What are the purposes and ways of spending money by the SCM's Foundation for Development of Ukraine?
The presentation of the first phase of reconstruction of the Metropolitan's Residence of the National Reserve "Sofia Kyivska" will take place in Kiev on Monday. Foundation for Development of Ukraine is actively participating in the restoration of the Reserve. The Foundation was established in 2005 by System Capital Management and FC "Shakhtar". The principal task of the Foundation is to make social investments into development of Ukraine which has to become not only a European promising economy but a country providing high living standards to its citizens. Mr. Alexander Zabolotnyi, the Director of Foundation, developed a non-commercial sector in Siberia, he was responsible for cooperation for development of civic initiatives in Armenia, and he worked as journalist for eight years in Russia. Mr. Zabolotnyi told the Den how to make Ukrainian education, medicine and culture worthy of the world community and inspire the citizens' cooperation.
- Mr. Zabolotnyi, please tell how did the activities of the Foundation start?
- System Capital Management was very much engaged in the charity activities from the very beginning of its existence, but this charity activities were, so to say, traditional. People who are in need of some help ask for money." Feeling an emotional impulsion, the company says that the money is indeed needed and gives it. This was the way the Pakistan earthquake and Romania flood victims, public veteran organization in Donetsk were aided. The money funds were invested into reconstruction of Ukrainian Batuirin [Capital of Ukrainian Hetmans]. This is a usual practice of 95 % of companies.
In 2005, a decision was made to move to a more systemic approach. EERC, Economics Education and Research Consortium at the Kyiv-Mohyla Academy, was the first project. It is an interesting program for training the world-class economists. It's quite evident, the country is missing people having good economic education. We set the most important task to train the world-class economists so that they can influence the situation in the country.
- What about local problems? What parameters do you apply to identify who needs help?
- A very important element of the social investments means that you invest money into the projects having a long-term return, into the projects useful for our country. Lack of the world-class economists is not a problem itself. But the very moment the country needs serious efforts from the economic science and there is no one to make such efforts, the problem will arise. Being in the transition period, the country definitely needs good economists. Another important parameter applied by us is that we invest into such things where the system can reproduce itself. That is, it's not enough to provide mere support to economist training. Let us assume that if we trained 100 economists, stopped money investments and those economists left the country, the country would not get any effect, although the project was good. But EERC was a great success: presently, Kiev Economics School is about to be open, a great agreement with Viktor Pinchuk's Foundation has been concluded. They have good prospects, and we believe it to be a part of our success.
- What regions, sectors and areas may count on support from the Foundation for Development of Ukraine?
- Up to the present time we have been operating in eight regions: Donetsk, Dnepropetrovsk, Kharkov, Lugansk, Lvov, Zakarpatie, Kiev Oblasts as well as in Kiev city and the Autonomous Republic of Crimea.  Presently, we are conducting re-registration and will cover the entire Ukraine. As for the sectors and areas, in our work we are seeking the development of Ukraine, so that, say, in 10, 15, 20 years it will be a strong and steady country. And what does a successful country need? Folks! Healthy, well-educated folks who, of course, have something else in their soles, it means, the culture should be covered.  
- What, in your opinion, is the situation in these areas?
- These three areas face a very hard situation. The economy experiences some reforms whereas there are very little movements in the social area. There are numerous claims that the health protection is insufficiently funded. But if we accurately calculate the percentage ratio of the funds spent for the health protection, this amount will appear to be great for Ukraine's economy. The problem rather arises from the fact that those funds are spent ineffectively. There are few people willing to reform the health protection system, because it is churly. So, our role is to make precedents. We are not able to change the system in health protection or education; these are the tasks of the Government. But the Foundation is able to make some social examples that could be replicated, lead to system changes and show how to make it effective.   
- Do you have examples of such systemic approach?
- Today Ukraine faces a very serious tuberculosis problem. We can speak of the epidemic in this case. The problem of common tuberculosis is under control while the problem of healed tuberculosis is almost beyond the power of the Government. Our task in DOTS-Plus project is to create within 4 years in cooperation with the World Health Organization a drug-resistant tuberculosis treatment system, to equip laboratories, to open hospitals, to train staff. In 4 years we will pass this system to the Government and will keep an eye on the Government's work so that the work will be done effectively.
- Who determines the strategy for the system?
