Tax Incentives for Grants

Tax Incentives for Grants

Published: May 29, 2013 (Issue # 1761)

MOSCOW — With some experts complaining about the decreasing quality of higher education, the government is planning to provide tax incentives for grants given to students.

Deputy Education Minister Igor Fedyukin, who oversees higher education, said last week that amendments had been prepared by the government to encourage private donors to invest their money in education programs.

“Without those resources, we will not be able to get to the required level of higher education financing,” Fedyukin said at a panel organized by the Vladimir Potanin Foundation.

The foundation, established by billionaire Vladimir Potanin in 1999, is a major supporter of education programs.

Under the amendments, those receiving any private grants from NGOs focusing on education will be exempt from taxes. Grant givers, who are currently exempt from taxes on only 25 percent of their donations, will not pay any taxes on them.

The government announced amendments to encourage private donors to invest money in education programs.

Other proposed measures will increase the reporting period for the funding of scientific projects to three to five years in order to stimulate longer-term financing and introduce unified standards for expert evaluations of scientific projects, Education Ministry official Yelena Dryganova said in April in an interview with the Science and Technology RF portal.

“We hope that proposed amendments will stimulate the private financing of science,” she said.

Fedyukin also said financial resources accumulated by charities were still insufficient.

“The development of charity efforts in education is a key thing and we can’t move further without it,” he said.

The Education Ministry’s amendments were welcomed by representatives of private organizations working in the field.

“Non-governmental investments are a resource that will become an important element in the development of domestic education and science,” said Revaz Yusupov, a spokesman for the Vladimir Potanin Foundation.

The foundation spends over $10 million annually to support various education programs in Russia, including grants to students and professors. The program covers 58 universities in various regions.

The new amendments might also help foreign-funded NGOs focusing on education programs. Yelena Danilova, a member of the board of trustees of the New Eurasia Foundation, said the amendments allowed Russian participants to introduce their innovative projects at leading U.S. universities, such as UCLA and the University of Maryland.

“Russian universities can go to the U.S., test their innovations and invite foreign investors,” Danilova said at the panel.

The funding of science and education in Russia has benefited from the creation of endowments after legislation regulating them was passed in 2006.

There are currently 87 such endowments worth a total of 18 billion rubles ($581 million) in Russia. While the first endowment fund was founded in 2007 to support the Skolkovo School for Management, the majority of similar ones were established at leading Russian universities.

Potanin was among the active supporters of the endowment legislation and took part in the establishment of the MGIMO Development Foundation, created to support education programs at the Moscow State Institute of International Relations (MGIMO).

The businessman donated over $6.5 million to the university, his alma mater, from 2008 to 2012.

Ironically, MGIMO, which is considered prestigious among the local elite, was not included in the top five Russian universities in an annual ranking released by the Vladimir Potanin Foundation in May.

The St. Petersburg State University ranked first, followed by the Moscow Physics and Technology Institute, Boris Yeltsin Urals Federal University, Novosibirsk State University and Moscow State University.

Vladimir Potanin Foundation head Larisa Zelkova said the ranking rated the level of students’ education, as opposed to university equipment or students’ scientific publications.

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