The Real Problem with NGOs in Georgia, and What Law Is Truly Needed to Solve It

01.06.2024 (Caucasian Journal). What’s the keyword of the newly adopted Law on Transparency of Foreign Influence? Correct, it is the word “budget”, because the law’s main provision is that a non-governmental organization must be labeled as a foreign agent if at least 20 percent of its budget is from foreign grants. The law is focusing on the budget, regardless of the NGO’s profile and mission.

▶ ქართულად:  Read the Georgian version here.

Even organizations typically not associated with political lobbying, such as medical, cultural, environmental, and even the dog shelters, would become vulnerable if they depend on foreign funding.  But instead of once again criticizing the law, let’s take a look at the core of the problem – why are they all dependent on foreign funding? What’s wrong with the Georgian nonprofit sector that it has to rely largely on foreign organizations’ grants? And what is to be done, in practical terms?

Most of the civil society organizations would be happy to live without foreign grants if they could secure funding locally.

The answer is simple. Most of the civil society organizations would be happy to live without foreign grants if they could secure funding locally.  But the organizations are forced to seek grants from foreign sources.  This brings us to the main issue: Where are the local Georgian donors?

The answer is again simple: There are no laws in Georgia that encourage companies or individuals to donate. 

In developed countries, laws have been in place for a long time that provide tax incentives to those who wish to support non-profit activities. For example, if someone wants to give money to protect animals, nature, or cultural heritage, to fight against diseases, or to support any other cause of their choice, they would pay less income tax. These systems have been successful in helping the non-profit sector grow in developed countries. As a result, it became so huge that it not only supports civil societies domestically but also provides significant support to organizations globally, including those in Georgia.

Where are the local Georgian donors? Answer is simple: There are no laws in Georgia that encourage companies or individuals to donate.

If we consider the extensive experience and examples of the USA and large EU countries supporting their nonprofit sectors – with their multi-billion dollar foundations and endowments – it may seem too distant or less relevant to Georgia. Instead, one can, for example, look at the relatively recent example of Slovakia, a country comparable to Georgia in overall statistics.  Slovakia’s Income Tax Law allows individuals and businesses to allocate part of their paid income tax directly to NGOs of their choice, actually providing donors with tax deductions for donations. I am sure other countries have a wealth of experience in this field that Georgia can benefit from.

Why not follow the experience of this and other EU countries, and adopt such a law in Georgia? The introduction of such a law might bring several benefits. It could:

  • Increase funding to address urgent societal issues; 
  • Encourage public and business community involvement in social causes and awareness of Civil Society Organization (CSO) initiatives; 
  • Strengthen the nonprofit sector to become self-sustainable;
  • Encourage active participation from the public and business community in civil society; 
  • Enhance corporate social responsibility to focus on real societal problems; 
  • Help balance foreign financing, if it still remains a concern for authorities.

Finally, when it comes to funding NGOs in the political arena, such a law would also appear beneficial. As it would stimulate the local donors, their contributions would naturally reflect the true level of Georgian public interest in each organization – in a natural way, without the necessity of creating registries or labels.

A law introducing tax incentives or other benefits to corporate and private donors would be a significant step forward in the modernization of Georgian legislation. It would demonstrate the maturation of civil society and a strong pro-democracy course. Undoubtedly, it would be welcomed by both the Georgian people and international public opinion. It would also enhance Georgia's reputation as a reliable partner in the eyes of foreign investors.  But most importantly it would effectively connect the interests of the business community with the public interest, and put an end to the current situation where companies, NGOs, and the public exist in “parallel worlds” with limited interaction.

Alexander KAFFKA, Editor-in-chief, Caucasian Journal

Read the Georgian language version here.

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