Country-Specific Situation of the Nonprofit Sector in the Czech Republic

CONTENTS

1. History and Specifics of the Czech Nonprofit Sector
1.1 Historical Development of the Czech Nonprofit Sector
1.2 Specific Features of the Czech Nonprofit Sector

2. Relevance of the Nonprofit Sector in Economic Terms
2.1 Employment in the Nonprofit Sector
2.2 Voluntary Work
2.3 Revenues and Spending
2.4 Funding Arrangements with the Public Sector

3. Relevance of the Third Sector in Political Terms
3.1 Council for Non-State Non-Profit Organisations
3.2 Council of Economic and Social Agreement
3.3 Other Corporatist Arrangements
3.4 The Legislative Process
3.5 Administrative Procedure
3.6 Political Affiliation
3.7 Government Policy towards the Nonprofit Sector

4. Legal Background of NPOs’ Activities
4.1 Legal Forms of Nonprofit Organisation
4.2 Tax Treatment of NPOs

5. Organisational Characteristics

6. Current Issues in the Czech Nonprofit Sector’s Discourse
6.1 Sustainability
6.2 Legislation
6.3 Relations with the State

REFERENCES

1. History and Specifics of the Czech Nonprofit Sector

1.1 Historical Development of the Czech Nonprofit Sector

The tradition of charity and voluntary association in „The Lands of the Czech Crown” is rich and old, dating back to the beginning of the Czech state in the 9th and 10th centuries. Its long evolution culminated in the latter half the 19th century and in the twenty years of the first Czechoslovak Republic in the 1920’s and 1930’s, after which its evolution was disrupted by fifty years of totalitarian rule (1939-1989).

In the 19th century the Industrial Revolution started transforming the economic, social and demographic map of the Czech Lands, but also spawned a new class of dispossessed. The new wealth and power of the bourgeoisie gave rise to many new scientific, scholarly, literary, cultural and social institutions; the poverty and societal upheavals led to the establishment of workers’ self defence and mutual aid. A most important process, however, that contributed to an unprecedented boom in associational life in Czech society was the Czech National Revival (approx. 1770’s - 1860’s). Similar emancipation efforts in the German population and the competition and rivalry between the two national groups further contributed to the “associational boom”. By the end of the 19th century the Czech Lands had the largest number of charitable and voluntary organisations in the Austro-Hungarian Empire.

In the 20 years between the two World Wars the Czech Lands became part of a new Czechoslovak Republic. Czechoslovakia was one of the world's most advanced industrial-agrarian countries, and the Constitution of February 1920 had guaranteed that the new Republic would also be one of the few states in Europe to have a genuine parliamentary democracy. Consequently dynamic charitable and voluntary organisations flourished.

The dynamic development of nonprofit organisations came to an abrupt end when Hitler’s Wehrmacht occupied what was left of the Czech Lands in March 1939. His Eimarsch marked the beginning of fifty years of totalitarian rule in the conditions of the Second World War and the ensuing Cold War. Under the German occupation (1939-1945), most nonprofits were banned and others were reorganised in order to serve the ideological purposes of the Nazi state. After World War II nonprofits renewed their activities, but their independent development was soon stopped again, this time by the Communist coup d’etat in 1948. Like the Nazis before them, the Communist regime banned all independent activity. The assets of churches as well as of foundations and associations were confiscated and most of them were dissolved. The remaining associations were amalgamated into several so called ‘mass social organisations’ (masové spoleþenské organizace) and with the new ones created by the communist regime they were unified under the umbrella of the infamous ‘National Front’, controlled by the Communist Party. The state monopolised the provision of public services, such as education, health and social care. These services were provided by governmental organisations. No voluntary organisations were permitted to exist outside the National Front, the membership in the National Front was considered to be the expression of the loyalty to the state (Friþ and Goulli, 2001).

In spite of harsh repression, some independent citizen initiative as well as opposition to the communist regime did exist, but remained fragmented and weak. Both the early scattered opposition of the 1950’s and the mightier reform movement of the Prague Spring in the 1960’s were put down by force, and so after 1968 occupation of the country by the Soviet Union, cultural activists and civic leaders had to find new ways of independent existence and opposition to the regime. They found it in the parallel polis of independent cultural initiatives, samizdat publishing, underground church and underground university¹ and in the defence of human and civil rights initiated and inspired by Charter 77².

In spite of the admirable work of the cultural activists and the opposition leaders, independent voluntary sector remained small and isolated from the rest of the society. It was not until the second half of the 1980’s, after Gorbachev had started his reforms in Moscow, that people started awakening again. The isolated opposition groups were intensifying their dialogue with the rest of society, a new generation of young people was beginning to speak up, and the Catholic Church finally turned around to confront the regime. In 1989 people’s long-suppressed frustration finally burst open and made the communist regime collapse within one week.

In the course of the past seventeen years (1990-2006), the nonprofit sector in the Czech Republic has experienced a dramatic transformation in the conditions of transition from a totalitarian regime to parliamentary democracy.

