ERNOP

National policies and the role of the philanthropic sector in different countries, among which the relation between philanthropy, the state and private companies.

Czech Republic – Katarine Svitkova (Anglo-American University)

 

 

According to the Neziskovky.cz (main information portal on NPOs in the Czech Republic) there were 107 028 non-profit organizations in the CR in 2009, nearly 69 thousand of them are civic associations and more than 30 thousand are branches and organizational units of NPOs. The number of foundations was 429. The numbers are an overestimate, as NPOs typically fail to report when they cease to exist. The numbers also fail to correspond to the numbers published by the CSO, which offers numbers consistently lower.

 

CSO (Czech Statistical Office, the main source of the data on NPOs; currently introducing the Satellite Account for NPOs to improve monitoring and reporting) estimates/monitors the size of the sector in terms of employees and HDP contribution: in 2007, it estimated the contribution of volunteering to be 10.5 billion CZK (400 mil Euro). NPOs employ nearly 40.000 people full time, 132 thousand people part-time and on contracts, and there are 1.2 million volunteers. (CR has 11 million people).

 

Historically, the NPOs in the CR focused more on sport and physical training/education (as these were the only organizations that were able to function during communism). Thus, according to the report on non-profit sector prepared by the government in 2003, 80% of the public funding (subsidies) went to social services (36%), sports (34%) and culture and cultural heritage (11%).

 

The Czech Republic has an institutional body that ensures communication between the government and the non-profit sector, RVNNO, Governmental Council for Non-profit and Nongovernmental Organizations. It functions as an advisory board of the government since 1992.

 

The main project of the board in the last 3 years was to conduct an analysis of the third sector in the country and use it to specify a strategy for future development of the sector. The analysis was performed in 2008, with cooperation of academics and representatives of the nonprofits and discussed at a roundtable. The strategy was presented to the government and approved in January 2009.

 

Most of the questions posed for the A3 session were identified by the RVNNO as the important questions/problematic areas that need to be addressed in the near future the Czech Republic. Namely, they are the following:

• Transparency of the sector
• Legislation
• Financial sustainability
• Cooperation with the public administration
• Human resources for the non-profit sector

(http://www.vlada.cz/cz/ppov/rnno/koncepce-neziskoveho-sektoru/zhodnoceni-koncepce-podpory-rozvoje-neziskoveho-sektoru-36109/)

 

The strategy of development for 2009-2013 plans to address these shortcomings. Specifically, it set the following goals:

• To create a legislation that supports transparency and efficient functioning of the non-profit sector.
• Public administration considers the non-profit sector an equal partner.
• NPOs have diversified and stable financial resources and high-quality human and technical resources for their operation.

 

The strategy defines steps to reach these goals. They are most specific for the legislative section:

• Amendment of the law of publicly beneficial organizations, amendment of the law of foundations and foundation funds
• Enactment of a definition of the publicly beneficial status/publicly beneficial organizations
• Replacement of the law on associations by the new Civil code that should unify the definitions of the publicly beneficial organizations

 

The recommended steps respond to the identified problematic areas of the Czech non-profit sector: problematic definitions of the various legal forms of nonprofits and lack of clear definition of the publicly beneficial status. This created many problems, mainly with transparency of the organizations. Namely, foundations and foundations funds, publicly beneficial organizations were required to disclose/report a lot of information and the requirements on the financial management were too complicated, this discouraged many founders from choosing these legal forms for their nonprofits and there turned to civic associations instead. Associations on the other side, have very limited requirements, leading to intransparency and consequent lack of trust. In addition, the plethora of various forms increased the complexity of the tax legislation; this should be avoided by introduction of the uniform publicly beneficial status.

 

Overall, the problem of the non-profit sector in the CR is that it is intransparent and administratively demanding. I believe this is to some extent a result of its development: it is relatively new, 20 years, and many of the laws were enacted without careful analysis of the relevant aspects. This resulted in a number of amendments and complicated the legislation. So one of the main challenges now is to simplify and streamline the regulations.

 

However, these problems have been identified already before and are constantly re-occurring in the discussions of the non-profit sector. The question is if the fact that the board spelled them out clearly and in one document will help to solve the problem. Particularly because the executive powers of the board are limited by its lack of a strong legal status and its direct dependence on the government. Moreover, the recent political developments in the CR are rather turbulent (fall of the government in spring 2009, current provisional government, initially till October 2009, currently till spring 2010), do not allow the board to function properly.

 

Recent steps:

• Amendment of the law on foundation and foundation funds in 2010 to improve their sustainability by improving their ability to engage in own publicly beneficial activities (limited in the current version, focused on fundraising and funding, not operations) and decreasing the administrative requirements. These changes aim to help the:
  • Zakon o socialnich sluzbach—Czech Charity complaints about its low quality and the planned decrease of funding for 2010 (to less than 40% of the funding in 2009). The system of subsidies that are an important source of funding for the social services is not transparent and ‘nesystemovy’
  • The complexity of the tax legislation is claimed to be the major problem of philanthropy in the CR. Even though the tax deductibility limits are high: 5% of taxable income for legal persons, 10% for individuals, the complexity of the regulations discourages many donors from engaging in philanthropy.