Mechanisms of state financing of NGOs in foreign countries
Most public funds abroad are transferred to socially significant NPOs, i.e. those who provide social services to the population and work in close cooperation with state bodies - usually within the framework of targeted programs of ministries and departments. In addition, the following activities are financed:
- participation of NGO representatives as experts in state bodies that develop social policy directions, participate in the preparation of legislative acts, form and implement social programs;
- implementation of joint projects (programs)
- the construction of regional network structures to ensure cooperation between government agencies and NGOs;
- participation in the work of advisory committees to exchange information and coordinate the provision of social services.
According to The Boston Consulting Group for 2011, in developed countries the sources of financing for NPOs are distributed as follows:
- government funding accounts for 48% of NPO income (in developing countries - 22%);
- income from core activities, including membership fees, - 35% (in developing countries - 61%);
- donations of business, citizens and foreign funds - 17% (in developing countries - 17%).
Consider the mechanisms of state funding of NGOs in foreign countries on specific examples.
In France public financing is the main source of income for NGOs (about 60%). The central place in the regulation of government funding for NGOs in France is assigned to a series of circulars issued by the prime minister, which emphasize that its public resources are limited and funding will be provided only through the central administration, ministries or local authorities to which this function is delegated by the center. >
The bulk of the state funding is provided to cover the costs of the project or program activities on the basis of an individual decision, for example, the minister's order. However, less signing of a contract becomes an increasingly frequent requirement in the decision-making process and even mandatory, when the amount of financing exceeds 23 thousand euros.
These innovations are largely designed to harmonize the requirements for applying for funding. Each ministry has a single collegial body whose task it is to monitor the expenditure of the provided financing in accordance with the goals set. Government officials at the central and, especially, at the local level, instruct applicants and monitor the targeted use of public funding. The decision on the provision of funding should specify how the spending of public funds will be monitored. In addition, in the case of long-term financing, the evaluation of the efficiency of spending of funds under this project is mandatory. France has created a single application form for the provision of public funding (with the exception of government funding for NPOs for investment purposes).
In the US to the state funding sources of NPOs are:
- regular government subsidies for the maintenance and development of non-profit organizations;
- One-time funding associated with the implementation of individual projects and programs.
There are several mechanisms for state funding of NGOs in the United States.
1. The US federal government makes contributions to the development of the nonprofit sector through state governments and local governments that have the right to determine the direction of spending and the range of non-profit organizations themselves, and through special off-budget funds.
2. Separately, state grants are given to individuals for cultural and educational purposes, or citizens are given the right to free access to such organizations.
3. Non-profit organizations are granted with privileges on payment of tax, customs and other payments. The latter may include the full or partial exemption of non-profit organizations from payment for the use of state or municipal property.
Some states business income non-profit organizations are not subject to taxation. This fact can be explained by the following reasons:
- the difficulty of separating the activities of NCOs into the "main" and revenue-generating & quot ;;
- receipts from the collection of such taxes constitute a small part of the state budgets;
- High administrative costs associated with detection in the financial statements of NGOs of business income.
Since the 1980s. in the state policy of the USA the tendency of transition from direct to joint financing of programs and projects in the non-commercial sphere is clearly traced.
There are two types of co-financing for the non-profit sphere.
The first view is " equity subsidies." Public funds in this case are provided only on condition of additional financing of the project at the expense of own or attracted funds of a non-profit organization. For example, the so-called subsidies "1: 3", in which one share of public investment accounts for three shares of private investments, became very popular in the United States.
The second kind is the refundable subsidies & quot ;. The state in this option allocates funds to non-profit organizations only if they undertake to compensate for partially or fully provided funding. In most cases, returnable subsidies are used to implement highly profitable long-term projects, the revenues of which considerably exceed the amount of subsidies. Thus, repayable subsidies can be considered as an interest-free state loan. With the help of such a financing mechanism, the state allows non-profit organizations to implement projects with high financial returns in the future.
In order to organizationally improve support for the third sector in 2006, under the Cabinet of Ministers Great Britain , the Third Sector Department was created ( The Office of the Third Sector ,
In order to improve the provision of public services, the Department of the Third Sector provides financial assistance in training specialists for various organizations that provide social services. Taking into account that many small and medium-sized enterprises intend to combine profitable business with social activities, the department actively promotes the development of social entrepreneurship in order to attract new founders or purchasers of socially-oriented enterprises.
