The impact of private philanthropy on cultural policy at the local level in Russia

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FEDERAL STATE AUTONOMOUS EDUCATIONAL

INSTITUTIN FOR HIGHER EDUCATION

NATIONAL RESEARCH UNIVERSITY

HIGHER SCHOOL OF ECONIMOICS

Faculty of Social Sciences

Master thesis

The impact of private philanthropy on cultural policy at the local level in Russia

Field of study 41.04.04 Political Science

Master's program `Political Analysis and Public Policy'

Department of Public Policy

Ksenia Olenina

Moscow 2017

Table of Contents

Introduction

Research design

Literature review

1. Theoretical aspects of philanthropy

1.1 Corporate citizenship, social responsibility and philanthropy: definitions of concepts

1.2 Stakeholder's theory of philanthropy

1.3 Carroll's CSR pyramid

2. Cultural policy and corporate philanthropy in Russia

2.1 Cultural policy in Russia

2.2 Corporate philanthropy formation and development in Russia

2.3 Government regulation of corporate philanthropy (legal aspects)

2.4 The role of the state in corporate philanthropy

2.5 Political environment for philanthropy

3. The impact of corporate philanthropy in cultural sphere on the regional level

3.1 Potanin's fund and the field of public policy in Russia

3.2 Timchenko's fund and its activities in cultural sphere

3.3 Gridchinhall fund and its activities in cultural sphere

3.4 Mechanisms of interaction between the state and philanthropic actors within cultural sphere

3.4.1 Regions in which corporate philanthropy is developed

3.4.2 Background of corporate philanthropy and cultural policy in Perm

3.4.3 The impact of cultural philanthropy on the regional level

3.4.4 The case of Perm state art gallery

3.4.5 Mechanisms of interaction between philanthropic actors and their stakeholders

Conclusion

Bibliography

Appendix 1

Introduction

Economic, social, political and cultural transformations of the last decades have formed prerequisites for the emergence of philanthropic actors and institutions in our country. The process of philanthropy development in Russia is in its process of establishment. Due to the shift toward market relations, Russian cultural policy also has undergone changes. It cannot be seen as only governmental priority. We perceive state as the main actor which formulates agenda, main priorities in its policy. But nowadays other actors like corporate and private charitable funds have come to the forefront. They also can take responsibilities for citizens' well-being. Such actors may interact with the state in the form of public-private partnership or as separate actors which undertake the responsibilities of charitable giving in order to help people or other organizations. Their main responsibility is to provide public goods.

Very often such actors being independent are supported by the governmental structures and they together participate in the decision-making processes. Sometimes the owners of such funds can influence the decisions by the means of political lobbying. All this enables us to call such organizations full-fledged actors of policy, in particular, public policy because mostly they act and behave in the interest of public.

Applicability of this issue is caused by both factors - the necessity of theoretical and methodological reflection and practical application.

Modern cultural policy is a field of interaction between different actors according to which policy strategies are being formulated. These changes are in a need of concepts and mechanisms definition of project implementation within cultural sphere from the prospective of their impact on outputs in social sphere together with providing succession of local and territorial development and supporting variety of innovations in the sphere of culture.

Almost all the large transnational companies publish reports regarding developments in this area. The philosophy of social responsibility spreads to the financial markets, where private investors while decision making process of cash investment take into account how the business matches ethical or environmental criteria.

Practices of corporate giving are also becoming widespread in Russia. They are not of local character and exist not only in the capital. Being spread in different regions, they have become all-Russian. What is important, corporate funds act mostly in different regions. So, in our country business allocates significant amounts of money to support social and charitable projects, development of territories and communities. According to experts and media reports, Russia's big business allocates 10-12% of their funds on charitable projects. According to the British Charities Aid Foundation (CAF), the Corporation's share in the total amount of charitable aid provided in Russia is about 75%. The total amount of corporate philanthropy in Russia is estimated at about $3 billion a year Corporate philanthropy, RIA Novosti, 2015 .

These figures give the evidence that it is important to investigate the phenomenon of corporate giving in Russia and its influence on territorial and local development. Аs most of the projects are implemented with the participation of the state, it is necessary to view philanthropic activity in Russia in the context of policy.

Taking into account the fact that corporate philanthropy in general has been more or less widely researched, it was decided to narrow the subject to the cultural sphere. We will analyze the impact of implementation of cultural projects with the help of corporate funds on the regional development and regional cultural policies.

