the 2000 ngo sustainability index

United States Agency for International Development Bureau for Europe & Eurasia

Office of Democracy and Governance

Developed by: United States Agency for International Development Bureau for Europe and Eurasia Office of Democracy and Governance

Fourth Edition – January 2001

The 2000 NGO Sustainability Index For Central and Eastern Europe

and Eurasia

The 2000 NGOSustainability Index

For Central and Eastern Europeand Eurasia

ACKNOWLEDGMENTS

The USAID Bureau for Europe and Eurasia, Office of Democracy and Governancewishes to thank the following individuals and organizations, without whose contributionsthis document would not have been possible.

USAID Field Personnel:Charlotte Watson, USAID/AlbaniaDebbie Berns, USAID/ArmeniaBill McKinney, USAID/AzerbaijanElchin Guliyev, USAID/AzerbaijanGene Gibson, USAID/AzerbaijanChristine Sheckler, USAID/BelarusLarissa Komarova, USAID/BelarusBen Feit, USAID/BonsiaNadereh Lee, USAID/BulgariaDiana Arnaudova, USAID/BulgariaLisa Petter, USAID/CroatiaSlavica Radosevic, USAID/Croatia

Carol J. Horning, USAID/GeorgiaManana Gegeshidze, USAID/GeorgiaMarc Ellingstad, USIAD/HungaryDavid Hoffman, USAID/Central Asia RepublicsMichael Cox, USAID/KosovoArgjentina Grazhdani, USAID/KosovoKathy Stermer, USAID/MacedoniaVasile Filatov, USAID/MoldovaRuxandra Datcu, USAID/RomaniaSusan Reichle, USAID/RussiaMarina Grigorieva, USAID/RussiaSylvia Babus, USAID/Ukraine

Local NGO Coordinators: Jiri Barta, Nadace Via, Czech RepublicKristina Mand and Merle Helbe, Network of Estonian Nonprofit OrganizationsSrdjan Darmanovic, Center for Democracy and Human Rights, MontenegroKaija Gertner, NGO Centre LatviaVaidotas Ilgius, Vilnius NGO Information and Support Center, LithuaniaKuba Wygnanski, KLON, Warsaw, PolandMiljenko Dereta, Dubravka Vekat and Jekica Minic; Civic Initiatives, SerbiaKatarina Kostalova, SAIA-SCTS, Bratislava, Slovakia

USAID/Washington Editorial Committee: Mark Levinson, Editor; Jennifer Stuart; Lawrence Robertson; Joshua Kaufman; and Mary AnnRiegelman

We particularly wish to thank Tania Tasse, our editorial and production assistant, a graduate stu-dent in the Masters Program in Policy Studies/Non-Profit Sector, at Johns Hopkins University.Very special thanks to Judy Gilmore and Lenora Watlington of the BHR/PVC office of USAID,whose generosity made Ms. Tasse’s assistance possible.

We also thank Peter Wiebler and Molly Herlihy at Freedom House/Budapest for their assistanceand creativity in arranging and coordinating grants to local NGO partners in the Czech Republic,Estonia, Latvia, Lithuania, Poland and Slovakia, without which the Index could not have been im-plemented in those post-presence countries.

Finally, our gratitude to all of the local NGO experts, USAID partners and international donorswho participated in the expert group discussions in each country. Their knowledge, perceptions,observations, and contributions are the foundation upon which this index is built each year.

FORWARD

Donald L. Pressley, Assistant AdministratorBureau for Europe and Eurasia (E&E), USAID

USAID's Bureau for Europe and Eurasia (E&E) is pleased to present this 2000 NGOSustainability Index. The Index is USAID's premiere instrument for measuring thestrength and overall viability of NGO sectors in the transition countries of Central/EasternEurope and Eurasia. This 2000 Index is the fourth in the Office of Democracy and Gov-ernance's series of annual reports.

This edition of the Index is truly an international team effort. Its scores are based uponconsensus observations made in expert discussion groups in every country in the re-gion. In those countries where USAID has active programs, the discussion groups in-clude USAID Mission staff and partner assistance implementers, international donor or-ganizations, and local NGOs and NGO support centers. Beginning with this issue, for thefirst time, we have formed a series of partnerships with local NGOs in each of the coun-tries that have graduated from traditional USAID assistance, enabling the Index to con-tinue to follow their progress, and allowing our readers to use them as a basis for com-parison and a source of ideas.

While the Index was primarily developed to meet USAID field Missions' need for qualita-tive indicators in the area of NGO development, it is also relevant to other donors, localintermediary support organizations, and indigenous NGOs as well.

The seven dimensions of sustainability examined in the Index provide a description ofwhat a sustainable NGO sector should look like, as well as a tool for gauging thestrength and overall viability of NGO sectors in the region. The Index assists in the iden-tification of progress, constraints and trends, as well as needs and opportunities in sec-toral development.

We hope that our readers will find the information in the Index highly useful, and that itwill help to facilitate cross-fertilization among programs in the design of on-going assis-tance strategies.

THE 2000 NGO SUSTAINABILITY INDEXTable of Contents

Introduction and Trends Analysis ................................................................................. 1

MethodologyThe NGO Sustainability Index: How is it measured?.......................................10Ratings: What they mean in general terms ..................................................... 142000 NGO Sector Score Sheet....................................................................... 15Ratings: A Closer Look ................................................................................... 18Field Instructions ............................................................................................ 25

Country Overview StatementsAlbania ...........................................................................................................27Armenia ..........................................................................................................33Azerbaijan ......................................................................................................37Belarus ...........................................................................................................43Bosnia and Herzegovina.................................................................................49Bulgaria ..........................................................................................................55Croatia............................................................................................................60Czech Republic ..............................................................................................66Estonia ...........................................................................................................72Georgia...........................................................................................................77Hungary..........................................................................................................82Kazakhstan.....................................................................................................86Kosovo ...........................................................................................................91Kyrgyz Republic..............................................................................................96Latvia............................................................................................................101Lithuania.......................................................................................................106Macedonia ....................................................................................................112Moldova........................................................................................................118Montenegro ..................................................................................................122Poland ..........................................................................................................126Romania .......................................................................................................132Russia ..........................................................................................................138Serbia ...........................................................................................................144Slovakia........................................................................................................150Tajikstan .......................................................................................................156Turkmenistan................................................................................................160Ukraine.........................................................................................................165Uzbekistan....................................................................................................171

Statistical Annex....................................................................................................... 176

INTRODUCTION

This Index began in 1997 as a study of five di-mensions of NGO sustainability in 17 countries.With the assistance of USAID's AdvisoryCommittee on Voluntary Foreign Assistance(ACVFA) and with input from USAID Missions,the methodology has been improved so thatthe study is both more rigorous and more com-prehensive. This 2000 NGO Sustainability In-dex measures seven dimensions in twenty-seven countries in the region plus Kosovo. Forthe first time this year, the Index also includesthe countries of the Northern Tier that have re-cently graduated from traditional USAID assis-tance, and Belarus and Moldova.

In order to improve the usability of the Index, beginning with this edition, we haveprovided a new statistical section in each country report. This section includes the capitaland population of each country, along with a set of basic economic indicators, to give thereader a sense of the economic and demographic context in which NGOs in eachcountry operate and seek to sustain themselves. All economic statistics quoted are for1999, unless otherwise noted. For the sake of consistency, all economic and populationstatistics used are quoted from Freedom House's "Nations in Transit 1999-2000".

OVERALL FINDINGS

In the year since the last edition was published, dramatic events have taken place in theBalkan region that highlight the critical part played by civil society in the transition to de-mocracy in former Eastern Bloc countries.

As the 1999 edition of this Index was going to press last year, indigenous NGOs weresharing lessons learned across borders and exploring new and expanded roles in thepolitical process, playing a crucial part in the democratic process by monitoring, and pro-viding civic education and voter mobilization programs in significant elections in Croatiaand Ukraine.

As the 2000 edition of this Index comes together, a remarkable presidential election hasjust taken place in the Federal Republic of Yugoslavia, an election in which the

NGO Index Dimensions ofSustainability

� Legal Environment� Organizational Capacity� Financial Viability� Advocacy� Service Provision� Infrastructure� Public Image

THE 2000 NGO SUSTAINABILITY INDEX

INTRODUCTION AND TRENDS ANALYSIS

TRENDS ANALYSIS

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Serb people, armed primarily with the tools of civil society, brushed aside an authoritar-ian dictator. Despite difficult conditions, due to the repressive tactics of the regime, theSerbian people took an extraordinary step toward democracy and re-joining Europe andthe world community.

These stunning achievementsrepresent new opportunities andnew openings for NGOs and civilsociety in general. They are not,however, in and of themselves,evidence of the consolidation ofdemocratic transitional progress,and underscore the need for in-ternational donors to continue tosupport the on going develop-ment of civil society in the coun-tries of CEE and Eurasia.

Positive Regional Trends:

NGOs are expanding their role in democratic society throughout the region. Informationcollected in the 2000 NGO Index shows that the sector is maturing, and strong cross-border networks of indigenous NGOs, international NGOs and donors have developed.

For example, though there is stillneed for improvement in many of theregion's legislative structures, thereare now sound legal and regulatoryframeworks in place in a number ofcountries through-out the region, notjust in the Northern Tier. In Macedo-nia, the Law on Citizen Associationsand Foundations that was passed bythe Parliament in 1998 has becomea model that has been used in anumber of countries. During 2000,implementation problems that hadoccurred during the year followingenactment of the law were dealt with in a manner generally thought to be satisfactory tothe NGO community. Further, new NGO legislative frameworks that embody a substan-tial number of international best practices have been put in place within the past year inAzerbaijan, Bulgaria, Kosovo, Kyrgystan, Romania, and Tajikistan.

New draft NGO laws are currently under review and discussion, with the full participationof local NGOs, in legislative bodies in Albania, Bosnia and Croatia. In Russia, new pro-NGO legislation is being advanced on the local and regional levels by NGO sector ac-tivists, including legislation on government contracts and procurement. In Serbia, thenewly elected government of Vojislav Kostunica has stated that a new NGO law will beone of his government's priorities.

NGO Sustainability by Region

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Northern Tier

Southern Tier

Eurasia

1997

1998

1999

2000

Legal Environment by Region

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Southern Tier

Eurasia

1997

1998

1999

2000

2000 NGO Sustainability Index

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In both the Southern Tier ofEurope and in Eurasia there isnew excitement in much of theNGO sector. NGOs are makingsubstantial progress in estab-lishing good working relation-ships with local governmentsand State Ministries, playing anactive role in policy developmentand public debate, and formingpartnerships to deliver commu-nity services. In Albania, NGOshave been invited by localauthorities to participate in the

drafting of regional economic strategies. In Tajikistan, the government has approached agroup of NGOs to draft the Republic's gender equality strategy. In Azerbaijan, the NGOcommunity was involved in reviewing and commenting on draft NGO legislation eventu-ally signed by the President in September 2000, that provides NGOs with recognitionfrom the government and a legal basis to conduct their work. In the Federal Republic ofYugoslavia, the new government has accepted the economic platform of an NGO, G17Plus, "as a well-conceived plan for getting out of the [economic] crisis."1

NGO infrastructures are alsobeginning to mature. Well-trained cadres of indigenoustrainers are in place throughoutthe region, particularly inNorthern Tier countries, butalso in Azerbaijan, Bosnia,Russia, Tajikistan, Ukraine andothers. NGO Resource Cen-ters are well established in theNorthern Tier, despite theircontinued financial depend-ence on international donors.Throughout the region, NGOresource centers are making major contributions to the development of the sector andreaching beyond the capital cities in Albania, Azerbaijan, Kyrgyzstan, Moldova, Turk-menistan, Ukraine and in a number of regions throughout the Russian Federation.

Strong NGO coalitions have emerged out of NGO election monitoring, civic educationand voter mobilization campaigns in Slovakia in 1998, Croatia and, Ukraine in 1999 andSerbia in 2000. In Ukraine, the Freedom of Choice Coalition has been able to sustainitself following the November 1999 presidential election and seeks new avenues to ex-press its civic concerns, including a focus on NGO-led anti-corruption campaigns. InGeorgia, effective NGO coalitions are providing services to children and youth, the dis 1 Vojislav Kostunica, in a telephone interview with Belgrade NGO Resource Center "Civic Initiatives",published in "Exit 2000", a voter information supplement to four Saturday editions of the independent dailynewspaper "Danas".

Advocacy by Region

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Organizational Capacity by Region

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TRENDS ANALYSIS

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abled and IDPs. Strong regional cross-sectoral coalitions have emerged in Georgia'sZugdidi and Samegrelo regions.

Cross-border NGO networksand partnerships are emerging.Many of the core NGOs fromSlovakia's very successful OK'98 civic education and votermobilization campaign haveshared their experiences andhelped NGO coalitions inCroatia, Ukraine and Serbiaapply the lessons learned totheir unique situations and cir-cumstances. The Orpheus CivilSociety Network, establishedby the European Foundation

Center, has grown to connect 27 NGO information and support centers throughout Cen-tral and Eastern Europe and Eurasia, sharing information about private foundation andcorporate funding, training and educational programs, advocating for the sector, andbuilding partnerships throughout the sector.

Constraints to Progress:

Despite impressive progress,serious threats to NGOsustainability remain, even inthe Northern Tier countriesthat have graduated from tra-ditional USAID support. NGOorganizational capacity is stilllimited, particularly in theSouthern Tier and Eurasia.NGOs across the region lackcrucial elements of organiza-tional capacity such as stra-tegic planning skills and an understanding of the appropriate role of boards of directors.

In the Southern Tier, despite large amounts of international donor money being spent inthe Stability Pact countries, much of that investment is not being used in ways thatsufficiently empower indigenous NGOs to build their constituencies and respond to theneeds and priorities of their communities. In Bosnia, the lack of donor funds to addresslocal priorities has contributed significantly to what many observers describe as an“ownership gap" where NGOs receiving donor grants often suffer from a weaker senseof mission and commitment than those who formed independently in response to com-munity needs.

In the Southern Tier and Eurasia, NGO financial sustain-ability remains in the distantfuture. Even in the Northern Tier, financial viability remains a serious problem for mostNGOs. Only a few economies approach GDP levels of 1989, and societal traditions of

Financial Viability by Region

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Public Image by Region

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Southern Tier

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philanthropy and voluntarism have not yet begun to take root. Sectoral infrastructure,regional cooperation and indigenous philanthropy still need substantial support, devel-opment and investment from international donors. The Orpheus Civil Society Network,for example, reports that its member NGO support centers remain deeply reliant on in-ternational donor funds, despite the intentions of most international donors to phase outgrantmaking in many countries in the region. On average, only 10 to 20% of supportcenter financial resources come from local government or corporate support, or from theCenters' own income-generating activities.2

REGIONAL TRENDS

The Northern Tier:

The gap in overall sustain-abilitybetween the Northern Tier, andthe Southern Tier and Eurasiaremains. NGOs in the NorthernTier retain substantial advan-tages in each of the seven di-mensions of sustainability, rela-tive to their counterparts else-where in the region. In Slovakia,for example, during the pastyear the National Council of theSlovak Republic passedamendments to the income taxlaws that will permit individualsto donate 1% of their income tax

payment to support public interest organizations. The amended laws also exempt NGOsfrom income tax on activities connected to the organization's purpose. Further, a coali-tion of 120 NGOs formed the Civic Initiative for a Competent Act on Information Access,working closely with Members of Parliament to prepare and pass a broad Freedom ofInformation Act in Slovakia. In Poland, public advocacy activities of NGOs are increas-ing. Coalitions and umbrella groups are working on issues related to childrens' rights,rights of the disabled, reproductive rights, human rights and environmental protection.

Cross border activities that share experience and expertise are growing in importancefor NGOs in the Northern Tier. These activities not only transfer ideas and practices, buthave been successful in facilitating the development of creative indigenous ideas andpractices.

Polish NGO trainers are providing services to DemNet/Croatia, and mentoring partnerNGOs under the Polish-America-Ukraine Cooperation Initiative (PAUCI). Slovak NGOs,particularly those that were active in OK '98, the civic education, election monitoring and

2 Ten Years of Civil Society Support in Central and Eastern Europe: Challenges for Building Support In-frastructure in the Region, Orpheus Civil Society Network, European Foundation Centre, Orpheus CivilSociety Project. November 2000. Page9.

NGO Sustainability - Northern Tier

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CZECH REPUBLIC

ESTONIA

HUNGARY

LATVIA

LITHUANIA

POLAND

SLOVAKIA

1997

1998

1999

2000

TRENDS ANALYSIS

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voter mobilization coalition, shared their experience and skills with civic action NGO coa-litions in Ukraine, Croatia and Serbia.

A degree of frustration, however, is becoming very apparent in the attitudes and percep-tions of Northern Tier NGOs. This was particularly evident in the initial results of the ex-pert groups empanelled in Poland, Hungary and the Czech Republic, Slovakia and theBaltics, as NGO activists compare themselves more and more with their counterparts inthe European Union, rather than with those in the other transitional countries of the re-gion. Where possible, we have tried to take this into account in arriving at final scores foreach of these countries.

Nevertheless, the most intractable obstacles to sustainability continue to plague thesector. In the Czech Republic, there is a chronic lack of finances and Government sup-port has been decreasing over the past few years. Further, the government‘s proposalfor a new Law on Civic Associations, which was supposed to replace the Law on Asso-ciating of Citizens, was rejected by the Czech Parliament in May 2000. In Estonia, thegeneral public is still largely indifferent to the activities of NGOs and media coverage islargely passive. In Latvia, NGOs still find it impossible to work together in coalitions andumbrella groups, because they believe that they are competing against each other forlimited resources, and are therefore often uninterested in co-operating for the commongood.


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The Southern Tier:

Clearly, it is civil society in theSouthern Tier region that hashad the most challenging year,following the dramatic politicalchanges in the Balkans. NGOcoalitions and other civil soci-ety organizations were crucialto the dramatic politicalchanges that took place, andwill remain essential to con-solidation of democratic prog-ress as monitors and watch-dogs of government policy andactions, and as providers ofcommunity services, in the ab-

sence of government resources. One of the most important challenges ahead for NGOsin formally authoritarian countries will be the need to learn how to work "with" rather than"against" the government, while continuing to monitor and challenge their new govern-ments.

Throughout the Southern Tier, NGOs are increasing their advocacy capacity, formingcoalitions and umbrella organizations, and improving their contacts with other NGOsthroughout the E&E region.

New NGO laws are in place in Bulgaria and Romania. The Bulgarian law, for example,introduces the concepts of public benefit organizations (PBOs) and mutual benefit or-ganizations (MBOs) for the first time in the region. The law specifies catagories of publicbenefit activities, and provides State benefits exclusively to PBOs.

Nevertheless, serious constraints still hamper NGO sustainability. The financial viabilityof the sector is very poor, strategic planning and constituency development skills areweak, board development is virtually unheard of, and many societies are still plagued byethnic rivalries, exceedingly weak economies and the aftermath of war.

Traditions of philanthropy and voluntarism are rare throughout the subregion. Govern-ment agencies, while generally becoming less hostile to NGOs, still tend to have littleunderstanding of the merits of third sector activities. Most NGOs do not have a mediastrategy, and relations with the media are haphazard and ad hoc at best. In general, thepublic is not well informed about NGO activities.

NGO Sustainability - Southern Tier

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ALBANIA

BOSNIA

BULGARIA

CROATIA

KOSOVO

MACEDONIA

MONTENEGRO

ROMANIA

SERBIA

1997

1998

1999

2000

TRENDS ANALYSIS

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Eurasia:

Interestingly, while NGOs in theNorthern Tier show increasingsigns of frustration, the NGO ex-perts that participated in the initialstages of scoring the Index inseveral Eurasian countries exhib-ited a great deal of unbridled en-thusiasm over the first signs ofimprovement in the legal envi-ronments, infrastructures, andpublic image of NGOs in theircountries. In Tajikistan, the gov-ernment has slowly begun to im-plement a generally progressiveNGO law passed in 1998, and theMinistry of Justice has begun to

actively solicit NGO participation in the development of further NGO legislation. In Turk-menistan, small improvements in the number and availability of NGO Resource Centers,and the first joint NGO-Government activities in the areas of environmental curriculumreform and AIDS, have generated a good deal of excitement and enthusiasm for the ini-tial signs of sectoral development.

Unfortunately, elsewhere in the region many governments remain hostile and suspiciousof NGOs. In Belarus, the government required that all NGOs be re-registered in a cam-paign aimed largely at creating obstacles for sectoral development. In Kazakhstan, tax-police harassment of NGOs with international partners increased in 2000. Further, pro-posed changes to the Kazakhstani tax code could result in government interference andcontrol over NGO programs by requiring international grants to be channeled throughthe Ministry of Press and Social Harmony in order to receive tax privileges. The pro-posed changes also roll back existing tax exemptions on NGO revenue generating ac-tivities. In Turkmenistan, the existing NGO law is not implemented at all, and govern-ment continues to harass NGOs that express criticism of national or local government. InRussia, government interference with the re-registration of politically controversial NGOshas increased.

NGOs remain heavily dependent upon international donor funds and new NGOs andNGO coalitions most often emerge around issues of importance to international donors,rather than issues of importance to local communities. There are some hopeful signshowever. In Russia, NGO sector experts continue to find that Russian regional and localgovernment agencies are the most likely sources of financial support. At least 40% ofRussia's NGOs receive some form of government assistance. During 2000, legislationon government grants to NGOs for the provision of social services was passed in thecities of Stavropol, Novosibirsk, Kemerovo and Krasnoyarsk.

CONCLUSIONS

NGO Sustainability - Eurasia

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ARMENIA

AZERBAIJAN

BELARUS

GEORGIA

KAZAKHSTAN

KYRGYZ REPUBLIC

MOLDOVA

RUSSIA

TAJIKISTAN

TURKMENISTAN

UKRAINE

UZBEKISTAN

1997

1998

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The 2000 NGO Sustainability Index continues to document profound changes that aretaking place throughout Central and Eastern Europe and Eurasia. It is clear, however,that continued international donor support and capacity-building programs remain es-sential for indigenous NGO sectors in the Southern Tier and Eurasia. Even in the moresophisticated civil societies of the Northern Tier, partnerships and networks with westernNGOs, and continued availability of international donor grants remain important to sup-port financial sustainability.

A number of the key elements of civil society are coming into place. There is clear evi-dence of maturing legal and regulatory environments throughout the Europe and Eurasiaregion. Though still somewhat weak, steady progress is being made in the areas of pub-lic image and advocacy. With the support of international donors, there is a growingcorps of NGO professionals and a substantial indigenous training capacity. And NGOs,particularly in the Southern Tier, are showing an impressive capacity to form coalitionsand participate in nonpartisan political activities that support the strengthening of demo-cratic roots.

Significant challenges remain. The most important of these are financial viability andcontinued improvement in credibility, public image and constituency building. In general,the new middle class is still too weak and unfamiliar with the role and capacity of NGOsto involve itself in charitable activities. Local economies are too weak to support robustcivil society sectors without outside donor assistance.

NGOs will need more than money, training and technical assistance to establish healthyand strong community roots that can sustain them. Donor assistance needs to go be-yond technical skills and financial assistance, and encourage NGOs to focus on theirmissions and their customers, public accountability and transparency.

Where government is highly hostile and suspicious of NGOs, major efforts may beneeded to affect attitudes, practices and behaviors of the citizenry. In other cases, wherecitizens question the value of voluntarism or NGOs are perceived as little more than ameans of avoiding taxes, NGOs and their international partners may need to focus onbuilding credibility based upon NGO expertise and quality of services.

- Mark Levinson, Editor

METHODOLOGY

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Seven different dimensions of the NGO sector are analyzed in the Index: legalenvironment, organizational capacity, financial viability, advocacy, service provision,NGO infrastructure and public image. Individually, these dimensions can provide USAIDMissions and partners, indigenous umbrella groups and intermediary support organizations,and other international donors with a reasonable measure of impact over time, and a basisfor identifying both needs and opportunities in a strategic planning process.

In the Index, each of these seven dimensions is examined, with a focus on the followingquestions:

1. What has been accomplished?2. What remains a problem?3. Do local actors recognize the nature of outstanding challenges?4. Do the local actors have a strategy and the capacity to address these chal-

lenges? A brief explanation of the criteria used to evaluate each aspect of sustainability follows:

Legal Environment

For an NGO sector to be sustainable, thelegal and regulatory environment shouldsupport the needs of NGOs. It shouldfacilitate new entrants, help preventgovernmental interference, and giveNGOs the necessary legal basis toengage in appropriate fund-raisingactivities and legitimate income-producingventures. The legal environmentdimension of the Index analyzes the legalstatus of non-governmentalorganizations. Factors shaping the legalenvironment include the ease ofregistration; legal rights and conditionsregulating NGOs; and the degree towhich laws and regulations regardingtaxation, procurement, access toinformation and other issues benefit ordeter NGOs' effectiveness and viability.The extent to which government officials,NGO representa-tives, and privatelawyers have the legal knowledge and

experience to work within and improvethe legal and regulatory environment forNGOs is also examined.

Questions asked include: Is there afavorable law on NGO registration? Doesclear legal terminology precludeunwanted State control over NGOs? AreNGOs and their representatives allowedto operate freely within the law? Are theyfree from harassment by the centralgovernment, local governments, and taxpolice? Can they freely address mattersof public debate and express criticism?Do NGOs receive any sort of taxexemption? Do individual or corporatedonors receive tax deductions? DoNGOs have to pay taxes on grants? AreNGOs allowed legally to compete forgovernment contracts/procurements atthe local and central levels

The 2000 NGO Sustainability IndexFor Central and Eastern Europe and Eurasia

How is it measured?


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OrganizationalCapacity

A sustainable NGO sector will contain acritical mass of NGOs that aretransparently governed and publiclyaccountable, capably managed, and thatexhibit essential organizational skills. Theorganizational capacity dimension of theIndex addresses the operation of NGOs.

Questions evaluated include: Do NGOsactively seek to build constituencies fortheir initiatives? Do NGOs have a clearly

defined Mission? Does the sector have acore of professionals who areexperienced practitioners and trainers ofNGO management? Does a core groupof mature NGOs exist in a variety ofsectors and geographic areas with well-developed missions, structures andcapacity, including a recognized divisionbetween the Board of Directors and staffmembers? Do NGOs actively seek tobuild constituencies for their initiatives?

Financial Viability

A critical mass of NGOs must befinancially viable, and the economy mustbe robust enough to support NGO self-financing efforts and generatephilanthropic donations from localsources. For many NGOs, financialviability may be equally dependent uponthe availability of and their ability tocompete for international donor supportfunds.

Factors influencing the financial viabilityof NGOs include the state of theeconomy, the extent to whichphilanthropy and volunteerism are beingnurtured in the local culture, as well asthe extent to which governmentprocurement and commercial revenueraising opportunities are being developed.

The sophistication and prevalence offundraising and strong financialmanagement skills are also considered,although this overlaps with organizationalcapacity, described above.

Questions asked under this dimensioninclude: Do NGOs raise a significantpercentage of their funding from localsources? Are NGOs able to draw upon acore of volunteer and non-monetarysupport from their communities? DoNGOs have sound financial managementsystems? Do NGOs engage inmembership outreach and constituencydevelopment programs? Do revenuesfrom services, products, or rent fromassets supplement the income of NGOs?

Advocacy

The political and advocacy environmentmust support the formation of coalitionsand networks, and offer NGOs the meansto communicate their message throughthe media to the broader public, articulatetheir demands to government officials,and monitor government actions toensure accountability. The advocacydimen-sion looks at NGOs' record ininfluencing public policy. The preva-lenceof advocacy in different sectors, atdifferent levels of government, as well as

with the private sector is analyzed. Theextent to which coalitions of NGOs havebeen formed around issues isconsidered, as well as whether NGOsmonitor party platforms and governmentperformance. This dimension does notmeasure the level of NGOs engagementwith political parties.

Questions include: Are there direct linesof communication between NGOs andpolicy makers? Are NGOs able to

METHODOLOGY

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influence public policy? Have NGOsformed issue-based coalitions andconducted broad-based advocacy

campaigns? Are there mechanisms andrelationships for NGOs to participate inthe political process?

Service Provision

Sectoral sustainability will require acritical mass of NGOs that can efficientlyprovide services that consistently meetthe needs, priorities and expectations oftheir constituents.

The index reviews questions such as: Dothe goods and services that NGOsproduce reflect the needs and priorities oflocal donors and the community, as wellas foreign donor grants and the

government? Do NGOs have knowledgeof the market demand? Do they haveknowledge of the ability of the consumersof their services to pay for their productsand services? Does the government, atthe national and/or local level, recognizethe value that NGOs can add in theprovision of basic social services? Dothey provide grants or contracts to NGOsto enable them to provide such services?

Sectoral Infrastructure

A strong sectoral infrastructure isnecessary that can provide NGOs withbroad access to Intermediary SupportOrganizations (ISOs) that provide localNGO support services. ISOs providingthese services must be able to inform,train, and advise other NGOs; andprovide access to NGO networks andcoalitions that share information andpursue issues of common interest.

Questions include: Is there an indigenousinfrastructure, including ISOs that

supports NGOs? Do local communityfoundations or ISOs provide grants fromeither locally raised funds or by re-granting international donor funds? DoISOs have an available body ofinformation and curricula on the not-for-profit sector? Do NGOs share informationwith each other? Is there a network inplace that facilitates such informationsharing? Is there an organization orcommittee through which the sectorpromotes its interests?


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Public Image

For the sector to be sustainable,government and communities should

have a positive public image of NGOs,including a broad understanding and

appreciation of the role that NGOs play insociety. Public awareness and credibilitydirectly affect NGOs' ability to recruitmembers and volunteers, and encourageindigenous donors. The Index looks atthe extent and nature of the media'scoverage of NGOs, the awareness andwillingness of government officials toengage NGOs, as well as the generalpublic's knowledge and perception of thesector as a whole.

Typical questions in this section include:Do NGOs enjoy positive mediacoverage? Does the media providepositive analysis of the role that NGOsplay in civil society? Does the generalpublic have a positive image of NGOs?What about the business sector andgovernment? Have NGOs adopted acode of ethics or tried to demonstratetransparency in their operations?

METHODOLOGY

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The NGO Sustainability Index uses a seven-point scale, to facilitate comparisons to the FreedomHouse indices, with 7 indicating a low or poor level of development and 1 indicating a very ad-vanced NGO sector. The following section elaborates on the characteristics of each level of de-velopment:

7 Erosion or no change since the Soviet era. A war, with its human and material costs, depletedeconomy, highly divided society or totalitarian regime and the like, has set the development ofthe sector back.

6 Little progress since Soviet era, one problem or constraint has replaced another. Facilitatingthe development of local capacity is severely limited by a hostile authoritarian regime, state-controlled media; brain drain; and/or a small or highly fractured community of activists withvery little capacity or experience in organizing and initiating activities, running organizations,and/or little interest in doing so.

5 Programmatic success in developing the local capacity or facilitating progress in the aspect inquestion is hampered by a contracting economy; an authoritarian leader; highly centralizedgovernance structure; a controlled or reactionary media; or a low level of capacity, will, or in-terest on the part of the NGO community. The absorptive capacity of the NGO sector is lim-ited -- perhaps limited geographically to the capital city, or sectorally to two or three areas ofactivity or policy issues.

4 Progress in the aspect in question is hampered by the factors cited above, but to a lesserdegree: perhaps by a stagnant rather than a contracting economy, a passive rather than hos-tile government, a disinterested rather than controlled or reactionary media, or a communityof good-willed but inexperienced activists. While NGOs in the capital city or in three or foursectors are progressing, others lag far behind.

3 Foreign assistance is able to accelerate or facilitate reform because the environment is gen-

erally enabling and/or local progress and commitment to developing the aspect in question isstrong. An enabling environment includes a government open to reform (legal), a growingeconomy (financial), some decentralization of governing structures (advocacy), or an inde-pendent media (image). NGOs in regional centers and in four or five sectors are beginning tomature.

2 The environment is enabling and the local NGO community demonstrates a commitment topursuing needed reforms and to developing its professionalism. Foreign assistance contin-ues to accelerate or facilitate these developments. Model NGOs can be found in most largercities, in most regions of a country, and in a variety of sectors and issues.

1 While the needed reforms and/or the NGO sector's development is not complete, the localNGO community recognizes which reforms or developments are still needed, and has a planand the ability to pursue them itself. Model NGOs can be found in cities and towns, in all re-gions of a country, in numerous different sectors.

Ratings: What they mean in general terms

COUNTRY LEGAL ORG FINANCIAL ADVOCACY SERVICE INFRA- PUBLIC OVERALLENVIRON CAPACITY VIABILITY PROVISION STRUCTURE IMAGE SCORE

NORTHERN TIERCzech Republic 2.0 3.0 2.0 2.0 2.0 3.0 3.0 2.4Estonia 2.0 2.5 2.8 2.0 2.5 2.5 2.5 2.4Hungary 1.0 3.0 3.0 3.0 2.0 2.0 2.0 2.3Latvia 3.0 2.6 3.5 3.0 2.5 3.0 2.0 2.8Lithuania 4.0 2.5 4.0 2.0 3.5 3.0 3.0 3.1Poland 2.0 2.0 2.5 2.0 2.0 2.0 2.0 2.1Slovakia 2.5 1.5 3.0 1.5 2.0 1.5 1.5 1.9

Regional Average 2.4 2.4 3.0 2.2 2.4 2.4 2.3 2.4

SOUTHERN TIERAlbania 4.0 5.0 5.0 4.0 5.0 5.0 4.5 4.6Bosnia 4.5 4.5 6.0 4.5 4.5 5.0 5.0 4.9Bulgaria 3.5 4.5 5.2 3.0 3.0 3.0 4.0 3.7Croatia 4.0 4.8 6.6 2.5 4.4 4.0 4.0 4.3Kosovo 3.0 4.5 6.0 4.5 5.0 5.0 4.0 4.6Macedonia 3.0 4.0 5.0 4.5 5.5 5.0 5.0 4.6Montenegro 3.5 5.0 5.5 3.5 4.5 5.0 5.0 4.6Romania 3.0 5.0 5.5 3.5 4.0 4.0 3.5 4.1Serbia 5.0 5.0 6.0 4.0 4.0 4.0 4.0 4.6


EURASIAArmenia 4.0 5.0 6.0 5.0 4.0 6.0 5.0 5.0Azerbaijan 5.0 5.2 6.0 5.5 4.5 4.5 4.5 5.0Belarus 7.0 5.0 6.0 6.0 5.0 5.0 6.0 5.7Georgia 3.0 4.0 6.0 2.0 5.0 4.0 5.0 4.1Kazakhstan 4.5 5.0 5.5 4.5 4.7 4.5 4.5 4.7Kyrgyz Republic 4.3 4.0 5.5 3.5 4.5 4.0 4.5 4.3Moldova 3.0 4.5 5.5 5.0 5.0 4.0 5.0 4.6Russia 4.0 4.0 5.0 4.5 4.5 3.5 4.5 4.3Tajikistan 5.0 5.5 6.0 5.5 5.5 5.0 5.0 5.4Turkmenistan 6.5 5.8 6.0 6.3 5.3 5.7 6.2 6.0Ukraine 5.0 4.0 5.0 4.0 4.0 4.0 5.0 4.4Uzbekistan 5.4 5.3 5.5 5.2 4.5 5.0 4.8 5.1


The 2000 NGO SUSTAINABILITY INDEX

USAID - BUREAU FOR EUROPE AND EURASIAOFFICE OF DEMOCRACY AND GOVERNANCE

NGO Sustainability Index: 1997 - 2000

NORTHERN TIER

Country 7 6 5 4 3 2 1

Czech Republic1997 Not Available1998 Not Available1999 Not Available2000 2.4

Estonia1997 Not Available1998 Not Available1999 Not Available2000 2.4

Hungary1997 2.31998 1.61999 2.1

2000 2.3

Latvia1997 3.61998 4.21999 1999 Not Available2000 2.8

Lithuania1997 4.01998 3.01999 2.9

2000 3.1

Poland1997 1.81998 2.01999 2.1

2000 2.1

Slovakia1997 2.81998 2.81999 2.2

2000 1.9

SOUTHERN TIER

Country 7 6 5 4 3 2 1Albania

1997 4.41998 4.21999 4.82000

Bosnia1997 Not Available1998 5.61999 5.32000 4.9

Bulgaria1997 4.01998 3.61999 4.02000 3.7

Croatia1997 4.61998 4.41999 4.62000 4.3

Kosovo1997 Not Available1998 Not Available1999 4.42000 4.6

Macedonia1997 4.41998 4.41999 4.62000 4.6

Montenegro1997 Not Available1998 Not Available1999 4.62000 4.6

Romania1997 3.61998 3.81999 4.02000 4.1

Serbia1997 4.81998 5.41999 5.42000 4.5

ConsolidationMid-TransitionEarly Transition

Early Transition Mid-Transition Consolidation

EURASIA

Country 7 6 5 4 3 2 1

Armenia1997 Not Available

1998 5.51999 5.1

2000 5.0

Azerbaijan1997 Not Available

1998 6.31999 5.6

2000 5.0

Belarus1997 Not Available1998 Not Available1999 Not Available

2000 5.7

Georgia1997 Not Available

19981999 3.8

2000 4.1

Kazakstan1997 4.6

1998 4.4

1999 4.8

2000 4.7

Kyrgyzstan1997 4.6

1998 3.9

1999 4.2

2000 4.3

Moldova1997 Not Available

1998 Not Available1999 Not Available

2000 4.6

Russia1997 3.4

1998 3.4

1999 4.1

2000 4.3

Tajikistan1997 Not Available

1998 6.61999 6.1

2000 5.4

Turkmenistan1997 Not Available1998 Not Available

1999 6.6

2000 6.0

Ukraine1997 4.0

1998 4.2

1999 4.1

2000 4.4

Uzbekistan1997 Not Available

1998 4.71999 5.3

2000 5.1

Early Transition Mid-Transition Consolidation

METHODOLOGY

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The following sections go into greater depth about the characteristics in each of theseven dimensions of the sector's development. These characteristics and stages aredrawn from empirical observations of the sector's development in the region, rather thana causal theory of development.

Given the decentralized nature of NGO sectors, many contradictory developments maybe taking place simultaneously. Therefore we do not attempt to break out the character-istics of the seven dimensions into seven distinct steps of development. Instead, thesecharacteristics are clustered into three basic stages: Early Transition, Mid-Transition andConsolidation. The Early Transition stage corresponds to a score of 5 to 7 points on thescale, the Mid-Transition stage corresponds to a score between 3 and 5 points, and themost advanced stage, Consolidation, corresponds to a score between 1 and 3 points.

Early Transition (5-7):The absence of legal provisions, theconfusing or restrictive nature of legalprovisions (and/or their implementation)on non-governmental organizations(NGOs) make it difficult to registerand/or operate (i.e., regulation to thepoint of harassment). Assistance pro-grams address status laws pertaining to

registration, internal manage-ment/governance, scope of permissibleactivities, reporting, dissolution, andother topics; as well as the degree ofbureaucratic and administrative impedi-ments to NGO formation and operation;degree of state regulation, harassmentof or violence toward NGOs.

Mid-Transition (3-5): NGOs have little trouble registering anddo not suffer from state harassment.They are permitted to engage in a broadrange of activities, although taxationprovisions, procurement procedures, etc.may inhibit NGOs' operation and devel-opment. Programs seek to reform orclarify existing NGO legislation, to al-low NGOs to engage in revenue-raisingand commercial activities, to allow na-tional or local governments to privatize

the provision of selected governmentservices, to address basic tax and fiscalissues for CSOs, etc. The local NGOcommunity understands the need tocoalesce and advocate for legal reformsbenefiting the NGO sector as a whole. Acore of local lawyers begins to specializein NGO law by providing legal servicesto local NGOs, advising the NGO com-munity on needed legal reforms, craftingdraft legislation, etc.

Consolidation (1-3):

Ratings: A Closer Look

Legal Environment

TRENDS ANALYSIS

The legislative and regulatory frame-work begins to make special provisionsfor the needs of NGOs or gives not-for-profit NGOs special advantages suchas: significant tax deductions for busi-ness or individual contributions, signifi-cant tax exemptions on CSOs, opencompetition among NGOs to providegovernment-funded service, etc. Legalreform efforts at this point are primarily alocal NGO advocacy effort to reform or

fine tune taxation laws, procurementprocesses, etc. Local and comparativeexpertise, as well as availability of legalservices and materials, on the NGO le-gal framework exists.

Note: The International Center for Not-for-Profit Law (ICNL) contributed to de-fining these stages of development.ICNL's web site (www.icnl.org) providescomparative analyses of NGO laws.

Early Transition (5-7):NGOs are "one-man shows," completelydependent upon the personality of oneor two major figures. They often splitapart due to personality clashes. NGOslack a clearly defined sense of mission.At this stage, NGOs reflect little or nounderstanding of strategic planning orprogram formulation. They lack organ-izational skills and procedures for budg-

eting and tracking expenditures; andthey lack the ability to monitor, reporton, and evaluate programs. Organiza-tions rarely have a board of directors,by-laws, staff, or more than a handful ofactive members. Programs provide ba-sic organizational training to NGO ac-tivists.

Mid-Transition (3-5):Individual NGOs, or a number of NGOsin individual sectors (women, environ-ment, social services, etc.), demonstrateenhanced capacity to govern them-selves and organize their work. Individ-ual NGOs in at least the major sectors --environment, business, social sector,human rights/democracy -- maintain full-time staff members and boast an orderlydivision of labor between board mem-bers and staff. Local NGO support cen-ters are founded to inform, train, andadvise other NGOs. Activities include

newsletters, libraries, consultations orother services. NGO activists may de-mand that training be at a more ad-vanced level. Programs train local train-ers and develop local language materi-als and locally sponsored courses toteach organizational skills. Local trainerslearn how to facilitate: strategic planningexercises and program development,financial management structures, ap-propriate communication channels bothwithin and outside an organization, andteam building.

Consolidation (1-3):A few transparently governed and capa-bly managed NGOs exist across a vari-ety of sectors. Essential organizationalskills are demonstrated, and include

how to recruit, train, and manage a vol-unteer network. A professional cadre oflocal experts, consultants and trainers innon-profit management exists. An ac

Organizational Capacity

Financial Viability

METHODOLOGY

Page 20

cessible network for identifying trainersand consultants exists. NGOs recognizethe value of training. The lack of finan-cial resources may remain a constraintfor NGOs wanting to access locally pro-vided NGO management training. Top-

ics of available training cover: legal andtax issues for NGOs, accounting andbookkeeping, communication skills, vol-unteer management, media and publicrelations skills, sponsorship and fund-raising.

Early Transition (5-7):New NGOs survive from grant to grantand/or depend financially on one (for-eign) sponsor. NGOs at this stage lackbasic fundraising skills, such as how towrite a proposal. Programs seek toteach fundraising skills in order to diver-

sify funding sources. Even with a diver-sified funding base, donors remainoverwhelmingly international. A de-pressed local economy may contributeto this dependency.

