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Could new business models make NGOs in the post-Soviet space more representative?

New business models are reshaping relations between the non-profit sector and wider society in post-Soviet countries. RU

A workshop on setting up a socially-oriented not-for-profit, GRANI Centre, Perm. Source: Facebook. Amid mounting state pressures on foreign funding, civil activists in eastern Europe, Russia and Central Asia are embracing new business models to generate alternative sources of income. For not-for-profit organisations, the transition to money and markets is full of challenges. However, as they explore strategies for marketing, fundraising and, yes, even profit, civil society groups are winning new freedoms and reshaping long-neglected relations with their domestic audiences.

The shift to paid services is part of a wider dynamic in the region as civil society pioneers new ways to push back against the closing space in which it can operate. Groups and individuals are redesigning strategies, re-registering operational models, embracing new technologies and devising new communication plans.

The transition to monetisation is proving a special challenge. So far, only a small vanguard have dipped their toes into this area, but those that have are enjoying surprising success.

“It’s a big jump for everyone, the director, the team and the clients,” says Svetlana Makovietskaya, founder of the renowned GRANI Centre in Perm, Russia. “It is difficult to ask for money from people who have been used to getting free services for 25 years.”

Despite this, GRANI is already earning 85% of its budget by selling services, notably research, consultations, trainings and the like. As a “resource centre” for civic activism, it is also teaching NGOs how to do the same. “We offer an exclusive product,” Svetlana says confidently. “For NGOs it’s an investment. They have to learn that it has a price.”

As in all walks of life, necessity begets invention. The struggle for sustainable financial support remains the number one challenge for civil society across the region. This struggle is compounded by increasing legal restrictions on foreign funding. In Russia in particular, stringent laws targeting “foreign agents” and “undesirable organisations” have taken a toll on the third sector and have resulted in the withdrawal of many leading western donors. At the same time, state funding through Russia’s so-called presidential grants scheme is creating new dependencies and often funds questionable pseudo-NGOs that promote government agendas.

“We never planned to earn any money,” says Svetlana Kuzevanova from the Centre for Media Rights in Voronezh, which provides legal aid to journalists in Russia. Since being declared a “foreign agent” in 2015, it has been a “trial-and-error run” to find additional funding. Today, the NGO operates a subscription scheme for access to legal services for Russian media outlets, which provides 20% of its budget. The rest, Svetlana is sure, will still continue to come from foreign funding. “In Russia, no one is ready to pay for the freedom of media.”

“In Russia, no one is ready to pay for the freedom of media”

At the same time, the attitude to philanthropy and giving to causes is changing, at least in the social sphere. In Russia alone, there has been a quiet revolution in social engagement. Crowdfunding and social entrepreneurship have become a new normal in recent years, while online donations for charitable organisations doubled in 2017. An impressive 10 million Russians have also become involved in volunteering. The trend is even more positive in Central Asia. In the CAF World Giving Index, all republics show scores of around 30% of people ready to help, donate or volunteer (compared to 20% for Russia) for 2017. Tajikistan, the poorest country in the region, even rose to the ranks of “most improved countries” in the world in the World Giving Index.

Amid these new opportunities for willing domestic funding, civil society organisations are making the “jump” to integrating innovative business models into their work. Examples vary from paid services and membership fees, to selling tickets for events, lending space and equipment or selling merchandise. Groups that have ventured to take the first steps, often go on to develop more high-flying ideas, like opening up art cafes, hostels or other commercial outlets they want to run in parallel with their NGO work.

But for many organisations, taking the first step still poses major challenges. “Non-profit organisations still have too many fears about turning their assets to money,” says Bahrom Saydulloev, a young marketing expert from Tajikistan. Bahrom is sure that “not being performance-orientated is what makes NGOs weak.”

Advert for a reading club at Bactria NGO, Dushanbe. Saydulloev’s NGO Bactria, which focuses on civic education and cultural events, already manages to generate 30% of its own income – the rest is largely grants for language and cultural programmes from a Paris-based development NGO. By 2020, Bahrom says, he wants to be 60% self-financed. “NGOs have to learn that money is intrinsic to any organisation, including those who want to be beneficial for society.”

Some organisations have adapted with amazing ease, such as Nochlezhka – the oldest NGO helping homeless people in Russia. The Petersburg-based organisation has built up an impressive range of services, including a night bus, heated tents, counselling services, a shelter for the homeless, and even a “cultural laundrette”. “If we rely only on western funding, we could not exist,” says project coordinator Victoriya Ryzhkova.

