Standard 1.1.3. Securing Financial Resources

The legislation allows for the CSOs to generate income through economic activity. The LAF regulates the activity of associations and foundations, and when the activities of the organizations generate income, itshould be used to achieve the goals set out in their statute (including all organizations’ regular activities, including payroll costs). The conducting of economic activity is further regulated with labor and tax laws, laws in the area of obligations, payment operations, foreign exchange operations, and other laws.

The legislation allows CSOs the possibility to receive funding from foreign public or private sources. According to LAF, associations and foundations could seek and obtain funding from a variety of foreign sources to support their activities, without special requests and prior approval by the state. The organizations can receive funding from international bilateral (USAID, SDC, embassies and others) and multilateral sources (such as the EU), then individuals, corporations, and other sources. CSOs can receive funding from foreign sources without any restrictions (e.g. administrative or financial obligations, prior approvals, or channeling of funding via specific authorities).

CSOs can receive funding from individuals, corporations and other domestic sources without restrictions.. Dominant domestic sources of funding are government grants, membership fees, corporate and individual donations. The Law on Donations and Sponsorships in Public Activities plays a key role in stimulating donations from individuals and companies.

CSOs are engaged in economic activities, and the legislation is implemented without any violations reported. According to the survey, 41,1% (67) CSOs are engaged in economic activity. Of them, 10 CSOs coped with complex administrative requests; six CSOs faced complex rules for accountability (reporting, monitoring) and three CSOs tackled other difficulties: fear of lack of sustainability due to increased minimal salary and monopoly over certain services (lack of competition).

CSOs received foreign funding with minor difficulties.

0 – 20 Fully disabling environment20 – 40 Disabling environment
40 – 60 Partially enabling environment60 – 80 Enabling environment
80 – 100 Fully enabling environment

Chart 2. Please select the answers relevant to your experience when receiving funds from foreign donors (%):

According to the survey, the majority of CSOs (68,1 %) had foreign donors as a source of funding. The survey showed that out of those, 47.2% (77) CSOs faced complex procedures for VAT exemption for foreign funds (long period of waiting for project registration which influences the beginning of the project implementation; the process is not online and only available in the capital city; donors canceling support due to the long procedures; administrative barriers; lack of capacities of the employees; lack of understanding on the side of businesses of the procedure; lack of clarity of rules and difference in responses by the state officials; problematic procedure for the partners of the consortium of the project; lack of ability to ask questions concerning the procedure over the phone.

CSOs freely receive funding from individuals, corporations and other sources. According to the survey, the majority (88,96%) of CSOs have not obtained funds from domestic private donors.

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