The International Journal
of Not-for-Profit Law

Volume 11, Issue 4, August 2009

Marek Rymsza1

The article analyzes the evolution of the policy of the State towards the civic sector in Poland after 1989. The author identifies five stages, which approximately match subsequent terms of office of the Polish Parliament. The analysis shows that the policy of the State has evolved from the provision of room for independent civic initiatives to the involvement of NGOs in co-operation with public administration. The growing interest in cooperation is accompanied by the trend to increase control over the non-governmental sector.

Phases of development of government policy toward the third sector in Poland

In the years after 1989, we can distinguish three fundamental phases in the evolution of government policy towards the third sector. First was the phase consisting of the creation of the scope for civic initiatives to operate within the new system with the simultaneous creation of a set of “privileges” for formalized forms of civic activity (the activities of associations and foundations). This phase was accompanied by the dynamic development of the civic sector as a reaction to the restrictions of the communist period. The second phase was a phase of declarative support on the part of the government for the third sector, though its significance was in fact marginalized, thanks to the public policy reforms undertaken. This phase was accompanied by stagnation in the development of civic initiatives due, in part, to the exhaustion of possibilities for societal self-organization under the legal and financial conditions created in the previous phase. Finally, in the third phase we see a defining of the principles of inter-sector cooperation with concurrent efforts towards the bureaucratization and control of organizations undertaking cooperation and the marketization of the mechanisms of public support for the activities of non-governmental organizations acting for the public benefit. This phase of government policy (still ongoing) seems to be accompanied, among others, by a progressive stratification within the third sector and the marginalization of informal grassroots local initiatives, at least within the system of inter-sector cooperation.

Two elements of government policy concerning the third sector come to light as crucial:

(1) The formulation of the legal conditions for the functioning of non-governmental organizations; and
(2) The creation of a model of cooperation between public administration and the civic sector.

Looking closely at these two aspects of government policy,2 one can distinguish five periods which more or less coincide with successive parliamentary terms and reflect changes in government policy resulting from the shifts in power of various forces on the political scene. Government policy towards the third sector seems to have been so far a function of the general approach of decisionmakers towards reforming the social sphere. These periods can be outlined as follows:

• 1989–1993 – creation of the scope for civic initiatives;
• 1993–1997 – stagnation policy;
• 1997–2001 – policy of missed opportunities;
• 2001–2005 – building of a model of inter-sector cooperation;
• 2005–2007 – between cooperation and control.

Below is a brief description of these periods of the development of government policy towards the third sector as well as a short account of the pretransformation period (1980–1988). The rise of the original Solidarity as a mass social movement (1980–1981) brought about the eventual democratization of Poland. Although it broke up this movement, martial law did not manage to stop the process of “making the public sphere more civic.” In other words, the rise of the third sector and its development after 1989 constitute a continuation of the changes initiated a decade earlier.

1980–1989: The politics of repression and weakening control in the period of “corroding communism”

1980–1989: Corroding socialism

• Experiences of the original Solidarity as a mass social movement (1980–1981)
• The politics of repression (1982–1985)
  – the breaking up of Solidarity as a legal entity
  – the “social vacuum” effect
  but concurrently
• Toleration of selected social activities (1986–1989):
  – grass-roots self-help, charitable and educational activities organized in cooperation with the Catholic Church
  – the Act on Foundations (1984)

The original Solidarity, though formally a trade union,3 was in fact a mass social movement with a strong ethical orientation in which three currents could be distinguished: trade unionist, political and civic currents.4 The communist authorities mostly feared the political current, yet all three challenged their legitimacy, not submitting to the control of the power apparatus.

