1. This presentation has been produced with the financial assistance of the European Union under the project “Strengthening the Legal Framework for Citizen Action through Freedom of Association,” implemented by the European Center for Not-for-Profit Law. The contents of this presentation are the sole responsibility of ECNL and can under no circumstances be regarded as reflecting the position of the European Union. Copyright © 2008 European Center for Not-for-Profit Law COMPARATIVE MODELS OF PUBLIC FINANCING OF NGOs BAKU, MAY 30, 2008 Dr. Dragan Golubović, European Center for Not-for- Profit Law, Budapest

2. 1) WHAT IS NGO? NGO: COMMON NAME FOR ORGANIZATIONS THAT ARE: ENTITIES IN PRIVATE (RATHER THAN PUBLIC) LAW. ORGANIZED VOLUNTARILY. ESTABLISHED TO PURSUE NOT-FOR-PROFIT GOALS. NOT PART OF THE GOVERNMENT’S (STATE) STRUCTURE. NGOs: associations, foundations, private institutions, not-for-profit corporations, etc NGO/NPO/CSOs.

3. 2) COMPARATIVE MODELS OF PUBLIC FINANCING OF NGOs TWO MODELS OF PUBLIC FINANCING OF NGOs: INDIRECT FINANCING (TAX BENEFITS TO NGOs AND FOR PRIVATE GIVING TO NGOs). DIRECT FINANCING: FINANCING FROM BUDGETARY RESOURCES (STATE AND LOCAL AUTHORITY). THE PRESENTATION (AND THE SEMINAR) ADDRESSES ISSUES RELATING TO DIRECT PUBLIC FINANCING OF NGOs ONLY.

4. 3) Revenue Sources (Excluding Volunteers) Country Fees/Dues Government Philanthropy Germany3264 3 Netherlands39592 UK45479 US315713 Poland602415 Hungary552718 Czech Rep.473914 Slovakia552223 Johns Hopkins Comparative Nonprofit Sector Project

5. 4) NGO Sector Revenue Sources Source: John Hopkins Comparative Nonprofit Sector Project

6. 5) COMPARATIVE MODELS OF PUBLIC FINANCING OF NGOs Two Basic Models of direct government funding  Grants, subsidies (to finance NGOs projects, support their institutional development, make up for low fees for services)  Contracting (paying for services provided by NGOs) Other Innovative Approaches  1% Law (Hungary, Slovakia, Poland, Romania).  National foundations for civil society (Hungary, Croatia, Estonia).  Use of underutilized municipal property and other kind of in- kind support (Ukraine, Tajikistan, Poland).  Use of privatization proceeds to support activities of foundations (Check Republic).  Use of lottery proceeds (EU good practices).

7. 6) COMPARATIVE MODELS OF PUBLIC FINANCING OF NGOs  Level of funding:  Central level  Ministries, offices for collaboration with NGOs (Croatia, Montenegro)  National civil society foundations, funds (Hungary, Croatia, Estonia)  Local level:  Local governments, community foundations.  Community foundations – attractive form of public/private partnership.

8. 7) COMPARATIVE MODELS OF PUBLIC FINANCING OF NGOs: KEY POINTS Public financing of NGOs critical for their sustainability. Public financing is an opportunity, not an inherent right to NGOs. Different models and levels of public financing do not exclude each other, rather they are compatible. Mechanism of public financing benefits if it is supported by policy documents which entail key principles of public financing: Compact Code of Good Practice in England: public financing should be goal oriented, multi-year project should take priority.

9. 8) COMPARATIVE MODELS OF PUBLIC FINANCING OF NGOs: KEY POINTS Transparency and accountability key elements. Transparency: open calls to submit project applications, clear rules of procedure for applications, clear rules of evaluation of applications, decisions on applications made to public, clear rules on conflict of interests for members of institutions and bodies that evaluate and decide on submitted applications. Accountability: Reasonable reporting requirements prescribed for NGOs that have received grants (proportionality between grants received and reporting requirements). Effective mechanism to monitor and evaluate of how grants are spent.

10. Contact information: Apaczai Csere Janos u.17, 1st floor, Budapest 1052,Hungary phone: + 361 318 6923 fax: + 361 266 1479 www.ecnl.org Email: dragan@ecnl.org.hu THANK YOU!