Legal and Institutional Mechanisms for NGO-Government Cooperation in Croatia, Estonia, and Hungary

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Legal and Institutional Mechanisms for NGO -Government
Cooperation in Croatia, Estonia, and Hungary
Katerina Hadzi -Miceva 1
The cooperation between the state bodies and non -governmental organizations (NGOs) 2 in Central
and Eastern Europe (CEE) has increased significantly in the past several years. There is a well –
recognized tendency among the countries to expand t he scope of applicable areas of cooperation, to
increase the available forms and mechanisms for cooperation, and to institutionalize the partnership
so as to ensure continuity and sustainability.
The forms of cooperation include a wide range of tools and m echanisms. Primarily, governments have
supported the civil sector through enacting a favorable legal environment for establishment, operation
and sustainability (e.g., by creating mechanisms to enable NGO to utilize diverse sources of funding).
Governments and NGOs have improved partnership in the delivery of social services, and
governments have increased support to NGOs through grants and subsidies. Importantly, some
governments have adopted mechanisms to financially support the development of the sector (e.g.,
Croatian National Foundation for Civil Society Development and Hungarian National Civil Fund).
Parallel to the financial relationship and partnerships in meeting social needs, governments and NGOs
throughout CEE have recognized the importance of hav ing continuous dialogue and longer term
strategies for cooperation and support to the development of the sector. Therefore, some
governments have established separate units, offices or departments to institutionalize the
cooperation with NGOs (e.g., Croati a, Hungary, Macedonia, Slovakia, Czech Republic). The role of
these offices includes furthering democracy and strengthening cross -sector relationships, developing
and implementing cooperation agreements, fostering dialogue, enhancing NGO participation in
decision -making and supporting the development of coherent policies for the development of the
Furthermore, public authorities throughout the region have adopted policy documents, such as
programs for cooperation or targeted strategies (e.g., Estoni a, Hungary, Croatia, Latvia and
Macedonia) which help strengthen the cooperation and support. These documents differ in terms of
purposes and goals; however they all outline the basic principles of the cooperation and promote
active measures that should be undertaken by the government to support the development of the
sector and foster cooperation. Estonia and Hungary have already implemented the first strategies and
have been able to draw lessons from the process, which serve as a base for the development of
follow -up documents. On the other hand, Croatia and Macedonia have just developed their strategies
and are in the first phase of their implementation.
Although there are many positive developments in the cooperation between CEE governments and
NGOs, the process of the development of partnership carries many lessons to be learnt and shared
with other countries. While the mechanisms or tools for cooperation might be similar, the processes
are different in terms of the purposes and motivations, the initiato rs of the mechanism, the challenges
and negotiations in the process and finally in terms of the results that have been achieved.
This article will provide an overview of the development of legal and institutional mechanisms to
strengthen the cooperation be tween governments and NGOs in three countries of CEE: Hungary,
Estonia, and Croatia. The Hungarian legal and institutional framework for cooperation can be regarded
as one of the most advanced in the region. The Croatian “model for civil society developmen t” which
features three state bodies as promoters of the development process is an excellent example of a local
needs -driven initiative, which aims to foster partnership in the fields of consultation, participation and
funding. Estonia is the first country to develop a policy document for cooperation in the region and is
currently developing a new mechanism for government funding for the overall development of the

The article will cover the following issues:
1. The b asic regulatory framework that supports the establishment and operation of NGOs
and an overview of government efforts to ensure financial sustainability of the NGOs
through creating tax benefits for utilizing income from self -generating activities and
priv ate donations (philanthropy);
2. Analysis of the innovative mechanisms for government funding to support the
development of the sector;
3. Institutional cooperation between government and NGOs;
4. Policy documents for cooperation and development of the sector; and
5. Involvement of NGOs in policy and decision -making processes.
By providing a comparative analysis and highlighting the successes and challenges of the development
of cooperation and the innovative examples from these countries, the article will aim to facil itate
cross -border learning and enable governments and NGOs to select the appropriate models to foster
their cooperation.
An enabling legal environment for the development of NGOs presupposes th e right of citizens to
associate freely in order to achieve common interests and needs. An enabling legal environment sets a
protective framework for NGO activities and limits the ability of governments to interfere with NGO
basic rights to be established and operate freely. 3 It also requires clear and well defined rules that
support NGO sust ainability and functioning. Equally important, an enabling legal framework
contributes towards the development of cross -sector(al) partnerships between NGOs, government,
commercial corporations. For example, assume a ministry decides to contract with an NG O to provide
services in a certain field (e.g., establishing and operating shelters for homeless people), allocates
funding to support partially the provision of those services, and requires the NGO to match the
ministry funding and use other resources to provide the service fully. The laws can support this
relationship (and the provision of the services) in several ways. First, the law could allow NGO to
generate its own income (e.g., sell publications on housing issues) and could exempt such income
from t axation. Second, recognizing the importance of attracting private resources, the law could
encourage the NGO to reach out to individuals and corporations and seek their donations, through
prescribing tax benefits for individual and corporate donations to t he NGO. Third, the NGO may want
to rely on volunteers in the implementation of its activities (e.g., volunteers can organize some
activities for the homeless people during the day). By removing the obstacles to volunteering (e.g.,
exemption from taxation r eimbursement of expenses to volunteers such as travel to the shelter and
food), the law can support citizen involvement in publicly beneficial activities, such as the provision of
social services.
1. Laws Governing the Establishment and Operations of NGOs
The basic NGO laws create frameworks for the overall operation of NGOs, by regulating the basic
lifecycle of the organizations from registration to dissolution, including the type of activities they can
engage in (e.g., political activities, economic activ ities, and participation in policy or legislative
processes), the status of public benefit (see below), internal governance structure, and the ability to
join unions or umbrella groups. The Croatian, Estonian and Hungarian Governments have all enacted
gene rally supportive laws for the establishment and operation of NGOs.
For the last decade, Hungary has been considered a leader in legislation affecting NGOs. The first laws
regulating associations and foundations were adopted in 1987, which provide a framewo rk for the

establishment, governance and operation of these organizations. In 1997 Hungary adopted the Act on
Public Benefit Organizations (PBOs), thus distinguishing those organizations that are implementing
activities which benefit the general public, an d setting the basis for tax deductions and other benefits
for these organizations. The Estonian Laws on Associations and Foundations came into effect in 1996,
and relatively few amendments have been made since. An important development for Croatia was the
enactment of the 2001 Law on Associations, which replaced the much criticized 1997 Law on
Associations. The 2001 Law largely complies with international standards and regional best
practices. 4Importantly, the enactment of the law resulted from collaborative efforts that included
government officials from the Ministry of Justice and the Govern ment Office for Cooperation with
Associations, representatives from local NGOs, and experts from international organizations.
All three countries recognize the two basic forms of NGOs: associations and foundations. 5 The
foundations in Estonia and Hungary can be grant -making or operating. Foundations in Hungary can
only be established for publ ic interest purposes; however, the Hungarian Government is currently
proposing amendments to the Civil Code, which would allow for the existence of private -purpose
Unfortunately, the Croatian Law on Foundations and Funds from 1995 prescribes r egressive conditions
for the establishment of foundations and gives the registration authority (Ministry of Justice)
unwarranted discretionary power over the establishment and internal governance of foundations. 6 As
a result, only some 75 foundations have been registered in Croatia to date (compare with more than
30,000 registered association s under the enabling Law on Associations). 7
In addition to associations and foundations, Hungary also introduced a third organizational form – the
non -profit company. Under this form, any for -profit legal form (out of the six types which currently are
recognized in the Hungarian Company Code) can as sume a non -profit status and seek public benefit
status under the same conditions as associations and foundations. Furthermore, the Croatian legal
system recognizes the “fund” as a third organizational form, which is defined as a foundation, except
that a fund can pursue its purposes only on a temporary basis (i.e., for less than five years). 8
As mentioned above, only Hungary has a separate law which defines public benefit status. Public
benefit status distinguishes between organizations that are established for the private interest of the
members, such as bridge clubs, from those whose activi ties benefit a larger community. Public benefit
status is fundamental to the sustainability of NGOs because most countries in the CEE region use this
status as a conceptual prerequisite to granting tax benefits (exemptions or deductions) or other types
of state financial support (e.g., in Poland only organizations which are of public benefit can receive
allocations through the percentage mechanism 9). The Hungarian Act on PBOs is interesting in that it
introduced two tiers of public benefit status: basic and prominent. Organizations can obtain the status
of “prominent public benefit organizatio n” if they undertake state or local government responsibilities
(usually by having a contract with a state body). Although only about 6 -8% of Hungarian NGOs have
this status, they represent good examples of NGO -government partnership in the implementation of
projects for the interest of the community that rarely existed before this mechanism was introduced in
the system. 10 In addition, prominent public benefit organizations receive higher tax benefits than
NGOs who do not have this status or than those organizations with basic public benefit status (see
There is no separate public be nefit status as such in Croatia or Estonia. In Croatia, the public benefit
concept does exist in various laws, but is not consistently defined or applied. In Estonia, as you say,
there is a tax -exempt status which is the functional equivalent of public ben efit status. Only the
organizations that are included on a government list are entitled to tax benefits. The Income Tax Act
defines the criteria according to which organizations can be included in that list. 11 There are
approximately 1,600 organizations in this list.
The decision as to whether an organization can be entered on the list is made by the Tax and Custom
Board). However, the law also provides for the establishment of a Committee of Experts, which should
provide recommendations to the Tax and Custom Board on every application. The Committee consists
of 9 representatives of NGOs, mostly from umbrella organizations from different fields of activities.