Research problem

A great number of professional scientists, social workers and even the third sector activists concentrate on historical and theoretical points of view of a corporate philanthropy problem. Institutionalization and professionalization of the non-profit sector followed by the formation of systemic approaches to charitable activities determined the background for new current trends and research facilities. Foreign scientists have analyzed the conditions and mechanisms of corporate philanthropy. Among them are economic aspects of the charity, social behavior of donors, their motivations, etc. Examination of political aspect of philanthropy in Russia is of current importance because here corporate philanthropy has its own specific traits due to the specific relations and the role of state in the social life. Several research studies have been developing the concept of mechanisms and conditions of corporate philanthropy functioning but they have not fully elaborated the issue of interaction between corporate donors and public authorities at the municipal level in particular. The problem of several determinations (specific traits, mechanisms of influence on political processes and particular methods of political activity from donors) is not fully examined yet. What is more, the role of corporate philanthropy and its legal framework for interaction between corporate donors and state at the municipal level is also under investigation. In light of this it is necessary to conduct detailed study of specific interaction between corporate donors, authorities and local communities, in which the latest have an impact on the implementation of private foundations' projects and vice versa.

Research goal

To assess the impact of philanthropic foundations in Russia on territorial development.

Research question

How does the activity of private philanthropic foundations at the municipal level influence the development of regions in the cultural sphere.

Research tasks

1. To reveal whether private philanthropic foundations are the actors of public policy or not

2. To assess the effectiveness of interaction between private philanthropic foundations and the state

3. To find out the priorities and mechanisms of interaction between corporate funds and local communities at the municipal level

Methodology

A set of several methods and approaches was utilized in this research. Within the framework of actor-based approach the private philanthropic foundations are seen as competent actors of public policy. Among different actors of public policy are state, local administration, NGOs, NCOs, etc. Policy actors have sway over agenda formation. They formulate behavior strategy. This approach enables us to view philanthropic foundations as important element of civic society which has an impact on public policy agenda in Russia.

Another approach is comparative one. It is used to contrast and compare several private philanthropic foundations' initiatives in cultural sphere.

One of the methods is case-study. We are to compare two initiatives of corporate funds (2014-2016) “Kulturnaya mozaika” (Cultural mosaic) by Timchenko foundation and “Menyajushiysya muzei v menyajushemsya mire” (Changing museum in the changing world) by Potanin foundation and one case of fund of culture development “Gridchinhall”. What is more, both foundations provide scholarships for workers in cultural sphere as a part of these two projects.

What is more, it is supposed to evaluate the particular case of Perm State Gallery and the participation of local citizens, activists and state in the process of implementation of several projects within this gallery. It will enable us to assess the mechanisms of projects implementation of cultural sphere and to find out whether the governmental structures support, work together of avoid actors of corporate philanthropy.

Literature review

This literature review provides an overview of the current academic research in the field of philanthropy and giving in the cultural and heritage sectors, in the context of the state's role in private giving in different countries, especially in USA, Western Europe and Russia.

We shall start from the outlining data regarding theoretical aspects of philanthropy. The definitions of corporate citizenship, philanthropy and corporate social responsibility we were collected from the literature of authors which proposed the definitions of notions by themselves. A. Carroll “The Pyramid of Corporate Social Responsibility” and H. Bowen in his book "Social responsibility of a businessman" proposed the definitions of the notions. The national standard GOST R ISO 26000-2012 "Guidance on Social Responsibility" helped to formulate the definitions of notions according to their Russian understanding. Also, M. Hopkins “Corporate social responsibility and international development” and research of A. Gautier, A. Pache “Research on Corporate Philanthropy: A Review and Assessment” were used to identify the definitions of such important concepts.

The next part is theoretical. Investigating the stakeholder's theory, we utilize the monographies of such theorists like H. I. Ansoff “Corporate strategy”, R. E. Freeman “Strategic management: a stakeholder approach”, A. Ullmann “Data in Search of a theory: a critical examination of relationship among social performance, social disclosure and economic performance”.

We used Carroll's corporate social responsibility theory which was described in his book “The Pyramid of Corporate Social Responsibility: Toward the Moral Management of Organizational Stakeholders”. Moreover, we applied the theory of special interest corporatism which was developed by S. Rokkan, F. Schmitter, G. Lembruch.

To investigate the nature of philanthropy in several countries including Russia came to collected data of several reports and statistics from “2014 Coutts Million Dollar Donors Report”, “Philanthropic Freedom Pilot Study: Russia Country Report” enables us to get a general picture of a vibrant philanthropic initiatives in our country. Further we focus on the information concerning correlation of governmental structures and philanthropic foundations. The report “Effects of Government Support of non-pro?t institutions on aggregate private philanthropy: Evidence from 40 Countries” by S. W. Sokolowski provides us with full understanding of donors and recipients' behaviors. This paper examines the effects of aggregate government payments to non-pro?t organizations on aggregate private philanthropy. The author formulates four hypotheses proposing four behavioral models of private philanthropic giving. Among them are no net effect (null hypothesis), crowding in (positive effect), crowding out (negative effect), and “philanthropic ?ight” or displacement (negative effect across different subsectors). These hypotheses were tested against the evidence from 40 countries collected as a part of a larger research project aimed to document the scale and ?nancing of the non-pro?t sector. The data showed that, governmental payments to non-pro?t institutions have a positive effect on aggregation of philanthropic donations. But a ?eld level analysis revealed evidence of “philanthropic ?ight” or displacement from “service” to “expressive” activities by government payments to “service” of non-profit sector. The four behavioral models outlined in the report are not mutually exclusive. The same person or organization may engage in different types of behavior under different circumstances.