Mid-Transition (3-5):NGOs pioneer different approaches tofinancial independence and viability.Some might survive and continue togrow modestly, by reducing foreignfunding and sticking to a minimal, vol-unteer-based operation. IndividualNGOs experiment with raising revenuesthrough providing services, winningcontracts and grants from municipalitiesand ministries to provide services, orattempting to attract dues-paying mem-bers or domestic donors. NGOs begin topool resources by sharing overheadcosts, such as hiring one accountant forseveral NGOs. Efforts are made to sim-

plify and/or establish uniform grant ap-plication procedures undertaken by do-nors or governmental agencies. A de-pressed local economy may hamperefforts to raise funds from local sources.Training programs accelerate financialviability by offering strategic planning,revenue raising and advanced fund-raising skills through indigenous trainersand NGO support centers. NGOs beginto understand the importance of trans-parency and accountability from a fund-raising perspective. NGO centers mayprovide "incubator" services to decreaseadministrative costs for fledgling NGOs.

Consolidation (1-3):A critical mass of NGOs adopt rules onconflict of interest, prohibitions on self-dealing and private procurement, ap-propriate distribution of assets upon dis-solution, etc., to win potential donors'confidence. In a conscious effort, thelocal NGO sector may lay the ground-work for financial viability by cultivatingfuture sources of revenue for the sector.This might include lobbying for govern-ment procurement reform for NGO-

delivered services, tax reform to en-courage revenue-generating activities,providing exposure through NGO train-ers and NGO support center to suc-cessful domestic precedents, cultivatinga domestic tradition of corporate phi-lanthropy, or cultivating international do-nors. There is also a growing economy,which makes growth in domestic givingpossible.


Page 21

Early Transition (5-7):Broad umbrella movements, composedof activists concerned with a variety ofsectors, and united in their opposition tothe old regime fall apart or disappear.Some countries at this stage have noteven experienced any initial burst of ac-tivism. Economic concerns become pre-dominant for most citizens. There maybe an increase in passivity, cynicism, orfear within the general public. NGO ac-tivists are afraid to engage in dialoguewith the government, feel inadequate to

offer their views and/or do not believethe government will listen to their rec-ommendations. NGOs do not under-stand the role that they can play in "pub-lic policy" or do not understand conceptof "public policy". Programmatic activi-ties begin to introduce the importance ofcollecting empirical data and first-handinformation in order to share facts ratherthan opinions with officials or concernedcitizens.

Mid-Transition (3-5):Narrowly defined advocacy organiza-tions emerge and become politically ac-tive in response to specific issues, in-cluding issues that emerge during thetransition: human rights, abortion, op-portunities for the disabled, environ-ment, etc. Organizations at Mid-Transition development may often pres-ent their concerns to inappropriate lev-els of government (local instead of na-tional and vice versa). Weakness of thelegislative branch might be revealed orincorrectly assumed, as activists choose

to meet with executive branch officialsinstead ("where the power truly lies.").Beginnings of alternative policy analysisare found at universities. The begin-nings of information sharing and net-working between NGOs, and the exis-tence of an NGO support center to in-form and advocate its needs within thegovernment may develop. Program-matic initiatives include training in advo-cacy techniques, coalition building,communication techniques, and policyanalysis.

Consolidation (1-3):The NGO sector demonstrates the abil-ity and capacity to respond to changingneeds, issues and interests of the com-munity and country. As NGOs securetheir institutional and political base, theybegin to 1) form coalitions to pursue is-sues of common interest, such as chil-dren's rights or handicapped care; 2)monitor and lobby political parties; 3)monitor and lobby legislatures and ex-ecutive bodies. NGOs demonstrate the

ability to mobilize citizens and other or-ganizations to respond to changingneeds, issues, and interests. NGOs atstage three will review their strategies,and possess an ability to adapt and re-spond to challenges by sector. A primemotivator for cooperation is self-interest:NGOs may form alliances aroundshared issues confronting them as non-profit, non-governmental organizations.

Advocacy

METHODOLOGY

Page 22

Early Transition (5-7): A limited number of NGOs are capableof providing basic social services--suchas health, education, relief, housing,water or energy. Those who do providesuch services receive few if any gov-ernment subsidies or contracts. NGOsthat produce publications, technicalservices or research do so only for their

own members. Attempts to charge feesfor goods and services are limited, andoften fail. The volume of services to thepoor is limited since there is little localprivate sector financial support and nocross-subsidization from services tobetter off constituencies.

Mid-Transition (3-5): The contribution of NGOs to coveringthe gap in social services is recognizedby government, which may on occasionsubsidize or contract for these “publicgoods.” NGOs recognize the need tocharge fees for services and other prod-ucts—such as publications and work-shops—but even where legally allowed,

such fees seldom recover their costs.The constituency for NGO expertise,reports and documents expands beyondtheir own members and the poor to in-clude other NGOs, academia, churches,and government.

Service Provision


Page 23

Consolidation (1-3): Many NGOs provide goods and serv-ices, which reflect community and/orlocal donor priorities. Many NGOs pro-duce products beyond basic socialservices to such sectors as economicdevelopment, environmental protectionor democratic governance. NGOs inseveral sectors have developed a suffi-ciently strong knowledge of the marketdemand for their services, the ability ofgovernment to contract for the deliveryof such services or other sources of

funding including private donations,grants and fees, where allowed by law.A number of NGOs find it possible tocross-subsidize those goods and serv-ices for which full cost recovery is notviable with income earned from morelucrative goods and services, or withfunds raised from other sources.

Early Transition (5-7): There are few, if any, active NGO Inter-mediary Support Organizations (ISOs),networks and umbrella organizations.Those that do operate, work primarily inthe capital city and provide limited serv-ices such as access to computerequipment, faxes, email and meetingspace. Local training and NGO devel-opment capacity is extremely limitedand undeveloped. Primarily programs of

international donors provide training andtechnical assistance. There is no coor-dinated effort to develop philanthropictraditions, improve fundraising or estab-lish community foundations. NGO effortsto work together are limited by a per-ception of competition for foreign donorsupport and mistrust of other organiza-tions.

Mid-Transition (3-5): ISOs are active in most major popula-tion centers, and provide services suchas distributing grants, publishing news-letters, maintaining a membership data-base, running a library of NGO litera-ture, and providing basic training andconsulting services. Other umbrella or-ganizations are formed to facilitate net-

working and coordinate activities ofgroups of NGOs. Local trainers have thecapacity to provide basic organizationaltraining. Donors' fora are formed to co-ordinate the financial support of interna-tional donors, and to develop local cor-porate philanthropic activities.

Consolidation (1-3): ISOs are active in all areas of the coun-try and provide advanced training, legalsupport and advice, and philanthropicdevelopment activities. Efforts are un-derway to found and endow community

foundations, indigenous grant-makinginstitutions, and organizations to coordi-nate local fundraising. Local trainers arecapable of providing high level trainingto NGOs throughout the country.

Infrastructure

TRENDS ANALYSIS

Early Transition (5-7): The general public and/or governmentare uninformed or suspicious of NGOsas institutions. Most the population doesnot understand the concept of "non-governmental" or "not-for-profit", includ-ing government officials, business lead-ers and journalists. Media coverage maybe hostile, due to suspicion of a free but

uninformed media, or due to the hostilityof an authoritarian government.Charges of treason may be issuedagainst NGOs. Due to a hostile atmos-phere caused by an authoritarian gov-ernment, if individuals or businessesdonate to NGOs at all, they do soanonymously.

Mid-Transition (3-5): The media generally does not tend tocover NGOs because it considers themweak and ineffective. Individual NGOsrealize the need to educate the public,to become more transparent, and toseek out opportunities for media cover-age. Individual local governments dem-

onstrate strong working relationshipswith their local NGOs, as evidenced bytheir participation in advisory commit-tees, consultations, public-private initia-tives, and the funding of an occasionalgrant.

Consolidation (1-3): This stage is characterized by growingpublic knowledge of and trust in NGOs,and increased rates of voluntarism.NGOs coalesce to mount a campaign towin public trust. Widespread examplesof good working relationships betweenNGOs and national and local govern-ments exist, and can result in public-private initiatives or NGO advisory

committees for city councils and minis-tries. Increased accountability, trans-parency, and self-regulation exist withinthe NGO sector to win public trust, in-cluding existence of a generally ac-cepted code of ethics or a code of con-duct.

Public Image


Page 25

Although the degree of expert vetting varied somewhat from country to country, thefollowing instructions, given to USAID field officers for gathering data and drafting acountry report, were followed:

1. Collect relevant information for each of the seven aspects included in the index andupdate your country overview statement.

2. Convene a group of 6-10 observers of the sector--drawing on donors, your NGOassistance implementers, representatives of NGO support centers, andrepresentatives of the chief sub-sectors, such as women's, environmental, or humanrights groups.

3. Share a draft of your updated overview statement with this "NGO Expert" group for itscomments and additions. You may want to have a longer description for your own in-country usage and a more concise overview statement for our regional document.Two to four pages (2-4 pp.) per country are more than enough for the regional piece.

4. With the NGO expert group discuss each indicator within each dimension, on thescore sheet provided, separately and rate it on the following scale:

(1) The indicator in question is lacking or not implemented/utilized, posing a seriousconstraint on NGO sectoral sustainability.

(2) The indicator in question is lacking or not implemented/utilized, constraining theNGO sector's sustainability to some degree.

(3) The indicator in question is present and implemented/utilized to the degree that ithas a somewhat positive impact on the NGO sector

(4) The indicator in question is present and well enough implemented/utilized tonurture the NGO sector.

5. For each dimension, add up all of the indicator scores – yielding your raw sum.

6. Average the indicator scores for that dimension by dividing your working sum by thenumber of indicators you scored. Round if necessary to the nearest one tenth. (Thisstep is necessary, you may notice, because the various dimensions have differentnumbers of indicators.)

Field Instructions

METHODOLOGY

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7. For each dimension, convert your average score into the final seven-point Index ratingscale by looking it up on the following table:

Average Score Dimension Rating*

3.6 to 4.0 13.2 to 3.5 22.8 to 3.1 32.4 to 2.7 41.9 to 2.3 51.5 to 1.8 61.0 to 1.4 7

*Note: The final index scale, on which the lower the number the “higher” the rating,inverts the more common sense score sheet scale, on which the lower the number thelower the rating.

8. After using the four new steps to systematically derive your rating for each of theseven dimensions of sector sustainability, simply average those ratings to get the finalcountry Index number. (Note: You may wish to ask those members of your groupwhose scores differ markedly with the others' rankings ("outliers") to explain thereasoning behind their rankings.)

The methodology used by the committee at USAID/Washington to review the Index wasas follows:

1. After USAID field officers of each country submitted a draft report, a member of thereviewing committee checked each country report for comprehensiveness. A firstround of additions and clarifications were requested.

2. The USAID/Washington committee reviewed the overview statements, and discussedboth the overall and individual sector rankings.

3. Any discrepancy between the field report and committee opinion was forwarded to thefield. Field officers were asked to justify their original rankings.

4. After considering explanations from the field, the committee agreed upon final scores,which are the basis of this Index.


Page 27

ALBANIA

OVERALL RATING: 4.6

Over the last year, Albania has made positive strides towards normalcy. With the end ofthe Kosovo crisis, a strengthening of public order, and a peaceful round of local electionsin October 2000, the country is less tense and polarized than it has been in some years.

It is believed that there are currently between 400 and 800 NGOs in Albania, approxi-mately 200 of which are active. The strongest NGOs are those engaged in advocacy,youth issues, and civic education, aswell as women’s organizations.

The overall outlook for the sector ismixed. While there was a broadeningof participation in the NGO commu-nity during the Kosovo crisis, littlehas been done to strengthen thesector’s capacity to serve a broaderconstituency since then. Thoughthere is more activity beyond the Ti-rana-Durres corridor, even thestronger NGOs remain donor driven and dependent. This dependence is related to theconstricted Albanian economy, as well as a lack of continued technical assistance in or-ganizational development.

The development of the NGO sector has also been severely impeded by the failure ofthe GoA to pass a new NGO law. Draft laws focus on two major issues: creating soliddefinitions of foundations, associations, and centers; and clarifying what types of NGOsmay provide services, of what sort, and for what (if any) fees. Despite its failure to passthe current draft, efforts to redraft and refine the law continue.

Thus, while Albanians are more confident of their physical safety due to progress in therule of law, the economy has not improved, and the strengthening of civil society seemsstalled. It is hoped that programs beginning at the end of 2000 will help the sector moveahead. Key activities will include continuing work to build an NGO coalition to reducecorruption, and broadening voter education efforts for the national election in 2001. Anemphasis will be put on strengthening organizations and associations within the justicesystem, the media, the health care sector, small businesses, agriculture and the socialservices sector.

Capital: Tirana Inflation: 18%GDP per capita: $1,080 Unemployment: 17.7%Population: 3,500,000 Foreign Direct Investment: $43,000,000

Albania Overall Ratings

4.4 4.24.8 4.6

1

2

3

4

5

6

71997 1998 1999 2000

ALBANIA

Page 28

LEGAL ENVIRONMENT: 4.0

Despite gaps and ambiguities, the cur-rent legal environment in Albania doesnot generally restrict the development ofthe NGO sector. For the most part,NGOs can register fairly easily and facelittle control in terms of their internalmanagement. The law would benefitfrom additional provisions promotingdemocratic governance structures.NGOs, at present, are allowed to en-gage in a broad range of activities, withthe exception of economic activities byassociations. Foundations are nominallysubject to control by relevant ministries,though the ministries have tended not toexert this control. The operation ofNGOs is loosely described by law,which sometimes leads to abuses byNGOs, such as intentional mismanage-ment of funds.

On the whole, NGOs and their repre-sentatives are able to operate freelywithin the law, and are free of harass-ment from the central and the local gov-

ernments. Reports of enforcement ac-tions by the tax police may be due moreto ambiguity in the tax laws themselvesthan actual “harassment.” NGO mem-bers can freely address matters of pub-lic debate and express criticism.

There are a large number of local law-yers, government officials and judgeswho are familiar with the NGO law.However, these resources are concen-trated in Tirana and much work needs tobe done to spread legal advice outsidethe capital.

The tax law contains a list of categoriesof public benefits to which NGOs areentitled, including a profit tax exemption.NGOs do not pay taxes on grants, butindividuals on a wage contract may notreceive deductions for contributions.The primary concern is that the law isconfusing and few people understandthe governing rules.

ORGANIZATIONAL CAPACITY: 5.0

On the whole, there has been littlechange in terms of organizationalcapacity in the NGO sector over thepast year. However, programs aimed atfilling the gaps in training andorganizational development are in theplanning stages.

With few exceptions, Albanian NGOsremain donor driven, which results inorganizations changing their mission tobe eligible for grants rather than usingtheir mission as a tool to build aconstituency.


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Although most citizen efforts to supportthe flow of refugees into the countrywere channeled through NGOs, theseorganizations are still characterized bylimited use of volunteers. There is littleto offer in the way of training for thevolunteers or for those who recruit andmanage them.

Most NGOs are mission-specificmembership organizations, such asgroups serving the handicapped, asopposed to broad-based communityorganizations. The new orientation ofthe NGO sector towards serviceprovision has highlighted the importanceand effectiveness of community-basedorganizations. There is very littleunderstanding of ways to involve andwork in communities. Among the donorsin Albania, there is little offered in termsof training and technical assistance todevelop community developmentcapacity of NGOs.

Albanian NGOs are still weak inmanagement structure and tend to haveboard members who have littlepreparation for their role. Many are theresimply because they are paid. A limitednumber of more mature and activeNGOs are becoming aware of theimportant role of a volunteer board. Afew Albanian NGOs are seekingspecialized training from donors to setup new boards or train the existing onesto work on volunteer principles.However, most organizations have littleunderstanding of their relationship withan executive staff, and still tend torevolve around a single strong leader. Inturn, a few Tirana-based NGO leadershave begun to delegate somemanagement responsibilities, but theseleaders are still in the minority. Again, itis only the organizations in Tirana thatare able to access the Internet, thoughthere are plans for the network to bespread to other municipalities in thenear future.

FINANCIAL VIABILITY: 5.0

The NGO sector remains highlydependent on the donor community,both for grants and as customers fortheir services. However, donor fundingshrunk as the Kosovar refugees left,reducing the level of funding available toNGOs. There are few possibilities toraise funds locally. Business is still at anearly stage of development, and thegovernment continues to face majorfinancial, infrastructural and socialproblems with few resources.Furthermore, the current legalframework provides little

incentive for businesses to supportcharitable activities. Given this situation,as long as the legal framework preventsNGOs from engaging in incomegenerating activities, financial viabilityremains in the future.

The creation of sound financialmanagement systems and reportingformats, as well as the training offinance personnel is still widely lackingin the sector. Donors offer little oversightof their grants, which

ALBANIA

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in itself could serve as a training period.In turn, financial mismanagement is

fairly widespread.

ADVOCACY: 4.0

Over the last two years, Albanian NGOshave continued to establish good workingrelations with various ministries and localgovernments and to play an active role inpolicy formulation. After the Kosovocrisis, they began to increase theirinvolvement in the development ofregional policy, as part of the StabilityPact. Local NGOs have representativeson the Democracy Roundtable, which, inturn, has increased their interaction anddialog with the central government. On aregional level, NGOs have alsoincreased their efforts to work with thebusiness sector as part of the StabilityPact work to improve Albanianinfrastructure. These recentdevelopments have strengthened theNGO sector’s role in advocacy and havebeen important factors in fostering

stronger NGO-government relationships.

Although there is considerable worktaking place to strengthen localgovernments, finances are still managedcentrally, limiting the opportunities forfinancial partner-ships. However, NGOshave worked with local authorities inother capacities, including draftingregional economic strategies, prioritizinglocal development needs, raisingenviron-mental consciousness, andproviding health services and leisurefacilities. Another promising local effortis the formation of NGOs by parents toimprove their childrens’ schools. Thetrend is likely to grow as thedecentralization process continues.

SERVICE PROVISION: 5.0

In Albania’s transitional economy, thegovernment is unable to provide asufficient level of basic services to itscitizens. The role NGOs can play in thisarea is still little understood by thecentral government, though there hasbeen some progress made at locallevels, where administrations are moreopen to NGO participation. Earlier draftsof the NGO law enabled NGOs toengage in providing services, but

more recent drafts have removed thisprovision.

Lack of service provision also reflectsdonor policy. Few international donorsoffer grants or technical assistance tosupport Albanian NGOs in providingservices to their membership or to thegeneral public.

The Kosovo crisis was the turning pointfor NGOs’ involvement in service


Page 31

delivery. Since then, the number ofNGOs working in service delivery hasincreased, though it is still not sufficientto meet demands for services.Interestingly, most of these new socialservices NGOs come from outsideTirana. The services they provide, likecommunity kindergartens, counseling forwomen and children, family planning,and informal training, are very importantin compensating for what thegovernment is unable to do. Still, these

are short-term projects with very littlecommunity involvement, which makesthem difficult to sustain. Since most ofthese NGOs are new and have littleexperience in project and financialmanagement, donors are reluctant tosubstantially fund long-term projects.The services now being provided areunlikely to amount to more thantemporary relief, unless thedecentralization process of localgovernment accelerates.

INFRASTRUCTURE: 5.0

After the Kosovo crisis, the donorcommunity became more interested inbuilding up local training and technicalassistance capacity. There wasconsiderable discussion among umbrellaor coordination groups (Albanian NGOForum, Women Center, Albanian YouthCouncil) and donors (OSCE, SNV,NOVIB, Albanian Civil SocietyFoundation) about establishing resourcecenters outside Tirana. Unfortunately,services provided by these centers arelargely limited to access to computers,photocopying, and in some, languagetraining. Organizational developmentservices,

still very much a need in the NGO sector,are not widely available. ANTARC is theonly organization offering such training,but it contracts its work to internationalNGOs and does most of its workshopsin Kosovo.

A lack of access to information is themain reason that the NGO sector is notwell developed outside of Tirana. Thefew resource centers that do existoutside the capital compete forinformation and have no networkthrough which to distribute theinformation.

PUBLIC IMAGE: 4.5

The recent involvement of NGOs inservice provision has somewhatimproved the public image of the sector.At the same time, it has exposed localNGOs to more public scrutiny than theyhave experienced before, which couldincrease NGO

accountability in the future. The recentlaw on broadcast licensing rules haspermitted NGOs to explore the use ofpublicity campaigns and public serviceannouncements. Still, training for boththe NGO sector and media is needed.On one side, media lacks knowledge

ALBANIA

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and understanding of NGOs’ work andthe role NGOs play in a civil society. On

the other hand, NGOs have very littleexperience in working with the media.


ARMENIA

Capital: Yerevan Inflation: 10%GDP per capita: $472 Unemployment: 9.3%Population: 3,800,000 Foreign Direct Investment: $150,000,000

Page 33

OVERALL RATING: 5.0

There are over 2,000 registered NGOs in Armenia, approximately half of which are ac-tive. Although a number of NGOs have made some progress over the past year in areassuch as financial viability, advocacy, and service provision, overall the sector has notchanged significantly. The poor economic situation hampers NGOs’ ability to becomefinancial viable or pay for services nec-essary to sustain themselves. NGOsstill rely almost exclusively on the inter-national community for financial sup-port, although several NGOs havelaunched revenue-raising programs asa way to generate extra income. MostNGOs are relatively small organizationsthat receive no support from a largerconstituency, although there are exam-ples of NGOs reaching out to broadsegments of the population to achieve short-term goals. While NGO activities have in-creased in visibility throughout the country, the government still does not utilize them tocarry out public services. There have been instances when NGOs have successfullylobbied for provisions in draft legislation or made government officials aware of prob-lems, but these remain isolated events.


Although NGOs can register freely withthe Ministry of Justice, they often facebureaucratic hurdles that make the reg-istration process take several months.All NGOs must register in Yerevan,which poses additional burdens forNGOs located in the regions. The CivilCode, enacted in January 1999, clarifiesthe classifications of NGOs and the pro-cedures for registering. However, allNGOs must re-register by January 2001in order to have their legal status complywith the Civil Code. This re-registrationperiod was to originally end in January2000, but was extended for one year to

allow ample time for NGOs to re-register. The re-registration process isunclear for many NGOs.

The current NGO law allows the Ministryof Justice to attend NGO meetings,however, there is no evidence that theMinistry is using this as a way to controlNGO activities. The law exempts allgrants from taxation, but individuals whodonate to NGOs receive no exemptions.The law is unclear about whether or notNGOs that earn income are required topay taxes on that income. NGOs withfunding from international organizations

Armenia Overall Ratings

5.55.1 5.0

1

2

3

4

5

6

71998 1999 2000

ARMENIA

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that are exempt from paying ValueAdded Tax (VAT), face bureaucratichurdles with the Humanitarian Assis-tance Coordination Committee when

trying to get the VAT waived. One localNGO, the Young Lawyers’ Union, pro-vides legal advice, including assistancefor registration, to local NGOs for a fee.


The most advanced NGOs work activelywith their members and constituents inorder to tailor programs to meet con-stituents’ needs. However, most NGOshave overly broad mission statementsand pursue grants in a variety of areas.This weakens their ability to developprograms responsive to constituents.

Few NGOs make a clear distinctionbetween the Board of Directors and thestaff; furthermore, most NGOs do nothave paid permanent staff. Managers

receive salaries when they have grants,and work as volunteers when there is nogrant funding. Some NGOs are able torecruit volunteers for specific programs,but there is generally no core of volun-teers continually available to supportNGO activities.

Many organizations have basic officeequipment such as computers and faxmachines, but this equipment is usuallyobtained through grants from donors.


Both the poor economy and the lack oflegal incentives for philanthropic dona-tions have greatly hampered the abilityof NGOs to generate financial supportfrom local sources. NGOs have devel-oped good proposal writing skills thatenable them to get funding from multipleinternational donors. Few receivefunding from other sources, such asrevenue-generating activities.

NGOs have improved their financialmanagement skills in order to both re-

spond to donor requirements and tocomply with Armenian law. SomeNGOs, such as business associations,are able to collect membership dues,but these NGOs tend to have relativelywealthy members. Some NGOs alsogenerate revenue by renting out confer-ence space or by producing and sellinggoods, but the majority does not engagein such activities. The government andbusiness communities rarely contractwith local NGOs to provide services.


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ADVOCACY: 5.0

Many NGOs have good contacts withgovernment at both the national and lo-cal levels. However, their ability to ad-vocate for change is limited becausegovernment officials either do not un-derstand or do not believe in the bene-fits of working with NGOs. Some issue-based coalitions have formed aroundparticular topics such as human rights,but they have focused primarily ondrawing public attention to the issue athand, rather than staging a long-term

advocacy campaign to influence policychange. NGOs freely engage in the po-litical process, including monitoringelections and conducting voter educa-tion campaigns.

NGOs are becoming increasingly com-fortable with lobbying efforts, and thereare examples where legislative changeshave occurred as a result of NGO advo-cacy. However, these successes arelimited to a small number of NGOs.


NGOs provide a range of goods andservices that are responsive to commu-nity needs. Due to limited financial re-sources, however, NGOs can rarelyprovide sufficient levels of service tomeet the needs of their communities.NGOs are able to offer an assortment ofservices to constituencies beyond theirmembership. These services includehealth care, food, and clothing for so-cially vulnerable groups including refu-gees and elderly and disabled people.However, when NGOs conduct semi-nars or produce publications, they tend

to be directed toward a more exclusivegroup—such as NGOs working onsimilar issues—and are not inclusive ofa broader segment of the population.When NGOs provide a good or service,they rarely recover any costs. The ex-ception is business associations.

The government recognizes that NGOscan fill gaps by providing services that itis unable to provide, nevertheless, theyrarely work closely with NGOs or con-tract services out to them.

INFRASTRUCTURE: 6.0

Intermediary support services arefunded exclusively by the internationaldonor community. Even donor-fundedISOs, however, do not exist throughoutthe entire country, leaving NGOs insome regions with little support. ISOsutilize local trainers—so local trainingcapacity exists—but NGOs do not haveresources to hire trainers as needed.Occasionally, NGOs are able to forminformal coalitions around specific is-sues, which more often than not dis-

solve soon after the issue is addressed.

NGOs’ willingness to share informationin order to achieve common goals hasincreased, but competition for limitedfunds stills exists. Due to all of theselimitations, the infrastructure score forthis year indicates little progress sincethe Soviet era. However, these condi-tions do not represent a change fromlast year; rather, last year’s score (5.5)was overly optimistic.

ARMENIA

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PUBLIC IMAGE: 5.0

Despite limited improvements, the publicimage of the NGO sector remains es-sentially the same as last year. To asmall extent, the media is able to coverNGO activities more frequently than inthe past. The coverage, however, isunsubstantial—it tends to be neutral anddoes not promote the sector. Many sta-tions provide air time for free or reducedcost for NGOs or other organizations,but this is also very limited because thestations devote most of their time to paidcorporate advertising. Only a smallsegment of the population understandsthe role that NGOs can play in society

beyond service delivery. The govern-ment and the business communitiesusually maintain a neutral attitude to-ward NGOs. They do not feel thatNGOs impede their activities, but theyalso do not realize the benefits of work-ing with NGOs. Individual NGOs usuallydo not have a code of ethics, nor isthere any sort of NGO watchdog groupthat could produce a general code ofethics for the sector. In general, NGOscomply with Armenian law and publishannual reports, but these are not widelydistributed.


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Azerbaijan

OVERALL DESCRIPTION: 5.0 The local NGO sector in Azerbaijan has experienced significant growth in the last fewyears in both size and capacity. Approximately 300 active organizations now work in awide range of sectors. NGOs have increasingly focused on providing basic social serv-ices in their communities; however, human rights groups and election educa-tion/monitoring NGOs also operate and are developing their capacity. While Baku-based NGOs remain significantly more developed than NGOs in the regions, there hasbeen an increased focus on developingthe capacity of organizations outside ofthe capitol over the past year. The legal environment in which NGOsoperate improved significantly over thepast year. The President signed a newNGO law in September 2000. While thenew legislation fails to address all issuesimportant to the development of the NGOsector, it does provide NGOs with recog-nition from the government and a legalbasis to conduct their work. The government still does not provide open support to theNGO sector and limits political activity by NGOs. However, a tolerance for the sectorhas developed to some degree over the past year, in part due to international pressure. NGOs in Azerbaijan are becoming more dynamic and are increasing their capacity toprogram effectively. Volunteerism in organizations is growing and the stronger organi-zations see the value of clear management structures. In addition, some of the moreadvanced organizations have begun to diversify their funding sources. But local busi-ness and government still provide limited financial support. While competition for funds still exists among NGOs, organizations are beginning toshare information with each other more readily than they have in the past. NGOs work-ing on issues pertaining to children, environment, health, human rights, and migrationmeet regularly. Finally, public awareness of NGOs is slowly increasing. NGOs are de-veloping better working relationships with the mass media, which reports almost daily ontheir activities. NGOs are also beginning to understand the value of promoting their ac-tivity more widely to garner support in terms of volunteers, understanding and funding. LEGAL ENVIRONMENT: 5.0

The legal environment for NGOs in Az-erbaijan has improved considerably over

the past year. In September 1999, theConstitutional Court confirmed that the

Azerbaijan Overall Scores

6.35.6

5.0

1

2

3

4

5

6

71998 1999 2000

Capital: Baku Inflation: 4%GDP per capita: $572 Unemployment (1997): 19.3%Population: 7,700,000 Foreign Direct Investment: $780,000,000

AZERBAIJAN

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law on grants passed in April 1999 ex-empts all grant recipients from taxationon grant monies except on salaries paidto staff with these funds. In September2000, the President signed new NGOlegislation. While the legislation doesnot address all key issues, it is a posi-tive first step in a country that has notpreviously recognized NGOs. The newlegislation makes some progress in de-fining permissible activities, internalmanagement, reporting, and dissolutionof NGOs, but does not preclude statecontrol over NGOs. In addition, thelegislation restricts the ability of NGOsto monitor elections if they receive morethan 30% of their financing from foreignentities or individuals.

The government of Azerbaijan has be-come more tolerant of NGOs recently.Registration has become morestraightforward, with fewer delays. In

addition, politically suspect groups havehad greater success in getting regis-tered. For example, in January 2000,the government finally registered anumber of human rights groups after athree-year wait. However, despite theincreased tolerance of NGOs, most or-ganizations still remain hesitant to di-rectly criticize the government.

Taxation remains a problem for someNGOs as a result of deep-rooted cor-ruption. In addition, some tax collectorsare not familiar with new laws exemptingNGOs from certain taxes. No tax ex-emptions or deductions exist for indi-viduals or corporations that donate tolocal NGOs, thus affording little incen-tive for charitable contributions. NGOsare able to earn income; however, in-come is taxed at the same rate as a for-profit organization.


Local NGO organizational capacity con-tinues to improve in Azerbaijan. A coregroup of local NGOs has emerged witha clear mission and organizational goalsas well as internal structures and per-manent staffing. While these organiza-tions can not yet be viewed as sustain-able entities, they are in the process ofinstituting the right mechanisms.

Serious problems still remain. First,most NGOs still do not have a clear un-derstanding as to the importance of de-veloping a constituency. Many organi-zations develop and implement projectideas without interacting with the proj-ect’s target population. However, someof the more advanced organizations arebeginning to work more closely withtheir constituencies. For example, anumber of organizations recently carriedout surveys and assessments withintheir target populations to determine thetype and priority of programming.

Most NGOs in Azerbaijan also lack aclearly defined mission, thereby allowingorganizations to pursue multiple areasof programming depending on the typeof funding available. While some NGO leaders are beginningto have a better understanding of theimportance of internal managementstructures, few organizations under-stand the distinction between staff andboard members. Furthermore, in mostcases, boards consist of friends andrelatives.

NGOs in Azerbaijan are becoming in-creasingly successful in recruiting andutilizing volunteers, although systemsfor recruiting volunteers remain un-structured.

Only a small number of the large andmore advanced Baku-based NGOs inAzerbaijan have their own modernized


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basic office equipment. According tothe Humanitarian Research Center,while 140 NGOs in Azerbaijan have

email access, few of these organizationsactually have their own computers or faxmachines.


The majority of support for local NGOactivities still comes from foreign foun-dations, businesses, and embassies.The concept of philanthropy in Azerbai-jan is not well developed, and currenttax laws fail to provide any incentive forlocal individuals or companies to makecharitable contributions. However, thereis some indication that a few local com-panies provide some financial and in-kind support to local NGOs, such as useof space or donation of supplies.

Few NGOs currently have financialsystems in place. The majority of NGOswork project to project and tend to re-spond to different donors’ financial re-porting requests.

Stronger NGOs are beginning to de-velop a core of financial supporters asthey learn to program more consistently.

For the most part, NGOs do not receivesignificant revenue from earned income.The concept of a non-profit organizationgenerating income is difficult to graspand many NGO representatives claimthat they should not charge for theirservices. In addition, under the currenttax legislation, NGO earned income istaxed the same as income earned by afor-profit entity. However, even withinthis context, a few organizations are be-ginning to charge for their services orpublications or collect membership fees.

ADVOCACY: 5.5

Given the constraints that exist withinthe country, NGOs in Azerbaijan stillhave limited experience in advocacyand lobbying. Direct communicationbetween NGOs and policy makers re-mains relatively limited, although rela-tionships are developing on some lev-els, generally because of personal con-tacts or intervention from internationalagencies.

Despite these restrictions, NGOs havetaken steps to influence policy or raiseawareness about certain issues. Forexample, the Democratic Congressbrought together NGOs and political op-position groups to advocate for demo-cratic change in Azerbaijan during the

last elections. Human rights and envi-ronmental NGOs have attempted toraise the visibility of their issues byholding press conferences or dissemi-nating information internationally. Inearly 2000, the NGO community wasinvolved in reviewing and commentingon the draft NGO legislation. In somecases, NGOs have also commented ondraft legislation in their fields of interest.

While there are some openings forNGOs to get involved in advocacy work,the government is hesitant to allowNGOs to operate within spheres that itconsiders political. As a result, NGOsare relatively careful about criticizing thegovernment.

AZERBAIJAN

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NGOs in Azerbaijan provide an in-creasingly diverse range of services,including health, education, humanitar-ian assistance, children’s issues, com-munity development, income genera-tion, environmental protection, and elec-tion education. However, these servicesstill tend to respond to the priorities ofinternational donors instead of theneeds of the organization’s constitu-ency.

NGOs rarely recover the costs of thegoods and services they provide. Ingeneral, there is a limited understandingby both the NGOs themselves and thebroader public about why NGOs wouldcharge for their services if they are anot-for-profit organization. In addition,

due to current tax legislation, any in-come they generate from the provisionof their goods and services is taxed as afor-profit company. There are some at-tempts by a few NGOs to charge certainsegments of the population for servicesin order to allow other, less fortunatemembers of the population to accesstheir services for free.

The government is beginning to moreopenly recognize the value of NGOs inproviding basic social services. How-ever, with the exception of the Ministryof Youth and Sport, the government stilldoes not provide funding for NGO activ-ity or allow NGOs access to governmentcontracts that would enable them toprovide such services.

INFRASTRUCTURE: 4.5

The number of intermediary support or-ganizations and NGO resource centersproviding training, computer and infor-mation access continues to increase.The Initiative for Social Action and Re-newal in Eurasia (ISAR) has beenworking in six regions of Azerbaijan forthe past year to make such servicesavailable to organizations and initiativegroups outside of Baku, and opened aresource center in Mingechivir in Sep-tember. The NGO Forum and the Dan-ish Refugee Council also have plans toopen resource centers outside of Bakuin the next year. A number of localNGOs also provide valuable training,seminars and other services for theNGO community. For the most part,intermediary support organizations donot earn income from the services theyprovide, making them highly dependenton continued donor funding.

Local grant-making capacity in Azerbai-jan remains extremely limited. Commu-

nity foundations have not yet been cre-ated and only one organization – Hayat,a local humanitarian organization – runsa grant program for local NGO projects,with funds from IOM.

Local NGOs in Azerbaijan are increas-ingly sharing information among them-selves. ISAR and the NGO Forum bothhold regular information meetings for theNGO community. NGOs working onenvironmental, health, and children’sissues meet regularly. In June 1999,the UN NGO Resource and TrainingCenter created the NGO Forum, whichclaims a membership of over 200 localNGOs. The Forum works to coordinateand promote NGO activity in close co-operation with the government. In July1999, the NGO Congress was formed inresponse to the NGO Forum and claimsa membership of over 100 local NGOs.The NGO Congress has slowly beenabsorbed by the NGO Forum, but stillexists to some degree.


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NGOs are beginning to understand thevalue and importance of working moreclosely with the government, businessand mass media to ensure their futuresustainability. Some of the more ad-vanced and professional NGOs have

developed effective partnerships withmass media and the business commu-nity; however, there still needs to bemore awareness and training to assistthe sectors in working effectively to-gether.

PUBLIC IMAGE: 4.5

Media coverage of NGO activity in Az-erbaijan has increased steadily over thepast year. There is now almost dailycoverage of NGOs by both the majornewspapers and other media outlets.News on sensitive issues that NGOs areinvolved in, such as AIDS or humanrights, will sometimes even make thefront page. In addition, beginning inJanuary 2000, the Fund for Democracyand Development began to produce amonthly 4-page insert on NGOs, whichhas been placed in the two top newspa-pers in Azerbaijan.Awareness and understanding of NGOsis increasing slowly. However, accord-ing to a recent NGO public awarenesssurvey carried out by SIAR Marketingand Research center, only 7 percent of1,000 people interviewed have heard ofa local NGO. When provided withnames of some of the larger and better-known NGOs in the country, more peo-ple showed recognition of these organi-zations.

As public awareness about NGOs in-creases, so does awareness about theNGO sector among representatives ofgovernment and business. Internationalbusinesses are becoming more familiarwith local NGOs and the larger onesprovide some support to the strongerNGOs in the country. International oilcompanies use some of the environ-

mental NGOs to provide expertise incertain topic areas. There are some ex-amples of local businesses providing adiscount or donating goods to an NGOwhen they learn about its activities, butmost local businesses tend to supportNGOs only if they know people involvedwith the organization. The government’sperception of NGOs is slowly changingfrom negative to more neutral, althoughsome suspicion remains. NGOs are developing a better under-standing of the need to work with themass media and publicize their activityto the larger public. The Local NGOFair organized by ISAR in June 2000was a good opportunity for the 57 par-ticipating NGOs to publicize their workamong the local mass media, interna-tional NGO and business community,government and general public.

The idea of transparency is relativelynew and there is still some fear associ-ated with opening up an organization’soperations to the broader public, par-ticularly financial information. As a re-sult, NGOs in Azerbaijan have not yetdeveloped a code of ethics. Most NGOsdo not produce annual reports, but maypublish brochures highlighting their ac-complishments to date.


BELARUS

Capital: Minsk Inflation: 213%GDP per capita: $1,464 Unemployment: 2.3%Population: 10,200,000 Foreign Direct Investment: $188,300,000

Page 43

OVERALL DESCRIPTION: 5. 7

The government’s hostility and suspicion toward the Third Sector fundamentally definethe environment for NGOs in Belarus. The 1999 re-registration campaign, declared bythe president’s administration and aimed at creating obstacles for the Third Sector,halved the number of registered NGOs. There are currently 1,919 NGOs registered withthe Ministry of Justice in Belarus.

The economic, political and legal environment in Belarus is not yet conducive to civil so-ciety development. As in many former Soviet countries, the state distrusts NGOs, andtherefore hampers the process of creating and registering groups with a complex, time-consuming and costly registration procedure. At the same time, the state harasses un-registered NGOs with penalties and even criminal charges against activists. The systemof tax privileges favors pro-government NGOs with little advantage for the rest of theThird Sector. Due to the conflicts of the legislation on business activities and regulationsof NGOs, any cost-recovery activities by NGOs lead to deprivation of even small privi-leges. Local businesses in Belarus, however weak, do support socially beneficial activi-ties of NGOs, but there are no tax privileges for this sponsorship. Society is very frag-mented, and there is virtually no inter-sectoral cooperation. With few exceptions, thegeneral attitude is that of mutual distrust between the NGOs and the state.


The legal process makes NGO registra-tion both painstaking and financiallycostly, and gives officials many opportu-nities to manipulate and interfere in theprocess. The registration procedure isunnecessarily long and complex, in-cluding two (three for local NGOs)stages, with the ultimate permission forregistration granted by the President’sBoard, a body whose status and author-ity is not legally defined. The law posesseveral impediments to all categories ofNGOs, thereby hampering citizen initia-tives. For example, the law requires alarge number of founders and fixedmembership. The law also requires alegal address prior to registration andmeans that only a designated office

space, not a residence, may be used,which is too costly for most NGOs.Likewise, the registration fee of $90 is asignificant burden given the current levelof income of the majority of population.

The law on NGOs, numerous legal acts,and practice by various controlling bod-ies are very controversial. On the onehand, the NGO Act forbids any interfer-ence in the activities of NGOs apartfrom the control and supervision by theprosecutor's department, taxation andregistration bodies. On the other hand,another act permits authorities to moni-tor both the NGOs, and other legal enti-ties, for conforming to a vast variety ofregulations. Minor violations may lead to

BELARUS

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penalties in the form of warnings byregistration bodies, with the secondwarning leading to the liquidation of theNGO. Paradoxically, impediments bythe state, most of all inspections by theregistration and taxation bodies, forceNGOs to upgrade their managementpractices, which increases NGOsustainability.

A significant amount of work has beendone to increase knowledge of NGOissues among local lawyers. With thehelp of an expert team of lawyers, themajority of Counterpart Alliance forPartnership (CAP) grantees were ableto successfully re-register in 1999.However, local legal capacity is still in-adequate, and needs additional re-sources and effort.


As a result of the weak history of civilsociety and the attitude of the statetoward the third sector in Belarus, mostBelarusian NGOs are very weakorganizationally. This is reflected intheir poor management practices andwork with clients. Frequently, NGOscan not effectively identify their clients,and still lack either an understanding ofthe need for constituency building, orthe skills and resources to reach theirconstituency.

Few NGOs engage in strategicplanning, with the exception of thosewho have received grants frominternational donors that require missionformulation, strategic planningtechniques, and the establishment ofsound management procedures.

Many NGO internal structures copy thegovernment’s authoritarian system, withautocratic leaders concentratingadministrative power. NGOs mayformally assign powers to a Board ofDirectors, but this Board is not always

involved in the decision making process.On the other hand, organizationsreceiving foreign grants sometimesreceive management consultingservices to help them overcome theseproblems. While leading NGOs have regular staff,the majority of Belarusian NGOs haveno permanent staff. Staff members areoften recruited on a temporary basis toaccomplish a task associated with acertain grant. In the regions, NGOshave a wide circle of volunteers.

In Minsk, NGOs generally havesufficient supplies and equipment. Inthe regional centers, however, only theleading NGOs have sufficient suppliesand access to communication, includinge-mail and the Internet. Sometimes,even NGOs with adequate equipmentdo not use it because they lackappropriate skills. The donor communityviews upgrading the technology base ofNGOs and the skills of staff andvolunteers as a priority.


