Institutional affiliation: Social Impact Alliance for Central and Eastern Europe (CEE Impact Foundation)
The report “Unlocking Private Capital for Social Good in Central & Eastern Europe” published in September 2023 by the Social Impact Alliance for Central and Eastern Europe, is a comprehensive analysis of the research conducted between 2020 and 2023 in collaboration with key stakeholders and decision-makers in 11 countries of Central and Eastern Europe: Bulgaria, Croatia, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia, and Slovenia. It also includes insights from Ukraine, as the war has been the context, catalyst, and driving force behind the activities of businesses, investors, and individuals in the region.
Potential vs. challenges
The countries of Central and Eastern Europe are facing a pivotal moment, brimming with opportunities and challenges. After approximately 30 years of a free market economy, both individuals and companies possess the means and willingness to contribute to social and environmental causes. With the right incentives, individual giving could nearly double. Skills-based volunteering, pro bono services and mentorship from the corporate sector are becoming transformative for nonprofits. The social impact ecosystem is also maturing, with the infrastructure already in place and robust organizations facilitating social development and EU regulations nurturing this domain.
However, there are also challenges that need to be addressed – lack of awareness, education, cooperation, “how-to” knowledge, transparent legislation, tax incentives or the viable offerings in the market. As the region’s economies are relatively young, the pursuit of profit remains a central priority for businesses and investors, hindering the adoption of a more socially responsible approach. Philanthropic giving remains emotionally driven, with donors still reluctant to fund infrastructure organizations and more systemic causes. Following the accession of most Central and Eastern European countries to the European Union, many Western donors who had previously supported such initiatives have shifted their focus to other global regions. This leaves a huge gap that neither international nor domestic donors are willing to fill.
Crisis Giving
Similar to The Global Philanthropy Environment Index “Central Europe” findings, the regional research indicates that the COVID-19 pandemic and the war in Ukraine significantly influenced the social activity in the region. The pandemic positively affected the philanthropic attitudes of 35% of CEE residents. A considerable number of individuals (46%) dedicated more time to assisting others, while one in five (22%) started to help which they haven’t done before.
The war in Ukraine, because of its geographic proximity to the countries of the CEE region, had even bigger impact on the region’s social engagement. Over half (53%) of the region’s citizens became involved in providing support for the refugees, mostly by making financial donations (50%), providing medicines or food (40%) or securing accommodation for refugees (13%). 53% declare that that their social activity, prompted by the war, will continue.
Interestingly, most CEE citizens believe that the current geopolitical situation requires more engagement on their side (59%), but they also expect developed countries, like the United States, to increase their philanthropic activities in the CEE region (52%). Germany, Switzerland, UK, USA and Canada were indicated as “TOP5” role models for building social involvement in the region.
Individual Giving
The data clearly shows that the citizens of Central and Eastern Europe know how to mobilize in the face of crises. However, they are still learning to give effectively and, above all, regularly. Even though nearly half (47%) of them donate funds to social purpose organizations, only 51% of CEE residents do it on a regular basis, which makes strategic planning in the social sector difficult (most donate funds once per year (39%) or once per quarter (34%), while only 14% donate monthly).
CEE individual donors can be divided into three subgroups: small donors, who donate rather irregularly and are driven mainly by emotions; mid-size donors, the fastest growing group who are already quite strategic and impact-oriented in their giving, for whom there is unfortunately a very poor offer on the market as there are few opportunities to be engaged more strategically; and major donors, who donate significant amounts but their number in the region is scarce.
The current average annual donation per donor is approximately 90 EUR, which amounts to nearly 2.8 billion euros in total for 11 surveyed countries. The highest average donations were observed in Czechia (150 EUR), and the lowest in Latvia (67 EUR). Donations are most often made in the form of one-off payments (SMS, street collections, one time transfers). What’s most promising, however, is that with proper motivation and removal of barriers, the region’s individual giving can double (from EUR 2.8 billion to EUR 5.5 billion).[i]
Tax and legal issues
The region of Central and Eastern Europe is very diverse in terms of tax deduction and tax redistribution mechanisms. There is no single, effective and, above all, coherent approach to this issue across countries, which is increasingly important in the context of cross-border giving. The situation can be assessed as “at least problematic in many ways, with much room for improvement”, citing the 2022 Global Philanthropy Environment Index Regional Report: Central Europe.
Most CEE governments use tax deductions or tax redistribution mechanisms, or both. Tax incentives offered are rather low and cannot be carried over from one tax year to the other. Only 33% of CEE citizens are satisfied with the value of tax reliefs and almost half (48%) express dissatisfaction with the way their governments support their social engagement. While this is not a big issue for individuals donating small sums, it is a significant barrier for major donors. The model of tax redistribution, highly valued by many CEE citizens, is not conducive to building a culture of giving and may lead to increased reliance on public money on the part of the social sector.
A challenge that applies to both tax mechanisms is the low awareness of their availability (only 44% have heard of them) and the low percentage of people who use them (26% among those who are aware, which translates into a mere 11% of the total population using tax incentives).
About the author
Anna Korzeniewska is the founder of the Social Impact Alliance for Central and Eastern Europe and the Scholarship Fund for the Talented. She is a graduate of the City University of New York (BA) and Nottingham Trent University (MBA) and was the first Pole to receive the Professional Certificate in Fundraising at New York University (NYU). Korzeniewska is a Forbes contributor and a former jury member at Google.org Impact Challenge Central and Eastern Europe, Social Tides and Econverse. She is a member of several international networks, including WINGS, Catalyst 2030 and ERNOP. The initiator of hundreds of value-based partnerships and alliances, she is a great supporter of value-based partnerships and cooperation.
Methodology
Six hundred online surveys (CAWI) were conducted in each of the 11 CEE countries included in this study, plus 1,000 in Ukraine, totaling 7,600 surveys. The respondents were a representative sample by age (18–65), gender, and place of residence. Additionally, over 230 individual interviews (IDI) and group meetings (FGI) were held in all 11 countries with leaders of mostly umbrella organizations for businesses, investors, nonprofits, academia, as well as public administration and organizations supporting social engagement in a given country.
Sources:
To download detailed CEE reports, please go to: https://ceeimpact.org/knowledge-base/
To download The Global Philanthropy Environment Index “Central Europe”, please go to: https://globalindices.iupui.edu/environment-index/regions/central-europe/index.html
The views and opinions expressed in this article are those of the author and do not necessarily reflect the official views of the IU Lilly Family School of Philanthropy.
[i] Please refer to page 86 of the “Unlocking Private Capital for Social Good in Central & Eastern Europe” report for more details.
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