The next section of our research looked in depth at legal aspects of philanthropy that emerged from the literature as being of particular significance to philanthropy and giving in general and in Russia in particular. Here we appeal to the research of Z. Aleskerov “Problems of legal and administrative regulation of public-private partnership”. The author highlights the main issues of public-private partnership development in Russia as a new form of investments in the corporate projects. He investigates main legislation loopholes and unstable legal framework. He came to conclusion that there isn't any specific and detailed legal framework. In this sense, it is necessary to improve the mechanisms of administration in the area of corporate philanthropy what will enable to raise efficiency of interaction between state and business circles. What is more, it was inevitable to use Russian legislative acts like Federal and regional (local) laws and decrees which concern philanthropic activities in Russia.

An important aspect is political lobbying was raised by P. Schmitter, A. Lubimov “История лоббизма в России/Istoriya lobizma v Rossii”. Research devoted to the corporate lobbying in politics was described by G. J. Fooks, A. B. Gillmore in their research “Corporate philanthropy, political influence and health policy”.

Among the literature concerning cultural policy, we can define the book by D. O'Brien “Cultural Policy: Management, Value and Modernity in the Creative Industries”. In this book the context of cultural policy combining government and social life is described. The other important reports for this research are “The value of planning” by Adams D. and “Perspectives of cultural development: new models of cultural policy” by M. Dragicevic-Sesic. Another important book for research is “Rethinking cultural policy” by J. McGuigan. Public cultural policies of the past and present are examined here. It is stated that culture and policy are not only prevailing governmental agendas. Also, the information regarding initiatives of Timchenko's and Potanin's fund in cultural sphere was available for analysis at their web-sites.

Talking about contribution of Russian researches to the investigation of philanthropy concept we can name such scholars like V. Benevolenskiy, I. Mersiyanova, T. Sidorina, I. Solodova, A. Tumanova and L. Yakobson. This monography provides an objective information about modern practices of corporate philanthropy in Russia. The vast empirical material characterizes social practices of philanthropy in Russia - volunteer activities, corporate welfare practices and problems of formation of the donor community. Monography by I. Semenenko and S. Peregudov “Корпоративное гражданство: концепции, мировая практика и российские перспективы/Korporativnoe grazhdanstvo: kontseptsii, mirovaya practika I rossiysiye perspektivy” helped to get the general understanding of corporate philanthropy and citizenship in international practice and in Russia in particular.

corporate philanthropy cultural gallery

1. Corporate philanthropy

1.1 Corporate citizenship, social responsibility and philanthropy: definitions of concepts

To start with, it is necessary to look into undefined concepts of corporate citizenship, social responsibility and philanthropy. Philanthropy from Greek - to help the poor, charity. Philanthropic activity has evolved with changes in historical circumstances and worldview shifts. Its forms, mechanisms and practices have been also changing.

I. Semenenko and S. Peregudov in their monography “Корпоративное гражданство: концепции, мировая практика и российские реалии” raise the issue of what is corporate citizenship. The first point is that there is no clear definition for this notion also in the international field. This notion is used as a synonym of strategic corporate philanthropy, social “inclusion” of corporation and corporate social investment. In a broad sense, corporate citizenship is the strategy of business to communicate with the public in order to provide effective and sustainable development and to raise own reputation as the responsible “citizen” and competent participant of such kind of development (Peregudov, Semenenko 2008). The notion of “sustainable development” became an inevitable part of political lexicon of globalized actors after adoption of “Agenda XXI” in 1992 (Ibid).

