ECNL provides ongoing support to CSOs in Ukraine in various fields, including in the area of financial sustainability. Currently, Ukrainian CSOs heavily depend on international donors and have limited available sources of funding. Digital fundraising has an untapped potential to attract resources for local CSOs that are now predominantly using standard methods of raising funds from private donors. The discussion about how to diversify funding and use new technologies to do so, is therefore very timely.
As part of our efforts to promote the development of philanthropy, ECNL released an updated research on the use of digital fundraising tools in Ukraine:
The findings of the research, developed by Mariya Heletiy, were presented at a webinar on digital fundraising, co-organised by ISAR Ednannia. The webinar, held on November 18, 2021, raised awareness on digital fundraising methods and their regulation and identified potential challenges and opportunities for future reform for over 100 participants.
Potential risks, benefits and trends
Eszter Hartay from ECNL launched the discussion by presenting potential risks, benefits and trends in digital fundraising. Some of the most common benefits Eszter mentioned were the possibility to organise campaigns across borders and to create donor prediction models that allow CSOs to tailor their fundraising campaigns. On the other hand, she also warned about risks, such as the incorrect handling of donor data or non-transparent use of algorithms in fundraising campaigns. One of the trends she described was the expansion of online and crowdfunding platforms that CSOs increasingly use for fundraising purposes.
ECNL has been mapping the regulatory trends around digital fundraising in Europe for several years and in early 2021, we published a comparative research paper dedicated to this topic.
Regulation in Ukraine
Mariya Heletiy presented the Ukrainian perspective on digital fundraising based on the updated research. One of the key findings is that overall, there is a lack of specific digital fundraising regulation in the country. Still, some digital fundraising methods (i.e. PayPal and donations in cryptocurrencies) are subject to some restrictions. This is due to the strong focus and control of the National Bank of Ukraine on Ukrainian banks. However, progressive legislation that is currently in the pipeline (e.g. Open Banking concept and Draft Law on Virtual Assets) may help to overcome these challenges. Another finding was that despite the existence of tax deductions for donors, only a very few of them actually benefit from these. Some of the reasons might be that the incentives are not significant and the procedure to obtain them is very bureaucratic.
In her recommendations, Mariya suggested to study international experiences and comparative country legislation to learn about best regulatory practices. She also highlighted the need to work more on transparency, good image of CSOs and to establish good relationship with the state. For the legislators, she also recommended improving the system of tax benefits for donors and increasing awareness of tax authorities about their administration.
Fundraisers’ experience using various digital tools
A panel of fundraising practitioners from Ukraine added input to Mariya’s findings and talked about their practical experiences using digital fundraising tools. Roman Vintoniv outlined the benefits of the Patreon platform that enables content creators to raise funds for the articles, videos or other types of content shared on the platform from its subscribers. It has a potential for CSOs to increase their funding and raise even 10,000 USD per month on subscription fees. When it comes to receiving donations in cryptocurrencies, Yevhen Shulha highlighted its main advantages, including flexibility and quick access as compared to bureaucratic grants and public funding schemes.
Two panelists shared experiences with their own digital fundraising projects. Iryna Solovey from Biggggidea discussed opportunities of online crowdfunding platforms as her organization is currently piloting one. She believes that digital fundraising is about creating a community, not only about money. To attract donors, she thinks that CSOs need to work on their strategy and central story when raising funds online and they need to know how to express gratitude for the received support.
Dmytro Fedorenko presented his organisation’s platform Tvoia Opora that brings together various stakeholders, including CSOs, experts, celebrities, professionals with different backgrounds. The aim is to allow CSOs to meet with other stakeholders and gain experience through various meetings, events and charity workshops. The platform also allows to support specific projects and initiatives.
Good practices in digital fundraising
To support the expansion of digital fundraising, ECNL just launched the Good Practices in Digital Fundraising formulated based on our research and a series of expert discussions. They aim to create some standards that CSOs and all stakeholders can consider and follow when engaging in digital fundraising. They are based on already existing international and regional standards and/or good practices we have observed through our work and in discussion with fundraising experts. As digital fundraising rapidly evolves, we consider this to be a living document subject to regular updates.
Our activities promoting the development of philanthropy are organized as part of the ‘Sustainable Framework for Public Fundraising’ regional project, managed by ECNL. The project is made possible by the International Center for Not-for-Profit Law (ICNL) through the Civic Space Initiative.