The politics of repression, undertaken together with the introduction of martial law, led to the delegalization of NSZZ “Solidarity” as a legal entity and its breakup as a mass social movement. The Union opened underground structures, the significance of which, however, was on the decline as the very formula of underground activity was running out. Many people engaged in the original Solidarity left Poland and went abroad or chose “internal emigration” – an escape to their private lives. Stefan Nowak defined this state as a “social vacuum.”5

Communism, however, was clearly undergoing corrosion and the controlling capabilities of the government apparatus were weakening. That is why the 1980s saw the development of “above-ground” self-help, charitable and educational activities, often in cooperation with the Catholic Church and with the use of Church infrastructure.6 The development of social movements in the 1980s7 surely facilitated the creation of the infrastructure for civil society in the next decade and constituted a link between the experiences of the original Solidarity and the system transformation that occurred in 1989.8 In the middle of the decade (1984), the authorities allowed citizens to set up foundations although it controlled and limited their numbers.9 The Act on Foundations, passed during this time, with small changes, has been in force until today.

1989-1993: The policy of creating the scope for formalized civic initiatives under the Solidarity-rooted governments

1989–1993: The first years of transformations under the Solidarity-rooted governments

• The Law on Associations is enacted (1989): civic freedom as a guarantee of democratization process
  
• Dynamic development of the third sector infrastructure: “removing the lid” effect
  
• Tax exemptions for civic and Church-related organizations granted
  
• Lack of proposals in social policy: NGOs try to “patch the transformational holes”

The first years of system transformation after the Round Table talks (1989) consisted in the government’s freeing space for formalized civic initiatives and the creation of regulations conducive to the activities of associations, foundations and church organizations, including “friendly” tax regulations that would allow them to conduct social activities at relatively low costs.10 The ruling Solidarity-rooted governments11 saw it as obvious that it was not the government’s task to exercise control over the association movement. It is worth remembering that the passing of the Act on Associational Law was a direct result of the Round Table talks, during which Solidarity’s social activists made signing the agreement with the communist authorities dependent on their agreement to pass this Act. Civic freedoms, including the right to associate were treated as a guarantee of system change.

After 1989 there was a rapid proliferation of non-government organizations: initiatives which were merely tolerated by the authorities under the previous system were legalized and new ones were undertaken. This dynamic development is commonly described as the “removing the lid” effect. Another factor which should be pointed out is one external to Polish government policy: the accessibility of foreign funds, both public and private (and here, American donors deserve a special mention), contributed greatly to the creation of civil society infrastructure in Poland.

At the same time there was a notable lack of offer for non-government organizations in public policy. Organizations were perceived as entities “patching the transformational holes,” that is, supporting groups perceived as “reform losers” and performing tasks neglected by public services. These tasks, however, were neither commissioned nor even recommended by the public administration, but rather were spontaneously undertaken by the organizations themselves.

1993–1997: Policy of stagnation under the rule of the defensive post-communist coalition

1993–1997: Period of self-preservation of the governing post-communist coalition

• Attempts to gain administrative control over non-governmental organizations (in the case of foundations)
  
• First local experiences of inter-sector cooperation (local law)
  
• A slowdown in the dynamics of third sector infrastructure development
• First attempts to regulate activities for the public benefit (1996)
• Principles: subsidiarity of the state and social dialogue inscribed into the Constitution of the Republic of Poland (1997)

In the 1993 Parliamentary elections central-right Solidarity-rooted parties lost power and a new Cabinet was created by a post-communist leftist coalition.12 During most of the next parliamentary term (1993–1997) there was still no coherent or clear government policy towards non-government organizations aimed at the development of inter-sector cooperation at a central level. What’s more, the government coalition was distrustful towards nongovernment organizations, especially those set up after 1989, which was manifested, among others, by dissolution of the Department for Cooperation with Non-government Organizations at the Ministry of Labor and Social Affairs. If at all, the authorities preferred to cooperate with organizations existing before 1989. This was a manifestation of the general mistrust of the government politics favored during the Solidarity governments.

On the other hand, initiatives of cooperation were undertaken at the municipal level based on regulations of local law – resolutions of county (gmina) councils. This was a positive effect of the politics of decentralization started in the previous period consisting in rebuilding local self-governance at the gmina level.

In general, however, this period witnessed the slowing down of the dynamics of the development of the third sector infrastructure. Updates of data bases on non-governmental organizations run by the Klon/Jawor Association13 showed that the third sector stopped growing in numbers: the establishment of new organizations was accompanied by the dying out of many others. Foreign aid also significantly decreased in the mid-90s: foreign donors moved their support and international activities eastwards (to strengthen civil society infrastructure in the countries of the former Yugoslavia and former Soviet Union).

