Big Strides Forward Made, Dependency on Foreign Donors Remains

21 February 2007

Over the past 15 years, the civil society in Albania has developed to levels that few people could expect, both in urban and rural areas of the country. With the passing of the law that granted the right to association in 1990, the first NGO was created. Since then, the Albanian civil society has made important strides ahead.

According to Natasha Pepivanit, specialist in Ministry of Labor and Social Affairs for NGOs, there are more 1000 associations registered at this moment but only 150 of them are active and potent in their activities.

We should mention the services rendered by civil society organizations for the general public and the vulnerable and disadvantaged groups in particular. The capacities of the non profit sector have seen tremendous growth with regard to drafting, proposing and lobbying for laws and policies both at the local and central level. Thus, civil society organizations made a substantial contribution to such primary law and policy making exercises as the drafting of the Constitution of the Republic of Albania, the National Strategy on Social and Economic Development, the Strategy on Decentralization of Local Governments, etc. A noteworthy contribution by the sector is made in the field of social research, monitoring and protection of human rights, including the right to vote freely, and recently in the fight against corruption and trafficking.

The legal background for the establishment and registration of an NGO allows every natural or juridical, local or foreign person to establish a non-profit organization. All Non-profit organizations exercise their activity in a manner independent from state organs and interests.

Non-profit organization with membership are established by the free will of natural or juridical persons with minimum number of founding members five natural persons or at least two juridical persons, whereas non-profit organizations without membership like foundations and centres are created by one or more persons or by testament.

There are three required documents to establish an ONG in Albania: the request for registration, the establishment act and the charter. The judge decides on applications for registration or deposit within 15 days from the date the request is deposited in court.

Foreign non-profit organizations have the right to exercise temporary or permanent activities in the Republic of Albania, respecting Albanian legislation and good customs and under the same conditions with those of local non-profit organizations.

Civil society organizations in Albania continue to be closed groups of individuals, often from among the elite, with weak links to the members, the clients and the public. This closeness is one of the main negative factors corroding the public image of the sector and quite often questioning its very legitimacy.

Civil society organizations are almost totally dependent on foreign donations. This dependency raises questions about their ability to continue to survive even in the nearest future, but it also severely restricts their impartiality in designing strategies and assigning priorities to address the needs of the segment of the public that they claim to represent.

Present legislation is largely considered positive for the development of the non-profit sector. However, while the law is broadly appropriate and fair, the by-laws that would make it implementable in real life remain unclear. One of the problems in the law is the present requirement to register all the civil society organizations centrally in Tirana.

Although NGO-s do not pay taxes on grants received by donors, sector representatives think that NGO-s are entitled to many more fiscal facilities, in addition to those provided by the present law. The biggest need, however, is the clarification of the existing tax laws for the sector.

Legislation allows NGO to generate income from the supply of services and goods. Also, the NGO-s have the right to bid for contracts and various procurements with government money.

Notwithstanding the progress that the non-profit sector has made with regard to the implementation of relevant legislation and accountability rules much more remains to be done. Donors have given considerable funds to train NGO-s on financial management and organization's transparency rules. Also progress has been made with regard to organizational management in general and the management of staff in particular, the establishment of clear internal procedures and the creation of the culture of board governance, etc.

The culture of installing efficient financial management systems is starting to take root, but it will take long before it turns into the norm. The number of NGO-s with adequate financial systems undergoing regular audits is growing, but the majority of NGO-s continue to have deficiencies in this direction. Instances of financial abuse are not infrequent, as the NGO sector is not immune to the corruption that has infested the entire Albanian society.

The public image of NGO-s, albeit slowly, is growing and improving. However, the image of the sector is generally distorted by the party mediums that tend to report events as best fits the interest of the party they serve to. But the image is also damaged by deformations and problems inherent in the sector itself. For example, instead of being the norm, annual reports continue to be an exception.

According to the current low the sources of income of a non-profit organization are income from dues, when there are such, grants and donations offered by private or public subjects, local or foreign, as well as income from economic activity and the assets owned by the non-profit organization.

Non-profit organizations acquire income from the sources recognized by this law and incur expenses only to realize the purpose and object of the activity for which they were created, as well as to manage and maintain their property.

Regardless of the form of organization, the purpose they follow and the activity they exercise, non-profit organizations are exempt from tax on revenues realized from donations and membership dues.

The competent state organs have the right to supervise non-profit organizations regarding the implementation of tax and customs legislation, social insurance legislation, the licensing of the exercise of economic activity, contracting of the exercise of public and social services, and for the fulfillment of their activities with funds from the State Budget.

A very important aspect of the civil society work is the monitoring of governmental policies. Notwithstanding efforts, the monitoring of the National Strategy on Social and Economic Development (NSSED) by the civil society and grass roots communities is obstructed by the lack of a clear system of monitoring and evaluation. In this connection, priority focus should be placed on the ministries' efforts to establish systems to monitor and evaluate their work relative to the attainment of objectives under the NSSED.

Despite the sanctioning of the public's participation in the local decision making by the Law on Local Government Operations, this participation is not easy to achieve due to lack of detailed rule to make it happen. In addition there is lack of awareness on the part of the citizens on the rights they are entitled to on one side and the role and responsibility of the local governments on the other side. Mention should also be made of the apathy and lack of citizens' willingness to participate in governance. Even though the civil society organizations participate in local government meetings, they often appear skeptical that their participation will manage to influence local decision making, much less public policies on a larger scale.

The NGO sector continues to depend on foreign donors' for grants and contracts. The history and practice of philanthropy are weak in Albania. Local fundraising is not easy due both to lack of tradition and lack of incentives for the private sector. Financial sustainability without foreign donor's support seems a distant objective.

Diversification of financial sources is rare among NGO-s. Those few non-profit organizations that have been able to achieve this are the think-tanks in Tirana which have the skills to adapt to donor requirements and to respond to the calls for proposals and solicitations. Civil society organizations are not prepared to bid for EU funds for the third sector. On the other side, the number of bilateral European donors is decreasing which means that diversification opportunities are also decreasing.

A new draft-law is presented last December to the social society organizations and the authority to approve and register NGO's will be given to the Ministry of Economy. Based on the new draft All the NGO's in Albania (established before or after the law comes to force) will have to report every year to the National Authority for NGO registration, which reports to the Ministry of Economy and the NGO's will have to report in detail all the names and addresses of their members, including their signatures

Faced with such changes in the legislation, many NGO's in Albania have raised their doubts whether this is a step by the Government of Albania to control NGO's activities and membership in the country. One does wonder if this draft becomes a law would it count for the end of independence of NGO's in Albania.