 2011 held gala concerts attended by glittering VIP stars from the West (at one of which Prime Minister Putin infamously sang Blueberry Hill in English). [bit.ly/putinsings] The recipient of millions of rubles from the state budget, the Federation Fund was reputed to be raising money for 20 medical clinics for children. Only later was it revealed that the Fund was not raising money for the clinics but merely raising awareness of their situation.

In the end, the main characteristic of the multicolored blanket that is Russian humanitarianism is that it is primarily distinguished by private giving, and mainly from those who are rather well-off. Today, many prosperous Russians (since the collapse of the Soviet Union, Russia has given birth to some 33 billionaires and 90,000 millionaires) consider giving to charity an investment in their reputations, a way to make their mark on history and help their compatriots in the bargain.

Peculiarities of Russian Philanthropy

Of course there are others who have set up funds on a smaller scale than the “Big Four” profiled on these pages. Thus, Suleiman Kerimov (net worth $7.8 billion), who was in a car crash and suffered from severe burns, donated €1 million to the Pinocchio Fund, which works with children who have severe burns. He went on, in 2007, to found the Suleiman Kerimov Foundation, which invests in initiatives to strengthen communities and help those in need, particularly in Russia. Between 2007 and 2009, it gave out over $164 million. Kerimov has also been a major supporter of sports, especially soccer, in his home republic of Dagestan.

Oil and metals magnate Viktor Vekselberg and his wife created the fund “Age of Good,” which focuses on healing psychological ailments. Nikolai Tsvetkov, president of the UralSib finance corporation, founded the Viktoria Fund, which aids children’s shelters. Equally interesting are the philanthropic initiatives of Alfa-Bank, as well as those of Peter Aven and Mikhail Fridman.

While the generosity of the major and minor named funds is notable, it is also indicative of the limits to charity. None of the funds noted above advertise any giving to “civil society” or “human rights” causes. The fate of oligarch Mikhail Khodorkovsky, who gave some $60 million to civil society causes, serves as sufficient warning that humanitarians should keep their giving non-political.

At present, the financing of human rights groups in Russia is almost entirely by American and European governments and foundations. For example, Memorial receives support from the Soros Fund, the Ford Foundation, the Adenauer Fund, the Solzhenitsyn Fund and others. A spokesperson from Memorial said that donations from Russians, both private citizens and funds, are small and as a rule designated for research, education and historical activities, not for human rights activities. All donations for human rights purposes given by Russian citizens, Memorial said, is done under conditions of strict anonymity.

Helsinki Watch, the oldest human rights organization in Russia, also receives most all of its support from western sources such as the EC, the MacArthur Foundation, the National Endowment for Democracy, the Open Society Institute and USAID. A source at Helsinki Watch reported that several persons approached the organization recently, interested in organizing a fundraising campaign to support the organization’s basic mission. The money, as a rule small donations from private Russians, would be given anonymously.

And, for some, anonymity is par for the course. Far from all Russian celebrities or businesspeople seek to make their charitable donations openly. Some help simply because. For example there is the
pomogi.org fund and Gifts of Life, to assist critically ill children and youth, organized by the actress Chulpan Khamatova and Runet pioneer Anton Nosik. And the previously mentioned together.ru, a humanitarian aid website founded on the basis of full transparency and designed to raise money for specific, concrete causes, not unlike kiva.org.

Therefore, while on the surface it appears as if the greater part of charitable giving in Russia is now being done by a handful of famous oligarch-businessmen, it is quite possible that their activities may kick-stat philanthropy in Russia on a scale equivalent to what it was in the nineteenth century. This would only have a positive effect for the development of Russian civil society, helping to patch some of what was lost during the tumult of the twentieth century. RL

* The CAF study, based on Gallup World Poll data, showed, interestingly, that the level of humanitarian activity in a country correlates most directly with how happy the residents of that country feel about their lives, not with how rich or poor those societies are.

