Public funding of NGOs in Romania Budapest, Hungary 25-26 November, 2010 Octavian Rusu, Legal adviser.

Public funding of NGOs in RomaniaBudapest, Hungary

25-26 November, 2010

Octavian Rusu, Legal adviser

NGOs in Romania: General Data

According to the latest data, in Romania there are over 40.000 registered associations (of which 40.66% are active ) and over 16.000 foundations (of which 50.73% are active).

Between 1996 - 2006 the number of associations and foundations increased by 5 (compared to trade unions (x3) and religious organizations (x2.78).

67.29% of all NGOs have no employees

Financial sustainability

In 2008, NGOs registered incomes of around EUR 1.25 billion. The revenues of NGOs in Romania increased slowly but steadily over the last years.

Financial sustainability (2008)

Public funding mechanisms

Grants – majority of funding (law 350/2005)

+ transparency; competition

- procedures are rather complicated; limited administrative capacity; there is no uniform application of the law

Subventions – specific to social services (law 34/1998)

Contracting out / Procurement – exception (mainly in the social field)

Subsidies – outdated (lack of transparency)2% law – an important source of funds for NGO

sector

Sources of funding (frequency)

•2% Law - 64.7% •Individual donations - 52.1%•Membership fees – 44.1%•Private companies - 39%•Foreign and international foundations -31%•European funding - 29.5% •Public Funding - 23.2%•Romanian private foundations - 9.2%

Sources of funding (percentage)

Foreign funding - 32.5%

- EU - 18,6%

- Other foreign - 13,9%

Public Funding (Grants) – 4,9%

Public subventions– 2,1% (social field)

2% Law – 10,3%

Public contracts: 1,6%

Total: 18,9% vs 34,9% EU Average (JH research)

Economic activities – 16%

National philanthropy – 17,4%

“2% Law”

During the period 2005 – 2009, the “2% law” generated over 57 mil. Euro of incomes for Romanian NGOs.•200,000 tax payers used the law in 2005 ( 2%)•1.32 mil. tax payers used the law in 2009 (19%)

Traditional public “donors”

Social (Ministry of Labour) – 83% (10 mil Euro)Culture – 6% (0.7 mil euro)Diaspora – 4% (0.5 mil euro)Environment – 3% (0.3 mil Euro)Youth – 3% (0.3 mil Euro)

14 NGOs received 64% from total public funds allocated to NGO sector in Romania (grants on social infrastructure, especially for child protection) dependency on contracts with the state and this big NGOs lose the voice in advocacy process.

Planning

- No special policies / strategies for supporting NGO sector- NGOs are still considered a black hole and politicians and

public leaders put a question mark on NGO activity- Financial crisis affect serious the budget allocated for NGOs

(grants or contracts)- No special structure in central or local authorities responsible

for NGO sector grants follow the procedure of public institutions in terms of spending the budgets

- Long term approach in finance NGO sector only from “traditional donors” – social, environment and culture

- Local NGOs more and more advocate for budget allocation for grants available at local level (coalitions, public debates, other advocacy actions)

contracting

- General law on grants – general framework- Provide an unique procedure (transparent, competitive)- Implemented both for local and central grants- More and more utilized by local authorities- Annual reports on each authorities that grants public

money- Special procedures (environment, social, culture) confusion

in implementation, over regulation- Annually budgets short projects and low impact- Recently, public authorities use external evaluators

(environment, culture)

Monitoring & Evaluation

- Financial monitoring on expenses- Low interest in measure the impact of the project- Public institution use internal resources for M&E- Cost – benefits indicators are missing- Low level of expertise in public institutions on monitoring and

evaluation

Monitoring & Evaluation

- Financial monitoring on expenses- Low interest in measure the impact of the project- Public institution use internal resources for M&E- Cost – benefits indicators are missing- Low level of expertise in public institutions on monitoring and

evaluation

New challenges

- Financial crises drastic decreases of budget allocated for NGOs

- Severe impact at local level in cutting the budget for NGOs- Human resources deficit / restructuring in public institutions- New elections (local and national) in 2012 could offer an open

attitude for NGOs needs in 2011- Better relation with Parliament members (uninominal system)

and more opportunities to put on political debate several financial issues with interest for NGOs (facing with Government opposition, including in the same political party)

- NGO eligibility for structural funds increase the NGO projects

Thank you

Octavian RusuLegal [email protected]

Mechanism of distribution

Most of them are distributed through-Public and transparent call for proposals-Special procedure (Law 350/2005 and other normative acts)-Evaluation and contracting process/procedure-Accent on financial report and not on technical evaluation or impact-Pool of NGOs clients for public funds (e.g. child protection)-Annually budgets