Public Funding of CSOs in Slovakia

1. Public Funding of CSOs in Slovakia • Boris Strečanský • Center for Philanthropy n.o.

2. This Presentation • Context & Role of CSOs • Basic Overview of Public Support to CSOs • Major Trends, Issues and Challenges • Lessons Learned

3. CSOs in Slovakia • From outside: Impression of a strong “third sector” that needs to get more support from the citizens • Period 1994-1998: Opposition to autocratic government • Elections 1998 - Role of NGOs • 1998 - 2006 = Democratization -> FOIA, Transparency, Reforms • => Increased Profile of Public Policy, Advocacy and Watchdog Role of the CSOs (paid by external donor funding) • Sufficient funding: 2% Tax Assignation • Sometimes closed, untrasparent or elitist

4. CSOs in Slovakia • CSOs perspective: • Poor institutional capacity (low levels of internal organizing among CSOs to platforms and coalitions, low levels of employment, low levels of volunteering, low levels of own assets) • CSOs sector is at margins of interest of the state (low level or lack of data, ad-hoc policy making, poor communication with the state) • Size and scope of services provided by CSOs to citizens is low and needs to defend against the pressures of public sector (Law on Social Services preferring public providers over non-profit ones, traditional (suspicious) public sector attitude towards active citizens)

5. CSOs - State Relationship • CSOs vs.State = Underdeveloped Relationship • Autocratic, nationalistic and illiberal movements (Mečiar, Fico) disliked the CSOs and preferred governmentalistic attitudes(1994-1998, 2006-2010) • Free-Market Liberal and/or Christian-Democratic political elites did not see hope or role for CSOs Societal Role in Reform-making, innovation of service provision (1998-2006) • ONLY 1 staff person (!!!) in the whole government – administrative secretary of the Governmental Council of NGOs (Advisory Body to the Government) => reflects limited interest and ability of government to address CSO-Gov. issues • 2010 - .....: Opportunity for Improving the Relationship?

6. Continuous Growth of NGOs Source: Slovak Statistical Office

7. Employement in Non-Profit Sector Source: Slovak Statistical Office

8. CSOs Sector in Perspective

9. Role of Public Funding in CSO Income

10. Direct Public Funding Support to CSOs • Transfers from state budget - grants from different ministries (social affaires, education, culture...) • Subsidies from the lottery revenues (Ministry of Finance) • Subsidies from central sectoral agencies thematically earmarked (Anti-Drug Fund, Environmental Fund) • EU Structural Funds / Norwegian / Swiss Funds - (Slovak government co-funding)

11. State Subsidies to Non-Profits (1996-2007)

12. Procedures • High degree of variations among ministries • State subsidies follow governmental strategies in general • Focus is often too narrow – inadequate commensuration with the pace of changes in the society • Typical Process: The Process: Applications --> Expert Committee Review --> Minister’s Decision on Support  Agreement signed and €transferred • Low level of transparency

13. Issues to be addressed • To open the pool of applicants and abolish the tradition of pre-determined beneficiaries • To improve and publicize the selection and rules for expert committee members and address conflict of interest policies, criteria for appointment, etc.) • To increase the degree of autonomy of the committee • To publish the names of the committee members • To publish the procedures and rules of committees • To open the decision-making process and invite experts from outside of the ministries • To publish criteria for selection in advance, to publish results and applicants • To justify the non-support to applicants • To review limitations on eligible expenditures

14. Issues to be addressed • To Change the Set-up of the Subsidies System from Legalistic to Performance-based • i.e. To prioritize impact/results accountability and review over formalistic reporting/monitoring • Fight the corruption and clientelism in the system – built-in checks

15. EU Structural Funds • 2007-2013 period = missed opportunity for NGOs Capacity Strengthening in Slovakia from SFs. • 2006 Change of government = changes in the programming and implementation of measures relevant to NGOs - no outsourcing, no progressive capacity building, coalition building or network strengthening • €28 million spent for education and training of NGO employees as “capacity building” from ESF • NGOs voice for correction was ignored/Formal feedback • Partnership principle preached but not implemented

16. Norwegian/EEA Funds • €5,5 million to NGO Fund • Sub-contracted implementation to grant-making foundations serving as a filter to recipients = good practice but need a lot of improvement. • A lot of red-tape and bureaucracy, intermediaries in pressure from the top and the bottom • EU and/or EEA funding is considered as burdensome for CSOs

17. Indirect Public Funding • 2% Income Tax Assignation - Individuals • 2% Income Tax Assignation - Corporations • Tax Free Income of Non-Profits from Mission-Related Activities • Some other Tax, Customs and Fees Benefits

18. Registration for “2% Tax”

19. 2% Tax Assignation(mil.EUR)

20. Lessons Learned/Questions • Who wants to see the results? Who cares about the impact? BBH. • Missed Opportunity to Invest SF into REAL Capacity Building - Lack of Understanding of Needs • Poor Implementation of SFs aimed at strengthening CSOs (politics, clientelism, incompetence, systemic barriers) • Decentralized vs. Centralized Approaches: Decentralized ones (2%) seem more resistant to management incompetence, hi-jacking or misuse (undesirable incentives) • CSOs Support Policies require Political Interest • Lack of Data => No Good Policies vs. Some Data => Policy-Making is Possible • Untapped potential in CSOs for improving the life of people (social services, innovation, anti-corruption/transparency, participation)

21. Thank you! strecansky@changenet.sk Center for Philanthropy, n.o. www.cpf.sk