1.2 Specific Features of the Czech Nonprofit Sector

It is typical of Czech nonprofit organisations that they have always played an important role in the building or renewal of Czech nationhood (19th century) and democracy (19th and 20th centuries) and, on the other hand, they have always been targets of harsh repression by authoritarian or totalitarian regimes. The frequent fundamental changes in the attitude of the state towards NPOs and the long years of totalitarian rule have left behind a confusing legacy of varied, often contradicting, traditions and legacies which have shaped the post-1989 development of the Czech nonprofit sector. Among them, the most important are (see also Friþ and Goulli, 2001 and Pospíšil, 2006):

(i) The tradition of the National Revival: The 19th century may seem too distant to be directly inspirational, but the Czech National Revival occupies such a prominent place in the Czech national mythology that a considerable number of groups and organisations base their work on the model of selfless sacrifice for the patriotic cause, of community development in difficult, neglected parts of the country, and of carrying out their mission on a strictly voluntary basis. Sometimes even the associations and societies of the 19th century have been revived.

(ii) The tradition of the first Czechoslovak Republic: The pre-WWII Czechoslovakia is seen as the golden age of civil society and the desire to re-start its successful institutions and to copy its successful models has been very strong. A large number of organisations have indeed been revived (Sokol, Boys Scouts, YMCA, the Caritas, …), some have even been restituted some of their property. Equally inspirational has been the relation between the state and the NPOs, particularly in the areas of health and social care, which the organisations working in these fields have been trying to imitate.

(iii) The legacy of mistrust: Of the many negative legacies of the totalitarian years, that of mistrust is one of the hardest to overcome. Under the communist regime, it had become second nature to disbelieve in the possibility of influencing public policy and in the usefulness of public engagement. People continue to mistrust the institutions that should serve them, including nonprofits.

(iv) The legacy of clientelism: Nepotism and informal networks of mutual services had become the dominant system of securing goods for the individual and the family in the short-supply economy of the “advanced socialist society”. The system survived the fall of communism and continues to pose a serious challenge to any attempt to introduce the rule of law and standard procedures in the market, in the public sphere and in the nonprofit sector.

(v) Divides in the sector: A specific manifestation of the legacy of mistrust is the deep divide that exists between ‘old’ and ‘new’ organisations. The ‘old’ NPOs are continuations and transformations of those organisations that existed in the communist era, and they are to be found especially in the areas of sport, recreation and leisure; the ‘new’ ones, which had been established since 1989, dominate in such areas as human rights, environment, and social services. In terms of numbers, the old NPOs by far otnumber the new ones. The problem that this divide causes is twofold: The ‘old’ organisations still enjoy preferential treatment by all levels of government in their access to public funding, based on old networks of nepotism and clientelism - a fact much criticised by the ‘new’ organisations; and in the areas where both the old and the new organisations co-exist, it invariably leads to bitter disputes, not only about public funding but also methods and styles of work. The divide also weakens the position of the sector vis-à-vis other sectors and societal actors. The mutual mistrust and animosity makes concerted action by the whole sector difficult, the state does not know with whom to deal as representatives of the sector because the two parts tend to ignore each other.

(vi) Position of churches: Although central to the life of Czech society and fundamental to the development of the charitable and voluntary action for centuries, the churches have been finding it very hard to recover from the devastation inflicted on them by the Communist regime. Equally, the most atheist country in Europe (with 59% of non-believers³ ) has been finding it very difficult to re- integrate the churches into society. The long and bitter struggle between the state and the churches about the restitution of former church property and about the separation of churches from the state remains unresolved (PotĤþek, 2000). Even though there have been no allegations that the state has used financial means to influence church affairs, the continued economic dependence of the churches on the state is intolerable for both parties (Friþ, 2000). Even within the nonprofit sector, the churches and their organisations appear to be largely separated from the other NPOs.

(vii) The legacy of the nanny state: The paternalistic communist state was a monopoly provider of all educational, cultural, social, health, and other services (e.g. Brhlíková, 2004). It had built for the purpose a centralised system of organisations, a state nonprofit sector of its own. The public sector has been finding it very hard to accept the loss of its monopoly in the public services after 1989, to recognise the existence of an independent nonprofit sector, and to change its role of providing the public services into the new role of securing their provision (e.g. Friþ, 2000). In the field of public services the dominance of the state and state-run organisations is still clearly visible⁴. (It is not only typical of the Czech Republic: it seems to be a general ‘post-communist’ pattern of providing public services.)

The new development of the Czech nonprofit sector after 1989 has been impressive, both in terms of the number of organisations and the scope of their activities. But, like the rest of the society, it has been, and still is in 2006, a societal sector in transition. Its organisations are still far from being taken by the body politic and the society at large as integral and important parts of the new democratic order. Their relations with the state and the business sector as well as with the general public are still fragile and unstable. Their position in law, in society, or in the market place is still in flux. This means that, besides fulfilling their mission, NPOs have to invest a considerable amount of resources to public relations, advocacy and political lobbying to establish and defend their place in their communities and in society at large.

