21.06.23 Review

Dwindling Philanthropy: Russian donations have decreased in scale, but they still demonstrate a willingness to donate

Since the full-scale invasion of Ukraine, charitable activity among Russians has declined, according to monitoring conducted by the 'To Be Exact' project. Total donations in May 2023 were nearly the same as last May, but only due to the low base effect. Over the course of twelve months, donations decreased by 4% instead of the usual growth, amid high inflation. The human rights sector is particularly vulnerable, and with the ban on the activities of Greenpeace in Russia, the ecological sector will be further affected. Prior to this, charitable contributions had been steadily rising in recent years, but the 15 months of war have disrupted this trend. The main factors here appear to be the economic crisis, increasing government pressure on the nonprofit sector, and 'war-related emigration,' with active donors among its main contingents. However, the decrease in donations is likely not indicative of a decrease in willingness to donate. For instance, during a media marathon in support of political prisoners, an astounding sum of over 34 million rubles was raised in a single day.

In May this year, Russian charitable donations decreased by 13%. This decline is, in itself, seasonal, typical for the May holidays and the start of summer, but it has become part of a larger negative trend. The results of a survey conducted as part of a joint project between the Higher School of Economics and the 'Help is Needed' Foundation, called 'NGO Pulse,' indicate that one in three NGOs faced a reduction in funding from individual and corporate donations last year. Overall, 38% of the NGOs surveyed experienced a decrease in funding. Data for the first half of 2023 indicates that the reduction in charitable payments and initiatives has continued, albeit unevenly across different sectors of organisational activity.

May 2023 marked the first month when the total amount of charitable donations from Russians through the CloudPayments service stopped declining, when compared to the same period last year, according to a review by the 'To Be Exact' project of the 'Help is Needed' Foundation. However, this is due to the fact that donations have been declining since the start of the war, and the year-on-year growth in donations in May 2022 was negligible. Thus, the baseline became low.

The 'To Be Exact' project regularly analyses online transaction data from the online transfer service CloudPayments in terms of donations made by Russians to public organisations. Analysts note that over the past fifteen months since the full-scale invasion of Ukraine, charitable donations have not returned to pre-war levels, and there is no trend towards recovery. Over the past seven months, the average donation amount was 8% less than in the same month of the previous year. However, the overall sum collected over the past 12 months is only slightly lower than in the previous period, a mere 4% decrease. Analysts have attributed this to the fact that the decline is more pronounced for one-off donations, while recurring donations have been less affected. However, it is important to note that, at the beginning of 2022, Russia experienced a sharp surge in inflation, which resulted in a significant reduction in the actual capacity of NGOs over the past year. Prices for services and goods had increased by an average of 15% by December 2021.

The findings of a blitz survey conducted by the 'NGO Pulse' project at the end of 2022, which took a sample of 227 organisations, confirm that the financial health of public organisations has taken a turn for the worse. While 31% of respondents reported an improvement in their financial situation over the year, 38% stated that it had deteriorated. Almost one in two NGOs relying on private donations and business contributions faced a reduction in charitable contributions in 2022. The study also highlights the fact that NGOs experienced a significant increase in their workload (75% of respondents) and number of beneficiaries (59%) in 2022, in addition to their deteriorating financial state.

In terms of the thematic focus of NGO activities, organisations engaged in the provision of social services and medical assistance (43%) as well as work on human rights and ecological issues (42%) were more vocal about the decline in funding, according to the 'NGO Pulse' data. NGOs with a cultural, educational, or sports orientation (29%) reported the issue less frequently. However, the data from the 'To Be Exact' project for May and April 2023 provides some additional insights. Assistance to socially vulnerable groups has grown consistently compared to the same period in the previous year (+18%). The share of this sector within all the donations to the non-profit sector has also increased, accounting for 30% of the total in May 2023, compared to an average of 24% in 2022. Donations to human rights organisations usually rise in response to high-profile events, but despite the abundance of such cases, these donations showed no growth in May 2023 and turned out to be the least significant among the beneficiaries of charitable payments. This is evidently linked to the pressure on the human rights sector, artificial reduction of active organisations, and their fundraising abilities.

Donations related to environmental issues usually respond to the media landscape. However, despite the fact that forest fires spread three times faster than usual in early May, this event had little impact on the volume of charitable payments. It is noteworthy that, on May 19, the Prosecutor General's Office declared Greenpeace, the largest ecological NGO in Russia, which has traditionally played a significant role in fighting forest fires, an 'undesirable organisation,' effectively rendering it illegal. Analysts believe that this will lead to a notable decline in ‘ecological’ donations in the future. Moreover, on June 21, the authoritative World Wildlife Fund was also declared an 'undesirable organisation’.

Charitable donations in Russia, 2022-2023, growth in total collections, % compared to the same period last year

The stagnation and decline in philanthropy in Russia, which had been growing steadily in previous years, appears to be influenced by three factors: political pressure from the authorities on the non-profit sector, the economic crisis, and the phenomenon of 'war emigration'. A significant portion of those who left Russia consists of individuals who typically play an active role in charitable giving. This reduction seems to be a response to the changing political environment. Some donations are being channelled through covert channels to aid those affected by the war in Ukraine, Ukrainian refugees, and the Ukrainian army. The decrease in charitable payments does not indicate a diminished willingness among Russians to donate, as demonstrated by the astonishing sum of over 34 million rubles raised in a single day during a media marathon in support of political prisoners organised by independent Russian media outlets on June 12.