Modern understanding of corporate responsibility notion was proposed in 1953 by H. Bowen in his book "Social responsibility of a businessman" (Bowen, 1953). According to the author, the business must not only follow the law, it is also obliged to take actions that are relevant to the goals and values of society. A. Carroll, one of the most famous and quoted theorists of corporate social responsibility, supposes that CSR is a response of business to the expectations of society in four main spheres: economic, legal, ethical and philanthropic (Carroll, 1991). The economic strand here is that business has to be profitable which means to gain more funds, maximize its shares, etc. The legal component here is when business answer legal demands, they provide their customers of recipients with corresponding legal norms. The ethical component implies that the activities of the company correlate with norms and values accepted in society. These norms are not codified but it is important they are understood and respected by the Company. Finally, Carroll includes with the philanthropy such activities like charity, art support, private and public educational institutions, corporate volunteering projects that improve the quality of life of the community. These four components can be viewed as a pyramid: it is based on the economic component, followed by a legal, ethical and philanthropic levels. The organization decides completely freely only for philanthropic activities, if it is not carried out, the sanctions will not follow. Those organizations which had overcome the basic stages of pyramid, started to work for charitable causes. The above mentioned classic definition of corporate business responsibility is interpreted widely as the responsible behavior of the company in the framework of existing legislation. A socially responsible organization should “to make a profit, obey the law, be ethical, and be a good corporate citizen” (Carroll, 1991).

A broad understanding of CSR was included and adopted in Russia in 2013, and written in the national standard GOST R ISO 26000-2012 "Guidance on Social Responsibility", which is advisory by its nature. The document states: "An essential characteristic of social responsibility is the desire of the organization to include social and environmental considerations into their decision-making processes and to be accountable for the impacts of its decisions and activities within society and the environment. This implies a transparent and ethical behavior that contributes to sustainable development in accordance with the domestic law and international norms of behavior " (GOST 2013). And further: "The fundamental principles of social responsibility is respect for the rule of law and compliance with legally binding requirements. Social responsibility, however, also embraces actions that go beyond legal compliance and the recognition of obligations that are not legal obligations towards others. These charges stem from the general ethical and other values ??" (GOST 2013).

There is also narrow understanding of CSR which include only voluntary actions of philanthropic actors. Thus, the report of the European Commission on Corporate Responsibility defines CSR as "a concept whereby companies decide voluntarily to contribute to the improvement of society and the environment" (European Commission). In another work, corporate social responsibility is defined as "practices that improve jobs and contribute to society and steps beyond what is ordained by law" (Vogel, 2006).

Taking into account stakeholder theory, it is assumed that the company's liability should be extended to all interested stakeholders in the organization. According to M. Hopkins, "Corporate Social Responsibility involves the interaction with stakeholders of the company on the principles of ethics and responsibility, accepted in society. Corporate Responsibility Objectives are to create a higher standard of living and develop the potentials of both internal and external stakeholders of the company (Hopkins, 2004). Among the company's stakeholders are customers, employees, local and federal authorities, the population living in regions where the company operates.

Being law-abiding is very important for modern Russian context of philanthropy. Practices of tax evasion, labor law violations are widespread in Russia, and therefore such companies which provide charitable assistance in order not to pay taxes, can hardly be considered as socially responsible.

Thus, we understand “corporate social responsibility” as the activity of companies, which includes economic, legal, ethical and philanthropic (charitable) aspects. The organization can be socially responsible if it acts according to the statutory regulations. In addition, the CSR includes a voluntary contribution of the organization to improve the organization of society and the environment. Formation of corporate social responsibility takes place together with both internal and external stakeholders of the company.

The concept of corporate philanthropy is another one. It is difficult to find a concrete notion of “corporate philanthropy” in academic literature. A. Gautier and A. Pache had investigated 132 research works concerning philanthropy for the last 30 years and revealed that the definition of corporate philanthropy was proposed only in 17% of all the works. These notions were mostly descriptive or technical. For instance, American Financial Accounting Standards Board states that “Corporate philanthropy is a voluntary and noncooperative transfer of funds or other resources from one organization to another organization or society without obligations of the receiving side towards the transmitting side” (FASB, 1993). A similar description is given in the RF Law "On charity and charitable organizations", dated 7 July 1995 (here the terms "philanthropy" and "charity" are used interchangeably). The law states that "charitable activity is a voluntary activity of citizens and legal entities by disinterested (gratuitous or on favorable basis) transfer to citizens or legal entities of property, including cash, impersonal performance of works, provision of services and other support" (ГОСТ 1995). These definitions emphasize voluntary, unilateral nature of corporate philanthropy and at the same time financial support for other organizations or the public. Philanthropy is a systematic activity, institutionalized process of assisting outside the legal responsibility of business. However, in contrast to the charity (which is often a substitution of public funds) the company participates in the creation of public goods that contribute to the development of society and social innovations.

