The International Journal
of Not-for-Profit Law

Volume 2, Issue 4, June 2000

A quarterly publication of the International Center for Not-for-Profit Law

Table of Contents

Letter from the Editor

Articles

Scottish Charity Law: Proposals for Reform
By Dr. Christine R. Barker

Volunteering-- The Long Arm of the Law
By Debra Morris

Do Czechs Need a New Law on Associations?
By Dr. Petr Pajas

The Freedom to Join an Association: A Principle in Question
By Barbara Rigaud

Structural and Systematic Issues Surrounding the Establishment and Management of Endowments in the Czech and Slovak Republics
By Robert N. Thomas

Report on the Violations Committed in the Course of Registration and Re-Registration of Public Associations in the Russian Federation in 1999
Prepared by the Information Center of the Human Rights Movement and the Center for the Development of Democracy and Human Rights

Reviews

An Introduction to the Not-for-Profit Sector in China
By Nick Young and Anthony Woo
Reviewed by Georgina McCaughan

Las Organizaciones de la Sociedad Civil en el Ordenamiento Legal Argentino
By GADIS and Foro del Sector Social
Reviewed by Fernando Latorre

Hacia un Desarrollo con Ciudadania
By La Sociedad Internacional de Investigación del Tercer Sector
Reviewed by Antonio Itriago

Entidades Sin Ánimo De Lucro - Regimen Tributario Especial
By Juan Carlos Jaramillio Diaz, Vargas Ballen, Jenny & Fabio Andres Duran Acosta
Reviewed by Antonio Itriago

Case Notes

North America:
the United States

South Asia:
India

Country Reports

Asia Pacific:
Australia

Central and Eastern Europe:
Regional
| Bulgaria | Croatia | Czech Republic | Estonia | Kosovo | Macedonia | Montenegro | Romania | Slovak Republic | Yugoslavia

Latin America:
Belize
| Chile | Colombia | Nicaragua | Venezuela

Middle East and North Africa:
Egypt

Newly Independent States:
Armenia
| Moldova | Russia

North America:
Canada | Mexico | the United States

South Asia:
India

Sub-Saharan Africa:
Ghana
| South Africa | Tanzania | Uganda

Western Europe:
France
| Germany | the United Kingdom

International:
CIVICUS Diamond Project | G4+1 Accounting Standards

International Grantmaking

Determining Whether to Make an Equivalency Determination or to Excercise Expenditure Responsibility
By Derek J. Aitken

Supporting Microfinance Abroad: Introductory Legal Issues for U.S. Grantmakers
By Timothy R. Lyman

United States International Grantmaking (USIG) Project Unveils New Web Site
By Derek J. Aitken

Community and Corporate Philanthropy

The Enabling Environment for Community Philanthropy

Changemakers.net

German Publication

Partnerships

Survey of the Current Legislative Framework for NPOs to Perform Social Services in Bulgaria

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Editorial Board

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Survey of the Current Legislative Framework for NPOs to Perform Social Services in Bulgaria*

By Marieta Dimitrova, Partner in AM & Partners Law Firm, Sofia, Bulgaria

December 1999

Introduction

In recent years significant changes and reforms have taken place in Bulgaria which have quite naturally affected the social sphere as well. A number of statutory acts were adopted whose underlying feature is the new approach toward the citizens' needs for social services and the role of Non-Profit Organizations (NPOs) as an dynamic component of civil society.

The purpose of the present document is to analyze the legislative provisions and the existing legal possibilities for the NPOs to provide social services in Bulgaria.

Part One of the present analysis outlines the legal background existing in Bulgaria for providing social services. In this part, we define the concept of "social service" in the context of the current legislation, and the statutory acts governing this matter are explicated. Part Two of the present analysis examines the different types of social services, the possibilities for these services to be rendered by NPOs, and the functions and powers of the coordinating bodies in this area. Parts Three, Four and Five examine and comment on the legal requirements with which the NPOs wishing to render social services should comply, the licensing procedure, and the mechanisms for funding of the activity of rendering social services. And finally, Part Six expresses the views and the opinion of the author of the report about the possible changes in the current legislation with the purpose of expanding the partnership between the state and the local bodies and the NPOs in the area of social services. Part Seven offers some practical guidelines for NGOs willing to engage in social services. The specific documents which the NPOs wishing to provide social services should fill in and submit are indicated. The paper contains also information about the individual institutions authorized to participate in the activity of funding, licensing and rendering social services.

I. Analysis of the Current Legislation/Laws, Rules and Regulations/Regulating the Matter of Social Services. Social Services Providers

The Constitution of the Republic of Bulgaria does not stipulate explicit provisions concerning the social services in Bulgaria and the role of the NPOs in that area. However, considering that social services are an indivisible part of social assistance it should be noted that chapter two of the Constitution stipulates the basic rights and obligations of Bulgarian citizens. Art. 51 provides that the citizens are entitled to public insurance and social assistance. We can conclude in this respect that the Constitution, as the basic law of the country, guarantees the right of the citizens to benefit from social services rendered in the sphere of social assistance. This right is backed up by the obligation of the state to provide an effective system for rendering social services through the generation of up-to-date social legislation.

