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The International Journal
of Not-for-Profit Law

Volume 6, Issue 3, June 2004

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

Table of Contents

Letter from the Editor

Accountability and Transparency

Introduction--Coming Clean: Civil Society Organizations at a Time of Global Uncertainty
Kumi Naidoo

International Humanitarianism: The Dark Sides
David Kennedy

On the Issue of Trust
H. Peter Karoff

Fostering Accountability in Zimbabwean Civil Society
Ignatius Adeh

Canadian Federal Budget Increases Transparency for Charities
Robert B. Hayhoe

The Crisis Facing Associations and Other Nonprofits in the United States
John H. Graham IV

Articles

Charities and Compliance with Anti-Terrorism Legislation in Canada: The Shadow of the Law
Terrance S. Carter

Corporate Philanthropy and Law in the United States: A Practical Guide to Tax Choices and an Introduction to Compliance with Anti-Terrorism Laws
Thomas Silk

Legal Mechanisms for NGO-Government Partnership in Ukraine
Alexander Vinnikov

The State-Civil Society Relationship in Kazakhstan: Mechanisms of Cooperation and Support
Vsevolod Ovcharenko

Comment: Defining Civil Society
Miguel Angel Itriago

Reviews

BETTER TOGETHER: Restoring the American Community
By Robert D. Putnam and Lewis M. Feldstein
And
THE GREATER GOOD: How Philanthropy Drives the American Economy and Can Save Capitalism
By Claire Gaudiani
Reviewed by Michael Edwards

A VOICE FOR NONPROFITS
By Jeffrey M. Berry with David F. Arons
Reviewed by Michael Bisesi

THE GOVERNANCE OF NOT-FOR-PROFIT ORGANIZATIONS
Edited by Edward L. Glaeser
Reviewed by Peter Frumkin

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Editorial Board

The State-Civil Society Relationship in Kazakhstan: Mechanisms of Cooperation and Support

By Vsevolod Ovcharenko*

The idea of state support of civil society recently gained recognition from representatives of the state administration of Kazakhstan. At the unprecedented Civic Forum, which took place in October 2003 in the capital, Astana, President Nursultan Nazarbayev announced ideas for cooperation between the government and civil society. The main result of the Civic Forum is acknowledgment by the authorities of the fact that civil society is beneficial for the government, and that cooperation between the two sectors should include state support of the social activities of civil society organizations (CSOs). There is an opportunity now for Kazakhstan to move forward and strongly improve cooperation between the state and civil society, yet the converse is also true.

Cooperation between the state and civil society can be divided into three areas:

Let us briefly consider achievements in each of the three areas and indicate the principal problems preventing the development of effective and efficient mechanisms for state support of civil society organizations.

Adoption of a Favourable Legal Environment

The situation in this area is the most complicated and progress the least noticeable. During the last five years, there has been a negative and repressive trend. However, the change in composition of the Majilis (the lower chamber of Kazakhstan’s parliament) in the autumn 2004 parliamentary elections offers the possibility for positive movement.

Principal Problems:

Public Participation

One can define three quite developed mechanisms of public participation in Kazakhstan:

Principal Problems:

The status of such Cooperation Councils is only advisory and is governed by acts of executive authorities rather than by legislation adopted by parliament. The criteria for selecting NGO representatives are not transparent (it is a discretionary decision of the head of executive authority and not governed by any prerequisites or procedures). One major criticism of these councils is that for the most part, NGOs controlled by the respective provincial governments (so-called “GONGOs”) are selected as members.

Financial Support of CSOs by the Government

The financial support provided by the government to NGOs can be labeled as direct or indirect, ranging from the direct funding of activities to mere tax preferences.

Subsidies (Grants), Including “Natural Subsidies”

Kazakhstan legislation provides for the granting of subsidies to youth and children’s organizations, but does not specify any criteria for identifying such organizations. Also, several municipal laws, including those of Almaty, Kazakhstan’s biggest city, provide for a considerable discount in rental payments for public organizations leasing premises on municipal property. This results in a rate one-tenth the average market value for similar premises. Such a discount is called a “natural subsidy.” However, similar to the situation with youth and children’s organizations, local legislation does not specify what organizations are eligible. Without such criteria, this leasing discount is left to the unlimited discretion of local officials administering municipal property.