To optimize the financing processes and improve the organizational interaction between the various state structures and subjects of the third sector, it was decided to form a three-year budget for their financial support. The OTS Department publishes a monthly magazine, "Innovators", which covers various issues related to the activities of enterprises and organizations of the third sector.
Strategic partnership is a long-term example of cooperation of the state with the most authoritative public organizations in order to support and develop social entrepreneurship, on the terms of granting government subsidies implemented in accordance with the "Memorandum of Understanding". This document is reviewed annually in accordance with changing circumstances, but the conditions for strategic partnership with organizations supporting social entrepreneurship and the third sector are reviewed in no less than three years. The OTS department is building its policy in such a way that strategic partner organizations focus their attention on informing the government about the priority directions for the development of the third sector in the country.
Public funding of strategic partners allows carrying out mass social activities of a social orientation, organizing thematic conferences and carrying out research, the results of which will be a weighty argument in favor of improving the government's policy towards the third sector. In addition, the OTS Department constantly attracts strategic partners for consultations and development of joint decisions on the development and improvement of the government's interaction with NGOs and social enterprises.
In 2006, the OTS Department developed conditions for granting subsidies for financial support to strategic partner organizations that are actively supporting social entrepreneurship and organizations of the "third sector". Three types of grants were established.
1. Grants to support voluntary and community-based organizations that actively express the views of various social groups about existing problems at the local, regional and national levels.
2. Grants for the organization of propaganda campaigns at the national level to involve citizens in participating in the activities of various volunteer societies and associations.
3. Grants for organizations that promote and support the development of philanthropy and the creation of philanthropic societies.
In Germany , the state supports the national umbrella organizations of NGOs, which, in turn, distribute funds to the organizations that make up their organizations. One of the main methods of financing in non-profit activities in Germany is state subsidies. The state, giving preference to the activities of private non-profit organizations in the social sphere, and also recognizing the right of the NCO to independence in setting goals and determining ways to achieve them, while at the same time guaranteeing them the provision of state financial support.
The activities of health and social protection organizations are financed mainly through insurance premiums and direct government subsidies. Non-profit organizations in these spheres (and in some other spheres with a high degree of state subsidies) are very closely connected with the state sector, they are completed from highly professional cadres, therefore they are quasi-public, for this reason they can not attract voluntary donations and private funds in any serious degree sponsors.
Non-profit organizations in Germany are practically the only organizations that provide services in such areas as physical culture and sports, and are in a privileged position in those areas of providing social services that are actively funded by the state.
In addition, non-profit organizations play a significant role in facilitating the performance of public functions. Traditionally, the government in Germany uses NGOs to implement its policies at the local level. For this, the state can finance non-profit organizations implementing important projects for the state, creating intermediary "quasi-public funds".
In Croatia public funds from the national budget to support NGOs in the form of grants and grants are distributed through the "Office for Cooperation with NGOs", unless a special provision is applied. For example, a provision that distributes finances to organizations of military veterans or brigades of voluntary firefighters. In view of the limited budgetary means for granting subsidies, the state attracts additional funds through the drawing of national lotteries, the revenues from which are annually divided into four parts:
- humanitarian aid (33.3%);
- subsidies for sports activities (33.3%);
- subsidies for technical development (8.4%);
- marketing promotion of games (25%).
Most of the amounts allocated for humanitarian aid, sports and technical development are provided to NGOs that work in these areas.
This funding covers a number of programs in the field of environmental protection, education, culture, youth policy, health, social welfare, volunteerism, elderly people, human rights and local government development.
All projects subject to funding are divided into three groups:
- long-term activities to meet social needs;
- annual (short-term) programs of NGOs;
small financial subsidies to support civil initiatives to find solutions to socially important problems.
Local self-government bodies independently determine the types of activities and the circle of recipients of subsidies (Law on Local Government (OG 29/00)). Most NGOs work at the local level, and often their activities depend on receiving funds from the budget of the local government (oblast, city of Zagreb, cities and municipalities).
The distribution of these funds occurs on a competitive basis, usually between the organizations of the "special interest of the Republic of Croatia", which include organizations whose spheres of activity are:
- children, youth, students;
- the development of civil society;
- consumer organizations;
- democracy and human rights.