Relationships between the state and theThird Sector in Belarus are character-ized by a selective subsidy policy pur-sued by the state, depending on the de-gree of NGO loyalty to the authorities.This selective subsidy policy preserves

paternalistic sentiments in the govern-ment-controlled part of the Third Sector.Other NGOs survive on sporadic volun-tary donations, grants, or have nomeans at all. Fund-raising skills are not


Page 45

developed, and frequently consist of anon-systemic search for resources.

The extremely unfavorable economicenvironment that obstructs the devel-opment of local business, and a regula-tory environment with no tax exemptionsfor charitable activities, prevents NGOsfrom accessing local resources. Thereare few local sources of philanthropy,either individual or corporate. The pro-cedure for collecting donations is notlegally defined, and state control bodiesprovide little guidance. NGOs engage incharitable actions like collecting clothesfor elderly, cash for medical treatment,or presents for children, at their ownrisk.

A number of foreign donors, includingthe Soros Foundation, which used tofinance a lot of the civil society activitieswere ousted from Belarus. Associatedindigenous organizations were liqui-dated. The limited number of interna-tional donors currently working in Be-larus inhibits diversification of the Third

Sector's foreign funding. The long-termassociation of an NGO with one or twolarge donors is typical in Belarus, lead-ing to donor-driven projects, as opposedto local initiatives or demand-driven ac-tivities.

The government uses tax, audit, andother inspections to harass those NGOsengaged in civil society developmentactivities. The authorities alsodiscriminate against businessessupporting NGO activities by harassingthem through tax inspections and audits.An exception is made for localbusinesses rendering assistance tosocial service NGOs.

The majority of NGOs have inadequatefinancial management skills. Moreover,many NGOs are forced to not operatetransparently in order to continue theiractivities (e.g. small grants’ programs byresource centers). This lack oftransparency creates conditions forcorruption.

ADVOCACY: 6.0

The state’s suspicion of all non-governmental initiatives has politicizedthe Third Sector. When democraticallyoriented NGOs touch upon issues re-lated to human rights or demonstratethe advantages of democratic valuesand procedures, their activities clashwith the government’s attempt to regu-late all spheres of social life. There is nosystematic cooperation between theauthorities and NGOs. Neither groupappreciates the necessity of regular co-operation, though some social servicesNGOs can boast of successful advocacyefforts with the government.

There are some instances of issue-based coalitions and advocacycampaigns in Belarus, such as raisingpublic awareness of the importance of

gender issues. As a result of aneffective lobbying effort by the women’smovement, women’s NGOs gainedrepresentation in the NationalCoordination Council on Gender Issues.Women’s organizations are also activelyinvolved in mobilizing women during thepre-election period.

There are few mechanisms for NGOs toparticipate in the political process otherthan protest actions. For example,strikes of private entrepreneurs initiatedby the Trade Union of Entrepreneursresulted in the government’s backing-offfrom new restrictive regulations. Activelobbying efforts of NGOs so far arerelatively rare, because of the positionsof the state and the Third Sectorleadership

BELARUS

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In Belarus, the provision of goods andservices by NGOs is underdeveloped.Mostly, NGOs render services to ThirdSector representatives, thus becomingself-serving organizations. NGO marketresearch and marketing efforts leavemuch to be desired. Services are pri-marily limited to health, education, andcultural and historical activities. Whilemany NGOs serve as resource centersfor other organizations and citizens, thequantity and quality of their services areinsufficient due to the inadequate re-source base. Social service NGOs arethe best at designing products andservices that reflect their constituency’sneeds. Other NGOs rely on their ideasof the community’s needs, rather thanhard data obtained though surveys,opinion polls, focus groups, etc.

The government generally regards non-governmental organizations as anti-governmental. Recognition of NGOs’role in society is granted exclusively tothe social services NGOs. In 1999, theNGO “We Are With You” became thefirst CAP grantee in Belarus to receive aGovernment Matching Grant. The grantsupported a project helping mentallychallenged orphans understand theirlegal rights to live fuller independentlives, and was instrumental in initiating astate regulation protecting mentallydisabled youth from real-estate fraud.The organization has additionally beenrecognized by the State as the onlyorganization in Belarus workingprofessionally with teenage orphans andyouth with psychophysical disabilities,and now has the right to participate indecision-making on serious social andlegal questions affecting its clients.

INFRASTRUCTURE: 5.0

The infrastructure of the Third Sector isin its formative stage, and underpressure from the social and politicalenvironment. There are twenty-fourresource centers, but they sometimesprovide their services to a limited groupof organizations. Belarusian resourcecenters also serve as a flexiblemechanism to provide small grants toyoung, unregistered NGOs or civicinitiatives, thereby facilitating numerousdemocratic actions and projects.Indigenous grant-making capacity isslowly being developed by incorporatinglocal representatives onto internationaldonor selection boards and using majorlocal NGOs to re-grant internationaldonor funds.

NGO coalitions in Belarus still are ratherephemeral due to a number of

disincentives, including legalimpediments. There are some informalalliances of Belarusian NGOs centeredaround the regional resource centersthat have mastered a system ofinformation exchange and somecoordination of activities. However, thismechanism still needs work sincecoalitions have not developed acommon policy.

In 1997, the Assembly of Pro-Democratic NGOs was formed to uniteNGOs committed to the principles ofBelarusian independence, democracy,market reform, and the protection ofhuman rights and freedoms. TheAssembly includes about 700 membersembracing a wide range oforganizations, including youth, women,environmental, social services, cultural,


Page 47

and ethnic groups. About half of theAssembly NGO members areunregistered but active. The Assemblyis represented by regional resourcecenters in each region of Belarus. At itsCongress in early December 2000, theAssembly resolved to register itself andthus create a formal structure to supportthe Third Sector.

Due to the fragmented character ofBelarusian society, there is very little

awareness of the possibilities for andadvantages of partnerships betweenNGOs, businesses and the government.

As a result of international donor trainingprograms and development grants,training on basic NGO management isavailable, but far from sufficient. Thereis a need to increase the number ofspecialists and the quality of training inmanagement and marketing, as well asfinancial management and legal issues.

PUBLIC IMAGE: 6.0

The public image of NGOs and of theThird Sector as a whole is ratherambiguous, but NGOs do not enjoysufficient grass-roots support in Belarustoday. A recent poll conducted by theIndependent Institute for Social,Economic and Political Researchregistered extremely low publicawareness of NGOs activities (1.4% ofpopulation). The main reason for this isthe dire situation of the Belarusianpeople, who are mostly concerned withtheir survival. Official statistics suggestthat 46% of people find themselvesbelow the poverty line. Impoverishmentleads to atomization of society andabsence of civil solidarity, whichobstructs active social life. The public islargely unaware of the goals of civilsociety organizations in general, andactivities of Belarusian NGOs inparticular. NGOs do little to publicizetheir agenda and get their message tothe people. NGOs often can notdemonstrate their usefulness andcapacities to businesses, and generallyappeal for assistance, rather then offerservices. There is a substantial differencebetween the coverage of third-sectoractivities between state and non-governmental media, with the

independent media giving moreattention to civil society issues. ThoseNGOs that do publicize their activities orpromote their public image, do soprimarily through the independentmedia, and are developing relation-ships with independent journalists. Theimportance of positive coverage isrecognized by most of the internationaldonor grantees, and their successstories often appear in the local media.However, public relations and imagepromotion efforts by the majority ofNGOs remain weak, and could benefitfrom further training.

Many public organizations are nottransparent in their work, because of theenvironment, and though there areregular internal reporting procedureswithin the majority of NGOs, theenvironment in Belarus makes itdangerous to publish reports or revealtoo much information about anorganization’s activities. The mostadvanced NGOs adopt codes of ethicsor try to demonstrate transparency intheir operations, while authoritar-ianismor anarchy characterizes the minorones.


BOSNIA AND HERZEGOVINA (BiH)

O

Bdthfoc

ThTinetrte

Tothtaagptameisc

Tbmssthinw

WNti

Capital: Sarajevo Inflation: 5%GDP per capita: $1,190 Unemployment: n/aPopulation: 3,800,000 Foreign Direct Investment: $52,000,000

Page 49

VERALL RATING: 4.9

iH continues to make progress in a difficult, dual transition towards lasting peace andemocratic governance. With a public sector of limited capacity, NGOs have facilitatedis transition by serving as counselors, caretakers and service providers, while theirunders have emerged as leading spokespersons for tolerance, reconciliation, and so-

ial responsibility.

he Bosnian NGO sector remains nascent. Although community-based associationsave a long-standing history, modern NGOs evolved during and in the aftermath of war.he sector’s evolution cannot be divorced from the broader consequences of the war,cluding its impact on Bosnia’s political,conomic and social fabric; the coun-y’s division into two Entities; and in-nsive international involvement.

he sector’s service orientation grewut of immediate wartime imperatives,e influence of international humani-rian relief organizations, and the

vailability of donor funding for emer-ency assistance programs. Due inart to the economic situation, the es-blishment of many early post-war NGOs was motivated more by a need for employ-ent rather than a commitment to a particular mission. Over the past four years, how-

ver, mission-oriented NGOs committed to a broad range of activities including gendersues, human rights and media monitoring, legal advisory services, civic education,onflict resolution and micro-credit extension have emerged.

he unprecedented international presence in BiH, itself a function of the war, has hadoth positive and negative effects on NGO sector development. It has ensured thatany NGOs receive resources, training and technical assistance to establish them-

elves and to meet donor objectives. It has also contributed significantly to what ob-ervers have described as an “ownership gap.” Organizations, networks and coalitionsat have come together at the urging of expatriates or in response to the existence ofternational funding, suffer from a weaker sense of mission and commitment than thoseho formed independently in response to community needs.

hile approximately 1300 NGOs are registered in BiH, the number of active indigenousGOs is estimated to be between 300 and 500. The organizational capacity of these ac-ve NGOs varies widely. NGOs in BiH continue to face substantial external and internal

Bosnia Overall Ratings

5.65.3

4.9

1

2

3

4

5

6

71998 1999 2000

BOSNIA AND HERZEGOVINA

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obstacles to their long-term sustainability. Externally, NGOs must grapple with politicalrifts and apathy, limited and uncertain financial resources in the wake of internationaldonor disengagement, and the absence of an appropriate legal framework to provide taxand fiscal benefits. There is a general lack of information in the community and in gov-ernment about the role and capacity of NGOs that results in weak constituency relations.NGOs generally lack the broad ability to cooperate and exchange information with eachother, and have a limited sense of ownership over their role, purpose, mission, and fu-ture.


The Constitution of BiH confers all pow-ers not specifically assigned to the Stateto its two Entities: the Federation of BiHand the Republika Srpska. NGOs oper-ate under a confusing, and potentiallyrestrictive array of laws including, interalia, a Law on Humanitarian Activitiesand Organizations, a Law on Citizens’Associations, a newly passed Law onFoundations and Funds in the Federa-tion, and a Law on Citizens’ Associa-tions in the Republika Srpska.

Regulations in the Entities are incon-sistent and tend to create large scopefor government involvement in the af-fairs of associations and foundations.There is currently no law allowing NGOsto register and operate statewide;rather, Entities are conferred legalauthority in this case. The strongestNGOs have found creative ways to op-erate throughout the entire country byregistering effectively as two separateorganizations, but with the same found-ing documents such as the statute, actof incorporation and list of foundingmembers. Tax laws are not favorablefor NGOs in either Entity, which effec-tively impedes corporate and privatephilanthropy.

Since 1997, the BiH NGO communityhas been involved in revising the legalframework in order to promote the long-term viability of the third sector.Through the Legal Advocacy and Edu-cation Project (LEA-Link), a task force ofBosnian lawyers, with assistance froman international advisory panel, setabout revising the legal framework.

At present, there are three nearly identi-cal draft laws being considered by thegovernments in the two Entities and atthe State level, which are based entirelyupon the draft law from the LEA-Linkprocess. The new laws seek to facilitatethe establishment and activities ofNGOs at all levels and ensure that therules on registration and internal gov-ernance are simple, clear and transpar-ent. It is hoped that all three laws will beadopted within the next year. While thisnew legal framework is an importantstep, it does not address tax and otherfinancial benefits that would favor NGOsand ensure their self-sustainability in thelong run.


Many local NGOs have become adeptat implementing programs largely de-fined by international community priori-ties, but remain institutionally weak and

largely unsustainable in the absence ofhigh levels of donor support. Institu-tional capacity in areas such as strategicplanning, internal management struc


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ture, staffing, technical resource avail-ability and constituency building andoutreach continue to vary greatly amongorganizations. Numerous internationalorganizations provide training to NGOs,largely through workshops, and localorganizations increasingly provide simi-lar training to their counterparts. Withthe major exception of the DemocracyNetwork (DemNet) program imple-mented by ORT, resource intensivetechnical assistance to ensure effectiveimplementation of lessons learned ismore limited.

Institutional capacity varies greatly fromregion to region. The strongest NGOsare located in Tuzla, Zenica, Sarajevo,Mostar and Banja Luka. Federation-based groups are significantly more vi-able than their counterparts in the RS.

Increasingly, local NGOs in smallertowns such as Rudo, Kakanj, Jablanicaand Livno are gaining capacity andstrength. Sectorally, micro-credit andwomen’s organizations appear to be or-ganizationally and financially strongest.

The strongest NGOs have boards of di-rectors and executive staff, although fewtruly understand their respective roles.Some board members receive salariesand, once they understand the impor-tance of a volunteer board, convert tofull-time staff. Thus, NGOs have diffi-culty maintaining a volunteer board andencouraging them to be active in theorganization. Another problem is thatthe public perception of civil society isgenerally unfavorable, so it is difficult forNGOs to recruit volunteer board mem-bers of high stature.

FINANCIAL VIABILITY: 6

The wartime devastation of BiH’s econ-omy, a limited pre-war tradition of phi-lanthropy, and the dearth of post-war taxincentives to promote financial contribu-tions severely constrain the sector’s fi-nancial sustainability. Community andcorporate philanthropy remain extremelyrare. As a result, NGOs continue to relyheavily on foreign government funding.Fluid and often politically driven donorpriorities contribute to confusion and fi-nancial uncertainty among NGOs.

Many NGOs, particularly those in ruraland under-served areas, lack skills infinancial planning, accounting and fi-nancial management. Other NGOs havereceived significant donor funds in thepast, as well as financial training, andare less in need of such basic skills.Some NGOs are able to identify alterna-tive financing methods such as mem-

bership fees, fees-for-service, in-kindcontributions, and government fundingto compensate for these constraints. Asa consequence of perceived politicalinstability and uncertain internationaldonor priorities, organizations tend tolive from project to project.

Finally, partially as a result of fundingavailability, many NGOs turn to incomegeneration activities that have little to dowith their broader mission — such ashairdressing and chicken farm man-agement — to promote financialsustainability. In the absence of regula-tions governing NGOs’ ability to engagein the sale of goods and services or lim-iting net revenue distribution, this tendsto blur the distinction between not-for-profit and commercial business activityand exacerbate confusion about theconcept of civil society.


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ADVOCACY: 4.5

NGOs are more involved in the publicpolicy process now than in past years,although many NGOs (originally con-ceived as social service providers in theimmediate post-war period) still resistgetting involved in “political” matters.Although public policy campaigns arestill driven by international organiza-tions, local NGOs feel more comfortableexpressing ideas for campaigns in thelocal community and even at the State(or Entity) level.

Examples of advocacy initiatives includeefforts to influence legislative bodiesand involve the third sector in the proc-ess of NGO law drafting, an NGO coali-tion that is conducting an anti-drugcampaign in schools in the Tuzla andBijiljina regions, and an ecological cam-paign to prevent the opening of a hydro-power plant in Sanski Most.

On the other hand, civic leaders aresometimes alienated from elected offi-cials and, due to overwhelming outsideinfluence in BiH, often target lobbyingefforts toward the international commu-nity in order to affect policy change.Many NGOs have a limited under-standing of lobbying and the concept ofissue-based coalitions. Even the

strongest NGOs largely perceive “lob-bying” as an end in itself, without a for-mulation of clear and concrete policyobjectives and a workable strategic planon how to achieve those objectives.Coalitions are also seen as part of aprocess that serves to gain NGOs ac-cess to donor funds rather than help toresolve a specific public policy issue.The political process and governingstructures are largely misunderstood, asmost civic activists are unaware of in-stitutional methods to influence policy.Instead, civic activists rely on personalcontacts within government to exert lim-ited influence. Moreover, advocacy isdifficult because political institutions andrepresentatives lack account-ability anda democratic culture of transparencyand openness.

Despite the barriers to active involve-ment in the public policy process, thereis increasing evidence of NGOs formingcoalitions, conducting advocacy cam-paigns and communicating with policymakers, particularly at the local level.Larger public advocacy campaigns dotake place, but are generally instigatedby an international NGO or the largerdonor community.


Most Bosnian NGOs were originallyformed to provide for the immediatepost-war needs of the local population,and are perhaps strongest in their abilityto deliver critical services. Local NGOsprovide a broad range of services, in-cluding education, health and micro-credit, but strongly emphasize the returnand rehabilitation of refugees and inter-nally displaced persons. Even duringthe past year, in an environment of

greatly reduced international funding,smaller service NGOs have sprung up inremote and previously neglected areas.

NGOs’ strong capacity to deliver serv-ices highlights the government’s inabilityto provide such services itself. As gov-ernment officials at all levels are divided,prone to in fighting and inaction, NGOshave stepped in where the governmenthas largely abdicated responsibility. At


Page 53

the same time, there is a continued lackof trust and understanding on the part ofthe government in civil society. This

seems to be improving as ministry offi-cials have more contact with civic ac-tors.

INFRASTRUCTURE: 5

Numerous international organizationsprovide training to NGOs via groupseminars or workshops. Indigenoustraining – considered both more relevantand efficient – is widely perceived aspreferable to ongoing expatriate-ledtraining. In the past there has been adearth of capable Bosnian NGO man-agement trainers. However, interna-tionally sponsored programs havetrained teams of NGO managementconsultants. A compendium recentlypublished with the assistance of the In-ternational Council on Volunteer Activi-ties provides names and contact infor-mation of several hundred trained Bos-nian facilitators and trainers, in a widevariety of subjects of relevance to fur-ther NGO development.

Bosnian civil society is still in need ofcenters to provide access to informationand technology. The OSCE maintainsnumerous democracy support centersaround the country, which may be usedas resources for NGOs. Recent effortsto turn these support centers entirelyover to Bosnians and register them as asingle NGO have in large part suc-ceeded, but they lack sustainablesources of funding. The International

Rescue Committee has funded threeresource centers based in under-servedareas of the country, which are staffedby leading NGO activists and provideconsultations, training, information ex-changes and other services to locally-based NGOs.

NGOs are still fairly isolated from oneanother and generally rely on the fewopportunities sponsored by inter-national donors to establish andstrengthen ties, particularly across thetwo Entities. Several cross-Entity coali-tions have formed to encourage two-way refugee return and some NGOshave established partnerships with otherorganizations across the Inter-EntityBoundary Line. A smaller number ofNGOs have an established office in bothEntities, but the legal framework contin-ues to make this difficult.

The few umbrella organizations andsupport centers that exist are institution-ally weak and fail to play their criticalfunction. The BiH NGO Council and itsnumerous regional NGO Fora are widelyperceived to be so dysfunctional andunfocused that they serve to discreditthe sector rather than promote it.

PUBLIC IMAGE: 5

Few NGO leaders view theirsustainability as a process from whichthe community as a whole benefits. Thesector’s youth, the relative inexperienceof its leaders, and the dearth of finan-cially sustainable independent mediahave inhibited the evolution of partner-ships between NGOs and the media.

While there has been some improve-ment over the past year in the interac-tions between the media and NGOs,local organizations still do not know howto sell their vision or program activitiesto a wider audience.


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The sector as a whole faces ignoranceand some resentment from govern-ment, the media, and the public due tothe perception that it is well financed bythe international community. NGOs in-creasingly recognize the importance oftheir public image and are seeking as-sistance in making use of their existingcontact base. USAID’s DemNet pro-

gram has launched the first ever publicrelations campaign for the NGO sectorentitled “Be Our Partner, Join an NGO.”Some of the leading local NGOs havealso taken the initiative to highlight suc-cess stories through recently producedradio shows and newsletters.


BULGARIA

O

TciasNtin1

Mfu4oreMamnncatiPsNz

L

OAeweNfuBo

Capital: Sofia Inflation: 5.3%GDP per capita: $1,490 Unemployment: 12.2%Population: 8,200,000 Foreign Direct Investment: $700,000,000

Page 55

VERALL RATING: 3.7

he Bulgarian civil society sector comprises around 8,000 organizations, including politi-al and religious organizations. About half of those are “Chitalishta”, traditional Bulgar-n educational and cultural organizations, most of which currently provide a very limitedcope of services. There are organizations active in almost all spheres of traditionalGO activities, such as civil society development, social services, environmental protec-on, human rights, economic development and education. Over the past two years theumber of organizations considered “active” has increased from 1,000 in 1998 to about,500 in 2000.

ost NGOs experience financial difficulties and are extremely dependent on foreignnding. While 20% of organizations receive some governmental funding and about

0% receive funding from businesses,pportunities to raise funds domesticallymain constrained and non-diversified.ost organizations are project-driven,nd links to constituents are oftenissing. There is often a lack of coordi-

ation and a limited capacity to formetworks. Still, NGOs are quite suc-essful in advocacy on specific issuesnd are constantly improving their rela-ons with central and local government.ublic awareness of NGOs remainsteady at 52%. The public is generally not informed about NGO activities, althoughGOs enjoy some positive media coverage at local levels. Intermediary support organi-ations (ISOs) are increasingly providing services to the sector.

EGAL ENVIRONMENT: 3.5

n September 21, 2000, the Nationalssembly of the Republic of Bulgarianacted a new law on Legal Personsith Nonprofit Purposes that will go intoffect on January 1, 2001. This newGO law will govern the establishment,nctioning, and legal status of NGOs inulgaria. This first step in changing theverall legal environment will open the

way for changes in tax and other relatedlegislation to improve the prospects forNGO sustainability.

The new law is the successful product ofseveral years of effort, headed by sev-eral leading Bulgarian lawyers, civil so-ciety organizations and parliamentari-ans, along with the significant input of

Bulgaria Overall Scores

43.6

4 3.7

1

2

3

4

5

6

71997 1998 1999 2000

BULGARIA

Page 56

the International Center for Not-for-ProfitLaw (ICNL).

The new NGO law provides for aminimum level of state control and easyregistration of NGOs in the court.Registration can only be denied if thepurposes of an organization are illegal.Moreover, the law strictly limits thestate’s powers over dissolution oforganizations.

The law specifies a set of provisionsrelating to the internal governance ofassociations and foundations, andintroduces one of the most moderninternational legal principles on NGOs’status, setting out two categories oforganizations: public benefit organi-zations (PBOs) and mutual benefitorganizations (MBOs). PBOs mustregister at the Public Registry within theMinistry of Justice and their purposesshould fall into one of the categories ofpublic benefit activities specified in thelaw. Only PBOs are entitled to benefitsfrom the state.

Under the new law, NGOs are allowedto perform economic activities related tothe main purpose of the organizationand to use the return from suchactivities. NGOs may set upsubsidiaries, which may engage ineconomic activities, but their profits willbe normally taxed. This provision opensthe way to NGO sustainability throughfees for the provision of differentservices.

The new NGO law is considered pro-gressive and will provide a basis for fu-ture work on tax amendments and rele-vant procurement legislation. A workinggroup on tax legislation has beenformed, which has drafted a package ofsuggested amendments. Legal assis-tance in the area of social contracting isalso underway. ICNL is working on aneducational initiative that will train andassist the broad community of NGOsleaders, lawyers, judges and journalistsin the implementation of the new law.


A small core of strong and influentialNGOs exists in Sofia and other urbancenters, with some viable NGOsemerging in regions throughout thecountry. Still, most NGOs are comprisedof small groups of people, survive on aproject-by-project basis, and lack stronglinks to their constituencies.

The law defines the internal manage-ment structure of NGOs, with a cleardivision between staff and board mem-bers, though boards are seldom active.The leading NGOs employ permanentstaff. NGOs have some success in at-tracting volunteers though, based on asurvey by MBMD, a Bulgarian pollingagency, general public participation re-mains low at 4%. NGOs declare theirmissions at registration, but mission

statements are often broad and quicklybecome irrelevant.

NGOs rarely undertake a detailed plan-ning process, because they are de-pendent on international donor fundingand respond to the goals stated by do-nors. Most NGOs do not have a regularmechanism with which to analyze con-stituents’ needs. There remains a greatneed for tailored training programs thatmeet individual NGOs’ organizationalcapacity needs and encourage constitu-ency building. In addition to training,NGOs need basic office equipment andare generally only able to obtain modernoffice equipment on a project-by-projectbasis. 20% of NGOs do not have anycomputer equipment.


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The financial viability of the NGO sectorremains extremely low, with the excep-tion of some strong NGOs, which aremainly located in the capital. Many ofthe smaller NGOs are entirely depend-ent on international donor funding.There is a great deal of pessimismabout alternative funding sources, andNGOs’ budgets are generally non-diversified. There are very few exam-ples of attracting local business support.In some sectors NGOs are successful in

contracting with local government, how-ever as a whole, NGOs meet a lot ofresistance. Some organizations collectmembership fees and charge for theirservices, but the income generated bysuch activities is extremely small due tothe overall poverty of the community. Ingeneral, NGOs do not engage in con-stituency building activities, and localsources of philanthropy are basicallynon-existent.

ADVOCACY: 3.0 NGOs are becoming increasingly awareof the need to engage in advocacy ac-tivities. They are gradually gainingseats on important policy-making com-mittees, and the existing legislation pro-vides opportunities for NGOs to haveinput into law-making activities. Recep-tivity to NGO input, however, is oftendependent upon the good will of par-ticular lawmakers.

While advocacy coalitions come to-gether around short-term issues, thereis no leading coalition that advocates onbehalf of the entire NGO sector. Still,NGOs are quite successful in formingissue-based coalitions and have beenactive in promoting legal reform.

NGOs have been successful in advo-cating many policy changes over thepast year, especially with regard to NGOand media legislation and in the areas ofenvironment and business. In one in-stance, the Bulgarian Media Coalitioninitiated the first public session of theBulgarian Constitutional Court, to reviewthe newly adopted Radio and TelevisionLaw. This lead to the elimination of themost drastic constitutional violation inthe new legislation — the breach of pri-vacy allowing authorities to checkhomes for the existence of undeclaredtelevision sets.


NGOs provide limited services in thesocial sector, but do offer a wide varietyof services in other areas. In general,NGO services reflect the strategies ofinternational donors rather than localcommunity needs and priorities. NGOsprovide services in the areas of democ-racy, economic development, socialsafety net, and the environment. Indige-

nous services to the NGO sector includepublications, workshops, and expertanalysis. As the state withdraws from some sec-tors, opportunities are emerging forNGOs to provide services previouslyprovided by the state. Some NGOs areable to charge fees for their services,but cost recovery is extremely limited

BULGARIA

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due to the overall poverty of client or-ganizations. In general, the government

recognizes the value of NGOs, althoughsupport is still very limited.

INFRASTRUCTURE: 3.0

A number of resource and informationcenters are located throughout thecountry. Most provide a limited scope ofservices, but provide at least theessential information needed by NGOsto function successfully — includinginformation on registration, operation,project writing, and management.These centers are generally successfulin attracting some income from locallygenerated sources. IntermediariesSupport Organizations (ISOs) are a

special focus of the USAID DemNetProgram, and as of summer 2000 arebeginning to provide grants and servicesto the NGO sector. NGO networks arefunctioning in a number of individualsectors. Diverse training opportunitiesare available and are based on well-developed systems. Inter-sectoralpartnerships are generally issue-based,but there is an increasing awareness onbehalf of media and local government ofthe value of NGOs.

PUBLIC IMAGE: 4.0

As a whole, NGOs are under-represented in the media. They enjoysome positive media coverage at thelocal level, but Bulgarian national mediaare mostly focused on political issues.Although some NGOs try to operatetransparently and attract publicattention, most NGOs do not have amedia strategy and their contacts withmedia are on an ad-hoc basis. In general, the public is not wellinformed about NGO activities. NGOsare, however, sometimes recognized bygovernment institutions and areincreasingly consulted on a number ofissues.

Relations with the media are constantlydeveloping, and special featuresfocusing on the role and activities ofNGOs are emerging on Bulgarian radioand television. During the past year, theBulgarian Media Coalition (BMC), anorganization representing the strongestmedia organizations in Bulgaria, hasbegun to improve NGO work with mediain the country. The BMC has alreadyconducted a number of local-levelmeetings between NGOs and themedia, and is continuing its work oneducating NGOs to work effectively withmedia, in a number of small towns.

CROATIA

CROATIA

Capital: Zagreb Inflation: 6%GDP per capita: $4,530 Unemployment: 17.2%Population: 4,600,000 Foreign Direct Investment: $750,000,000

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OVERALL RATING: 4.3

In spite of significant political changes that took place after the Parliamentary Electionsin January 2000, the Croatian NGO sector remains weak and its sustainability is indoubt. The new government has expressed rhetorical support for NGOs, emphasizingthe role of non-governmental organizations in bringing positive changes and democracyto Croatia. However, this support has not manifested itself in the concrete changes thatare vital to NGOs’ survival. Even the amount of funding provided by the Croatian Gov-ernment to NGOs has decreased in the past year. The only positive change broughtabout by the new government relatesto the public image of NGOs: organi-zations are no longer perceived asenemies, or as anti-Croatian.

The challenges facing the sector stemfrom serious economic and socialproblems. The level of donor supportpreviously available to Croatian NGOshas decreased due to positivechanges in the political environment.Consequently, many NGOs active inthe area of human rights and reconciliation are having difficulties with organizational andfinancial sustainability.

The number of registered NGOs has increased slightly, to approximately 20,000. Ofthese organizations, 18,073 operate at the local level and 1,834 at the national level.There are 38 foundations and 55 foreign NGOs registered in Croatia. There are onlyabout 1,000 active and well-developed NGOs. Many NGOs operate as interest groupsor grassroots initiatives at the local level. The most active NGOs include those in thefields of social services, women’s issues, human rights, legal assistance and environ-mental protection. Croatian civil society is still weak in the development of intermediarysupport organizations and local foundations. The legal environment, including the ex-isting Law on Associations, the Law on Foundations and Funds, and tax and fiscal laws,remains weak. Positive changes are anticipated in the near future, though, and the gov-ernment used a transparent procedure for drafting the Law on Associations, actively en-gaging both NGOs and the broader public in the process.

Croatia Overall Ratings

4.4 4.6 4.4 4.3

1

2

3

4

5

6

71997 1998 1999 2000


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Early in the year, the ConstitutionalCourt struck down a number of provi-sions in the Law on Associations thatimposed unnecessary burdens on asso-ciations seeking to register. Since a newlaw has not yet been enacted, NGOscurrently operate in a somewhat fluidlegal environment that is open to poten-tial abuse.

The existing Law on Associations andFunds is reasonably transparent re-garding the internal management, scopeof permissible NGO activities, and fi-nancial reporting. Provisions on thedissolution of NGOs, however, give riseto some concern. The Law on Founda-tions and Funds confers upon the gov-ernment a great deal of unwarrantedpower regarding the appointment of or-ganizations’ managing bodies.

While NGOs (particularly human rightsorganizations) were frequently harassedby the previous administration, the newgovernment has not engaged in thistype of behavior. On the contrary, theyhave introduced significant improve-ments and increased the transparencyand involvement of NGOs in the proc-

ess of drafting a new Law on Associa-tions. Three NGO activists were mem-bers of the drafting committee, and thedraft law is publicly accessible throughthe Government Office for NGOs’ webpage. Panel discussions regarding thedraft law were held in four regionalcenters.

Only a handful of lawyers are expert inNGO law, although modest efforts to in-crease this capacity are underway. TheCroatian Law Center (CLC) of Zagreb isstill the most active NGO providing probono legal services.

Grants and endowment income are taxexempt, but exemptions to individualand corporate donors are quite limited.In addition, the Law on Associations isnot clear as to whether or not (and towhat extent) associations can engage ineconomic activities. Registration prac-tices have not been consistent on thatissue. Nevertheless, the tax code doesprovide certain exemptions for incomegenerated from the economic activitiesof NGOs.


The organizational capacity of mostCroatian NGOs is low due to their pre-carious financial situation, causedlargely by the difficult economic and so-cial conditions in the country, as well asdecreasing donor support.

Well-developed NGOs can afford tohave a few paid staff members, whilesmaller organizations generally have nomore than one full-time (or half time)paid staff member and a few volunteers.Some NGOs have reduced the number

of paid staff members they employ, be-cause of fund-raising problems. In gen-eral, volunteerism is limited. Few NGOsactively utilize volunteers and/or pro-mote volunteerism. In order to improvetheir sustainability, many well-developedNGOs have started to practice strategicplanning, using local consult-ants/trainers to help them with the proc-ess. This is also true for some smallerNGOs that have recognized strategicplanning as one of the key issues criticalfor future development.

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Leading NGOs usually have a well de-veloped management structure withclearly defined roles and responsibilities.Boards of directors or supervisoryboards are still very weak in mostNGOs. Boards rarely adopt a pro-activerole in advising and assisting adminis-trators. Often, top managers will be bothleaders of their NGO and board mem-bers, a situation that may entail a con-flict of interest. Generally,

most Croatian NGOs still face numerousmanagement weaknesses, espe-ciallythose that have not received foreign do-nations and assistance.

The capacity of Croatian NGOs to de-velop their constituency base is limited,and is an uncommon concept to mostorganizations. However, larger NGOsare becoming aware of the need to buildand improve their relationships with theirconstituencies.

Most well developed NGOs have com-puters, faxes, and Internet access, al-though the equipment is generally notup-to-date.


As a result of serious economic and so-cial difficulties, and a decrease in donorsupport, financial viability is the largestobstacle to the sustainability of CroatianNGOs. Most leading NGOs are de-pendent on the support of a few foreigndonors; therefore their financial viabilityis at great risk. Although funding fromlocal sources is low, it has started to in-crease. Conversely, national govern-ment support to NGOs has decreasedsubstantially within the past year.

There is growing interest on the part oflocal governments in supporting NGOs,especially in cities such as Rijeka, Split,Zagreb and Osijek. This support is of-ten the result of personal connectionswith local government officials, as op-posed to open and transparent competi-

tions for funding. Several larger NGOsincreased their revenues by contractingwith local governments to provide socialservice activities. Some local govern-ments have provided office space fororganizations. With the exception oftrade unions, the Croatian Bar Associa-tion, and a few elite associations, fewNGOs receive significant revenues fromdues.

NGOs supported by foreign donorshave good financial management sys-tems in place and have excellent re-porting skills. Many of these organiza-tions employ professional accountantsbecause they have few full-time em-ployees.


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ADVOCACY: 2.5

Croatian NGOs — especially environ-mental, human rights, peace, youth, andwomen’s groups — have organizedstrong advocacy campaigns. For ex-ample, an impressive, broad-based“get-out-the-vote” campaign was or-ganized before the presidential electionsin late 1999 and the parliamentary elec-tions in early 2000 by NGO coalitionsGLAS 99, GLAS 2000, and GONG.These coalitions included over 50 localNGOs, and had a major impact on thehigh voter turnout in the elections. Ap-proximately 73 percent of voters partici-pated in the Croatian ParliamentaryElections on January 3, 2000. Further-more, an impressive group of more than5,000 non-partisan election monitorswas recruited during the campaign, andwas critical in ensuring free and fairelections.

The national government is beginning tocooperate with NGOs, primarily thanks

to the efforts of the Government Officefor NGOs, which is very supportive ofcivil society groups. In Spring 2000, theGovernment Office for NGOs invitedcivil society groups to propose changesto the new draft Law on Associations.In order to facilitate this process, theyput the draft law on their web page.Unfortunately, many NGOs have not re-sponded. In addition, the Croatian LawCenter has proposed a new draft Lawon Associations. NGO initiatives re-garding the abolishment of several pro-visions of the current Law on Associa-tions were unsuccessful.

Local authorities are becoming moreopen to the idea of cooperation withNGOs, though such openings are stillnot common in smaller municipalities.Similarly, the development of localfoundations is at a very early stage.


Psychosocial organizations, humanrights groups, and women’s groupshave been active in providing servicesto children, youth, women, refugees,displaced persons, and returnees inCroatia. Often, the government doesnot provide such services. While con-tracting with local governments is not acommon practice, some local govern-ments have recognized the importanceof such services and have started tosupport NGOs in providing them. Evengovernment-supported NGOs, however,have not been successful in recovering

their costs. A small number of NGOsprovide support in the fields of economicdevelopment, environmental protection,governance, and housing.

NGOs generally offer services that re-spond to the needs of vulnerable groupsin their communities. Recently, someNGOs have initiated community-buildingprograms in war-affected and rural ar-eas. The new government has alsostarted to recognize a potential role forNGOs in providing social welfare serv-ices.

INFRASTRUCTURE: 4.0

The overall infrastructure of the NGOsector remains weak, although there

has been some development in thisarea. Two new training organizations

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(EOS and SMART) have been estab-lished and are focusing on topics criticalto NGO development including organ-izational development, strategic plan-ning, fund-raising, proposal writing, ad-vocacy, volunteerism, and communica-tion with the media. In addition, threenew NGO support centers have beencreated. One is a new organization andtwo exist within already-establishedNGOs. While a positive development, itis too early to determine whether thesenew training organizations and supportcenters will be effective and responsiveto the needs of the overall sector, espe-cially concerning the development ofsmaller grassroots NGOs in regionsoutside of the big cities.

During the last year, DemNet/Croatiacompleted and published the first NGOHandbook written in the Croatian lan-guage, a crucial development for thosenumerous NGO activists who are unableto use a foreign language. A substantialmarket remains for additional literatureon civil society, published in Croatian.

In general, Croatia lacks local grant-making organizations with the capacityto provide grants to other NGOs. Thereis substantial interest in establishingcommunity foundations, but only onehas been developed to date.

The electronic network Zamir.Net hascontributed to communication amongNGOs, and is critical for regional coop-eration and networking. Some NGOsubsectors meet regularly; for examplethe Women’s Network and Green Fo-rum. In addition, Ceraneo and the Gov-ernment Office for NGOs organize an-nual NGO gatherings.

In addition, the Government Office forNGOs continues to play a critical role inimproving the communication betweenlocal authorities and NGOs. Partner-ships with local governments havestarted to emerge in the social servicesfield, primarily in larger cities such asRijeka and Split. Unfortunately, the cor-porate sector remains mostly closed tothe non-profit sector, although there area few initiatives in which the two sectorshave begun to cooperate.

PUBLIC IMAGE: 4.0

The NGO-led civic education and get-out-the-vote-campaign during the presi-dential and parliamentary elections con-tributed significantly to improvements inthe public image of NGOs. One exam-ple of an NGO with an exceptionallypositive public image is GONG, whichexcels in media communications.Women’s groups and environmentalNGOs have also continued to receivefavorable media coverage due in part toclose cooperation with several journal-ists. However, most NGOs need to es-tablish or improve their media relationsskills.

In general, the national media has beenless interested in civil society than thelocal media. Despite small improve-ments, public understanding of andsupport for the NGO sector remainslimited. Most national and local govern-ment officials and most businessper-sons also have a limited understandingof the role, capacity and value of NGOs.Generally, Croatian NGOs are not suffi-ciently open or transparent in their op-erations.

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CZECH REPUBLIC

OVERALL RATING: 2.4

As of May 2000, there were close to 44,000 NGOs registered in the Czech Republic.The vast majority - 96% - of these are civic associations, while the remainder are foun-dations, foundation funds, public benefit organizations, and church-related organizations.It is estimated that two-thirds of the civic associations are active. Apart from the above-mentioned NGOs, there are around 4000 government owned non-profit organizations(ROPO) active in the Czech Republic.

The non-profit sector accounts for approximately 3% of total employment in the CzechRepublic. Non-profit organizations operate in all regions. Although most of them areregistered in Prague, Brno, Ceské Budejovice and other big cities, many of them benefitthe whole region, or in the case of foundations, the whole country. About a third of non-profit organizations operate at the local level, a third at the regional level and a third atthe national or international level. The scope of services provided is wide, but citizensare not sufficiently informed about them.

The government does not perceive NGOs as partners yet and therefore the level of co-operation between the two is stagnant. The legislation governing NGOs contains manyimperfections and ambiguities, thereby impeding NGO growth and development.

Government funding of NGOs decreases each year, corporate and individual philan-thropy is still rare, and local grant-making foundations are still quite weak. As a result,there is a chronic lack of finances in the Czech non-profit sector that prevents NGOsfrom hiring a sufficient number of professionals, building a firm position in society, andgetting properly involved in public policy.

There is a network of information centers for non-profit organizations, but it is not fullydeveloped. To represent their interests more effectively, some NGOs have establishedcoalitions on a regional or field-of-interest basis.


Activities of non-profit organizations inthe Czech Republic are regulated byseveral laws, including the Law on As-sociating of Citizens of 1990, the Law onFoundations and Foundation Funds of1997, the Law on Public Benefit Organi-zations of 1995, and the Law on Free-

dom of Religion and the Status ofChurches and Religious Organizationsof 1991. All of the above mentionedpieces of legislation are ambiguouslywritten and therefore allow for variousinterpretations.

Capital: Prague Inflation: 4.5%GDP per capita: $5,262 Unemployment: 7.5%Population: 10,300,000 Foreign Direct Investment: $3,500,000,000


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Current legislation also provides differ-ent opportunities to different types ofNGOs to earn money through income-generating activities. Civic associationscan earn money in the least restrictedway, public benefit organizations´ eco-nomic activities are more restricted andfoundations are allowed to earn incomeonly through specifically defined activi-ties such as the rent of assets, organi-zation of lotteries, public collections andcultural, sport and educational events.Given the lack of legal restriction on en-trepreneurial activities by civic associa-tions, this legal form is chosen by or-ganizations even in cases when thepublic benefit organization status wouldbe more appropriate.

Civic associations and church-relatedorganizations register at the Ministry of Interior, while foundations, foundationfunds and public benefit organizationsregister with the court. Registration itselfis not a difficult process, but it takes ap-proximately 6 months due to the backlogin the courts and the lack of technicalequipment. In 1998, all foundations

were required to re-register under thenew law – which requires, among otherthings, a minimum endowment – result-ing in a significant decrease in the num-ber of foundations. Foundations thatwere denied re-registration were eitherabolished or had to register as a differ-ent type of NGO.

According to the tax law, NGOs do notpay taxes on certain income categories,such as membership dues, gifts, andinterest generated from a foundation’sendowment. Non-profit organizationsare exempt from paying taxes up to$25,000 of income and can also deduct30% of the base taxable income up to$75,000. Nevertheless, tax obligationsare still considered too high by NGOrepresentatives. Donations to NGOsare tax deductible up to a percentage oftaxable income. As a result of the taxsituation, NGOs are highly dependenton government donations.