The issues related to the performance of social services are governed by the Social Assistance Law (promulgated State Gazette, issue 56 dated 1998), the Rules of Implementation of the Social Assistance Law (promulgated State Gazette, issue 133 dated 11.11.1998, amended issue 38 dated 1999, amended and supplemented issue 42 date 1999), Regulation No. 4 dated 16 March 1999 on the conditions and procedures for delivery of Social Services (promulgated State Gazette, issue 29 dated 30 March 1998, amended issue 54 dated 1999). Other statutory acts also refer to the separate types of social services which will be examined in Part Two of the present report.

Pursuant to art. 16 of the Social Assistance Law, social services are defined as activities designated to support persons and families facing difficulties or unable to meet essential living demands. In art. 18 par.1 of the Social Assistance Law it is stipulated that social services are performed by the state and the municipalities, and by legal and natural persons. According to the current legislation, NPOs are registered as legal persons and possess the same rights as the other legal persons working in the social services domain. Individual providers which in the meaning of the law render social services may enter into contracts between themselves for the purpose of organizing and providing social services with joint participation. No preferences or limitations are stipulated with respect to the activity of the separate providers, including NPOs .

NPOs may perform all kind of activities in the social services domain if they comply with the Social Assistance Law and the statutory acts. The legislation in force does not stipulate any explicit limitations or special provisions concerning the activity of foreign NPOs in connection with rendering social services. But taking into account the conditions and procedure for granting a license for performing social services and the requirement that applicants submit a document for tax registration in the country, as well as a document for entry into the register of the relevant court, it can be concluded that for a foreign NPO should be effective, i.e. to be licensed for rendering social services, it should be registered in accordance with the Bulgarian legislation. This should not be interpreted as a limitation which does not allow a foreign NPOs, registered in another country, to provide social services in Bulgaria. Such foreign organization can incorporate a local legal person (NPO) in accordance with the requirements of the Bulgarian law and provide social services on its behalf.

II. Types of Social Services and Institutions for Social Services. Bodies. Interaction Among the NPOs, the State and the Municipalities

Considering the provisions of art. 36, par. 1 of the Rules of Implementation of Social Assistance Law and art. 3, par.1 and par.3 of Regulations No. 4 on the conditions and procedures for delivery of Social Services, the different types of social services may be divided into two major groups depending on the place of their performance. These include: social services provided in the usual home environment and social services provided outside the usual home environment. Depending on the time during which the social services are provided, they may be day-care or year-round services. Social services are rendered through a social service institution. The National Agency for Social Assistance (National ASA) ratifies the minimum statutory requirements for the organization of the activity of the social services institutions. The ratified statutory requirements are mandatory for institutions opened by natural and legal persons, including NPOs.

1 .Types of Social Services Delivered in the Usual Home Environment

These are stated in detail in art. 5-art.10 of Regulations No. 4 on the conditions and procedures for delivery of Social Services and include:

  1. day-care homes - which create conditions for the day care of persons with mental impairments, persons over 18 years of age with physical impairments with certified first or second group disability and of persons over 60 years of age;
  2. home social patronage - it provides services to persons over 60 years of age, persons with certified first or second group disability, and disabled children. Home social patronage includes the delivery of food, maintenance of the personal hygiene and the hygiene of the premises, inhabited by the person attended, providing necessary assistance in case of disability or serious illness, assistance in the communication and the maintenance of social contacts, and rendering various everyday services;
  3. social services bureaus - which provide social and legal consultations on problems related to social assistance, engage in activities for the distribution of humanitarian aid, perform social work with disadvantaged children, persons and families, offer consultations and assistance in finding jobs, caring for babies, elderly and sick people, consult and assist persons and families who want to adopt a child;
  4. centers for social rehabilitation and integration - which render social services to children with slow development, to children and adults with sensory impairments, to children with difficult behavior, children and adults with physical impairments, persons with mental impairments, disadvantaged children and adults, abused children and women, alcohol addicts, drug addicts, former prisoners, persons prostituting, and beggars. The centers provide rehabilitation, social and legal consultations, orientation to social services institutions, programs for social integration and re-socialization, education and vocational orientation, and training in professional skills of persons with mental impairments;
  5. dining centers - providing food for the needy;
  6. clubs for disabled persons - organizing social contacts and possibilities for active life for persons with a certified group of disability;

Before examining the social services provided outside the usual home environment we will explore the specific day-care social services delivered to the disabled, stipulated in art. 44 of the Law on the Protection, Rehabilitation and Social Integration of the Disabled (promulgated State Gazette, issue 115 dated 1995). Part of these services constitute a special case of the day-care homes: the centers for social rehabilitation and integration, the dining centers and the clubs of the disabled due to which they will not be commented explicitly upon in the present account. Together with them, however, other possible day-care social services for the disabled are provided for in this law and namely: residential care for the disabled at their homes, opening of specialized shops, rendering of everyday and communal services, as well as administrative, legal and intermediary services tailored to the individual needs of the disabled. All social services in the meaning of the Law on the Protection, Rehabilitation and Social Integration of the Disabled can be performed by natural and legal persons, NPOs and religious communities, after receiving permission from the Ministry of Labor and Social Policy.