2. Relevance of the Nonprofit Sector in Economic Terms

Like most other Central/Eastern European countries, the Czech Republic lacked quantitative information on the nonprofit sector for a very long time. Although the Czech Statistical Office (CZSO) started collecting data on nonprofit organisations in 1994, they were used for the system of national accounts only, were ill structured for analytic work and did not cover all the nonprofit organisations, but only some of them. In the 1990’s the Czech Republic took part in the Johns Hopkins Comparative Nonprofit Sector Project (CNP), but the data published by the project did not seem very reliable.⁵

The situation changed in 2004, when CZSO decided to implement a Satellite Account on Nonprofit Institutions. After publishing the pilot versions of the NPI Satellite Account, based on 2002 and 2003 data, in the second half of 2005, the Czech Statistical Office (CZSO) issued the first regular edition of its NPI Satellite Account, based on 2004 data, at the end of June 2006. The CZSO obtained the 2004 data on NPIs through two separate statistical surveys: Questionnaire NI 1a-01, designated for “small” entities (entities with less than 20 employees), and NI 1b-01 for “large” entities (entities with more than 20 employees).⁶ Although the share of nonprofit organisations that are annually surveyed is not very high, the CZSO also uses the business register and other administrative sources to make the data reliable.

The Czech nonprofit sector is defined according to the structural-operational definition in the Satellite Account.⁷ The CZSO decided to define NPIs by legal form although this approach is not trouble-free.⁸ Even though the situation has greatly improved with the Satellite Account, some data are still available for the NPISH sector only (any use of such statistics will be indicated).

2.1 Employment in the Nonprofit Sector

Although the data on the nonprofit sector employment are accurate, we are unable to make a detailed analysis in terms of fields of activity, because the available statistics use the OKEý classification (the Czech version of NACE). That means that more than half the nonprofit organisations are classified in the category “Other community, social and personal service activities”.

According to the data, the number of employees at the end of 2004 was around 45,600, which made up 0.7% of the total employment in the country. Expressed in full-time equivalent (FTE), there were 42.6 thousand employees. The share of women employed in the nonprofit sector was estimated at about 62%.

Table 1: Intersectoral comparison of employment, OKE Č categories, FTE, 2004

Abbildung in dieser Leseprobe nicht enthalten

Source: CZSO, NPI satellite account, 2006

2.2 Voluntary Work

The total number of volunteers that worked in nonprofit organisations in the Czech Republic in 2004 was estimated by CZSO at 568,823 volunteers (approximately 6.8% of the total population over 18 years), which represented almost 14,000 full-time equivalent persons. It is not possible to say how many people volunteer in which areas of activity. The only survey aimed at such questions was the Johns Hopkins CNP, but it only obtained answers from 262 volunteers.

2.3 Revenues and Spending

The data on revenues and spending are only available for the NPISH Sector at a global level. Detailed research projects carried out by the Centre for Nonprofit Sector Research have shown that the structure of revenues differs not only by type of nonprofit organisation but also by field of activity and by legal form.

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¹ A good account of the history of the underground church is given in Fiala and Hanuš (1999) and of the underground university in Day (1999).

² For basic information on Charter 77 see e.g. Wikipedia, for a detailed account Nadace Charty 77 (1998) and especially Prečan (1990).

³ Czech Statistical Office 2004

⁴ For more detailed information see Salamon, L.M., H.K. Anheier, and Associates (1999), "Global Civil Society: Dimensions of the Nonprofit Sector", Baltimore, MD: Johns Hopkins Center for Civil Society Studies

⁵ Using the same definition of the nonprofit sector, the CNP estimated the nonprofit sector empoyment to be 1.7% of economic active population for the year 1995 (see Sokolowski, 2005), whereas the Satellite Account shows only 0.7% for 2004. Other data show similar discrepancies, while it is at the same time clear from them that the economic size of the sector was slowly growing between 1995 and 2004.

⁶ The response rates: NI 1b-01 questionnaires were sent (like before) to all the 497 big entities, of which 493 returned them (99,2 % response rate). The statistical survey of small entities was sent to a sample that had been significantly enlarged for the year 2004: for the first time the NI 1a-01 was sent to 9,438 small NPIs (out of 74,727 active ones), out of which 4,582 responded (48,5 % response rate).

⁷ Definition: (a) Organisations; (b) Not-for-profit and non-profit-ditributing; (c) Institutionally separate from government; (d) Self-governing; (e) Non-compulsory.

⁸ The most controversial legal form proved to be ‘public university’, because Act 111/1998 on Higher Education stipulates that public universities shall be established and dissolved by an Act of Parliament. For the purposes of this Country Background Review we have excluded them from NPI Satellite Account statistics.