A base of legal experts on NGO lawshas been developed to a certain level.

ORGANIZATIONAL CAPACITY: 3.0 Most NGOs now have defined missionsthat they try to fulfill through their activi-ties, which also trying to generate publicsupport for their activities. Nevertheless,because of financial uncertainty, someorganizations focus too much on fund-raising from the state and foundations,and therefore do not pay sufficient at-tention to building their membership andbase of supporter. Many NGOs under-estimate the fact that membership basedevelopment is important for increasingfinancial self-sufficiency and generatingunrestricted money.

Over one-third of NGOs admit to havingdifficulties in recruiting volunteers, one-fifth experience problems in managingthem, and many organizations realize

that they are not fully prepared to givethe volunteers something to do. Theidea of volunteering itself reminds manycitizens of the communist past, whenmost people were forced to volunteer.Public polls showed that about 20% ofCzechs occasionally volunteer for somenon-profit organization.

Most NGOs do not use strategic plan-ning techniques in their decision makingprocess because they view themselvesas being “too small“ for it. The division ofresponsibilities between the Board ofDirectors and the staff is not alwaysclear – about a third of NGOs do noteven have a Board. In many organiza-tions, members of the Board considertheir position only as a formality neces

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sary to register an NGO, and therefore,do not take it seriously. Service provid-ers have permanent paid employees,but the existence of many NGOs de-pends on a single person.

Larger organizations operating in citiesand most environmental NGOs tend tohave sufficient technical equipment andfrequently work with the Internet. Onthe other hand, small regional NGOsstruggle to get even basic equipment.


A 1998 survey on the structure of fi-nances flowing into the Czech non-profitsector showed that, on average, 30% ofNGOs’ income comes from governmentsubsidies, 21% from individual dona-tions, 17% from income generating ac-tivities, 18% from membership fees, 4%from local foundation grants, and 2%from foreign foundation grants, with theremaining 2% from other sources.

In 1998, the Czech government pro-vided NGOs with $75 million of support,which went primarily to organizationsworking in the fields of sports, healthcare, and social services. In 1999, gov-ernment support declined to about $57.5million. Of this government funding,82% was granted to civic associations,14% to church- related organizations,and 4% to public benefit organizations.ROPO, or government-owned NGOs,have an advantage over other non-profitorganizations because they are financedby the government automatically andtherefore do not have to apply forgrants. Other NGOs are required tosubmit projects on an annual basis andget state funding only for the period ofone year, so that support for long-termprojects is not guaranteed. The publicfinancing system is not fully transparentand does not take the degree of publicbenefit into account. Furthermore, it isdifficult to obtain timely and sufficientinformation regarding government tend-ers.

Domestic foundations provide limitedsupport to NGOs, but do not have suffi-cient resources and/or endowments.

However, in 1999, their situation im-proved with the first distribution of theFoundation Investment Fund (NIF)which gives 1% of the proceeds fromthe second wave of privatization to do-mestic foundations. In 1999, $12.5 mil-lion were distributed among 39 founda-tions to raise their endowments. In2001, a second round of grants will bemade in the amount of $37.5 million.

Local corporate philanthropy is not fullydeveloped yet, in part because of lowlimit for tax deductions and the lack ofNGO experience in cultivating donors.Companies prefer sponsorship to mak-ing donations as their sponsorship con-tribution counts as an expenditure. Indi-vidual donors are still rare for many rea-sons, including lack of information aboutNGOs, lack of trust, and the difficult fi-nancial situation that many families face.NGOs are able to supplement their in-come through income-generating activi-ties, but complicated accounting and taxregulations discourage this. Despitethese difficulties, the proportion of fund-ing from local resources and income-generating activities is gradually in-creasing.

In general, NGOs are too dependent onstate funding. Government funding rep-resents over half of the budget in aquarter of all NGOs that work mainly inhealth, social care, education and re-search.

The flow of foreign funding has de-creased dramatically since 1997. For-eign funding was $22.5 million in 1997,


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and only $6 million in 1999. As a result,organizations that were established andfunded for a long time from foreign re-sources, particularly those in the areasof human rights and the environment,have experienced a sharp decrease inrevenues.

NGOs are aware of the need to profes-sionalize their fundraising activities;however, there is neither enough expe-rience in this area nor appropriate train-ing available.

ADVOCACY: 2.0

Some NGOs have started forming coali-tions on a regional or field-of-interestbasis. For example, good cooperationoccurs among NGOs in the environ-mental field, who have been able topush through a number of changes inregional development plans and otherprojects. However, such coalitions arestill not very common.

There are few formal mechanisms al-lowing NGOs to participate in the deci-sion-making process. The extent towhich NGOs can influence state admin-istrative bodies largely depends on theattitudes and goodwill of individual offi-cials. The Council for NGOs estab-lished by the government comments onnew legislation, attempts to change the

system of state funding for NGOs, andtries to create space for NGO participa-tion in decision-making at a regionallevel. The effectiveness of such activi-ties depends on the members of theCouncil at a given time. Individual NGOexperts are also occasionally consultedon draft legislation.

Advocacy campaigns, petitions, demon-strations, and blockades are quite com-mon and sometimes very successful,although they do not always mobilizebroad public support. In general, NGOsare too passive in advocating for theirinterests, tend to wait for an invitationfrom the government, and do not makesufficient use of opportunities providedby the current legislation.

SERVICE PROVISION: 2.0 The scope of services offered by NGOscovers basically all areas, and the serv-ices are usually available to the generalpublic. The participation of Czech NGOsin humanitarian aid in the Czech Repub-lic as well as abroad is significant andacknowledged by the public. The activi-ties of some NGOs significantly contrib-ute to the improvement of the situationof the handicapped and ethnic minori-ties, mainly Roma. In addition, someNGOs work to address the temporaryhousing needs of socially disadvantagedgroups of citizens.

Needs analyses and assessment arenot systematically carried out yet in thefield of service provision. Since manyNGOs are financially dependent on thestate and compete to provide state-subsidized services, they do not conducttheir own assessments of their clients’needs.

Although publications about the non-profit sector are not systematic, thereare some available which are used bythe state. Information about NGO serv-ices can be obtained either in NGO of-fices or in information centers. On theother hand, libraries and universities

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offer very few books about the non-profitsector.

Due to the rather extensive network ofstate-owned non-profit organizations

(ROPO), the government has little moti-vation to contract or cooperate withother NGOs to provide these services.However, NGOs are occasionally usedbecause they are cheaper than ROPO.

INFRASTRUCTURE: 3.0

There is a lack of NGO informationcenters. The Prague information centerthat for years has been providing infor-mation to NGOs, organizing trainingprograms and offering legal and finan-cial consultations, recently curtailed itsactivities due to financial and manage-ment problems. Regional centers thatwere established by this organization inmajor cities work well, but their servicesare sometimes inaccessible for smallerNGOs that lack the necessary technicalinfrastructure.

Training for NGOs covers various fields,but there is a severe lack of trainers insome areas, especially fundraising,

board development, and organizationaldevelopment.

Some NGOs work hard to developcross-sectoral partnerships with localgovernments and businesses. Severalumbrella NGO coalitions were formedand operate on a regional and/or field-of-interest basis. In general, coopera-tion between NGOs is not satisfactorydue to limited access to modern com-munication technology and/or competi-tion, which results in the fear of someNGOs to share information. Domesticgrant making foundations support bothnation-wide and local projects but theirpotential is still quite limited.

PUBLIC IMAGE: 3.0

In 1998, 1999 and 2000, the Prague in-formation center and its regionalbranches organized information cam-paign called “30 Days for the Non-profitSector“. These campaigns succeededin improving the NGO sector’s coopera-tion with the media, although media at-tention of NGOs is still insufficient.

Many people do not fully understand therole of NGOs, much less recognize thenames of individual NGOs or their ac-tivities. Foundations that organize pub-lic collections and therefore regularlyappear in the media are generally betterknown. NGOs themselves often under-estimate the importance of their publicimage. Due to the lack of informationabout NGOs, the public still tends toview the non-profit sector as untrust-

worthy. Moreover, many people rely onthe state, which in their opinion is re-sponsible for assisting people in need.Individual citizens begin to show an in-terest in NGOs only when they have apersonal problem.

Some important representatives of thebiggest political parties are even tryingto discourage people from active partici-pation in public matters, accusing NGOsof trying to replace public bodies. Gov-ernment attitudes towards NGOs arereserved and wary. Government bodiesmake use of non-profit expertise only toa limited extent.

Foundations have adopted a code ofethics to make their activities more


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transparent. All recognized NGOs publish annual reports.

ESTONIA

ESTONIA

Capital: Tallinn Inflation: 4%GDP per capita: $3,438 Unemployment: 9.6%Population: 1,400,000 Foreign Direct Investment: $350,000,000

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OVERALL RATING: 2.4

There are 14, 247 registered non-profit organizations in Estonia. Most of them havebeen established over the last ten years, since Estonia re-gained independence. NGOsare actively involved in social welfare, health care, education, culture, human rights, andenvironmental protection.

The main challenge facing the development of the third sector in Estonia is the lack ofinformation available to individuals interested in starting and managing successfulNGOs. Information on issues fundamental to the success of these organizations, suchas how to access available funding, establish partnerships, and use modern technologyto run a successful nonprofit organization, is not always available. This lack ofinformation is most serious outside of the capital of Estonia, where organizations sufferfrom relative isolation and neglect, and opportunities to share information about foreignprograms, funding available from national agencies, and training events is very uneven.

People working in the non-profit sector often fail to fully appreciate the need for NGOs tobe run professionally and in a business-like manner, in order to be able to developsources of funding and to build sustainability through partnerships with local people,businesses and authorities. Many NGO leaders lack sufficient understanding of thebenefits of collaboration. People in the voluntary sector do not understand theimportance of collaborating, on both national and regional levels.


Minor, but substantive improvementscontinue to be made to the legalframework, which consists of the 1996Laws on Foundations and Non-ProfitOrganizations. Both laws are now wellenough established not to causesignificant problems for NGOs in theprocess of registering an organization.

There are three kinds of non-profitorganizations provided by law –Foundations, Non-Profit Organizations,and Non-Profit Partnerships. Estonianlegislation does not set limits or specifythe purposes for which an NGO can beestablished. Estonian NGOs are freely

able to address matters of public debateand express criticism. Specialregistration departments of the countyand city courts hold the register of non-profit organizations and foundations.Entries in the register are public andeveryone has the right to examine andobtain copies of the register and the filesof non-profit organizations andfoundations.

NGOs pay no taxes on grants andenjoy exemptions or deductions forincome earned on the investment ofgrant funds or endowments. The lawrequires a very detailed report covering


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the management, action plan andfinancial activities of NGOs. Legal advice for NGOs in the capitaland secondary cities is available on avery limited scale. There is a severelack of local lawyers with specialized

training in NGO law, and a lack of skilledtrainers to address this need. Theservices of recognized law firms areexpensive and the firms are not alwaysfamiliar with the issues of NGO law.


Many leading NGOs received training tostrengthen and promote thesustainability of their organizations. As aresult, they have all the components of aclearly defined management structure,including recognized division ofresponsibilities between the board ofdirectors and staff members andvolunteers.

Many NGOs have had training instrategic planning, fundraising and havedefined their mission statement andfinancial goals. Typically, however, mostNGOs have no clearly definedmanagement structure and lackadvanced management, leadership andorganizational skills. Tallinn PedagogicalUniversity has recently introduced acourse on the non-profit movement toimprove the skill base and knowledge ofmodern management techniques forNGOs.

Leading NGOs have permanent, paidstaff and there is a small but capablecadre of local trainers, usually

associated with NGO Support Centers.NGOs that have received prior fundingfrom international donors usually havebasic modern office equipment such asrelatively new computers, software, faxmachines, internet access etc. PublicInternet cafes make access to theInternet available all over Estonia.

Most NGOs have a clearly definedmission in their statutes, though it isoften not well known or clearlyunderstood, even by the organization'smanagement. The potential ofvolunteers as a valuable resource is notbroadly understood or recognized.Emerging NGOs have difficultyobtaining necessary office equipment,because of a lack of local funds andinternational donors no longer supportequipment acquisition. Many NGOs arenot familiar with different areas of non-profit organization management and donot know how to get the necessaryassistance and support to answer theirquestions.

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Most international funders have left orare currently in the process of leavingEstonia, and as a result of budgetaryproblems the Estonian Government hasreduced its financial support for NGOs.Nevertheless, many local NGOs areable to raise a significant percentage oftheir funding from local sources, andsome are able to finance theiroperations entirely with Estoniansources of support.

Government and local authorities, aswell as many local businesses arebeginning to contract with NGOs forservices. The Ministry of Internal Affairshas established standards for thedelegation of services and theinvolvement of local authorities in thedelegation process. Local governmentsare becoming more aware of thefinancial needs of NGOs and the waysthat NGOs can use public financing toprovide services.

Increasingly, NGOs recognize theimportance of sound financial

management and accounting. LargerNGOs have professional financialmanagement staff and sophisticatedfinancial reporting systems.

NGOs are generally unable to drawupon a large enough core of volunteerand non-monetary support from theircommunities and other consistencies,because there are only limited traditionsof voluntary or philanthropic activity. Inspite of this, public attention to differentcharity campaigns and events hasincreased noticeably in recent years.Most NGOs do not have sufficientresources to remain viable for the short–term future.

NGOs are not active enough inpromoting membership outreach andconstituency development programs.Membership based organizations suchas unions typically collect dues, but notin sufficient quantities to supportsustainability. Many NGO activities arestill too often donor-driven.

ADVOCACY: 2.0

NGOs are able to influence public policyin different levels and have beensuccessful at affecting change for thethird sector. Several leading NGOs haveformed issue-based coalitions andconducted broad–based advocacy andpublic education campaigns in areasincluding the environment, humanrights, minority integration and the plightof stret children.

The dialogue between NGOs andgoverning institutions has becomeconsiderably more open andconstructive. Seminars and conferencesinvolving the NGO community andgovernmental officials have become

more frequent. Several governinginstitutions recognize that NGOspossess considerable expertise inspecial areas, and acknowledge them tobe active parties in decision- makingprocess. For example, The Ministry ofFinances has asked NGOs to provideinput into the State budget process.

During the past year, the Open EstoniaFoundation and the Estonian LawCenter initiated a program to developlegislative cooperation between thepublic and non-governmental sectors.With the support of UNDP, amemorandum of understanding wassigned between a number of Estonian


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umbrella organizations and a number ofpolitical parties to establish a forum tocooperate on and discuss issues ofcommon interest.

Nevertheless, communication betweenNGOs and public policy makers is often

one-way, and many NGOs, particularlythose in rural areas are simply unawareof the possibilities that exist and lack thetechniques and skills to take advantageof them.


Many NGOs provide basic social serv-ices, such as health, education and hu-manitarian assistance at the regionallevel. In most cases they reflect theneeds and priorities of their constituentsand communities. Regional NGO re-source centers and business advicecenters provide a range of services.Several of their products, such as publi-

cations, workshops or expert analysisare marketed to other NGOs. The rec-ognition and value of NGOs is commonin several places of Estonia. Localauthorities value the capacity of NGOsto provide basic social services andseveral local authorities provide grantsor contracts to NGOs for providing suchservices.

INFRASTRUCTURE: 2.5 The Network of Estonian Non-Profit Or-ganizations (NENO) has establishednine information and support centers incooperation with the Baltic-AmericanPartnership Program. These supportcenters provide information on NGOlegislation, accounting and tax policy,NGO management and strategic plan-ning, about sources of financing of non-profit organizations. Each Center gath-ers data on the non-profit sector in theirregion of operation, and promotes localcooperation with both non-profit organi-zations with both non-profit organiza-tions and representatives of local gov-ernment and business sector on theregular basis.

There are several coalitions of NGOs indifferent areas of activity, including envi-ronment and social issues, that shareinformation and knowledge a on theregular basis. There are umbrella or-ganizations in different areas of interestthat promote their activities to the largerpublic. Discussions about the need for

an organization to promote the interestsof the entire sector have started.

There is a general lack of well educatedtrainers covering issues of basic NGOmanagement. Training in advocacy, fi-nancial management etc. are generallyavailable in the larger cities, through re-gional NGO resource centers supportedby the Baltic American Partnership Pro-gram. It is, however, difficult to predicttheir financial sustainability and effec-tiveness after international supportcomes to an end. At the moment theyare not able to collect regularly fees fortheir services.

There are no traditional communityfoundations in Estonia, but county gov-ernments distribute resources for NGOson an annual basis. There are also sev-eral foundations created by the state tofinance regional development, cultureetc.

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More advanced specialized training likestrategic management, accounting, fi-nancial management, fundraising, vol-

unteer management, and board devel-opment is available in Tallinn.

PUBLIC IMAGE: 2.5

Consultation and cooperation betweenlocal authorities and NGOs isincreasing. Local authorities are alsobeginning to view local NGOs aspotential partners and effective serviceproviders. A number of leading NGOshave established relationships withjournalists that encourage positivecoverage, and a special monthlynewspaper, “Foorum”, for NGOs ispublished with international donorsupport. Many NGOs publicize theiractivities and many of them areorganizing events designed to increasesectoral awareness and visibility suchas forums, conferences and seminars.

Leading NGOs publish annual reportsand have made encouraging progress indemonstrating transparency in theiroperations.

The general public, however, is stilllargely indifferent to the activities ofNGOs. Media coverage of NGOs andtheir activities has been mostly passiveand the electronic media make littledistinction between public serviceannouncements and corporateadvertising. The public does notgenerally know and understand theconcepts of NGOs.


GEORGIA

Capital: Tbilisi Inflation: 20%GDP per capita: $1,033 Unemployment: 14.5%Population: 5,400,000 Foreign Direct Investment: $96,000,000

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OVERALL RATING: 4.1

During the last year, the third sector in Georgia expanded geographically, with NGOsnow active in almost all regions of Georgia. As the number of NGOs in-creases, how-ever, so do many of the sectoralchallenges. Most NGOs still faceproblems related to programmaticand financial sustainability, aswell as public image. In addition,partnerships between differentsectors are rare and sporadic.Despite this, a few well-developed, strong, sustainableorganizations do exist.


The registration process for NGOs inGeorgia is straightforward, but lacks so-phistication. The Civil Code recognizesonly two types of NGOs: associationsand foundations. Recently passed laws,including the Law on Creative Unionsand the Law on Youth and Children’sCreative Unions, contradict the CivilCode and provide special status andbenefits to post-Soviet type NGOs inidentified areas. This preferential treat-ment restricts the creation, registrationand functioning of new NGOs in thosespheres. In addition, several nationalorganizations have encountered prob-lems when registering their localbranches.

Georgian law provides considerablefreedom to organizations regarding in-ternal management and bookkeeping.However, the law lacks detailed instruc-

tions, especially on financial reportingand taxation. A new law regulating ac-counting and bookkeeping will come intoeffect in January 2001, and introduces amore complicated system of bookkeep-ing. Training NGOs as well as tax of-fices will prove crucial for securingtimely and correct implementation of thelaw.

There are no significant instances of di-rect governmental interference in NGOactivities. The lack of a law on publicmeetings, gatherings and rallies has notadversely affected NGO activities todate.

An increasing number of organizationsprovide legal services and consultationsto NGOs. Highly professional legal as-sistance is available for organizations inthe capital city. The situation is worse in

Georgia Overall Ratings

3.6 3.8 4.1

1

2

3

4

5

6

71998 1999 2000

GEORGIA

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some of the regions, especially insoutheast Georgia.

The Tax Code, and the drawbacks in itsimplementation, creates an unfavorableenvironment for the development of thesector. The tax law al-lows non-profitorganizations to carry out limited incomegenerating activities; however, no taxadvantages are provided. NGOs aretaxed as commercial organizationswhen involved in income generating ac-tivities. The legislation governing com-mercial enterprises also regulates NGOincome, thus making the financialsustainability of the sector problematic.Although the law does not limit dona-

tions, it does not provide tax exemptionsto physical or legal entities either.

The Law on State Procurement allowsNGOs to participate in official tenders,but there are few, if any, instances ofthis occurring. The Parliament has yetto hold hearings on the draft Law onCharity. Reimbursement of the VAT taxremains a big issue. Only a few organi-zations have appealed to the court andhave managed to regain their funds.However, these problems are not con-sidered a targeted government con-straint. The Horizonti Foundation hasprepared a package of proposals tosubmit to the Parliament this fall.


Constituency building remains one ofthe biggest problems facing the thirdsector in Georgia, but some progresswas made in the last year as a few or-ganizations attempted to target moreactivities toward building their constitu-encies.

The majority of organizations have mis-sion statements, but due to financialconstraints and donor funding they tendto work on a project to project basis.Most organizations do not have long-term plans and strategies. A smallnumber of organizations have well-developed organizational managementstructures. The vast majority of organi-zations do not have supervisory boardsand there is no separation of functions

between governing and executivebranches. Most organizations havepermanent employees with securewages. Some organizations manage toattract volunteers. Although the LaborCode of Georgia prohibits legal entitiesfrom recruiting volunteers, it is possibleto convert donated time into a moneyindex and devaluate it, thus avoiding theproblem. Nevertheless, the Code needsamending.

In Tbilisi and the regions, the majority ofNGOs have well-equipped offices withat least one computer. In some regions,however, communications systems areunavailable or have deteriorated, andInternet/email access is limited.


Overall, the financial sustainability ofNGOs has proven tenuous. Inclusion ofindicators such as the level of local sup-port and diversification of financialsources in the 2000 Index caused a sig-nificant decline in the score for this di-

mension from last year’s score of 4.5.Funding from local sources is insignifi-cant, with few instances of local philan-thropy. Only a handful of organizationsexperience any success when they at-tempt community fundraising. Due to


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the lack of local funds, inter-national do-nor organizations remain the primarysource of NGO funding. Some NGOsmanage to raise funds from westernfoundations. In-stances of governmentor business support within Georgia arerare. While funding sources remainstagnant, the number of NGOs contin-ues to increase. This expansion of thesector increases the shortage of funds.

The majority of NGOs lack sound finan-cial management systems. Reports areproduced mainly to satisfy donor re-quirements. Legislation allows an NGOto earn income from the provision ofgoods or services. However, in such acase, the NGO is taxed as a commer-cial, for-profit organization.

ADVOCACY: 2.0

NGOs cooperate with governmentalagencies primarily in the legislativebranch at the national level. Neither anofficial structure nor a well-organizedeasily accessible mechanism exists toregulate the cooperation of NGOs withgovernment. There are a few examplesof successful cooperation, but for themost part personal connections ac-count for the success. Since 1998, aspecial advisory council in the StateChancellery has mediated relationsbetween the President and NGOs. De-spite its two-year history, the efficiencyof the council remains questionable.

NGOs in Georgia have not implementedany large-scale advocacy campaigns.There are no formal coalitions, althoughhuman rights groups have been activeand successful in working together to acertain degree. NGOs are increasinglyaware of possibilities to influence politi-cal decisions from non-partisan posi-tions. They understand the necessity ofa well-developed legal framework indifferent spheres, as well as the impor-tance of public monitoring. A group ofleading NGOs, with the support andparticipation of the Horizonti Foundation,is actively engaged in the legal re-formprocess.


Service provision by NGOs is develop-ing at a relatively slow pace. In compari-son to the total number of NGOs, thepercentage of service providing organi-zations is very low and their geographicservice coverage is limited. The mainfields in which services are provided arelegal services, management, book-keeping, technical and computer serv-ices, and psychosocial and humanrights services. NGOs do not need agovernment-approved license to provideservices in these fields. In other fields,where government approval is required(mostly social services such as educa-tion and health care), NGO services are

only sporadically provided. In many cru-cial fields (such as housing and watersupply management), NGOs cannotprovide services because the govern-ment is not willing to decentralize stateservices.

The high standards of the services thatare provided by NGOs have triggeredthe interest of the government and busi-ness sectors, as well as many interna-tional organizations. Despite their highquality, services and products in mostcases cannot recover production costs.Though the legislation allows NGOs tocarry out commercial activities, it does

GEORGIA

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not provide tax exemptions. Incomegenerating activities are taxed at thesame rate as commercial activities.Consequently, NGOs often fail to covertheir production costs.

Government agencies, at least on thenational level, are increasingly aware of

the importance of the third sector. De-spite this fact, and the positive image ofNGOs, especially the leading organiza-tions, the government is generally notinterested in contracting for these serv-ices and products.

INFRASTRUCTURE: 3.0 The process of creating and developingNGO resource centers is underway. Inseveral cities there are technicallyequipped centers that are accessible forNGOs, for example the Horizonti officein Telavi and centers in Zugdidi, Gori,and Kutaisi. In other cities, such centershave yet to appear. Horizonti and a fewother organizations carry out mobile or-ganizational management training inmost regions of Georgia, according tothe region’s identified needs. Only a feworganizations receive income from themarketing of such services.

NGO coalitions that have been formeddo so according to a field of activities orgeographical location. However, theirsocial and political influence is limited,and no coalitions have formed specifi-cally for the purpose of defendingNGOs’ interests.

The Horizonti Foundation providesmanagement training for GeorgianNGOs throughout the country. Thetraining is conducted in Georgian, andwhere needed, in Russian. Horizontioffers special management literature inGeorgian. Within the last year, the pro-fessional level of Horizonti trainers hasimproved considerably. Pursuant to aprogram developed by Johns HopkinsUniversity, the Horizonti trainers havebecome certified through testing andexamination. In the future, Horizontiwants to expand its activities to educateregional trainers. Horizonti is also theonly organization that pro-vides man-agement services for Georgian NGOs.

Sectoral cooperation between the gov-ernment and the third sector takes placemainly at the national level, althoughthere is some progress in relations withthe business sector.

PUBLIC IMAGE: 5.0

The media does not pay appropriateattention to NGO activities or the rolethat NGOs play in civil society. In fact,the media paid even less attention toNGOs during this year than last. Someof the publicity that the sector did re-ceive was negative. There were severalcases in which NGOs were publicly ac-cused of corrupt practices. In addition tothe media’s inability to contribute posi-tively to public opinion building, NGOs

themselves generally lack contacts withtheir constituencies, with the exceptionof some of the leading NGOs. Conse-quently, a positive public opinion ofNGOs has not yet been established. Inseveral regions throughout Georgia, themere existence of NGOs remains un-known.

Acknowledgment of NGOs by the busi-ness and government sectors remains


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inconsistent. The central governmentacknowledges and tries to cooperatewith NGOs, although such cooperationhas yet to develop into financial assis-tance. In the regions, with individual ex-ceptions, dialogue between NGOs andgovernmental agencies has yet to beachieved.

Progressive representatives of the busi-ness sector acknowledge the role andmeaning of the third sector. They try tolearn about the activities and resourcesthat NGOs offer. Businesses at the na-tional level also are beginning to de-velop a strategy for future cooperationwith NGOs. Business enterprises havebegun to see a mediator role for thethird sector in relations between thebusiness sector and society, and to see

NGOs as supporters of their interests.Relations between the business andNGO sectors have not only begun, butpromise significant positive develop-ments in the future. However, it must bementioned that such interest by thebusiness sector has few financial orlegislative implications and merely con-stitutes an expression of moral or con-ceptual support.

Openness and transparency are char-acteristics not yet present in GeorgianNGOs. With a few exceptions, non-profitorganizations have not implemented in-dependent financial audits. A majority ofNGOs have not made their annual re-ports public and have not institutional-ized a code of ethics.

HUNGARY

HUNGARY

Capital: Budapest Inflation: 9%GDP per capita: $4,885 Unemployment: 9.1%Population: 10,100,000 Foreign Direct Investment: $1,600,000,000

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OVERALL DESCRIPTION: 2.3

By some counts, there may be as many as 50,000 NGOs in Hungary, although mostestimates of “functioning” organizations put this number closer to about 10,000 - 20,000.One potential point of concern for the sector is that NGOs are increasingly being used –across the ideological spectrum, but perhaps to a greater extent by “successor”organizations of former communist institutions – for political party purposes. Some of the most important chal-lenges to the sector are the strength-ening of organizations’ socio-economic legitimacy, the discoveryand fulfilling of social service func-tional roles, and improvement of bothintra- and inter-sectoral cooperation.Improved cooperation with other sec-tors will be important for the develop-ment of local sources of support tobuild sustainability in the long run. In-creased opportunities for NGOs to co-operate, communicate and work in coalitions would be beneficial for the sector. NGOsparticularly need assistance in participating more actively in civil advocacy and in localand national decision-making processes.

Strong regional differences continue to present challenges for the sustainability ofHungarian NGOs, particularly the differences in patterns of economic opportunity andinvestment, and regional differences in unemployment rates and per capita GDP. Ingeneral, NGO development in Hungary will continue to be closely linked to economicdevelopment, presenting a great challenge in those regions where needs are objectivelythe greatest and indigenous resources for NGOs are the scarcest. Central StatisticsOffice figures show, however, that increasingly NGO resources are going outside thecapital, a healthy trend.


The legal environment in which non-profit organizations operate in Hungaryis generally positive and has been sta-ble over the past years. The Govern-ment of Hungary (GOH) enacted com-prehensive NGO legislation in Decem-

ber 1997, and has been receptive tofurther discussion of improvements inthe law. A number of such modificationsare currently pending in the Parliament.The existing NGO legislation lays outfinancial and reporting criteria, and

Hungary Overall Ratings

2.3 2.1 2.31.6

1.0

2.0

3.0

4.0

5.0

6.0

7.01997 1998 1999 2000


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seeks to remove inactive NGOs fromthe official registry. This legislation hasimproved transparency and offers sev-eral benefits to non-profits, including theopportunity to compete for public pro-curement at the local and regional lev-els, especially in the realm of socialservice provision.

Long-term benefits of the legislation willlikely include a gradual improvement inthe credibility of the sector. The Hun-garian Central Statistics Office reports

that 11,000 different NGOs received in-dividually selected tax contributions in1999 under the “One Percent” legisla-tion, which allows citizens to designate aregistered NGO to which one percent ofincome tax will be given. While therewere some difficulties encountered atthe beginning of this effort, steady im-provements have been made. Thislegislation has also helped NGOs to re-alize the benefits of reaching out to theirlocal communities, and increases theexposure of the sector in general.


As measured purely in the number andvariety of NGOs, organizational capacityis strong. Currently there are between40,000 and 50,000 legally registeredNGOs, but it is unclear exactly howmany are functioning and active. Untilrecently it has been extremely rare to“de-register” non-functioning NGOs, be-cause there was no established processand no incentive to d-register. Apartfrom vocational associations, there is alack of nationwide coalitions

During the past year one NGO that hadreceived support from USAID becamethe first Hungarian NGO to receive cer-tification from the International Stan-dards Organization (ISO). ISO is almostexclusively in the private sector, andmeans that the NGO went through thesame total quality audit processes that alarge multinational corporation would

experience. This certification means thatthe entire organization - from financesand administration to service productionand delivery - has been audited with aneye toward total quality. This processhas helped the NGO find ways to im-prove its services and service deliveryand is evidence to both clients and po-tential donors of a high level of profes-sionalism and credibility.

Nevertheless, the sector in general isstill relatively weak in areas such as re-porting, strategic management and pub-lic relations. Skill levels in these areasvary, depending on sector and region,with environmental NGOs among themost professional, and NGOs in theeconomically depressed eastern regionsamong those with the greatest need fororganizational capacity development.

HUNGARY

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Hungary is currently enjoying sustain-able, dynamic growth for the first timesince the regime change. As the econ-omy improves, it is hoped corporate citi-zenship will take hold, but HungarianNGOs are still very much in the begin-ning stages of approaching commercialand corporate sponsors. For manyNGOs this is simply not seen as a viablestrategy yet, particularly in disadvan-taged regions where companies oftendo not have resources to spare. Finan-cial viability is very much a function ofregional economics.

An encouraging sign, however, is thatslightly more than 60% of NGO re-sources in Hungary do come from self-generated revenues, suggesting thatNGOs have developed the beginningsof a core base of support. The CentralStatistics Office reports that 11,000NGOs received funding through the OnePercent Program during the past year.

Another encouraging sign is that thenumber of individuals using the OnePercent Program has virtually doubled,from 1 million in 1997 to almost 2 millionin 2000.

Although only one third of the country'sNGOs are located in Budapest, theyhave almost two-thirds of the entiresector’s resources.

Provincial NGOs have made markedimprovement over the past year, how-ever. Unfortunately the greatest needsare actually outside of the capital city,which has a per capita GDP double thatof the nation as a whole. There is somedegree of consolidation occurring in thenon-profit sector as a result of the newNGO law and the withdrawal of foreigndonors.

ADVOCACY: 3.0

In certain areas, particularly minorityrights, rights for the disabled, etc.,NGOs are proving themselves to be ef-fective at making their positions knownand in working for change. These ef-forts can be very effective, particularly atthe local level and more NGOs shoulddevelop a policy development orienta-tion.

At the national level the picture is moremixed. A number of NGOs are moreand more willing to become players inparty-political issues, with formal or in-formal party affiliations increasinglycommon. This trend, should it continue,might harm the state of the sector as awhole.


Direct provision of services providesperhaps the best opportunity for NGOsto connect with their communities. Cur-rently NGOs are able to generate morethan 60% of their income from servicesprovided, and this proportion is growingas foreign donors reduce funding levels

in Hungary. Local and national govern-ments do provide a number of opportu-nities for normative support, normally forniche social services to those with spe-cial needs.


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Local governments are still wary of giv-ing funding to NGOs to provide servicesthat municipalities are legally mandatedto provide. This is not likely to change in

the near future. A complicating factor isthe fact that contracts signed by a mu-nicipal government and NGOs are oftenthrown out following election cycles.

INFRASTRUCTURE: 2.0

The Hungarian non-profit sector hasreached the point of maturity where astrong cadre of well-trained profession-als exists to provide consultative serv-ices to the sector, although it is rare thata smaller NGO can actually afford topay for such services. The GOH re-cently began funding a nation-wide net-

work of “Civic Houses”, built in largertowns across Hungary, which provideservices to local NGOs.

A certain degree of currently existinginstitutional infrastructure is supply-driven, and will likely not be sustainablewithout foreign funding.

PUBLIC IMAGE: 2.0

The impact of the “One Percent” legisla-tion and the 1997 NGO law are begin-ning to be felt: NGOs have begun un-dertaking concentrated efforts to informlocal communities of their activities. Thefact that the “One Percent” law hasproven to be rather popular with the

public at large suggests that perceptionsare generally positive.

One potential area of concern is thetendency of political parties to either in-vent or subvert NGOs to serve their ownparochial purposes.

KAZAKHSTAN

KAZAKHSTAN

Capital: Astana Inflation: 6%GDP per capita: $1,523 Unemployment: 3.7%Population: 15,400,000 Foreign Direct Investment: $800,000,000

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OVERALL RATING: 4.7

According to the Kazakhstan Ministry of Information, approximately 6,000 NGOs are of-ficially registered in Kazakhstan. However, according to the database kept by theCounterpart Consortium, only 800 of these are active. Many of the other registeredNGOs are dormant, or are quasi-NGOs created by government agencies. The NGOcommunity is fairly diverse, but certain parts of the NGO sector tend to be stronger.Ecological NGOs, for example, are fairly strong and are numerous. Historically, theywere the first to agitate for government accountability in the USSR in the mid- to late-1980s. While based among intellectuals, many ecological groups have become moreinvolved in grassroots work within communi-ties in recent years. Business and profes-sional associations as well as women’sgroups are also fairly numerous, as arehealth NGOs and groups working with dis-abled people. The civil society sector in Ka-zakhstan has been an invaluable arena forwomen's activism. Women head approxi-mately 70 to 85% of NGOs in the country,and a considerable number of organizationsare also comprised of female-dominantstaffs.

Since last year, the ability and willingness of NGOs to enter into advocacy projects hasincreased. NGOs have been involved in a successful independent monitoring campaignfor the parliamentary elections, local government de-centralization, NGO legislation, andgovernment contracting to NGOs for social services.

While these efforts have increased the visibility of NGOs in Kazakhstan over the lastyear, most NGOs in the country remain small organizations with very small membershipbases, limited community outreach, and poor networking and coalition building skills. Asa result, the NGO sector is still marginal in Kazakhstani society. This makes it all themore difficult for NGOs to lobby the government to create or implement legislation, whichwill help nurture the sustainability of the sector. In addition, most NGOs in Kazakhstancontinue to operate under the guidance of strong personalities rather than through de-centralized and democratic structures of organizational governance. While this may helpNGOs adhere to clear and cohesive strategies, it also limits the ability of stronger NGOsto take the next step towards becoming truly sustainable organizations based on a sta-ble and active membership and/or constituency.

Kazakhstan Overall Ratings

4.6 4.44.8 4.7

1

2

3

4

5

6

71997 1998 1999 2000


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Legally, NGOs face few formal difficul-ties in registering with the government.Legal advice is available in major citiesfrom both lawyers and other legal ex-perts. However, many NGOs, espe-cially those that are less developedand/or located in outlying regions, findthe current registration fee of $100 pro-hibitively high, even though this is lessthan what was previously required.

NGO operations vary significantly interms of the degree to which legislationis implemented. This in turn varies withgeography; enforcement is generallystrongest in Almaty and other urbancenters. On a positive note, the partici-pation of unregistered organizations isnow permitted.

NGOs engaged in advocacy campaignscontinue to experience harassment bylocal authorities, making good (or atleast working) relations with akims (re-gional governors) more important thanever.

NGOs currently enjoy few tax benefits,although grants from international or-ganizations are exempt. The lack of le-gal tax protection seriously underminesNGOs’ capacity to engage in revenue-generating activities.

The current draft of the proposed taxcode rolls back tax exemptions for NGOrevenue generating activities, therebyeffectively eliminating the NGO sector’sability to sustain itself. The draft legisla-tion also requires international grants tobe funneled through the Ministry ofPress and Social Harmony in order toreceive tax privileges. However, withthe active participation of the Interna-tional Center for Not-for-Profit Law, thedraft tax code has undergone severalrevisions favorable to NGOs. Blanketharassment by the tax police of NGOswith international partners or donors in-creased dramatically in August 2000 inAlmaty and Shimkent in an attempt tostrip NGOs of many privileges in thedraft Tax Code, which was then underconsideration.


In general, organizational capacity re-mains weak in Kazakhstani NGOs:many organizations have few members,and membership issues are not per-ceived to be necessary to obtain grants.This focus on grants, rather than organ-izational capacity-building, has also im-peded the formation of NGO coalitions.Some NGOs in Kazakhstan activelyseek to build constituencies among thebroader population. Most organizations,however, do not understand the impor-

tance of maintaining active ties to soci-ety, and seem unconcerned by the ab-sence of such links.

Despite technical advances such aswider access to modernized office andcommunications equipment, NGO staff-ing procedures remain underdeveloped.Poor levels of both volunteerism andclear internal governance proceduresexist in all but the strongest NGOs.


KAZAKHSTAN

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Many NGOs in Kazakhstan, exceptthose enjoying direct support from thegovernment, remain almost entirely de-pendent upon grants from foreign do-nors. This is problematic for severalreasons. International donors are lim-ited in number (inducing a competitive,rather than cooperative, intra-sectoraldynamic), and the year-to-year fundingcycles of international donors instill localNGOs with a sense of insecurity, hin-dering their ability to plan—much lessoperate—in mid- to long-range terms.Despite this, many NGOs, especiallythose outside of Almaty and Astana,work locally without contact with the in-ternational donor community. These or-ganizations survive “under the radar” ofinternational donors, with the support ofsmall businesses, local residents, and

membership fees. This is especiallytrue of organizations representing theinterests of ethnic groups and othertight-knit communities. The continueddegradation of the economic environ-ment outside of the main cities of Almatyand Astana, however, continues to takeits toll on regional NGOs’ financialbases.

Sound financial management systemsare being put in place in many Ka-zakhstani NGOs as the result of foreigntechnical assistance, foreign donor re-quirements, and the need to withstandincreasing scrutiny from state tax andother regulatory bodies. These systemsinclude realistic budgets and durableaccountability mechanisms.

ADVOCACY: 4.5

Only a small number of KazakhstaniNGOs have shown strong improvementin advocacy work, galvanized by the re-cent parliamentary elections in Ka-zakhstan. These organizations havedemonstrated both the inclination andability to engage in advocacy workbased on specific issues or broad re-form campaigns. These efforts havegenerated some notable successes.For example, the previous rape law wasrepealed and replaced, largely thanks toa lobbying campaign spearheaded byNGOs. Also, NGOs such as “Daytar”and the Center for the Support of De-mocracy were instrumental in forcing theparliament to postpone consideration ofa controversial draft law on self-government, and then to publish thedraft. In addition, a group of NGOsforged a successful independent moni-toring campaign for the parliamentaryelections, and have since turned theirattention to local government de-centralization. Finally, several NGOs

have been involved in drafting new NGOlegislation.

Despite a rise in the visibility of advo-cacy efforts, the vast majority of the Ka-zakhstani NGO sector, including envi-ronmental NGOs, has shown little or noimprovement in advocacy work. Net-working among NGOs has yieldedmixed results. Despite the existence ofthe Confederation of NGOs, the lack ofa unifying, nationwide agenda has im-peded coalition building. As a whole,NGOs engaged in advocacy work – par-ticularly those involved in


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political advocacy and lobbying – remainimmature in their development of advo-cacy skills. They also experience diffi-culty in changing their stance towards

the government from one based onconfrontation to one oriented towardspersuasion.


Despite a general weakness in constitu-ency building efforts, NGOs in Ka-zakhstan provide a broad range ofservices to local populations. Service-oriented NGOs tend to focus on sociallyvulnerable segments of the population.The Association of Diabetics, for exam-ple, represents a successful social part-nership forged between a service pro-viding NGO and local government. De-spite ongoing problems with NGOs’ability to monitor and track the effective-

ness of and demand for their services,there appears to be a general expansionof services provided by the sector. Thistrend is encouraged in some cases bylocal governments that view NGOs asan important supplement to govern-ment-provided services. In this, how-ever, there exists the danger that NGO-provided services may eventually sub-stitute, rather than supplement, the ef-forts of local governments and budget-ary organizations.

INFRASTRUCTURE: 4.5

The infrastructure supporting the Ka-zakhstani NGO sector appears to haveimproved somewhat over the past year.Training resources available to NGOshave grown over the past year, both interms of quality and geographic avail-ability. The weak link in terms of infra-structure is the inability of local grant-making organizations to function. Local

community foundations and ISOs havebeen incapable of raising local fundsand redistributing international donorfunds. NGO networks exist, but theircooperative efforts have been limitedprimarily to information sharing, ratherthan mounting coordinated advocacycampaigns or resource management.

PUBLIC IMAGE: 4.5

The public image of NGOs in Ka-zakhstan has not changed appreciablyover the past year. While NGOs slowlyexpanded their public relations activities,such as outreach to media, their failureto create a positive perception of NGOsamong government officials and busi-ness sector representatives continue tostunt the sector’s activities. Perceptionsamong government officials tend to beespecially negative towards NGOs in-volved in political advocacy campaigns.