2. Types of Social Services Provided Outside the Usual Home Environment

They are stipulated in art. 11-art.18 of Regulations No. 4 on the conditions and procedures for delivery of Social Services, and are rendered in the following institutions and include:

  1. homes for children or adults with physical impairments. Those render social services to children and young persons of 7-25 years of age with heavy physical impairments that prevent them from attending ordinary and special schools within the system of the Ministry of Education and Science, persons under 18 years of age with heavy physical impairments of the limbs with first or second group certified disability, and blind persons over 18 years of age;
  2. homes for children or adults with mental impairments which provide social services to children and young persons from 3 to 18 years of age with a different degree of mental impairments, children or adults with sensory impairments (blind, deaf), persons over 18 years of age with different degree of mental impairments, persons over 18 years of age with mental illnesses, and persons over 18 suffering from dementia;
  3. social vocational centers which provide professional qualifications and new qualifications to persons from 14 to 35 years of age which have a certified group of disability, with slight intellectual retardation and with sensory impairments, as well as to children over 14 years of age coming from disadvantaged families;
  4. children's villages which provide conditions for short-term recreation for children and young persons from 7 to 18 years of age who are orphans or with one living parent, children of divorced parents or of single mothers, children from families eligible for social assistance or from disadvantaged families, children from social services institutions, and children from refugees' families;
  5. homes for elderly persons which provide social services to persons over 60 years of age, as well as to persons with impaired mobility or bedridden patients of the same age;
  6. homes for temporary accommodation in which social services for homeless persons over 18 years of age are rendered. The period of accommodation in these homes can extend up to three months within one calendar yea. Article 16, par. 3 of Regulations No. 4 provides an exception with regards to orphans who have completed social vocational institutions or other institutions and who can be accommodated in the homes for temporary accommodation for a term of one year;
  7. orphanages in which social services are rendered to children and young persons who are under 18 years of age and left without parental or foster care. The activity of the orphanages is stipulated in the Rules on the organization and the activity of the homes for abandoned children, issued by the Ministry of Labor and Social Policy (promulgated State Gazette, issue 29 dated 1999);
  8. seasonal homes, which provide conditions for recreation for a period of up to three months to persons over 60 years of age, persons over 16 years of age with a certified group of disability able to attend to themselves and persons and families with children under 18 years of age who are eligible to receive social assistance.

Pursuant to art. 21 of the Social Assistance Law, NPOs may perform all the activities in the social services, provided they comply with the current legislation. Considering the other statutory acts in the domain of social assistance, it can positively be concluded that there are no social services in Bulgaria that under the law or other statutory act are confined solely to the area of operation of the state or the municipalities. The provision that gives green light to the NPOs for working in the social sphere is permanently provided in the legislation. The question is not whether there is a legal possibility for the NPOs to render social services but rather whether favorable conditions for the practical realization of this possibility are being created. The problem will be analyzed when expounding on the interaction between the different social services providers and more specifically on the possibilities for interaction between the NPOs, the state and the municipalities, as well as in the part considering the possible changes in the statutory acts which guarantee and expand the role of the NPOs in the social services domain.

3. Bodies

The state and the municipalities render social services by virtue of the law, and state and municipal bodies have the managing, coordinating and controlling functions in the area of social assistance and services. For NPOs working in the domain of social services, it is important to be familiar with the structure, functions, and powers of these bodies.

State policy in the area of social assistance is determined by the Council of Ministers. The Ministry of Labor and Social Policy is the specialized body of the Council Of Ministers that is responsible for the management, coordination, and control in the domain of social policy and hence in the domain of the social services. Pursuant to Epistle No. 485 of the Council of Ministers dated 22 Dec. 1997 (promulgated State Gazette, issue 125 dated 1997) defining the main functions and objectives of the Ministry of Labor and Social Policy in the domain of social assistance, the Ministry:

The activities in the domain of social services are performed by the Ministry of Labor and Social Policy in cooperation with the municipalities and NPOs pursuing charitable and other philanthropic goals. To achieve this cooperation the Social Assistance Law provides for the formation of a Council of Social Assistance as a public consultative body at the Ministry of Labor and Social Policy. Representatives of the different Ministries, the National Association of the Municipalities of the Republic of Bulgaria, representatives of the organizations of the employers and the employees, represented on national level, as well as representatives of the NPOs participate in the Council of Social Assistance. The organization and activity of the Council of Social Assistance shall be regulated by a decree of the Minister of Labor and Social Policy. At the time of the compiling of the present report no such decree has been issued.

The specialized body of the Ministry of Labor and Social Policy in the area of social assistance is the National Agency for Social Assistance (National ASA), whose structure is approved by the Minister of Labor and Social Policy. National ASA is a legal person with an independent budget. This specialized body prepares and proposes legislative drafts in the domain of social assistance, develops and ratifies legal requirements for the activity in social assistance, gives permissions for the opening and closing of social services institutions, grants licenses for the rendering of social services, and performs other activities connected with the further qualification of the personnel working in the domain of social assistance. Regional Agencies for Social Assistance are created at the National Agency for Social Assistance. They have basically managing and controlling functions regarding the activity of the municipal offices for social assistance.

The maintenance costs of National ASA and the regional agencies are covered by the republican budget.