They are appointed by the Ministry of Finance after consulting with the NGOs. This expert committee
was establis hed at the beginning of 2007 and it has met twice so far. The existence of such a
committee was considered a positive development, because it aims to provide guidance in defining
what public benefit is. So far however, there are two challenges in its work: (1) it faces difficulties in
defining public benefit as this concept is still new in the society and there is much “grey zone” around
it and (2) the Tax and Custom Board and Ministry of Finance are not receptive to the suggestions of
this committee as the se recommendations are not binding for them. It is anticipated that in time, with
some legislative clarifications, the situation could be improved. 12
2. Support for Development of Own Income and Philanthropy
Generally, NGOs can benefit from three domestic sources of income: economic activities, or other self –
generating income (rent, passive investments), from direct government financing, and from
philanthropy (understood as donations in time and money). Hungary, Croatia and Estonia follow a
positive trend in providing tax benefits to NGOs to enable them to generate their own income to
suppor t their activities. Also the legal frameworks provide incentives to help NGOs to engage
supporters and receive financial contributions.
2.1 Economic Activities and Tax Exemptions
First, all three countries allow NGOs to engage directly in economic activiti es, which can be defined as
“regularly pursued trade or business involving the sale of goods or services.” Income from donations,
gifts, passive investment, occasional activities which can also generate income, such as fundraising
activities, usually do no t fall under the definition of economic activities as described above, because
these are not conducted through a market -type transaction. 13
In Hungary, NGOs can also engage in entrepreneurial or commercial activity which is defined as
economic activity aimed at or resulting in obtaining income and property. The law provides that the
followi ng is not considered as entrepreneurial/commercial activity: (1) public benefit activity, or in the
case of a non -PBO, activity according to the statutory purposes; (2) revenue received from selling
goods and inventory serving solely the public benefit pur pose or in case of a non -PBO, the statutory
purposes; (3) part of the interest received from the credit institution or the issuer of securities, or part
of the yield of state bonds, based on the proportion of the percentage of revenue from public benefit
or statutory activity of the whole revenue. 14
The reform of the Hungarian tax framework affecting NGOs has resulted in a favorable fiscal
environment that supports financially the development of the sector and stimulates philanthropy. In
the mid -90’s, several provisions were adopted which exempted all NGOs from paying tax on income
from miss ion -related economic activities. For example, all NGOs, regardless of whether they have
public benefit status or not, may benefit from tax exemption on the income from commercial activities
which does not exceed 10% of total income or 10 million HUF (appro x. 39,946 Euro). Further,
organizations that have acquired public benefit status are exempt for commercial income that does
not exceed 10% of total income or 20 million HUF (approx. 79,892 Euro), and those that have
obtained the status of prominent public benefit organizations are exempt up to 15% of total income.
Estonian NGOs are treated in a manner similar to business organizations in that they do not pay taxes
on their income, but on certain distributions. Generally, they are permitted to engage in any activity
that corresponds to the purposes stated in their statutes and are not taxed on income from such
activity. However, if an organization is engaged in business as its principal activity or uses business
income for purposes other than those specified in its statutes it cannot be entered into the
government list and will therefore not be entitled to the tax benefits. 15
In Croatia, an organization’s income from economic activities is considered taxed exempt only unless
the exemption will give the organization an “unjustified privileged position in the market.” The Tax
Administration, on i ts own initiative or upon the request of a taxpayer or other interested person, may
determine on a case by case basis whether to tax income generated from an NGO’s economic
activities. It is not yet clear how the Tax Administration will interpret the “unju stified privileged

position in the market” language of the law, and what types of activities will be considered to afford
such a position to an NGO. An organization that is found to have an “unjustified privileged position” is
taxed at the regular business rate of 20%. 16
2.2 Tax Incentives for Donations
Hungary provides for tax deductions o nly for donations given to PBOs. Businesses may deduct 150%
of the amount of all donations up to 20% of pre -tax income if they donate to “prominent” PBOs, which
perform governmental services. For other PBOs, companies can deduct the whole amount of donatio ns
up to 20% of pre -tax income. Hungary also prescribes a combined aggregate limit of 25% of pre -tax
income if the donor gives to both types of PBOs. An individual may take a tax credit equal to 30% of
the donation to a public benefit organization or publi c interest commitment. 17 The credit may not
exceed 50,000 HUF (approx. 200 Euro). In t he case of donations to prominent public benefit
organizations, the tax credit is 30% of the donation, up to 100,000 HUF (approx. 400 Euro). As of
2006, however, taxpayers above a certain level of income may not claim any tax benefits (including
those rela ting to donations).
In Estonia, income tax is not charged on gifts and donations made to persons included in the
government list or to a person who owns a hospital, to a state or local government, to a scientific,
cultural, educational, sports, law enforce ment or social welfare institution, to members of the “church –
register” or to a manager of a protected area, up to 3% of the amount of the payments subject to
social tax made by the taxpayer during the same calendar year or 10% of profits for the last fina ncial
year of a taxpayer dissolved as of January 1. 18 In Estonia, individuals may deduct up to 5% of
taxable income for documented gifts and charitable contributions to the same recipients as businesses
can donate to, including also public universities and political parties.
In Croatia, donations made by corp orations or individuals to organizations pursuing cultural, scientific,
educational, health, humanitarian, sports, religious, and other activities are deductible up to 2% of the
donor’s income generated in prior calendar year. The established threshold may be exceeded upon
approval of the competent ministry. The Government Office for Cooperation with NGOs, the National
Foundation and NGOs have initiated discussion around the concept of public benefit status and the
necessity of clarifying the legal framewor k, in order to expand the list of activities that may benefit
from tax deductible donations.
2.3 Legal Framework for Volunteering
Volunteers are critical to the success of civil society initiatives around the world. They contribute to
humanitarian relief e fforts, service delivery to underserved populations, advocacy efforts representing
those with limited or no voice in public affairs, and provide other needed services. The Croatian and
Hungarian Governments and NGOs have come to recognize the value of volu nteering and they have
launched programs to support and promote it. In addition, they have also undertaken efforts to
remove legal obstacles to volunteering and create a favorable legal environment for citizens’
engagement and social contribution. Hungary adopted the Act on Volunteering in Public Interest
Activities in 2005, while Croatia adopted the Law on Volunteering in 2007. The Hungarian Act created
new opportunities for citizens’ activism by establishing a new legal relationship 19 and attaching tax
exemptions and other benefits to it. It regulates the provision of “public interest volu ntary activities”;
however it limits the scope of public interest volunteerism only to volunteering with public benefit
organizations, governmental institutions, and public or private service providers in the social, health,
educational, cultural, and mino rity fields. While the law explicitly stipulates that it leaves intact
volunteering in other types of organizations or fields of activities, this implies that the extensive
benefits and protections do not extend to other types of volunteering. Because over half of registered
NGOs do not have public benefit status, this law does not cover the majority of NGOs and their
volunteers. In addition, the law requires those organizations that work with volunteers to register with
the competent Ministry; and it outli nes a detailed and bureaucratic procedure of registration as well as
conditions under which registration might be refused. 20

In Estonia, a Development Plan for Volunteering was developed by the Tartu Volunteer Centre with the
participation of several NGOs in 2006 and it was adopted by the Joint Committee for implementation
of the Estonian C ivil Society Development Concept – EKAK (see below). The goal of this plan is to
define common understandings and activities in supporting and developing volunteering in Estonia for
the period of 2007 -2010. The Ministry of Interior is responsible for imple menting this Development
Plan. However, in 2007 the implementation was supported only with 265 000 Estonian kroons
(approx. 17 000 Euros), because the plan was finalized after the state budget for 2007 was approved.
Due to lack of funding only limited acti vities are planned for implementation in 2007.
III. Direct Government Financing
The government approach towards strengthening partnership with and supporting the growth of NGOs
can be also analyzed through the financing policies it has developed. The issue of government funding
for NGOs is a significant part of the efforts to conceptualize, rationalize, and organize the government –
NGO relationship. 21 Toward that end, all three countries studied in this article have designed a policy
document (program for cooperation and/or strategy) which outlines the core principles of good
partnership betw een the state and the NGOs, including the commitments in terms of government
funding opportunities. The core values embedded in the cooperation documents subsequently served
as a basis for more specific and detailed pieces of regulation. For example, the H ungarian
Government, in its Strategy Paper for Civil Society in 2002, pledged to increase the amount of state
funding to NGOs and create the National Civil Fund. Indeed, in Hungary, direct financing as a source
of income for the non -profit sector has incre ased significantly in the past 10 years, and in 2003
reached the target of representing 42% of the sector’s total income (whereas in 1993 it amounted to
only 16% of the total income). 22
Government funding can be distributed through several traditional forms, amounting to three main
types of financing: support (usually through subsidies or g rants); procurement (usually through
service contracts); and third party payments (per capita fees or vouchers). 23 These funds may be
distributed from the central level budget (through the parliament, ministries, lotteries, privatization
proceeds, public funds and foundations) or through budgets of local governments.
Of all forms and source s, however, it is worth highlighting the current mechanism of government
support to NGOs through the percentage tax allocation mechanism in Hungary, the Hungarian National
Civil Fund, the National Foundation for the Development of Civil Society in Croatia and the new
initiative in Estonia to create an Endowment Fund. What is important in all these initiatives is that they
provide an opportunity for NGOs to gain access to funds which can support their institutional, core
costs – funds which are hard to obtai n otherwise. With the exception of the percentage mechanism, all
other mechanisms have been created following demands by NGOs that there is a need for a more
targeted and transparent and – indeed – creative policy for the support of the civil sector as a w hole.
The procedural aspects of granting government funding deserve particular attention. In most CEE
countries the mechanisms for distribution of government funding lack sufficient levels of transparency
and accountability, and clear procedures. To respon d to these challenges countries have undertaken
initiatives introduce principles of good government funding in codes or regulations. For example, in
Estonia a “Code of Good Practice on Funding,” an initiative led by the Network of Estonian Nonprofit
Organi zations (NENO), is currently the focus of consultations between the public sector and NGOs, and
is expected to be finalized by the end of 2007. This forthcoming agreement will serve to harmonize
the principles of public funding processes (e.g. determining the form and setting the objectives of
funding, eligibility criteria, grant tendering and application processes, selection criteria, contracting
and payments, and reporting, monitoring and evaluation). Croatia also adopted a similar code
(described below) and is currently assessing its implementation in order to improve the procedural
1. Percentage Mechanism
The percentage mechanism was introduced for the first time in Hungary with the enactment of the Act
CXXVI of 1996 on the Use of a Specified Portion of the Personal Income Tax (the “one -percent law”).

