SOURCES OF FUNDING FOR NGOs Luben Panov Bulgarian Center for Not-for-Profit Law

Why is Funding Important? It determines whether NGOs will have the resources to achieve their objectives It gives NGOs more independence in their activities But very often donors can determine the agenda of NGOs So it is important to have diversified funding both in terms of different sources but also different types of funding

The Current Situation USAID Sustainability Index 2008: With rare exceptions Financial Viability is the worst score for all countries; Average score is 3.1 for Northern Tier, 4.6 for Southern tier and 5.2 for Eurasia Among Black Sea countries the best score is 4.1 in Bulgaria, Romania and Ukraine. The worst score is 5.7 in Azerbaijan.

Own income Membership fees Fees for services Sale of products Rent of property Investment income Endowment Income from a separate business entity

Philanthropy Individual donations Corporate donations Contributions from private foundations Volunteers

Indirect State Support Exemption from income tax for the nonprofit activity Exemption from income tax for the business activity Tax benefits for donors – companies and individuals Free use of property Benefits for volunteers Exemption from customs duties, inheritance taxes, etc.

Direct State Support Budget subsidies Budget grants Contracting - for provision of services Funding for international development (ODA) Other mechanisms –1 % mechanism, lottery, vouchers Issue: Dependence of recipients from the state?

Source of State Funding Privatization Special tax State lottery Fines The general budget Distributed by government, Parliament, a separate ministry, state fund, etc. Issue: For every NGOs or only public benefit?

Contracting/Procurement The state hires NGOs to provide certain services It keeps its role in: Funding; Control of the spending Control of the quality of the service. Tender, negotiations or other Contracting vs. Grants Issue: Should NGOs be treated preferentially in this process?

Contacts: Bulgarian Center for Not-for-Profit Law (BCNL) Luben Panov