Central Europe Review: politics,
society and culture in Central and Eastern Europe
Vol 2, No 11
20 March 2000

[Photo by FreeFoto.com]
C Z E C H   R E P U B L I C:
Leaving Too Soon?

Helena Ackerman

Discussions about donor-driven strategies versus recipient needs-driven strategies have surfaced throughout the ten years of foreign donor presence in Central and Eastern Europe. In retrospect, it seems that the donor-driven strategies have, to some degree, shaped the development of beneficial systems and values which would not have emerged without donor intervention. The real danger now is that aid will be withdrawn too soon and some of that investment wasted.

Western assistance to the Czech non-profit sector has focused largely on key infrastructure organizations working to strengthen the capacity of the sector as a whole. The relatively fast emergence of these able organizations would not have been possible without financial resources and know-how from the outside. At the same time, Western donors have systematically drawn attention to other broad issues such as regional development, developing both individual and organizational leadership capacity and the role of non-governmental organizations (NGOs) in building communities.

What worked

By its nature, Western assistance has been a value-added process. One key component has been the promotion of good practice from the very beginning. The majority of grants received from foreign sources have required transparent reporting, cooperation with others, good management and bookkeeping, formulation of goals, strategic planning and clarification of mission. As a result, there is a considerable difference between those organizations that have never worked with Western donors and those that have. However, these values have gradually begun to spread through the sector.

The best and most effective donor programs offered much more than just funds. They combined supportive involvement - with grant recipients being offered consultations and active personal involvement - with a "hands-off" approach, a high level of trust and a willingness to take risks, thus giving NGOs the tools to effect change without insisting on controlling the process.

The most valuable support has perhaps come from American private foundations, many of which have enabled organizations to respond to problems flexibly through general funds support - a crucial type of support that is not possible to raise from domestic resources at this point.

Advocacy and the importance of coming together to reach common goals have often been stressed by foreign donors. But sadly, Czech NGOs are still trapped in the fierce independence stage; after decades of dictatorship, nobody is going to dictate to us now, the thinking goes. This makes the sector as a whole weak and ineffectual.

An example of a successful legacy of Western assistance is the cooperation among donors that resulted in the emergence of the Czech Donors Forum, which has slowly but systematically fostered the building of trust and openness in the donor community. The Forum's membership has gradually changed and is now mostly made up of indigenous donors.

What didn't

Western assistance in the Czech Republic began to dwindle too soon. In a way, the donor countries and institutions have made an investment that has not been brought to full fruition, and some of the investment may therefore be lost. The assistance was significantly reduced before Czech NGOs were safely on the road to sustainable development, well before the resources they needed could be replaced locally.

Much energy and money has been dedicated to the development of organizations and their activities but not enough to the development of indigenous resources such as cultivating corporate community involvement, developing individual philanthropy, advocating for tax laws that support the development of philanthropy, educating NGOs in financial management, fundraising and investment opportunities.

Western assistance came almost too soon, and results were expected too quickly. In fact, the early stages of assistance could be characterized as too results-oriented; only later did attention transfer to the importance of building social infrastructure. The problem is that NGOs did not know then what they know now. The sector is only now ripening into a stage at which assistance can be used effectively. Only recently has data been made available on many aspects of the NGO sector. In the last couple of years, for example, it has gradually become clearer what the domestic resources look like and what their limitations are.

Funding foundations

The most critical need is to strengthen indigenous grantmakers. Without minimal wealth behind foundations, sustainable development of the sector will be difficult. At present, foundation financing accounts for around five per cent of the total financial resources of the non-profit sector. State funding represents around 30 per cent, but in future this support will largely consist of buying specific services from NGOs. Nonprofit organizations active in the protection of human rights and the environment, in advocacy activities and in the development of civil society in general are fully dependent on foundation grants. With a declining economy creating limited individual or corporate wealth, fundraising can have only limited results.

Some of the most significant Czech donors are re-granting foundations, which are fully dependent on funds from a foreign donor (mother foundation) that they then distribute to local projects and NGOs. A significant proportion of other foundations have some income from abroad. Most are barely obtaining funds for minimal grantmaking and their own overhead costs; building endowments is thus well outside the realm of possibility. Under these circumstances a further withdrawal of Western assistance could endanger these much-counted-on domestic donors.

Something that could help is a change in the Czech foundation law to give foundations better investment possibilities and opportunities to generate income through related activities. At present, it is almost impossible for foundations to increase the value of their meager endowments. Working for changes in the law is an area in which Western donors have had an important input, through the funding of foreign experts, and they could play this role again.

One positive development was the one-off decision made by the government in 1992 to allocate one per cent of the proceeds of privatization of state industries to the foundation community. It took foundations seven years to push the government to fulfill this promise: the first portion of the funds was distributed to 39 Czech foundations at the end of 1999, and the second round will be distributed in early 2001. Altogether, this will represent around USD 60 million, which will form the core endowments of Czech foundations. Although it is an important political gesture, this allocation will yield only USD 500,000 per year for grantmaking.

Shifting focus

The biggest challenges for the Czech NGO sector are to develop local resources, to strengthen foundations and to create an understanding that the further development of the sector - the strengthening of its infrastructure and the development of community philanthropy - must be supported from within the country.

What lies ahead? The Czech NGO community is shifting its focus toward the possibilities of EU funding associated with the accession process; some organisations are already beginning to position themselves to be able to participate. But this foreign funding is very different in character from earlier foreign funding; it is a politically and institutionally driven process which has little in common with the flexible and sensitive approach of the US private foundations.

Helena Ackerman

Helena Ackerman is director of the Czech Donors Forum.

This article was first published in Alliance, vol 5, no 1 in March 2000.

For a closer look at the work of Czech environmental NGOs over the past ten years see Andreas Beckmann's article "A Quiet Revolution" in the 13 September 1999 issue of CER.



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