It is a form of tax allocation, which allows taxpayers t o designate a portion of the tax they need to pay
to a specific organization. The initial idea of the “one percent law” was brought into the political debate
in the context of church financing, when in the early 1990s the restitution of churches required a
solution regarding their public support. However, in addition to this, the issue of financing of NGOs
was entering the government agenda. All Hungarian government coalitions in the past few years found
it important to stress their commitment to the streng thening of this sector by targeting two problems:
(1) Hungarian NGOs received proportionately less foreign support than NGOs in other CEE countries
and (2) the distribution of state funding to NGOs was over -politicised. The central notion of the “one –
perce nt law” thus became the possibility for party -neutral public financing of NGOs through a tax
designation mechanism. 24 The percentage mechanism in Hungary enables individual taxpayers –
natural persons – to designate 1% of their paid income taxes to a qualifying NGO and another 1% to a
church (in addition to NGOs, there is also a list of bud getary institutions, and as an alternative to a
church, a special budgetary priority objective is named each year). Taxpayers may make the
designations on special forms enclosed in the tax return. The tax authority transfers the amounts
designated after th e beneficiary proves its entitlement, and the designators remain anonymous. 25
After Hu ngary introduced the so -called “1% Law,” Lithuania, Poland, Slovakia and Romania have
adopted similar legislation. Hungary has witnessed over 9 years of implementation of this law.
Therefore, one can draw some lessons learnt from its experience. 26
In addition to the reasons mentioned above, there are two other overarching objectives behind
introducing such mechanism: (1) increasing the pool of resources available to NGOs and (2) helping to
develop a philanthropic culture among taxpayers. However, there are several concerns expressed by
policy makers, NGOs and experts in terms of whether and to what extent the mechanism meets these
objectives. First, the potential group of “donors” is limited as only taxpayers, and furthermore, only
individual taxpayers can designate the percentage. 27 Second, it allows only a limited amount (i.e.,
1% in Hungary) to be designated which in terms of revenues may be quite small compared to other
resources available to the sector (e.g., donors under the traditional scheme of tax deductions are not
limited as to how much they can/want to give to the NGOs). Consequently, contrary to philanthropic
giving, the “percentage cake” available to the NGOs has a finite size and cannot be increased. Thus, it
is not only that the amount of available funding is limited, but also the receipt of a larger portion by
one NGO reduces the amount available to others. It seems that in the end a small cluster of
organizatio ns (e.g. those who run the best marketing campaigns) benefit disproportionately from the
mechanism. In addition, the overall amount may be quite small compared to other sources of revenue
as the economy develops. In Hungary it was found to be less than one percent of the total revenue of
the sector. 28 Although all taxpayers can designate th e funds with no cost to them, only 35% in
Hungary use this opportunity. Finally, the effect of the mechanism on philanthropy cannot be easily
assessed, as there are no comprehensive research results, which can show whether the law has
achieved its second o bjective. Individual giving has not increased significantly in Hungary. One study
shows that those who regularly designate their 1% also give donations in higher amounts or more
frequently. However, this may also mean that those who are more philanthropic also designate their
tax percentage more often as this is the higher income and higher educated group of taxpayers. This
raises the question of whether their philanthropic behavior would be the same regardless whether the
percentage mechanism exists or not , given that they are more socially sensitive and active anyway.
Despite the above challenges, this mechanism does have certain advantages. Specifically, it has
proven to be a good resource for local and smaller NGOs, because it is easier for them to mobilize
local support (although in terms of the actual amount of fund s it has a bigger impact on the larger
NGOs who champion popular issues such as children’s care or animal shelters). It creates competition
among NGOs, thus contributing to increased professionalism, better communications and improved
image. Most important ly this was the first and major reason why NGOs in Hungary started to
communicate with their constituencies rather than with the government grant departments. As a
result NGOs have become more embedded in their local communities. In addition, the mechanism
gives the possibility to taxpayers to decide on how a certain percentage of their tax money is spent
(decentralizing and de -politicizing the decision making process), increases awareness about the
importance of civil society and sends signals about needs they find important to be supported. The
government also benefits as it is able to monitor the preferences of society and regain part of the “lost
revenue” through other taxes, e.g., VAT.

2. National Civil Fund, Hungary 29
In 2003, the Hungarian Government established the National Civil Fund with the aim to provide a
mechanism for institutio nal support to NGOs. 30 The idea behind this mechanism came from the need
to provide state support for NGO operational costs beyond the existing percentage mechanism. Thus,
the National Civil Fund supplements the mechanism of percentage allocation in that the government
matches t he amount of funds that are designated to NGOs through the percentage system. 31 60% of
the resources of the National Civil Fund are allocated to NGOs to support operational costs. In
addition, funds from this source also support development programs (research, education,
international representation). Elected NGO representatives sit on comm ittees tasked with deciding on
the distribution of the funds. Specifically, the Fund is administered by a Council and a number of
regionally based Colleges. The Council is the strategic decision -maker, which sets the priorities,
divides up its resources am ong the various purposes, and develops its other rules. It consists of 17
members (2 representatives of the Parliamentary Committee on Civil Society; 3 representatives of the
Ministry; and 12 representatives of civil society: 5 elected from national organi zations working in
various fields, 7 elected on a regional basis). The Colleges are the operative decision -makers, deciding
about concrete grant proposals. They are organized both on a regional and a professional basis;
however, their exact number and comp osition is still to be decided. Colleges have 5 -11 members, the
majority selected from NGOs. 32 In the first year a total of 28 million Euros was distributed to support
the operational costs of over 3,500 organizations.
The introduction of the National Civil Fund was accompanied by great enthusiasm from NGOs.
However, the first couple of yea rs of distribution of the funds faced many challenges, which raised
concerns over its real effect. This was due to the lack of carefully planned implementation mechanisms
on the side of the government. It revealed that in conceptualizing the National Civil Fund the
Government did not consider a concrete overall strategy to develop the sector. Even the uniquely
designed NGO participation in decision -making bodies raised controversies over conflict of interest
issues. 33
Specifically, the implementation of the National Civil Fund was based on application requirements
which appeared to be too bu rdensome and rigid. As a result of complicated and not clearly drafted
application forms, approximately 70 -90% of the applications were rejected. The responsible Ministry
for overseeing the distribution needed to intervene to allow for a broader interpreta tion of the strict
formal requirements so as to permit a higher number of applications to be considered. Consequently,
the decision on the distribution of the funds came later than expected, leaving NGOs with only a
month to spend the allocated funds, whic h originally were designed to cover costs for more than a
year. At the same time, the substantive requirements were rather broad and lacked strategic focus.
Thus, it is questionable whether the implementation of the National Civil Fund indeed supported NGO s
to reform and to strengthen institutionally. 34 In September 2006 the State Audit Off ice found that the
Fund faced serious transparency and accountability challenges as well. The implementation of the
mechanism revealed that the Minister and the Council did not elaborate an overall strategy to develop
the sector, did not elaborate performa nce indicators, and the criteria for support remained unclear.
Although, the funding potential of this mechanism is considerable, its impact on general financial
sustainability in the longer term largely depends on the willingness of the government and the
Governing Council of the Fund to learn from the challenges of the first few years and to revisit the
goals, in order to improve the effectiveness of the system. For example, for the second year of
operation, the Council successfully developed a more clear and user -friendly application system but
did not address other issues which could help the Fund achieve its purpose, such as criteria and types
of projects that should be supported.
3. National Foundation for Civil Society Development, Croatia
Until 2003, the Government Office for Associations (see below) was the main actor that distributed
public funds to NGOs. It used to channel funds to all areas of work of NGOs, from human rights,
education of youth, health, development of civil society, unemployment, etc. Independent experts’
working groups were created to review and assess the projects and programs submitted for public

funding. Although Ministries had certain funds to support projects of NGOs, this was not practiced
widely and the cooperation in progr am implementation and funding became more centralized and
focused mainly on the relationship between the Office for Associations and the organizations. In 2003
the Government established the National Foundation for Civil Society Development (National
Found ation) 35 as a public foundation, with the basic purpose of promoting and developing ci vil society
in Croatia and decentralizing the cooperation between the government and NGOs (for a more detailed
description of the model and relationship between different state bodies, see below). 36
The establishment of the National Foundation was the culmination of a 24 -month process led by the
Government Office for Association. The first step was developing a proposal for amendment of the Law
on Games of Chance and Competitions, which would create the material basis for the establishment of
the National Foundation. According to the Law on Games of Chance and Competitions, which was
enacted in 2002, 50% of the moneys collected through games of chance are allocated for civil society
organizations in Croatia. 37 Out of the 50%, 14.5% are allocated to the development of civil society.
96.55% of the 14.5% allocated to development of civil society are allocated through the Governm ent
Office for Associations to the National Foundation, which then distributes them for the program “Our
contribution to the community.” The remaining 3.45% are distributed through the Ministry of Foreign
Affairs and European Integration for international cooperation programs.
In addition to the funds from the lottery proceeds, the National Foundation is financed through private
donations, income from economic activities and other sources. The Foundation aims to promote the
sustainability of the sector, cro ss-sectoral cooperation, civic initiatives, philanthropy, and voluntarism.
Core activities include: (1) education and publications, (2) grantgiving, (3) public awareness
campaigns, (4) evaluation services, (5) research and (6) regional development. Importa ntly, the
Foundation is be governed by a Management Board composed of 3 representatives from the
Government, 1 from local governments and 5 from NGOs.
The establishment of the National Foundation was seen as a critical step towards improving the
system of public financing for NGOs. As noted above, it marked a shift from a highly centralized
system, in which the Government Office for Associations played the critical role, into a more de –
centralized system. Accordingly, the role of line ministries was emphasi zed and they remain
responsible for the funding of and cooperation with NGOs within their own jurisdiction. In the same
time, the Foundation focuses on supporting grass -roots initiatives and programs that do not
necessarily fall within the competence of an y particular ministry. In this way a more equitable
distribution of responsibility among government stakeholders was ensured. 38
To guarantee that grant -making decisions, whether made by the National Foundation, the ministries,
or the local governments, are made according to established standards of transparency, a “Code of
Good Practice, St andards and Criteria for Providing Financial Assistance to Programs and Projects of
Associations” 39 was adopted by the Croatian Parliament in 2007. The Code establishes the basic
standards and principles for granting financial assistance from the state budget to associations. It
applies to all state authorities and offices of the Government , which support the implementation of
programs and projects which are of special general/public interest in Croatia. In addition, the National
Foundation distributes funds based on the “Ordinance on the Conditions and Procedure for the
Allocation of Funds used for the Fulfillment of the Foundation's Purpose.” 40
The Foundation supports sever al types of programs related to its strategic objectives, including the
institutional support program, which supports the organizational development or stabilization for a
period of three years, but only for those associations registered in Croatia. A gran t is provided to help
further the activities of the association and for the performance of its primary activity. Importantly,
the Foundation also supports multi -annual grants (2004 -2007), which are approved within the
program, in the program area of instit utional support and stabilization of associations for the program
related to the linking of associations. The National Foundation also supports separate projects and
programs to foster research, cooperation and development of civil society on national and local level.
The total annual income of the National Foundation for 2006 was 31.736.477 kuna (approximately
4,346,270 Euro). The Foundation granted 12.943.80 kuna (approximately 1,772,657 Euro) for the
operational support programs of 2004 -2006.

