USSR Builds on New Foundations

Scores of private grantmaking organizations are funding special projects in the Soviet Union. SOVIET PHILANTHROPY

SERGEI STAROSTIN of the Institute of Oriental Studies has long wanted to complete his etymological dictionary of the North Caucasian languages. Now, with a $2,300 grant for a computer, his work can get under way. The news? It's not that a scholar got a computer. It's that the grant didn't come from the government, which for decades has held the purse strings for such projects. It came from the Soros Foundation - one of scores of private grant-making foundations that, in a quiet but massive development during the last three years, have sprung up across the Soviet Union.

The relatively unreported story of the astonishing rise of private philanthropy here may be one of the most telling bits of evidence about the ongoing privatization of the Soviet economy - a privatization that, according to economists inside and outside the system, will have to occur if the Soviet Union is to solve its economic problems.

``The real story in the Soviet Union,'' says James A. Joseph, president of the Washington-based Council on Foundations, ``may be the emergence of a charitable sector, the flourishing of private initiatives, and the formation of foundations and other forms of organized philanthropy.''

Tair Tairov, a specialist on Soviet foundations who heads the nongovernmental section of the Institute for World Economy and International Relations at the Soviet Academy of Sciences, agrees. ``There is tremendous frustration [with government], and people are seeking alternatives,'' he says. ``They don't believe anymore in the system, and they think that we have to do something ourselves.''

This newfound, do-it-yourself mentality is breaking out in numerous directions:

In Lithuania, the tiny Group for Aid to Former Political Prisoners and Exiles regularly doles out grants of 30 rubles ($50 at the official exchange rate) to individuals imprisoned and impoverished for political reasons.

In Zagorsk, a modest home for deaf-mute children received nearly 80,000 rubles ($133,000) last year from the Foundation for Social Inventions.

In Leningrad, a well-known television personality has established a foundation named Chelovek (``man'' in Russian) to funnel funds to elderly pensioners living alone and in poverty.

Within days of a fire that swept through its stacks, the Library of the Academy of Sciences in Leningrad received a promise of 100,000 rubles ($167,000) from the Moscow-based International Foundation for the Survival and Development of Humanity.

All across the USSR, churches are reengaging themselves in charitable work - much of it in hospitals, where hard-pressed doctors and nurses are beginning to welcome religious volunteers.

What do these groups have in common? They're all based on private, nongovernmental contributions to worthwhile causes - causes that, in the rhetoric of the pre-perestroika Soviet Union, either didn't exist or were assumed to be adequately met by state funding.

To outside observers, the growth of a Soviet charitable sector may seem almost a contradiction in terms. Private grantmaking, which requires an accumulation of wealth, is sometimes thought of as the last logical step of capitalism - hardly something that could be expected to arise within a communist system.

But from dozens of interviews with Soviet foundation personnel in Leningrad, Kiev, Moscow, and Vilnius (Lithuania) - and from discussions with a delegation of American foundation executives during a tour of the Soviet Union earlier this year organized by the Council on Foundations - the following picture emerges:

Foundations are mushrooming across the nation. Most are small and devoted to specific purposes. But a few, with millions of rubles to distribute, fund a broad range of projects.

While some money comes from the new ``cooperatives'' or privately held businesses - which can realize significant tax advantages by contributing to charities - the bulk of the donations seems to come from individuals. With rising wages and an acute shortage of consumer goods, Soviet citizens have amassed considerable savings - an estimated 300 billion rubles ($500 billion), according to recent estimates. Some of those rubles are flowing into foundations.

No clear regulatory framework is in place. Each foundation is established by a special decree from the Central Committee or the Council of Ministers. ``It's like having an act of Congress every time you want to open up a foundation,'' says Antonina W. Bouis, executive director of the New York-based Soros Foundation, which recently helped set up a new foundation, the Cultural Initiative, in Moscow.

