ERNOP

Croatia

Current research projects on philanthropy in Croatia

Information about current research project on philanthropy will follow shortly.

 Current state of Giving Research in Croatia

Introduction

Research on philanthropic giving in Croatia is limited to a small number of indirect researches dealing with civil society development. In last several years there are some initiatives trying to put philanthropy and issue of giving for the public purpose on the public agenda. Some humanitarian actions, with the support of prominent organisations and the persons, also promote charitable giving as the new value.

Historical context

            In Croatia, institutionalised giving has a tradition dating back to the 19^th century when prominent industrialists set up foundations for various purposes. I the same time the Catholic Church began to address social welfare issues more systematically (Bežovan, Zrinščak, 2007). In late 19^th and the beginning of 20^th century, significant number of civil initiatives established foundations for some cultural, educational and social institutions, and contributed to the modernization of society. These initiatives were linked to similar initiatives throughout the rest of the Austro-Hungarian Empire. The first social, cultural, educational and health institutions have been set-up through these civil initiatives. Noble and well-off families provided resources for mentioned institutions.

            Scholarship foundations represented institutional philanthropy in the beginning of the 20^th century. In 1913 there were 241 such foundations in Zagreb and prominent donors have been named as mecena.

            Rather big Croatian diaspora in USA made the first viable steps of overseas philanthropy helping Hrvatski Radiša[1] and other public institutions. 

            In the period between the World Wars social teaching of the Church inspired citizens for giving. Caritas and other church organisations dominated social service provision and actions to help the poor. Limited numbers of other secular humanitarian organisations were active in that period.    

            These institutions and activities were suspended during the authoritarian regimes established during and after World War II. Even, in the communist period the Church played certain role in collecting gifts and providing support for the poor.

The war for the country’s independence (1991-1995) slowed down the development of civil society in Croatia. The crisis resulted in wide-ranging social problems relating to displaced persons, refugees and victims of the war. However, it also brought about enhanced solidarity and citizens’ self-organization in various associations. The technical and material assistance to these organizations was provided by international and foreign humanitarian organizations.

Data sources

There is a scarcity of data sources on charitable giving. Official statistics (collected by respective Administration is usually not publicly available. Croatian Central Bureau of Statistics (CROSTAT) collects data on individual giving from Personal Consumption Survey based on a household sample. It contains questions on ‘giving in cash or kind to people in the country or abroad’.

Data on individual and business tax deductions (tax incentives for donations) are collected by the Tax administration of the Ministry of finance, but also not publicly available. There are only secondary data provided by some authors.

Information on charitable giving is therefore mainly obtained from respective researches (presented below).

Research findings[2]

Charitable giving. The survey revealed that 66.8% of citizens have donated cash or goods, such as garments and food, for humanitarian purposes in the past year. Charitable giving in Croatia during the last several years has increased thanks to the introduction of new technologies of giving by phone or recurring payments. A slightly higher number of women than men give to charitable purposes, and individuals with higher levels of education are more inclined to donate. In some areas (North-West Croatia, Split) cases were recorded of young entrepreneurs approaching civil society organisations-CSOs to offer support for their programmes. The results indicate that, in general, the public is in favour of a culture of giving. Still there is a lack of trust in charitable giving, due to the lack of transparency among charitable organisations (Bežovan, 1995). However, trust in charitable giving is being restored, and could potentially be a basis for establishing new types of solidarity among citizens and a stronger orientation of citizens for the public good.

Encouraged by the success of a number of humanitarian organizations soliciting donations over the telephone, Croatian Telecom has waived its right to profit from certain humanitarian organizations. In cooperation with the Government, Croatian Telecom established a committee for allocating phone numbers to humanitarian organizations, so that the money raised can be fully distributed for humanitarian purposes. The media review showed that the media pays close attention to charitable giving, and stories in the media have inspired individuals and donors to give more.

      Charitable giving has not featured on the agenda of Croatian or foreign programmes of civil society support. However, a culture of giving for public purpose is an important part of a civic culture and the state should therefore stimulate it through various programmes. Most Croatians give only small amounts to charity. The 2004 Civil Society survey reveals that for 76.6% of respondents, the financial value of donations during this past year did not exceed 500 Kuna (83$) (see graph 1). With the current average net income per annum in 2004 being 4.143 Kuna (690$) this amounts to 1.2% of a person’s annual income.