** The nominal GDP of Russia – the world’s 11th largest economy – was $1.465 trillion in 2010, so $3 billion in annual giving represents two-tenths of one percent of the country’s economic output. By way of comparison, in 2010, Americans gave $290.89 billion to charitable causes (73 percent of which was from private individuals; Giving USA). Since the U.S. nominal GDP in 2010 was $15.227 trillion, that represents 1.9 percent of economic activity. The U.S. and Russia rank 41st and 42nd, respectively, in the World Bank’s Gini ranking of income inequality of nations.

Dmitry Zimin

This 78-year-old pioneer of the Russian mobile telephone market founded VimpelCom and the Beeline brand, which is the second largest cellular carrier in Russia. A scientist (he participated in building Moscow’s ABM defensive system), laureate of the Popov Prize of the Academy of Sciences, multimillionaire and patron, Zimin was the first in post-Soviet Russia to give all his wealth to charity, founding the Dynasty Fund.

Nearly 60 when he turned full-time to business in 1992, Zimin founded VimpelCom as Russia’s first cellular phone company. In 1996, it became the first Russian company listed on the New York Stock Exchange. Beeline, the consumer rebranding of VimpelCom, is now one of the three most valuable brands in Russia and one of the 100 most valuable in the world.

In May of 2001, Zimin stepped down as chairman of VimpelCom and gave most all of his $520 million to his Dynasty Fund.

“We cannot compete with the West in innovations,” Zimin said, “nor with China in mass production. Therefore it seems to me that science is the entry point for our country, and in the first place the fundamental sciences, those which demand cultivation of the intellect and not resources. This will allow us to get ahead in innovative technologies. The Dynasty Fund therefore invests primarily in science and education.”

The Fund seeks to support the fundamental sciences and education, to create better work conditions for primary researchers, and to popularize science through print and internet publishing activities, and through sponsoring science festivals and lectures. “I sought to create a fund which would support intelligent people. This is the world’s greatest resource. I traveled to CERN and arrived just as the collider was being cooled down. And it turned out there were scientists there who had benefited from Dynasty Fund grants. That was a very pleasant thing.”

The past decade, Zimin noted, has seen an unprecedented growth of wealth in Russia, accompanied by a widening of the gap between rich and poor. “At the same time,” he said, “there has never been such a severe intellectual degradation. These are the sorts of records Russia has been setting recently.” If Russia does nothing, Zimin said, it will surely fall into the ranks of Third World nations. “The main task,” he said, “is to occupy a worthwhile place in the global competition for talented, competitive young people... Talented people are both rare and the thing of greatest value today in Russia, and among all of humanity. The successful countries will be those where conditions are created for the realization and honest competition of human talents in all spheres of endeavor.”

Mikhail Prokhorov

In 1993, at the age of 28, having graduated just three years previous from the Russian Finance Institute, Mikhail Prokhorov, together with Vladimir Potanin, engineered the takeover of Norilsk Nickel by Onexim bank, which Prokhorov chaired. It was the first of several acquisitions that made both men very rich.

Prokhorov and Potanin separated their business interests in 2007, and Prokhorov concentrated his assets in the Onexim Private Investment Fund, of which he is now president. The fund owns large shares of Russian Aluminum, Polyus Gold, Intergeo and a range of innovative projects, including the Ë-mobile hybrid car. In 2010, Prokhorov was Russia’s third richest person, with a net worth estimated at $18 billion, making him, at 46, the 39th richest man in the world. That same year he acquired the financially distressed New York Nets basketball team.

In 2004, Prokhorov founded the Mikhail Prokhorov Fund, which is headed by his sister Irina, a publisher and philologist. The Fund focuses on supporting culture in the regions, integrating them into the international cultural space, increasing the intellectual and creative potential of the provinces, and supporting artistic groups such as the Maly Drama Theater, the Russian National Orchestra, and the State Theater of Nations. In 2010, the Fund presented the “Unknown Siberia” festival in Lyon, France, seeking to break down stereotypes about Russia and engage in Russo-French cultural exchange. The Fund also provides generous support to the translation of Russian literature into English, through its TRANSCRIPT program,* as well as other literary initiatives.

