Funding panacea or vital injection?

Marilyn Wyatt

Three years ago, in the pages of Alliance, the founding of the Trust for Civil Society in Central and Eastern Europe was hailed as an instance of ‘unprecedented … cooperation between private foundations’. Formed by six US donors with a long commitment to the region, the Trust was established to strengthen civil society in Europe’s newer democracies through a programme of infrastructure development and institutional support. To date, the Trust has spent or committed more than $17 million in grants in five countries. But just how successful has it been?

The Trust’s report card so far is mixed, but encouraging. On the plus side, it has launched large, varied and innovative programmes in Slovakia, the Czech Republic, Poland and Hungary. Preliminary developmental grants have been made in Slovenia, and a generous number of bids are being reviewed for Bulgaria. Activities in the final country of Trust operation, Romania, are expected to start up this autumn. A host of networking and institutional strengthening initiatives are well under way.

Yet the story is one of partial successes. The mission of the Trust – to build a supportive legal, fiscal and political framework for civil society; develop the non-profit sector’s institutional capacity; and promote the long-term financial sustainability of NGOs – is so ambitious that the results of individual efforts are still difficult to judge. Some will bear fruit only after a number of years, while others may appear over-reaching. As an unusual experiment in philanthropy, however, the Trust’s experience, even after a few years, offers lessons for civil society builders everywhere.

Making local partners responsible

The Trust’s unique approach is to ‘empower’ one or more local partners – usually foundations already engaged in building civil society – to carry out the bulk of its operating and grantmaking activities. Trust partners accomplish this task by means of unusually large, multi-year grants. While the objectives of Trust-funded programmes remain the same from country to country, Trust partners are fully responsible for the programmes and freely shape their own activities and goals. The aim is to wean NGOs from dependence on foreign support and encourage them to take ownership of the development of healthy, efficient and sustainable non-profit sectors.

Fostering cooperation

This laudable vision has posed unexpected challenges, according to the Trust’s recently released three-year report, Bridges to Sustainability. An initial problem in nearly every country has been establishing an unfamiliar kind of relationship with suitable grantees. Only in the Czech Republic and Poland is the founders’ original idea of a single in-country partner in effect. In Slovakia and Hungary, no one organization was found to have the breadth of experience needed to run a large, strategically oriented operating and grantmaking programme. In the end, a number of organizations, some working as consortia, have been selected as Trust partners, and these have had to learn to work with each other and other organizations in new, more cooperative ways.

The process has been unexpectedly slow and painful at times, but in the end new relationships have been forged that are helping to strengthen the non-profit sector as a whole. In Hungary, says Zsuzsa Foltányi, executive director of the Environmental Partnership Foundation, one of the Trust’s Hungarian partners, ‘potential Trust partners had never worked together to develop a sector-wide vision. The Trust helped to speed up cooperation among us so we could develop a plan for the sustainability of the sector.’

Other forms of cooperation are taking shape as a result of Trust involvement. In Slovakia, Trust funding has been used to activate an unprecedented Joint Investment Project, which allows NGOs to pool their cash assets in a professionally managed investment fund. In Hungary, Trust support has been instrumental in starting the National Civil Fund, which helps NGOs meet their operating costs. In Poland, the Trust partner, the Stefan Batory Foundation, has launched a programme to build partnerships between NGOs and local government to foster policy change and increase the flow of resources. These programmes represent one of the Trust’s most valuable contributions to date – giving NGOs the means and encouragement to build new, national-level networks and coalitions which are helping to define and to meet the non-profit sector’s long-term strategic needs.