Toward the end of this parliamentary term, works on system solutions were, however, undertaken. Thanks to the engagement of Jerzy Hausner (then advisor to the Minister of Finances), in 1996, the first attempts were undertaken to draft legal regulations on the cooperation between public administration and non-government organizations. It is worth mentioning that at the end of this term the National Assembly passed a new Constitution of the Republic of Poland (1997), in which two governing principles important for the development of civil society found their place: the principle of social dialogue and the principle of subsidiarity of the state.

1997–2001: Policy of missed opportunities during the period of system reforms of the central-right coalition

1997–2001: Period of social reforms of the central-right coalition

• Unsolved dilemma: Decentralization or marketization of the social sphere? Between the German and Anglo-Saxon models

• Lack of a place for non-governmental organizations in the four social reforms

• Narrow operationalization of the principle of subsidiarity: priority for local authorities

The 1997 parliamentary elections were won by two Solidarity-rooted parties that created a new coalition: AWS and UW.14 The main achievement of the AWS-UW coalition, which came into power after the 1997 elections, was the simultaneous carrying out of four social reforms: reforms in the social security, health care, public administration and education systems. Unfortunately, nongovernment organizations were not considered as potential partners of public administration in any of these four programs of reforms. This was in part a result of the lack of coherence in the reforms package because in some areas (i.e., the social security system) the concept of marketization of the social sphere dominated, while in others (i.e., administrative reform, education) decentralization of social policy was favored, and still in others (i.e., health care) the two directions were combined.15

We can also thank these administrative reforms for the narrow operationalization of the principle of state subsidiarity in a manner unfavorable to the third sector. This meant an increase in the importance of local authorities, but not of non-governmental organizations.16 A notable effect of this operationalization is the dispute observable in recent the social mandate.17

The condition of non-government organizations continued to be difficult. The lack of regulated access to public funds and the limited availability of foreign aid weakened the financial condition of the third sector and led to an interest in payable systems of social services delivery. Thus there was growth in third-sector support for passing an act regulating public benefit activities (although there also were people working or otherwise involved in the third sector that questioned the necessity of this act). There was, however, no political will in the government structures to finalize the draft law; and one of the reasons for this was the conflict between the positions of the Ministry of Labour and Social Policy and the Ministry of Finances with regards to the form of these regulations.18 Therefore, in spite of active government policy, the 1997–2001 term can be described as a period of wasted opportunities.

2001–2005: Building a model of intersector cooperation during the finalization of Poland’s accession to the EU

2001–2005: Towards a model of inter-sector cooperation

• Act on Public Benefit Activities and Volunteer Work (2003)

• Establishment of a special legal status for NGOs – public benefit organization
  

• Impact of EU priorities in the fields of employment policy and counteracting social marginalization
  

• Development of the basis for a model of intersector cooperation

Undoubtedly, the direction of activities of public administration in the next term (2001–2005) was determined by the Act on Public Benefit and Volunteer Work passed in 2003 (leftist SLD once more in power). This Act regulated a few key issues regarding nongovernment organizations and inter-sector cooperation. These were: the principles and forms of cooperation, including the commissioning of organizations for public works projects; the conditions for receiving status of a public benefit organization (PBO; an equivalent to the British charity) and the accompanying additional entitlements (such as the possibility for individuals to assign 1% of their tax liabilities to PBOs); and conditions under which nongovernment organizations (and public administration) can make use of the work of volunteers.19 It can be said that the Act contributed to (although, unfortunately, only to a limited degree) the popularization of a “broader” definition of the principle of state subsidiarity embracing third sector actors as well.20

The Act initiated, however, directions of government policy towards the third sector which were disadvantageous, such as a growing fiscalism (subjective and objective limitations of tax exemptions as an offset to the 1% mechanism in the PIT system), increased government control (especially over PBOs) and standardization of intersector cooperation without taking into account the logic of the functioning of non-government organizations (especially in executive regulations21).