The organisation has helped some 100,000 people in the city and saved thousands of lives over the past 28 years. But only 10% of Nochlezhka’s funding comes from government grants, another 10% from foreign funding. The rest of the NGO’s 45m rouble ($722,000) annual budget is raised from individual donations, business philanthropy and joint projects with businesses, such as a “buy and help” initiative in coffee shops last year.

With astonishing drive for an organization dating to the 1990s, Nochlezhka has co-opted banks to facilitate regular online transfers by clients and organises an annual rock concert with popular Russian musicians, which has become its star fundraising event. “Our sponsors are happy to support us,” says Victoriya, “they know that their money helps to improve the lives of people.”

Life is more difficult for organisations not working in social sphere. Human rights, environmental issues and other “political” groups still find it very difficult to raise funds in their societies. But positive examples do exist. For example, fundraising initiatives by the OVD-Info platform, which monitors political arrests in Russia, and the Anti-Corruption Foundation of opposition activist Alexey Navalny, which raised 80m rubles (1.1m euros) in 2017, more than ever before.

lead The staff at Nochlezhka, a St Petersburg NGO that helps people without homes in the city. Source: Nochlezhka. To some human rights organisations, the shift to paid services is logical. “Human rights is needed not by foreign donors, but by our society,” says Kyrgyz lawyer Fatima Yakupbaeva. The civic rights sector, she is convinced, has become “de-emancipated” by decades of foreign funding. “People have to relearn that our reality is a jungle in which you have to fight for your rights.”

Since 2012, Yakupbaeva’s organisation Precent has operated a double structure, running both an NGO and a registered law firm. Like others, Fatima says monetisation has been the only way to be financially sustainable and truly independent. “Today we define our own mission, instead of filling in endless donor documents.” It is important for her that “society learns that assistance on civic rights is not something you get for free forever,” she notes. “When people pay, they become more conscious of the deeper value of their rights.”

Others are finding the struggle more up-hill. “It is a constant fight for everything, for clients, attention and money,” says Yulya Malkova, who runs ProWomen.by, a small centre in Minsk, Belarus, supporting young women to set up their own business. In total, Malkova has not managed to raise more than $200 this year. NGOs like hers, she says, have to accept that “the public is simply not ready to pay for our ideas”. The biggest challenge for her remains to “work non-stop to reach out to my own citizens.”

“Many organisations wait for grant calls like for a white knight. They’ve never had to reach out to their own citizens and they don’t want to”

Forcing NGOs to turn to their local communities may be the biggest benefit of new monetisation strategies. Many experts see that the lack of “constituency building” by NGOs is the biggest deficiency fostered by western donor strategies of the 1990s.

“International funders have formed a whole culture of dreaming of grants,” says Almut Rochowanski, an expert working with civil society groups in the North Caucasus. “Many organisations wait for grant calls like for a white knight,” she notes. “They’ve never had to reach out to their own citizens and they don’t want to.”

Russian organisation OVD-Info monitors politically-motivated arrests and detentions at public rallies. Photo: Xinhua/SIPA USA/PA Images. All rights reserved.Thinking about fundraising, marketing and profit makes NGOs reach out and become more embedded in their own societies. “Like others, civil society has to be clear about its target audience,” says marketing expert Irina Davydenko, who advises social start-ups. For her, in-depth market research is the key for a successful transition. “Like in business, the client has to be at the heart of everything.”

In the end, the funding crisis may be a much-needed game-changer for civil society in the post-Soviet countries. According to Rochowanski, “local fundraising is the best way to encourage community buy-in, financial sustainability, stronger mandates, better programming and enhanced security.” Meanwhile the challenges of transition are huge, as NGOs learn to change long-standing management structures and rebuild their teams to include fundraisers, PR experts and digital specialists.

“Like in any other sector, NGO people should be happy and well-paid”

New critical issues stir up heated inner debates in organisations. By making money, are they shifting from partners to service providers for their clients? Who should pay and who shouldn’t have to for their services? How to keep a balance between business plans and the mission of an organisation? How much accountability can donors expect? Is it ethical to spend income on furniture and better salaries in the organization? “Inner development is as important as helping people,” says Svetlana Makovietskaya from the GRANI Centre. “Like in any other sector, NGO people should be happy and well-paid.”

“In the end, the most important is to understand monetization as a means, not an end,” says Bahrom from Tajikistan. “The aim is not to turn into a commercial structure, but stay a civic organisation able to fulfil a mission for society.”

Some are dedicated to go a long way. “If a project exists,” says Yulya Malkova from ProWomen.by defiantly, “it means that there is money for it somewhere.” However little money people give, she sees her NGO on the right way. “However small we are,” she adds, “we are already an engine working for development in our country.”

 


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