Principal Problem:

The constitutional ban on state financing of public associations in Kazakhstan could be extended after the adoption of the pending Budget Code because the term financing, and thus the constitutional ban, is defined in this law to include any usage of state finances, including payments under state procurement contracts.

“Grants” Given under State Procurement Contracts

During the summer of 2003 the Ministry of Culture, Information and Public Accord (now split into the Ministry of Culture and the Ministry of Information) conducted tenders and distributed grants among NGOs using state procurement procedures and state procurement contracts. Such tenders had a closed nature and only NGOs were eligible to participate (exclusion of other organizations violates the principle of fair competition stipulated by state procurement legislation). Furthermore, only invited NGOs could participate. A more detailed analysis of such “procurement grants” is complicated by the classified status of information on those grant tenders.

Principal Problems:

The non-transparent mechanisms of “grant tenders” and usage of the term “grant” (commonly used to specify project subsidies) to characterize a type of state procurement contract complicates the situation with direct financing of NGOs and arouses reasonable suspicions regarding the potential corruptive nature of such experiments.

State Procurement Legislation

State procurement legislation in Kazakhstan does not in principle preclude NGOs from participation in state procurement contracts. However, a lot of hidden problems are revealed by the application of such legislation to NGOs over the last five years.

Principal Problems:

State procurement law formally provides for equal treatment of all potential vendors under state procurement contracts. In reality, NGOs have less opportunity to compete with commercial vendors because of the limited and restricted assets they possess. This prevents them from being able to place a compulsory security deposit along with a tender application, 3 percent of the contract price. Moreover, state procurement legislation does not stipulate special procedures for procurement of social services. Also, there are no special criteria to evaluate tenders for services—the law only stipulates that the “lowest price” be sought. This ignores the quality of services, qualifications, reputation, and other non-price factors. As a result, both NGO participation in state procurement of social services and procurement of social services by the state are discouraged due to inadequate regulations.

Pending Law on State Social Contracting 

As the result of a long process of lobbying by certain NGO activists, the government finally agreed that in the period 2003-2004 it would draft and submit to parliament a Law on State Social Contracting, which is supposed to stimulate and develop state procurement of social services from NGOs. However, the draft law prepared by the Ministry of Information does not solve any of the problems mentioned above; on the contrary, it creates a lot of new ones. Primarily, this results from a closed drafting process in the Ministry of Information, without involving representatives from the Agency on State Procurement and the various social Ministries (Health, Education, Labour, and Social Protection).

Tax Preferences

During the last four years, many preferences for non-commercial organizations (NCOs) and social sphere organizations (SSOs) have been incorporated into Kazakhstan’s tax legislation. Yet there are many inconsistencies and problems:

General Conclusions

The legislative framework is critical to NGO-government cooperation and economic support for NGOs. The current situation of government interest in civil society and civil society’s interest in working with government presents an opportunity to transform the current and past sporadic ad hoc experiments in state support of civil society into a regulated system that is open and transparent. So, although there are indications of this growing state-civil society relationship, further steps need to be taken to ensure the delivery of efficient and effective social services in Kazakhstan.

Should the state take on this challenge, we can expect that the state-civil society relationship will escape the negative public image most often associated with practices that look to be mere political patronage. The state can use the upcoming legislative agenda to remedy any current inefficiencies within the state-civil society relationship.
 
Notes

* Vsevolod Ovcharenko is Legal Consultant for Kazakhstan at the Central Asia office of the International Center for Not-for-Profit Law (ICNL) in Almaty. For further information, please contact Kevin Borrup, ICNL Program Director for Central Asia, kborrup@icnl.org. Web: www.icnl.org/car. This article originally appeared in the Winter 2003-Spring 2004 issue of the Social Economy and Law (SEAL) Journal, published by the European Foundation Centre. We are grateful to SEAL for permission to reprint it

 

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