The First Hungarian Presidency Event 13-14 January 2011 Workshop

The primary aim of the workshop was to provide platform for dialogue between representatives of the civil sector and actors of the financial market in Hungary.

Moreover, reflection on the following concerns of sustainability was made with the assistance of Hungarian and other European experts on finances and civil sector:

1)    The past 20 years’ development in the Hungarian civil sector, current situation, civil society’s actual and potential role, assessment of results in relation to non-EU countries;
2)    Introducing 3 researches on civil society, the legal and financial environment of social enterprises founded by Hungarian civil actors and on the relationship between civil society and financial market actors;
3)    The current Hungarian and European examples of alternative partnerships and financial services, especially those addressing the civil sector; 
4)    The concept of social innovation and the financing of the application of this approach 
5)    The functioning and financing possibilities of social enterprises and (social) cooperatives;
6)     Ongoing reforms of financial regulations in the EU.

As a result we have found that social embededness of the sector state is very weak.

Additionally state resource and Structural Fund dependency of civil society actors is very strong, and in general these are basically the main elements of transition experience in civil society development in the region.

Putting an emphasis here rather on challenges then the positive outcomes, we found several reasons for such a dependency and for the lack of connections to other stakeholders of society: 

1)    The shift in attitude is still and ongoing process (“The state should solve everything!” temper constantly reappears, all social actors are striving for risk minimalization)
2)    State and EU secured grants, the project based and only result oriented operation is the primary that did not prove to be sustainable, also considering the fact that these are almost the only resources available
3)    The ability to access other resources is incredibly weak:

a.    the level of private donation (both from citizens or businesses) is very low, not strategic and capacities for reaching out to private resources (individual or corporate) are missing
b.    financial market actors do not invest in civil society based initiatives, they rarely provide financial services for civil society actors. (Banks do not consider civil society being a large market; civil society can weakly phrase its demands; social financing, social investment is basically unknown.)

c.    private income generation strategies are only applied in a few cases, services provided by CSOs are bought rather under average market price, there is a certain financial literacy within CSOs.

4)    There are still transparency related questions appearing because of the weak communication of impact and application of good governance principles at all stakeholders.

To respond these problems, we recommend these next steps (in Hungary, in the NMSs and also to be shared with the countries of the EU’s Neighbourhood):

1)    to create an enabling environment for risk taking at all levels of society (e.g. create granting systems, financial services that focuses on long term sustainability and encourages innovation, do not focus on risk minimalization)
2)    to develop the skills of civil society actors to use and to incorporate new, innovative fundraising techniques into their organizations in order to reach private donations
3)    to foster the transformation of CSOs operation in order to generate own income or profit (e.g. create social enterprises, become market actors, sell services, etc.)
4)    in addition to improving knowledge on innovative social investment strategies, to strengthen partnership between financial market actors (banks, credit unions) and civil society organizations in order to create financial services which can respond to the needs of civil society.