In order to strengthen civil society in October 2003, the country's parliament passed a law establishing a National Civil Society Development Fund with an initial capital of 2 million kuna (about 261 thousand euros), formed from revenues from the state lottery and gambling games. In addition to the initial 2 million kuna of the national capital, the Fund continues to be financed from the state budget in a separate line. The Fund is given the right to attract donations and use any other methods of income generation provided for by the Law on Charitable and Financial Funds of the Republic of Croatia.
The law on the establishment of the Fund regulates all matters related to its activities, if any of these issues are not covered by this law, they should be regulated by the Republican Law on Charitable and Financial Funds. The founder of the Foundation is the Republic of Croatia.
In Hungary , in accordance with the Law on the State Budget, the amount of funding allocated to public and charitable organizations as grants is approved annually. In the Hungarian Parliament there is a Commission on Civil Organizations, which receives applications from NGOs and gives recommendations to the parliament on which groups of recipients to allocate subsidies to cover their expenses. The Parliament, having voted on these recommendations, grants subsidies to the relevant groups.
In addition to the parliamentary commission, the distribution of subsidies is handled by individual ministries, based on their budgets and program needs. Financing of individual NPOs can be clearly stipulated in the budget of the ministry. For example, the Ministry of Foreign Affairs of Hungary has an article in its budget for financing the World Hungarian Federation. NGOs and other socially important organizations (for example, religious organizations) that create and support social, health and educational institutions have the right to "normative support", receive the same amount of support as state institutions. The ministries conclude treaties with these organizations. Size quota per agency is determined in the annual state budget provision. Recipients of regulatory support must submit a report on the use of funds by January 31 of the next year.
The law regulates contracts between local government bodies, according to which NGOs undertake to manage educational institutions and for this they receive the "normative" support in the form of subsidies. In accordance with the Social Law, local government bodies can transfer certain activities and powers of NPOs on the basis of a contract, providing the NCO with appropriate funding in the form of "regulatory support".
In addition to the national state budget, Hungary has two state extra-budgetary funds: the Labor Market Fund and the Central Atomic Fund, which are entitled to provide funding to various NGOs in their field of activity.
There are also several public funds, which are established with the participation of the state, although in the future they work independently. The funds distribute funds between NPOs and other groups in accordance with their charters with a view to ensuring the permanent fulfillment of public obligations. The funds work in those areas where the state has an obligation to provide services and is used as a means of cooperation between the state and NGOs.
In 2003, the Hungarian government established the National Civil Fund ( National Civil Fund , NCF), intended directly to finance the development of the civil society sector in Hungary. The National Civil Fund implements the mechanism of meeting the requirement of a percentage ratio, i.е. system, under which the government provides funding for NPOs, provided that a certain percentage of the necessary funds for this organization already exists. Unique for government programs is that 60% of NCF resources are allocated to NCOs for current operating expenses. From the same source, development programs (research, education, international relations) are supported. Selected representatives of NGOs participate in the work of all regional and other committees that decide on the allocation of funds. In the first year of its existence, a total of € 28 million was spent to support operating costs for more than 3,500 organizations.
The Hungarian Local Government Act encourages local authorities to promote civil society by providing, for example, financial and many forms of non-financial support for NGOs.
In Poland relations on the financing of social projects and programs are regulated mainly by legislative acts of local authorities. For example, Decision No. XIV/458/99 of the City Council of Szczecin on 11.10.1999 adopted the "Szczecin Charter of Cooperation between City Authorities and Non-Governmental Organizations". The document established that the City Council should allocate funds from the annual budget to non-profit organizations for municipal purposes. The charter lists the areas in which the city intends to cooperate with NGOs - health care, social security, education, sports, ecology, art and culture, public safety, self-government, civil society, economic and local development. Financing of social projects in these areas is carried out in one of three types:
- small subsidies;
Applications for the implementation of social projects are submitted by organizations to the city department for NGOs and are subject to evaluation by an Advisory team consisting of representatives of the City Council, the Budget and Finance Committees of the City Council. The final decision is made by the City Council.
In the Czech Republic there are several types of state funds supporting NGOs. The largest of these is the Czech Foundation for Funds Funds ( Czech Foundation Investment Fund) , created in 1992 the Czech Council, aware of the importance of national support for NGOs, amended the Law on Privatization, according to which 1% of the proceeds from the sale of state enterprises should be sent to the newly created fund. This organization was created not as a fund, but rather as a joint-stock company, which nevertheless basically works as a fund.
Currently, the Czech Fund for Funds Funds continues to function, providing financing to Czech funds by obtaining interest income from the funds originally invested in it.
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