TCS Daily


Thinking Outside the Tank

By Ugnius Trumpa - September 8, 2004 12:00 AM

New European Union countries will soon celebrate a half-year of membership in the bloc. It's a good time to consider what has been the impact of EU membership on think tanks -- and on the economic and social changes that are affecting their activities.

The past decade has brought a number of profound socio-economic changes. These changes have helped our countries to get ready for accession to the EU. There is no doubt, however, that changes have multiplied since the day we joined. If think tanks in the new member states are to have the ball at their feet, they should analyze and assess these changes thoroughly and carefully. From a strategic point of view changes in financing conditions and a growing diversity of activities are the most important ones.

Before identifying implications of EU membership for the financing of non-governmental organizations (NGOs) in general and thinks tanks in particular, one should realize that many of these changes occurred already -- several years ago. Those think tanks and NGOs that managed to recognize, evaluate and take advantage of them, avoided pitfalls or even strengthened their activities.

Let us take Lithuania, one of the new member states, as an example. To analyze financial conditions of think tanks and other NGOs in Lithuania, just like in other Central and Eastern European countries, is a difficult task. This is mainly due to a lack of data. In the past ten years scant research has been done on the financing of NGOs in general and think tanks in particular. As a result, there are few sources of data about NGO financing, while the quantity and quality of available information are fairly modest. Some foundations, think tanks and NGOs in Lithuania have conducted research to explore the motives and legal conditions of, and the trends in, giving. Yet, analysis of the scope of giving has never been attempted, so the only source of this type of information in Lithuania is the Department of Statistics.

Accountants for non-governmental organizations in Lithuania have to spend an enormous amount of time calculating and manually filling in intricate reporting forms required by the Department of Statistics. In spite of the complexity of these forms and all the work that goes into completing them, a closer look at the data released by the Department of Statistics shows that to extract any valuable information about NGO financing from the statistical yearbooks is not easy at all. If you take, say, data by area of activity (for example, funding provided for health care initiatives by Lithuanian and foreign donors), it is not clear whether they include governmental or semi-governmental organizations (public institutions) co-founded by one or more state institutions or whether they refer only to non-governmental organizations.

Similar ambiguities will come up if you try to see how donations split by institutions: the category "Scientific, educational, cultural, publishing and sports organizations" is so broad that any kind of institution may fall under it. The category "business enterprises," which is listed in this cross-section, is even more confusing, since the existing rules of granting charity and support in Lithuania prohibit enterprises from receiving donations.

Given such distortions of information, any analysis of the financing of NGOs and think tanks is general at best. Still, let us have a look at least at such generalizations. What first catches the eye is that the amount of overseas donations has shrunk in the past six years, from approximately 235 million litas in 1996 to 117 million litas in 2002. Admittedly, the total amount of donations rose from 271 million litas to 317 million litas during the said period, but this growth was caused by increased giving from local donors (from almost 36 million litas in 1996 to 117 million litas in 2002).

These changes were discernible earlier, since the long-awaited economic growth, international recognition and integration into NATO and the European Union had adverse implications for thinks tanks that counted mostly on foreign donations. As the living standard in the country rose and the political situation stabilized, international foundations began to lose interest in Lithuania in favor of African, Asian, Middle East, CIS and other less economically advanced and politically stable countries. Most international organizations and foundations began to withdraw from Central and Eastern European countries or narrowed their activities or reduced funding in this region already several years ago. Today our former donors who think that we have achieved a comfortable living can be reminded that the living standard in our country is eight times lower than that in the EU average. Still, they are right to say that many more countries are struggling with poverty than we are.

An important factor underlying the reduction of international support has been the economic decline of the world's leading economies and their internal social problems which have been absorbing resources in the first place. These processes became quite obvious when large international donor foundations withdrew from Lithuania and the remaining organizations markedly cut down their funding. Funds that were designated for the country's integration in international organizations shrank as well.

In designing next year's activities, allowance should be made for a strong probability that, after accession into the European Union, donations from the US, which account for 32 percent of total international funding today, will go down. At present it is not clear how things will stand with funding from other large international donor-countries, such as Denmark (almost 19 percent of total international funding), Germany (16.1 percent), Finland (7.8 percent) or Sweden (6.5 percent). Upon Lithuania's joining the EU, these countries are not only colleagues but also competitors.

