Bulgaria, August 15, 2004



Luben Panov

An Image Problem

NGOs and the state in Bulgaria have often had a difficult, even strained, relationship with each other. In the beginning of the 1990s, NGOs (especially foundations) had a very liberal financial regime which gave rise to the problem of abuse of the existing benefits - at that time foundations were big importers of cigarettes, alcohol, etc. After this scandal all tax and customs benefits for foundations were abolished. Since then, foundations have had a negative image in society. It took more than 10 years to improve the public perception of foundations.

New Laws

The first step towards meaningful legal reform to make NGOs legitimate partners of government was the adoption of the new NGO Law in 2000 which introduced the concept of "public benefit organisations" (PBOs). The newly adopted status of PBO implied in itself the creation of special incentives (financial, tax, etc.) for these organisations, as their mission and role would be to help the state fulfil its social responsibilities although no special incentives were contained in the NGO law. Therefore the next step in the reform process was the adoption of new tax laws, which created incentives for donations to PBOs. Through such tax reform, the state began to recognise the importance of stimulating public benefit organisations, and linking stricter regulations with greater tax incentives.

Continuing Mistrust

The state, however, continued to demonstrate mistrust for NGOs. Subsequent tax reform initiatives seeking to stimulate PBOs by reducing the taxation of income from economic activities and eliminating VAT on donations received were rejected by the state. More recent scandals relating to foundations supporting political parties have made enabling fiscal reform very difficult in the near future. Hopefully, the government will understand the benefit of having and supporting public benefit organisations.

Civil Society Committee

The current Bulgarian government has shown a greater openness to working with NGOs. When the new Parliament was formed, a special standing committee to discuss issues related to the development of civil society was created - the Civil Society Committee. The creation of the Civil Society Committee was a good idea. It gives NGOs a good opportunity to present their issues before the parliamentary institutions. Unfortunately, however, there are several obstacles which prevent it from becoming a forum where all issues relating to civil society can be discussed. One problem is that civil society is diverse and amorphous and cannot be represented through a single committee. Even on basic issues such as the legal framework for NGOs (registration, taxation, operation), the committee can only give consultative opinions as the respective laws (e.g. the tax laws) are considered an area of special interest of various other committees (in the case of tax laws, this is the budget and finance committee).

Public Council

To increase its legitimacy, the Civil Society Committee designed its own consultative body called the Public Council which consisted of NGO representatives from different fields of expertise and different geographic regions. The aim of the Public Council was to advise the committee on various issues related to civil society. The Council members have the right to participate in the meetings of the committee without voting rights. One problem is that Council members from the regions have problems coming to Sofia for a two-hour meeting each week. But the more serious problem is that the role of the Council has been more reactive than proactive; its agenda is based on the legal drafts introduced in Parliament that have been assigned to the Civil Society Committee. The Council's challenge is to promote its own agenda in Parliament.


One of the first joint initiatives between the Civil Society Committee and a number of leading NGOs was an initiative to create a Bulgarian Compact to govern relations between NGOs and public institutions. It was to take the form of a declaration by Parliament as it was meant to show the general attitude of the state towards NGOs. During its preparation, NGOs recognised that only they were pushing the initiative forward and that the state was unengaged and uninterested. Thus, the process of drafting the Compact has stopped. The truth is that probably the state still does not view NGOs as fully legitimate partners in public affairs.

Partnership in Service Provision

There are areas in which the process of NGO-government partnership is developing well. A good example is the social sphere and the provision of social services (the term social services is interpreted narrowly under Bulgarian law to include only "services designed to promote and expand the potential of individuals to exercise an independent life" - in other words, it excludes areas such as health care and education). With the latest legislative amendments (December 2002), the right of municipalities to contract with independent providers of social services, including NGOs, is for the first time explicitly recognised. The new law requires an open competition to select the service provider. In addition, the law facilitates joint social work between NGOs and municipalities (or government institutions).

NGOs are currently excluded from other potential areas of cooperation. The best example in this respect is health care. In Bulgaria, hospitals and other health institutions cannot be organised as NGOs (but only as commercial companies or cooperatives). There is now a draft in Parliament allowing PBOs to perform health activities, prepared after a careful study of European Union and US legislation and a broad public discussion with NGOs working in the social sphere. Hopefully the draft will be adopted.


In conclusion, it is necessary for the state to understand the potential NGOs have in providing public services. Such recognition is fundamentally important and will change the attitude of the state towards the Third Sector. To generate better understanding, however, it is necessary for NGOs to learn to market their own successes and abilities. There are many NGOs doing good things but the general public usually does not hear about their work. Instead, public perception is based on the negative media coverage of those few organisations that are in no way representative of the whole sector.

Luben Panov is Director of the Bulgarian Center for Not-for-Profit Law in Sofia.
E-mail: => luben@bcnl.org
Web: => www.bcnl.org

The author would like to thank David Moore, Managing Director of the European Center for Not-for-Profit Law, for his support in writing this article.

First published in SEAL (Social Economy and Law Journal), Winter 2003 - Spring 2004. See => http://www.efc.be/publications/sealabstract.html .
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