Hungary, August 15, 2004



Nilda Bullain

Forms of Cooperation The forms of cooperation between government and NGOs in Hungary include a wide range of tools and mechanisms, both at the national and local levels. At first sight these may even seem enviable.

First, there is the legal framework . For the last 6-7 years, Hungary has been considered a leader in legislation affecting non-profit organisations across the region. Successive governments have found it important to introduce laws that encourage and support NGO activity. The so-called One Percent Law (adopted in 1996), the Law on Public Benefit Organisations (1997) or the recently adopted National Civil Fund Program are but the most well-known examples.

Second, government support . Direct government financing, as a source of income in the non-profit sector, constitutes 34% of the sector's total income. This is less than the Western European average (40-60%) but is among the highest in the region. Even if we consider the fact that much of this support actually goes to government-established public foundations and other QUANGOs1, Hungarian NGOs receive a significant amount of support from central and local government. This will only be increasing with the new sources available from 2004 due to European Union accession.

Third, government contracting . As part of the financing described above, NGOs have been increasingly taking part in the provision of public services in the fields of education, social welfare, and health care. The Law on Public Benefit Organisations (PBOs) introduced the category of "prominent public benefit organisations" in 1997. These are non-profit organisations that undertake state or local government responsibilities, and are contracted by a state organ to provide them. Although only about 6-8% of Hungarian NGOs have this status, they represent good examples of NGO-government partnership that rarely existed before.

Fourth, NGO involvement in government decision-making . This has been a sensitive issue for a long time, as governments had not always been open towards such involvement. However, the basic legal framework to enable NGO participation has existed since the change of the political system (embodied in the Constitution and the Law on Legislation); currently, there are plans to make NGO involvement more explicit and broader in its scope. In recent years, NGOs have made successful efforts to influence legislation concerning the sector (e.g. in the case of the National Civil Fund), and more and more results have also been seen in legislation in different fields (such as the environment, disabled rights or women's rights).

Fifth, the institutional framework for dealing with the NGO sector . Over the years, the system of communication and cooperation with NGOs has become institutionalised across the government, both horizontally and vertically. It started with the introduction of special departments dealing with NGO support in the line ministries. In some ministries (e.g. social and employment), special councils or working groups have also been set up (with NGO participation) to advise the minister in professional issues and strategy development. In 1998, a Department for Civil Relations was established in the Prime Minister's Office that was responsible for development and coordination of policies affecting the non-profit sector as a whole. This department developed a comprehensive strategy for the support and development of the non-profit sector that was adopted by the government in June 2003.2

In addition, a Parliamentary Committee for the Support of Civil Organisations has existed since the early 1990s - it used to grant budget subsidies to national associations. More recently it has taken on responsibility for legislative policy concerning the sector (while its grantgiving role will be transferred to the National Civil Fund). Finally, local governments have also developed various mechanisms to work with NGOs, ranging from local legislative committees to a single responsible officer to the establishment of a whole department for civil society relations.

Problems of Implementation

Reading about all these developments one may ask what problems could there possibly be. The problems are related to how all these laws, financing and cooperation mechanisms are being implemented. From some more recent studies and reports concerning this field3, we may distinguish three main areas of concern:

The first is the lack of transparency. On the government's side this means untransparent use of public funds in supporting non-profit organisations. For example, the State Audit Office Report found, among other things, that 80% of central state (government and ministry) support to non-profit organisations was given based on individual decisions (as opposed to open grant competitions) and 50% of the funds of public foundations was distributed without grant announcements as well. In addition, only two ministries met the public disclosure requirements of the grant procedures prescribed by law.

However, NGOs are not innocent either. The same report showed that a majority of those who had received public funding did not account for it correctly. For example, many organisations tried to get more funds by submitting applications to various sources for the same project and then fiddled with the money.

The second major area is the lack of accountability . This means that public funding is not used adequately. For example, non-profit organisations that were named in the annual budget adopted by the Parliament received annual support without submitting a budget request, simply based on the previous year's support. Ministries have not held their grantees accountable either. In fact, only 70% of grant support, and only 40% of non-grant support was contracted in the first place.

The third major area of concern is that NGO-government cooperation has always been strongly and unduly politicised . The political dividedness of society as a whole (essentially between right-wing and left-wing party followers) is also reflected in the non-profit sector. Under each government, a different pool of NGOs received more state support than others; a different pool of NGO experts were involved in helping to shape policy in certain areas; even a different pool of NGOs were contracted to provide state services locally. Unfortunately Hungarians, even NGOs, consider this extreme political dividedness as a given, a commonplace - and the few NGOs that tried to stay free from political pressures had a hard time not only financing their activities, but also getting acknowledgement from their peers.

Finally, we also have to say that the increased interest and financial support on the part of the government was like a double-edged sword. It helped the work of several NGOs, but it also resulted in an increased weight of the governmen t on the non-profit sector as a whole. While the sector grew stronger in providing services, its advocacy functions were weakened. The proportion of QUANGOs increased to the extent that a report of the Central Statistical Office stated in 2000: "We are witnessing not simply a change in proportions but a contraction of the part of the sector that can be considered really >civil<, voluntary and non-governmental". This increased influence led to an unhealthy dependence on the governmental establishment by NGOs - regardless of the political orientation of the current government.


Unfortunately, cooperation between NGOs and governments in Hungary in the past decade has been based on paternalism, favouritism, providing mutual advantages and the building of loyal clientele, rather than professionalism, mutual respect and a common interest in advancing social development. In recent years, however, an increasing number of government officials and more and more leading NGOs have adopted new, professional norms and are trying to introduce real changes in this evolving relationship.

Nilda Bullain is Program Director at the European Center for Not-for-Profit Law in Budapest.
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First published in SEAL (Social Economy and Law Journal), Winter 2003 - Spring 2004. See => .
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