Relations between NGOs and journal-ists have improved slightly. Althoughthe work of NGOs does not appear inthe national media as much as manywould like, NGOs do appear on televi-sion and in newspapers. The degree towhich an NGO is covered in the mediais a function not only of the political cli-mate or the media’s attitude towards theNGO sector, but also of the NGO’s ef-forts to actively interface and cultivategood relations with media outlets.Some NGOs seem to have reduced

KAZAKHSTAN

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their outreach efforts after initial at-tempts to make inroads with the mediahave failed.

The public at large remains relativelyskeptical and/or ignorant of NGOs.Many view NGOs as vehicles for ad-vancing the interests of narrowly definedeconomic and political elites. This is

especially true of NGOs with ties to po-litical figures. In many cases, this prob-lem of public perception is related atleast in part to the failure of NGOs toactively establish channels of communi-cation with the public. Bulletins andnewsletters produced by NGOs, for ex-ample, are not distributed widely.


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KOSOVO

OVERALL RATING: 4.6

Civil society in Kosovo benefits from a strong history, as Kosovar society provided itselfwith social, cultural and basic community services over the past ten years through alargely voluntary civil society system. As a result, NGOs in Kosovo enjoy a largely posi-tive public image.

There are currently over 400 local NGOs registered in Kosovo, although it is estimatedthat less than 100 of these are truly active. These figures reveal the significant divide inthe Kosovar NGO sector between a few well-established and capable organizations, thatmostly began operations before the war,and the large number of less developedorganizations that have formed since thewar, often in response to the availability ofdonor funding. This dilution has dimin-ished the overall effectiveness and publicimage of the NGO sector.

The NGO sector in Kosovo benefits from afavorable legal environment that largelyadheres to international best practices.However, other types of infrastructure – including a cadre of capable local trainers andlocal sources of funding – are necessary to increase the sector’s sustainability and ef-fectiveness.


Since November 1999, local and foreignNGOs in Kosovo have operated underthe provisions set forth in UNMIKRegulation No. 1999/22 on the Regis-tration and Operation of Non-Governmental Organizations in Kosovo.Administrative Direction No. 2000/10,signed on May 9, 2000, clarifies the im-plementation of this Regulation.The regulation and administrative direc-tion are largely based on internationalbest practices and establish a favorable

legal environment for NGOs. Consistentwith civil law traditions, the regulationpermits the establishment of both asso-ciations and foundations, which may beestablished for either public benefit ormutual interest. In addition, the regula-tion also recognizes that individuals havethe right to associate without forming alegal entity. Registration is simple, andUNMIK has limited authority to deny reg-istration. Associations and foundationsare allowed to engage in economic activi

Capital: Pristina Inflation: n/aGDP per capita: n/a Unemployment: n/aPopulation: n/a Foreign Direct Investment: n/a

Kosovo Overall Ratings

4.4 4.6

1

2

3

4

5

6

71999 2000

KOSOVO

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ties to support their purposes. In ex-change for exemptions on customs dutiesand excise and sales tax on importedgoods, organizations with public benefitstatus must submit an annual report with programmatic and financial informa-tion.

Although NGOs operate under a favor-able NGO law, there is limited under-standing of the law among both localNGOs and local lawyers. There are cur-rently efforts underway to establish a lo-cal organization focused on NGO legalissues and to introduce a course on NGOlaw in the law school to address this defi-ciency.


The NGO sector in Kosovo consists of afew experienced and sophisticated NGOsthat have been operating since before thewar, and a large number of NGOs thathave formed since, in part to meet theneeds of the large community ofinternational develop-ment and reliefagencies operating in Kosovo. There is awide gap between the level oforganizational capacity between thesetwo groups. Several experienced andestablished NGOs have developed strongand loyal constituencies, clear missions,and strategic plans. The majority ofNGOs, however, are more likely to designtheir initiatives in response to donorinterests and priorities. Hundreds ofNGOs have been created in response todonor announcements of grant programs,and then cease operations when fundingends or fails to materialize. StrongerNGOs have permanent, high quality staff,but smaller NGOs are more likely to hirestaff on a temporary basis to fulfill theneeds of particular projects.

A further problem faced by all NGOs isretaining experienced NGO activists, asmany have accepted jobs withinternational agencies that can offer

higher salaries. The level of technicaladvancement within the NGO sectoralso varies widely. Organizations thathave been successful at attracting donorfunds have solid technical bases, whileothers do not have access to even themost basic equipment. However, whileaccess to computers and the Internet isa particular problem for NGOs in smallercities and in rural areas, the situationhas improved dramatically since thewar.

Over the past decade, volunteerism wasprevalent in Kosovo, as the Albaniancommunity provided itself with social,cultural, and basic community services.Although volun-teerism is still relativelyhigh, the number of active volunteers hasdropped over the past year.

Internal management structures remainweak, with most NGOs dominated by asingle dynamic leader. NGOs must havea board of directors to register; however,few organizations have defined roles foror effectively utilize their boards, and inmany cases, staff members also serve asboard members.


Although there is a long-standing historyof community support for civil societyinitiatives in Kosovo, the NGO sector

relies heavily on foreign donors forfinancial support. The local economy hasextremely limited capacity to provide


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financial support to NGOs, and evenvolunteerism is declining.

Existing legislation does not place anylimitation on NGO capacity to compete

for government (i.e. UNMIK) contractsand procurements, but such com-petitionis rare. Some NGOs have started tocharge fees for the services they provide,but this is still an uncommon practice, asmost of their target beneficiaries can notafford to pay for the services they receive.

In general, NGOs lack sound financialmanagement systems to track the use oftheir funds.

ADVOCACY: 4.5

Local NGOs have little experience inadvocating for policy change. Over thepast ten years NGOs had no contact withthe government and there are currentlylimited traditional governmental entitieswith whom NGOs can communicate.Furthermore, the NGO sector is generallymore comfortable with the role ofopposing the government, rather thanlobbying the government to implementspecific policies.

Despite these obstacles, NGOs generallyhave good lines of communication withUNMIK and OSCE, both of whom consultwith NGOs on a variety of policy issues.Local NGOs were actively involved in

reviewing and commenting on UNMIK’sNGO regulations, as well as the natureand content of reporting for publicbenefit organizations. NGO coalitionsexist in the areas of election monitoringand women’s issues.

Some NGOs played a role in localelections in Kosovo in October 2000, bothas observers and in educating the publicabout candidate platforms. As localgovernment structures evolve, NGOs willneed to develop the capacity tosuccessfully participate in public policydebate and decision making with thesestructures.


In the absence of support and servicesfrom the Serbian government, Kosovarcivil society has been active in providinghealth services, education, protection ofhuman rights and other public servicesover the past decade. While numerousorganizations remain active in the field ofservice provision, the influx ofinternational organizations with missionsto provide such services has reduced thenumber of local organizations involved inthis sphere. This disempowerment oflocal groups raises serious questions

about the provision of needed socialservices once international groups start topull out of Kosovo.

There is wide discrepancy in the ability ofNGOs to produce goods and servicesthat reflect community needs andpriorities, but many establishedorganizations regularly conductassessments to ensure that their projectsrespond to local realities. Furthermore,local NGOs serve as a valuable source ofinformation about community needs for

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international organizations. However,several local NGOs report thatinternational NGOs often developprojects based on local groups’ ideas oruse their contributions withoutrecognizing their participation. The abilityof local NGOs to provide high qualityservices is also diminished by the “braindrain” that is taking place, as talentedNGO leaders accept positions withinternational organizations.

While UNMIK is favorably disposed tolocal NGOs, there are no establishedprocedures for government structures toprovide grants or contracts to NGOs todeliver services. NGOs also have adifficult time recovering costs for theservices they provide, given thedevastating local economic situation.

INFRASTRUCTURE: 5.0

The OSCE has been actively trying todevelop an infrastructure to support thedevelopment of the NGO sector inKosovo. This has included thedevelopment of a network of sevenNGO resource centers and theestablishment of an NGO assembly, ledby an Executive Council. Unfortunately,these initiatives have had limitedsuccess to date. The services offeredby the NGO resource centers are largelylimited to access to space for meetings,office equipment, and modest libraries.The sustainability of these centers is aserious cause for concern. Likewise,the Executive Council has had limitedeffectiveness, as many of the larger andmore established NGOs have chosennot to participate in it.

Local NGOs have had some success atbuilding structures for sharing

information and promoting cooperation –both within the sector and withbusinesses and government agencies.NGOs operating in the field of women’srights have been especially effective atnetworking, and have formed a strongcoalition. A coalition also exists fororganizations involved in electionmonitoring. In addition, local NGOcouncils exist in two towns.

Two local organizations – the KosovoCivil Society Foundation and the KosovoFoundation for Open Society – providegrants to local groups. Both of thesegroups rely on international donors fortheir funds. While there are some localtrainers, their level of skill remains low.As a result, foreign trainers lead most ofthe training sessions taking place inKosovo.


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PUBLIC IMAGE: 4.0

NGOs in Kosovo developed a positivepublic image before and during the war.While this image has largely remainedintact, the recent development of op-portunistic and ineffective NGOs, as wellas businesses registered as NGOs totake advantage of tax exemptions, hastarnished this image somewhat. How-ever, both UNMIK, essentially the onlygovernment operating in Kosovo, andbusinesses generally respect NGOs asa sector.

The level of media coverage of NGOactivities varies by organization. Sev-eral large, well-known NGOs enjoy al-most daily coverage. On the otherhand, other organizations, particularlywomen’s groups, receive very little me-dia attention. Part of the reason for this

is a poorly developed understanding ofpublic relations and NGOs’ responsibilityto inform the media and the public oftheir work.

Self-regulation is still a relatively newconcept in Kosovo. While manyorganizations express an interest inbeing open and transparent, none haveadopted codes of ethics or publishedannual reports. However, the UNMIKregulation governing non-profits requiresthose with public benefit status to fileannual reports, with the first reports duein November 2000. The reports will beaccessible to the public, and are hopedto increase transparency andaccountability within the NGO sector.

KYRGYZ REPUBLIC

KYRGYZ REPUBLIC

Capital: Bishkek Inflation: 10%GDP per capita: $382 Unemployment (1997): 3.2%Population: 4,700,000 Foreign Direct Investment: $64,000,000

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OVERALL RATING: 4.3

Approximately 2,000 NGOs are officially registered in Kyrgyzstan. However, according tothe database kept by Counterpart Consortium, there are about 1,060 active NGOs in thecountry. Many of the other registered NGOs do very little, or are quasi-NGOs created bygovernment agencies. The NGO community is fairly diverse, but capacity is unevenlydistributed among NGOs, with those en-gaged in apolitical service provision suchas in the health or consumer protectionspheres for example, generally stronger.

The past year has witnessed the increasedinvolvement of Kyrgyzstani NGOs in thepolitical arena. While this is largely a posi-tive development, increased political in-volvement has also led to a highly con-tested sector that is politicized internallyand that is under great pressure from theGovernment. These developments stemmainly from the NGO community’s activism during and since the flawed parliamentaryelections. It is unclear how this increased involvement will affect the Kyrgyzstani NGOsector in the long run. In the meantime, the sector faces the challenge of the up-comingpresidential election. In the best case scenario, developments in the political sphere willpush the NGO sector toward increasing maturity, unity, and consolidation; but increasedpolitical participation may also lead to fragmentation in the short-term. At present, Kyrgyzstan’s NGO sector is the most advanced in Central Asia. NGOs haveemerged throughout the country, and a few national organizations even have localbranches. NGOs exist in numerous sectors including advocacy, elections monitoring, ag-ricultural and business development, health care, disability support, consumer protec-tion, and women’s rights.

The largest problems facing the NGO sector in Kyrgyzstan are rooted in issues of or-ganizational and financial sustainability. Most NGOs are run by strong personalities whomicro-manage the organizations’ activities. While this may provide short-term coherencyand effectiveness in the implementation of activities, it also limits the ability of NGOs toplan for their continued existence beyond the present leadership. It also limits the abilityof NGOs to reach out to a large membership and/or constituency. Financially, NGOgrowth is constrained by tax legislation that taxes any commercial activity performed byan NGO at the same level that businesses are taxed, regardless of what the income isused for. Furthermore, the poor economic environment in Kyrgyzstan provides little hopefor increased local financial support for NGOs.

Kyrgyzstan Overall Ratings

4.6

3.94.2 4.3

1

2

3

4

5

6

71997 1998 1999 2000


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Despite the passage of a new NGO lawin October 1999, the legal environmentfor NGOs in Kyrgyzstan has degradedappreciably over the past year, and re-mains tenuous at best. In the wake offlawed parliamentary elections and inthe run-up to a presidential election thathas already seen the suppression ofopposition candidates, the NGO sectorhas become dangerously politicized. Forsome NGOs, in particular those orientedaround political advocacy or electoralissues, this largely reflects the activedegradation of relations between thegovernment and NGOs. In a departurefrom its prior policies of restraint, thegovernment has begun to manipulatevarious levers, such as the state media,government-sponsored or government-sympathetic NGOs, and the registrationprocess to harass NGOs with politicalagendas that are seen as antithetical tothe government.

Other apolitical NGOs have also beenaffected by the politicization of the legalenvironment. This politicization hascaused a cooling in the government’sattitude towards the sector in general.Implementation of the NGO law remainsproblematic, and the application of for-mal registration procedures is ad hoc. Ingeneral, stronger NGOs with higher pro-files encounter more impediments in theregistration and re-registration proc-esses.

Although most lawyers have little knowl-edge specifically about NGOs, legal ad-vice is readily available and provides thesector with a certain capacity to defendits interests and engage the formal legalregime. There are no restrictions on in-come generating activities for NGOs,but taxation remains a problem becausetax authorities do not distinguish be-tween not-for-profit organizations andfor-profit companies.


The organizational capacity of the NGOsector in Kyrgyzstan has not changedappreciably over the past year. ManyNGOs have moved beyond grant-to-grant thinking, and demonstrate an un-derstanding of the need for strategicplanning and sustainability. NGO staff-ing has also improved. Despite this,problems remain in creating the condi-tions necessary for NGO sustainability.Volunteerism, for example, is not popu-lar or commonly encouraged amongNGOs. Similarly, NGOs in Kyrgyzstan,by and large, do not have stable con-

stituencies. This reflects the need for re-liable and proven constituency buildingtechniques. Nevertheless, the NGOmovement and community in Kyrgyz-stan are growing.Governance problems continue to hin-der the growth and activities of the NGOsector. In particular, internal manage-ment structures such as boards of di-rectors are poorly defined. Furthermore,instances of nepotism have been notedin some NGOs, further hampering boththeir growth and effective management.


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Financial viability remains problematicfor NGOs in Kyrgyzstan, as evidencedby the lack of change from last year’sscore. Kyrgyzstani NGOs scored par-ticularly low on the financial manage-ment systems indicator, reflecting thesector’s inability to develop reliable ac-counting and budgeting mechanisms.The absence of these mechanisms notonly retards organizations’ ability to ef-fectively use the funds at their disposal,but also impedes broader engagementwith the international donor community.

The Kyrgyzstani business communityhas shown some willingness to invest insocial activities and to provide a certainamount of funding to local NGOs. Incertain areas, local companies haveprovided significant operating funds forlocal NGOs. However, improvements inlegislation are required to strengthen

these funding relationships. For exam-ple, the current tax code allows privatecompanies to contribute no more than5% of their income to NGOs tax-free,effectively limiting private-sector contri-butions by penalizing larger contribu-tions. Furthermore, there is no databasethat local commercial donors can use toidentify potential recipients.

Given the increasing politicization of theNGO operating environment, it is im-portant for NGOs to understand theneed for “neutral” money from nonpoliti-cal sources. Overall, however, financialviability of Kyrgyzstani NGOs primarilydepends on international donors. Simi-larly, international donors remain themain forces for improving the organiza-tional capacity and financial account-ability of local NGOs.

ADVOCACY: 3.5

Advocacy remains the strongest ele-ment of the Kyrgyzstani NGO sector.NGOs have demonstrated the capacityand willingness to engage in advocacywork and in particular to promote policy-focused advocacy initiatives. ManyNGOs have considerable experience incoalition-building and political lobbying.In the recent electoral environment, anumber of Kyrgyz NGOs collaborativelypressed for free and fair elections at thenational level.

Government acceptance of NGO advo-cacy remains mixed. Outright politicallobbying by independent NGOs—in par-ticular by those viewed as hostile to thecurrent government—has prompted aconcerted negative response by thegovernment. This response has in-cluded administrative pressures as wellas attempts to influence the NGO sectorthrough government-supported or gov-ernment-organized NGOs (GONGOs).These attempts to co-opt the NGO sec-

tor, while ominous, indicate that top po-litical leaders understand the importanceof NGOs and civil society. By one esti-mate, of the more than 2,000 NGOs inKyrgyzstan, almost half are either sym-pathetic to the government or are out-right GONGOs.

The government has not actively un-dermined advocacy and lobbying effortsby non-political NGOs. Organizationssuch as the Association for the Protec-tion of Consumers’ Rights play an activerole in advocating for the rights of mem-bers and constituencies. They have ex-perienced some successes. In one in-stance, complaints against a Bishkek-area dry cleaner were taken up by theAssociation, which caused governmentagencies to discipline the business inquestion and compensate consumersfor damaged clothing items. Other serv-ice provision NGOs, such as those pro-viding health or drug addiction services,do not generally encounter active resis


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tance from the government, althoughthe persistent ignorance of legislationand Soviet-style administrative proce-

dures and attitudes continues to be aproblem.


Overall, the Kyrgyzstani NGO sector’scapacity for service provision decreasedover the past year. Diverging tendenciesexist within this aggregate score, how-ever. Measured as a function of theNGO sector’s range of goods and serv-ices, community responsiveness, andconstituencies and clientele, serviceprovision actually increased from 1999to 2000. Poor scores in the ability topromote cost recovery schemes and togain government recognition and sup-port more than negated these advances.

Cost recovery by NGOs in Kyrgyzstan

remains poor for several reasons. ManyNGOs lack the experience and under-standing of market realities needed toseriously engage in cost recovery andincome-generation efforts. Marketingefforts, without which broader outreachto both local communities and interna-tional donors is unlikely, are largelylacking. Also, fee-for-service programsoffered by NGOs often cannot competewith “bad but cheap [or free]” govern-ment services, given the continuing de-terioration of the broader economic cli-mate.

INFRASTRUCTURE: 4.0

NGOs in Kyrgyzstan benefit from someof the most highly developed supportinfrastructure in Central Asia. In terms ofinfrastructure development, the sectorshowed improvement over its already-significant 1999 score. This progressbecomes even more dramatic if localgrant-making capacity, which remainsweak throughout the country and mostof Central Asia, is not considered.

A stable support infrastructure exists forNGOs in Kyrgyzstan, including interme-diate support organizations (ISOs) andNGO resource centers. This networkconsists of resource centers and ISOsfunded by various agencies (includingUNHCR), and is centered on the sevenUSAID-funded Counterpart Consortium

Civil Society Support Centers in differentregions of the country. The resourcecenter network provides access to basicoffice equipment and space, and, in-creasingly, access to important commu-nications technology, such as the Inter-net. Also, local ISOs and NGO resourcecenters sometimes serve as clearing-houses for local contract trainers. Fur-thermore, an NGO coalition exists, al-though NGOs have encountered diffi-culty in moving beyond the mere sharingof information into broader nationwidecoordination efforts. In particular, multi-organizational governance has provenimpossible, as NGOs in Kyrgyzstanhave proven reluctant to accede to na-tionwide coordination boards.

PUBLIC IMAGE: 4.5

NGOs are generally afforded wide coverage in the Kyrgyzstani mass media. In

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particular, NGOs focusing on issues ofsocial importance have been widelycovered by the media. However, mostNGOs fail to publicize their work, partlydue to a lack of resources in local com-munities and partly due to ignoranceabout the power of marketing. ManyNGOs do not actively promote a positiveimage of themselves: very few haveadopted ethical codes, and generallyonly larger NGOs publish annual reportsthat allow the public to familiarize itselfwith the their work.

In the wake of the flawed parliamentaryelections, and in the contentious politicalatmosphere attending the approachingpresidential elections, the state-controlled media and a number ofGONGOs have mounted a campaign todiscredit certain independent NGOs withagendas that are seen as antithetical tothe government. The poor quality ofjournalism, especially in outlying regionsof the country, is a constraint to NGOs’abilities to improve their public image.


Page 101

LATVIA


The NGO sector in Latvia is strengthening slowly. The state has begun to recognizethe benefits of delegating responsibilities to NGOs, but rarely allocates resources tofulfil these responsibilities. Politicians have recently begun to comprehend the im-portance of favorable legislation for NGOs to fulfil their mission, but even NGO activ-ists have not fully recognized their potential or the role that they could have in shap-ing the sector. NGOs often see others in the sector as competitors and co-operationbetween organizations is limited.

NGOs have been established representing almost all segments of society and tar-geting all demographic groups from children to the elderly, on issues ranging fromsocial care and environmental protection to cultural affairs and education. AlthoughNGOs exist throughout the country, the sector is strongest in the capital Riga and thelargest cities.

Despite the best of intentions, most NGOs in Latvia disband shortly after their found-ing due to their inability to attract volunteers and secure funding. Over 5,000 NGOsare officially registered in Latvia, but according to the database kept by the NGOCentre in Riga, only about 1,500 are considered active.


The registration process for NGOs inLatvia is fairly easy. Organizations mustpay a fee that is deemed to be quitehigh and could be considered restrictive,but it is not a deterrent for most organi-zations. All NGOs must register in Riga,so organizations must travel to thecapital to complete their paperwork.

Existing legislation allows NGOs tofunction, but the laws on financing andaccounting are both complex and dis-heartening for NGOs. The legal andregulatory environment is not conduciveto promoting the non-profit sector andthe work of non-governmental organiza-tions. The process of obtaining tax ex-

empt status is confusing and often arbi-trary, and tax deductions are difficult toobtain. The granting of tax exemptstatus is not entirely transparent. Six or-ganizations have a special status thatallows 95% of their donations to be taxdeductible, whereas all other registeredNGOs are entitled to only an 85% de-duction. The certification process for taxdeductibility must be undertaken annu-ally and can last a number of months,which means organizations enjoy theirstatus perhaps for only a few months ayear.

The issue of VAT (value added tax) isalso a potential conflict for NGOs. Cur

Capital: Riga Inflation: 3%GDP per capita: $2,512 Unemployment: 13.8%Population: 2,400,000 Foreign Direct Investment: $150,000,000

LATVIA

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rently, if an NGO receives more than aspecified amount in earned income, theymust pay VAT at the standard rate. Ad-mittedly, the ceiling amount is highenough that VAT is not an issue formost NGOs. Funds received from do-nors in the form of grants or stipends forindividuals are currently subject to all in-come and social taxes, slightly over50% of the amount received, therebyreducing the grant amount by half.

Existing laws offer NGOs basic protec-tion from state interference without justi-fication, and include basic requirementsfor the structure of an NGO, such as re-

quiring a board of directors and definingits functions.

The local legal capacity for the NGOsector is negligible at best. A number oflawyers are available in Riga to servethe NGO sector, but few serve the re-gions. In general, lawyers are not inter-ested in working in the non-profit sectorbecause of the lack of personal remu-neration and because non-profit law isnot taught as part of the law school cur-riculum. Also, the societal mentality isthat lawyers cost too much money;therefore, many NGOs shy away fromusing their services.

ORANIZATIONAL CAPACITY: 2.6

The laws in Latvia make registering anNGO easy, but operating the organi-zation difficult. An NGO can registerwithout much thought or effort and of-ten the organization needs only threepeople who serve as both the boardand staff. Co-ordination among or-ganizations with similar missions israre, as they view each other as com-petitors for limited resources, and aretherefore often not willing to co-operate for the common good.

According to a survey conducted bythe NGO Centre, 82% of Centre cli-ents said that they have a missionstatement, and 58% said that they en-gage in strategic planning. While manyorganizations may have developed amission statement, few have the or-ganizational capacity to fulfill theirstated mission, or complete their stra-

tegic plan. The political environment isfavorable, and organizations certainlymake an effort to succeed, but there isa lack of relevant training for NGOs.

The largest, most sustainable NGOshave boards of directors with a clearseparation between their governancefunction and staff. The majority of or-ganizations, however, are still in thebeginning stages of developmentwhere board and staff responsibilitiesoften rest in the same individuals.

Most NGOs do not have any technicalequipment, and most of those that doreceived the equipment as part of agrant. Most organizations do not havethe resources to purchase equipment,and those that have some technicalequipment cannot afford to upgrade orto replace existing resources.


Approximately 80% of all financial re-sources received by NGOs come fromoverseas rather than domesticsources. Even international support,however, has been sporadic and lim-ited. International donors are more in-

clined to fund the creation of a newNGO rather than assist an existing or-ganization to continue functioning. Thefunding base for Latvia’s NGOs is notdiversified, and organizations usuallyrely on only one or two sources for


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funding. NGOs tend to ask one donorto fund an entire project, rather thanapproaching multiple funders to par-ticipate. In the regions, local govern-ments often match 50% of funding fora local NGO.

NGOs for the most part, have imple-mented proper basic accounting tech-niques. They are often unable to en-gage in financial planning, however,

because they do not see the biggerpicture and do not often know whattheir real costs of operation are.

Earned income is not a significant partof most NGOs' operations. ManyNGOs are working to find ways togenerate their own income, but, busi-nesses often see such NGOs as unfaircompetition.

ADVOCACY: 3.0

NGO co-operation with local govern-ments is effective, but co-operationwith the federal government is not. Anumber of lobbying organizations,modeled on the US style of lobbying,have begun to operate within the lastyear. Most of these groups are mem-bership organizations, composed ofbusinesses with a stake in pendinglegislation.

The absence of non-profit advocacygroups is due to a lack of effort on thepart of NGOs and a lack of specializedadvocacy skills. Latvian NGOs do notform coalitions, because they oftenbelieve that they are competingagainst one another.

The sector has succeeded in ensuringthat all draft laws are available for re-view on the Internet, during all phasesof governmental deliberation.

Public awareness of the sector’s im-portance is increasing due to exten-sive coverage of the sector's activitiesin the largest daily newspapers. Thebusiness and public sectors are finallybeginning to understand the conceptsof philanthropy and volunteerism, butNGOs still do not yet fully understandthe importance of sectoral develop-ment.

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NGOs in Latvia cover all regions of thecountry and support all demographicgroups. Other than trade unions, fewof these organizations are member-ship-based so most NGOs focus theiractivities on the wider public. If organi-zations do not succeed in effectivelyspreading their message, the problemmost often lies within the organization.Many groups do not know how to pub-licize themselves.When NGOs provide services, theyrecover only a small percentage, ifany, of their costs, and donors oftendo not provide funding for administra-tive expenses. As an example, theNGO Centre recovers only 10% of itscosts for conducting training and edu-cation seminars.

When an international donor providessupport for a project, the organization

is usually barred from charging for itsservices. Such a policy tends to de-feat the NGO’s drive towardssustainability and makes the organiza-tion dependent on donors for its exis-tence. If the service, such as a semi-nar, is provided for free, the partici-pants are not always fully engaged,and tend to treat attendance lightly.

The framework for legislative supportof the sector is in place, but the stateoffers little financial support to NGOs.The conditions and environment arefavorable for state support, but the na-tional government cannot give NGOsfinancial resources because it doesnot have the resources to give, exceptperhaps a limited amount of in-kindsupport.

INFRASTRUCTURE: 3.0

Latvia has a network of 14 RegionalNGO Support Centres throughout thecountry that provide information andservices to NGOs. The centers do notrecover the cost of the services theyprovide. The NGO Centre in Riga ispreparing to develop a pilot communityfoundation, but no legislation exists togovern the operation of communityfoundations.

In general, coalitions of NGOs do notexist. A limited number of networkswithin mission-areas have formed, butNGOs lack the motivation to develop

an extensive network. NGOs are bet-ter adept at developing intersectoralpartnerships with businesses and thegovernment than they are at develop-ing intrasectoral partnerships withother NGOs.

Latvia has a large number of trainersand training opportunities, but themajority of training is at a basic level.A multitude of training options existsfor fledgling NGOs, but few such op-portunities exist for mature NGOs.Training materials are available in Lat-vian, English and Russian.


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PUBLIC IMAGE: 2.0

The media is usually willing to writeabout the sector if NGOs provide qualityevents to write about. Therefore, cover-age is positive, but limited. The largestdaily national newspaper has a publicservice advertising program, but mostlocal newspapers do not have such astructure.

Public perception of the NGO sector ismixed, but mostly positive. NGO rela-tions with the government could be im-proved, because if the government isaware of the sector at all, it sees NGOs

as competition for limited resourcesrather than as an ally in developing acivil society.

NGOs do not have a printed code ofethics, but those who receive funds frominternational donors are required to ad-here to transparency in their operations.Most NGOs do not publish annual re-ports because of the expense, and if anorganization has received funding, it isnot likely to share the information withothers.

LITHUANIA

LITHUANIA

Capital: Vilnius Inflation: 2%GDP per capita: $3,040 Unemployment: 6.4%Population: 3.700,000 Foreign Direct Investment: $400,000,000

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The legal framework provides Lithuanian NGOs with the basic elements necessary fordevelopment of the sector, but improvements in a number of areas are necessary.NGOs are becoming more professional, are developing their organizational capacities,and are engaging in more concertedoutreach to constituents and officials alike.Public relations and improving the qualityand availability of NGO services is receivinggreater emphasis. Limited financialresources are a major constraint for NGOs,exacerbated by obstacles to carrying outcommercial activities and insufficienttraditions and local resources forphilanthropy.


The legal environment and thelegislative framework for NGOs inLithuania have not improvedsignificantly during the past couple ofyears. NGOs do not have majorproblems registering or conductingbasic activities, but the legislativeframework under which they work isgenerally considered to be tooprescriptive, relatively ambiguous andoverlapping. Current NGO laws inLithuania recognize four types ofNGOs: two types of membership-basedNGOs ("societal organizations" and"associations"), and two types that areproperty-based ("charity andsponsorship funds" and "publicinstitutions").

Two positive recent developmentsinclude the final legislative approval ofamendments to the Law on Charity andSponsorship for NGOs, which covers

philanthropy, and an amelioration of thelegal restrictions on volunteerlabor/activity. Unfortunately, significantissues remain concerning implementationof these and other legal provisions.

With the support and assistance of theinternational donor community, NGOs aresuccessfully engaging govern-mentalauthorities on both the national and locallevels. Officials have become more awareof the legal needs of NGOs, and arebecoming more open to the involvementof NGOs in efforts to revise the legalframework that governs their activities. Atthe initiative of a leading group of NGOs,the Prime Minister has created aPermanent NGO Commission, which isintended to serve as a consultativemechanism. Progress, however, hasbeen slow. The Ministry of SocialSecurity and Labor continues to beactively involved in NGO legal affairs, and

Lithuania Overall Ratings

4.0

3 2.9 3.1

1.0

2.0

3.0

4.0

5.0

6.0

7.01997 1998 1999 2000

2000 NGO Sustainaibilty Index

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a number of municipalities are workingmore closely with NGOs in this area.

In theory, NGOs have the capacity tobid on contracts for social servicesprovided by Municipal authorities, butthe absence of legal mechanismsleaves grants as the preferredalternative. Mini-courses on NGO lawhave been given to law students inLithuania’s second city, Kaunas, and alegal clinic has been opened at VilniusUniversity, which may in the futureprovide services to NGOs. However,the number of lawyers trained in andfamiliar with NGO law is both limitedand concentrated in the cities, and fewNGOs can afford their services.

Most obstacles to the registration andoperation of NGOs are bureaucratic innature, and can be overcome. Financialissues are another story. Most NGOs areprohibited from directly performingeconomic activities, and theestablishment of subsidiaries for thispurpose is problematic. Tax laws arecomplicated, do not sufficientlydistinguish NGOs from for-profit entities,and are strictly enforced. NGOs areexempt from taxes on charity and supportthat they receive, and can often get VATreimbursed. They are also entitled to apreferential lower rate of tax on income.When legal entities give charity orsponsorship in an amount up to 20% oftheir profits, they are entitled to deductdouble this amount, but there arecomplications in practice. Individuals can,in theory, receive an income taxconcession of up to 100%, but becausemost taxes are deducted directly by theemployer, there are no mechanisms totake advantage of this possibility.


Many of the more prominent and activeNGOs are aware of their organizationaland management needs, and are ableto obtain appropriate local training tostrengthen the organization and pro-mote sustainability. NGOs understandthat professionalism yields betterresults.

Major NGOs often have all of thecomponents of a sound institution, suchas a board of directors, volunteers, andpaid staff. Many NGO representativeshave had training in strategic planningand fund raising, and have definedmissions and financial goals. LargerNGOs have professional financialmanagement staff, performmonitoring/oversight, and pay attention totheir financial reporting systems.

Several donors have worked to increasethe level of training and technicalassistance available to NGOs. There isnow a small cadre of capable Lithuaniantrainers who are fully able to train NGOleaders, if and when funding for theirservices is available. Most NGOs are notable to afford to pay for such serviceswithout donor support. More readilyuseful are the informational and trainingmaterials now available in the Lithuanianlanguage.

The level of professionalism andexperience among people involved inNGO activities is continuing to increase.There are more volunteers interested inNGO activities, and they are oftenbetter educated, despite the legalobstacles that, if taken literally, requireNGOs to pay social services taxes onthe market value of volunteer labor

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received. Most major NGOs have basicmodern office equipment at theirdisposal, such as computers and faxmachines, and access to the Internet.

Most small and local NGOs still do notrealize that business-like management iscrucial for success. Consequently, theyare often reactive rather than proactive.Boards of directors and volunteer

programs do not function as efficiently asthey should. These NGOs face manage-ment and organizational difficulties.Further, they often do not have access tomodern technology, except through NGOsupport centers. These conditionsincrease the level of isolation of NGOsoutside of the major urban centers, andreduce their efficiency.


The financial challenges facingLithuanian NGOs continue to increase.Several major government andinternational donor sources havereduced their budgets. The economicclimate is uncertain and only slowlyimproving. On the positive side, NGOsare working to diversify their fundingsources to include more local andnational government and privatesources, in addition to internationaldonors. Local governments arebecoming more aware of the financialneeds of local NGOs, and the ways thatNGOs can use public financing toprovide services.

However, financial resources are usuallylimited, and funding can be inconsistent

or intermittent. Much funding still comesfrom foreign donors, which means thatactivities are too often donor-driven andmany donors are reducing their supportfor Lithuanian NGOs. Due to budgetaryproblems, the Lithuanian government hassignificantly reduced or at least delayedits financial support for NGOs.

The prohibition of direct commercialactivities is a major constraint to raisingrevenues, and establishing for-profitsubsidiaries is no simple matter.Continuing practical obstacles tovoluntary labor limit an important sourceof support, namely the time and energy ofinterested individuals. Finally, the lowvolume of personal and corporatephilanthropy is extremely problematic.

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ADVOCACY: 2.0

Public policy advocacy has become aworking concept for many NGOs. Thedialogue between NGOs and governmentinstitutions is continuing to broaden andbecome more open and constructive.Seminars and conferences involving theNGO community and government officialshave become more frequent. On thenational level, the Parliament modified itsrules to allow open hearings concerningdraft legislation, and NGOs now provideinput to parliamentary committees on aregular basis. There are a number ofconcrete examples of NGOs influencingthe final content of laws. On the municipallevel, NGOs and coalitions of NGOs(sometimes formal but more ofteninformal) are having frequent interactionswith officials, and influencing policy

development and regulatory anddecision-making processes.

Not all government institutions recognizethat NGOs possess considerableexpertise to assist them in draftinglegislation, implementing programs andproviding services. Some institutionshave yet to acknowledge NGOs as activepartners in the decision-making process.

Information concerning governmentalprocesses and draft legislation, whilemuch more accessible, is still notwidespread. Many NGOs, particularly inrural areas, are simply unaware of thepossibilities that now exist, and how totake advantage of them.


Recent legislative changes have intheory made it easier for municipalgovernments to award funding toNGOs for providing social services.Municipal authorities are becominginterested in working with NGOs toprovide services to their constituents,although the absence of implementingmechanisms creates a serious con-straint. While the types of servicesprovided has tended to be narrow,there are signs that the variety andcoverage of NGO services is growing.NGOs are developing greater capacityto reach out to both the authorities andtheir constituents, which is increasingthe visibility of NGO provided serviceprograms and enhancing their ability toprovide services.

The financial resources available tomunicipal authorities are extremelylimited, as is their control over their

budgets and revenues. This in turn limitsthe funding and opportunities available toNGOs from local governments.Additionally, when it comes to serviceprovision, NGOs face difficulties incompeting with govern-mental entities.Since NGOs receive only project funding,they have few means to coveradministrative expenses, or provide fordevelopment of the organization. Thisproblem is compounded by the generalinability of NGOs to offset their coststhrough charges for services, and costsharing. Recently, there has been someprogress in opening up governmentalprocesses, but they are not astransparent as they could or should be.The interest of governmental authoritiesin consulting with NGOs concerningpolicy development and regulatoryactivity, while increasing overall, variesgreatly from one location to another.

LITHUANIA

Page 110

INFRASTRUCTURE: 3.0

NGOs are starting to form morecoalitions, usually within their specificsectors of activity and around specificissues, but occasionally on the nationallevel as well. NGO resource centers areserving as resources for information,training, fundraising, and networkingactivities. While there are only a handfulof major resource centers, the needs ofthe NGO community are generallybeing met.

Modern technology has opened newdoors for NGOs to cooperate and shareinformation. NGOs have greater accessto training and expertise from localsources. Among the most popular subjectareas are strategic planning, fundraising,financial management, constituent

services, public relations, media relations,and advocacy. There are national andlocal publications for the NGO sector.

Traditions of cooperation and sharingbetween NGOs are developing slowly.Many NGOs do not appreciate thebenefits of collective action, and prefer tofocus on parochial interests. Thecompetitive processes for obtaininglimited funds exacerbates thisindividualism. While one national coalitionhas been formed, most such institutionshave a more limited mandate. The NGOresource centers are cooperating closely,but they are not financially self-sustaining,since it is difficult to collect fees for theirservices, due to legal restrictions andlimited resources on the part of NGOs.

PUBLIC IMAGE: 3.0

Media coverage of NGOs continues toexpand slowly. At the local level, mediainterest in the activities of NGOs hasgrown considerably. More municipalofficials view NGOs as potential partnersand effective service providers, and arewilling to learn about their work andconsult with them. There is less publicsuspicion concerning the activities ofNGOs. A larger number of NGOs activelypublicize their activities, and promotetheir image and services. NGOs areorganizing highly visible public events,such as NGO forums, fairs, andinternational conferences. NGOscontinue to receive more trainingconcerning public relations and workingwith the media.

However, the public is still far too oftenunaware of or even indifferent to theactivities of NGOs. While there has beenprogress, NGOs rarely publicize theiractivities on a national level. Further, thenational media is far less likely than thelocal media to publicize NGO successes,as opposed to scandals. Cooperationbetween governmental institutions andNGOs is still constrained by perceptionsconcerning conflicts-of-interest, which areexacerbated by the tendency to overplayinstances of misconduct. There is still aneed to increase NGO transparency andself-regulation, and to establish a Code ofEthics for the sector.

MACEDONIA

MACEDONIA

OVERALL RATING: 4.6

As of September 2000, there were 3,977 NGOs registered in Macedonia under the 1998Law on Citizen Associations and Foundations. Approximately 10% are considered to beactive. There has been a steady increase in the number of active NGOs over the past twoyears, following the events in Kosovo in 1999 and increased levels of donor funding avail-able for NGOs.

The vast majority of Macedonian NGOsremain institutionally weak. Business andprofessional associations remain at anincipient level of development. Both generaland in-depth training in organiza-tionalmanagement, strategic planning, andaccounting remains a significant need forNGOs and associations alike.

Macedonian NGOs survive primarily ongrants from international donors, althoughsome have begun to obtain limited resources from within their communities through fund-raising, provision of local services, and charitable work. Ethnic differences continue to di-vide the sector, with limited communication and coordination among the groups. Nonethe-less, to the extent that it does occur, the best examples of common actions across ethniclines in Macedonia are found in the NGO sector.

On the positive side, the legal environment for NGOs is relatively good. A new Law on Citi-zen Associations and Foundations, enacted by Parliament in June 1998, now regulatesNGOs. NGOs have had to reregister, a relatively straightforward process but one that suf-fered delays in the capital and larger towns due to a judicial system that is overburdenedand uninformed about the new registration requirements. NGO tax issues have not beendealt with in a systematic manner, but new legislation regarding VAT contains reducedrates for NGOs. Much remains to be done regarding tax benefits for NGOs.


The Law on Citizen Associations andFoundations was enacted by theParliament in June 1998. The enact-mentof this law significantly improved the NGOlegal framework by liberalizing the

operating environment for NGOs inMacedonia. The law is considered to beone of the most progressive in the formerYugoslavia. Nonetheless, there areseveral problems with it, including a

Capital: Skopje Inflation: 10%GDP per capita: $1,700 Unemployment: 34.5%Population: 2,000,000 Foreign Direct Investment: $30,000,000

Macedonia Overall Ratings

4.4 4.4 4.6 4.6

1

2

3

4

5

6

71997 1998 1999 2000


prohibition on NGOs engaging in directeconomic activities and a provision thatprohibits legal entities from foundingassociations. An official commentary onthe NGO law was prepared; and is usedby NGO representatives, judges, andlawyers as the standard text forinterpreting the NGO law.

Implementation problems observedduring the year following enactment of thelaw have been dealt with satisfactorily.The most notable problem was themandatory re-registration of NGOslocated in the capital. Many groups facedlengthy delays, which were largely due toan excessive caseload and lack ofunderstanding of the new requirementsamong the presiding judges, rather thanpurposeful interference with the process.The registration process has improvedover time as the judges have becomeaccustomed to their new role, and therehave been no reports of anyorganizations being denied registrationwithout justification.

There has been a significant increase inlocal legal capacity in recent years.There exists a core group of NGO lawspecialists who are trained in andfamiliar with NGO law. Over the pastyear, a series of training courses onNGO law for judges and legalprofessionals has taken place. However,NGOs need training to better

understand the laws that regulate thesector. The Law Faculty of St. Cyril andMethodius University has agreed tointegrate NGO law into the curriculum.Outside the capital, however, legalcapacity remains limited.

The fiscal enabling environment forNGOs in Macedonia is poor even byregional standards. The only types oforganizations that are tax-exempt underall circumstances are certain enter-prisesfor professional rehabilitation andemployment of disabled people. Otherlegal entities, such as those aimed atprotecting the environment, may receivereductions in their tax base for certainexpenditures. As a practical matter,however, NGOs are not required to paytaxes on grants or contributions. One ofthe most significant obstacles to NGOfinancial sustainability is that NGOs maynot directly engage in economic activities.NGOs also do not receive anypreferential treatment under the VATlaws. The Open Society Institute-Macedonia (OSI) is organizing an NGOtax/fiscal initiative and will convene ateam of experts to examine the currenttax/fiscal framework, including customsduties exemptions, profit taxexemptions, VAT issues, and incentivesfor private philanthropy. The workinggroup will then propose legislativechanges.