1.2 Stakeholder Theory

Stakeholder theory describes the strategy of the company development by taking into account the interests of so called stakeholders or concerned parties. According to this theory, a company is not only an economic entity and a tool for generating profit, but also an element of the environment in which it operates, as well as a system that influences and itself experiences the influence of its environment: local communities, consumers, suppliers, public organizations, As well as personnel, investors and shareholders. The stakeholder theory asserts that when achieving the organization's goals, the organization should take into account the diverse interests of various concerned parties (stakeholders) that will represent a certain type of informal coalition. There can also exist different relationships between stakeholders that do not always have the character of cooperation, coincidence of interests, or they may be competitive. However, all stakeholders can be viewed as a single contradictory whole, the resultant interests of the parts of which will determine course of the development. Such a whole is called a "coalition of influence" or "coalition of business participants" of an organization. (А. Зуб)

The first who used the term “stakeholder theory” was H.I. Ansoff in 1965. He claimed that the main objective of the firm is to satisfy the demands of its stakeholders. In 1984 R.E. Freeman defined a stakeholder as “any group or individual who can affect or is affected by the achievement of the firm's objectives”. Also, he stated that a firm embraces such stakeholders like employees, customers, suppliers, governmental bodies, creditors and public interest groups. In the same year A. Ullmann applied such theory to the activities of business in the field of corporate social responsibility. He proved that the stakeholder theory can be seen as an appropriate basis to imply incorporate strategic decision-making into studies of CSR. In 1992 Roberts found that the stakeholder theory is applicable to CSR research and enables to analyze and select corporate traits. Thus, the theory forms a theoretical basis which aimed at analyzing the impact of economic performance, strategic goals and aims of social responsibility activities and the influence of stakeholders toward the activities of big business.

Talking about this particular research it was decided to take such theory to analyze which participants/stakeholders are included or not into activities of corporate funds and which to the private foundation. What is more, it will enable to define whether state bodies are among these stakeholders or not and to which extent they influence the outcomes of implemented projects.

1.3 Caroll's pyramid

Some experts perceive socially responsible behavior, primarily in the ethical sense, others - as a concept of legal responsibility. Thus, according to M. Palazzi and J. Starcher, "social responsibility is basically a philosophy or an image of relations between business circles and society, and for their implementation and sustainability over a long period of time these relations require leadership" (M. Palazzi, J. Starcher).

According to A.Caroll, corporate social responsibility is presented in the form of pyramid as multilevel. The model of the CSR pyramid proposed by A. Caroll is based on the subordination of economic, legal, ethical and philanthropic "levels" of social responsibility.

The economic responsibility at the bottom of the pyramid is directly determined by the basic function of the company in the market as a producer of goods and services. This allows satisfying the needs of consumers and, accordingly, to make profit. Legal responsibility implies the need for law-abiding business in a market economy, the conformity of its activities to the expectations of society, fixed in legal norms. Ethical responsibility, in turn, requires that business should act accordingly the expectations of society, which are not stipulated in legal norms, but based on existing norms of morality. Philanthropic responsibility encourages the company to take action aimed at maintaining and developing the well-being of society through voluntary participation in the implementation of social programs.

Thus, CSR is the obligation of business to make a voluntary contribution to the development of society, including the social, economic and environmental spheres, adopted by the company beyond what the law and the economic situation require. In foreign literature, social responsibility is often interpreted as a self-imposed (voluntary) commitment of business to support sustainable economic development through working with workers, their families, local activist groups and society as a whole, with the goal of improving the quality of life through actions beneficial to both business and for the development of society as a whole.

Carroll's CSR Pyramid

Pic 1.

This model has recently been subjected to a severe critical evaluation and re-evaluation. Critics proceed from the premise that ethics is an essential element of all levels of CSR being considered by A. Carroll, while the question remains whether CSR is inherent duty or remains the duty to choose.

We are in favor of Caroll's position but we suppose that ethical constituent is inevitable nowadays because of the ecological, environmental and other challenges of modernity. Although the philanthropic way remains selective. There are a lot of companies which behave ethically but they do not undertake any philanthropic actions.

2. Cultural policy and corporate philanthropy in Russia

2.1 Cultural policy in Russia

National concept of cultural policy is not once defined and static. On the contrary, it is rather possible to talk about the ever-changing nature of cultural policy, because the focus of its priorities and interests is very changeable.

The construction of the national concept of cultural policy primarily depends on the political ideology adopted in the given society and on the dominant ideas about the nature of cultural processes, their influence on the development of society, the priority of solving cultural problems for the state and on its mutual obligations with the actors, which create culture and with society as a whole.

The initial condition for the development of cultural policy is the achievement of an agreement between official, creative and social forces regarding the priority of cultural development goals. Summarizing the attempts of foreign analysts to define the cultural policy, it is possible to single out the target, institutional and resource approaches. In Russia they are combined and an integrated management approach is used (Vostryakov, 2011). Accordingly, cultural policy is a conscious regulation in the field of culture in making the necessary decisions on all issues relating to the cultural development of society as a whole (M. Dragicevic Sesic, 2008).