The municipal office for social assistance is the specialized body for social assistance in the municipality. It is a legal person maintained by the municipality's budget. The institutions rendering social services on the territory of the municipality are also included in the structure of the municipal office. The municipal office for social assistance works in cooperation with the NPOs and other natural and legal persons and encourages their activity in the area of social assistance.

III. Legal Relationship Between the Municipalities and the State, and the NPOs Rendering Social Services

As it was mentioned earlier in this report, social services are provided by the state, the municipalities, by natural and legal persons including NPOs. They can organize and render social services with joint participation on the basis of a contract. In the present section we shall expound on the existing possibilities for the NPOs providing social services to use state or municipally owned real estate property in their activity, and the joint participation, respectively, in rendering social services.

Firstly, we shall examine the possibilities for the NPOs providing social services to enter into contracts for lease of municipal real estate property, to acquire ownership rights on estates constituting municipal property or limited estate rights on them, and the possibility for gratuitous use of municipal real estate property

Pursuant to the Law on Municipal Property (promulgated State Gazette, issue 44 dated 1996), municipal property can be private and public. Under the provisions of art. 12, par.3 of the same law the real estates and the chattels which are public municipal property cannot be leased, remised or used jointly with third parties. Public property is the real estate intended for the accomplishment of the functions of the local authorities and administration, as well as the real estate designated to satisfy the public needs of municipal importance and the cultural sites. All other municipal estates and chattels, not included in the scope of public property, are private municipal property. Therefore NPOs, on the grounds of their activity, can negotiate the use and the acquisition of rights only on sites constituting private municipal property. The municipal council of the respective town or village organizes the care for, the management and the disposition with the municipal property by a special decree on the procedures for the acquisition, care for, the management of and the disposition with municipal property. It should be noted that every municipal council adopts such a decree and although it is based on the law it is possible that certain differences might exist for the different municipalities.

NPOs rendering social services have the possibility, under the provisions or art. 14, par. 2 of the Law on Municipal Property, to lease premises in private property of the municipality for the performance of social activities. The lease is based on a writ of the municipality mayor under the terms and procedures of the above decree of the respective municipal council. The term of the lease cannot extend to more than 3 years. Thus the ensuing lease-hold legal relations may be terminated on the part of the municipality before the end of the term if a pressing municipal need arises. In that case the lessee is obliged to vacate the premises within a period of three months from the service of the notice. In addition, NPOs may acquire the right of ownership on a real estate - private municipal property, or limited property right of construction on municipal land under the general procedure upon the holding of auction. A contract is signed on the grounds of the results of the auction.

The Law on Municipal Property does not provide for preferences for NPOs rendering social services in leasing or acquiring estates constituting private municipal property. A tangible opportunity for efficient cooperation between the NPOs and municipalities in the sphere of social services exists under art. 39 of the Law on Municipal Property. Pursuant to the above-mentioned provisions, there is a legal possibility to constitute a gratuitous right of use to a NPO on a estate which is private municipal property. The gratuitous right of use is constituted with the writ of the municipality mayor for a period not longer than 10 years and only upon the decision of the municipal council. A contract between the municipality and the NPOs is concluded on the grounds of the writ. It should be noted here that the law does not explicitly list or favor the NPOs but since this is a possibility opened to all legal persons, the NPOs rendering social services are implicitly included. The requirement for the writ of the mayor to be based on the decision of the municipal council presupposes the preparation of a motivated project for rendering social services on part of the organization. The project is considered by the municipal council before the decision is taken.

The Law on State -Owned Property (promulgated State Gazette, issue 44 dated 1996) provides also the possibility for use of real estate - private state-owned property for the performance of social activities. Similarly to the Law on Municipal Property, the Law on State-Owned Property distinguishes between state-owned public and state-owned private property. Public state-owned property includes the sites constituting exclusive state-owned property under the provisions of the Constitution of the Republic of Bulgaria, real estate remised to the government institutions, real estate to meet public needs of national importance, as well as cultural sites. The public state-owned real estates can not be expropriated, encumbered with estate rights and acquired because of prescriptive rights. Therefore with respect to sites owned by the state, NPOs rendering social services might use only estates constituting private state-owned property. Basically, private state-owned property sites are leased by auction or with a tender. But art. 19, par. 2 of the Law on State-Owned Property provides through National ASA the legal means for interaction with the state for NPOs rendering social services. According to this decree, real estate may be leased without auction or tender for the health, educational and humanitarian activities for satisfaction of the respective social needs of the population. The leasing is done by the respective local executive or the head of the government institution at prices fixed by the Council of Ministers. The term of lease of such premises cannot be extended for more than 3 years, except with the approval of the Minister of Regional Development and Urbanization. The Law on State-Owned Property does not permit the leased premises to be sub-leased, to be remised or used jointly with third parties under a contract.

In view of the aforesaid, it can be concluded that no preferences for NPOs rendering social services are established in the law that regulates the management of the municipal and state-owned property. They are treated equally with the other legal persons. There is no obligation for municipalities or the state to assist NPOs providing social services by renting them premises or other material assets. Rendering social services with the joint participation of the state and the municipalities on the one hand and the NPOs on the other presupposes a contract under which the state, respectively the municipality, undertakes certain obligations in relation to the rendering of social services. The very limited legal possibilities for gratuitous use of premises which are municipal or state-owned property, restrict and do not encourage providing state-owned or municipal property for use of management by NPOs.

