Several leading Western foundations became involved in supporting democracy and civil society development in Central and Eastern Europe more than a decade ago, soon to be followed by various governmental agencies. Once stable market economy regimes and basic democratic systems were established, however, the attention of foreign donors began to shift to other areas.
In December 1996, the Hungarian Parliament provided a new avenue to strengthen civil society by enabling taxpayers to support an NGO with 1 per cent of their personal income tax. A study of the first three years of the scheme suggests it has had a significant impact. However, though most Hungarians know about the scheme, so far only half have chosen to make use of it.
A recently completed survey of tax laws affecting NGOs in 14 Central and Eastern European countries suggests that these countries are mostly ready to consider reform of their tax laws in order to improve the financial sustainability of NGOs.