Czech Republic, August 15, 2002

FOUNDATION INVESTMENT FUND BOOSTS CZECH FOUNDATIONS' INCOME

Pavlína Kalousová

In 1991, the government dedicated 1 per cent of stocks from the second round of privatization of state property to Czech foundations. Although it took nine years before the first contributions from the fund were distributed, the Foundation Investment Fund (FIF) has proved a great boon for the Czech foundation sector, particularly for small regional foundations. Altogether 73 foundations received a contribution (22 per cent of all registered foundations).

The first round of FIF took place in 1999 when the first 38 foundations received a total of CZK484 million (US$13 million). The second round was distributed at the end of 2001 (money paid in the beginning of 2002), when altogether 64 foundations obtained CZK849.3 million ($24 million) plus a promised share of the future proceeds of the sale of remaining stocks from FIF (electricity and gas distributing companies, Czech Airlines). This will be transferred to the 64 foundations after the sale and should amount to CZK800 million.

Foundations must use FIF contributions to create an endowment and spend only the annual income (20 per cent for administration and 80 per cent for grants). Grants have to be made through an open, public grant-making process.

The first round had fairly strict conditions for eligibility (minimum number of grants made, formal criteria, etc), but the criteria for the second round were less strict and opened the process to small regional foundations. This has caused a real change in the structure of the Czech foundation sector and supported the development of local funding sources for NGOs.

Recipients of the first round of FIF made their first grants in 2001. Results suggest that foundations did gain a significant source of funding for model and innovative projects as well as for projects in the regions and in areas with a lack of resources (human rights, environmental protection, non-profit sector development).

FIF has been very important in strengthening the position of foundations in the civil society sector. Their endowment income enables them to become stable and independent funding sources for others. The FIF process also started the process of foundation sector development. Cooperation among foundations became an everyday need and the need for information and education increased. Relations among foundations, financial institutions and the state were strengthened.

FIF provides a unique model for the whole CEE region, whereby the state helped restore the foundation sector.

Pavlína Kalousová is Executive Director of the Czech Donors Forum. She can be contacted at kalousova@donorsforum.cz.

First published in Alliance, Vol. 7, No. 2, June 2002.  
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