Another major factor shaping government policy was the finalizing of Poland’s accession to the European Union (full membership since May 1, 2004). One could observe the influence of EU program document priorities stressing the value of non-government organizations in employment policy and the so-called active social policy (increase of the significance of the third sector as an employer),22 as well as in the ways structural funds are spent, especially funds of the European Social Fund (the participation of the nonprofit sector in the new wave of the social economy is thanks, in part, to the accessibility of funds from The EQUAL Community Initiative23).

Summing up the 2001–2005 period, one can say that during this time the basis of a Polish model of inter-sector cooperation was created which will be discussed below.

2005–2007: Between cooperation and control – “carrot and stick” policy

2005–2007: Between cooperation and control

• Attempts to strengthen the state: But at whose expense?
  

• Yellow card for decentralization, red one for marketization of the social sphere
  

• Continued absorption of EU funds

Since 2005 there have been no breakthroughs in government policy towards the third sector. In spite of the continuation of policy from the previous period, there is, however, a noticeable constraint in the government’s position regarding forming partnerships between the state administration and non-government organizations. It seems that one of the reasons for this stiffening was the strategic political goal of the Law and Justice Party (which dominated the governing coalition until its collapse in the summer of 2007 and later led a minority government) to strengthen state structures. The government’s program for state reform consisted, among others, in fighting corruption and the murky areas of political/business arrangements. It turned out that this strengthening of the state apparatus also resulted in the growth of control over the activities of social entities.

This explains, for instance, the restrictive regulations concerning foundations in the proposed new Act on Foundations24 and similar propositions regarding all non-government organizations (and specifically public benefit organizations) presented by political decision-makers during works on preparation of the government’s draft amendment to the Act on Public Benefit and Volunteer Work.25 In this case, if one takes a closer look at the government proposals, at least in relation to inter-sector cooperation, they would constitute a further bureaucratization of the third sector more characteristic of the government policy during the previous phase (and finding its confirmation in the original version of the Act on Public Benefit and Volunteer Work from 2003).

Parallel to the tendency to increase control over the activities of the third sector, one also finds government attempts to limit the independence of local authorities. When one considers the arrangement of powers on the political scene, it was, in a way, a “reversal of alliances,” because throughout the transformational period the central right-wing parties supported decentralization, while centralizing tendencies were manifested by the left-wing parties with communist origins. This aspect of “strengthening of the state” had for non-government organizations an ambivalent character, because many local governments were and still are reluctant to cooperate with them. However, the policy till then for developing cooperation had been directed at increasing decentralization though the aforementioned operationalization of the subsidiarity principle.

The policy of spending ESF resources on projects where non-government organizations participated was continued from the previous period. Although this signified greater possibilities for the creation of workplaces in the third sector, research of the Klon/Jawor Association from 200626 confirmed neither an increase of the economic potential of the third sector nor growth in the position of the third sector as a collective employer. The role of EU structural funds, especially from the European Social Fund, in financing the activities of non-government organizations, however, will expand.

To sum up, the 2005–2007 period did not bring any fundamental breakthroughs in government policy towards the third sector. But although the interest of government bodies in controlling organizations and the hierarchization of relations (attempts to re-centralize the social sphere) surely grew, this growth was manifested to a larger extent in declarations rather than in actions.27 This negative tendency for the civic sector was, however, to some extent counterbalanced by the growing role of organizations as beneficiaries and performers of projects financed from EU structural funds. Because these structural funds are also managed by the public administration, one can talk about the appearance of “two-speed politics” in administrational attitudes on cooperation with civic sector organizations.

The question of politics towards the third sector – Poland in the setting of international experience

Summing up the characteristics of consecutive phases in the evolution of government policy towards the civic sector in Poland, it is worth pointing out the international context of the observed changes. The examples of Germany, Great Britain and Hungary will be presented here. Germany and Great Britain represent two historically and politically grounded models of public administration – non-government organizations, thus determining de facto frames of state policy towards the third sector and a range of possible choices.28 Hungary, on the other hand, is Poland’s “companion” on the journey from communism to political democracy, market economy and civil society.