While the NGO sector remains weak inareas of organizational capacityincluding strategic planning,management, staffing, technicalresources, and constituency building,there have been some positive stepsforward in the past year. Most NGOshave mission statements, althoughthese are often very broad. Most NGOsunderstand the need for strategicplanning; however, few actually apply

strategic techniques in their decision-making processes and operations. MostNGOs are one-person operations, andtherefore lack solid internalmanagement structures. Nonetheless,model NGOs do exist throughout thecountry—mostly in the form of small,efficient groups that are addressingcommunity needs. The leading NGOs inthe country, for the most part, haveinternal management structures and

MACEDONIA

differentiate between the roles andresponsibilities of the Board of Directorsand staff. In terms of staffing, there isimprovement from last year in that moreNGOs have paid staff. However, in mostcases they are employed on a by-project basis.

While constituency-building efforts arelimited, there have been several initiativesin the past year, which indicates that theNGO sector is beginning to understandthe importance of building constituentsupport for its activities.

FINANCIAL VIABILITY: 5.0 International funding remains the primarysource of revenue for NGOs inMacedonia. The difficult economicconditions in Macedonia (official figuresput unemployment at 36 percent) impedephilanthropy among businesses andindividuals. Given the prevalence offoreign funding available, NGOs are notcompelled to think about other fundingsources. While economic conditions forfundraising are poor, there are numerousreports of NGOs successfully seekingfunds from their local communities. Ingeneral, however, fundraising techniquesare not widely understood. NGOs formarginalized groups such as women andRoma have a particularly difficult timeraising funds, and very few NGOs have astrategic approach to fundraising.Macedonian NGOs are beginning toexplore various revenue-raisingtechniques—but they tend to look to theirmembership or immediate constituency

as their market and do not consider thewider market demand for products andservices.

Internationally acceptable accountingprocedures have not been introduced inMacedonia in general. NGOs usefinancial management and accounting asa way to meet donor requirements but donot see these mechanisms as a means toincrease the transparency of their ownoperations. Many NGOs do not sharefinancial information with theirmembership or the public, which can leadto suspicion about the use of funds. Itshould be noted that NGOs are not alonein their need to improve accountingstandards—the business sector facessimilar problems. However, an additionalchallenge for NGOs is that they areexpected to act professionally in financialaccounting without the benefit of full-timeprofessional staff.


ADVOCACY: 4.5

Due to the incipient nature oforganizational development and thelimited understanding of the trans-formative role that NGOs can play insociety, advocacy skills remain relativelyundeveloped. While NGOs generallyneed more information about theimportance of advocacy and lobbying,examples of advocacy do exist,particularly at the local level. There havealso been several national initiatives—most notably in the areas of domesticviolence, women’s political participation,and human rights—that have beensuccessful in raising public awarenessand, in some cases, passing legislative orpolicy changes. In one case, a small,vocal, and politically well-connected NGOcalled ESE, lobbied for the passage oflegislation to bring Macedonia’s domesticviolence laws into compliance withinternational standards. Anotherimportant initiative was undertaken by acoalition of 54 women’s NGOs inadvance of the local elections in

September 2000. These NGOs joinedtogether to lobby the political parties tolive up to their promise of increasingwomen’s participation in party structures,and to increase women’s participation inelections in general. They weresuccessful in getting political parties toincrease the number of women includedon the party lists for municipal councils,and hence the number of women elected.They also succeeded in their efforts to getmore women to vote.

There are no official constraints onNGOs’ direct communications with publicofficials at either the local or the nationallevel, and many Ministries now haveofficial NGO contact points. However,communication is often led by a powerfulpersonality rather than by the NGO as anorganization. The effectiveness of suchcommunication varies widely, based onthe nature of the NGO and the particulargovernment official.


On the whole, the Macedonian NGOsector is very weak in its capacity to de-liver services, with the notable exceptionof humanitarian assistance providedduring the Kosovo refugee crisis in1999. This weakness can be attributedto several causes that stem from a gen-eral lack of understanding among thegeneral public, business, government,and the NGO sector itself of the roleNGOs play in a civil society. For exam-ple, most NGOs do not have a sense ofthe demand for services among theirimmediate constituency or in the coun-try. NGOs tend to focus upon what theycan offer rather than what the commu-nity or sector needs. When services areprovided, there is a gap between NGOs’

abilities to serve members versus thelarger public.

Providing services for a fee is a newconcept for Macedonian NGOs; and dueto the country’s weak economy, fewpeople are able to pay for products andservices. As a result, very few groupsare able to recover costs in this way. In-stead, NGOs focus on obtaining grantsfrom outside donors to support them-selves and sustain their activities.NGOs' lack of understanding about therole that they can play in providingservices is compounded by govern-ment’s lack of understanding of the roleof NGOs in general. While NGOs arelegally allowed to bid on governmentprocurements that fall within their

MACEDONIA

missions, this does not occur in anybroad sense. The positive role thatNGOs played in providing humanitariansupport during the Kosovo crisis helpedto highlight the service provision role

NGOs can play. The potential of NGOsis now clearer to government, butindigenous re-source levels are so lowthat such activities are still notwidespread.

INFRASTRUCTURE: 5.0

Over the past year, there has been littleimprovement in the infrastructuresupporting the NGO sector. Donors arejust beginning to support the develop-ment of infrastructure and there is littleindigenous support.

A particular area of weakness is thedevelopment of intermediary supportorganizations (ISOs), which now meetonly a fraction of the overall need fortraining and assistance. The MacedoniaCenter for International Cooperation(MCIC) provides grants and technicalassistance to a portion of the sector andmaintains a small service center to attendto the basic informational needs of itsNGOs. The local branch of the RegionalEnvironmental Center, located in Skopje,offers support services to theenvironmental community. The OpenSociety Institute (OSI) has plans to opensome NGO resource centers around thecountry within the next year.

Observations by NGO leaders indicatethat the NGO community is not utilizingthe resource centers that do exist asmuch as was expected. The reasons forthis are unclear, but contributing factorsmay include the general disinclination ofNGOs to work with other groups and therelative ease of access to informationthrough informal channels in a smallcountry.

While training materials exist in locallanguages and basic NGO management

training capacity exists in Skopje, theexisting core of local practitioners andtrainers available to the NGO sectorremains limited. In particular, thereremains a great need for expertise inareas such as strategic planning, financialmanagement, and revenue raising.

NGO networking remains very weak inMacedonia, sometimes due to ethnicdifferences. The Kosovo crisis led tojealousy between groups that receivedsignificant donor funding and those thatdid not, and there is a general impressionamong ethnic Macedonian NGOs thatforeign assistance has disproportionatelyfavored ethnic Albanian NGOs. The NGOnetworks that do exist are generallybased on ethnic ties, political affiliations,or social relations. However, there areseveral examples of NGOs cooperatingon issues that cross ethnic divides.Examples include the NGO coalitionworking for passage of legislation ondomestic violence; the women’s politicalparticipation initiative; and the NGOdomestic observation effort, which unitedNGOs from all over the country to monitorlocal elections.

With respect to intersectoral partnerships,there appears to be willingness on thepart of government officials to engage theNGO sector, but not necessarily toprovide it with resources. Governmenthas sought the expertise of specificNGOs at the local level in a few cases.

PUBLIC IMAGE: 5.0


Despite increased media coverage overthe past two years, public awarenessabout NGOs remains low. This is inlarge part due to the strongly centralizedand politicized system that exists inMacedonia. People still look to thegovernment to solve their problems, andNGOs have not been successful indemonstrating that they are an effectivealternative.

The government and business sectors’perception of NGOs tends to be fairlyneutral. They see NGOs neither asresources nor as threats. Over the pastfew years, NGOs have had somedegree of success in raising awarenessabout the role of NGOs in theirrespective areas. The Kosovo crisis was

also important in raising publicawareness about the role of a fewNGOs in the humanitarian sector.

Every major newspaper now has areporter dedicated to covering NGOs,and stories about NGOs are found in allstate and independent media outlets.However, since the overall quality ofjournalism is low, stories about NGOstend not to be written clearly and containlittle analysis. Recent local-level growthamong NGOs may create an enhancedpublic image for the sector, particularly forthose NGOs able to deliver the necessarybasic services that government is unableto provide.

MOLDOVA

MOLDOVA

OVERALL RATING: 4.6

According to the World Bank's Annual World Development Report for 2000-2001, theRepublic of Moldova ranks 167th among the world's 206 countries in terms of gross do-mestic product per capita. This makes Moldova one of Europe's poorest countries, with53% of the population living on less than one dollar per day.

Given this difficult economic situation, it is impressive that there are nearly 1,800 NGOscurrently registered in Moldova. Most of these are based in the capital, Chisinau, al-though there are organizations registered in all regions of the country. NGOs operate ina variety of spheres, including culture, education, economic development, health andhuman rights.

Moldovan NGOs benefit from a fairly well-developed legal framework and a solid infra-structure. Challenges faced by the NGO sector lacks include the need to improve theirpublic image, organizational capacity and financial viability.


Moldovan NGOs are regulated by anumber of laws, including the CivilCode, the Law on Public Associations(1996), the Law on Foundations (1999),and the Law on Philanthropy and Spon-sorship (1995). Currently a draft Law onNon-Commercial Organizations is beingdeveloped, which Parliament is ex-pected to consider at the end of 2000.

NGOs are generally free to addressmatters of public interest and expresscriticism. The only activity they are re-stricted from engaging in is campaigningfor elections, although the law is not al-ways followed.

At the national level NGOs can registerrelatively easily at the Ministry of Jus-tice. The process is straightforward andregistration fees – 54 lei, or about $4.40– are reasonable. However, registration

procedures at the local level need radi-cal improvement, in particular to specifywho should perform the registration.

Although central and local governmentbodies are not always supportive ofNGOs and do not fully understand theirrole in society, there have not been anycases of institutional-level harassment.On the contrary, both government offi-cials and NGOs are beginning to under-stand that instead of competing theyshould complement each other's efforts.

Moldovan NGOs are entitled to incometax exemptions, but neither public asso-ciations nor foundations are entitled toVAT privileges or exemption from cus-toms duties.

Moldovan businesses that sponsor pub-lic benefit associations are entitled to a

Capital: Chisinau Inflation: 15%GDP per capita: $480 Unemployment (1997): 1.6%Population: 4,300,000 Foreign Direct Investment: $170,000,000


tax deduction for any donations madefor charitable purposes, provided thatthose donations do not exceed 7% ofthe taxable income in the current year.

The Republic of Moldova is the onlycountry in the NIS to have a certificationcommission similar to the UK CharityCommission, which is responsible forgranting organizations public benefitstatus.


Moldovan NGOs vary immensely interms of their organizational capacity,ranging from feeble “one-man shows” toreal “stars” of the third sector that gainrecognition and credit for their achieve-ments internationally. Mature NGOsexist in many sectors, including eco-nomic development, education andyouth, media, human rights, social,women, environment and local publicadministration. It is estimated that be-tween 15 and 30% of Moldovan NGOsare active, able to govern themselvesand efficiently organized.

Although the overwhelming majority ofNGOs are concentrated in urban areas,particularly in Chisinau, a handful ofgenuine community-based NGOs withclear mission statements and links toconstituencies exists. In addition, someorganizations have successfully estab-lished branch offices in the regions toextend their activity outside the capitalcity.

Volunteerism is still not a common prac-tice in Moldova, but the first steps inbuilding a volunteer movement havebeen made.


Among the financial problems faced bythe NGO sector are a weak economy, alimited number of foreign donors, lack offinancial management skills, and pooraccess to information on funding op-portunities. As a result, the MoldovanNGO community is greatly dependenton the few international donors who op-erate there. This dependency forcesNGOs to orient their programs towardsdonor priorities. A further problem is thatdonor funding tends to be monopolizedby a small group of highly qualifiedNGOs

Very few, if any, organizations rely ex-clusively on self-financing or donationsfrom local sources. Because of the pooreconomic conditions in the country,

philanthropy is very limited. Althoughthe passage of the Law on Foundationsestablished a favorable environment forphilanthropy, allowing tax deductions upto 7% of income for charitable dona-tions, very few local businesses are in-clined to make donations.

The certification commission selects themost competitive public benefit organi-zations to receive state support. Article11 of the Law on Public Associationsprovides for the government to supportpublic organizations, for example by fi-nancing some social, scientific and cul-tural programs. Unfortunately, at thispoint in time the government has not yetimplemented this provision.

MOLDOVA

ADVOCACY: 5.0

Although NGOs are beginning to shareinformation and network, NGOs oftenview each other as competitors forscarce resources and are therefore re-luctant to share information and cooper-ate. The Moldovan legal framework en-ables NGOs to form coalitions and un-ions. The most active NGOs in Moldovaworking in the area of environmentalprotection have formed coalitions in anattempt to solve issues of public impor-tance and to influence public policy.

The National NGO Forum, which is heldonce a year and published in “WhiteBooks”, promotes the interests of theNGO community as a whole. The Forumalso approves resolutions on the mostimportant problems faced by the NGOcommunity. In the period between theforums this function is delegated to theGroup for Resolution Implementation,which consists of representatives of themost active NGOs.


Although NGOs providing services orproducing goods exist and are well de-veloped, the number of such organiza-tions is very small. The most activeNGOs providing services work in thefields of education, audit and account-ing, medical care and sociological stud-ies. The need to charge fees for serv-ices is recognized and occasionally putinto practice. For example, several

NGOs charge participants for theirtraining courses on international ac-counting standards or computer literacy.In some instances, the services pro-vided by NGOs, such as seminars,workshops, research and publications,reflect national priorities, like local publicadministration reform, and are coupledwith international donors concern for theissue.

INFRASTRUCTURE: 4.0

In 1996, the CONTACT AssistanceCenter was established to provide localsupport services to NGOs. The centerhas branches in four out of elevencounties in Moldova that deliver trainingand consulting services to grassrootsorganizations, distribute training materi-als and keep a database of regionalNGOs. These intermediary support or-ganizations (ISOs) maintain a compre-hensive library and also provide accessto the Internet, and other office equip-ment. There are also a few other ISOsin the country, like the National YouthCouncil, the Regional EnvironmentalCenter and the Resource Center of Hu-man Rights NGOs.

There is a cadre of local trainers whodeliver courses in subjects such as pro-gram implementation and evaluation, fi-nancial management, bookkeeping forNGOs, fundraising, human resourcesmanagement, marketing and public re-lations. Although these efforts havehelped strengthen some leading na-tional NGOs, grassroots organizationsstill need such training.

One of the most visible publications inMoldova covering the NGO communityis the Civic Voice Newsletter, which isdistributed free of charge to NGOs, pub-lic administration bodies and politicalparties. In each issue of this publicationa domestic NGO is presented, as well


as funding opportunities, studies and re-search. IFES/Moldova currently pro-duces this newsletter, but it is very im-portant for domestic NGOs to assumethis responsibility. Domestic NGOs to-gether with international organizations

also regularly address the problems ofthe third sector in radio programs.These programs feature interviews withNGO leaders, reports on individual NGOachievements and inter-sectoral coop-eration.

PUBLIC IMAGE: 5.0

There is generally a low awareness ofNGO activities among the Moldvan pub-lic, state authorities, mass media andeven funding organizations. As a result,NGOs have feeble partnership relationswith local government authorities, themedia and within the NGO communityitself.

Moldovan NGOs do not market them-selves well. The NGO Forum’s secondWhite Book, published in 1999, identi-fied the need to promote a better imageof the NGO sector in mass media as apriority. One problem is the lack of pub-

lications on the activities of the NGOcommunity. Although NGOs do producepublications and newsletters to report ondevelopments in specific sectors, be itenvironment, drug abuse, or women’sissues, these have a narrow scope andlimited circulation.

The NGOs with the most positive imagetend to be those active in research, pub-lic administration, economic, and politi-cal development. Organizations trying tosolve social, environmental, and humanrights problems are generally lessknown by the public.

MONTENEGRO

MONTENEGRO

OVERALL RATING: 4.6

In many ways, the situation of NGOs in Montenegro was the opposite of the situation inSerbia before October 5th. There were fewer and less developed NGOs in Montenegro,but they functioned within a more supportive legal atmosphere and political environment.New laws, created by NGOs at the end of 1998 and passed by the Montenegrin parlia-ment last year, provide full freedom to formand operate all organizations. Aside from theusual registration requirements, the law pro-hibits state interference in the functioning ofNGOs.

The government, democratically elected in1998, views NGOs positively. NGOs are gen-erally well covered by the independent media.There are pro-government NGOs in the sameinstitutional sense as before, but the govern-ment shows little favoritism towards them.The government has provided some financial help for NGOs and has organized twoopen competitions for grants so far.

The main challenges facing Montenegrin NGOs relate to their late start, slow develop-ment, and poor organizational capacity. But the situation is slowly improving. Under thenew law, the NGO sector has flourished. Over 800 NGOs have registered so far. SeveralNGOs have become prominent think tanks and policy advocates, and some are very ac-tive in the fields of human rights, women issues, consumer protection issues, communitydevelopment, and NGO development. However, most NGOs are small, inactive, andcentered around a single person. There is very little domestic support, and internationaldonors—though the most important resource for NGOs’ work—are not numerous or ac-tive enough to meet the needs of the Montenegrin NGO sector.


As noted above, Parliament passed anew NGO law in 1999 which providesfor open and simple registration proce-dures, ensures swift registration, andcontains minimal requirements. The lawwas passed with the support of a coali-

tion consisting of almost all MontenegrinNGOs. The coalition provided key ad-vice and lobbying in the drafting andlegislative stages.

Capital: Podgorica Inflation: n/aGDP per capita: n/a Unemployment: n/aPopulation: n/a Foreign Direct Investment: n/a

Montenegro Overall Ratings

4.6 4.6

1

2

3

4

5

6

71999 2000


After the law’s passage, aides to Presi-dent Milo Djukanovic indicated the needto improve the law even more, particu-larly the regulations making registrationmandatory, the controversial provisionson internal governance, the lack of aconflict of interest provision, and rela-tively large fines imposed for non-compliance. CEDEM and the Interna-tional Center for Not-for-Profit Law havebeen asked for assistance in the effortto fine-tune the 1999 law.

Tax legislation affecting domestic dona-tions to NGOs is quite liberal, and iscovered in a separate tax law. This lawprovides that corporate donations to

public benefit, sports, or religious or-ganizations are tax deductible to up to3% of the corporation's total income. In-dividual donations to these organiza-tions are deductible to the 10% of tax-able income.

While the overall tax environment isgood, tax laws tend to be interpretedrather broadly, particularly in terms ofincome generating activities of NGOs,making it very difficult for organizationsto conduct activities for their support. Fi-nally, as Montenegro functions withinthe legal framework of the FRY, itsoverall status remains precarious.


In terms of organizational development,Montenegrin NGOs fare rather poorly.Only the strongest NGOs have definedtheir basic goals and missions, as wellas mechanisms to implement theirplans. Most NGOs have basic, butpoorly defined, missions. NGOs gener-ally have basic internal managementstructures, as required by the law, butthere is limited understanding of strate-gies. It is estimated that

around 50 NGOs have staff, but only ahandful have more than one staff mem-ber. Few NGOs have their own equip-ment, often relying on personally ownedequipment instead. NGOs also rarelyseek to build their membership or con-stituency base. Outside of political par-ties, the only organization with a signifi-cant constituency is the Montenegrin in-dependent trade union federation.


International interest in Montenegro isincreasing. The government does notrestrict international funding, and the lawallows unfettered registration of foreignNGOs and foundations. NGOs arelargely dependent on foreign donors,and organizations often alter their mis-sions to conform to donor interests.Many organizations are also created inresponse to donor priorities.

Montenegrin NGOs still face seriouschallenges in raising local funds. One ofthe few examples of local support is the

open competition for public grants heldby the government. Six NGO represen-tatives served on the panel for the com-petition, thereby helping to avoid anybias towards pro-government organiza-tions.

Most NGOs are starving for even themost basic support and unlikely to sur-vive. CEDEM estimates that, at most, 15to 20 % of the current 800 NGOs inMontenegro are likely to survive finan-cially.

MONTENEGRO

ADVOCACY: 3.5

There is a generally positive relationshipbetween NGOs and both the nationaland local governments, with the excep-tion of areas that are controlled by thehard-line party of Momir Bulatovic. Thisis evident in the many NGO-local gov-ernment agreements on community ac-tivities, as well as the engagement ofNGOs in the drafting and passage of theNGO law. Other fields in which advo-

cacy is common include economics andhealth care.

The practice of “lobbying” is still un-known in Montenegro. Instead, mostadvocacy initiatives take place in themedia, through advertisements or cov-erage of press conferences. Very fewstrong figures have emerged from theNGO community that can take on largerissues.


Several NGOs have developed a realcapacity for providing services to the lo-cal community. Services provided in-clude the protection of women from do-mestic violence, education for parentsand children, and training for juveniledelinquents.

Several NGOs have developed coop-erative relationships with local authori-ties. For example, the SOS Hotlineworks with the local police, who now

take the problem of spousal abuse moreseriously.

However, there are few examples ofthis. In general, service provision is un-derdeveloped due to society’s generalexpectation that all services will be pro-vided by the state. Furthermore, manyinternational institutions, especially hu-manitarian organizations, wish to pro-vide services themselves.

INFRASTRUCTURE: 5.0

Overall, the support system for NGOs inMontenegro is weak. NGO ResourceCenters, advice centers, and supportorganizations are only starting to de-velop. The NGO Network and the Cen-ter for NGO Development have begun toprovide services to the NGO community,but their roles have to be improved inthe future. NGOs have to take on sev-

eral functions because of the greatneeds that exist.

Indigenous Montenegrin training materi-als and trainers still do not exist. As aresult, NGOs rely on training capacitydeveloped in Serbia. Promises of inter-national support to address this defi-ciency have been slow to materialize.

PUBLIC IMAGE: 5.0

When there is media coverage of NGOactivities, it tends to be positive and re-sponsive to NGOs. Much of the popula-

tion now views NGOs as part of Monte-negrin society, as opposed to a foreigncreation. However, a significant part of


the population, which voted for MomirBulatovic and his hard-line party, stillview NGOs as traitors, and NGOs areportrayed this way in the pro-Bulatovicpress.Overall, public understanding of NGOs’role in society remains limited. People

often think of NGOs simply as replace-ments for state-provided services. Thegeneral public is not knowledgeableenough about NGOs to be supportive.The business sector is not developedenough to offer support. NGOs them-selves have little sense of promotion.

POLAND

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Capital: Warsaw Inflation: 7.5%GDP per capita: $3,809 Unemployment: 10.4%Population: 38,700,000 Foreign Direct Investment: $6,500,000,000

age 126

VERALL DESCRIPTION: 2.1

he Polish NGO sector is one of the most robust in Central and Eastern Europe, withearly 30,000 registered non-governmental organizations including professional asso-iations; social service, environmental, religious, youth, charity organizations; and politi-al groups and public policy think tanks. Polish NGOs are working in a wide variety ofreas including education, health care, social welfare, culture, human rights, local eco-omic development and the environment. It is estimated that the Third Sector accountsor approximately 1.1% of total employ-ent in Poland. The NGO sector has dif-

iculty attracting and retaining employ-es, however, due to the lower salariesnd lack of stable funding.

any Polish NGOs remain financiallyependent on international donor supportor a substantial part of their budgets, but growing number of organizations areeveloping other sources of support,articularly by forming relationships with local government. Community Foundations areaking root in a number of communities, but corporate philanthropy is still in the earliesttages of its development, and therefore corporate support is still rare.

he NGO sector in Poland is beginning to evolve from organizations based upon the vi-ion of their pioneering founders, into more institutional leadership structures that canustain their organizations in the longer term. Many leading organizations are goinghrough this type of leadership crisis at the same time, and need to confront the end ofhe "heroic era" for NGOs, and work out new mechanisms for managing and sustainingheir organizations.

EGAL ENVIRONMENT: 2.0

here are two legal forms for NGOs inoland – associations and foundations.he process for registering an associa-

ion is relatively easy and decentralized,ith no unfair regulations by the centralovernment. The situation for founda-

ions, however, is quite different. For theast four years, the court responsible foregistering foundations has been reluc-

tant to register foundations whose stat-utes contain clauses enabling them toconduct business activities, therebyclosing a source of revenue for suchNGOs.

Grants and donations received by NGOsare tax exempt. Polish law also providestax exemptions for individual and corpo

Poland Overall Ratings

1.8 2 2.1 2.11.0

2.0

3.0

4.0

5.0

6.0

7.01997 1998 1999 2000


rate donors if donations support certainaims. Such donations are tax exempt upto 10% or 15% of revenue, depending onthe aims of the donation. However, thelaw concerning exemptions is archaicand a debate on what constitutes a pub-lic benefit purpose is necessary. Theregulation concerning endowments isalso ambiguous. The court recently set adangerous precedent by ruling that en-dowment funds do not support statutorygoals and therefore should be taxed.

NGOs are required to submit annual re-ports and financial statements to therelevant authorities, such as the Ministrymost closely related to the organization’sarea of activity. There are no consistentand transparent requirements for report-ing format and level of control for theThird Sector as a whole.

Current legal regulations do not provide aclear framework for the public sector tofund NGOs through grants and contracts.A draft law on “cooperation betweenpublic administration and NGOs” will

hopefully be submitted to the Parliamentafter four years of consideration. Thislegislation is designed to regulate notonly access to public funding, but otherimportant issues such as the introductionof Public Benefit Organizations andregulations on the status of volunteers.

Both NGOs and the government need toimprove their understanding of currentregulations. NGOs often have legalproblems because of misinterpretation ofthe law, which is getting more and morecomplicated.

There are also occasional problems dueto over-regulation. Smaller organizationsare sometimes overwhelmed by theamount of reporting required. For exam-ple, Parliament recently proposedobligatory audits for all foundations re-ceiving public funding. Although neces-sary for big foundations, such a regula-tion would harm small foundations, forwhom the cost of an audit would proba-bly exceed the level of public funding.


In 1996, the national forum of NGOsadopted a Charter of Principles as a self-regulatory measure. The Charter calls formanagement and supervisory functionsto be separate and precludes membersof the supervisory body from receivingremuneration. The Association for theForum of Non-Governmental Initiatives isnow working on developing measures tohelp organizations operationalize thesevalues.

There is a growing understanding in thesector that the fundamental question isnot so much the “quantity” of NGOs, butrather more about the “quality” of theirwork. A number of public awards avail-able for NGOs such as the Government's“Pro Publico Bono” award and the “Qual-

ity Outside Government” award given bythe Stephan Batory Foundation.

It is estimated that the Third Sector ac-counts for approximately 1.1% of totalemployment in Poland. The NGO sectorhas difficulty attracting and retaining em-ployees, due to the lower salaries andlack of stability in funding. Nevertheless,leading NGOs generally have paid staff,usually well-trained and skilled profes-sionals. Many organizations, however,operate without any outside funding, andtherefore can not afford to have paidstaff. More than 60% of NGOs do notemploy any people.

Training for NGO staff is available, butresources that support training are gen-erally directed to training institutions, not

POLAND

directly to NGOs. This can hamper thedevelopment of a consumer market fortraining. While it is unrealistic to expectthat the market can regulate all trainingfor NGOs, it is still necessary to developstrategies for increasing competition,quality control and customer orientationamong service providers.

Polish NGOs also increasingly cooperatewith and support the development of theThird Sector in Belarus, Ukraine, Lithua-nia, and the former Yugoslavia. Polish

NGOs are also actively trying to be in-cluded in negotiations related to the EUaccession.

NGOs are fairly well technicallyequipped, although smaller organizationshave more problems in this regard.NGOs also have relatively good accessto the Internet. More than 40% of allNGOs use the Internet as a source ofinformation and 61% would like to use itin future.


NGOs are increasingly raising funds fromlocal sources, especially local govern-ment, and models of consistent andtransparent funding of NGOs by localgovernment have been developed andare being replicated. However, additionalwork is needed to develop a consistent,nationwide mechanism for local govern-ments to fund NGOs and devolve re-sponsibilities for service delivery throughcontracting.

Over the last three years, several initia-tives have been developed to generatelocal sources of funding for NGOs. TheAcademy for the Development of Phi-lanthropy in Poland develops and pro-motes philanthropy by organizing a"Benefactor of the Year" competition,which supports interesting philanthropicinitiatives, and implementing a programaimed at creating and developing com-munity foundations. A pilot program forthe contracting of services to NGOs bylocal government has been initiated inselected municipalities.

Poland has good training programs andconsulting services available in fundraising. Fundraising skills are fairly welldeveloped in Poland. Although still lim-ited to a small group of NGOs, almost allmodern techniques of fundraising - in-cluding modern Internet technologies,telethons, lotteries – have been tried inPoland.

Many NGOs are beginning to chargefees for their services, as a means ofcost recovery, but many NGO activistsremain concerned about the sectormaintaining a clear separation in theminds of the general public, between not-for-profit organizations and businesses.Regardless, economic realities and thelimits of local philanthropic support arestrong considerations on the side of in-creased earned income and greater fi-nancial diversification. Many organizations have problems man-aging their finances and are not able toafford professional advice and assis-tance in this regard. Furthermore, thereare few good accountants with knowl-edge of NGOs.

ADVOCACY: 2.0

There is an increase in the number ofpublic advocacy activities being initiated

by NGOs. This is evidenced by the exis-tence of coalitions and umbrella groups


working on issues such as children'srights, the rights of disabled people, hu-man rights, environmental protection,cooperation between NGOs and othersectors, and the legal framework forNGO activities. The Association for theForum of Non-Governmental Initiatives isworking to build stronger coalitions tosolve the problems of the sector basedon existing federations.

Numerous NGOs representing most ofthe NGO sector have conducted suc-cessful advocacy campaigns. One of themost successful advocacy campaignswas an initiative by NGOs to influencethe new public finance law that createdserious problems for NGOs to receivefunding from local governments. The As-sociation for the Forum of Non-Governmental Initiatives continues toprovide the Parliament with informationon the Third Sector and with input con-cerning the proposed law on publicbenefit activities.

Most NGO advocacy campaigns havebeen focused on defeating negative actsand ideas. For example, NGOs activelylobbied against Article 118 of the PublicFinance Law, which imposed mandatoryaudits on all foundations receiving publicmoney.

One issue that still needs to be resolvedis to legitimize the organizations that rep-resent the interests of the third sector. Todate, organizations such as the Associa-tion for the Forum of Non-GovernmentalInitiatives have played this role as the re-sult of tacit agreement, rather than aformal mandate.

A stable mechanism to regularly monitorlegislation is still under construction.KLON/JAWOR is now implementing aprogram to organize constant legislativemonitoring, as opposed to action-drivenmechanisms.


NGOs actively provide basic social serv-ices, such as education, health-care, andsocial assistance. In addition, many or-ganizations engage in activities to pro-mote culture, environmental protection,the rights of underprivileged groups suchas women and minorities, and humanrights. Other organizations are involvedin job creation and other activities. The lack of a nationwide system for localgovernments to fund NGOs means thatmost NGOs provide services that areoutside of the public social safety net.For example, the role of NGOs was notaddressed in major reforms passed inthe last year in education, health care,

public administration, and the pensionsystem. As a result, NGOs often have ahard time securing a steady stream offunding. For example, NGOs workingwith the homeless may only receivefunding at the end of the year, when theproblems are the most severe.

In essence, NGOs are stuck in a viciouscircle: NGOs do not get contracts forservices because of their poor standards,but they are unable to improve theirstandards unless they begin contractingservices. There is a great need to buildmechanisms to contract services on theopen market for all three sectors.

INFRASTRUCTURE: 2.0

NGOs in Poland benefit from a well-developed infrastructure. The “SPLOT”

network of NGO support centers locatedin major cities provides information,

POLAND

training and advisory services in fund-raising, NGO management, cooperationwith local government, and promotionand cooperation with the media. Over thecourse of the past year, five new centershave been added to the network, bring-ing the membership to twelve. Some ofthe achievements of the Network includecreation of a national information bankon NGO directories, with regularly up-dated guidebooks; numerous publica-tions, including NGO directories, guide-books and newsletters; Internet servicesfor NGOs; and, centers promoting vol-unteer work. Most of the support centersin the network have subnetworks oper-ating in smaller towns.

Over the last four years, NGO supportcenters have substantially improved theirskills and capacity to serve NGO needs.However, financing continues to be aproblem. The centers are largely de-pendent on donors, primarily foreign fun-ders. Local funding has not been raisedin significant quantities and the resourcecenters do not earn much income, asservices are generally provided for free.There are concerns that indigenoussources of funding might not be devel-oping quickly enough to fund the centersonce foreign funding is no longer avail-able.

Although there is some concern formaintaining independence, there is anincreased understanding of the impor-tance of coalitions. Coalitions are startingto form, especially among NGOs workingon children rights, the rights of the dis-abled, human rights and environmentalprotection.

Intersectoral partnerships are developingwith foreign and local business, localgovernment and the media. The Acad-emy for the Development of Philanthropyin Poland and the Association for the Fo-rum of Non-Governmental Initiatives bothwork to develop links between the thirdsector and business. Links with localgovernments are especially importantdue to decentralization efforts. USAID’sLocal Government Partnership Programhas played an important role in promot-ing such links, including the creation of alegal environment that supports localgovernment-NGO cooperation.

Most of the training, advisory and infor-mation services are provided for free andare funded by various donors. The ma-jority of the NGOs, especially from smalltowns, are not able to pay for services.

PUBLIC IMAGE: 2.0

During the last year, coverage of NGOactivities in the media has increased.There are now more articles writtenabout NGOs and there are now threeprograms on TV and several on the radiothat cover NGO issues. Press coveragehas also become more favorable.Whereas coverage used to focus onscandals in the NGO sector, now thereare often articles portraying people in-volved in public benefit activities.

Although coverage has improved, thegeneral level of understanding of NGOsby journalists remains low, and there arefew journalists who specialize on the

third sector. To address this need, NGOsorganize training programs and confer-ences for local journalists and informthem about activities in the sector. Thereis an NGO Internet press agency, "Fi-press", that prepares and distributes in-formation among NGOs and the media.

Media have played an important role inpublicizing problems faced by NGOs. Forexample, an article on the 1999 publicfinance law contributed to NGOs’ suc-cess in getting the law amended.

The general public still does not have asolid understanding of the non-profit


sector and often has a negative image ofNGOs. Foundations are generally per-ceived as suspect, if not dirty, busi-nesses, although individual well-knownorganizations are recognized as trust-worthy and necessary.

Many NGOs are shifting their public rela-tions programs from “membershipbased” development to “publicity based”activities designed to bring attention anddonations to the organization. Modernmarketing tools are engaged, rather thanconstituency development activities thatcan recruit new members. Nevertheless,

the membership base in Poland is fairlystable. It is estimated that approximately25% of Polish citizens consider them-selves to be members of an NGO.

The third sector tends to be perceivednarrowly as involving charitable activities,and less frequently as conducting lobby-ing or representing particular interests.Politicians have been “trained” to consultwith NGOs, but do not necessarily do soin practice. NGOs still need to developmore effective ways to publicize their ac-tivities and promote their public image.

ROMANIA

ROMANIA

Capital: Bucharest Inflation: 46%GDP per capita: $1,721 Unemployment: 10.3%Population: 22,500,000 Foreign Direct Investment: $1,345,000,000

OVERALL RATING: 4.1

Ten years after the non-profit sector reemerged in Romania, NGOs, although relativelynumerous (official databases1 indicate that there are almost 23,000 organizations), con-tinue to struggle with a lack of resources. Many of the trained professionals who contrib-uted to the development of Romanian civil society in the early 1990s have moved to thebusiness sector, partly as a result of the lack of financial resources that the nonprofitsector faces, and partly due to their own career development plans. Many programs aredonor-driven, rather than demand-driven, because most of the sector's funding stillcomes from foreign sources,

During 1999 and early in 2000,even foreign funding resourcesavailable to Romanian NGOs (in-cluding FDSC, the Open SocietyFoundation, EU-PHARE, andUSAID) declined or were delayed.This resulted in even more pro-found limitations than usual on re-sources for NGO development, andseverely inhibited NGO capacitybuilding.

Although significant steps have been made regarding cooperation between NGOs andpublic institutions, there is still a lot of mistrust between the two sectors. Similarly, al-though there are NGOs involved in community development programs, in general, or-ganizations do not have close relationships with the communities that they work in, andare not able to build long term bonds of trust with their constituencies.

On the positive side, Law #21, which regulated the sector since 1924, was replaced byGovernment Ordinance #26/2000, which aims to facilitate the activity of NGOs and sup-port their partnership with state institutions.

In sum, the sustainability of the Romanian nonprofit sector changed little over the pastyear. Although there were some improvements in areas such as the legal environment,advocacy and public image, NGOs continued to experience financial difficulties that hada negative impact on the development of their organizational capacity.

1 Sources: Civil Society Development Foundation (FDSC), Romanian Ministry of Justice, local public ad-ministration, Romanian National Commission for Statistics

Romania Overall Scores

3.6 3.8 4 4.1

1

2

3

4

5

6

71997 1998 1999 2000



Since May 2000, NGO registration hasbeen governed by Government Ordi-nance #26/2000, regarding associationsand foundations. The ordinancereplaced the previous Law #21/1924,which did not provide adequatesafeguards or a complete framework forNGO regulation. The new legislationstreamlines the registration process,establishes a central registry for NGOs,and specifically grants the right to NGOsto establish subsidiaries to carry outcommercial activities. The ordinance willremain in force until it is repealed,amended, or adopted by the Parliamentas a law.

The “Sponsorship Law,” passed as agovernment ordinance in early 1998,was amended by Parliament in 1999. Adecrease in the cumulative amount thatcan be deducted from the taxable basefor sponsorships and donations, to amaximum of 5% was a significantchange. Many perceived this as a failureof the NGO sector to follow up on itsprevious success with the “Invest in CivilSociety” advocacy campaign, which hadoriginally led to the passage of the Ordi-nance.

Under current legislation, there are nolimitations on NGOs or their representa-tives regarding their right to operatefreely within the law and to addressmatters of public debate and expresscriticism. NGOs are legally allowed tocompete for government contracts andprocurements at the local and centrallevel.

Romanian NGOs are exempt from im-port and value-added taxes on foreigngrants. They are also exempt from VATfor economic activities that generateless than $2,250. However, the proce-dures that are required to be followed torecover VAT expenses are so cumber-some that in practice most do not bene-fit from this exemption. NGO revenuesfrom donations, sponsorships, and for-eign grants are not included in the tax-able profit. Associations of people withdisabilities are exempt from profit tax.

Free legal advice is not easily availableto NGOs, especially those outside of bigcities. While NGOs can access paidspecialized legal advice, this service islimited, because there are very fewlawyers who have an understanding ofthe regulations regarding NGOs and theneeds of the nonprofit sector.


Institutional capacity continues to varyfrom organization to organization andfrom region to region. Over the pastyear, a lack of funds has contributed tothe decline of the sector’s organizationalcapacity by decreasing NGO activities.Many NGO professionals gave upworking full time in the sector andtransferred to jobs in the business orpublic sector. Funds to train new staff

were not generally available, resulting infurther amateurism in the sector. While the strongest NGOs, locatedmostly in Bucharest and major cities,have boards of directors and executivestaff, members assume both aleadership and a management role inmost organizations. Problems common-ly encountered include boards that areelected by staff, and board memberswho receive remuneration. Those few

ROMANIA

NGOs that try to think strategically areoften limited in their attempt to makelong term plans by the uncertainty offunding levels. Although there are NGOswith strong leaders, civil societygenerally faces an acute lack of thoseleadership skills needed to providevision, motivate organizations to worktogether, and to ensure furtherdevelopment of the sector.Most NGOs struggle to cover basiccosts including office space, telephonesand the salary and benefits of at leastone professional staff member. Althoughmost NGOs have basic office equipmentsuch as telephones and fax machines,less than 18% have e-mail connections,

and only 3% have developed webpages. A relatively small number of or-ganizations employ qualified account-ants or have proper internal financialcontrol and external audits.

Few Romanians envision a career forthemselves in the NGO sector. Thenumber of volunteers is decreasing dueto the difficult economic situation in thecountry and to the fact that most NGOsthat work with volunteers lack clearstrategies regarding how to attract anduse them. Furthermore, voluntary workis not regulated under Romanian law,which creates administrative problemsfor NGOs using volunteer labor.


NGOs continue to rely heavily on foreignfunding. With GDP falling by 16% overthe past three years and real wagesbeing more than 25% below their 1996level, it is difficult for even the most ad-vanced NGOs to raise funds locally.Furthermore, because NGOs have frag-ile links with their communities and con-stituencies, it is difficult for them to raiseeven limited amounts of money from lo-cal sources. The majority of organiza-tions tend to live from project to project,with very few making long-term strategicor financial plans.

Many NGOs, particularly those locatedin under-served areas, lack skills in fi-nancial planning, accounting and finan-cial management. Those that have re-ceived significant donor support or do-nor supported financial training, and aremore skilled in identifying alternative fi-nancing methods such as membershipfees, fees-for-service, in-kind contribu-tions, subsidiary commercial activitiesand government funding, tend to bebetter in this regard. NGOs expect anincrease in revenues from economic ac-tivities and contracts following the im-plementation of Governmental Ordi-nance #26/2000.


ADVOCACY: 3.5

Advocacy and communication with gov-ernment policy makers continues to be achallenge for the nonprofit sector. Al-though NGO expertise has been occa-sionally sought out -- for example duringthe preparation of Romania’s strategyfor EU accession or the Stability Pactconsultations organized by the Ministryof Foreign Affairs -- in general politicalleaders do not engage NGOs in the de-cision-making process in a systematicmanner. While access to draft legislationin the Parliament is ensured – especiallyat the Chamber of Deputies through itsOffice for Public Information and Rela-tions with Civil Society – access to draftlegislation within the Ministries is verydifficult and is usually only accomplishedthrough personal contacts. The Gov-ernment’s Office for Relationships withNGOs and its local branches at thecounty level facilitate access to centralsources of information for local organi-zations.

Lobbying is a relatively new concept forboth NGOs and policy makers. Legisla-tion that aims to regulate lobbying ac-

tivities has recently been drafted. Coali-tions of organizations, by activity, objec-tive, or region are not characteristic ofthe Romanian nonprofit sector. Never-theless, there are a few active federa-tions such as the Federation of NationalOrganizations for Child Protection.There are also a number of informalcoalitions of NGOs that work togetheron short-term projects.

The 1998 NGO National Forum estab-lished an informal group of fifteen NGOrepresentatives, known as The Groupfor the Implementation of NGO NationalForum Resolutions (GIR) to follow up onthe implementation of various Forumresolutions designed to benefit the NGOsector as a whole. After a new GIR waselected in 1999, members initiated asuccessful campaign for the enactmentof GO #26/2000. Other functions of theGIR include intervening in situations thataffect the overall image of the NGOsector, creating a campaign to attractfunds for NGO programs and projects,and analyzing ways in which to institu-tionalize the NGO Forum.


