To begin with, a lack of understanding of the role of the NGO sector is evident among parliamentarians when one observes their work on the draft Law on Public Benefit Organisations and Volunteerism: most of the remarks made by NGO sector representatives are immediately brushed aside. Secondly, the severe budget deficit seems to be a major obstacle, resulting in the negative attitude of the Ministry of Finance towards any tax exemptions and towards giving foundations the right to freely decide on which instruments to invest in. Thirdly, interactions with parliamentary deputies prove that the majority of MPs have a limited knowledge about the specific needs and characteristics of the NGO sector and that their attitude is far from being supportive. A recent example of this was the attempt by a number of foundations to persuade a group of MPs to submit an amendment that would make the draft law more precise by defining various types of financial instruments appropriate for investment by NGOs. Thus far, parliamentarians have not shown much concern about the financial aspects of foundation operations.
White Paper on Philanthropy
In Spring 2002 the Academy for the Development of Philantrophy in Poland (ARFP) began work on the White Paper on Philantrophy in Poland. This report will include a comprehensive analysis of the current legal-fiscal framework, evaluating the main laws and regulations governing philanthropic activities from the viewpoint of whether or not they are favourable to such activities, as well as recommendations for the future. Since a number of leading Polish foundations are cooperating closely with the ARFP on this project, the report can be seen as reflective of the views of the foundation sector. The White Paper can serve as an educational tool for politicians to improve their understanding of the importance of endowment building in Poland.
The Road Ahead
Polish foundations have a lot of work ahead of them with regard to improving the legal and fiscal climate for their activities, including endowment building. Current laws and regulations are inadequate, legislative work is not going in the right direction, and the dialogue between the Ministry of Finance and Polish foundations is far from satisfactory.
On the other hand, the favourable ruling in the Foundation for Polish Science court case is a sign that there is already a degree of goodwill and understanding among public officials. Foundations should work towards making these attitudes more widespread in public institutions. There is growing recognition among foundations that their active participation in legislative activity is necessary, as is cooperation with the banking sector in order to help them design the most appropriate financial instruments to increase foundations' capital in a risk-free manner. There is also an emerging need for foundations to become more knowledgeable about financial management so they can become equal partners for the banking sector. Furthermore, there is an acute need for a legal definition of the term "endowment" and regulations concerning the investment of endowment funds.
It may also be worth considering the issue of obligatory spending, i.e. so-called payout requirements. A specific form of the payout functioned in Poland in 1995 and 1996. The relevant regulation implied that in order to be eligible for a tax exemption, a foundation should spend its entire budget within two years of obtaining the funds earmarked for the budget. If the foundation sector in Poland is to be strengthened, it seems reasonable - at least for the foreseeable future - not to have a mandatory payout in the initial period of a foundations' operation as it may render its endowment-building capacity insufficient.
Foundations should continue to work towards changing the attitude of parliamentarians and the Ministry of Finance regarding the efforts to create an endowment-friendly environment in Poland. Otherwise, it could turn out that all these efforts have been in vain and the worst part of it would be that not only foundations, but the entire civil society sector in Poland would be losers.
Anna Kwiatkiewicz is Coordinator of the Polish Donors' Forum Initiative in Warsaw.
* See SEAL Winter 2000-2001 (p. 3) and Summer 2002 (p. 45)
Thomas, Robert. Report on Endowment Building and Endowment Management Conditions in Poland, Warsaw, June 2002, conference materials Perkowski, Tomasz. The Management of Endowments by Foundations, Warsaw, June 2002, conference materials The Academy for the Development of Philanthropy in Poland. White Paper on Philanthropy in Poland, www.monitorprawa.ngo.pl (2.12.2002)
First published in SEAL (Social Economy and Law Journal), Winter 2002-2003. See http://www.efc.be/publications/sealabstract.html .