Changes and challenges to the Icelandic third sector -Lecture- Gestur Páll Reynisson, Faculty of Political Science

Structure Introduction NGOs in Iceland: Past and Present How did the economic crisis of 2008 affect the third sector and its relations with the government? The changing nature of the volunteer sector- (Research from 2013)

A short introduction to the Icelandic volunteer sector Icelandic society –Agrarian society –Farming economy –Urbanization The volunteer sector in Iceland traces its roots to the 19th century.

Historical overview of the Icelandic third sector The “general” trend in accordance with international developments In the 19 th century and first decades of the 20 th century non-profits played a leading role both in establishing and providing health and social services – with or without limited government support Fundamental changes in the relationship occurred following the establishment of the welfare state, economic growth and social changes Following a large expansion of the government in the 1950s and 1960s the government began to dominate some areas such as hospitals and general health services Several types of public services were left to non-profits

Historical overview (cont.) Non-profits increased in numbers in the 60s and 70s, especially social movements and advocacy groups. The advocative role of non-profits in Iceland became strong in the 1960s and 1970s, with creation of human rights organizations In the 80s an effort was made to create formal contractual relations - which had not existed previously – some “tools of government” such as tax incentives were left out The small and reactive public administration seems to have had limited capability to play a leading role in the partnership (administrative capacity) A tight but informal social network of key players created complex relations early in the 20 th century Different historical paths depending on area of activity

NGOs fulfilling Public tasks Elderly care(approx. 60%) Mass care volunteering –The Icelandic emergency system consists of state, municipalities and third sector elements Various welfare task handled by different NGOs –Influential disability society, both umbrella with associate societies. –The Icelandic Red Cross and more... Other NGOs...

Different types of NGOs in Iceland Service organizations: Historically important entrepreneurial role – service provider –Revenues: Public funds, private fees, lotteries and gaming machines, corporative support –Examples: Nursing homes, Icelandic Red Cross, SAA (National Center of Addiction Medicine) Mutual support organizations: Member orientations: –Revenues: Membership fees, household donations, grants from government, rely on volunteering –Self-help groups and interest societies like AA, IceIandic Diabetics Society, Association for surviviors of sexual abuse Campaigning organizations:Social movements –Revenues: Membership fees, houshold donations, grants from government, rely on volunteering –Throskahjálp, The National Association for Intellectual disability, Sjalfsbjorg, the association of disabled in Iceland

The non-profit-government relations Non-contractual informal relations – until 1990s: NPM – development towards more detailed unit cost contracts (performance oriented?) No comprehensive legal framework for TSOs except for private foundations In some policy areas: Legal requirement for consultation Tax exemptions: TSOs: Income and property taxes, VAT, donations of private entities deduction from total tax base (0,5%) TSOs pay capital tax and donors inheritance tax System of grants (ministry level, annual basis, competitive funds (e.g. social innovation fund)) Lottery/game machine licenses for selected TSOs

The Prospective Change Agent: The Economic Crisis! Deepest economic crisis since the country´s independence in 1944 Iceland in 2011: –Still negative economic growth –Currency exchange restrictions –Approx. 8% unemployment –Substantial private and public debt –Monumental budget cuts (2011) – at the same time increasing stress on the welfare system

Increased demands in

Measures to meet decreased income

Changes (%) in communication between NGOs and relevant partners

Future scenarios for Icelandic third sector organizations The economic crisis has created new and unprecedented challenges for the Icelandic third-sector Growing demand, need for more financial and human resources Formal contracts with government will be maintained but revised Government will put up for bid new programs TSOs will press for long-term contracts More diverse revenue base More focus on household contributions Revision of the contingency strategy Efforts to improve the economy of scale and scope Constraints on human resources Emphasis on volunteers and membership Still a laissez-faire approach in the relations between third sector organizations and government

NGOs in 2016 Showed good adaptability during the recession (c.a.) Though some fundamental changes have been recognised, some are contradictory. NGOs have become more professional, more bureaucratic, decrease in volunteer effect. Why?

Changes since the recession: Diminishing role of volunteers Why has the role of volunteers diminished? –Expanded role in public service. –Service agreements with the state call for increased role and responsibility. –Increased responsibility calls for increased professionalism. –Relying on volunteers not as suitable as before. –Demands from the buyer (the state) for increased reliability (predictability).

The democratic spillover effect Increased democratic value and strength NGOs universally recognised. In general NGOs have shown strength, durability and resourcefulness in tackling the difficulties in the last recession. The role of Icelandic NGOs continues to be big, but the volunteer factor has diminished considerably. Raises questions about the democratic effect

What can Romania learn and do? –Romanian NGOs will play a key role in providing and evolving all sectors of the society. –In Iceland NGOs have been successful at defining the problem, finding innovative solutions and maintaining a dialogue with the state. –In Romania much public sector innovation work will have to involve NGOs, especially in the welfare sector. –While it is strongly recommended for the state and municipalities to have stronger relations with NGOs, fiscal monitoring is always strongly advised.

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