Georgian Businesses Reluctant To Donate To Public Sector

by Lika Chakhunashvili & image by Emil Shukurov

In early spring 1997, ISAR-Georgia carried out an investigative "Needs Assessment" to identify Georgian NGO needs and problems. During this process, ISAR-Georgia surveyed 88 NGOs from Tbilisi, Khashuri and Ozurgeti and, among other issues, explored sources of financing for NGOs. Throughout the country, it was clear that the sector is dependent on international funds-for example, of the Tbilisi-based NGOs, seven percent responded that businesses are their major financial supporter, while 70 percent are sponsored by international foundations. In the Khashuri region, the numbers showed only six percent had gathered major support from businesses and 50 percent from foundations. None of the Ozurgeti NGOs had received help from the business sector, with nearly 75 percent receiving foundation support.

An interesting example is Junior Achievement-Georgia, a group that promotes economics education in Georgian schools. "If there is an NGO in Georgia for which it should be easy to establish relations with business, that NGO would seem to be Junior Achievement-Georgia," comments Niko Orvelashvili, one of the founders of Junior Achievement-Georgia and the President of the International Center for the Reformation and Development of the Georgian Economy (ICRDGE), "but even for us it is not easy."

In the past, economics has not been taught in Georgian secondary schools. Junior Achievement will begin teaching economics in 30 schools this academic year. The fund has trained teachers and translated and published a textbook on applied economics.

"The business sector should recognize that, by preparing well-educated specialists for business, we support its prosperity and development," Orvelashvili states. "One banker easily grasped this logic and decided to support children's economic education with the intention in the future of recruiting the best students for his bank. This banker is a unique exception to our experience. During two years of establishing our economic education program, we managed to attract only 3,000 lari (about $2,300) from local businesses, only five percent of the resources we have allocated for this program. Again, I stress that we and businesses speak the same language-businessmen need us and often ask us for advice, we have broad contacts in the business community, we know their weak and strong sides-and even we have difficulties in attracting funds from business. I can imagine how difficult it could be for charitable, environmental and other NGOs."

Nevertheless, some successful examples exist. At least one Georgian environmental NGO has experience in such fundraising. The Georgian Center for the Conservation of Wildlife (GCCW) has found a way to establish regular relations with the business sector. Since the autumn of 1996, the Georgian-British joint oil and gas company, JKX, has provided regular donations to the Center for the production of the GCCW's television programs about wildlife in Georgia. The Georgian firm Kartu also once donated some money for the production of these television programs; unfortunately the company was unable to continue sponsoring the NGO because the company itself faced financial difficulties. Currently, donations from businesses are approximately 15 percent of the Center's budget.

Ramaz Gokhelashvili, the executive director of GCCW, explained that it took tremendous time and energy to persuade the businesses to contribute. "With support from international foundations, we had already produced our first television programs. We went to different companies, showed them our films and offered to mention their name as a sponsor at the end of the program if they would support future productions; for them, this would serve as a good-will advertisement," Gokhelashvili commented. "The result was that two out of six companies became our sponsors. The rest have not yet given a final refusal, so we now are in the process of negotiation."

Based on discussions with NGOs and business leaders, it appears that important reasons why the business sector has not yet provided significant support to NGOs include a lack of information about the sector and a mutual lack of trust between NGOs and for-profit organizations. During the Soviet period traditions of charity were totally ignored and forgotten; only now are they slowly recovering. Often, business leaders are not completely aware of the benefits the public sector can provide both society and business and, for its part, the public sector is often suspicious of business. NGOs must do a better job of publicizing their activities throughout society. At the same time, we must all be realistic and recognize that, at this moment, the business sector in Georgia is also developing and it is not strong or stable yet.

We must also consider the effect of legislation on donations from business. Neither past legislation nor the newly-adopted Tax Code of Georgia create an environment conducive to donations. Businesses receive no tax benefits for their support of public organizations. Nevertheless, the Georgian NGOs that took an active part in writing and lobbying for amendments to the tax code last year consider the Parliament's decision not to provide businesses with deductions for donations to public organizations to be correct based on the current situation in Georgia.

Orvelashvili, who participated in the process with ICRDGE, and Vazha Salamadze, President of the Business Law Center, believe that during the current transition period a real possibility exists that businesses could abuse a tax deduction provision. Such abuse would have a negative effect not only on the tax collection rate but also on the future development of the public sector in Georgia. Both noted, however, that with time and improvements in the tax collection system, it will be necessary to revise the tax code to provide benefits for business donations to the public sector.

Finally, businesses in Georgia today have no institutionalized charity departments or persons assigned to such responsibilities. It is a new experience for NGOs to suggest project ideas to businesses. As a result, many contacts are spontaneous and often confuse both sides.

Despite all of these difficulties, even in the poorest communities some reserves for charity might be available, and, if the local organization chooses the right strategy and recognizes the barriers, it still can attract funds from local businesses.

This is one of the reasons ISAR-Georgia currently works on promoting NGO-business relations through its training program. A session on community fundraising is included even in the introductory NGO management course for newly established NGOs. Giorgi Tsintsadze, ISAR-Georgia's training program coordinator, noted a lack of effort among both well-established and new NGOs to reach out to the business community. "During the different trainings, we always ask participants to share their experience of communication with the business community. As of now, very few have had anything to say," Tsintsadze noted.

At the trainings, NGOs are given examples of how to attract attention from business, how to use different forms of communication, and how to identify areas of common interest with businesses.

The existing situation is best summed up by the comment of one Georgian NGO leader that "it is lucky that international foundations are operating in Georgia." Orvelashvili's opinion is that "until a considerable part of Georgian society becomes wealthy, NGOs in Georgia should expect nothing from local businesses."

However, there are examples of success despite the difficult economic situation, and a thorough search would find more examples of successful cooperation between NGO and businesses. These will grow in the future-but as of today, NGOs rarely receive donations from businesses, and those received are small.

Lika Chakhunashvili works at the ISAR-Georgia's Press Center.