The experiences of Germany are very important for Poland because it is precisely the postwar Federal Republic of Germany to which we owe the operationalization of the principle of state subsidiarity. This consisted of incorporating the ethical principles guiding state-civil society relations formulated in the Catholic Church’s social teachings29 into the legal frame of a democratic country. The legitimization of this principle opens a broad scope for public services and non-government organizations to act jointly, limiting at the same time the risk of excessive commercialization of the civic sector with simultaneous assurance of its financial stability.30 Legally defined subsidiarity of the state signifies, in the German model, the primacy of nongovernment organizations in delivering social services financed from public sources.31

Inscribing the principle of subsidiarity of the state in the Preamble to the Constitution of the Republic of Poland of 1997 represented a turn towards the German concept of social order.32 We should also note that German non-governmental structures made a significant impact on the shape of the third sector in Poland by providing numerous social organizations with organizational and financial support.33

The disadvantage of the German model of inter-sector cooperation seems to be, however, the entangling of the subsidiarity principle in corporate solutions.34 This results, among others, in excessive federalization of non-government organizations providing social services, which is conducive to the development of so-called “social cartels.”35 Thus there is the legitimate question of whether with the introduction of the operationalized principle of state subsidiarity according to the German model, we do not accidentally adopt it with “the whole German package.” In this way one can explain the observable tendencies since passing the 2003 Act on Public Benefit and Volunteer Work of the state towards control of non-government organizations and the perception of their main role as service-providers. It seems then that in light of proposed changes, there is a real threat of bureaucratization of NGOs delivering social services and thrusting inter-sector cooperation onto a corporate trajectory.

It is worth noting that Germany is currently looking for ways of limiting excessive bureaucratization and the routinized actions of professionalized NGOs delivering social services. On the one hand, self-help organizations – less formalized and less professionalized – are being “rediscovered” since they often retain more of the spirit of acting for the common good than professional public benefit oriented NGOs financed by public funds. On the other hand, however, attempts are being made to introduce competitive mechanisms to the system, through enabling the possibility to contract works to corporate entities, for now, limited to nursing services.36

Consideration of the British concept is, in turn, essential because British methods in the area of inter-sector relations were a second point of reference during works on the Act on Public Benefit and Volunteer work. One can also find several similarities in the evolution of British politics towards the voluntary sector (as the civic sector is commonly referred to in that country) in the 80s and 90s of the twentieth century and the evolution of such a policy in Poland after 1989.

The changes in British policy were a response to the crisis of the welfare state. The first reaction, characteristic for the period of the government of Margaret Thatcher, was the state’s withdrawal from direct service provision and the introduction of competitive mechanisms (commissioning of tasks by public tender open to non-profit organizations and commercial firms, commonly described as the independent sector37). In fact this broadened the scope for voluntary organizations, which had been previously pushed by public services and institutions to the margins of the social service system. However, it also led to the advanced commercialization of the third sector (many organizations started resembling economic entities providing social services) and the formalization of its activities.38 It also provoked an internal polarization (the process of strengthening the economic potential of large organizations thus “pushing” smaller, local and volunteer-based organizations to the system’s margins).39

During Tony Blair’s rule, the government, while continuing the politics of contracting out public services, searched for possibilities to “soften” the market rules for contracting such work to non-profit organizations through the policy of social compacts and popularization of the culture of partnership. Comparing the policy of Thatcher and Blair, Jane Lewis shows how British organizations are currently freeing themselves, with government support, from the “double corset”: (1) of being dominated by public social service institutions during the period of the welfare state doctrine, and (2) of undergoing commercialization in the period of Thatcherism.40

From the sociological perspective the crucial question is whether and how in Great Britain the “state crisis” was used for strengthening social institutions in accordance with the general idea of moving from welfare state to welfare society.41 The answer seems to be only partially, since the aforementioned processes of commercialization and polarization of the non-profit sector weakened its civic character and led to both permanent divisions and a crystallization of the concept of the so-called informal sector as a social service provider on the local level.42 This “fourth sector” can be conceived as an alternative to the over-formalized and commercialized “third sector.”

