The goals of any charity in Ukraine include both raising funds for financing various projects and money distribution. We decided to ask the biggest charitable foundation in Ukraine who, how and in what volume administers their financial resources.
 
 
Charitable activity in Ukraine is governed by the Law On Charity and Charitable Organizations. In contrast to the businesses, non-profits have another target funds distribution method.  However, charities are similar to commercial companies, first of all, with their management structure.
Any Ukrainian charity must have both an executive and a supervisory body that controls its operation and target usage of the funds and property of the foundation. Pursuant to the law, the executive body of a charity is its Board (Committee). Its competences vary depending on the charter. According to the law, administrative and executive bodies headed by a chief (president, director, board chairman) must be created to ensure day-to-day operation of the foundation.
 
Variations on Managerial Theme
 
Classical foundation management structure is seen in Ukraine-3000, charitable foundation. Its supreme governing body is Foundation Members Conference. It determines the members of the Supervisory Board and its priority field of development. In turn, the Supervisory Board assesses and controls the operation of the Board, the executive body of the Foundation. Its members are selected by the Conference and report to the Supervisory Board. The Board chairman accounts for day-to-day operation of the foundation.
 
On the other hand, the day-to-day operation of SCM’s Corporate Foundation for the Development of Ukraine is controlled by the Foundation’s director, not a board chairman. Its supreme governing body just like in Ukraine-3000 is the Meeting of Founders. In turn, the Foundation’s Board (headed by Rinat Akhmetov) is a strategic governing body that determines foundation’s strategy, sets aims and goals to the foundation’s management, approves programmes and their financing, and decides to audit and assess the operation of the foundation. A Supervisory Board controls the foundation’s activity.
 
The Board is the major public body that forms the strategy of the International Renaissance Foundation (its Supervisory Board meets just once a year to check the results of the foundation’s operation). Besides the Board, the Renaissance Foundation is governed by programme boards that aim to consider submitted projects.
 
Similar committees can be seen in other foundations. So, for example, the activity of the Foundation for the Development of Ukraine gets adjusted by two committees: a programme committee that determines the goals of the foundation’s programme activity, and a financial committee, which manages distribution of funds and controls money usage.
 
The role of programme committees in the Foundation Ukraine-3000 is played by the expert councils and task groups that adjust its activity to certain situation. Just like in other cases, the expert councils of Ukraine-3000 include specialists, public figures and scientists. Similar expert functions in the Foundation for the Development of Ukraine are given to the Advisory Board established, as Anatoliy Zabolotniy says, to enhance transparency of the foundation.
 
 
Budget Formation
 
Decisions to finance projects are made almost identically according to the scheme "project consideration by experts - project approval or disapproval by the Foundation Board". The approval of the project is followed by its financing.
Pursuant to the law, the total amount spent by a foundation for projects implementation must not be less than 80% of its budget. The budget formation process varies depending on the Foundation’s organization structure. For example, the budget of the Foundation for the Development of Ukraine consists of funds given by SCM, while the annual budget of Ukraine-3000 comprises the budgets of all programmes and projects. The Foundation informs the amount of the budget changes depending on attraction of new partners that give money to implement certain initiatives. The funds are transferred to the account of Ukraine-3000 except for the cases when the foundation only coordinates aid rendering process.
Hence, the amount of funds raised by foundations for charitable efforts in the current year differs as well. The budget of Ukraine-3000 will total almost UAH 12m. (Last year the foundation gave help for the amount of nearly UAH 35m but not all the money was transferred through the foundation’s account. Soon Ukraine-3000 expects to launch a large-scale fundraising project to establish and build a children health center in Kiev. The project budget totals $120m). Financial support for Ukrainian projects rendered by the International Renaissance Foundation will net about $7m. This year the Foundation for the Development of Ukraine has over $6m in disposal. Although the foundation says the volume of help or social investments in the cities where SCM operates, several times exceeds the budget of the Foundation, because SCM finances local projects directly.
 
Help Received from Outside
 
The budget of corporate foundations is formed from funds of their corporations, yet the projects can be financed by other sources as well. According to a representative of the Foundation for the Development of Ukraine, such cooperation is required to implement projects in the most optimal manner. At the same time, financial contribution from partners or project implementation agents is usually not envisaged. The Foundation believes it is important that such companies invest into project their knowledge, experience, established contacts, and commitment to achieve results.
The fundamental condition for foundations to cooperate with other charities (or businesses) is the conformity of the aims and goals of the foundation with those of the partner. The competence of the attracted organization plays an important role. Anatoliy Zabolotniy, director of the Foundation for the Development of Ukraine, believes the projects effectiveness level can be improved if the partner can achieve success. For example, this foundation chose World Health Organization as a project partner to treat drug-resistant TB in Donetsk region (DOTS-PLUS strategy).
Non-corporate foundations have also their requirements to the partners. So, the Foundation Ukraine-3000 uses charitable finances raised from lots of partners, yet its critical principle is not to use state funds or the money of the companies controlled by the state. Exception is made for joint projects with various organization including state ones. The Foundation says in such cases they cooperate on partnership principles, while the foundation acts only as the funds administrator.
Moreover, to protect itself from attempts to launder funds through Ukraine-3000, the foundation doesn’t use the finances that can be of illegal origin. To this end, it follows specific procedures to prevent such situations.
For example, a charitable contribution of up to UAH 50,000 can be transferred onto foundation’s account only if it is of transparent origin. The amounts from UAH 50,000 to 500,000 require negotiations to be held with a Board member, while the finances over UAH 500,000 can be accepted only upon written agreement signed by the foundation and its partner.
 
Money for Education
 
Despite the diversity of social problems in the modern Ukrainian society, the priority fields of charities’ activity including private and corporate foundations can be virtually divided into several spheres — health care, promotion of education and culture. The foundations prefer not to scatter their efforts on scores of activities, choose priority industries and start to work actively in them. For example, the priority sphere for Ukraine-3000 this year is medicine.  Together with a large programme From Hospital to Hospital, the foundation will implement the project Joy of Childhood - Free Movements (for children with central nervous system problems). The foundation will realise this initiative with TNK-VR. At the same time, it will pay less attention to education. Representatives of Ukraine-3000 say ‘every programme of this organization includes the educational aspect. However, the foundation doesn’t have any specific projects for universities and institutes’. Its managers believe ‘there are a lot of international organizations working in this segment. Therefore, the foundation decided to focus its resources on children health care that requires help more urgently’.
 
Still, Universities remain one of the major beneficiaries of the charitable aid rendered by foundations. For example, financing of the educational programme of International Renaissance Foundation totals $415,674 this year. Within the programme Contemporary Education in 2005/2006, the Foundation for the Development of Ukraine transferred $300,000 for EERC Master’s Programme. In turn, charitable contributions of legal entities and natural people, and contributions in foreign currency helped the International Charitable Foundation of Kiev-Mohyla Academy accumulate over UAH 10m last year. But when cooperating with charities or businesses, universities usually don’t focus on one of them. So, Lvov National University is involved in programmes carried out by, for example, Renaissance Foundation for a range of universities. At the same time, it launches own initiatives attracting various business and other organizations to participation. Vera Balatskaya, Head of Advanced Development Department of NaUKMA, says "we regard it not as sponsorship but rather partnership projects. We offer our partners certain image support and believe such partnership must have publicity aimed not to advertise their products but build a responsible social image".

InvestGazeta, 11 July, 2006
By Daria Ryabkova