In the face of such developments leaders of think tanks are very likely to ask themselves: And what about tomorrow? Shall we compete fiercely for shrinking international donations? Or shall we persuade ourselves and others that there is no way we could get along without international support? Such tactics are still feasible today, but I sincerely doubt it would justify itself in the long term.

How should think tanks change and what should they do under the current developments if they want to proceed with their missions and objectives? Identifying and eliminating shortcomings is their first priority. For many years think tanks learned how to write grant applications and how to raise funds. They struggled hard for donations both domestically and internationally. To obtain them, think tanks inevitably modeled their activities on the programs and fashions that were set by the foundations they approached. In many cases this led think tanks to forego their originality and identity, as economic interests invariably made them alter their strategies and tactics, their management and expertise.

Competing interests outweighed cooperation possibilities. They outweighed opportunities to learn from partners and to develop international projects and to enhance their expertise in other ways. Some foundations discerned these adverse trends before it was too late and started to finance networking and international cooperation. Despite that, much time was lost and as a result on May 1 many Lithuanian NGOs entered the common EU market equipped only with local experience.

As NGOs kept themselves narrowly focused on donations from foundations, they lost time and opportunity to find local and foreign donors in the private business community or among individual philanthropists and to exhibit themselves as representatives of community, national or international interests. Many projects undertaken by NGOs had little in common with community interests or any wider interests so that NGOs and their donor foundations ended up being the final and biggest beneficiaries of these projects. Consequently local donors from the private business community were lost. It is likely that a recent rise of communities and their activities, coupled with a provision of the 2003 law on personal income tax allowing Lithuanian taxpayers to allocate 2 percent of their income tax to charity, will lead Lithuanian NGOs to look for potential donors among business enterprises and private individuals.

Equally erroneous was a strategy to stake one's existence on state or municipal funding. Such NGOs wasted time on "extorting" money from the government through political parties or connected officials instead of focusing on fundraising from potential private donors. In a situation where societal problems are widely expected to be tackled not by civic organizations but by the government and private individuals and legal entities have to make generous contributions to maintain the government, little incentive is left to support not too strong and attractive civic organizations and to bank on their worthy accomplishments.

Little wonder that the issues NGOs and think tanks are addressing are widely believed to be the domain of the state or charitable organizations or foundations. Such perceptions were reported in most of the surveys on the visibility and attractiveness of NGOs and think tanks among potential investors. For example, according to a public opinion poll "Philanthropy in Lithuania 2003" commissioned by the Open Society Fund-Lithuania, the majority of potential donors think that social care, science, education, health care, environment protection and culture should be supported, not by private individuals or companies, but by the government. Naturally, as long as this opinion prevails and government agencies continue to usurp the role of the benefactors instead of yielding it to private initiative and responsibility, NGOs that are active in these areas can hardly count on any private giving. Following this line of reasoning, it is not surprising at all that the bulk of private donations are going to organizations where "the hand of the state" is felt the least, for example, religious organizations.

A positive trend that has been evolving since ten new countries joined the EU is first of all a new market of ideas in the expanded Europe. Internal problems of the member states, neighborhood relationships and issuing evolving at the EU level will require many innovative decisions. Think tanks will have an opportunity to exploit their exceptional advantages, advantages that private enterprises and state agencies cannot boast. Public policy areas will be expanded to include new issues and new problems both at the national level and in the EU domain soon after the EU expansion. Given that the new member states will gradually adopt new practices of public administration and policy making that are already established or have been recommended in the EU, our politicians and civil servants will be very likely to change their attitudes towards think tanks and to rethink the advantages that think tanks possess.

The involvement of think tanks in the policy making process is a normal and long-standing practice of governing bodies at both member state and EU level. The expanded Europe means not only a common market of goods and services but also a common market of public policy issues in which various types of think tanks can find a niche. Some think tanks will be able to focus their efforts, independently or cooperatively, on the nations that are awaiting another round of EU expansion or on other neighboring countries that are set to accelerate their economic and social growth.

Think tanks in the new member states will be able to use on a wider scale the experience of their counterparts in the old member states and to establish new coalitions that would address, and formulate proposals for, national and EU public policy issues. The market for policy advocacy and education is no smaller than the market of internal issues of the EU and its member states.

Finally, it should be stressed that the European Union has accepted nations which have much more dynamic experience of free-market reforms than the old member states. The European Commission, the Council of Ministers and the European Parliament can use this background not only a source of valuable experience but also as a tool of policy making to put the reforms in the European Union and its member states on the free-market path.

The author is president of the Lithuanian Free Market Institute


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