IV. Licensing . Licensing Procedure Under Special Laws

Unlike the state and municipalities, the natural and legal persons, including NPOs, need to be granted a license to receive funding from the Social Assistance Act for rendering social services. The rules for licensing of natural and legal persons and NPOs that provide social services is provided at a legislative level - in the Social Assistance Law. Provisions to this effect are also contained in the Law on the Protection, Rehabilitation and Social Integration of the Disabled. The terms and procedures for granting licenses are stipulated in a statutory act - The Rules of Implementation of the Social Assistance Law.

Licenses for rendering social services are granted by the National ASA. Pursuant to art. 42 of the Rules of Implementation of the Social Assistance Law, the applicants wishing to be licensed and receive funding from "Social Assistance" fund for rendering social services, including NPOs, submit at the National ASA the following documents for issuing of a license:

  1. application;
  2. description of the planned activities;
  3. copies of the certificates of registration at the relevant court and copy of the statutory or administrative act of their incorporation;
  4. evidence of tax registration for the tax-liable persons;
  5. a receipt for paid application fee. On issuing or renewal of a license the applicant pays a fee of 10 levs. The fee is deposited in the "Social Assistance" fund.

Legislation does not provide for specific requirements for the foreign NPOs. The provisions of art. 42 of the Rules of Implementation of the Social Assistance Law, however, implicitly stipulate the requirement that foreign NPOs can apply and be granted license for rendering social services only if they are registered as NPOs under Bulgarian law.

The applications for license granting are considered by a commission consisting of five members chosen under rules established by the Director of the National ASA. The commission considers applications in the order of their filing and if necessary, may ask for the opinion of other experts about the social effect of the activities for which license is intended. The commission has the right to require the applicants to submit additional documentation. If inaccuracy or incompleteness is established in the application documents, the commission notifies the applicant within 3 days and gives instructions for their correction. Within 14 days from the submission of the documents, the commission makes its recommendation to the director of the National ASA for the granting or refusal of a license. In case of recommended refusal, the commission presents its reasoning in writing. Within 14 days of the submission of the commission's proposal the head of the National ASA issues the license. The refusal of the director of the National ASA to issue a license is subject to appeal under the procedure of the Law on Administrative Legal Proceedings, before the Supreme Administrative Court. The term of the granted license for rendering social services is 5 years. Upon the expiration of this period, the owner of the license may submit a new application for its renewal together with the required documents.

The documents submitted by the applicants are kept at the National ASA in accordance with the Law on the State Archives Fund and are available to all persons holding a legal interest. If malpractice are established the head of National ASA issues a motivated ordinance for revoking of the license. The persons concerned are notified to this effect within 7 days from the issuance of the ordinance. The ordinance with which the license is revoked may be appealed under the procedure of the Law on Administrative Legal Proceedings before the Supreme Administrative Court. A new license may be granted one year after the revocation of the first license, upon the showing that the requirements of the law have been complied with.

NPOs operating in rehabilitation and social integration area, including social services for the disabled, should be granted a license under the Law on the Rehabilitation and Social Integration of the Disabled. This requirement is stipulated in art. 4 of the Law on the Rehabilitation and Social Integration of the Disabled and is elaborated in details in the Rules governing its application. Persons who wish to be granted a license, including NPOs, must submit an application tot the "Rehabilitation and Social Integration" Fund (RSIF), with a description of the planned activities and copies of the certificates of registration at the relevant court that provide evidence of tax registration. The application with the attached documents is considered by a commission of five members. Within 14 days from the submission of the documents the commission makes its recommendation to the president of the fund for the granting or refusal of a license. Within 14 days of the submission of the commission's proposal, the president of the fund issues the license and in the case of refusal states his/her motives in writing. The refusal for granting a license by the president of RSIF is subject to appeal under the procedure of the Law on Administrative Legal Proceedings. The term of the granted license for rendering social services is 5 years. Upon the expiration of this period, the owner of the license submits a new application for its renewal together with the required documents. The granted licenses are entered in a special register which is kept in the RSIF.

V. Funding and Control

Social services are provided against payment of fees by the persons who use them pursuant to the Law on the Local Taxes and Fees or under agreement between the parties. Pursuant to art. 17 of the Social Assistance Law there are several possibilities for the payment of the fees and more specifically:

Natural and legal persons, including NPOs, may open institutions for the performance of social services by defining the conditions and procedures under which the social services will be rendered in compliance with the minimum normative requirements affirmed by the National ASA. The persons using the services pay fees for the social services rendered by those institutions. These fees, however, are a very inadequate resource for funding of such institutions, since art. 18, par. 1 of the Social Assistance Law stipulates that when NPOs render social services and the proceeds accrued from fees for rendered social services exceed the expenses, according to their annual financial reports, the surplus is deposited in the Social Assistance Fund. Conspicuous is the fact that the Law does not stipulate such an obligation for the other social services providers which puts the NPOs rendering social services at a disadvantage. The cited provision does not take into account the operational and administrative expenses of the NPOs in connection with the rendering of social services. In fact, the provision contravenes the established legal opportunities for a NPO which quite naturally does not make profits, to make profits with non-commercial purpose but rather for the funding of its activity.

