Moldova’s legal framework concerning NGOs has been reformed significantly over the last few years. The changes made were aimed at improving the conditions of maintaining and running NGOs and at adjusting the national legislation to the European standards. However, there are shortcomings as regards the financing and transparency of the NGOs, consider experts of the Budapest-based European Center for Not-for-Profit Law Hanna Asipovich and Eszter Hartay.
Moldova is a leader among EaP countries
Hanna Asipovich has told IPN that under the 2011 European integration index for the Eastern Partnership Countries, Moldova is a leader in implementing reforms and surpassed Georgia in adjusting the national legislation on civil society to the European standards. But there are also drawbacks. “As far as we managed to see, the most serious problem of the Moldovan NGOs is the financial sustainability. The dependence on donors is very great. About 90% of the financing comes from donations. The financing-related problems can be solved by implementing the Civil Society Strategy, which envisions a number of mechanisms for financially supporting the NGOs,” said the expert of the Budapest-based European Center for Not-for-Profit Law.
The Civil Society Strategy provides a very important element by creating mechanisms for financing from budgetary sources. The proposals for adjusting the national normative framework for implementing the mechanism for redirecting a part of the income tax, about 2%, to a nongovernmental organization have a special importance. Another aspect concerns the direct financing mechanisms, for example by the National NGO Support Fund. According to the European practice, such funds already exist in Hungary, Estonia, Croatia, and Albania.
Hanna Asipovich also said that the financial sustainability in the European states is ensured by the fact that the nongovernmental organizations have other sources of income too and are trying to diversify the resources obtained by a number of possibilities, including individual philanthropic actions, state financing, economic activity. Such aspects are topical for Moldova too. It is important that the NGOs have access not only to financing for parties, but also for institutional development. In Hungary, there is a cooperation fund that offer financial support to nongovernmental organizations for projects and institutional development. This mechanism is included in the Civil Society Strategy of Moldova too. Currently, the ministries provide a number of grants programs, but there is no central support for the NGOs. Such a fund would offer more possibilities to the Moldovan NGOs in all the areas of activity.
Transparency can be ensured by presenting financial reports
Hanna Asipovich said the environment in Moldova is favorable for founding a nongovernmental organization. As it is a developing area, the relations between the organizations and civil society must be strengthened. This can be done not only by activities carried out by public associations, but also by society financing the NGOs. If the people donate money to an NGO, they become more interested in the organization’s work. One of the positive aspects of transferring a part of the income tax paid to the state to an NGO is that the beneficiary organization must become more transparent and promote different campaigns so as to make itself known. Evidently, it is very important that the organizations present financial reports as this will increase the confidence of the people, the state institutions and the beneficiaries too.
The Civil Society Strategy suggests a number of methods for improving NGO transparency by defining the accounting reporting standards for NGOs. The first steps in this direction were already taken by adopting regulations concerning bookkeeping for noncommercial organizations. Many questions remain yet unsolved, such as the absence of regulations on grants and self-management of the nongovernmental sector. “I refer to the absence of a code of ethics and conduct for NGOs. The drafting of such a code is envisions in the strategy. Such codes exist in Poland, the UK, and Ireland and they refer only to certain public organizations. There are also organizations that pledge to meet a number of conditions based on a business plan worked out at internal level. Such a model is used Austria, Germany and other countries,” said the policy coordinator.
In the same connection, Hanna Asipovich said that the setting of a favorable legal environment for NGOs must be followed by coordinated efforts on the part of the NGOs and the state institutions. This aspect remains a priority. The strategy includes these tasks, while the persons who are responsible for the implementation of this document must continue work.
Civil Society Strategy will increase financial sustainability of NGOs
Law consultant of the European Center for Not-for-Profit Law Eszter Hartay said the implementation of a strategy is the most difficult aspect. Now the strategy includes a number of tasks and if the provisions are carried out, the level of financial sustainability of the NGOs in Moldova will undoubtedly increase. The obligation for the NGOs to ensure transparency will lead to the improvement of the relations between civil society and the population. In Hungary, in 2011, there was drafted a bill that obliges the NGOs to present annual financial reports. This aspect helps not only the state to see what the organizations do. But it is also a proof of civic attitude on the part of the organizations as they obey the law. The openness and transparency of the organizations become more important when the state provides financial resources. Each organization must report how it managed the money.
Eszter Hartay underlined that the improvement of the organizational activity by codes of ethics helps the organizations to set principles and good practices in a certain area of activity. This practice can be useful in Moldova as well if the NGOs decide to improve the existing standards.
The experts of the Budaptest-based European Center for Not-for-Profit Law provides regularly consultancy to the state institutions and representatives of civil society of Moldova in working out and implementing the Civil Society Strategy for 2012-2015. The experts often pay working visits to Chisinau, where the present reports and conclusions about the mechanisms designed within the Moldova Civil Society Strengthening Program that is implemented by USAID and FHI360.
Alina Marin, IPN