In this context it is worth mentioning that the 2003 Act on Public Benefit in Poland includes elements of a compromise between the two extreme tendencies dominating in Great Britain during the two successive periods: namely, the period of marginalization (the pre-Thatcher period) and the period of marketization of the third sector (the reforms of the 80s and 90s of the twentieth century). For example, legal regulations from the Act on Public Benefit and Volunteer Work are so constructed that the generalization of quasi-market mechanisms in the open-bid system of commissioning public tasks is not accompanied by the equalization of commercial and non-profit entities in competition for public tasks (priorities are given to NGOs). All the more reason to warn Polish legislators against rash changes which could upset that balance. It has to be added that the Polish model: privileges for NGOs in delivering social services plus competition inside the third sector may be also seen as a moderate solution between the German patterns (no competition in social service delivering system) and the British ones (open competition for all providers).

Unfortunately, we are currently observing in Poland, as in Great Britain two decades earlier, the phenomenon of the polarization of the civic sector and pushing small and local organizations to the margins of inter-sector cooperation. This is caused by both the Act on Public Benefit and Volunteer Work43 and the rules for making use of ESF funds, which practically exclude organizations of low economic potential (for instance without adequate capital to enable temporary crediting of contracted tasks). The British experiences are valuable for Poland not only because of their unfavorable consequences in the third sector which are dynamically growing as a result of the policy of “rolling back the state,” but also as a way of finding methods to alleviate the side-effects of implemented reforms. We should also finally note that this model is of value due to the government policy that facilitates the entry of non-profit organizations into social entrepreneurship.44

Poland’s experiences, to a great degree, converge with those of Hungary45 and seem to point to general regularities in the evolution of government policies towards the civic sector in the countries of the Visegrad Group (which besides Poland and Hungary includes the Czech Republic and Slovakia).46 This is obviously a result of “transformation logic” (leaving communism), but is also thanks to the common traditions regarding the functioning of public administration and relations between the government and citizens dating back to the Habsburg era.47

Both in Poland and in Hungary after 1989 there was a growth in the significance of nongovernmental and Church-related organizations in the area of social services. This is not only a result of the democratization of the countries in the region (creating the headway for grassroots civic and social activities is one of the basic dimensions of transformation), but also a result of limiting the activities of the state in the social sphere (which also can be seen as part of the transformation process, although it should be noted that we have seen a similar process in Great Britain and other countries of Western Europe caused by the crisis of the welfare state as already mentioned in this text). At the same time we witness the evolution of state policy regarding the development of civil society: from creation of free space for civic activities as an institutional reaction to the old communist system to later attempts to involve third sector organizations in performing public tasks with concurrent attempts to spread control over NGOs.

An excellent illustration of this second phase of state policy towards the third sector in the transformation period is the 1% mechanism in the PIT system, introduced first in Hungary48 and then other countries of Central-and Eastern Europe, including Poland.49 And this is not only a question of the very mechanism of the 1%, but the accompanying activities, such as, for instance, the growth of state fiscalism (restriction of organizations’ tax privileges as the “price” for benefits connected with the 1% mechanism) or the introduction of elements of intensified control and licensing of organizations entitled to profit from those 1% deductions (e.g., the PBO status in Poland).

A comparison of the evolution of state policy towards the civic sector in Poland, Germany, Great Britain and Hungary points out to some similarities in the countries’ political and economic conditions at the turn of the century: the “logic of transformation” in the case of post-communist countries and the logic of the “welfare state crisis” in the case of the two others. Reforms undertaken in Great Britain and Germany bring these two models closer to one another (introduction of market elements to the German model and elements of the culture of partnership to the British model). Also, similar new ideas have appeared (the growing role of self-help organizations in the German model and the informal sector in the British model). However, the British model still bases inter-sector relations on market mechanisms, while such relations in the German model have a more negotiations-based administrative character. The legal and institutional situations of the civil sector in Poland and in Hungary are certainly similar, but one can venture to say that Hungary is a bit closer than Poland to the corporate-federative German model, while in Poland such German patterns are rather counterbalanced by quasi-market British solutions.