For the purposes of funding social assistance activities, the law provides for the institution of a Social Assistance Fund at the Ministry of Labor and Social Policy.

The Social Assistance Law opens up the possibility for licensed NPOs operating in the social services domain to apply to the Social Assistance Fund for funding after providing adequate justification for a project. The current legislation, however, does not provide for a procedure for application and allocation of funds from the "Social Assistance" Fund, neither there are distinct criteria for applying or a term for the pronouncement of the competent authority. In that case, without appropriate guarantees and obligations of the state this possibility could turn into empty rhetoric without actual utilization. The NPOs apply for resources from the fund on equal footing with the other licensed legal and natural persons.

The Social Assistance Law binds the NPOs which have received funding from the "Social Assistance" fund to submit annual general and financial reports to the National ASA on their activity in the area of social services. Such obligation is not stipulated for the other licensed legal and natural persons which have used financial resources from the fund. This distinction in treatment clearly discriminates NPOs in contrast with the other social services providers.

Another, specific possibility for the NPOs to apply for funding by the state exists under the Law on the Protection, Rehabilitation and Social Integration of the Disabled. Under the provisions of art. 48 of the same law the Rehabilitation and Social Integration Fund is instituted at the Council of Ministers. The fund is a legal person with a non-budget income debit and credit account and registered office in Sofia. The resources of the "Rehabilitation and Social Integration" Fund are used for the support of projects and programs for disability prevention, and for rehabilitation and social integration of, and social assistance to the disabled. The fund is administered by a Management Council which organizes tenders and decides on projects and programs for prevention, rehabilitation, and social integration. NPOs rendering social services for the disabled may apply for funding of projects and programs by the fund. The Managing Council is the decision-making body. In case of refusal for funding the Managing Council must motivate the refusal by specifying the actual and legal reasons for such decision and within 14 days of its pronouncement notify the persons concerned. The refusal of the Managing Council may be appealed under the procedure of the Law on Administrative Legal Proceedings before the Supreme Administrative Court.

The control in connection with the rendering of social services is exercised by the Ministry of Labor and Social Policy. The specialized controlling body is the Inspectorate at the National ASA. In performing their controlling functions the inspectors have the right to visit without limitation the places where social services are rendered, to demand explanations and the presentation of documents, verifications, and information. The inspectors must maintain confidentiality of private and classified information which has become known to them in the course of their inspection as well as to respect the honor and dignity of the aided persons. If infringements of the law are established, including data for committed crime, the inspector immediately notifies the prosecutor's office. If the infringements do not constitute a crime under the Penal Code of the Republic of Bulgaria the inspector has the right to impose the following administrative sanctions:

  1. to give mandatory instructions for the elimination of the recognized infringements;
  2. to suspend the enactment of the illegal decisions of the social services institutions;
  3. to enter into the register of the licensed NPOs the information about the recognized infringements.

Other bodies granted controlling functions are the Public Councils instituted by a decision of the Municipal council. The Public Councils render assistance and cooperate in accomplishing the activities of social assistance, and exercise public control on their performance.

VI. Suggestions for Legislative Changes with View to the Expansion of the Possibilities of NPOs for Rendering Social Services  

The Social Assistance Law provides that the Ministry of Labor and Social Policy performs the activities of social policy in cooperation with the municipalities and the NPOs. The municipal offices for social assistance work in cooperation with the NPOs with charitable and other humanitarian purposes and with natural and legal persons and encourage their activity in the area of social assistance. Similar provisions are stipulated in other laws and regulations which pertain to the social sphere and the rendering of social services. Some of these provisions acknowledge the role of the NPOs. They express the recognition on behalf of the state and the municipalities of the potential of NPOs for solving problems in the social sphere by active participation and cooperation of these organizations and express the new attitude and approach of the lawmaker toward the NPOs. Undoubtedly this is one positive tendency which however needs further development. The possibilities for NPOs to participate in providing social assistance, to render social services and to stimulate their activity with the provision of certain counter-part engagements on behalf of the state should be guaranteed and expanded.

In this respect, specific provisions which guarantee the actual cooperation in the social services area between the state and the municipal bodies, on the one hand, and the NPOs, on the other hand, should be stipulated in the Social Assistance Law and the pertaining rules and regulations.

Under the current legislative provisions the social services are institutionalized, and under the existing system of social services' institutions they are rendered predominantly by the state and the municipalities. The institutionalization of the social services, the fact that the institutions in Bulgaria operate in the conditions of Currency Board, and the interference of still existing but outdated models for delivery of social services affect negatively the quality of social services. The law does not preclude NPOs from providing all kinds of social services while wholly undertaking the responsibility for the financial support of this activity. But the possibilities to look for funding by the state for rendering activities in the sphere of social services are extremely limited and NPOs have to rely on funding predominantly by other sources (e.g. funding by foreign donors still occupies an essential place among those sources).