“The main focus of our work,” Prokhorov said, “is local culture. Our task is to kick-start, to do things so that people from the regions can achieve their goals.” To that end, the fund worked from 2004 to 2006 almost exclusively in Norilsk, expanding to Krasnoyarsk region in 2006 and to other Siberian regions in 2008. In 2010, the Fund had a budget in excess of R321 million.

“‘Pure’ charity,” Prokhorov wrote on his blog, “is helping those who are in difficult situations, those who need care and support. This is the natural human need to do good. And in this the successful businessman can distinguish himself as a man who simply has greater possibilities to provide assistance.”

At press time, Mikhail Prokhorov announced he would be making an independent bid for the Russian Presidency.

* Full disclosure: RIS Publications, which owns Russian Life, has received two translation grants under the TRANSCRIPT program.

Vladimir Potanin

Born into a family of high-ranking Soviet officials, Potanin, now 50, heads the management company Interros, which owns large shares of Norilsk Nickel, Rosbank, Prof-Media and others. With a personal net worth of just under $18 billion, he was, in 2011, the fourth richest person in Russia.

After getting his start in the “family business” in the Ministry of Foreign Trade in the 1980s, Potanin moved into private business in 1990, and in 1996 was appointed first deputy prime minister under President Boris Yeltsin. He oversaw the controversial “debt for shares” program, which made him and several other connected business people (e.g. Mikhail Khodorkovsky, Boris Berezovsky, Rem Viakhirev, Mikhail Prokhorov and others) very wealthy.*

Potanin’s humanitarian fund, focused on education and cultural initiatives, was created in 1999 and was one of the first such private funds in modern Russia. He gave most of his wealth to this fund, becoming the second very wealthy Russian to do this, after Dmitry Zimin. Potanin was also one of the first to seek prestige in the West through his charitable giving, most notably donating $1 million a year to the Guggenheim in New York, on whose board he sits.

“I consider myself a person who is capable of changing things for the better in the sphere where I have worked for a long time,” Potanin said, “and particularly in the realm of charity. I will not pass on my inheritance. Capital should work to the benefit of society.”

One of the most important dimensions of the Potanin Fund is its grants and stipends program, where it supports talented students and promising teachers at Russia’s leading higher education institutions. It also gives financial support to museums seeking to expand their capabilities (e.g. Kolomna Pastille Museum, the Pushkin Museum in Mikhailovskoye and others).

* For a superb account of this period in Russian history, see Sale of the Century, by Chrystia Freeland (Crown, 2000)

Oleg Deripaska

The 41-year-old owner of Basic Element, Deripaska is Russia’s “Aluminum King.” Basic Element has over 250,000 employees on five continents and Deripaska is worth an estimated $16.8 billion, making him the sixth richest Russian, according to Forbes Russia.

Fresh out of school (he was trained as a theoretical physicist) Deripaska worked as a metals trader, and by 1994 had acquired enough shares to take over the ailing Sayanogorsk Aluminum Plant, which became his first step in building a huge multinational business in metals, automotives, manufacturing and financial services.

In 1998, Deripaska founded Volnoye Delo, which quickly became one of Russia’s largest, if not the largest, private charity foundation. The Deripaska Fund now oversees some 400 humanitarian programs, with an annual budget of R6.2 billion, wholly financed by Deripaska. It is active in education and science, cultural and spiritual renewal, health and sport. It has given support to both Moscow and St. Petersburg State Universities; the Hermitage, the Bolshoi and Mariinsky Theaters; the Serafimo-Diveyev, Sretensky and Don Monasteries; and the New Russia Orchestra of Yuri Bashmet. It supports students, teachers, the preservation of monasteries and churches, and, interestingly enough, anti-aging drug research.

In April 2010, Deripaska announced that he was giving to Volnoye Delo two-thirds of the bonus ($62 million) he received from the Russian government for his successful management of Rusal’s IPO in Hong Kong. The funds were invested in the 20 regions and cities where the Rusal aluminum conglomerate operates, helping, among other things, to open service enterprises.