      According to the survey of Franc, Šakić (2006.) up to 500 kunas donated 77.8% of citizens and only 4.7% donate more.

      Civil initiate Donacije.info[3] provided the web space to humanitarian organisations to make presentation on one place and to offer to donors opportunities for giving donations.

      Case study on this topic show that charitable giving depends very much on the trust, purpose of giving and the respect of organisations involved in campaign. 

      Tax benefits for philanthropy. Tax incentives for donations have been introduced in 2000. Businesses can donate up to 2% of their income for the public good, which can be deducted from their taxes. In the same way, individual taxpayers can donate up to 2% of their total personal income. Pursuant to the decision of the respective minister, non-taxable amounts of certain grants for important purposes can be increased. However, tax incentives for donations are only used by a few businesses, and even fewer private taxpayers. In the regional focus groups much emphasis was placed on cases when young entrepreneurs contacted CSOs to make a donation.

Generally, tax regulations for donations are complex. Therefore, only a small number of individuals involved in CSO activities understand their potential and promote them when soliciting citizen’s or corporate sector donations. Nevertheless, in theory, the available tax benefits are significant.

Corporate social responsibility. Corporate social responsibility in Croatia has only become a topic of discussion at the beginning of the new millennium, when the first research efforts and round tables on this topic were organized (Bežovan, 2002). Research revealed that the type of welfare state emerging in Croatia does not contribute to the development of a socially accountable corporate sector since the corporate sector is obliged to pay high taxes and contributions for social and public purposes, yet the corporate sector is not seen as an important stakeholder for society at large. As a result, only a small number of firms are beginning to establish socially responsible relations in the communities in which they are active and there is uncertainty among these firms about their returns for social investments. Also, the media review showed that the media pays close attention to charitable giving, and stories in the media have inspired individuals and donors to give more.

Overall, the corporate sector considers CSOs solely as beneficiaries of their support, while the associations consider the corporate sector as donors only. Such a narrow view of civil society-business relations results in a limited number of partnerships between CSOs and the corporate sector. This is confirmed by the stakeholder survey results on the extent of social responsibility of larger companies, which are mainly seen as insignificant (20.8%) or limited (33.6%).

Yet, the study of ten major Croatian companies' web sites has revealed some positive trends of corporate social behaviour. However, it is evident that companies do not have a clear policy of corporate responsibility and are unaware of the impact a company’s reputation can have on its economic success. In general, firms see this type of spending as another way of spending money on marketing or sponsorship, rather than as their social responsibility.

The regional focus groups emphasized the importance of a limited number of small and medium entrepreneurial firms that have begun to make charitable donations. A few Croatian companies have a history of inviting tenders for grants to CSOs (Zagrebačka banka) and reports are beginning to be published on social accountability in the corporate sector (Coca Cola Beverages Hrvatska, INA, Pliva). Also, companies that are a part of the Croatian Business Council for Sustainable Development promote the concept of sustainable development, through corporate responsibility.4] However, these companies form only a small minority among Croatian businesses. Thus, in comprehensive consultations on this topic (Bagić, Škrabalo, Narančić, 2004) concerns were voiced about the limited number of promoters and practitioners of corporate social responsibility in Croatia. Participants at the national focus group debate also pointed towards problematic aspects of corporate social responsibility, namely the greenwash phenomenon. Here, major companies which are frequent environmental polluters, buy the approval of the community through donations and sponsorship.5]

Corporate Philanthropy. Corporate philanthropy is a new notion and there is no reliable information on its understanding and the scope in Croatia. CSI research results indicate that 33.2% of surveyed CSOs receive funds from the corporate sector, and the average share of corporate sector funds among CSO income amounts to 18.2%. Whereas these findings point towards a moderately solid basis of corporate philanthropy, the concept of corporate philanthropy is not seen as a part of the corporate sector’s image, which is signified by the fact that only several companies have established foundations.

National focus group observed a recent positive development in this area, where an increasing number of small and medium companies are becoming active in their communities. However, these companies still provide most of their support to sport and cultural events. Therefore, on the whole, the current extent of corporate philanthropy still is seen as rather limited.