Therefore, to encourage the activity of rendering social services by NPOs, it is necessary for the law to emphasize the alternative forms of joint delivery of social services which combine the efforts of the state, the local authorities and the NPOs, secured with the respective mechanisms for funding. One such alternative form, for example, is the commissioning of the management of social services institutions, opened by the state or the municipality, to NPOs as well as the joint establishment of such institutions with the division of the obligations and the funding accordingly. Unfortunately, experience has shown that examples of joint rendering of social services on the basis of a contract between the state and/or the municipalities and the NPOs are extremely limited. In most cases the relations are not regulated by a written agreement since there are no legislative provisions to that effect. In that case the general provision acknowledging the role of the NPOs in the sphere of social assistance is not adequate, and remains a “green-light provision” only.

Without the stipulation of a procedure, clear-cut requirements for to the NPOs and the obligations of the state or/and the municipalities regarding the conclusion of contracts for joint delivery of social services with the NPOs, the provision of art. 39 of the Rules on the application of the Social Assistance Law which state that social services may be organized and rendered with the joint participation of the separate providers, remains just wishful thinking and has a rhetorical character. The NPOs should also be given an equal standing as social services providers alongside with the state and should enjoy more expressly stated rights and even preferences in the area.

With respect to the possible changes in the current legislation, the present analysis suggests the following :

First, to introduce regulation by law of the forms of rendering social services jointly by the state/municipality and the NPO as a kind of social mandate, and to adopt the approach of decentralization of the management and funding of the activity provision of social services. The obligations of the state and the municipalities in the area of social assistance should be clearly differentiated. The local authority in the body of the municipalities should receive more freedom and flexibility to manage the activity in delivering social services and to fund jointly with NPOs the rendering of such services. The mechanism of such social mandate includes: the defining of clear-cut criteria for NPOs which are eligible to apply for commissioning, the procedure for commissioning and short terms for the pronouncement of the competent authorities, parameters for the financial involvement of the state/municipality for joint rendering of social services. The relations between the state, municipalities and the NPOs should be settled with a contract regulating the specific possibilities for funding. Another issue to be considered is the establishment of minimum mandatory content of these contracts.

Secondly, if the above stated concept for commissioning the activities of rendering social services on the basis of social mandate and the development of alternative forms for rendering social services, is accepted, it would become necessary to amend the procedures for funding NPOs, consistent with the procedure for commissioning. The existing legislation and the Law on Municipal Budgets in particular should explicitly provide for possibilities and procurement mechanisms for municipalities to fund NPOs in the area of social services. Changes should be also made with regard to the procedure for licensing. The procedures for granting licenses should be accompanied by certain specific rights or privileges for the NPOs rendering social services rather than being simply a formal requirement. This would put an end to the existing practice of NPOs performing activities in the area of social services to work piecemeal, and will encourage the formation of an overall concept about the role of NPOs in this area.

Thirdly, the current tax legislation should also be changed with the purpose of stimulating benefaction and charitable activities, for the facilitation of funding of NPOs from various sources.

Fourthly, certain amendments are recommended in the laws which establish the conditions and procedures for the use of state-owned and municipal property with the view of creating favorable possibilities for the state-owned and municipal estates to be used free of charge by NPOs rendering social services.

And fifthly, alternative forms for rendering and performing social services for the different categories of citizens in need should be developed at the legislative level. Thus, for example, the Child Protection Draft Law, which is to be ratified by the Bulgarian Parliament in the second reading,[1] provides for the possibility for NPOs to open family homes, day-care homes and other alternative forms for the upbringing and education of children in a family-like environment. Such modern approaches toward social services to children could be adopted also toward the rendering of social services to the disabled and other categories of persons and families eligible to such services.

VII. Practical Manual

1. Documents for Applying for Licensing and Allocation of Resources from the State Funds 

NPOs wishing to provide social services and be funded by the Social Assistance Fund should first be granted a license by the National ASA. On applying for such license NPOs have to submit an application in free format with a description of the planned activities. They also have to prove their legitimacy by submitting the relevant documents (Court Decision for registration, certificate of tax registration) attached to the application. At the time of writing of the present report about 30 NPOs have applied for licensing and have been granted a license respectively. A sample form of a license is given in Appendix No.1. Practice, however, shows that this licensing procedure is too formal and few of the licensed organizations have in effect opened institutions for rendering social services. Most licensed organizations work on joint projects with foreign NPOs.

The NPOs which apply for funding by the Social Assistance Fund and the Rehabilitation and Social Integration Fund should be aware that the specific application requirements for applying are developed and determined by the Managing Boards of the funds. These requirements are not stipulated in a statutory act and are subject to change depending on the decisions of the managing bodies of these funds.

It is mandatory for NPOs rendering social services that want to apply for funding by the Social Assistance Fund to have been granted a license by the National ASA.[2] The allocation of funds is possible only after the NPO has provided justification for a project. The documents which the applicants submit before the Fund include documents concerning their registration and legal status as well as information about the project (description of its scope, objectives, activity, strategy, duration, financial information).