During the first year of operations, the National Foundation faced criticism about its process of grant
giving. The criticism was triggered by the fact that the body which decides on the grant recipients is
also composed of NGO representatives, so questions about imp artiality and conflict of interest were
raised. As a result, the National Foundation adopted a more clear principle on conflict of interest in the
above mentioned Ordinance. The National Foundation has also developed evaluation grids for the
tenders that g uide the NGOs, but also the evaluators in the process of deciding on the grants.
Importantly, to further remedy the problem of conflict of interest, the National Foundation introduced
a register of the potential conflict of interest situations which is not a public document but upon
request it may be presented for inspection to the representatives of authorized bodies. 41 NGOs have
highlighted another shortcoming in the rules of distribution of institutional grants. According to the
current rules an association which has received institutional support is not eligible to apply to any
other sep arate project or program tender in the course of implementation of such institutional support
grant. Further, they cannot apply for another institutional support within 3 years after their grant has
expired. NGOs feel that this presents an obstacle for tho se associations which would otherwise be able
to offer more good quality projects under different tenders opened by the National Foundation. In
addition, since only a few NGOs are in practice able to fulfill the criteria, the number of NGOs who can
actuall y use this opportunity is limited. 42
4. Proposal for Creation of Civil Society Endwome nt, Estonia
Although the idea for the creation of a Civil Society Endowment is still in the formative stages, it is
worth mentioning as it promises to be yet another creative initiative to support the operational costs
of NGOs. The Endowment was one of the proposals made in a political manifesto of NGOs prior to the
parliamentary elections in 2007 that made its way to the Government’s Program. The concept was
created by the NENO through a participatory process whereby several seminars and meetings with
umbr ella organizations and experts were held and supplemented by Internet consultations. Currently
ministries are studying the concept to provide feedback.
The proposal envisions that the endowment will receive around 20 million Estonian kroons (approx.
1,3 mi llion Euros) from the state budget annually. According to the concept, the new Endowment will
focus on 1) funding the operational costs of public benefit NGOs, 2) supporting projects that create a
more favorable environment for NGOs, and 3) local projects that promote civic participation and
cooperation between NGOs. According to the proposal the Endowment would be managed by a Board
consisting of 3 representatives from the government and parliament and 6 -8 members who will be
nominated by NGOs and selected by the Joint Committee between the government and NGOs for the
implementation of EKAK.
The framework for cooperation between governments and NGOs has been institutional through the
establishment of different liaison offices for cooperation and communication as well as adoption of
policy documents on national level. In addition, in some count ries (such as Estonia and Hungary) the
Parliament has also played a role in developing cooperation with NGOs and setting an overall example
for a progressive state approach to supporting the development of NGOs and encouraging cross -sector
1. The Institutional Framework For Dialogue with and Support to NGOs
1.1 Hungary
Over the years, the system of communication and cooperation with NGOs has become institutionalized
across the government, both horizontally and vertically. It started with the intro duction of special
departments dealing with NGO support in the line ministries. In some ministries (e.g. social and
employment), special councils or working groups have also been set up (with NGO participation) to
advise the minister on professional issues and strategy development. Currently, there are also a
number of offices, which promote cooperation between the state and the NGOs.

First, in 1998, a Department for Civil Relations was established in the Prime Minister’s Office, which
now operates under th e Ministry of Labor and Social Affairs. The Department was established by
government decree, without any participation of civic organizations in the process. However, its first
leader was recruited from the NGO sector and thus, from the very beginning the staff of the
Department was aware and responsive to the needs and concerns of NGOs. The Department is
responsible for initiating laws for the development of the third sector (e.g., in 2005 it was closely
engaged in the drafting of the Volunteering Act) and facilitating dialogue with NGOs. It was
responsible for drafting the Government strategies towards civil society (see below). The Department
also provides information about available European Union funds and supervises the implementation
and work of the N ational Civil Fund. It is currently working to develop a nationwide database system
for NGOs, which is lacking in Hungary.
More recently, a special department was set up in the Ministry for Local Governments and Regional
Development, which also houses the National Development Agency (responsible for implementing the
European Union National Plans and Structural Fund Programs), called the Department for Social
Dialogue , which is responsible for coordinating involvement of NGOs and other social partners in the
development, implementation and monitoring of European Union instruments in Hungary.
Furthermore, practically every Ministry has by now set up a contact office or at least a person
responsible for liaising with civic organizations. As ministries engage in more and more intensive
working relationships with NGOs, they each develop their own internal rules and systems to support
NGOs and involve them in decision -making processes.
Regarding the Parliament, a Parliamentary Committee for the Support of Civil Org anizations existed
from the early 1990s until 2006. It used to grant budget subsidies to national associations and with
the institutionalization of the National Civil Fund, which overtook the grant giving role, this Committee
took on the responsibility for legislative policy concerning the sector. In 2006, however, it was merged
with the Committee on Human Rights, Religion and Minorities.
In addition, a Civil Office of the Parliament also continues to exist, which fulfils an informational role;
e.g. maintai ns a database of NGOs to which it sends out the Parliament’s legislative agenda sorted by
area of interest (e.g. if an NGO wants to receive the legislative plans on environment related laws,
they can sign up for such option); answers NGO inquiries; coordin ates and arranges NGO participation
in the various Committee meetings etc.
1.2 Croatia
The institutionalization of the NGO -Government cooperation in Croatia commenced with the
establishment of the Government Office for Associations , a centralized NGO liaison office on the
Government level. Subsequently, the Government established the Council for Development of Civil
Society (the Council) which works in partnership with the office. The cooperation between the two
sectors proved to be a vibrant process that was flexible to adjust to the current needs of the two
sectors. In 2002, the Government promised to submit a proposal for financing NGOs to the Croatian
Parliament. 43 The Government Office for Associations immediately embarked on this initiative and
developed plans for a decentralized system of funding and cooperatio n. As a result, the framework of
the New Model of the Organizational Structure for Civil Society Development in Croatia (“the new
model”) was established. This model consists of three bodies: the Office for Associations, the Council
and the National Founda tion for Civil Society Development (described above). The model also
envisioned the creation of a Strategy for the Development of the Civil Society (which was adopted in
2006) and harmonization of the state funding process.
As mentioned above, the introduc tion of this model was triggered by the need to support direct
communication between various Ministries and NGOs, in order to enhance their cooperation in
addressing particular social needs. Until then, the NGO -Government cooperation was mainly
centralized and was functioning effectively only between the Office for Associations and NGOs. The
relationship with the other states bodies was not so developed. The new model also opened the
possibilities of diversifying funding sources for NGOs and of tapping alte rnative and matching funds for

joint NGO -government activities. The new model increased the cooperation between different
ministries and NGOs and it encouraged Ministries to designate a person or unit responsible for
fostering cooperating and dialogue with NGOs.
The Government Office for Cooperation 44 with Associations was established in October 1998 by the
Act of Government of Republic Croatia. The Office for NGOs was primarily entrusted with the task of
building confidence and developing cooperation through financing, consulting, educating and
informa tion sharing. It also coordinated working groups on various legislative initiatives affecting
NGOs, such as the Law on Associations, the Law on Income from Games of Chance and Competitions,
the Law on Volunteers etc. Most importantly, the Office for Associ ations achieved remarkable results in
drafting and implementing a transparent national program for public financing of NGOs. The Office for
Associations channeled funds in all areas of work of NGOs, from human rights, to education of youth,
health, develop ment of civil society, unemployment, etc. Working groups of independent experts were
created to review and assess the projects and programs submitted for public funding. During the
period 1999 -2003, 1,997 programs and projects were funded in the total amou nt of approximately
13,830,004 Euros. With the opening of the Office for Associations, a new era began in the relationship
between the Government and NGOs and a new incentive was given for the further development of
A further step in the advan cement of collaboration between the government and NGOs in Croatia was
the establishment of the Council for the Development of Civil Society as a governmental advisory body
in 2002. The Council is composed of 10 representatives from the Ministries and 14 r epresentatives of
civil society (elected by the NGOs themselves). The Council focuses its activities on the
implementation of the Strategy for the Development of Civil Society and harmonization and oversight
of financial support provided from the State bud get for financing NGOs programs/projects. The role of
the Council is to provide advice to the Government regarding NGO development and policies, as well
as to coordinate efforts in realizing goals and action plans developed in the “National Strategy for
Cr eating Supportive Environment for the Development of Civil Society.” The Council has no veto power
over Government’s decisions, but can initiate different discussions important for civil society
development and oversee the implementation of policies and st rategies. In past years it was proven
that the work of the Council seems to depend greatly upon the motivation of its members and,
especially its President.
As mentioned above the third body in this model is the National Foundation for Civil Society
Develo pment . In addition to grant mechanisms, it also runs educational, training and research
programs. Its goals focus on (1) the encouragement of public action, inclusion and participation in
community development, (2) building capacity of civil society organi zations, (3) the development of
inter -sectoral cooperation and cooperation between civil society organizations, (4) increasing public
influence and the visibility of the work of NGOs, (5) the development of social enterprise and
employment in the not -for -profit sector and (6) increasing the influence of the civil society in the
process of adoption of public policies. 45 The National Foundation cooperates with all three sectors of
the society: public authorities, business and NGOs. In 2007, the National Foundation selected, through
a public competition, three organizations and their network of organizations, located in three major
regions in Croatia, with whom it will cooperate in the process of financing, regional development and
capacity building of the third sector. This initiative was one of the efforts of the National Foundation to
decentr alize further the cooperation and financing schemes. The National Foundation has participated
in many legislative drafting initiatives aiming to improve the legal framework for NGOs and conducted
significant research on issues relevant for the Croatian NGO s.
In addition, with property granted by the Government, the National Foundation established
the European Centre for Cross -Sectoral Partnerships (IMPACT) in Zadar, which aims to become a
European center of excellence in education and training for represent atives of all three sectors in
society, for innovative and sustainable programs of inter -sectoral cooperation. 46
1.3 Estonia