While connecting main functions and foals of cultural policy, we can define its main characteristics:

1. The objectives of the central government should be combined with the interests of regional and local governments, as well as the interests of major players in the cultural sphere; 2. The objectives of the state should be correlated with the real possibilities of choosing the subjects involved in the processes of cultural policy; 3. Realization of cultural policy always assumes actions on material and technical and creative maintenance of functioning of culture;

4. Cultural policy involves the allocation of resources, both financial and administrative, structural, human and creative; 5. Cultural policy necessarily involves planning, which is the process of preparing the state for participation in cultural activities, as well as in planning the allocation of resources.

D. Adams defines the following mechanisms of cultural policy.

Distribution of grants and bonuses; employment and job creation; creation of cultural infrastructure - buildings, equipment, space for cultural activities; formation of legislative and regulatory framework for the activities of cultural and art institutions (D. Adams, p. 4).

Among the main actors of cultural policy are the state, cultural organizations, business-structures, public organizations, media and citizens as main consumers of cultural values.

The cultural policy is closely connected with the methods of management in culture. These methods differ, first of all, depending on the dominant form of power. They can be rigid, administrative-command or more flexible, flexibly adjustable, and in other cases self-regulating. At present, the most acute problem for the national culture is the problem of financing. The state does not cope with it, in spite of the fact that it does not fully fund all. The budget in the foreseeable future will not be able to satisfy the demands of culture. For these reasons, sources of extra-budgetary funding should be found. One of such sources is donations from the business.

2.2 Philanthropy formation in Russia

In modern Russia, it is quite popular to use the notion of corporate social responsibility as a synonym for charity, that matches the domestic cultural traditions. The role of the corporate capital in the Russian market of social services is quite high: 75% of donors are companies. According to the non-profit organization CAF (Charity Aid Foundation), before the economic crisis, Russian private sector annually spends money on charity about $ 1.5 billion. (About 0.1% of Russia's GDP). At the same time percent of corporate philanthropy in Russia is 15 times larger than private (С. Ивченко, М. Либоракина «Город и бизнес»… 2003, с. 28). In real practice, the Russian business brings into effect such traditional forms of charity aimed at supporting cultural institutions, the church and the poor and strategic ones which make a contribution to the welfare of society and at the same time serve the interests of the business itself (С. Ивченко, М. Либоракина «Город и бизнес»… 2003, с. 28). The third type of charity can be called innovative, it is presented in the type of venture philanthropy, involving the use of the charity business technology to solve social problems and maximize the effects within society.

In the area of traditional charity, the commercial organizations as well as some representatives of big business behave actively. The priorities of traditional social investment among the business community are as follows: culture, assistance to socially unprotected citizens, Russian Orthodox Church and sport activities. It is necessary to mention that the main feature of the traditional charity in Russia is its spontaneous and random character: separate charity events usually resolve branding objectives and are not intended on building long-term relationships with the company system and its institutions. According to the research “CAF Russia” areas such as human rights, assistance to people living with HIV, the rights of minorities, are still extremely unpopular in Russia because quick results cannot be achieved here, so the process needs long-term assistance (CAF, Russia, 2016).

The attempts of philanthropists are largely dependent on their subjective preferences and cannot be seen as a reliable source of support for the social sphere. Within the framework of traditional public charity visible outcomes can be expected only in the case of very big investments. Experts even compare this kind of charity with hand-outs: according to the principal “I give people money - and they will decide how to spend them”. Thus, the corporate philanthropy in the traditional version is mainly aimed at solving problems of business reputation and does not involve long-term programs of action, therefore, cannot contribute fully to the effective social problems solving. A lot companies which acknowledged corporate social responsibility and work on different programs on this field, refer to this group. Such bright examples of companies are “Severstal'”, “Norilskiy Nikel”, “Gazprom”, etc (RBK, Rating of CSR top managers).

The second type is strategic philanthropy. To achieve the maximum public effect - (the image of the company; trust relations from the side of public, etc.) many companies tend to use strategic philanthropy technology aimed at solving long-term tasks in the areas where the interests of society and business are the same. Therefore, charity projects are usually implemented in the regions where the company has business interests, which also contribute to building a mutually beneficial relationship with local authorities. Most companies achieve here a pragmatic goal: they try to integrate charitable programs in the overall business process system, while ensuring the creation of a stable comfortable social environment for doing business in the region and increasing the effectiveness of such projects in terms of both spending and fitting the needs of population. Such funds as “Potanin fund”, “Timchenko fund” and “Prokhorov fund” can be referred to this group. Their projects are long term and aimed at regional developments.

