THE HISTORY AND PRESENCE
OF THE FOUNDATION INVESTMENT FUND
The Foundation Investment Fund (FIF) was established by the law passed by the ČNR (Czech National Council) in 1991, “with the aim to support foundations selected by the Chamber of Deputies of the Parliament on the proposal of the Government”. The Government earmarked for this fund 1% from the sale of shares in the second stage of the coupon privatization.
Only in 1997-1999 however, three basic steps were taken towards the enforcement of this law from the year 1991.
1)The law on foundations and foundations without endowment No. 227/1997 coll. was adopted, reducing the number of foundations from 5.300 foundations registered at the end of 1998 to 144 foundations re-registered in accordance with the new law in March 1999. (Up to 15th October 2001 there were 328 foundations registered.)
2)In 1997 the Governmental Council for Non-state Non-profit Organizations elaborated a proposal for the distribution of the FIF to foundations, which relied on two principles:
-the FIF financial contribution will be allocated to foundations that succeed in thecompetitive tender,
-the FIF contribution is intended for the foundation endowment and only foundations annual revenue will be used for grants.
3)The allocation and distribution of the FIF was decreed by the Government of the Czech Republic in two stages. For several years both stages were prepared and realized by the Governmental Council for Non-state Non-profit Organizations.
- 1st stage
The competitive tender (announced from 27th June 1998 to 31st January 1999) for the distribution of the first 500 million CZK of the FIF was decreed by the Government of the Czech Republic.
“Our aim was to select foundations that are qualified to administer financial resources provided by the state, to make profit out of these resources and from their income to finance not themselves, neither their activities, but other organizations in the non-profit sector. The financial resources of the Foundation Investment Fund are thus not intended for selected organizations but through their activities for the entire non-profit sphere”, stated the Government in discussing the results of the competitive tender in the Chamber of Deputies of the Parliament of the Czech Republic.
- 2nd stage
The competitive tender (announced 31st January 2001 - 30th April 2001) for the remaining resources of the FIF took place. The results of this tender were accepted by Chamber of Deputies of the Parliament on 12th December 2001.
The status of the resources earmarked for the FIF (dated 31.12.2001):
-484 mill. CZK has been distributed among 38 foundations in the first stage (1 foundation did not accept the FIF contribution);
-300 mill. CZK was earmarked by a resolution of the Chamber of Deputies of the Parliament into the Foundation Fund “for the relief of some injustice inflicted upon property of the Holocaust victims”;
-849,3 mill. CZK is prepared on a separate account of the Fund of National Property of the Czech Republic in order to be distributed among 64 foundations from the 2nd stage of the competitive tender;
-shares in the expected nominal value of 820 mill. CZK are being sold and the income from their sale is also intended for foundations from the 2nd stage of the competitive tender.
POLITICAL CONSENSUS
The establishment of the FIF and its distribution has gradually gained support of the overall spectrum of political parties. All the cabinets and parliaments, regardless of their political constitution, have participated in this process in the course of ten years:
-the Czech National Council established the FIF by law (1991);
-the cabinet of prime minister Pithart earmarked the property for the FIF (1992);
-the cabinet of prime minister Klaus (minister Pavel Bratinka) elaborated principles for the competitive tender for the FIF distribution (1997);
-the Chamber of Deputies of the Parliament adopted the Law on Foundations and Investment Funds (1997);
-the cabinet of prime minister Tošovský (minister Vladimír Mlynář) announced the 1st stage of the competitive tender (1998);
-the cabinet of prime minister Zeman (minister Jaroslav Bašta) organized the 1st stage of the competitive tender (1998-1999);
-the Chamber of Deputies of the Parliament distributed 500 mil among foundations (1999);
-the cabinet of Prime Minister Zeman (Minister Karel Březina) announced the competitive tender for the FIF remaining resources (2001)
-the Chamber of Deputies of the Parliament distributed among foundations 849,3 mill.CZK and also the income of the rest of shares in the portfolio FIF, that are being sold
THE FIF EXCEPTIONAL STANDING
The policy of the Czech Republic is quite singular within the context of the post-communist Europe. This exceptionality consists not only in the fact that the state donated financial resources to private foundations, but also in the fact that its donation is not designed to be allotted but to be deposited in the foundation endowment. To dispose only of the income of the FIF means to ensure that the financial contribution of the state is not expended on short-term purposes but, on the contrary, that it serves as a tool of development of long-term strategies guaranteed solely by the annual income.
In the course of the past ten years it has not always been certain if the Foundation Investment Fund would really fulfil the original intention stipulated by the law (the state support of foundations) and if it would not be eventually incorporated into the state budget. From this perspective, it is not significant which foundation succeeds in the competitive tender, what is important, however, is the fact that the entire foundation sector has succeeded because the financial resources earmarked for the sector have been retained and eventually distributed.
FOUNDATION ENDOWMENT OF CZECH FOUNDATIONS
At the beginning of 2002, the endowment of Czech foundations totaled up to 2,3 mld. CZK. Out of this amount, the endowment of the foundations, that are members of the Czech Donors Forum represents 700 mill. CZK.
A considerable participation of the state in the development of the foundation endowment was allowed partly by the transformation of the property of former cultural funds into foundations, and partly by the distribution of 500 mil CZK from the FIF. On the completion of the 2nd stage of the FIF distribution, the endowment of Czech foundations will exceed 3 mld CZK.
The increase of the endowment is a significant contribution towards the self-support of foundations. Since foundations are, beside the state and foreign donors, a substantial financial resource for other non-state non-profit organizations, such development reinforces the entire non-profit sector. And since foundations meet other needs than the state, their increasing economic emancipation strengthens the entire civil society.
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Material of Czech Donors Forum, Štěpánská 61, 116 02 Prague 1, Czech Republic