Ukraine’s crowdfunding holds donors’ interest
Looks to reduce friction, boost transparency
The Ukrainian government is marrying some digital marketing tools with crowdfunding and other incentives for giving to keep global attention trained on its war efforts against the Russian invasion.
“There is a wave and there is this kind of euphoria, but then it abates,” Mykhailo Fedorov, vice prime minister of Ukraine and minister of digital transformation, told The Associated Press. “We want to keep up this positive energy, the positive vibes.”
Ukrainian President Volodymyr Zelenskyy tasked Fedorov, 31, the youngest member of the nation’s cabinet, with setting up a new fundraising campaign and website to encourage donations for the country’s defense, humanitarian aid and reconstruction.
That resulted in the United24 website and campaign that lets donors send funds via PayPal, cryptocurrency, credit card or direct bank transfer to the state’s accounts.
“It’s very important that people helping Ukraine are not paying money directly all the time, but that they have some fun,” said Yaroslava Gres, who runs a public relations company and is one of the coordinators of the project.
In the future, people looking to help Ukraine might buy a T-shirt with an image of Zelenskyy printed on it or attend a soccer match played by the national team with ticket or merch sales benefiting the country, Gres suggested.
“I cross my fingers,” she said of the Zelenskyy T-shirt.
Gres has asked international companies and banks to invest in repairing Ukraine’s damaged infrastructure. She envisions a menu of projects that a donor can choose to support.
They want “to see these two pictures: as it was, as it is,” she said of the before and after comparison that shows precisely where funds were spent.
Donations from individuals over a recent seven-day period totaled around $27 million, a drop in the ocean compared to the support other governments have sent to Ukraine. The U.S. alone will send over $50 billion if the U.S. Senate approves a new aid package, which it is expected to do.
On May 10, a single entity donated almost $22 million directly to Ukraine’s Ministry of Defense through the United24 site, representing the bulk of the donations that came in between May 511. The National Bank of Ukraine does not share the name of donors, a spokesperson said.
Ukraine pledges to release weekly reports detailing funds raised and dispersed. The project will be reviewed by the international accounting firm Deloitte pro bono, Sergey Kulyk, managing partner of Deloitte Ukraine, said. The company is still finalizing the scope of work with United24, he said.
Most individual donations come from political allies: the United States, United Kingdom, France, Canada and Germany, though Ukrainians have also been giving, Gres said. She considers their donations a mark of trust.
In late February, Ukraine started soliciting donations in cryptocurrencies that raised some $67 million in about a month.
Ukrainians have crowdsourced funds for national defense since at least 2014, when private campaigns raised money online for volunteers fighting Russian-allied forces in the country’s eastern region. The government also set up a way to collect donations through text messages to support the army, though that was less popular.
Garrett Wood, an economics professor at Virginia Wesleyan University, studied what motivated Ukrainians to donate to their defense at that time and found donors could chose at a very granular level to fund things like winter clothing, body armor or drones.
One group, the People’s Project, had the accounting firm Ernst & Young audit their finances, which further bolstered its credibility. In comparison at the time, Ukraine’s Ministry of Defense and its largest contractor were seen as corrupt and ineffective.
“You were dealing with an army that’s poorly equipped,” Wood said. “Rotted out from the inside from corruption, and it’s got low morale.”
In the years since, reforms have improved government accountability. Andrii Borovyk, who directs Transparency International Ukraine, pointed to online court records and procurement systems as examples of greater transparency.
“I would say that Ukraine is moving really in the right direction if you’re talking about fighting corruption. But is it fast enough? No,” he said, speaking from Kyiv.
This current crowdfunding also differs from previous examples, because civilians from other countries are now donating to Ukraine’s defense rather than Ukrainians donating to volunteer fighters. Does giving to a conflict produce desirable outcomes, Wood asked?
“One obvious answer is that anything that allows for more funding of conflict is going to produce more conflict,” he said.
It is, of course, entirely up to donors large or small to decide where to give. Derek Ray-Hill, director of international strategy at Charities Aid Foundation, said for those interested in supporting charitable causes, experienced humanitarian organizations are still working even through the apparent chaos of the current fighting.
Donating without the help of expert advice also raises the risk of breaking laws or regulations.
“To get a charitable donation from here, from anywhere, to people affected by the war in Ukraine is a phenomenally complex task,” he said, acknowledging that for many people following the war online it may feel less dynamic to give through traditional channels.
U.S. residents can donate through a nonprofit set up by the Ukrainian embassy, which allows for a tax deduction. Those gifts are also counted as donations to United24.
‘“To get a charitable donation from here, from anywhere, to people affected by the war in Ukraine is a phenomenally complex task.’
Derek Ray-Hill, director of international strategy at Charities Aid Foundation