The third one is venture philanthropy. It is rather new phenomenon in the world, and in the Russian practice. It is supposed that the implementation of the principles and technologies of management in the activity of the non-profit sector organizations will be added to financial support in order to maximize social impact. The basic principles of this approach to philanthropy are: focus on long-term forms of support, partnership between donors and recipients, a high degree of involvement of the philanthropist, focused on final results and the effectiveness of investments. Venture philanthropy is aimed at ensuring the long-term strategic development of social organizations and not at the support of individual projects or programs with short-term effect. It is expected that as result of cooperation between the philanthropist and recipient, viable structures capable to solve social problems on their own basis, without financial assistance from outside, occur (Самородов, 2007).

Experts of CAF (КАФ Россия) define several forms of venture philanthropy: 1)the creation of “start-up” - capital and intellectual resources investment to create a framework for the realization of a unique and promising ideas; 2) “coaching” for non-profit and social organizations, here the knowledge of business processes, management, financial management and marketing is extremely important; 3) “strengthening” support for growth companies offering a unique social services, in order to disseminate the experience; 4) “release” - preparation for the transfer to a strategic investor, or buyout funding: assistance in structuring the organization, what is more, as a result such company can receive funding from a major investor - the state (Самородов, 2007).

There are not so many Russian examples of this approach to philanthropy. The successful experience of using of business logic in a charity we can find in two charitable funds “Territory” and “Pole of Hope” founded by businessman Roman Abramovich in Chukotka. This example of a business application of technology in the field of charity is also interesting for its large scale, what is more, a project was being developed within the framework of the whole region.

Summarizing above mentioned, in modern Russian philanthropy is widely spread both through large companies, and by the specific business aware of its responsibility towards society. Understanding of charitable activities in the Russian business community is also expanded. Charity in Russia is rather a demonstration of “corporate responsibility”, such an informal commitment than philanthropy - a manifestation of love for the people, to society. Large Russian business is required to donate money, and this responsibility is attached to them by the state.

2.3 Government regulation of corporate philanthropy (legal aspects)

Philanthropic activity in the Russian Federation is regulated by the legislation on charity functioning. In accordance with Art. 3 of the Federal Law of August 11, 1995 № 135-FL. "About charitable activities and charitable organizations". Federal law of January 12, 1996 № 7-FL “About non-profit organizations”, which clarifies the legal status, establishment, operation, reorganization and liquidation of the Fund as the legal entity; questions of formation and using of NGO property, rights and obligations of the founders.

Taking into account economic stimulation, it is necessary to mention legislation here. The first one is Federal Law № 95-FL of May 4, 1999 “About non-repayable aid (Assistance) of the Russian Federation and making amendments and additions to certain Legislative Acts of the Russian Federation on taxes and on the establishment of benefits for payments to State non-budgetary funds in connection with the Implementation of non-repayable assistance of the Russian Federation" (amended and supplemented on August 5, 2000, March 24, August 6, 2001, November 27, 2002, January 10, 2003).

The others are decrees. Decree of the Government of the Russian Federation of December 24, 2002 № 923 "On the list of foreign and international organizations, which grants are not taken into account for tax purposes in the income of Russian organizations - grant recipients", Decree № 1046 of the Government of the Russian Federation of September 17, 1999 "On approving the procedure for registration of projects and programs of technical assistance, issuance of Certificates confirming the assignment of funds, goods, works and services to technical assistance and control of its intended use "(amended on September 6, 2000, April 25, 2003), Decree of the Government of the Russian Federation of December 4, 1999 № 1335 "On Approving the Procedure for Providing Humanitarian Aid (Assistance) to the Russian Federation" (amended on September 26, 2001, May 12, 2003).

Legislation on charitable activities consists of the relevant provisions of the Russian Constitution, the Russian Civil Code, the Law on charity, other federal acts and acts of the Russian Federation. Legal regulation of charitable activities comes under the joint jurisdiction of the Russian Federation and its territorial entities. The Russian Federation recognizes the priority of international norms over national.

Chapter 3 of Art. 39 of the Constitution states that "charity is encouraged." It does not specify whether encouragement is opportunity or obligation, and the subject, which ability or responsibility is philanthropy, is not indicated. According to the Constitution, charity is seen as one of the levels of non-state system for social benefits.

The adoption of the "Conception of promoting charitable activity and volunteering in the Russian Federation", approved by the RF Government on July 30^th, 2009 (Conception of charitable activity in RF № 1054-p, 2009) is an important step toward philanthropy development in Russia. According to this Conception, the main principles of philanthropy development are providing support to the growth of society and citizen participation in the charitable and volunteer activities, increase of public confidence to charities and creation of conditions to increase the amount of donations of citizens and organizations. Ensuring growth in the number of charities, including private and corporate foundations that provide charitable sustainability and promote the efficiency of charitable organizations activities. As a priority, the Conception identified the promotion of and the institutionalization of charity and volunteering.