Nor are there any standard spending requirements or widely accepted rules of accountability to govern the operation of foundations. ``There is a lack of tradition in this area,'' says Roald Sagdeev, former director of the Institute of Space Research for the USSR and a board member of the International Foundation for the Survival and Development of Humanity. So new is the concept, he notes, that ``we have only one particular word'' in Russian for these organizations. The word fonda can be translated either fund or foundation.

Unlike the United States, there is no culture of proposal-writing and grantmaking. ``A lot of the proposals are downright silly,'' says Ms. Bouis. That doesn't trouble Gennady P. Alferenko, founder and director of the three-year-old Foundation for Social Inventions. ``The main idea of [this] foundation is to help innovative people who have very, very free and new thinking, who are ready to risk and to break the old thinking,'' he says.

The long tradition here of sympathy for the less fortunate, coupled with an inherent distrust of government, makes charity an appealing activity. ``Every member of this society has had a relative put away for some reason'' by the government, says John Nicolopoulos, a longtime Moscow-based, free-lance journalist from Greece. He notes, too, that a common history of hardship, engendered by war, poverty, and official oppression, has created a unified sense of community and a desire to help one another.

UNLIKE its American counterpart, the typical Soviet foundation begins not with a lump-sum donation from a wealthy investor, but with many small contributions. Nor is it an endowment in perpetuity, investing its capital and distributing only the income - in part because, with Soviet banks paying very low interest on savings accounts, the income would be small.

Most foundations here operate, instead, as pass-through organizations - spending with one hand what they raise with the other. Not surprisingly, there are few clear distinctions between fund-raising and income-distributing activities:

The All Russian Cultural Fund, which assists in the restoration of monuments and folk culture and plans to produce the first Russian encyclopedia, has invested 200,000 rubles ($333,000) in setting up a number of small money-making ventures in jewelrymaking, woodcarving, and other indigenous crafts.

The International Foundation, whose board includes Soviet physicist Andrei Sakharov and former Massachusetts Institute of Technology president Jerome B. Weisner, hopes to realize 9 million rubles ($15 million) from a joint venture involving Melodia, a Soviet rock group, and Greenpeace, the international environmental organization, in the production and sale of a rock recording.

The Foundation for Social Inventions is thinking about launching a lottery with electronic goods as prizes. In a nation where a VCR can cost 4,000 rubles ($6,700), such prizes are very attractive.

Chelovek, in Leningrad, has extensive plans to build and operate a hotel, an ice cream factory, a limousine service, and numerous other ventures to raise money for its grantmaking activities. ``We've chosen for ourselves a very broad area of activity - those areas that can give us the maximum commercial effect,'' says Chelovek's founder, Vladislav Konovalov. His goal is to put ``half of the profits'' of these ventures into ``cost-free food, medicine, and the requirement of various technical equipment needed by invalids.''

This melding of fund-raising and grantmaking sets the Soviet foundations apart from their American counterparts. ``There's generally a distinction between the funding sources and the organizations that carry out the tasks [in the US],'' says Bruce R. Sievers, executive director of the Walter and Elise Haas Fund of San Francisco, a member of the Council on Foundations delegation. ``It's very, very tricky and can easily move into personal agendas if you don't have that distinction.''

Why the sudden spawning of foundations? Mr. Konovalov and others point to the new political climate under Soviet leader Mikhail Gorbachev. Some foundations have responded with a rush to send down roots as quickly as possible. ``There's a sense of urgency on all of our parts to get things done and to do what we can while the chance is there,'' says William G. Miller, president of the United States branch of the International Foundation.

Some foundations seek to bolster Mr. Gorbachev's reforms. ``I consider that our activity here should create a new paradigm for the people,'' says Mr. Alferenko. His goal is to inculcate a sense of community independence and ``get rid of the old Stalinist thinking that for every step you're going to make you have to ask permission.''

Most foundation officials point to several key developments that have allowed them to flourish: the economic crunch, which has caused the government to look with increasing favor on private solutions to public problems; the new openness to foreign (particularly American) models of organization and capitalism; growing official interest in individual initiative; and willingness to discuss and reassess the past.