Organizations providing social servicesdominate the sector in Romania. Whileactivities related to culture and the artsare numerous, social and economic de-velopment NGOs are less common. Inaddition, the nonprofit sector continuesto be weak in less developed counties.

The concept of developing communityservices is still unknown to many NGOs,though there are organizations that areresponsive to community needs. Oneexample is Albamont, an NGO that as-sists poor rural communities in Albacounty receive financial support from the

Romanian Social Development Fundand other local agencies.

The results of NGO activities, as well assome of their products and services, aremarketed to a broad audience, but not ina particularly systematic manner. Gen-erally, NGOs provide free services andproducts, but fees-for-service are in-creasingly being used in an attempt topartially cover costs and to ensure thecommitment of beneficiaries.

NGOs are recognized as importantpartners for the delivery of social serv-ices. The Ministry of Labor and Social

ROMANIA

Protection was the first central public in-stitution to implement legislation allow-ing increased government support toNGOs (Law #34/1998). No other lawshave been passed regarding govern-

ment support for NGOs, but the Ministryof Youth and Sports organizes regulartraining sessions and forums for youthorganizations, and supports regionalYouth Information Centers.

INFRASTRUCTURE: 4.0

Romanian civil society is still in need ofresource centers that provide access toinformation and technology. The morehighly developed support organizationssuch as CENTRAS and FDSC, donorslike the Mott Foundation, and leadingNGOs in specific sectors such as Savethe Children, Romanian League forMental Health, have supported the es-tablishment of regional, local and secto-ral resource centers. The success andviability of these centers varies de-pending on the commitment level oftheir staff and on the types of servicesprovided. There are very few Romaniangrant-making organizations adminis-trating international funds to the non-profit sector, though examples do exist,such as FDSC and the CommunityPartnership Foundation.

The NGO National Forum has beenorganized annually since 1994. Since

1998 participation at the National Forumhas been based upon nominationsmade by local Forums, meeting in morethan half of Romania’s 43 counties. Thelocal and sectoral forums supported byFDSC and the Open Society Foundationhave facilitated communication amongNGOs, as well as between NGOs andpublic authorities. However, contactsand cooperation among NGOs need tobe further developed beyond sporadicmeetings and one-time actions. Whilelocal authorities lack the resources andstaff trained to deal with NGOs, NGOscomplain about the lack of good will onthe part of local authorities.

Although still rare, there are examples ofpartnerships with the international busi-ness community such as the Procter &Gamble/Save the Children campaign tosupport investments of informationtechnology in schools.

PUBLIC IMAGE: 3.5

During 1998-1999, the public image ofthe sector was seriously affected by amedia campaign, exposing fake NGOsthat were engaged in fiscal corruption.Over the past year, NGOs have beenraising awareness of large public inter-est issues including corruption, domesticviolence, and employment, and haveenjoyed positive media coverage. Rela-tionships with the press are often evalu-ated as excellent at the local level, whileat the national level, NGOs are rarelyable to get substantial positive mediaattention.

A public opinion poll conducted in Sep-tember 1999 indicated that citizens areparticularly aware of organizations ac-tive in the social field (44.7%), followedby health (26.3%), and human rights(24%). Of 1,553 persons interviewed,44% knew about NGOs – most of themfrom television (67.%) followed by theprint media (44.8%), radio (44.4%) andacquaintances (13.3%). NGOs are bestknown in medium-size cities (54.4%),followed by large cities (51.9%) and


small cities (44.4%). In rural areas,NGOs are less well known.

NGO leaders are developing more sys-tematic approaches to promoting thesector, such as the "Bridging the Gap --Romanian NGOs and the Media" projectdeveloped by FDSC and CENTRAS incollaboration with the BBC MarshallPlan of the Mind Trust. The projectconsists of a series of 10 radio showson the subject of how to set up and runan NGO, and were produced andbroadcast nationally. A training videoand package are currently being distrib-

uted to NGOs for the purpose of in-creasing the efficiency of NGOs in man-aging relationships with the mass me-dia.

Self-regulation in the sector has alsoimproved. The 1999 NGO National Fo-rum adopted a Code of Ethics coveringissues such as transparency, commit-ment to a stated mission, separation ofexecutive and supervisory/advisoryfunctions, and willingness to cooperatewith other NGOs. Leading NGOs regu-larly publish activity reports that turn intopublic relations instruments.

RUSSIA

RUSSIA

Capital: Moscow Inflation: 100%GDP per capita: $3,211 Unemployment: 12.4%Population: 146,500,000 Foreign Direct Investment: $3,500,000,000


Over the past 12 years, Russia's NGO sector has grown dramatically. In 1987, therewere 30 to 40 registered civic NGOs. By January 1, 2000, 274,284 organizations hadregistered with the Ministry of Justice. Sector experts estimate that roughly one-quarterof these NGOs are active and engaged in civic issues. The remaining balance is com-prised of trade unions, religiousgroups, consumer cooperatives,businesses registered as NGOs, ordefunct organizations.

Strong organizations exist in allsectors, but not in all regions.Rather, the development of Rus-sia's NGOs varies greatly acrossthe country’s 89 federations. So-phisticated organizations located inthe main cities possess excellenttechnological, training, information, financial, and human resources, but smaller volun-teer groups operating in the regions sometimes rely solely on the basis of in-kind contri-butions. The majority of active NGOs, both large and small, are concentrated in urbanareas and population centers. Activists cite an increase in the professionalism of NGOsin general, and the need for professional development in particular, as one of their high-est priorities. They believe that increasing the professionalism of NGOs will removesome of the barriers to cooperation with businesses and government.

The most pronounced negative factors affecting NGOs during 2000 were Russia's sloweconomic revival and political uncertainty. These factors contribute to somewhat bleakprospects for NGO sector financial viability and much-needed federal-level legislativereform, and represent the most serious constraints on medium-term NGO sector growthin areas where other resources are present.


Federal legislation provides a legal ba-sis for NGOs to exist and operate andmost NGOs operate free from harass-ment from government authorities. Atpresent, pro-NGO legislation is beingadvanced on the regional and local lev-els by NGO sector activists, includinglegislation on government contracts and

procurements. Provisions for such pro-curements are not expected at the fed-eral level within the next few years.Access to legal consultations or advicefor NGOs was expanded this yearthrough NGO resource centers in Sibe-ria, Southern Russia, Novgorod, Sam-ara, and the Russian Far East. The Ini

Russia Overall Ratings

3.4 3.44.1 4.3

1

2

3

4

5

6

71997 1998 1999 2000


tiative for Social Action and Renewal inEurasia (ISAR) provides Russian FarEast (RFE) NGOs with legal consulta-tions at five resource centers, and pub-lishes texts of pertinent legislation in itsjournal and on the Internet. Legal con-sultations outside of larger cities aresometimes difficult to obtain.

The legal environment for RussianNGOs has not improved over the pastyear. The term for re-registration ofcertain NGOs, mandated by the Law onPublic Associations, was not extended.Registration of politically controversialNGOs remains problematic. The policeraided some NGOs in an attempt to in-timidate them.

Taxes are often collected on cost recov-ery measures or fee-for-service ar-rangements, without distinguishing be-tween nonprofit and profit-making activi-ties. Significant tax incentives are notlikely to be a part of Russia's tax struc-ture in the foreseeable future, due tointernational and domestic pressure onthe Russian federal government to raisecritically needed revenue. The generalprovisions of a new tax code wereadopted in August 1998. The specificprovisions have not yet been adopted.In 1998, NGO sector activists formed anational coalition to lobby for a packageof amendments to the new tax code thataddress serious defects in the generalprovisions and restore some level ofprotection for nonprofits. The fate of thislegislation remains uncertain.


Although the capacity of local experts toprovide training in a range of organiza-tional topics is increasing, regional dis-crepancies in access to training, and inNGO development as a whole, createinconsistencies. Many NGOs still sufferfrom a lack of appropriate internaldemocratic governance principles, oftenbecause they are "one-person" NGOs.While leading NGOs have permanent,paid staff, most NGOs rely predomi-nantly on volunteer staff.

Foreign donor sponsored training andtechnical assistance in organizationalmanagement is beginning to produceresults in some parts of the country. Thenumber of indigenous consulting andtraining agencies that offer specializedtraining in one or more areas of organ-izational management held steady overthe past year. The leading NGOsthroughout the country have clear mis-sion statements and are successful inattracting volunteers.

Training is still needed in the areas ofconflict resolution, strategic and financialplanning, constituency outreach, volun-teer management, and the developmentof governing bodies. While some or-ganizations are somewhat advanced inthese areas, most are just beginners.Both basic and advanced training is stillcritically needed by NGOs throughoutRussia.

Constituency outreach is an area ofspecial concern. Many NGOs do notunderstand the concept of building aconstituency and lack the human ca-pacity and skills necessary to attractnew members or to cultivate a circle ofsupporters. There is a lot of skepticismamong NGOs that their outreach effortswill be worthwhile; therefore theychoose to focus on their immediate cli-ents.

RUSSIA


Russia's poor economic performancecontinues to pose the most serious con-straint to the financial development of itsNGO sector. The contraction of theeconomy following the August 1998 fi-nancial crisis and its reported slowgrowth in 1999 and 2000 has made fi-nancial sustainability for leading NGOswith significant foreign funding unlikelywithin the next five years. Professionalorganizations in general are just begin-ning to learn how to provide memberservices, a necessary precondition fordues collection. Cost-recovery, fee-for-service and other revenue-raisingschemes are being introduced by NGOsacross Russia but may carry serious taxliabilities.

While the overall financial viability of theNGO sector remains problematic, somepositive steps are being taken at the lo-cal level. Russia's NGOs are turning tolocal government and businesses forsupport with increasing success. Lead-ing Siberian NGOs have begun to cata-

lyze small grant programs by mobilizingresources from local government andbusinesses; small grants from this "con-solidated" pool are then awarded com-petitively to local groups for socially sig-nificant projects. NGO sector expertscontinue to find that Russian regionaland local government agencies are themost common sources of financial sup-port: at least 40% of Russia's NGOs re-ceive some form of governmental as-sistance. However, 50% of those sur-veyed have no cash income at all.

Traditions of indigenous philanthropyare slowly being revived in Russia.Classical "fundraising" from commercialorganizations (in the sense of direct so-licitation) is becoming more widely prac-ticed. Few NGOs have had success inraising money from private individuals,however. Basic fundraising training isincreasingly available, but most NGOsector activists still lack the sophistica-tion to make credible, well-targeted so-licitations.

ADVOCACY: 4.5

Several federal level advocacy cam-paigns failed to materialize within thepast year, deflating the high expecta-tions associated with last year’s optimis-tic advocacy score of 3.5. Local advo-cacy initiatives, on the other hand, havegained strength in over thirty of Russia'sregions, as demonstrated by the crea-tion of local citizens’ councils that meetregularly to advise legislative and ex-ecutive-branch officials on policy mat-ters. Advocacy mechanisms that exist atthe local level are sometimes underutil-ized or abused.

Local government officials and NGO ac-tivists continue to find mechanisms topromote collaboration. In some regions,officials eagerly solicit help from NGOactivists on programming and on draft-ing legislation. In Siberia, SouthernRussia, Novgorod and Samara Oblasts,for example, over 280 consultationsbetween NGO activists and governmentofficials occurred during the first quarterof 2000, and 75 expert commentarieswere submitted to officials on policy is-sues. In other regions, however, gov-ernment officials (and sometimes NGOactivists) envision the role of NGOs tobe that of temporary social service pro


viders until the state can stand on itsfeet again.

Informal, issue-based coalitions are in-creasingly frequent and visible at the lo-cal level. Organizations pool resourcesand work together when there is a per-ceived need or a pressing issue such asthe 1998-1999 National Campaign forFair Taxation of NGOs. However, theirimpact on governmental decision-making has been limited. Larger issue-oriented NGOs have formed nationwidenetworks to advocate on specific policy

issues (such as youth, ecology, votermobilization and military reform).

There are a few Russian "think tanks"following the Western model that advo-cate public policy recommendations atthe federal level, and a core of well-known experts, whose opinion seems tobe respected, in the major cities.

The lack of political parties with issue-based platforms, and the lack of ac-countability of elected officials in gen-eral, seriously hinders the effectivenessof NGOs' lobbying efforts.


Most NGOs provide some type of serv-ice to their members or to their commu-nities based on needs perceived at thelocal level, rather than at the behest ofdonors. Most experts agree, however,that improving service provision is oneof the biggest challenges facing thesector. Due to the lack of human re-sources and funding, the services thatmany NGOs provide cannot be suppliedon a reliable and daily basis. Only theelite NGOs are able to provide high-quality services in the areas of housing,health, training, and environmentalhealth. They have succeeded in creatinga demand for their services amongNGO, commercial, and government cli-ents, and have found clients who arewilling and able to pay. Their "productlines" are not, as a rule, diversified.These elite NGOs have also found waysof registering and obtaining the neces-sary licenses so that they can providethese services and manage their tax ob-ligations. These successes are confinedto a very small number of organizations,however.

Local government officials are beginningto recognize the value that NGOs canadd to the provision of basic socialservices. For example, in 2000, legisla-tion concerning government grants toNGOs for social services provision waspassed in the cities of Stavropol, Novo-sibirsk, Kemerovo, and Krasnoyarsk.Local budgets will begin to have a sepa-rate line for NGO support.

Russian tax law does not favor cost-recovery schemes. For example, inmany instances the tax implications ofthese schemes are so unfavorable as tomake even charging membership feesunprofitable. Leading Russian NGOsare exploring fee-for-service and othercost-recovery options, and have foundthat many NGOs and some businesseswould be willing to pay for publications,workshops, and expert analysis, as wellas other services. Few of those willing topay actually have the means to do so.

INFRASTRUCTURE: 3.5

RUSSIA

NGO resource centers provide localNGOs with access to information andtechnology in many regions throughoutRussia. There is a growing cadre of ca-pable Russian management trainers,and NGO management training andRussian-language materials are avail-able in many regional capitals. Ad-vanced specialized training and con-sulting in strategic management, ac-counting for non-profits, financial man-agement, fundraising, and volunteermanagement are available in major cit-ies and regional centers.

Resource centers that serve NGOs (asopposed to business support institu-tions) have difficulty earning income andgenerating revenue for the reasonsnoted above (see "service provision").Vast distances between populationcenters in certain regions (e.g., the Rus-sian Far East) and poor infrastructurelimit NGOs' access to resource centerservices. Although several donor-fundedprograms feature Internet libraries, theoverwhelming majority of RussianNGOs do not have reliable Internet ac-

cess. In most of the country, Internetconnections are not sufficient to permitdownloading of large documents.

Over the past several years, numerousattempts have been made to establishlocal grantmaking organizations and todevelop mechanisms for the granting orsub-granting of funds, including thecreation of local community foundations.Despite of the absence of clear andsupportive legislation in this area, localdevelopment foundations were createdin Togliatti and Tyumen. NGO resourcecenters in Southern Russia, Siberia,Samara, and Novgorod conduct smallgrant competitions for grassroots NGOswith funds from international and do-mestic sources.

NGOs are able to work in both formaland informal partnerships with localbusinesses and local government. In afew cities, awareness of the possibilitiesfor, and advantages of, such partner-ships is growing among the varioussectors.

PUBLIC IMAGE: 4.5

Among government officials in regionswhere foreign donors are active, theperception of NGOs continues to im-prove. NGOs (and especially NGO re-source centers) continue to work ac-tively with local media representatives toincrease coverage of the active, positiverole that NGOs are playing in theircommunities. NGO fairs are an exampleof collaborative activities undertaken bygroups of NGOs to promote their publicimage.

Much work remains to be done, asmany organizations still lack basic publicrelations skills. Cultivating good rela-tions with local media representativesmay take more time and attention thansmall organizations are able to devote to

this crucial work, although many are im-proving their skills.

Many NGOs are open about their activi-ties, though few organizations publishannual program and financial reports.Some membership organizations haveadopted a code of ethics, but such ex-amples are few. Journalists are oftenpoorly informed about the role NGOsplay in civil society and are preoccupiedwith other news items. Therefore, thepublic at large continues to have a poorunderstanding of the role and positiveachievements of NGOs in society.Popular opinion continues to associateNGOs with illegal businesses or taxevasion. The lack of tax reform thatwould enable small businesses to func


tion profitably without resorting to regis-tering as nonprofits also contributes to

this negative image.

SERBIA

SERBIA


During 2000 the position of NGOs in FRY passed through several different phases. Afterthe NATO bombing, NGO activities increased in several fields, including humanitarianassistance, psychosocial services for displaced persons from Kosovo, and educationalactivities for displaced children. Parallel to that, activities of NGOs were focused onraising awareness of the need for free and democratic elections, as a non-violent meansof changing power.

After the announcement of elections,NGOs entered a new phase, whereactivities were focused on organizinglocal and national campaigns. Theseefforts contributed to the highest voterturnout ever in Serbia and to the vic-tory of democratic forces. These ac-tivities were carried out in especiallydifficult conditions due to the growingrepression of the regime, includingarrests and harassment or NGO ac-tivists, and the closing down of politically active NGOs. Contrary to the regime’s aims,this repression served to strengthen the solidarity and networking of the sector and re-duced fear from repression.

After the fall of Milosevic, NGOs are facing a new challenge – working with a friendlygovernment, as opposed to working as an opposition force. There are many basic needsthat the government cannot meet alone, ranging from education and health care to hu-man rights and minority issues, where NGOs can play a valuable role.

There are around 2,000 NGOs registered on the Federal level, of which approximately500 are estimated to be active. A large number of NGOs are active in the spheres of en-vironment, education, arts and culture, and human rights. However, the sheer number oforganizations does not correspond to the relative strength and activity of various groups.Some of the most influential NGOs are those working in the fields of civic education,economic development, and human rights.

Capital: Belgrade Inflation: n/aGDP per capita: n/a Unemployment: n/aPopulation: n/a Foreign Direct Investment: n/a

Serbia Overall Ratings

4.85.4 5.4

4.5

1.0

2.0

3.0

4.0

5.0

6.0

7.01997 1998 1999 2000



Although there have not been any leg-islative changes over the past year, theenvironment in which NGOs in Serbiaoperate has changed dramatically.Growing repression against all individu-als and groups acting in opposition tothe regime marked the first part of theyear –especially the pre-election period.Raids were carried out by the financialpolice, which resulted in the closing ofmany organizations. Other groups hadtheir equipment and files taken fromthem, were subject to arrests, and facedother types of pressure. Although suchharassment was aimed at preventingtheir activities, it did not succeed due tothe strong solidarity among NGOs. Al-though the registration procedure isrelatively simple, the Yugoslav Ministryof Justice and the Serbian Ministry ofthe Interior refused to register severalorganizations because of their pro-grams. As a result of these conditions,NGOs were essentially only able to workin cities controlled by the oppositionbefore October 5th.

Since the 5th of October, however, therepressive tactics of the governmenthave stopped, even though the old lawsremain in place. The new governmenthas pledged to make NGO legal reformone of their top priorities.

With the exception of grant funds, NGOsdo not receive any tax exemptions.There are also no tax deductions forpeople who support NGOs.

NGOs are allowed to earn income, asthere are no laws specifically preventingthis. As most NGOs were consideredenemies of the state until recently, therehave not been any public and transpar-ent competitions for governmentalfunds. However, some NGOs do getbudget funds.

There is a network of lawyers who pro-vide legal advice and assistance toNGOs.


Leading NGOs tend to have paid staff,as well as a clearly definedmanagement structure. In smaller, localNGOs, there are still core groups ofenthusiasts who do a bit of everything.

There are several organizations thatassist NGOs with recruiting volunteers.However, the economic situation inSerbia is still so dire that it is hard toexpect people to volunteer when theyface daily problems of survival. At thesame time, there is a wave of youngpeople who are interested in workingwith NGOs as semi-volunteers, for theopportunities this affords to learn, gainexperiences, meet people, travel, andearn a modest income.

NGOs still do not have wideconstituencies – their activities aremostly based on the individual or groupefforts, although this is beginning tochange.

Until recently, the conditions in whichNGOs worked really prevented theformulation of long-term strategies.Nevertheless, measures were taken toovercome all possible obstacles that theprevious regime imposed. For example,when the state closed CESID, it did notprevent them from doing their work onthe night of elections in the premises ofother NGOs. However, many NGOshave undergone training on strategic

SERBIA

planning, and the new conditions in thecountry should allow them to implementwhat they learned.

Approximately 35% of NGOs areequipped with computers and modems,but this is only the case when funderscover the cost of equipment, which isoften not the case. Despite this basiclevel of equipment, electricity restrictionsprevent them from fully utilizing thisequipment.


Due to the difficult economic situation, itis virtually impossible for NGOs tosecure financial support locally.However, some NGOs are successful insecuring in-kind support, both in theform of volunteers and other goods.

Well-established NGOs often havediversified sources of funding, whilesmaller groups still depend on one ortwo donors. Although there is asignificant amount of donor fundingavailable for Serbian NGOs, untilrecently, very few donors have hadoffices or representatives in country. Asa result, it has been difficult fororganizations to cultivate relationshipswith donors. Most NGOs need additionalfunding to remain viable for the short-term future. This problem is especially

acute for those groups that do not focuson foreign donors’ priority areas.

Few organizations have financialmanagement systems, but as a newNGO law is put into place, this situationis likely to improve.

NGOs do not generally earn incomefrom their services or products, asbeneficiaries cannot afford to pay. Gov-ernment and local businesses do notcontract NGOs for services, althoughNGOs do provide services that govern-ment is unable to. NGOs usually do nothave assets that could be a source ofincome. Unions and other membershiporganizations do collect dues, but thisamount of money does not represent asignificant portion of their funding.

ADVOCACY: 4.0

In terms of advocacy, the situationbefore and after October 5th is alsosignificantly different. Before October5th, the only examples of cooperationbetween NGOs and government wereon the local level, mostly in “free towns”run by the democratic opposition. Onthe Republic and Federal level, the onlytrue example of advocacy by NGOs wastheir critical role in ensuring the activeparticipation of citizens in thepresidential elections.

Over the past few months, the situationhas changed. Due to their role in theelections, several NGOs are seen ascritical partners to political parties andthe government, and are regularlyconsulted about various issues.Furthermore, many NGO leaders andmembers are becoming part of thefederal and republican governmentalstructures. For example, the DeputyPresident of the federal government,head of the central bank, and futureSerbian Minister of Interior all haveNGO backgrounds. The influence of


NGOs on governmental policy at alllevels is expected to increase as thenew government consolidates power.

As their influence with the governmentincreases, NGOs will need to developnew skills. As there is little experience inlobbying and advocacy, new trainingprograms will need to be put into placeto teach people how to work incooperation with the government, ratherthan in opposition to it.

NGOs are very interested in reformingthe legal environment under whichNGOs operate, as this is necessary toenable them to function as legal entitieswith full accountability and transparency.A draft law is currently being preparedand will be proposed to the new gov-ernment in the nearest future. The gov-ernment has also pledged to make NGOlegal reform one of its top priorities.


Given the poor economic situation in thecountry and the state’s inability to meetpeople’s basic needs, there is high de-mand for service provision by localNGOs. While they are not able to meetall of these demands, Serbian NGOs doprovide a diverse range of services at ahigh quality. NGOs work in the fields ofeducation, social protection, psychoso-cial support, human rights, environment,and humanitarian assistance. Servicesprovided generally respond to the needsof various disadvantaged populations,including refugees, displaced children,single mothers, and disabled persons.

Although there is great demand for theservices provided, beneficiaries

can not generally afford to pay for them.Therefore, services are generally pro-vided free of charge, with the costsborne by foreign donors or through vol-unteers.

Given the political situation in the coun-try before October, the government hasnot generally recognized NGOs as pos-sible partners in providing basic socialservices. While some local governmentshave provided in-kind support to a feworganizations, none have run competi-tions or provided grants to NGOs. NGOsare optimistic that they will be able tomore actively provide services and todevelop more cooperative relationshipswith local governments in the future.

INFRASTRUCTURE: 4.0

There are two NGO resource centerslocated in Belgrade, as well as severalinformation centers on the local levelthat disseminate information amongNGOs. Civic Initiative’s Resource Cen-ter provides training, access to e-mail,and technical assistance, and also pub-lishes a monthly bulletin for NGOs andtranslates books, projects and othermaterials. All of the services are pro-vided free of charge. The resourcecenter run by the Center for the Devel-

opment of the Non-Profit Sector(CRNPS) has a database and provideslegal support for NGOs trying to register.

There are a few organizations re-granting international donor funds,including G17+, Civic Initiatives,CRNPS, and the European Movementin Serbia. There is also cooperationbetween local NGOs and foreign

SERBIA

funders in grant assessmentprocedures.

There are several networks thatdisseminate information among NGOsvia email and newsletters, includingthose run by Group 484, CRNPS, andCivic Initiatives. There have also beenseveral big conferences of NGOs, whichfacilitate networking.

Basic and advanced training is providedby a local group of trainers – Team Tri –that is part of Civic Initiatives. To date,they have trained almost 1000 NGOrepresentatives, and there is a waitinglist of over 300 people. All the materials

delivered to participants are translatedinto Serbian and adapted to the localsituation, but there are still insufficientsources of information available inSerbian.

Although rare, there are occasionalexamples of inter-sectoral partnershipson the local level. For example inKikinda and Vrsac, joint projectsbetween local authorities and NGOshave helped develop small and mediumenterprises. The trade unionNezavisnost also cooperated closelywith local media in the pre-electioncampaign.

PUBLIC IMAGE: 4.0

Before October, NGOs in Serbiareceived very different treatment by theofficial and independent media. Only theindependent media presented a positivepicture of the sector. Since October,media have made strides in learningabout NGOS and covering theiractivities. However, much work remainsto be done to educate journalists aboutthe role of NGOs in civil society.

Although the role of NGOs in society isstill not well understood by the generalpopulation, NGOs do have a fairlypositive image, especially after theNATO bombing, due to the programsand services that they have developed.As a result, the general publicunderstands that NGOs are working forthe common good.

The Milosevic government, of course,had a negative perception of NGOs.

Local government tended to be morecooperative, especially in “free cities”.Fortunately, already there are positivesigns of a different approach by the newgovernments at all levels. While there issome progress within NGO-governmentrelations, ties have not yet beendeveloped with the business sector.

NGOs have a difficult time publicizingtheir activities for many reasons. Thereis still a lack of interest in the media,journalists lack knowledge of the sector,NGO representatives do not have suffi-cient skills in public relations and pro-motion, and there is a lack of funding forpromotional activities. While theseproblems still exist, the electoral cam-paign made significant strides to im-prove the public image of NGOs andrelations with the media.

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SLOVAKIA

OVERALL RANKING: 1.9

The last ten years have been characterized by the extraordinary development of thethird sector in Slovakia. The sector is cultivating new values in society such as charity,solidarity, and philanthropy, as well as citizens’ participation in public affairs. The sectorhas proved that it is also able to function under great pressure, and that it is developingand maturing politically.

The ability of the third sector to achieve a consensus, define targets, and co-operate isprobably best documented by several na-tion-wide campaigns in which hundreds ofNGOs participated. In 1996, there was the‘Third Sector SOS’ campaign, announcedthrough the Gremium of the Third Sectoragainst the government’s restrictive propos-als on foundations. In 1998, the OK ’98 civiccampaign for free and fair elections signifi-cantly affected voter participation in the par-liamentary elections. A further campaignwas the Civic Initiative for a Competent Acton Information Access, culminating in thepassage of this act in May 2000.

Despite all of the above, the third sector in Slovakia still faces challenges that need to beaddressed. The most pressing issues are related to financing, legislation, and the publicimage and perception of NGOs.


The legislative framework relevant to thenon-profit sector in Slovakia haschanged several times over the past tenyears. Slovak NGOs are able to registerand operate under four existing laws –the laws on foundations, non-investmentfunds, non-profit organizations providingpublic benefit services, and civic asso-ciations. Proposed new legal standards,which should regulate the existence offoundations, non-investment funds, and

non-profit organizations in the future,have been prepared and discussed withthe Ministry of Justice of the Slovak Re-public. These include the adoption ofnew NGO legislation that reflects themajor change in NGO-government rela-tions after the 1998 elections. The Min-istry of the Interior is also expected topropose an amendment to the law oncivic associations soon.

Capital: Bratislava Inflation: 12.5%GDP per capita: $3,851 Unemployment: 11.9%Population: 5,400,000 Foreign Direct Investment: $500,000,000

Slovakia Overall Ratings

2.8 2.82.2 1.9

1.0

2.0

3.0

4.0

5.0

6.0

7.01997 1998 1999 2000


Page 151

In January 2000, the National Council ofthe Slovak Republic amended the in-come tax law. The most importantchange for the third sector enables tax-payers to designate 1% of their incometax payment for the support of publicinterest activities. This regulation willcome into effect on January 1, 2002.

NGOs are also exempt from paying in-come tax on activities connected to theorganizations’ purpose. Income tax mustbe paid on income exceeding SKK300,000 arising from unrelated activities(approximately $6,000).

The existing tax framework provides onlylimited exemptions under the law. Or-ganizations are subject to value-addedtax, import duties and interest on bankdeposits. Individuals and corporationscan deduct donations that support publicinterest aims from the tax base. In thecase of legal persons, the value of thedonation must be at least SKK 2,000(approximately $40), while a maximumof 2% of the tax base can be deductedin total.


The Slovak NGO sector has graduallyincreased its organizational capacity.This process is reflected in the profes-sionalization, specialization, and region-alization of NGO activities. In addition,new types of organizations, such asthink tanks and community developmentgroups, are being formed, which havenot been represented thus far in thewide spectrum of NGOs.

The internal structures created over thepast ten years help the sector respondto its needs, as well as to enter into dis-cussions, partnerships and co-operationwith other important groups in society.Apart from the Gremium of the ThirdSector, there are a number of nationalumbrella organizations in Slovakia.

NGOs often enter into coalitions to re-spond to the sector’s needs. For exam-ple, there have been coalitions focusedon regional development, decentraliza-tion of public services, and accession tothe European Union.

The significance of volunteerism iscoming to the fore, and special activitiesand projects are beginning to investigatethis phenomenon, revitalize its ideas, in-

crease the number of volunteers work-ing in various areas of public life, andincrease public appreciation for them.For example, on International VolunteerDay (December 5), outstanding volun-teers are awarded a ceremonial Heart ofPalm under the auspices of the Presi-dent of the Slovak Republic.

Engaging in foreign activities and react-ing to current international issues in theregion as well as in the European orglobal network is another characteristicof the growing capacity of the third sec-tor. This includes the activities of Slo-vak NGOs in the Balkans, and member-ship in international networks such asthe European Foundation Centre, theCIVICUS World Alliance for Citizen Par-ticipation, and the International Associa-tion for Volunteer Effort (IAVE).

Despite this progress, there aresignificant differences between moreprofessional and less skilledorganizations on both the national andlocal levels. NGOs still do not have equalopportunities to take advantage of theorganizational development servicesoffered by some institutions.

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The financing of the third sector in Slo-vakia is similar to that in other econo-mies in Central and Eastern Europe. Inspite of the new skills and growing pro-fessionalism of NGOs, the third sector isstill significantly dependent on foreignfinancial resources. Questions of finan-cial sustainability, systematic and trans-parent public financing, the introductionof fees for services, the diversification ofresources, as well as changes to theexisting legislation are all subjects of in-tra-sectoral discussion.

The government has various mecha-nisms at its disposal through which it isable to co-finance NGOs. Other than in-direct support, which involves the crea-tion of an appropriate legislative and taxenvironment, there is also direct sup-port, i.e., the direct financing of NGOsfrom public funds in the form of subsi-dies, contracts, and the allocation of in-come from lotteries, public collections,and other similar activities.

The level of funding allocated as a partof the proposed budget dedicated to“civic associations, foundations, andsimilar organizations” in 1996 was ap-proximately $17.6 million. In 2000, itgrew to approximately $19.6 million.

Apart from funds allocated to variousgovernment departments and statefunds, NGOs can also turn to foreigngovernment institutions with theirprojects, especially to embassies thatsupport various grant programs.

There are currently over 470 registeredfoundations in Slovakia. Most of themare operational, and only a small num-ber provide grants to other institutions orindividuals. According to available in-formation, there are only five founda-

tions in Slovakia with an endowmentfund of over SKK 1 million ($20,000),while only three have endowment fundsof SKK 10 million ($200,000) or more.

Foundations, which play an importantrole in the development of the thirdsector in Slovakia and are among thelargest donors, often simply redistributefunds obtained from abroad, as they donot have their own endowment fundsyet. In the last few years, ‘communityfoundations’ aimed at supporting civicinitiatives and cross-sectoral co-operation on a local level have comeinto being in Slovakia and are slowlycreating their own endowment funds.There is also an active group of foreignfoundations that are not resident in Slo-vakia, but have special significance forthe development of Slovak civil society.

Unfortunately, most private U.S. founda-tions have announced that they will begincutting back their funding in Slovakia.While EU funds are expected to fill thegap created by the reduction in U.S.-based support, EU support is highly di-rective, limited to program assistance,and less flexible than the assistance it willbe replacing.

In 1998, grant-making organizationscreated an informal group called theDonors’ Forum, which is aimed at in-creasing the effectiveness of grant allo-cation, and creating conditions for im-proving the financial support of the thirdsector. In 1999, selected foundations inthe Donors' Forum allocated grantsamounting to 252,677 mil. SKK (over $5million).

Private donations are another possibilityfor supporting NGOs in Slovakia. Ac-cording to the Central Tax Office of the


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Slovak Republic, the number of peoplemaking donations to public benefit pur-poses over the last four years has de-creased, though there has been a grad-ual increase in the total amount do-nated. The statistics do not specifywhether these donations were providedto state, church, or NGOs.

Apart from donations made possible byexisting legislation, voluntary collectionsby NGOs are more popular than ever.One of the most exceptional examplesin 1999 was the ‘Children’s Hour’ cam-paign by the Children’s Foundation of

Slovakia, through which the record sumof SKK 13 million ($260,000) was col-lected for projects aimed at working withchildren. The League Against Cancerhas organized ‘Daffodil Day’, a cam-paign to support programs targeted atthe prevention, early prevention, and thetreatment of cancer since 1997. In 2000,almost 6,000 volunteers, 200 localsponsors, and 100 national, regional,and local media organizations joined inthe campaign, raising more than SKK6.6 million ($132,000).

ADVOCACY: 1.5

The Gremium of the Third Sector (G3S)and the regional gremia functioning inseven administrative regions of thecountry have been the most visible rep-resentatives of the third sector, advo-cating its interests on national as well aslocal levels. G3S was involved in com-menting on several acts by presentingits opinions and resolutions on importantsocietal issues. Regional gremia serveas a platform for intra-sectoral co-operation, publicize the achievements ofthe sector, and communicate with rep-resentatives of regional and local gov-ernment offices.

Since the 1998 elections, relations be-tween the government and NGOs haveimproved significantly. A Council of theGovernment of the Slovak Republic forNGOs, chaired by the Deputy PrimeMinister, has been created as a new ad-visory body. The council is composed ofmembers of the third sector and all min-istries. The two meetings held thus farhave focused mostly on NGO legislationand the state of NGO financing from pub-lic sources.

The continuing ability of the third sectorto mobilize was demonstrated by the

NGO campaign to adopt new freedom ofinformation laws. This campaign, whichwas supported by 120 NGOS, endedsuccessfully in June 2000, when thePresident signed the Act.

International co-operation and exchangeof experience has been an importantdimension in the Slovak NGO sector.After ten years of building civil societyand surviving in an often hostile envi-ronment, Slovak NGOs have becomeready not only to learn from internationalexperiences, but also to offer and sharetheir skills, especially with their counter-parts in Central and Eastern Europewho are struggling with similar chal-lenges. There are several examples ofactive and efficient involvement of Slo-vak NGOs in the Balkans, Ukraine, andother part of this region.

SAIA-SCTS published the first Slovakpublication dealing with advocacy, enti-tled, “Civic Advocacy or How to AchieveChange in Society”, in 2000. It builds onlocal and international experience withadvocacy campaigns to stimulate inter-est and increase understanding of ad-vocacy among Slovak NGOs.

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NGOs are actively providing services in agrowing number of fields that isexpanding beyond traditional socialareas. The creation of new types oforganizations, such as think tanks, ismaking the sector’s expertise available inother areas as well.

Contracting of NGOs by publicinstitutions is limited, despite the fact

that NGOs are often able to provideservices more efficiently and lessexpensively. Existing governmentsupport, mostly in the form of grants orsubsidies, is often offered topredetermined “traditional” NGOs.

The majority of NGOs still do not chargefees for their services, thereby foregoingan important opportunity to raise funds.

INFRASTRUCTURE: 1.5

The infrastructure of the third sector isdiversifying and expanding the types ofservices it offers to NGOs. For example,the Donors’ Forum has been trans-formed from an informal group of grant-makers into an officially registered NGOthat aims to provide special services tothe grantmaking community, while con-tinuing to represent its interests andneeds.

Several well-established service, um-brella and training organizations con-tinue to offer consulting services andtraining courses, publish magazines,newsletters, and leaflets, distribute in-formation, and create to discuss andaddress important NGO issues. In 2000,

the Gremium of the Third Sector andSAIA-SCTS organized the 7th nationalconference of NGOs – the StupavaConference – and the 1st NGO Fair inPoprad. Approximately 400 NGO repre-sentatives and decisionmakers, includ-ing two Deputy Prime Ministers attendedthese events.

Various formal and informal coalitionshave been created in response to thespecific challenges of the third sector.For example, coalitions have promotedregional development, decentralizationof public services, and accession to theEuropean Union.

PUBLIC IMAGE: 1.5

NGOs in Slovakia strive to co-operatewith the mass media to make their ac-tivities public and transparent. Co-operation with the media takes differentforms, such as press conferences, in-viting journalists to third sector activities,providing press releases and interviewsand supplying notices to daily newspa-pers about the grant programs of differ-ent donors.

NGOs also use their own tools to pres-ent their activities. For example, NGOspublish their own leaflets, brochures,annual reports and other informationmaterials, put information into the secto-ral monthly NonProfit and on the Inter-net, and communicate electronicallythrough ChangeNet.


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The Donors’ Forum is presently workingto create a Code of Ethics and encour-ages other organizations to participatein this discussion.

The overall increase of acceptance ofthe NGOs is also visible from the in-crease in invitations for partnerships andco-operation extended by governmentaland other institutions.

Despite this progress, there is still a highpercentage of the population that is notinformed about the existence of the thirdsector and its activities. This is increas-ing the need to conduct sociological re-search on the “usefulness of NGOs” tofind new ways of improving the publicimage of the third sector in Slovakia.

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TAJIKISTAN

OVERALL RATING: 5.4

NGOs in Tajikistan are undergoing a renaissance. The end of wide-scale civil unrest hastransformed the nature of NGOs from service providers and humanitarian aid organiza-tions to lobbying and advocacy organizations working at both the national and local lev-els. Both the national government and regional authorities are increasingly receptive torecommendations made by non-governmental organizations.

There are more than 600 organizations officially registered in Tajikistan. Most are clus-tered in the Dushanbe, Khujand and Qurgon Teppa areas. Not all are non-governmentalin the strictest sense (many were estab-lished during Soviet times as quasi-governmental unions), and many are cur-rently inactive due to a lack of funds or thepolitical environment.

The security situation has stabilized signifi-cantly in the past year, and this stability haspromoted the development of NGOs in ar-eas outside of the capital, Dushanbe. NGOswere effective in advocating the implemen-tation of elections in the country. However,the manipulated results of the elections created a situation in which nominally-electedleaders are now more beholden to high-level political forces than they are to society,thereby clearly constraining the potential role of NGOs as agents for public lobbying andadvocacy.

The biggest problems facing NGOs in Tajikistan are organizational capacity and financialsustainability. Other than relief and humanitarian work, the civil war and political and so-cial instability that characterized Tajikistan for much of the postwar period largely pre-cluded foreign engagement with the NGO sector. Due to this “late start,” NGOs in Tajiki-stan are only beginning to develop the capacity for sustained sectoral activities. Theeconomy is in shambles following the war, and few businesses are stable enough tothink about charity. Furthermore, even donor funds must be handled through outsidebanks or in cash due to the tenuous nature of the local banking system. Despite havingthe best tax code in Central Asia, which stipulates broad tax exemptions for NGOs, thelaw is not implemented appropriately. NGOs with a more political orientation are experi-encing harassment from the government.LEGAL ENVIRONMENT: 5.0

Capital: Dushanbe Inflation: 12%GDP per capita: $211 Unemployment: 3.1%Population: 6,200,000 Foreign Direct Investment: $29,000,000

Tajikistan Overall Scores

6.15.4

6.6

1

2

3

4

5

6

71998 1999 2000


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A new NGO law was passed on May 23,1998. Organizations pushed the legalministries and participated in the draftingprocess. The new law ushered in anumber of improvements. For example,the number of founders required for anNGO to register was reduced from tento three.

Unfortunately, implementation of thenew law is taking place slowly, but or-ganizations have extensively lobbied toinform the government on these issues.After many seminars and discussionswith local NGOs, tax authorities are be-coming more acquainted with the workof local organizations and harass NGOsto a lesser extent than in previous years.

As the internal security situation in thecountry stabilizes, the government ismore willing to accept the role of NGOsin society. Stability has given the gov-ernment new priorities. In a surprisingmove forward, the Ministry of Justice isconsulting with NGOs on the develop-ment of further NGO legislation, includ-ing a law on non-commercial organiza-tions, and a law on charitable activitiesand charitable organizations.

Registration costs, averaging around$500 (but lower for certain categories ofNGOs, such as women’s groups), areprohibitive, especially for NGOs outsideof Dushanbe.


Most NGOs were founded by and arecontrolled by strong personalities. Fewhave democratic boards or maintainstrong membership. The goals of mostorganizations change with the objectivesof international donors. Little progresswas noted in this area since last year,although many organizations are strivingto better define themselves. Often, the

capacity and ability of NGOs are corre-lated directly to their relationship withthe government. Many NGO leadersmaintain positions in the government.Permanent paid staff is maintainedwhen grant money is available. No co-ordinating mechanism exists to linkNGOs together.


The relative impoverishment of Tajiki-stan prevents NGOs from becoming fi-nancially independent from internationaldonors. Local donors do not exist. In-kind financial support is sometimesavailable but is limited to the provision ofoffice space and expert consultation.Usually such in-kind contributions comefrom the government as opposed to in-dependent sources. Few NGOs in Ta-jikistan are financially transparent. Thebanking system is disorganized at best,making money transfers difficult. Com-

pounding the difficulties, no legal basisexists for NGOs to provide services.Some organizations strive to receivegovernment orders for services, butthese opportunities are also limited.While local financial support is limited,volunteers are abundant and energetic.Organizations promoting women’s is-sues, youth, refugees, and the handi-capped receive an automatic tax ex-emption, enhancing their financial viabil-ity.