In Estonia, the Minister of Regional Affairs is responsible for the development of civil society (together
with his other duties that include public services and regional policy). The Minister’s staff in the field of
civil society is limited to two full -time officials dealing with civil society issues and two political
advisers. Although the Minister has declared a plan to form a department for civil society, the concept
of such department has to date not been develope d. Other Ministries cooperate with NGOs as well;
however the extent of this co -operation can vary considerably. Notable examples include the Ministries
of Foreign Affairs, Economic Affairs, Culture, Finance, Education, and Social Affairs.
In addition, the Government Communication Office at the State Chancellery is also engaged actively
with fostering the culture of public participation among public authorities. In addition, in 2007 each
ministry named an official who is responsible for organizing public inv olvement in law -making
A parliamentary group for the support of civil society is also formed in Riigikogu (Estonian parliament)
that includes representatives from all political parties in the Parliament. More than one -third of MPs
belong to this group, thus making it the biggest parliamentary grouping in Riigikogu. The group
perceives its role to be discussion of the situation and initiation of necessary legislation for support of
civil society development. However, they have not made legislative initiatives or statements so far.
2. Policy Documents on Cooperation with NGOs
Policy documents on cooperation with NGOs express the position of public authorities on the role of
NGOs in society and the commitment for future constructive interaction with them. Such documents
outline the principles of cooperation, they provide for a means for NGOs to receive increased support
for their work and hence, to expand the areas of their activity in the interest of society and
opportunities for partnerships in init iatives for addressing common needs. Since they all aim to
promote partnership and dialogue, it is also important that all of them are developed through a highly
participatory process and the involvement of NGOs. 47 All three countries analyzed in this article have
developed such policy documents, and all of them have been able to evaluate their implementation.
2.1 Croatian Program of Cooperation and Strategy
The first document between the Croatian Government and NGOs was the “Program of Cooperation
between the Government of the Republic of Croatia and the Non -Governmental, Non -Profit
Sector” which was signed in 2001. 48 The Program of Cooperation is based on “common values of
modern democracy and the values of civic initiatives founded on social changes, cooperation,
solidarity, social justice, transpar ency, personal ability and responsibility, participation in decision –
making, consideration for personality, self -organisation, consideration for organizational diversity and
continuous learning. It aims to create effective mechanisms that will enhance the communication
between the Government and the Sector.” Although the Program for Cooperation listed the obligations
of the Government and NGOs, it was not perceived as a legally binding document. The Program was
conceived as a living document – “a starting p oint, not a conclusion” – with an “authority evolved from
the confirmation” given by both sides. Additionally, the Program of Cooperation anticipated the
creation of local and regional compacts so as to decentralize cross -sectoral cooperation. The
implemen tation of the Program of Cooperation has been evaluated positively. It led to legislative
reforms benefiting NGOs, including the new Law on Associations, the Lottery Law, the Law on
Volunteerism and draft Law on Foundations, the Code of Good Practice in Gr ant -Giving, tax law
amendments providing deductions for donations to NGOs, and the creation of local compacts in cities
throughout Croatia.
Following the successful implementation of the Program for Cooperation, the Croatian Government
adopted in 2006 a “Na tional Strategy for Creating Supportive Environment for the Development of Civil
Society.” The Strategy outlines the goals and measures that should be accomplished by 2011 in order
to increase and strengthen the legal, financial and institutional framework for the support of civil
society. Specifically, the Strategy contains targeted objectives and measures in the fields of
participation in decision -making, the legal and tax framework for NGOs, the institutional framework for
cooperation, financing of NGOs through contracting, development of social enterprises, development

of philanthropy, volunteering and foundations, social cohesion, and the role of NGOs in the process of
European Union integration. The Strategy was developed through a highly consultative, collaborative
and participatory process by NGOs and government officials. Upon the adoption of the Strategy the
Office for Associations developed an Operational Plan for Implementation of the Strategy which was
adopted by the Government in February 2007. The Operational Plan clearly outlines all the measures
necessary to support the implementation of the Strategic goals, the deadlines and the responsible
ministries or state bodies.
2.2 Strategy Paper of the Government of Hungary on Civil Society
In 2002, t he Department for Civil Relations led the process of development of a Strategy Paper of the
Government of Hungary on Civil Society. The Strategy was initiated as a result of the fact that the
then newly -elected government made cooperation and communication with civil organizations a
priority objective. The elaboration of the policy document and consequent legislation was put on the
fast track and its development was – though contentious – highly participatory. Comments from the
NGOs were considered and most ly integrated into the final document. Initially, the government
actually envisioned the signing of a “real” compact type agreement with the representatives of the
NGO sector, which would have required a single representative body of the NGOs to sign it. S ince
there was strong resistance among civil society organizations against such a notion of a single
representative body of NGOs, the government had to abandon this idea. 49
In terms of its implementation, the Hungarian Government has accomplished the central idea of the
Government Strategy, that being the establishment of the National Civil Fund and also has made
progress in its legislative plans, especially by adopting the Law on Volunteering.
In 2006 the Government launched a process of developing a new strategy for its partnership with civil
society. At this time, however, instead of deve loping one central strategic document for the whole
Government, the Ministries were entrusted with developing their own separate strategies, to help
decentralize the cooperation and make it more effective. Besides the Ministry documents, a second
Governmen tal Strategy was also developed and adopted in 2007.
3. Estonian Civil Society Development Concept and Civic Initiative Support Development Plan
The Estonian Civil Society Development Concept – EKAK is perhaps the only policy document adopted
by a Parliame nt in CEE. EKAK was adopted in 2002 and a joint committee for its implementation was
created in order to advance the implementation goals of EKAK. EKAK reflects the following priorities
for development of the sector: sustainability, accountability, and tra nsparency mechanisms for civil
society. The national priorities are reflected in EKAK activities, which are designed to address issues of
great concern to both the public and voluntary sectors, including legislation regulating citizen
initiatives, involvem ent of citizens and citizens’ associations in decision -making processes, financing of
citizens’ associations, compilation of statistics on the NGO sector’s size and activities, civic education,
and public awareness. 50 The Estonian EKAK has its own Implementation Plan, and the
implementation schedule is followed strictly by both parties. The EKAK implementation plan formulates
goals, activities to achieve each goal, and specific indicators to measure achievement. It allocates
responsibilities and contains a fixed schedule. Although the implementation plan was drafted in pursuit
of the EKAK’s short -term priorities, it also came as a result of the government’s and the non -profit
sector’s joint efforts and understanding of the essential aspects of civic, legislative, and economic life
in the country and the importance of adopting a comprehensive approach to solving problems in these
areas. 51 The Estonian EKAK resulted from bilateral initiatives and nationwide public discussions.
“The process of writing, rewriting and once again rewriting the document also became an international
success story. Kristina Mänd, executive director of NENO, recalls how an Indian rose from his seat at a
meeting in Canada, which the country’s NGOs, politicians and public officials had summoned, slapped
his fist on the table and told Canadian officials: “If you can’t do it like Estonians, don’t do it at all!”
Unlike th e Estonians, the Canadians felt that they had been pushed too far into the background when
a similar Canadian document, the Accord, was discussed. Indeed, even before the concept was
adopted by the Riigikogu, Estonian NGOs had talked about the paper in the USA, Canada, Japan,

Hungary, Ukraine, Australia, Denmark, the Czech Republic, Germany, Poland, Russia, Latvia,
Lithuania, South -Africa, Brussels, Strasbourg… Everywhere it became a "best practice" and was cited
with excitement. According to program manage r Daimar Liiv, who coordinated the completion of the
document, it is the first cooperation document of its kind approved by a country’s parliament. “It
demonstrates to the world that a political agreement has been reached in Estonia between the NGO
sector and the state over how to enhance cooperation,” Liiv says. Writing the document and seeing it
adopted by the parliament gave the national NGO community a boost of self -esteem.” 52
A Joint Committee was established in 2003 composed of representatives of each ministry and civil
society. Among other things, the Committee was assigned to evaluat e the degree to which the parties
have fulfilled the commitments they undertook in the EKAK, as well as to develop an Implementation
Plan for future action. Thus, while created in execution of the EKAK, this body has served as a link
between various stages of the adoption and implementation processes. 53 Importantly, the work of
the Committe e enabled the two sectors to reach a higher level of collaboration.
In the years following the establishment of the Committee, membership increased to 30, which slowed
down the efficiency of the work of the Committee. At the end of 2006, NENO 54 conducted an audit for
the joint committee that identified three main problems in implementing EK AK: (1) lack of political
interest; (2) poor quality and implementation of activity plans caused by insufficient financial and
human resources, 55 and (3) unclear role and responsibilities of both the committee and its members,
especially from the side of public sector (the ministries were represented by officials who usually didn’t
have the power to make decisions in the name of the ministry). In order to solve these problems,
NGOs recommended the revision of the principles and membership of the Joint Committee and
formation of implementation units in both the public sector and NGOs. 56 During the summer of 2007,
the principles and membership of the Committee were revised, and as a result the new committee is
smaller in number, but composed of higher level officials. It includes representatives of 10 umbrella
organizations, business and trade unions, as well as chancellors (the highest state officials in Estonia)
of the ministr ies of Finance, Social Affairs, Education, Culture, and Economic Affairs, and the deputy –
chancellor of the Ministry of Interior. The Minister of Regional Affairs chairs the Committee. In
addition, a representative of the Estonian Parliament and two governm ent foundations (Enterprise
Estonia and Non -Estonians’ Integration Foundation) also sit on this Committee.
Further, in June 2006 the Civic Initiative Support Development Plan , known as KATA in Estonian, was
approved. KATA is one of the results of the Estonian Civil Society Development Concept (EKAK), and it
serves to standardize the government’s approach to nurturing civil society. Essentially it is a document
that brings toge ther information about all the activities from the development plans of the various
ministries that are connected with civil society. KATA also aims to replace the activity plan for
implementing EKAK as of 2007. The new development plan sets five goals for the next three years:
(1) to raise the administrative ability of the public sector in communicating with citizens and
NGOs/NPOs; (2) to bring into order the system of financing the NGOs/NPOs; (3) to engage
NGOs/NPOs consistently and successfully in the de cision -making processes; (4) to raise awareness
and develop cooperation between the public, private and the nonprofit sectors and (5) to develop and
support civic activism.
NGOs have criticized KATA because they feel that this document does not bring any n ew ideas.
Instead it only reinstates the activities which are already taking place. They feel that KATA failed to
provide the qualitative leap in the development of civil society and its cooperation with the
Government. 57 For example, as mentioned above, the aim of KATA was to gather information from all
ministries’ development plans (which are essentially sub -sectoral strategies) on what they are doing in
the field of civil society (for example, what does the Ministry for Environment do to support
environmental organizations, or the Ministry for Education to support youth and educational NG Os).
The main problem however, is that KATA does not perceive civil society as a whole (as EKAK does) but
as a sum of specific activities particular to one sector. Therefore, its focus is not on the cross -sectoral
issues, e.g., sustainability of NGOs. Furt her, NGO participation in the development of KATA is also
limited, because of the fact that it relies predominantly on the ministries’ development plans. To
remedy this problem, NGOs are lobbying for the establishment of an implementing unit called the
EKA K bureau, which would help the nonprofit sector in taking the ideas and commitments of EKAK
forward. 58