Recently established corporative Foundation Adris, with a larger and diverse donation programmes, made important contribution to further development of corporate philanthropy.

Mentioned organisation Donacije.info promote corporate philanthropy organising each year award for the best companies practice in corporate philanthropy.

Foundations[6]

According to the legislation foundations in Croatia are defined as an endowment.  Foundations in Croatia mainly have a complementary role, and they fulfil the needs that cannot be fulfilled by the state and local authorities. The redistributive role of the foundations is slowly emerging. The foundations shyly appear as innovators, and their activities in promoting social changes are restricted.

The corporatist social model would to the greatest extent describe the role of foundations in Croatia that act in the public interest. Having in mind their small number, limited resources at their disposal and poor support of other actors, as well as the lack of their presence in the public life, we could also speak of the peripheral model of the development of foundations. Scholarship foundations are the priority area of the development of foundations.

Foundations are faced with serious problems with obtaining donations that would increase their endowment and which would later provide revenues for fulfilment of the foundation purposes. Foundations mostly do not pursue a policy of increasing the endowment, which appears as a problem of their sustainable development. Most foundations do not have respectable endowment, so they raise funds, mainly from the citizens and companies, for the fulfilment of their purpose.

Foundations are mainly managed on the volunteer basis, and the achievements are the result of the work of a smaller number of enthusiasts. The lack of professional and trained management staff is a decisive factor for the inability to raise more considerable means for the foundation operation, as well as for the scarce programmatic activities of the foundations.

A large number of foundations realised their set aims and they believe that they will work even better in the future. The opportunities for the development of foundations in Croatia are assessed as more unfavourable than favourable ones. The media’s discouragement of foundations contributes to their marginalisation.

It is important to mention the fact that the state does not appear as a partner in the development of foundations. The state is not showing an interest to acknowledge the importance of foundations, at least on the symbolical level. It seems that this is affecting the problems of the legitimacy of foundation work and the lack of trust in their missions.

Despite of that, case studies show the recognisable potentials for the development of foundations in Croatia. In that context, the positive facts connected with the success of some foundations that have gained the trust of donors and other actors have to be emphasised. In that manner, those foundations have placed important social changes on the agenda. 

The foundations in Croatia have similar problems as the foundations in other transitional countries that have recently become the member states of the European Union. Nevertheless, there are differences, such as larger support that the states and foreign donors give for the development of foundations in these countries. Croatian foundations do not have an international co-operation. On the other hand, foundations as promoters of social change and innovations have important influence, particularly in the Czech Republic, Poland and Hungary.

A considerable development of foundations in Croatia will be linked to the economic progress and coming of age of the representatives of new ranks of society. Without active support of the state, the available resources will not be mobilised for the purposes of general good. Good examples of the work of foundations are offered as a new framework of the modernisation of society. These are the potentials that slowly pave the way for the development of sustainable philanthropy in Croatia.

The research that could stimulate the development of foundations and reveal the capacity of foundations in solving social problems should analyse in more depth the role of the state in the development of foundations, the development of local community foundations, corporate social responsibility and the role of the media in the development of foundations

Conclusions

There are very limited numbers of data sources from where we can obtain information on charitable giving in Croatia. Giving to charitable, civil society organisations is a recent development, and very often, without understanding the brother concept of philanthropy.

Empirical evidence of several successful cases in charitable giving can give a reason to believe that Croatian society have are potentials for development of sustainable philanthropy. Low level of trust and weak social capital undermine these potentials.      

References

Bežovan, G. (2002.) Zaklade i dosezi razvitka u Hrvatskoj (Foundations and Reach of its Development in Croatia), Zbornik Pravnog fakulteta u Zagrebu 52:619-649. 

Bežovan, G., Zrinščak, S. (2007. ) Civilno društvo u Hrvatskoj (Civil Society in Croatia). Zagreb: Jesenski i Turk/Hrvatsko sociološko društvo. 

Bežovan, G. (2008.) Can foundations pave the way for sustainable endogenous philanthropy?, ISTR Conference 2008,

Barcelona. Franc, R., Šakić, V. (2006.) Javno mnijenje: stavovi javnosti o nevladinim organizacijama 2006. Zagreb: Academy for Educational Development.