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ADVOCACY: 5.5

Generally speaking, the government hasbecome more receptive to NGOs andfrequently consults with NGOs on spe-cific issues, thereby improving NGOs’influence on policy-making. Governmentofficials are beginning to better under-stand NGOs and their purpose, and tosee the impact of independent organi-zations. For example, NGO efforts tolobby the government have made animpact in the equal rights sector, whereNGOs are writing the government’sgender equality strategy for the republic.NGOs have also had some impact onthe government’s decisions on how tocarry out the election, although they re-mained silent when the disappointingelection results were announced. Self-censorship still exists to some extent –most organizations refrain from strongly

criticizing the government. NGOs arealso playing a more active role in publiccouncils recently convened throughoutthe country. NGO advocacy efforts re-main consolidated at the local, and to alesser degree, the regional levels.

Competition for international donorfunding hinders NGOs’ ability to collabo-rate on a large-scale level, although afew issue-based coalitions exist in theareas of health, ecology, and legal is-sues. In addition, coalitions were activeduring this year’s presidential and par-liamentary elections. Dilapidated anddecaying communications infrastructureinhibits effective communication be-tween organizations and thus furtherlimits the possibilities for coalition build-ing.


The dramatic and urgent situationcaused by the civil war required thatNGOs provide services and humanitar-ian assistance to those most in need.Due to these unique circumstances, Ta-jikistani NGOs are well versed in serviceprovision. While such assistance is stillneeded, it is not profitable and does notencourage the financial sustainability oflocal NGOs. The poor economic climateand banking infrastructure also severely

limit the ability of NGOs to effectivelyengage in such activities.

There remains a lack of entrepreneur-ship and innovation among projects.Many NGOs replicate each other’s proj-ects because they know such projectsare acceptable to the donor community.At the same time, NGOs are increas-ingly examining the real needs of thecommunity.


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INFRASTRUCTURE: 5.0

NGO support centers exist throughoutthe country and their numbers are ex-pected to increase during the next year.Overall, there has been an increase inboth the quality and the quantity oftrainings developed by and delivered toNGOs. Well-trained cadres of Tajik-speaking trainers exist and are expand-ing their activities into the rural areas ofthe country.

Efforts to build coalitions exist. A na-tionwide association of twelve NGOsserving over 40,000 disabled personswas established. Other associations andcoalitions include the Association ofMedical NGOs; a coalition of refugeeorganizations; and the Coalition ofYouth NGOs.

PUBLIC IMAGE: 5.0

Local media entities have increased thebroadcast time devoted to the work ofNGOs, thereby improving the public im-age of local organizations. Little nationalmedia attention, however, is devoted toNGOs. Many organizations favored bythe government have received extensiveattention from the national media, al-though the accuracy of the coverage isquestionable because these organiza-tions do not always perform the workreported. A newspaper published byNGOs and sponsored by a series of in-ternational donors continues to highlight

the successes of NGOs and is availablefor public consumption.

Some rural NGOs are also becomingbetter known due to the services theyprovide. While a few organizations havea solid community base for their activi-ties, many are not grassroots oriented;rather, their operations lie behind thecapabilities of a single individual. Due tothis limited constituency base, manyNGOs are not accessible to the generalpublic.

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TURKMENISTAN

OVERALL RATING: 6.0

The NGO sector in Turkmenistan continues to be the weakest in the former Soviet Un-ion. According to the database kept by the Counterpart Consortium, there are approxi-mately 200 registered NGOs and unregistered “initiative groups” in Turkmenistan at pre-sent. Since registration is the major problem for local NGOs, many work on an unregis-tered basis. The national government remains largely unsupportive and often times hos-tile towards NGOs, viewing them as a threat to order and stability in the country. There isno evidence that any NGOs have been able to register as “public organizations” duringthe past two years, although 10 organizations were able to register as commercialstructures in the past year. This reflects the government’s broad suspicion of the NGOsector. For the first time in three years, the Ministry of Justice began to provide writtenexplanations for refusing NGOs registration. This acknowledgment of the right of a groupto know why its registration was refused may be interpreted as a small step towardstransparency. However, most observers believe that the government will continue to re-ject applications until a new law on public or-ganizations is adopted, which is not antici-pated to happen soon.

The only organizations officially recognizedand actively supported by the government arequasi-governmental NGOs, such as the Unionof Women, the Union of Veterans, the Unionof Youth, and the Trade Union. EnvironmentalNGOs are probably the strongest in Turk-menistan. Historically, they were the first toagitate for government accountability in the mid- to late-1980s. While based among in-tellectuals and disproportionately Russian in ethnicity, many ecological groups have be-come more involved in grassroots work within communities in recent years. In addition,environmental activism attracts some participation from government officials, both formerand active. Social NGOs and groups working with disabled people are also active. Civilsociety also represents a vibrant arena for women’s participation. Approximately 80 to90% of Turkmenistani NGOs are led by women, and a great number of NGOs and initia-tive groups are comprised of female staffs. Many of the program activities of thesegroups target women and their specific needs.

In some cases, NGOs are willing to advocate for their constituencies’ needs. However,the political environment precludes political lobbying or advocacy at the national level.Furthermore, NGOs have not been allowed to participate in the process of drafting newNGO legislation.

Capital: Ashgabat Inflation: 20%GDP per capita: $537 Unemployment: n/aPopulation: 4,800,000 Foreign Direct Investment: $100,000,000

Turkmenistan Overall Ratings

66.6

1

2

3

4

5

6

71999 2000


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NGOs continue to be financially dependent on international donors. Since 1997, how-ever, there has been a marked differentiation of international funding sources for Turk-menistani NGOs. Whereas in 1997, only one organization provided grant assistance,there are now 10. Meanwhile, the inability to register prevents NGOs from undertakingany official activities, including fund raising and income generation activities. In this re-spect, technical assistance provided by donors and through intermediary support organi-zations is very important. Questions remain, however, as to whether Turkmen NGOs willbe able to mature and grow in the absence of government recognition and registration.

Most NGOs in the country remain small and have very small membership bases, limitedcommunity outreach, and poor networking and coalition-building skills. As a result, theNGO sector is still marginal in Turkmenistani society. In addition, most NGOs continue tobe run by strong personalities rather than through decentralized and democratic struc-tures of organizational governance. While this may assist NGOs in formulating and ad-hering to clear and cohesive strategies, it also limits the ability of NGOs to take the nextstep towards becoming truly sustainable organizations based on a stable and activemembership and/or constituency.


The legal environment for NGOs inTurkmenistan is probably the worst inthe former Soviet Union. Although theformal legal regime and tax code can beconstrued as being favorable for theexistence of civil society groups on pa-per, in reality, the law is not imple-mented at all, and there are serious im-pediments constraining NGO develop-ment. NGOs continue to be harassed bythe government and cannot freely criti-cize local or national governments.Many initiative groups are active andcontinue to operate without registration,however. They do so at the pleasure ofthe local or national government, andthus their activities represent ad hoc fa-voritism from individual government offi-cials rather than the legitimate exerciseof the right to exist.

As mentioned above, 10 organizationsregistered in the past year as commer-cial structures. As such, they gained le-gal status and the right to exist, but donot enjoy any of the privileges thatNGOs in Turkmenistan receive.

NGOs lack knowledge of relevant legis-lation and their legal rights. There are nolawyers in the country who specialize incivil society issues, though some con-sultations may be provided by the Min-istry of Justice to registered NGOs or bya few lawyers’ groups.

Although NGOs officially enjoy some taxbenefits, there have been cases whentaxes on grants were allegedly levied.Taxes are used as a tool for limitingand/or halting the operations

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of particular organizations. The inabilityto register affects the NGO sector’s abil-

ity to generate income legally.


Constituency building efforts remainweak in Turkmenistan. Most often,NGOs build their mission statementsand strategies around donor organiza-tions’ requirements. Only a few organi-zations have membership fees anddemocratic structures.

A scarcity of donors and a lack of localfunding impede the development of or-ganizational capacity. As many donorswork only with registered NGOs, unreg-istered initiative groups are limited intheir ability to ensure appropriate staff-

ing, management structures, and ad-vanced technical capacity. Only abouthalf of NGOs possess the organizationalmanagement capacity, institutionalstructures, and physical and institutionalequipment needed in order to operateeffectively.

A generalized lack of funding encour-ages NGOs to seek support from vol-unteers. Volunteerism seems to haveincreased over the past year; however itis still not institutionalized.


With the exception of quasi-organizations, most NGOs remain en-tirely dependent upon grants from inter-national donors. The limited availabilityof grants induces a competitive, ratherthan cooperative, intra-sectoral dy-namic. On the positive side, the growthof the international donor base forTurkmen NGOs has the potential to in-crease capacity within the NGO sectorto manage grant projects.

Depending upon the scope of activitiesand missions of NGOs, local govern-ments or the business community mayprovide in-kind donations to organiza-tions, such as free rent. However, thistype of social partnership is not system-

atic, and is susceptible to the vagariesof local political authorities and the uni-versally weak economy.

Despite these difficult circumstances,some organizations, especially outsideof the capital where donors are not pre-sent, continue to exist without donorsupport. This is particularly true for or-ganizations representing environmentalinterests and the interests of marginal-ized groups.

NGOs need more training programs todevelop and maintain sound financialmechanisms, and they will not be ableto achieve financial sustainability untilthe registration problem is solved.


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ADVOCACY: 6.3

Advocacy is practically non-existent inTurkmenistan, as it can be politicallyand physically dangerous to advocatevigorously for changes in the country.The ability of Turkmen NGOs to advo-cate varies by the issue, and is practi-cally limited to a narrow range of com-munity-based needs such as those ex-pressed by marginalized groups of inva-lids, consumer rights groups, or waterusers’ associations. The governmenttolerates no truly political or legislativelobbying. Even environmental organiza-tions, which are the strongest in thecountry, have little opportunity to lobbythe government, either nationally or lo-cally, due to the repressive attitude to-wards NGOs. However, in certain cases

when an NGO’s efforts have coincidedwith the government’s agenda – envi-ronmental curriculum reform and AIDSawareness are two examples – joint ac-tivities have taken place.

The lack of unifying ideas and experi-ences, as well as strong competition forlimited donor funds, results in the un-willingness of NGOs to create andmaintain coalitions. A nascent associa-tion of environmental NGOs was cre-ated in the summer of 2000 with thesupport of the Ministry of Natural Pro-tection. It remains unclear, however,whether it will prove strong and repre-sentative enough to play an active rolein promoting its members’ interests.


Despite a general weakness in constitu-ency building efforts, NGOs in Turk-menistan have witnessed some im-provement in service provision over thepast year. Services provided includethose to marginalized groups, such asdisabled people. NGO services are lim-ited because only registered NGOs areofficially permitted to provide services. Itshould be noted, though, that many un-registered NGOs provide assistance totheir constituents, for example re-

training services for unemployedwomen. The government does not rec-ognize NGOs as a valuable tool inhelping to solve social problems in thecountry, and its support is usually con-strained to a few quasi-organizations.Despite ongoing problems, some or-ganizations, like the Water Users’ Asso-ciation, effectively work with local com-munities to identify their needs and pro-vide services accordingly.

INFRASTRUCTURE: 5.7

It was noted by a sampling of TurkmenNGOs that there has been some im-provement over the past year in terms ofinfrastructure. This is due to an increasein the number of Intermediary SupportOrganizations and NGO Support or Re-source Centers. Such centers provideinvaluable support to NGOs and initia-tive groups by sharing information andoffering training programs and technical

assistance. However, due to the prob-lems discussed previously, they aresolely dependent on international do-nors, as they are unable of generatingincome through fee-for-service schemesor from local sources. It is extremely im-portant to sustain such centers, espe-cially because of their information dis-semination services. No governmentalorganizations are willing to disclose in

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formation to NGOs. Intersectoral part-nerships are not sufficiently developed.Existing NGO networks are limited to

information sharing activities and are notcapable of implementing advocacycampaigns.

PUBLIC IMAGE: 6.2

The public in Turkmenistan remains ex-tremely indifferent, but not negative, to-wards the NGO sector. The absence ofnon-state media in the country meansthat media coverage of NGOs is limitedto sporadic publications in newspapersand television reports, all of which re-flect the perspective of the government.Most of the population has never heardof NGOs or has incorrect informationabout them. Nevertheless, the term“NGO” has gone from being an un-known phrase to a term used frequentlyby government officials in newspaperarticles and television interviews. Withfew exceptions, neither the businesscommunity nor the government consider

non-governmental organizations as animportant community resource or asource of expertise. NGOs have madelittle effort to become more transparentby sharing information about them-selves, for fear of divulging such infor-mation to the government and law en-forcement authorities. Registered NGOsmust submit reports to the Ministry ofJustice, a practice that appears to beanother method of controlling NGOs inthe country. Unless the government’snegative and aggressive stance towardsNGOs changes, it is hardly possible toanticipate that the sector’s public imagewill improve.

NGO Sustainability Index

UKRAINE

Capital: Kyiv Inflation: 45%GDP per capita: $1,048 Unemployment: 3.7%Population: 49,900,000 Foreign Direct Investment: $600,000,000

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The Third Sector in Ukraine shows signs of energy, enthusiasm, and vigor despiteconsiderable obstacles that block progress toward sustainability. Of the 28,700 NGOsregistered as of July 1, 2000, local specialists estimate that about 3,500 are really active.NGOs are heavily concentrated in the largest cities of Kyiv, Lviv, Kharkiv and Donetsk.Of national level NGOs, 58% are in the capital, Kyiv, 18% in Lviv, and 10% in Crimea.No other oblasts have more than 5%. Approximately 16 resource centers providetraining and informational support to NGOs, and are united in their own organization, theLeague of Regional Resource Centers. A Ukrainian training organization providescourses in NGO management at several locations, and has a certificate program fortrainers.

During 1999, 268 Ukrainian NGOsformed a nation-wide coalition in favor offree and fair elections and democraticreform, the Freedom of Choice 99Coalition, that attracted foreign fundingand domestic support for its members.The Coalition has survived into 2000,albeit on a shoestring, gathering about100 NGOs to support the coalition’s newNational Anticorruption Program thatbegan in February 2000. The largestNGO in Ukraine, the Committee of Voters of Ukraine (CVU), with member organizationsin all 25 oblasts and over one hundred cities across the country, has expanded itsbetween-elections work to include community advocacy and transparency programs thatare having results at the grassroots.

NGOs in Ukraine – especially those involved with policy or advocacy -- are still heavilydependent on foreign funding, hampered by clumsy and restrictive regulations, andfrustrated in their fundraising by an unsupportive legal environment and a decliningeconomy. Still, some social-sector NGOs have been able to improve their sustainabilityby matching foreign donor grants with corporate and government funds. A few haveeven launched social enterprises to fund some of their work.

Ukraine Overall Ratings

4.0 4.2 4.14.4

1.0

2.0

3.0

4.0

5.0

6.0

7.01997 1998 1999 2000

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Much work remains to be done toimprove the legal environment so thatNGO development can flourish inUkraine. NGOs must still register bytype, and according to whether they areinternational, national, or regional. TheLaw on Trade Unions (passed late in1999) introduced comparably restrictiveand complex registration requirementsthat generated an appeal by Ukraine’sindependent trade unions to theInternational Labor Organization.

The International Center for Not-forProfit Law (ICNL), Counterpart Alliancefor Partnership (CAP), and the Institutefor Civil Society are working to generatea consensus in Parliament forimprovements in the regulations, anddevelop a cadre of lawyers specializingin NGO law. While donors are doingtheir best to provide legal training andadvice to the NGOs they fund, there is aclear need to reach many more –especially outside larger cities.Numerous clarifications in the laws areneeded. For example, tax authorities areable to interpret the existing law suchthat an NGO that distributes magazinesis a for-profit business. NGOs also seekspecific provisions that will encouragedonations to NGOs and allow NGOs to

carry over funds from one year to thenext without punitive taxation.

Following the late 1999 presidentialelections, tax police harassment ofNGOs has intensified – a policy thatmay reflect political impulses, but alsothe generally more aggressive approachto anyone receiving foreign funds.

A lack of sound legal advice is a majorconstraint on NGO development.Donors and Ukrainian activists areworking to redress this, but there is agreat deal of work to be done. The legaleducation system does not prepareprofessionals well to help. Some legaladvice is available, often pro bono, frominterested lawyers at local advocacyclinics and free clinics attached to lawschools. Foreign donors often make itpossible for some legal advice on amore systematic basis, and synergiesare created when they cooperate. Forexample, NDI’s civic program includes aCAP staff lawyer in its fund raisingseminars, and the IREX media lawspecialist has participated in seminarsand programs for NGOs and think tanks.CAP has already planned joint legaltraining with ABA/CEELI, Winrock, andthe US-Ukraine Foundation


The majority of NGOs in Ukraine aresmall local organizations, often isolated,and not eager to locate other communitygroups they may view as potential rivalsin the quest for funds or attention. Thosethat receive foreign assistance do workto build their constituencies, but this taskis much more difficult for groups inoutlying regions.

Foreign-funded organizations are morelikely to have clear goals and missions,

and foreign funded groups are amongthose few that can afford to have a smallprofessional staff. Youth groups andsocial service organizations rely muchmore on volunteers. Only the most


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on the list of requests to donors. Donorshave been happy to meet theserequests, and regard the capacity tocommunicate and build networks of

affiliates and like-minded organizationsand partner groups across borders as akey achievement.


The overall economic situation inUkraine leaves little money in anyone’spocket to contribute to charity work,professional associations, advocacygroups, or community projects. Yetthere are some successes in localfundraising. Some NGOs are doing verywell -- not just in raising funds, but indiversifying their support among anumber of foreign donors. This groupincludes think tanks, and civic actiongroups such as the Committee of Votersof Ukraine (CVU). One charity group inDonetsk has raised over one milliondollars in cash, locally. However, hintsof true financial sustainability are so farlimited to some social service NGOs

that have not only found support frombusiness and government, but haveeven been able to earn some income tosupport their charitable activities.Examples include wheelchair repairfacilities in Kyiv, Lviv, and Chernivtsythat run bicycle repair shops; ahomeless shelter in Odesa that sellsclothing made by its residents; and othergroups with unrelated economicactivities – stationery stores, pastaproduction facilities, cafés. All activeNGOs are under pressure to showaccountability and careful recordkeeping -- not just by foreign donors, butalso by the tax authorities.

ADVOCACY: 4.0

Despite a continuing decline in polls thattrack public confidence and optimism,the past year has been an exciting onefor those who have been hoping to seemore signs of successful advocacyamong Ukrainian NGOs. The Freedomof Choice Coalition that brought together268 NGOs in a national campaign forfree and fair elections and democraticreforms survives and has turned to anti-corruption advocacy. The new reformistPrime Minister has reached out toNGOs, and offered support to pro-reform think tanks, policy groups, andintegrity advocates.There is plenty of evidence that withassistance and prodding from donors,and given examples of success byothers, Ukrainian NGOs can developeffective advocacy programs. Activistsocial service groups have been

effective on the local level in severalcases: A Lviv NGO initiated a strongadvocacy campaign for the wheelchairdisabled and achieved improved accessthrough ramps on streets and in publicbuildings.

CVU has worked hard to achievechanges in election laws that will allowdomestic observers and improvetransparency. Their latest efforts havebeen high visibility, but it is still too earlyto tell how successful their mixedcitizen-government drafting group willbe. CVU has done better at the locallevel, as in its successful defense of fiveactivists jailed for trying to monitor theVasilkiv mayoral election. In Rivne, CVUactivists mobilized citizens for a “honk-in” that persuaded the city council to

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change its plans to restrict businessopportunities for citizen transport.

Think tanks and policy analysis NGOshave also has some success. One NGOconducted a study of the shadoweconomy, and the language and ideasfrom its study were incorporated into thenew government’s plan. A retailer’sunion successfully persuaded theParliament to make a small, butimportant change to the law oncorporate income tax. The community-based Integrity Partnership in Donetskachieved agreement from the Oblastgovernment to open a citizen advocacycenter, and a similar group inKramatorsk exposed and halted theftsby city employees from a businessman’sconstruction materials stockpile. Acitizens rights group in Luhansk thatsuccessfully fought a groundlessdismissal of a mayor in 1997 is nowattempting to gather evidence and

mobilize public opinion against brutalityin pre-trial detention facilities. In sum,national level lobbying has potential,although achievements have beenmodest, and greater impact wouldrequire more collaboration.

Legal advocacy groups are relativelyrare among NGOs, but can and do playan important role. In some places,lawyers and citizens have joined to takeaction to help – such as the Associationof Lawyers in Vinnitsya that providesfree legal consultations for citizens.Human rights advocacy NGOs haveoccasionally registered successes,especially at the local level. TheEnvironmental Public AdvocacyCenters, an affiliate of ECOPRAVOfunded and organized by ABA/CEELI,have had good success with legal casespursuing citizen’s rights underenvironment laws.


The majority of active NGOs in Ukraineprovide some form of service across avariety of sectors: education, environ-mental protection, legal consulting,training, empowerment, job training, andhealth services. To some extent this hasbeen driven by foreign donors thatchoose to assist those providing specificservices to their community, or to aneedy group. Reform-oriented NGOsdisseminate their studies, publications,and advice, and are highly motivated toreach and influence a wide audience ofgovernment officials, legislators, andacademics. As a result of donor re-quirements, groups receiving interna-tional grant funding have been able toreach a wider community beyond theirown membership.

Cost recovery is extremely difficult, es-pecially because of restrictive laws and

aggressive tax authorities. Althoughmany service groups have attempted tolink grant proposals to plans to use theirexpertise or facilities to generate acommercial return (using computers forjob training or website development,using physical therapy equipment to of-fer paid treatments), in general cost re-covery is rare. There have been someimpressive successes with a few “socialenterprises” that have been built by so-cial service NGOs after specializedbusiness training. In a few cases, socialservices NGOs have successfully con-cluded “social contracts”. For example,a Rivne-based Volyn resource centerhas been sub-contracted by the cityadministration to manage a small grantcompetition for social serviceoutsourcing. Elsewhere, some municipalauthorities have developed quite favor-able and supportive relations with youth


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groups, social service NGOs, or thoserepresenting groups in difficulty (such aspensioners, the disabled). The integritypartnerships in Donetsk, Lviv, andKharkiv are based on government-business-NGO agreements.

The new reformist government has of-fered support to some pro-reformgroups, including a small grant to helpthe Freedom of Choice Coalition workon its Anti-Corruption Program. The

Prime Minister’s office has asked asmall collection of pro-reform think tanksto screen policy proposals. Groups likeMothers of Soldiers work closely withthe government at many levels to seekbetter treatment for draftees –relation-ships that are sometimes difficult. Thelawyers association in Vinnitsya occu-pies an office subsidized by the citygovernment, and local deputies refercitizens to its consultative sessions.

INFRASTRUCTURE: 4.0

NGOs in Ukraine can avail themselvesof some high quality support services,thanks to the maturation of someexcellent Ukrainian resource centers.Training expertise is perhaps the bestdeveloped, as represented by thecertificate program now in place fortrainers and trainers of trainers byCounterpart Creative Center (CCC).CCC has even won contracts toadminister US Embassy grantcompetitions, and has been hired toassist foreign funded implementers inbuilding up training capacity in a varietyof fields. A number of foreign donorshave contributed to the development ofthese centers, but the effectivetemporary withdrawal of the key funder,the Eurasia Foundation, this year hasleft a big gap that has not been filled.

The Eurasia Foundation has supporteda network of NGO resource centers that

continues to grow. Recently, new oneshave appeared in Kirovohrad, and inCrimea. However, funding has not beenlevel and there is a serious need to findways to keep them operating, as mostlocal NGOs are unable to pay for theirservices. New NGOs and potential NGOs needhelp to get started, organizethemselves, register, and plan forsustainability. Increasingly, usefulinformation about potential funders, andabout legal issues is available on theInternet, and is also available throughlocal representative offices of donors, aswell as through the resource centers.Coalition building has been successfulamong the civic action groups thatformed the Freedom of ChoiceCoalition, but coalition building in othersectors -- even among groups active onsimilar tasks – has not been very visible.

PUBLIC IMAGE: 5.0

The media in Ukraine are politicallyrestrained, and face heavy harassmentfor coverage considered critical of thegovernment or leading political figures.Yet the picture is not totally bleak.Aggressive and apparently successfulefforts by a few well-funded NGOs to

utilize media, including the internet, topromote their programs, involve citizens,and publicize civic activism suggeststhat there is much untapped potential forcitizen communication in Ukraine. Insome cases, such as anti-trafficking,media and NGOs have combined forces

UKRAINE

Page 2

to help publicize the dangers oftrafficking. For the average NGO, the media canseem unfriendly or uninterested. Somedonors have sought to help remedy thisthrough publications, con-ferences, andtraining that show NGOs how to use themedia, and cultivate contacts with mediain order to promote their goals.

Internews, a USAID-funded activity insupport of independent broadcastingmedia, has also assisted NGOs directlywith production assistance for mediaspots, talk shows about their successes,and even docudramas. The legaladvocacy specialists at IREX-Promediahave also have been helpful.


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UZBEKISTAN

OVERALL RATING: 5.1

There are currently 469 active, independent NGOs in the country. There are also quasi-governmental NGOs (GONGOs), which exist in significant numbers and vary widely intheir capacity. While the NGO community is diverse, organizations specifically promot-ing women’s rights, health care, and environmental issues are able to excel in theirfields, largely because their themes echo those supported by the government. Self-censorship exists in the NGO community and the media. Most NGOs are weak in con-stituency building, tend to be small, are often led by a few dynamic personalities, dependon foreign donors for financial support, and lack transparency in both their governancestructures and finances.

The bombings in Tashkent in February 1999 produced an oppressive political atmos-phere, which has limited the ability of NGOs to take a leading role in advocating for po-litical changes. Presidential and parliamentary elections, held in January 2000 and De-cember 1999 respectively, were consideredneither free nor fair by international norms.NGOs played only a marginal role in moni-toring and supporting candidates.

A new national law on Non-CommercialNon-Governmental Organizations (NNOs)was passed in 1999 that better defines theforms and rights of NGOs. For the mostpart, this law has eased the NGO registra-tion process, but there remains intenseconfusion among regional authorities con-cerning implementation of the law. Such confusion limits the ability of NGOs to registerin certain regions of the country. Proper implementation of the 1999 law, in addition tothe passage of a law on Charitable Activities, would allow Uzbek NGOs to recover costsor provide services for a fee, aiding their efforts at sustainability.

Although the majority of NGOs are still located in Tashkent, Nukus, and Samarkand, thepast year has witnessed a substantial growth of NGO activity in other regions. The Fer-ghana Valley, Bukhara, and surprisingly, the remote southern region of Kashkadaryo, allwitnessed recent growth in the NGO sector. NGOs and other grassroots initiativegroups are also beginning to emerge in truly rural areas. NGOs have yet to develop inthe Surkhandaryo and Khorezm regions. In areas outside of Tashkent, the attitude ofthe local government towards NGOs largely determines the ability of NGOs to work ef-fectively.

Capital: Tashkent Inflation: 29%GDP per capita: $626 Unemployment: .6%Population: 24,400,000 Foreign Direct Investment: $226,000,000

Uzbekistan Overall Ratings

4.75.3 5.1

1

2

3

4

5

6

71998 1999 2000

UZBEKISTAN

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Great confusion exists about a 1999 lawregarding Non-Profit Non-Governmentalorganizations. While the law promotesand empowers NGOs, it has not beenimplemented. Interpretation of the lawvaries from region to region. Accord-ingly, the level of tolerance of the 14 re-gional branches of the Ministry of Jus-tice largely determines the ability ofNGOs to register in their regions. Con-fusion about the law does not only existamong local officials, but among manyNGOs as well, thus impeding work.Many local authorities meddle in thecharters of NGOs, dictating terms oftheir registration.

In at least one region of the country –Karakalpakistan – however, local gov-ernment officials, including members ofthe local parliament, have proven to bestrong supporters of the NGO commu-nity. In this part of Uzbekistan, NGOshave by and large not encountered diffi-culty (aside from financial) either in reg-istering or in conducting their activities.

Politically, NGOs practice self-censorship, dealing only with thosethemes that are safe from a governmentperspective. Recent political eventshave had a chilling affect on humanrights in the country. While humanrights violations in Uzbekistan have notdirectly affected NGOs, they certainlylimit the ability of NGOs to act as openadvocates for political change.

Tax breaks for NGOs exist for limitedactivities by women’s and environmentalorganizations. These tax breaks arelimited, however, and are insufficient.The government often considers grantsfrom international donors as profit, andtherefore taxes these funds. GONGOsare exempt from taxes, but grassrootsNGOs created through civic initiative arenot. Fear of taxation and harassment bythe tax police are permanent sources ofstress for service providing NGOs.


Few organizationally sophisticatedNGOs exist in Uzbekistan. The mis-sions and goals of local organizationsare generally based on the objectivesand missions of the international donorcommunity, although some recent im-provement has been noted in this area.Most NGOs lack adequate strategicplanning skills and instead base most oftheir activities on the whims of donors.

Boards of directors and broad-basedvolunteerism have yet to be developed.Charismatic and dynamic personalitiesdominate NGO leadership, and cansometimes be inflexible and resistant to

transparency and sharing control of theorganization with a board. Accountabil-ity and governance are the main chal-lenges to constituency building.

A handful of NGOs retains a permanentpaid staff, but staffing is generally de-pendent on the acquisition of donor as-sistance. When no donor funds areavailable, many NGOs work without apermanent staff. Rurally based NGOs have emergedover the past year, which is encourag-ing, as a majority of Uzbekistan’s popu-lation lives in rural areas. Such organi-zations are more dependent on con


Page 173

stituency support than international sup-port and, thus, better reflect the needs

of their communities.


The lack of convertibility of Uzbekistanicurrency and poor laws related to thetaxation of NGOs is a serious constrainton the financial viability of NGOs. Thelack of convertibility limits the financialtransparency of organizations, many ofwhich receive grants in dollars from for-eign donors, even though this is techni-cally illegal.

With a few notable exceptions, NGOs inUzbekistan are entirely dependent oninternational donor assistance. Localdonors are rare, but their

number has increased over the pastyear as NGOs have increased theirprominence in society and the media.Some NGOs receive small, off-the-books donations by local businessesand citizens. In a few instances, thegovernment has also awarded grants toNGOs for specific projects, but the ma-jority of these grants go to GONGOs.Currently, NGOs can generate incomein a fee-for-services manner, but manyorganizations are hesitant to developthis practice until the tax codes areamended to adequately stipulate theirregulation.

ADVOCACY: 5.2

Uzbekistani NGOs are promoting theircauses through advocacy campaigns toa greater extent. Generally only themost developed NGOs are involved inadvocacy efforts. Organizations workingat a local level tend to be the most suc-cessful in such endeavors, as authori-ties in the capital do not tolerate nationaladvocacy campaigns.

Given the current political environment,there are few political lobbying efforts. InJanuary 2000, the Parliament formed acommittee on NGO issues and activi-

ties, theoretically providing NGOs with adirect channel to lobby the government.However, thus far the committee is seenas a rubber stamp body (as is the rest ofparliament), where lobbying efforts areunfruitful. The creation of such a com-mittee, however, demonstrates the in-creased lobbying power and social visi-bility of NGOs.

By law, NGOs are forbidden to play anactive role in politics, but some NGOsattempt to participate in limited politicalactivity, such as monitoring elections.


NGOs are aware of the needs in theircommunities, but are not always able tomeet them, in part because strict taxa-tion laws virtually prevent NGOs fromgenerating income through service pro-vision. The current tax law taxes all in-come gained by NGOs through serviceprovision. As a result, NGOs are largelydependent on international donors for

financial support, thereby removing in-centives for marketing. Crisis centers, known as trust centers inUzbekistan, are notable in the serviceprovision sector. The number and abili-ties of such crisis centers to respond topeople in need has developed signifi-cantly over the past year. A network ofsuch centers has been established and

UZBEKISTAN

Page 174

centers in various regions of the countrywork together in close cooperation,

sharing experiences and training staffmembers in collaboration.

INFRASTRUCTURE: 5.0

Both the quantity and quality of Uzbekitrainers has improved in the past year,although their numbers still remain in-sufficient to meet demands. WhileUzbek-speaking trainers are available,training materials in the Uzbek languageare lacking. In addition, materials fromother NIS countries must be adapted tosuit the culturally Islamic and sociallyconservative situation in Uzbekistan.Few NGOs implement activities to in-crease their technical capacity; rather,they perform services to attract donorattention and potential funding. Localgrant-making organizations are barelyfunctional.

NGO Support Centers exist in a limitednumber of regional capitals. Coalitionsand networks are still rare, as few NGOsdesire partnerships with others in anatmosphere of scare donor resources.However, efforts to create coalitions incertain sectors, such as the environ-mental sector, have emerged during thepast year. A strictly government-controlled GONGO led by the deputyPrime Minister for women’s issues hasoutwardly sought to control any coalitionorganized in the women’s sector, thuslimiting any potential to advocate inde-pendently of government control.

PUBLIC IMAGE: 4.8

Press coverage resulting from the pas-sage of the 1999 law on Non-Commercial Non-Governmental Organi-zations truly bolstered the public imageof NGOs. Following the passage of thelaw, NGOs received increasing attentionfrom the local media. However, someperceptions per-

sist that many NGOs simply exist to at-tract large donor grants. There is stillsome apprehension in the public that anon-governmental organization is onethat is anti-governmental.

Previously, NGOs had to pay bribes tojournalists to attract publicity. This


Page 175

practice has ceased and journalistsregularly cover NGO events in thecapital city and in the regions. Organi-zations are publishing more materialsthat are available to the public, thus in-

creasing their public stature. On theother hand, self-regulation mechanismsare not yet developing.

STATISTICAL ANNEX

Page 176

COUNTRY SCORES: 1997 - 2000

FINAL SCORES

NORTHERN TIER 1997 1998 1999 2000CZECH REPUBLIC 2.4ESTONIA 2.4HUNGARY 2.3 1.6 2.1 2.3LATVIA 3.6 4.2 2.8LITHUANIA 4.0 3.0 2.9 3.1POLAND 1.8 2.0 2.1 2.1SLOVAKIA 2.8 2.8 2.2 1.9

SOUTHERN TIER 1997 1998 1999 2000ALBANIA 4.4 4.2 4.8 4.6BOSNIA 5.6 5.3 4.9BULGARIA 4.0 3.6 4.0 3.7CROATIA 4.6 4.4 4.6 4.3KOSOVO 4.4 4.6MACEDONIA 4.4 4.4 4.6 4.6MONTENEGRO 4.6 4.6ROMANIA 3.6 3.8 4.0 4.1SERBIA 4.8 5.4 5.4 4.5

EURASIA 1997 1998 1999 2000ARMENIA 5.5 5.1 5.0AZERBAIJAN 6.3 5.6 5.0BELARUS 5.7GEORGIA 3.6 3.8 4.1KAZAKHSTAN 4.6 4.4 4.8 4.7KYRGYZ REPUBLIC 4.6 3.9 4.2 4.3MOLDOVA 4.6RUSSIA 3.4 3.4 4.1 4.3TAJIKISTAN 6.6 6.1 5.4TURKMENISTAN 6.6 6.0UKRAINE 4.0 4.2 4.1 4.4UZBEKISTAN 4.7 5.3 5.1


Page 177

COUNTRIES RANKED BY SCORE: 1997 - 2000

2000 Prior Year Rankings Rank Score 1999 1998 1997

SLOVAKIA 1 1.9 3 3 3POLAND 2 2.1 1 2 1HUNGARY 3 2.3 1 1 2ESTONIA 4 2.4CZECH REPUBLIC 4 2.4LATVIA 6 2.8 10 5LITHUANIA 7 3.1 4 4 7BULGARIA 8 3.7 6 6 7ROMANIA 9 4.1 6 8 5GEORGIA 9 4.1 5 6RUSSIA 11 4.3 8 5 4KYRGYZ REPUBLIC 11 4.3 10 9 12CROATIA 11 4.3 12 13 12UKRAINE 14 4.4 8 10 7SERBIA 15 4.5 20 17 15KOSOVO 16 4.6 11MACEDONIA 16 4.6 12 13 10MONTENEGRO 16 4.6 12MOLDOVA 16 4.6ALBANIA 20 4.6 15 10 10KAZAKSTAN 21 4.7 15 13 12BOSNIA 22 4.9 18 19ARMENIA 23 5.0 17 18AZERBAIJAN 23 5.0 21 20UZBEKISTAN 25 5.1 18 16TAJIKISTAN 26 5.4 22 21BELARUS 27 5.7TURKMENISTAN 28 6.0 23

STATISTICAL ANNEX

Page 178

INSERT FOUR YEAR SCORING TRENDS CHART


Page 179

Legal Environment by Region

1.02.03.04.05.06.07.0

Northern Tier

Southern Tier

Eurasia

1997

1998

1999

2000

NGO Sustainability by Region

1.02.03.04.05.06.07.0

Northern Tier

Southern Tier

Eurasia

1997

1998

1999

2000

STATISTICAL ANNEX

Page 180

Organizational Capacity by Region

1.02.03.04.05.06.07.0

Northern Tier

Southern Tier

Eurasia

1997

1998

1999

2000

Financial Viability by Region

1.02.03.04.05.06.07.0

Northern Tier

Southern Tier

Eurasia

1997

1998

1999

2000


Page 181

Advocacy by Region

1.02.03.04.05.06.07.0

Northern Tier

Southern Tier

Eurasia

1997

1998

1999

2000

Public Image by Region

1.02.03.04.05.06.07.0

Northern Tier

Southern Tier

Eurasia

1997

1998

1999

2000

STATISTICAL ANNEX

Page 182

NGO Sustainability - Northern Tier

1.02.03.04.05.06.07.0

CZECH REPUBLIC

ESTONIA

HUNGARY

LATVIA

LITHUANIA

POLAND

SLOVAKIA

1997

1998

1999

2000

NGO Sustainability - Southern Tier

1.02.03.04.05.06.07.0

ALBANIA

BOSNIA

BULGARIA

CROATIA

KOSOVO

MACEDONIA

MONTENEGRO

ROMANIA

SERBIA

1997

1998

1999

2000


Page 183

NGO Sustainability - Eurasia

1.02.03.04.05.06.07.0

ARMENIA

AZERBAIJAN

BELARUS

GEORGIA

KAZAKHSTAN

KYRGYZ REPUBLIC

MOLDOVA

RUSSIA

TAJIKISTAN

TURKMENISTAN

UKRAINE

UZBEKISTAN

1997

1998

1999

2000

STATISTICAL ANNEX

Page 184

Legal Environm ent - Northern T ier

1 .02 .03 .04 .05 .06 .07 .0

CZECH REPUBLIC

EST O NIA

HU NGA RY

LA T V IA

LIT H UA NIA

PO LA ND

SLOV A KIA

1 9 9 7

1 9 9 8

1 9 9 9

2 0 0 0

Legal Environment - Southern Tier

1.02 .03.04 .05 .06 .07 .0

ALBANIA

BOSNIA

BULGARIA

CROATIA

KOSOVO

MACEDONIA

MONTENEGRO

ROMANIA

SERBIA

1997

1998

1999

2000


Page 185

Legal Environment - Eurasia

1.02.03.04.05.06.07.0

ARMENIA

AZERBAIJAN

BELARUS

GEORGIA

KAZAKHSTAN

KYRGYZ REPUBLIC

MOLDOVA

RUSSIA

TAJIKISTAN

TURKMENISTAN

UKRAINE

UZBEKISTAN

1997

1998

1999

2000

STATISTICAL ANNEX

Page 186

Organizational Capacity - Northern T ier

1 .02 .03 .04 .05 .06 .07 .0

CZECH REPUBLIC

ESTONIA

HUNGA RY

LA TV IA

LITHUA NIA

POLA ND

SLOV A KIA

1 9 9 7

1 9 9 8

1 9 9 9

2 0 0 0

Organizational Capacity - Southern Tier

1.02.03.04.05.06.07.0

ALBANIA

BOSNIA

BULGARIA

CROATIA

KOSOVO

MACEDONIA

MONTENEGRO

ROMANIA

SERBIA

1997

1998

1999

2000


Page 187

Organizational Capacity - Eurasia

1.02.03.04.05.06.07.0

ARMENIA

AZERBAIJAN

BELARUS

GEORGIA

KAZAKHSTAN

KYRGYZ REPUBLIC

MOLDOVA

RUSSIA

TAJIKISTAN

TURKM ENISTAN

UKRAINE

UZBEKISTAN

1997

1998

1999

2000

STATISTICAL ANNEX

Page 188

Financial Viability - Northern Tier

1.02.03.04.05.06.0

CZECH REPUBLIC

ESTONIA

HUNGARY

LATVIA

LITHUANIA

POLAND

SLOVAKIA

1997

1998

1999

2000

Financial Viability - Southern Tier

1.02.03.04.05.06.07.0

ALBANIA

BOSNIA

BULGARIA

CROATIA

KOSOVO

MACEDONIA

MONTENEGRO

ROMANIA

SERBIA

1997

1998

1999

2000


Page 189

Financial Viability - Eurasia

1.02.03.04.05.06.07.0

ARMENIA

AZERBAIJAN

BELARUS

GEORGIA

KAZAKHSTAN

KYRGYZ REPUBLIC

MOLDOVA

RUSSIA

TAJIKISTAN

TURKMENISTAN

UKRAINE

UZBEKISTAN

1997

1998

1999

2000

STATISTICAL ANNEX

Page 190

Advocacy - Northern Tier

1.01.52.02.53.03.54.04.5

CZECH REPUBLIC

ESTONIA

HUNGARY

LATVIA

LITHUANIA

POLAND

SLOVAKIA

1997

1998

1999

2000

Advocacy - Southern Tier

1.02.03.04.05.06.07.0

ALBANIA

BOSNIA

BULGARIA

CROATIA

KOSOVO

MACEDONIA

MONTENEGRO

ROMANIA

SERBIA

1997

1998

1999

2000


Page 191

Advocacy - Eurasia

0.01.02.03.04.05.06.07.0

ARMENIA

BELARUS

KAZAKHSTAN

MOLDOVA

TAJIKISTAN

UKRAINE

1997

1998

1999

2000

STATISTICAL ANNEX

Page 192

Public Image - Northern Tier

1.02.03.04.05.06.07.0

CZECH REPUBLIC

ESTONIA

HUNGARY

LATVIA

LITHUANIA

POLAND

SLOVAKIA

1997

1998

1999

2000

Public Image - Southern Tier

1.02.03.04.05.06.07.0

ALBANIA

BOSNIA

BULGARIA

CROATIA

KOSOVO

MACEDONIA

MONTENEGRO

ROMANIA

SERBIA

1997

1998

1999

2000


Page 193

Public Image - Eurasia

1.02.03.04.05.06.07.0

ARMENIA

AZERBAIJAN

BELARUS

GEORGIA

KAZAKHSTAN

KYRGYZ REPUBLIC

MOLDOVA

RUSSIA

TAJIKISTAN

TURKMENISTAN

UKRAINE

UZBEKISTAN

1997

1998

1999

2000

the 2000 ngo sustainability index

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