NGO involvement in policy and decision making processes has been understood to include, among
others, the possibility and rights for NGOs to have access to information about the pr ocess of policy
making and law drafting, to be consulted about issues under consideration, and to take active part in
defining the process and policy or law in question. 59 Public participation in policy making can be
supported through various mechanisms, including: information about the launch of the process, the
plans and timelines, sharin g early versions of drafts for consultation with NGOs and other
stakeholders, including NGOs in working groups which develop the concept of the policy and the draft
law from the outset. Participation in decision making processes, on Parliament level, can b e realized
through allowing NGOs to take part in discussions in Parliamentary Committees or developing reports
on the consultation process which would reflect on the input given by NGOs and stakeholders. Opening
the processes for participation of NGOs and stakeholders can have many benefits. Primarily, the
process can result in fair policies/laws which are reflective of the real needs and are enriched with
additional experience and expertise. The participatory process can also facilitate dialogue and
consen sus on issues, can ensure legitimacy of adopted solutions and guarantee compliance.
Participation in the process of developing policies and laws can also increase the feeling of ownership
among stakeholders and responsibility for the implementation of the provisions.
The three countries discussed in this article have worked towards analyzing the challenges posed for
successful partnership and participation in policy making and integrating the best practice principles
into such processes. Out of all three, only Estonia has adopted a Code of Good Engagement which
outlines the basic principles of participation while Croatia has initiated a process for drafting such a
1. Hungary
The issue of NGO participation in policy and decision -making processes in Hungary has been a
sensitive issue, as governments have not always been open to the involvement of NGOs in such
processes. However, the basic principle to enable NGO participation has existed since the change of
the political system embodied in the Constitution. Further, there is no one piece of legislation that
would detail NGO involvement in policy and decision making processes. Rather, this issue is addressed
in various laws and regulations on national or local level.
There is one relevant provision in the Constitution 60 and also in the Act on Legislation, 61 which
establish the broad basis for NGOs to participate primarily in the governmental (as opposed to
Parliamentary) process on polic y-making and law drafting. Although the Act on Legislation contains
some specific provisions on NGO involvement, those have not been supported by implementing
regulations which leaves them open to various interpretations. In 2005, Hungary made a big step
towards public participation when the Parliament adopted the Law of Freedom of Electronic
Information, 62 which is the most relevant legislation from the access to information and consultation
point of view. This law obliges both national and local governmental bodies to make available on the
internet data of public interest. Such data, according to the Protec tion of Personal Data and the
Publicity of Data of Public Interest 63 and also in accor dance with some decisions of the Constitutional
Court, include not only drafts of laws, but also concepts and other preparatory materials. The law
details deadlines, methodology and procedures for publishing such information and reacting on it to
give feed back to the public. Further, there are some other mechanisms that depend on Ministry level
regulations, such as the various Councils (elderly, youth, social etc.) which also have their own
procedures for the involvement of NGOs.
There are also some mechani sms which ensure NGO participation in decision making processes on the
Parliament level. The Civil Office (mentioned above) maintains a Parliament “lobby list.” NGOs who
register on the list are informed and involved in the work of the Parliament. Hungary also adopted a
Law on Lobbying in 2006, which caused some controversy. Essentially the law does not apply to NGOs
but states that only those entities formally registered under this law may conduct lobbying activities.
Therefore, in theory, if the law is in terpreted restrictively, it would mean that NGOs are not allowed to

lobby in Hungary today. Nevertheless, the practice is different – NGOs are still able to directly contact
government officials and MPs about legal reform. 64
In recent years, NGOs have made successful efforts to influence legislation concerning the sector (e.g.
in the case o f the National Civil Fund, the Act on Public Interest Volunteering), and more and more
results have also been seen in legislation in different fields (such as the environment, disabled rights
or women’s rights). In addition to cooperation in the legislativ e process, NGOs and the government
have also cooperated with respect to European Union accession issues. The two sectors have also
launched partnerships for providing public services (e.g., the Ministries of Health, Social Affairs and
Family, Education, an d Culture), and they have worked together on processes for determining direct
and indirect (delegated) civil representation in European Union institutions. 65 Finally, NGOs also are
actively involved in working groups on Ministry levels and they sit on the bodies of the National Civil
2. Estonia 66
In Estonia, consultations with NGOs are mentioned in a governmental decree adopted in 1999 which
provides that the explanat ory letters of draft laws should also include the opinions of NGOs. In 2005, a
“Code of Good Practice on Involvement” 67 was developed by representatives of the public sector and
NGOs (based on the EKAK), 68 elaborating the key principles that should support active and
meaningful participation of NGOs. The Code aims to be applied by administrative agencies in the
preparation of at least the following documents: drafts of laws and their amendments; drafts of the
regulations and directives of the Government of the Republic; drafts of Ministers’ decrees; documents,
concepts, policies, development plans, and programs that are imp ortant to the country’s development;
drafts of legislation of European Union institutions and other strategic documents (i.e. green and white
books); instruction and procedures for rendering public service; conventions and international
agreements, as well as the documents that are worked out within their framework, and that influence
the society.
Several studies have shown that civil servants have an increased awareness about the need for civil
society involvement. A study conducted in 2006 showed that 92% of civil servants find NGO
involvement to be necessary for better results in lawmaking. 69 A more recent qualitative study by
Tallinn University showed that civil servants who have permanent contacts with NGOs view the
cooperation much more positively, while the lack of experience gives rise to unrealistic expectations,
disappointment and p rejudice. 70
The involvement of NGOs in consultations of draft laws and their participa tion in different working
groups and steering committees is increasingly common. The infrastructure of NGOs is well
established in Estonia and there are well known umbrella organizations for different sectors in addition
to NENO which represents the cross -sectoral advocacy body on behalf of nonprofit sector.
Although NGO participation and consultation is improving, there are still many challenges on the side
of both the public and nonprofit sector. The challenges on the side of the public sector are: (1)
insufficient knowledge about potential partners (therefore the consultations are often limited for
stronger and more known umbrella organizations instead of wider involvement of other types of
groups or organizations); (2) insufficient knowledge about the pr ocesses of involvement, which makes
the consultation process often formal without any real effort to ensure meaningful input from NGOs;
(3) poor quality of drafts laws (since they are often very long and complicated texts, that NGOs are
not capable to deal with); (4) poor planning of time and short deadlines (The time given to
organizations for sending their feedback to draft laws is usually 2 -3 weeks, which is often not
sufficient when organizations want to gather their members’ or constituencies’ options first, especially
if they are not informed in advance about forthcoming consultation processes. Thus NGOs are often
involved only in consultations about ready -made draft laws instead of involving them in the stages of
needs assessment and development of th e draft); (5) poor capacity in giving feedback to
organizations who have contributed to the law -making processes with their proposals.

On the other side, NGOs face the following challenges (1) lack of resources (both human and financial)
to make meaningful contributions to policymaking; (2) lack of competence to comment on legal texts;
and (3) lack of ability to consult and involve their members and target groups when they formulate
the organization’s position towards a policy or law. The solutions to these problems are being sought
through trainings (e.g., NENO’s annual summer school in 2007 concentrated on involvement and
participation issues, bringing together NGOs and officials to discuss and exchange experiences on how
to implement public involvement pr ocedures to achieve the best results) and better funding
mechanisms for NGOs (e.g., operational costs for advocacy organizations through the future
A further interesting initiative is the new participation portal (“participate” in Estonian),
which was launched by the State Chancellery in summer of 2007. The portal allows civil society groups
and individuals to post comments about the ongoing consultation processes, while the ministries can
provide the public with draft laws, backgro und materials as well as post polls. In the future, the users
will also get the opportunity to initiate legislation and comment on the needs and shortcomings in the
society that can currently be done through another portal, “Today I decide.” 71 In the first few months
the input from public sector has been low, while the feedback from NGOs ha s been moderate.
Nevertheless, the portal has good potential to facilitate the consultation processes.
3. Croatia
In Croatia, 72 NGO involvement in policy -making and decision making process is still undergoing an
initial phase of developing tools and mechanisms for more systematic engagement. Currently, there
are no special regulations in Cr oatia that would guarantee NGO participation at any level of
government or parliamentary decision making. Government ‘s Rules of Procedure prescribe that
ministries and other governmental bodies should, when appropriate, forward proposals and opinions to
(professional) associations which deal with the issue in the proposal or opinion. 73 Howe ver, this
provision is not being fully respected and there are no statistics to confirm the efficiency of such an
approach. The Parliament's Rules of Procedure provide that “external members of the Parliament 's
committees“ who are nominated from various e xpert groups, universities and associations, can give
opinions on draft proposals without the voting right. However, only 11 out of 25 different
Parliamentary committees can use the option of nominating external members and the procedure of
appointment is not transparent.
Due to the lack of systematic involvement of NGOs in the decision -making processes, representatives
of NGOs and Government dedicated a special chapter on participation of NGOs in the newly
adopted “National Strategy for Creating Supportive Environment for the Development of Civil
Society.” 74 The Strategy indicates the need for the development of unified standards and a
mechanism at the national and local level to provide NGOs the opportunity to participate in the
drafting, implementation and evaluation of public policies and decisions. Accordi ngly, the Council for
Civil Society Development and Government’s Office for NGOs have formed a working group tasked
with drafting several possible mechanisms and tools for NGO consultations, such as a Code for NGO
Most of the current practic e of NGO involvement includes ad hoc reactions through the media
pressure, advocacy coalitions and direct lobbying after the certain draft proposal (policy or law) has
been published. The consequences of this approach are firstly, a significantly low level of access to
information about the drafting process (usually conducted in the national or local Government’s body)
followed by the late publication of the drafts, and secondly, the need for a quick and targeted reaction
of NGOs, which does not allow for e laborate comparative analysis or public discussions. Some NGOs
have already established a database of comparative research relating to their main focus of interest
and are able to react quickly and produce policy analysis in very short time.
In addition, t he process of decision -making, especially on the parliamentary level, is still based on a
daily schedule which is constantly subject to change. There is no systematic approach to setting the
agenda and thus NGOs face limited possibility and time to prepare meaningfully for the discussions.
Moreover, over 80% of legislative drafts are being adopted under so -called “urgent procedures,” which

