European models and practices in public financing of NGOs Nilda Bullain European Center for Not-for-Profit Law (ECNL)

Elements of a puzzle Form of support Funding mechanism Source of support Rationale of support Principles of support Procedural rules Implementation practices “Model” of public financing

What is the purpose of funding? PurposeConceptMain forms Implementing government policy Public supportGrants Subsidies In-kind support Purchasing services for the government ProcurementService contracts (with or without tenders) Realizing obligatory government tasks Third party payment Normative funding Voucher payments

Main forms of financing Support Subsidies Grants Endowments Free use of public property / infrastructure Contracting Direct contracting (without tender) Tenders for service contracts Third party payments Per capita support Vouchers

Main forms of financing Grants and supportProcurement and contracting Third party payments AimImplementation of government policy Providing services to the government Providing a gov’t service Terms of contractSet by the governmentSet dominantly by government Set by law Key selection principle Best ideas and project plans Highest quality at the lowest price Fulfillment of legal requirements NGOs fundedSeveral applicantsOne bidderSeveral licensees Cost structureProject budgetFee based budgetBudget according to regulations Indirect costs related to the activities Percentage of project budget May be fully covered in fees General overhead % set by law

Main financing mechanisms Parliament Government (e.g. cabinet office) Ministries Independently operated special funds Public foundations Authorities (e.g. health authority) Local level (council, mayor, local funds etc.)

Possible sources General budget (central or local) Ministry budgets Designated taxes & public revenues: e.g., unemployment contributions, pollution fines, cultural tax, license fees Lottery proceeds Commitments, e.g. matching the 1% or 2% designations Joint public funds (e.g. with EU, multilateral agencies) Privatization revenues Local budgets

Basic Questions Why would the government support NGOs? What role is the NGO sector expected to fulfill in social development? What is the guiding principle of the relationship between NGOs and government? To what extent government finances NGOs?

Gov’t – NGO relationships in Europe MORE INDEPENDENT LESS INDEPENDENT LESS INSTIT. MORE INSTITUTION- ALIZED LIBERAL / ANGLO-SAXON CORPORATIST/C ONTINENTAL SOCIO- DEMOCRATIC / SCANDINAVIAN EMERGING (MED & CEE)

Relationships & public funding MORE INDEPENDENT LESS INDEPENDENT LESS INSTIT. MORE INSTITUTION- ALIZED “Partnership” (contracts) PF 35-55% “Autonomy” PF 20-30% PF under 20% “Regulatory”(support) “Subsidiarity” (normative) PF 60-70%

Guide to assembling the puzzle Rationale Mechanism Principles Procedures Source Forms Practice

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