Developing the legal framework

Another area of consistent achievement is Trust-funded efforts to improve the legal and fiscal framework for NGOs. NGOs have long recognized the inadequacy of existing laws in Central and Eastern Europe, but campaigns for legal reform have often been uncoordinated, ad hoc, or focused on a single issue. With Trust support, partners have been able to play a leading role in coordinating national-level efforts at reform. In the Czech Republic, for example, the VIA Foundation is supporting a group of NGOs working on relevant passages of a new Civil Code, while in Hungary the Environmental Partnership Foundation is cooperating with other NGOs to close loopholes and make the law more ‘NGO friendly’. Similar efforts are under way in Poland. Only in Slovakia have results been less satisfying: NGOs have gained favourable tax incentives within the framework of a general tax reform, but less progress has been made on legislation affecting NGOs.

Inexperience of local grantmakers

A clear record of success is less apparent in the other major areas of Trust concern – strengthening the institutional capacity of the NGO sector and promoting the long-term financial sustainability of NGOs. The Trust report frankly admits slow progress in these areas. Trust partners are contributing directly to the financial stability of key organizations with large, institution-building grants to their endowments or reserve funds. But a major constraint has been their lack of experience in making this type of grant. Since indigenous grantmakers in Central and Eastern Europe have relied for years on foreign project-related funding, their grantmaking activities have usually been limited to the dispersal of many small grants. Encouraging Trust partners to make larger investments in the institutional sustainability of fewer organizations, basing their selection on an overall vision for the NGO sector, has proved to be a challenge in several countries.

This challenge is complicated by the widespread inability of NGOs to plan strategically for their own long-term future. The weakness of proposals for institutional grants induced the Stefan Batory Foundation in Poland to work intensively with prospective grantees before any grants were made. ‘Planning and measuring institutional development are the most difficult areas of NGO management,’ says Lidia Kuczmierowska, director of the Trust programme at Batory. ‘We’ve spent a lot of time with our grantees trying to articulate what changes we’re striving for and what choices need to be made. In the process, the Batory Foundation has learned together with our grantees how to effectively build our own institutions.’

The Trust’s aim – making itself ‘obsolete’

Since institution building can be an area of snail-like progress, the impact of the Trust’s approach may not be visible for several years. However, the stress on strong organizations has already stimulated partner organizations and the Trust itself to think hard about the future leadership needed from indigenous philanthropic institutions. ‘One of our main goals is to leave behind a critical mass of organizations that have sufficient experience and assets to anchor the ongoing development of civil society,’ says Jacek Wojnarowski, Executive Director of the Trust. Although a review of Trust programmes currently under way in Slovakia could result in a change of emphasis in programme areas, the Trust remains committed ‘to nurturing Central and Eastern Europe’s own capacity for inspired NGO leadership. Our most important legacy will be to make the Trust itself obsolete,’ says Wojnarowski.

A bridge between start-up and self-sufficiency

The Trust’s intention at its founding was to spend down its resources in ten years. During the next few years the Trust looks forward to getting more involved in developing civil society on a regional level. Trends like enlargement of the European Union and the withdrawal of Western funders pose challenges that call for a coordinated regional response, according to Wojnarowski. Although the Trust already convenes a regional meeting and hosts other cross-border initiatives, it hopes to increase its regional impact by cooperating with other donors. Joint donor initiatives can ensure that dwindling levels of foreign assistance have maximum effect while new, diverse, and still fragile indigenous sources of funding take root.

The Trust sees itself as a bridge between start-up and self-sufficiency for Central and Eastern Europe’s civil society. ‘The Trust arrived at a time of significant shift in the region’s funding streams,’ says Jenny Hyatt of the Development School, who has observed the region’s NGOs for more than a decade. ‘The key question will be whether it can use its funds strategically rather than remedially – whether it can be not just a funding panacea, but a vital injection for the future health of civil society in the region.’ Early results suggest that, given time, the Trust can achieve that goal.

Marilyn Wyatt is a consultant based in Warsaw, Poland. She is working with the Trust for Civil Society in Central and Eastern Europe on an initiative to strengthen the governance of Trust partner organizations and their grantees. She can be contacted at

To download a copy of Bridges to Sustainability, go to

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