in theory should be used only in limited situations. This practice limits the ability of NGOs to
participate in decisio n-making processes. 75
A more systematic approach to NGO involvement is rare but succes sful on both the national and local
levels. Usually this includes forming a working group for a draft law or policy; the working group is
initiated by a governmental body but also includes members of NGOs. 76 Frequent meetings and open
discussion and inputs of NGO members helped bridge the gap between drafting and implementation of
certain l aws and policies. However, these examples depend on the personal motives and openness of
each governmental office. The main body established by the Government that represents NGOs is the
Council for Civil Society Development (described above). In addition to the Council, 53 NGO
representatives and experts from the academic sector are involved in the negotiations of Croatian
accession to the European Union. Moreover, the Government initiated the establishment of a Joint
Consultation’s Committee between Europ ean Economic and Social Council and Croatia, with two
participants nominated by the NGOs participating in its work. Finally, in late 2007, the Government
initiated the establishment of the National Council for Promotion of Voluntarism which will include
representatives of NGOs.
Cooperation between governments and NGOs in the three countries analyzed in this article has taken
many creative forms. In all three countries, the governments have adopted the basic framework laws
which would enable NGOs to operate and sustain their activities. With the exception of the Croatian
Law on Foundations and Funds, all of them reflect good practice principles. The tax laws also follow
this trend and all three countries have introduced exemptions on income tax and tax benefits for
donors which would motivate NGOs to generate their own income and turn to their local communities
to gain financial support for their activities. In addition, the volunteering laws in Hungary and Croatia,
and the development plan in Eston ia aim to create a supportive environment for citizen engagement in
the activities of NGOs and social life.
Governments and NGOs have also been innovative in developing mechanisms to improve the financial
viability of the sector, especially to address the most common challenge of lack of funding for NGOs’
institutional costs. The models described in this article show that there are many creative ways in
which governments and NGOs can try to address this problem if they make an assessment of the local
needs and opportunities. Each model depends on a distinct source of funding (lotteries, percentage
Importantly, the state bodies and NGOs have been able to explore different avenues to increase
dialogue and cooperation. They have set up central offic es at governmental and parliamentary levels,
which are responsible for liaising with NGOs, soliciting their input, working jointly on initiatives of
common interest and ensuring their participation in the policy and decision -making processes. The
establish ment of different departments at ministries tasked to liaise with NGOs ensures that the
cooperation is not limited to only one public body but is decentralized and allows for direct
partnerships on issues which are close to the parties involved. The progra ms for cooperation or
strategies for support of the development of the sector are important as they embrace and endorse
principles and commitments which guide the cooperation and ensure that the support is targeting real
needs. The highly participatory pro cesses in the development of these documents are perhaps even
more significant as they have brought the public bodies, state authorities and NGOs closer together,
have facilitated consensus -building on the priority issues and have created ownership and tru st that
increase the chances of successful implementation. Finally, the initiatives to translate the principles
and rules of NGO involvement in policy – and decision -making processes into codes or regulations have
elevated the importance of NGO participatio n and ensured that all public authorities and NGOs are
familiar with the benefits of such involvement and also the obligations and opportunities that arise
from it.
The Croatian, Estonian and Hungarian models of cooperation have faced several implementatio n
challenges. The experiences gained through these innovative initiatives have served and can continue

to serve as valuable examples and inspiration to other countries that are considering adopting similar
approaches in their local environments.
1 Katerina Hadzi -Miceva is Senior Legal Advisor at the European Center for Not -for -Profit Law
(ECNL), . The author would lik e to thank the following experts who have contributed to
the development of this article: Nilda Bullain, Executive Director, ECNL, for the section on Hungary;
Urmo Kübar, Executive Director, Network of Estonian Nonprofit Organizations (NENO), ,
for the section on Estonia; and Vanja Skoric, Legal Advisor, GONG, , for the section on
Croatia. The contribution of these experts to this article was supported by the United States Agency
for International Development (USAID).
This article was produced with the financial assistance of the European Union, and was presente d at a
conference on October 25 -26, 2007, in Warsaw as part of the project KOMPAS II, financed by
European Union. It was first published in “Organizacje pozarzadowe. Dialog obywatelski. Polityka
panstwa,” by the Institute for Public Affairs, Poland (2007). The contents of this document are the sole
responsibility of the Institute of Public Affairs and ECNL and can under no circumstances be regarded
as reflecting the position of the European Union.
2 In this article, the term NGO will refer to associations, foundations, and other legal forms or informal
type of organizations which are recognized in the selected countries.
3 Hadzi -Miceva, K., “A Supportive Financing Framework for Social Economy Organizations,” paper
developed for and presented at a conference on Social Economy in CEE: Emer ging Trends of Social
Innovation and Local Development, organized by OECD and LEED Program (2005).
4 Among others, the new law allowed informal associations to be able t o exists (by abolishing the
mandatory registration), minimized the number of founders from 10 to 3, allowed foreigners to be
able to establish an association, minimized discretionary power of the state during registration, it
empowered the court to decide on prohibition (instead of the registration authority) and returns to
associations property that was nationalized under the prior framework.
5 The Estonian and Croatian laws also allow informal, unregistered organizations to operate in the
form of civil law partnerships. In Estonia, these organizations can be eligible for some small project
6 For example, the Ministry may deny registration even if a foundation’s statutory goals are perfectly
legitimate, if it does not deem the establishment of such a foundation to be necessary. According to
the Ministry, registration of a foundat ion, provided that all submitted documents are in order, may
take up to six months.
7 The Government, with the support of the Government Office for Cooperation with Asso ciations, the
National Foundation for Development of Civil Society, international experts and NGOs developed a
draft law to improve the existing legal framework however it has not yet been finalized and submitted
for enactment.
8 The draft Law on Foundations, which, if enacted, would replace the 1995 Law on Foundations and
Funds, would also eliminate the “fund.”
9 The percentage mechanism allows taxpayers to allocate a certain percentage of the personal income
or profit taxes that they pay, to organizations that fulfill the criteria prescribed in a law. This
mechanism will be discussed i n more detail below.

10 Bullain, N., “Mechanisms of Government -NGO Cooperation in Hungary,”
(https://www ).
11 Income Tax Act, article 11 prescribes that an organization (association or foundation) can be
entered to the list of associations or foundations benefiting from tax incentives, if it: 1) operates in the
public interest; 2) is charitable, that is, offering goods or services primarily free of charge or in
another non -profit seeking manner to a target group which, arising from its articles of association, the
association supports, or makes support payments to the persons belonging in the target group; 3)
does not distribute its assets or income, grant material assistance or monetarily appraisable benefits
to its founders, members, members of the management or controlling body, persons who have made
a donation to it or to the members of the management or control ling body of such person or to the
persons associated with such persons; 4) upon dissolution of the association, the assets remaining
after satisfaction of the claims of the creditors shall be transferred to an association or legal person in
public law ent ered in the list; 5) the administrative expenses of the association correspond to the
character of its activity and the objectives set out in its articles of association; 6) the remuneration
paid to the employees and members of the management or control bo dy of the association does not
exceed the amount of remuneration normally paid for similar work in the business
sector. http:/ /
en&pg=1&ptyyp=RT&tyyp=X&query=tulumaksu Professional organizations, trade unions,
organizations established by a public institution and political parties (as well organizations that suppo rt
them) can not qualify for this list.
12 As described by Urmo Kübar, Executive Director of NENO, Estonia.
13 Hadzi -Miceva, K., A Supportive Financing Framework for Social Economy Organizations, paper
developed for and presented at a conference on Social Economy in CEE: Emerging Trends of Social
Innovation and Local Development, orga nized by OECD and LEED Program (2005).
14 Art.1.1. Act LXXXI of 1996 on Corporate Taxes and Dividend Taxes (CTDT Act).
15 Article 11 of the Estonian Income Tax provides that The act further defines that a principal activity
of an association will be treated as business if over a half of the income of the association is received
from b usiness, unless at least 90 % of the business income minus the expenditure related to business
are used in the public interest. Further the law states that the following will not be considered as
business: 1) activities directly related to the objectives s et out by the articles of association (for
example publication of printed matter, training, information exchange, organization of events); 2)
activities for the sale of donated capital; 3) organization for lotteries and auctions for charitable
purposes, an d other such activities for collecting donations unless such activity is the principal activity
of the association; 4) receiving financial income which results from the principal activity.
16 “Survey of Tax Laws Affecting NGOs in Central and Eastern Europe” published by the International
Center for Not -for -Profit Law (second edition, 2003, ).
17 A “public interest commitment” is a particular fund established with the aim of raising money for a
specified purpose (family opening an account to receive funds from the public for an operation for
their child who needs a medical treatment).
18 Estonia eliminated the system of taxation of profit, and replaced it with the system of taxation of
profit distributi on. Based on this system, all legal entities pay taxation on the distributions in the form
of salaries, fringe benefits, gifts, charitable contributions, dividends etc. For a more detailed overview
of this system see: “Survey of Tax Laws Affecting NGOs in CEE” published by the International Center
for Not -for -Profit Law (second edition, 2003, ).
19 The new legal relationshi p of volunteering is clearly distinguished from the employment
relationship as well as from the relationship of a paid contractor.

20 Hadzi -Miceva, K., “Comparative Ana lysis of the European Legal Systems and Practices Regarding
Volunteering” (2007), International Journal for Not -for -Profit Law, Volume 9, Issue 3.
21 Hadzi -Miceva, K., and Suplisson, F., (2007) “Overview of State Funding Schemes for Civil Society
Organizations, research paper,” .
22 Source: Civil Society Development Foundation, Hungary, 2005.
23 Bullain, N., and Toftisova, R., “A Comparative Analysis of European Policies and Practice s of
NGO/Government Cooperation” (2005), International Journal of Not -for -Profit Law, Vol. 7, Issue
4, .
24 Bauer Tamás, “Hungary’s 1% Law: A Brief
History,” .
25 For details see: Bullain Nilda, “Percentage Laws Explained: Percentage Philanthropy and Law”
( ).
26 Some of the lessons learnt described here have been taken from two previously developed papers
which addressed the topic: Hadzi -Miceva, K., “A Supportive Financing Framework for Social Economy
Organ izations” (2005), and “Cooperation Between the Government and Civil Society Organizations in
Hungary,” report prepared for the British Council by ECNL (2006).
27 Except in Slovakia where corporate taxpayers can also designate 2% of their profit taxes.
28 Central Statistical Office, 2002.
29 For details see: Hadzi -Miceva, K., “A Supportive Financing Framework for Social Economy
Organizations, 2005 ( ).
30 The National Civil Fund was established to support: operational expenses of civil organizations;
public benefit activities of civil organizations; anniversaries, fes tivals, domestic and foreign events
involving civil organizations; ensuring the presence of Hungarian civil organizations in international
civil relations; scientific research related to the civil sector; supporting monitoring activities and tasks
related to registration; educational, service, advisory, development and assistance activities and
institutions related to the civil sector; promotional materials introducing the civil sector, supporting
electronic and written media specialized in this field; civi l organizations to raise their own contributions
for tenders; grantmaking organizations based on the decisions of the Fund Program Council and the
Colleges, such decisions pertaining to automatic provision of resources determined by unified
principles; cov ering the expenses related to the operation and administration of the Fund Program;
supporting activities of civil society representation.
31 I.e., the government will provide from the budget the same amount to the National Civil Fund as
was designated (in total) by taxpayers to NGOs in the preceding year and the law states that in no
case the fund will contribute less than the 0.5% of personal income taxes collected.
32 HEPF, ICNL, Editors of SEAL, “Hungary’s National Civil Fund: Building on the 1% Law,” in Social
Economy and Law (SEAL), Autumn 2003.
33 In fact, the Minister herself made a statement to call the attention of the Council (highest
governing body of the Fund) to such controversies. Tényszerűen a Nemzeti Civil A lapprogramról –
Göncz Kinga sajtóközleménye 2005. augusztus 30. (Factually about the National Civil Fund – press
release of Kinga Göncz, Minister of Youth, Family and Social Affairs, August 30, 2005).

