No. 2, 2009

Igor Beketov ,
General Director of the LUKOIL Charity Fund


Competitions for social and cultural projects are an effective mechanism for distributing LUKOIL charitable funds

Since the first days of its existence, LUKOIL has, through its own Charity Fund, developed and implemented various programs for improving the social climate in the areas where it operates. One form of the Company's social partnership with the areas in which it operates is competitions for social and cultural projects whose aim is to support initiatives by members of local communities to solve the real problems faced by Russia's regions today, and to improve the quality of our charitable aid.

The principles of LUKOIL's Social Code

The competition mechanism for distributing the Company's charitable funds was first used by LUKOIL in 2002. This coincided with the adoption of the LUKOIL Social Code, in which the principles for its collaboration with Russia's regions were set forth. The most important of these was social partnership. One mechanism for realizing this partnership was the Competition for Social and Cultural Projects.

The main task of the competition was to stimulate social initiatives and create the conditions for building a broad class of active citizens capable of independently solving their own problems, and the problems of their communities.

The project-based approach to this task is one possible way of raising the effectiveness of organizations working in the social sector. The format of the competition calls for close cooperation both with government agencies at the regional level and with local authorities, along with involving noncommercial organizations and the ordinary people who actually live in Russia's regions in the solving of social problems.

The procedure for holding competitions in all of Russia's regions is governed by a single system. A competition commission, consisting of representatives of the heads of local government agencies, public and municipal organizations, deputies of local representative organs, and LUKOIL representatives, is set up to judge the results of each competition. Expert groups are created to organize consultations, accept applications, act as judges, and oversee projects. These expert groups are made up of regional representatives of LUKOIL's public relations department, deputy chairmen of the Company's unified trade union organization, and municipal regions' deputy directors for social problems.

After the projects have been studied by the expert groups, they are presented to a commission, at whose meetings the results of the competition are decided and the winners are determined. One contest principle is cofinancing. A mandatory condition for receiving a grant is that each organization applying contributes no less than 30% of the requested sum.

Financing from LUKOIL is an incentive for the contestants to solicit additional funds: they must seek out other organizations that are willing to bankroll their projects and interested in the announced results. This mechanism for partnership between business, the public, and government agencies is today increasingly attractive to small and medium-sized businesses. It is calculated that every ruble invested by oil companies in social projects returns up to three rubles in additional investments.

Each annual competition for social and cultural projects has several categories. The names of these categories are the same for all regions: Ecology, Charity, Culture and Art, Physical Culture, Sport, and Tourism, and My Native Region. In Russia, 2008 was declared the Year of the Family, and the additional category of Family Values was added. It rewarded the best projects aimed at popularizing family values. In 2009, a special category dedicated to the Year of Youth will be offered.

The Competition for Cultural and Social Projects is now held in ten different constituent entities of the Russian Federation. The number of participants is continually growing. In seven years, the competition has received some 6,000 applications; of these, more than 1,000 socially-oriented projects totaling more than 200 million rubles have been realized. In 2008, the competition's budget was 25 times larger than it was in 2002, and more than 300 projects, carefully selected out of 1,600 applications, received grants.

For several years now, the competition has gotten high marks from the public, the business community, and the government. In 2007 and 2008, LUKOIL's Competition for Social and Cultural Projects program was a winner in the annual Corporate Donor of Russia competition, in the category of Best Program for Realizing Trilateral Cooperation between Business, Noncommercial Organizations, and Regional (Local) Government Agencies. The competition is held on the initiative of the RF Ministry for Economic Development, the Donors' Forum, the Russian Union of Industrialists and Entrepreneurs (RUIE), and the RF Public Chamber Commission on Problems in the Development of Charity, Charitable Organizations, and Volunteer Work.

From the Baltic to the Caspian

In the Perm Territory, LUKOIL has been holding the competition regularly since 2002. It has traditionally been held on four levels: corporate, municipal, rural, and among the heads of municipal organizations.

In 2008, more than 30 districts of the Perm Territory took part in the competition. A total of 1,207 applications were received, 208 of which ended up as winners. As a result of the projects implemented in the towns and villages of the Perm Territory, some 30 sports facilities (both large and small) were opened. Many public squares and parks were beautified, including one square located in the historical center of Kungur and extending into the protected zone of the Kungur Open-Air Museum of History, Architecture, and Art. Funds from another grant were used to organize an international volunteer camp in the Cherdyn District, attended by students and other young people from Russia, the United States, Denmark, and Iceland. Some of the projects were aimed at preserving and reviving national traditions of the Tatar and Bashkir peoples, popularizing ideas of spiritual unity and interethnic harmony, and restoring Orthodox cathedrals and Muslim mosques.

The first competition for social and cultural projects in the Volga area was organized jointly with LUKOIL-Nizhnevolzhskneft in 2004. Since 2005, noncommercial organizations from the Astrakhan Region have been invited to take part in the competition. In 2008, the competition mechanism was adopted for use in the Republic of Kalmykia.

In the last few years, a great many projects aimed at environmentally enlightening the local inhabitants and drawing attention to the problems of environmental protection have been implemented in the Astrakhan and Volgograd Regions. A number of winning projects are developing the practice of ecological tourism by organizing ecology excursions, lectures, and tourist jamborees. We also cannot ignore the one-of-a-kind projects aimed at preserving the cultural legacy of Russia's hinterlands. A unique historical monument uncovered by archaeologists, a burial complex from the Sauromat-Sarmatian era (2nd to 1st century B.C.), not only put the Volgograd area on the map, it rounded out an exposition at one of the Kremlin's museums.

The Strategy for Success Competition for Social Grants has been held in Western Siberia since 2005. Of the 61 applications submitted in 2008 by representatives of Kogalym, Langepas, Pokachi, Urai, and Tazovsky District, 18 contestant organizations have emerged as winners. In the village of Tazovsky, public sports programs for the handicapped have reached new heights thanks to the grants, and steps to promote ecological awareness have also been taken.

In continuing to apply the experience gained in distributing charitable funds through competitions, the first Nizhny Novgorod Region Competition for Cultural and Social Projects was held in 2007. Nizhny Novgorod public organizations and government agencies have submitted 130 applications to the competition in just two years. As a result, 40 projects have been recommended for financing. Thanks to the projects' implementation, the problems of rallying and motivating Volga area youth to take action have been solved. In the Nizhny Novgorod Region, there is now a permanent camp for handicapped children, where youngsters with serious illnesses like infantile cerebral paralysis are treated with the help of unique methods such as teaching them to ride horseback.

Experience in holding competitions for cultural and social projects has been needed in the Kaliningrad Region since 2008. From the very first day, the public showed a lively interest along these lines, and 52 applications were submitted to the contest. The competition committee decided to award project grants to 11 contestants.

As a result of the competition winners implementing their projects, steps are now being taken in the Region to protect the environment, to develop soccer programs for teenagers and younger children, and to create opportunities for youngsters to discover the sport of sailing. Sports grounds and facilities are also being renovated. Using the funds from yet another grant, the city's Central Hospital has acquired exercise equipment for restoring joints, a necessary step in the physical rehabilitation of patients.

In the seven years of its existence, the Competition for Cultural and Social Projects has proven its right to be called a unique launchpad for the development of social initiatives. Experts recognize that the effective mechanism of a competition containing its own motivational element is worthy of being copied in federal programs. It allows those who implement their projects to develop, to set their own goals, and to advance steadily toward achieving them, with the help of LUKOIL's informational and financial resources.

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Oil of Russia, No. 2, 2009
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