CSO Financial Sustainability in Bulgaria Luben Panov Bulgarian Center for Not-for-Profit Law

BG CSO Sector Officially registered – more than Public Benefit – more than 4500 Active – somewhere between 2000 and 4500 Income – varies somewhere between 50 and 250 mln. euros per year

The International Perspective Sources of funding: 34 % - from the state (26 %); 12 % - donation (31 %); 53 % - from fees (42 %). 1,3 trillion USD is the GDP of the CSO sector; If it were a separate country - №7 in the world – before Italy, Spain, Canada and Russia.

Sources of Income Distribution of income by source % of income International donors40% Economic activity17% Membership fee11% Subsidy from the state budget8% Donations from companies8% Bulgarian non-governmental organizations 6% Donations from individuals6% Charitable events3% Subsidy from the local budget2%

Current Situation Traditional foreign donors are moving out; EU Funds are not targeting CSOs per se; Lack of local Bulgarian donors; Government grants for CSOs – less than euro in 2007; Social contracting is developing slowly; Philanthropy still not a real source for most CSOs.

CSO Dialogue with Government No regular dialogue on CSO sector development; Government has no clear strategy how/whether to deal with CSO problems; No representative structures of CSOs; Because of shrinking funding CSOs are: – partners or opponents; – project or mission based.

Possibilities? Economic activity – no tax incentives for CSOs because of bad image; Increase of budget grants and clear rules for their spending; Development of CSO contracting – social area, healthcare, education, culture; Creation of local donors; Innovative mechanisms – 1% mechanism, state foundation to support CSOs; Philanthropy – incentives are not everything but are a sign of support.

How to create local donors? Building local endowments – where will the money come from? Supportive measures for passive investments e.g. no tax on bank interests or on dividends; Can the state devote funds for creation of a special fund/foundation; Restitution of foundation property – a myth?

How can donors help? Support/assist a real dialogue with the government on CSO development; Support the creation of sustainable mechanisms for CSO financing; Help keep the CSO legal issues on the agenda of governments; Make sure CSO legal reform is on their agendas as long as needed.

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