34 See USAID 2004Sustainability Index for Central and Eastern Europe and
Euroasia , .
35 Official Gazette of Republic Croatia, no.173/03.
36 The factual information about the work of the Foundation in this article has been drawn from the
website of the Foundation and its annual reports. For more see: .
37 Every year the Government adopt s a “Decree on the Criteria for the Distribution of the Lottery
Proceeds.” According to the decree from 2007, the 50% of the allocated funding were distributed to
the following fields: 30.5% sport, 8% fight against drugs and other types of addiction, 4% so cial and
humanitarian activities, 28% problems and needs of people with disabilities, 6.5% technical culture,
5% culture, 3.5% out of institutional education and upbringing of children and youth and 14,5%
development of civil society. The funds are distrib uted through responsible Ministries listed in the
38 From Vision to Change: A New Model for Civil Society Development in Croatia, by Cvjetana Plavsa –
Matic and Katerina Hadzi -Miceva, published in Social Economy and Law (SEAL), Winter 2003 -Spring
39 Official Gazette of Republic of Croatia, no.16/2007. The English and Croatian version of the code
are available on: .
41 Article 9: Protective Measures to Prevent Potential Conflict of Interest, Ordinance on the Conditions
and Procedure for the Allocation of Funds used for the Fulfillment of the Foundation’s Purpose.
42 Around 30 NGOs a year are receiving three types of institutional grant support: maximum, middle
and minimum for a three -year period. As described by Vanja Skoric, GONG.
43 Government of Republic of Croatia, Program of Work for 2000 -2004 (as cited in “From Vision to
Change,” publication by the Government Office for Associations, 2003).
45 Operational Strategy of the National Foundation for Civil Society Development 2004 -2007
( ).
46 The principal activities of the of IMPACT are: (1) study and educational programs implemented
continuously in cooperation with international and national partnership organizations (2) organization
of public debates on the subjects of cross -sector cooperation and partnership, (3) public advocacy of
cross -sector cooperation and partnership, (4) interdisciplinary research, (5) technical assistance and
counseling and publishing In addition to educational services, the Centre will offer, o n its premises of
almost 1,500 m 2, 20 accommodation units, a multimedia centre, a convention room, an exhibition
room and a library. .
47 “A Comparative Analysis of European Policies and Practices of NGO – Government Cooperation,”
report by Nilda Bullain and Radost Toftisova ( ).
48 Available at .
49 “A Comparative Analysis of European Policies and Practices of NGO – Government Cooperation,”,
report by Nilda Bullain and Radost Toftisova ( ).

50 Toftisova, R., Implementation of NGO -Government Cooperation Policy Documents: Lessons
Learned, IJNL, volume 8, issue 1
(2005) .
51 Toftisova, R., Implementation of NGO -Government Coope ration Policy Documents: Lessons
Learned, IJNL, volume 8, issue 1
(2005) .
52 Ruus, K.,”Change of mindset underway as Estonian parliament adopts agreement on civil
society,” .
53 Toftisova, R., Implementation of NGO -Government Cooperation Policy Documents: Lessons
Learned, IJNL, volume 8, issue 1
(2005) .
55 The budget for the Joint Committee was allocated from a supplementary budget of 2 -3 million
Estonian kroons a year (approx. 130 000 -190 000 Euros).
56 The discussions over the formation of implementation units are still in process. NGOs have stated
that they find it inevitable to have such units with stable funding fr om state budget in both public
sector (for example the future department of civil society by Minister of Regional Affairs) and
nonprofits (administered by one NGO) to perform day -to-day activities and being responsible in taking
EKAK forward.
58 As explained by Urmo Kü bar, Executive Director, NENO.
59 “Citizens as Partners: Handbook on Information, Consultation and Public Participation in Policy –
Making,” OECD, 2001, .
60 Section 36 of the Constitution states that while performing its duties, the government shall
cooperate with the ci vil organizations concerned. For the obligatory character of this provisions on
policymaking bodies, see the discussion on the Constitutional Court decision in “Civil Organizations in
the Legislative Process,” edited by Judit Fridli and Ildi Pasko, a Publi cation of the Hungarian Civil
Liberties Union, Budapest, April 2000 (on file with ECNL).
61 Art. 20 of Act on Legislation provide that civil organizations shall be involved in drafting those
regulations which “pertain to the interests or affect the social conditions which they represent and
62 Law XC of 2005.
63 Law 63 of 1992.
64 Companies, on the other hand, need licensed lobbyists to proceed with such activities.
65 “The Liaison Office as a Tool for Successful NGO -Government Cooperation: An Overview of the
Central and Eastern European and Baltic Countries’ Experiences” by Maria Gerasimova
( ).

66 This section of the article has been developed with significant contribution by Urmo Kübar,
Executive Director of NENO.
68 NGOs expect the Code to be adopted by the Government in October 2007, and thus become a
legally binding docu ment.
69 .
71 Or TOM in Estonian, .
72 This section of the article was written with significant contribution by Vanja Skoric (Legal Advisor,
73 Article 27 para 5 of Government ‘s Rules of Procedure, Official Gazette 6/02, 91/03 and 58/04.
74 Chapter 4 of the National Strategy for Creating Supportive Environment for the Development of
Civil Society.
75 Article 159 of Parliamentary Rules of Procedure. According to the official web site of the
Parliament, and their Information and Documentation Service, in the period January
15 – July 13 2007, a total of 115 laws have been adopted, 81 of them according to the “urgent
76 Law on Voluntarism, adopted in 2007, is a good example of including NGOs in draft law working
group. Example on local level includes working group for adopting City Program for Youth in the town
of Zadar.
Bauer Tamás, “Hungary’s 1% Law: A Brief
Bullain, N., and Toftisova, R., “A Compa rative Analysis of European Policies and Practices of
NGO/Government Cooperation” (2005), International Journal of Not -for -Profit Law, Vol. 7, Issue
4, vol7iss4/art_1.htm
Bullain, N., “Percentage Philanthropy and Law,” Percentage Philanthropy (2004), ECNL (European
Center for Not -for -Profit Law) and NIOK (Nonprofit Information and Training Center)
at and
Bullain, N., “Mechanisms of Government -NGO Cooperation in Hungary”
( )
ECNL, “Cooper ation between the Government and Civil Society Organizations in Hungary,” report
prepared for the British Council (2006)
ECNL, “Tax Treatment of Non -Profit Organizations and Tax Benefits for Donors (2006),” research

European Foundation Centre, “Foundations’ Legal and Fiscal Environments – Mapping the European
Union of 27” (2007)
Fridly, J., Pasko, I., “Civil Organizations in the Legislative Process,” edited by Judit Fridli and Ildi
Pasko, a Publication of the Hungarian Civil Liberties Union, Budapest, April 2000
Gerasimova, M., “The Liaison Office as a Tool for Successful NGO -Government Cooperation: An
Overview of the Central and Eastern European and Baltic Countries’ Experiences,”
( )
Göncz, K., “Tényszerűen a Nemzeti Civil Alapprogramról” – sajtóközleménye 2005. augusztus 30.
(Factually about the National Civil Fund – press release of Kinga Göncz, Minister of Youth, Family and
Social Affairs, August 30, 2005)
Government Office for Asso ciations, Government of Republic of Croatia, Program of Work for 2000 –
Hadzi -Miceva, K., “Comparative Analysis of the European Legal Systems and Practices Regarding
Volunteering” (2007), International Journal for Not -for -Profit Law, Volume 9, Issue 3.
Hadzi -Miceva, K., “A Supportive Financing Framework for Social Economy Organizations” (2005),
paper developed for and presented at a conference on Social Economy in CEE: Emerging Trends of
Social Innovation and Local Development, organized by OECD and LEED Program
Hadzi -Miceva, K., and Suplisson, F., (2007) “Overview of State Funding Schemes for Civil Society
Organizations, research paper,”
HEPF, ICNL, Editors of SEAL, “Hungary’s National Civil Fund: Buildin g on the 1% Law,” in Social
Economy and Law (SEAL), Autumn 2003
ICNL, Survey of Tax Laws Affecting NGOs in CEE, 2nd edition, (2003), ICNL,
Ivanovic, M., “Legal Framework for the Activity of Public Benefit O rganisations in the Republic of
Croatia – State of affairs on 31 May 2005,” published by ECNL and National Foundation for Civil
Society Development (2005)
National Foundation for Civil Society Development, Annual Report 2006
National Foundation for Civil S ociety Development, Operational Strategy 2004 -2007
( )
OECD, “Citizens as Partners: Handbook on Information, Consu ltation and Public Participation in Policy –
Making,” (2001),
Plavsa -Matic, C., and Hadzi -Miceva, K., (2004) “From Vision to Change: A New Model for Civil Society
Development in Croatia,” Social Economy and L aw (SEAL), Winter 2003 -Spring 2004
Ruus, K., “Change of mindset underway as Estonian parliament adopts agreement on civil
Rutzen, D., Durham, M., Moore, D., (2004), “Overview of NPO Legislation in Central and East

Salamon, L., Sokolowski, W., and List. R., Global Civil Society: An Overview, (2003), the John Hopkins
Comparative N onprofit Sector Project, Baltimore: Johns Hopkins Center for Civil Society
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IJNL, volume 8, is sue 1 (2005)
USAID 2004 and 2006 Sustainability Index for Central and Eastern Europe and