- The Directorate makes strategic decision on what projects to participate. The Directorate consists of the SCM employees, independent experts and is chaired by Mr. Rinat Akhmetov. If necessary, we involve expert companies. We are going to establish a public council in future. And, of course, we have program managers who head certain areas and have to analyze the situation. The worst thing in social area is that the problems are usually not so easy as to say: "Aha! This particular person is in fault, we are going to make here something very quickly, and it will change for better."   The first thing which can be done is to start creating a system. For example, this is what we are doing with the tuberculosis treatment in Donetsk Oblast. If we speak of social investments, the choice is very hard here: what would you do - would you cure the tuberculosis or, say, breast cancer? There are no adequate criteria.
- In what projects are you engaged now?
- It is DOTS-Plus in the medicine; we invest EUR 2.26 million in it.  We are still deciding on our next project. Usually, we have one "locomotive" project which is great and expensive. Next year we will have some small medicine projects but it's too early to speak of them now. Presently, we are analyzing the whole health protection system in an attempt to identify effective and ineffective elements and to provide recommendations.  In the sphere of education our EERC project (economist training) is about to be completed this year. We have already started studying the problems of educational system disbalancing, professional staff training, labor market and its real sector. It's a great problem when the graduates go right away to a labor exchange or when seven managers compete for one job position while it is impossible to find a skilled engineer. 
In the cultural sphere we are engaged in reconstruction of Sofia Kyivska. A mere funding of the reconstruction would be uninteresting for us. We are trying to help Sofia Kyivska move from the strategy of survival to the strategy of development. We initiated the establishment of Advisory Board. Presently, we help Sofia Kyivska develop its own strategy for fund raising and build a community of partial people around it, the "Club of Sofia Kyivska Friends". These people should be sincere and enthusiastic, and not necessarily potential patrons of art. They could be common people, which is very important for any Museum.  
- To what extent does the Government support your undertakings?
- On an as-needed basis. Say, DOTS-Plus is unlikely without the Government because the medicine is a state system. But we have a very good mutual understanding in Donetsk Oblast and drug system in the Oblast. Many state authorities provide assistance. In this case, they provide great assistance, because it won't do any good without cooperation and change in the treatment of this problem. On the other hand, our basic principle is to prevent duplication and refrain from substitution of the Government and its functions.
- What population categories, in your opinion, need greater support than the others?
- It's a hard question to determine who needs support most of all. The pensioners, the senior generation, are the people who indeed appear to be disadvantaged today. At the same time, today the families having several kids are also disadvantaged. If they had one kid, they could afford "normal" living standards (if both parents are employed). But if they have three kids, their living standards get significantly down even provided the parents earn good salaries. Usually, such families, even they have good standing,  immediately move to the category of poor people should any accident take place, because the medical support system requires great costs. As the education does.  This is a problem of nowadays: poverty is a systemic thing which has to be treated very seriously. 
- Is such poor society ready for the long-term projects if they want to eat here and now?
- You know, people have already realized that the present situation has to improve step by step. The majority of thinking people have realized that the "cosmetic" one-time measures cannot improve the situation. What can be done here? To give out money to people?
- To show a man how to fish?
- Yes, in our opinion it is the best option. We are ready to help those who are ready to help themselves. We are eagerly helping people who themselves have started to do something.  if the situation is hard, of course, a man does not think: "Well, whenever this system will change?" We have recently discussed the problem of cancer kids. The medicines are needed here and now, the kids cannot wait. On the other hand, if you have a look at the performance of the Returning Board in the program addressing the improvement of the curing system for cancer kids, it includes millions of hryvnias spent in an improper manner. You can muster businessmen who will give money which will be spent for treatment, but the money will be needed again. Should you simply change the system, spend the money effectively, you will get enormous reserve. 
- How does the Foundation control money application?
- We have program managers. We also can involve independent auditors. Usually, the organizational system has its own auditing system. If we take Sofia Kyivska, the money is transferred to a special separate account and can be spent for reconstruction only. This is a state institution having an auditing system. Additionally, the Advisory Board was established. If it is the health protection system, they have their own system monitoring money application. We always have a right to check it. We have contractual relations: what are the purposes this money can be spent for. These relations include everything: the amounts and expenditure items. Everything should be transparent. In addition, we have to select reputable partners. 
- There are many selection criteria. Do you have a universal final investment strategy?
- Social investments are the investments into the system development of the social area. In this case, it is important that the money is not simply invested and spent for certain events. Change in people's attitude, problem treatment and influence on the system changes are important. These should be long-term changes. One more important thing: if you try to invest money, there is a concept of "interested parties", persons concerned with this particular problem; so it is very important to take into account the interests of these persons. If you see the results of your actions, this is the rightest decision.

Olga Pokotilo
Source: Daily newspapers Den
21.10.06