THAT past has not been kind to private philanthropy. The word charity, says an English teacher associated with the foundation world here, ``was not pronounced for 70 years'' after the revolution in 1917. Private foundations and charitable fund-raising campaigns, which existed in 19th-century Russia, were outlawed after the October Revolution. In 1929, charitable activity by religious organizations was also forbidden by the Communist government. ``They thought that everything was possible without God, without church, and without religion,'' says Archpriest Vladimir Sorokin, rector of the Leningrad Theological Academy, one of the nation's three active seminaries.

After World War II, the Soviet Peace Fund began collecting volunteer donations from the public - in part to improve defense programs, and in part to improve the image of the Soviet Union around the world. Tightly controlled by the central government, the fund is widely criticized for its lack of accountability and its bald partisanship.

After Gorbachev's accession to power in 1985, the private-foundation movement began. The Children's Foundation, founded in 1986 as the Soviet Union's first private charitable fund, raises some of its money from voluntary contributions. But it, too, is strongly tied to the government, deriving some of its income from the sale of special postage stamps. Within several years, the independent foundations began to emerge: The Charity and Health Foundation, the Cultural Initiative (the new name for the Soros Foundation - Soviet Union), and the International Foundation all began operating in 1988.

Not surprisingly, these foundations are still feeling their way. Yet the public response has exceeded expectations. ``We had our first deadline for proposals in September [1988],'' says Bouis, ``and in one month we received 2,300 applications.'' Money, too, has come pouring in from individual contributors. ``We started from zero,'' says Alferenko of the Foundation for Social Inventions, ``and now we've got about 8 million rubles [$13.3 million].''

WHERE will this new thrust into foundations lead?

Most Soviet foundation officers appear to share the view that, as Prof. Tairov says, ``the situation in this country is very volatile: There are thousands of ideas and thousands of programs.''

The situation amounts to a kind of primordial soup, in which foundations, informal social-action groups, new political movements, private enterprises, and government entities are all swirling about in relatively undifferentiated states. Sorting them out - not only in law, but in the hearts and minds of the citizenry - may not be easy.

``There have been no philanthropies functioning for 70 years here,'' says Bouis of the Soros Foundation. ``Culturally, it's been inculcated that it's a bad thing to need charity - it's a bad thing to ask for help in a socialist society where you should have everything.''

That attitude has been used effectively by conservative, anti-perestroika forces to cast doubt on the direction of the Soviet reform movements in general and the role of foundations in particular. And with the growth in private property has come a more vocal distrust of the wealthy - and more numerous incidents of racketeering and gangsterism.

Yet there is also a burgeoning sense of individual initiative for foundations to build upon. Last March, a delegation of American foundation executives attending a meeting in the offices of Komsomolskaya Pravda was publicly introduced to a Soviet electronics manufacturer proudly billed as ``a self-made millionaire.''

Another problem facing the fledgling foundations is organizational structure. With few models to draw from, Soviet foundations have largely patterned themselves on other Soviet institutions. ``Most of the foundations are totalitarian, set up from above,'' notes Tairov. ``They don't have an image [yet] in the nation that here is a place you can go and solve your problem.''

Yet the very newness of the concept guarantees a certain flexibility. ``It is a sort of experiment here,'' says Yevgeni P. Velikhov, chairman of the International Foundation and a senior adviser to Gorbachev. Foundations, he says, ``have very special privileges. You already have the charter, and this charter makes many things possible for which you do not need to ask government for [permission].''

American foundation executives find this freedom and willingness to experiment both surprising and engaging - although they have misgivings about the standards of organization in the Soviet foundation community. ``I was impressed with the ability of people starting these enterprises to identify what seemed to me really worthwhile ideas,'' says Humphrey Doermann, president of the Bush Foundation in Saint Paul, Minn., a member of the Council on Foundations delegation. ``I was less impressed with the complexity and sophistication of their internal processes for executing those ideas.''

Many share the conclusions of the Soros Foundation's Bouis. ``I can't think of a more exciting place than the Soviet Union,'' she says, ``because everything is hopping, everything is jumping, everybody's ready to do something. I think if we had a motto, it would be, `Why Not?'''