NPOs which apply for funding by the Rehabilitation and Social Integration Fund must receive in advance a permission by the President of the fund. On applying they submit:

2. Fees Paid by the Persons Using the Social Services Pursuant to the Law on the Local Taxes and Administrative Fees.

Article 90 of the Law on the Local Taxes and Administrative Fees (promulgated State Gazette, issue 117 dated 10.Dec.1997) stipulates that persons who are accommodated in private boarding houses or private social patronage pay fees as agreed. The institutions covered by the provision in this particular case include social services institutions opened by private natural or legal persons, including NPOs. When negotiating the amount of the fees NPOs should take into consideration the provisions of art. 18, par.2 of the Social Assistance Law. Under this provision if the financial reports show that the proceeds from the fees exceed the expenses the surplus is deposited in the Social Assistance Fund.

Article 86 of the Law on Local Taxes and Administrative Fees stipulates that persons using homes for social care or other forms of social services pay a monthly fee into the account of the municipal budget to the amount corresponding to the actual sustenance of one person. The law defines the scope of the actual sustenance of one person. It includes monthly expenses for food, bedding and clothing, laundry and hygienic products, transport expenses for the delivery of food, as well as the corresponding part of the common expenses for electricity and heat, water, pluming and garbage, with the exception of the target aids for the use for every-day needs of electricity, fuel, water, laundry and clothing provided by the government and non-government organizations to the institutions for social care and other forms of social care.

The fee due is deducted from the individual income of the person receiving social services. The amount available to those persons for individual expenses should not be less than:

The provision of art. 87, par. 3 of the same law states that if the remaining part of the individual income is insufficient for covering the fee due for the social service, the difference is covered by the budget of the municipality in which the home or the other social care institution is established.

The Law on the Local Taxes and Administrative Fees stipulates in art. 87, par. 4 that for persons who pay alimony to minors, the amounts of the individual expenses and the fee for receiving social service are determined after the deduction of the adjudicated alimony.

The Law on the Local Taxes and Administrative Fees exempts from the payment of fee for the received social services persons who do not have any individual income and savings. Art. 88 of the Law on the Local Taxes and Fees specifies the categories of persons exempt from fees for the social service they receive. These include: children under 16 years of age, accommodated in institutions for social care and in day-care homes and children under 18 years of age trained at social vocational centers; persons temporarily accommodated in distribution centers and orphanages; children with health and social problems accommodated for a short-term recuperative rest in children's villages.

The Law on the Local Taxes and Administrative Fees provides that orphans and children with one living parent under 18 years of age and without individual income who have been accepted for training at the social vocational centers are provided with resources for individual expenses to the amount of 50% of the basic minimal income

In conclusion, a very small number of NPOs work effectively in the sphere of social services in Bulgaria and they rely in their activity primarily on funding form foreign sources (foreign organizations and foreign governments).

Nevertheless, their experience even under current legislation shows that NPOs have extremely high capacity in the social sphere. The existing bond between the nature of the social services and the non-profit objectives in the activities of the NPOs represents a solid basis for delivering efficient, high quality, and low cost social services to citizens in need. The primary task of the new Bulgaria legislation in the social sphere is to develop this idea by providing for and guaranteeing wider rights and possibilities for NPOs to deliver social services.

Appendix No.1

Ministry of Labor and Social Policy

National Agency for Social Assistance

License

No.

for rendering social services

1. …………………………………………………………………………………………………………………………………………

2. …………………………………………………………………………………………………………………………………………

3. …………………………………………………………………………………………………………………………………………

Issued on ……………………………………………………………………

Registered office, address ……………………………………………………………………………

Date of issuance …………………………………………………………………………………………………… Director of the National Agency for Social Assistance:

……………………………………………………

The license expires on: ……………………………………..

The license hereby is issued on the grounds of art. 43, par. 5 of the Rules of Implementation of the Social Assistance Act (Epistle No. 243 of the Council of Ministers dated 1998) and application Ref. No. ………………..dated ………………..19……

Appendix No.2

List of laws, rules and regulations used:

  1. Constitution of Republic of Bulgaria of 1991
  2. Social Assistance Law of 1998
  3. Law on the Protection, Rehabilitation and Social Integration of the
    Disabled of 1999
  4. Law on Municipal Property of 1996
  5. Law on State Owned Property of 1996
  6. Law on Administrative Legal Proceedings of 1979 (last am.1999)
  7. Law on the Local Taxes and Administrative Fees of 1997
  8. Law on Municipal Budgets of 1998
  9. Child Protection Draft Law
  10. Rules of implementation of Social Assistance Law of 1999
  11. Rules of Implementation of the Law on the Protection, Rehabilitation
    and Social Integration of the Disabled of 1999
  12. Regulations No 4 on the conditions and procedures for delivery of
    Social services of 1999
  13. Rules on the organization and the activity of the homes for abandoned
    children of 1995
  14. Epistle No 485 of the Council of Ministers of 1997

Notes

* This report was made possible through support provided by the ENI/DGSR/CS, ENI, U.S. Agency for International Development, under the terms of Grant No. EE-A-00-98-00015-00. The opinions expressed herein are those of the author(s) and do not necessarily reflect the views of the U.S. Agency for International Development.

[1] The law for enacted in May 2000.

[2] The question remains as to whether the licensing procedure is necessary and justified, given the small number of NPOs that have applied so far, and the insufficient funds available for distribution by the Social Assistance Fund.

 

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