Fund financing consists of donations from both corporate and private donors, commercial and non-profit organizations, individuals and cash receipts from governmental bodies. Fund resources are distributed on a competitive basis among NGOs and citizens' initiatives. The grant committee and advisory councils which include representatives of the three sectors of the community and experts on specific issues resolve the appropriation of funds.

Funds are controlled indirectly by the community through the equal representation of government, business, public and non-profit sector. The Fund is a transparent organization that disseminates information about its own activities and financial position. The Russian fund certain features are implemented adequately. However, there is a specific feature, which will be discussed below.

Unlike other types of non-profit organizations, federal law does not establish for funds a particular set of command structure with clear competences for each of these authorities. It only requires to determine the charter fund management order (which bodies govern the activities of the fund, how competence is distributed between them) and the formation of its bodies - by whom and how such bodies are appointed.

Federal and regional levels do not correlate very much. There is no special rules or procedures according to which regional authorities adopt their own laws. There is only one specific character - regional law should be in agreement with the federal one. Also, regional governments can develop their own short- and long-term strategies of philanthropic activities.

Talking about regions, the legislative bodies of Russian Federation have their own rights to adopt laws which aimed to developing philanthropy. Such laws are adopted in Samara region - Law about philanthropic activity in Samara region, 24.05.1999. The same law is used in Tambov since 25.12.2006 and in Tomsk since 10.08.2009. To encourage charitable activities, another Law was adopted 8.08.2001 "On the provision of benefits to charitable organizations in the Tomsk Region”. In the Chelyabinsk region, the current law "On state support of charities in the Chelyabinsk region" was adopted 01.12.1999. When the legislative body annually approves the regional budget, they have to define priority areas of charitable activity. The same laws were adopted in Tambov region 25.12.2006 Charitable activities in the Republic of Sakha (Yakutia) is referred to as sponsorship and is regulated by the Law № 614-III dated 8.12.2005 "About the sponsorship and maintenance activities in the Republic of Sakha (Yakutia)". What is more, in 1998, in the Republic of Sakha (Yakutia) they adopted the Law "On the patrons and patronage." In accordance with, the patronage is recognized as the sphere of social activity related to the maintenance and development of cultural facilities, professional activities (culture, art, science, education, health, sports) that make up the cultural heritage and spiritual heritage of the Republic of Sakha (Yakutia). The same law was adopted in Ivanovo region 15.06.2007. Laws “About charitable activity” were adopted also in Sakhalin, Bryansk, Perm, Voronezh, Volgograd and Altai regions.

We see that some of Russian regions can regulate philanthropic activity by their local bodies.

Legal framework for philanthropy on federal and regional levels is not fully developed yet. It exists on paper but in real life these laws do not play an important role while implementing this or another project. Underdevelopment of legal regulation is also connected with the fact that we refer the sphere of philanthropy to ethical question. In this sense the laws are adopted but governments do not strive to apply them to any case of philanthropic activity. Put it otherwise, they exist but are not used for each situation as other laws. What is more, it is focused exclusively on supporting specific target groups, while today we are talking about public benefit, social effect, social change, which implies a broader understanding of charity.

2.4 The role of the state in philanthropic activities

Within the concept of corporate citizenship, the state and its institutions play an important role as inevitable participants of interaction both with business structures and civil society. The state here is not only a part of partnership but it acts as a “mediator” which has an impact on the character of social and economic relations between these parties (S. Peregudov, I. Semenenko, 2008, p. 255). A lot of experts and analysts give several examples of the role which the state plays in many countries. It can be immediate participant of interaction between three main actors or an institution stimulating concrete initiatives of other participants (Ibid).

According to the institutional approach, to operate successfully, the business has to achieve legitimacy in the eyes of key stakeholders. The organizations that meet social expectations of society and the state can be seen as legitimate. This approach explains when the organization becomes the subject to the existing rules, which sometimes does not coincide with the economic objectives of the company. Most often social demand comes not from the civic society but from the most powerful stakeholder - state. So, the organizations that support social and active image get “legitimacy” in the eyes of the authorities. It is necessary to mention that the first project of Potanin's fund was implemented in Norilsk. In 1998 Vladimir Potanin wanted to support students in Norilsk by providing them with stipends. Further this idea turned to charitable stipend program under the auspices of CAF fund and Olga Alexeeva who was the pioneer of philanthropy development in Russia. So, by 2000s this stipend program spilled over Russian regions (New strategy of Potanin's fund, 2017).

According to V. Ledyaev and A. Oleynik, in Russia here there is an interesting contrast to the Western experience in terms of who dominates - state or corporations. For instance, in the US, the corporations and the owners who control them dominate, in Russia the dominance occurs in favor of the state and the bureaucracy (Ledyaev, 2009; Oleynik, 2011). If the profit is ensured not by economic capital but the administrative one, it means that the existence of the company without the administrative resource may be thrown into question.