State Funding of Welfare Organizations

Socially oriented organizations operating in Georgia offer services to population, provision of which is viewed as Government obligation. Despite this fact, share of Government funds in total incomes of welfare organizations is low. Surveys conducted in this field indicate that welfare organizations operating in Georgia are immensely dependent on funds from foreign donors. The latest national survey conducted in 2007 "Study of Development of Welfare Organizations in Georgia” indicates that share of funds from donors is 87.7% in total incomes of welfare organizations (Diagram #1).

Nevertheless, among other sources of income (business, donations from private individuals, self-financing, state funding), share of state funding is the biggest (Diagram #2)..

The Survey further revealed state structures, with financial support of which welfare organizations have implemented projects(Diagram #3).

State-funded projects were mainly implemented via two sources: local municipality budget and ministries (Ministry of Education and Science of Georgia and Ministry of Labour, Health and Social Protection of Georgia). Interviewed organizations have implemented projects with support of three structures under the Ministry of Labour, Health and Social Protection: Department for Public Healthcare, United State Fund of Social Insurance of Georgia and State Agency for Employment and Social Assistance of Georgia.

With the support of local self-governances the organizations have mainly implemented single measures, e.g.: sound-tracking books for the blind, single monetary assistance for the elderly, prophylactic medical examination, New Year presents, provision of beneficiaries with bread, etc.

In total, in last two years local self-governances have provided organizations with 125,603 GEL (Information Provided by Interviewed Organizations).

Projects funded by the ministries are more long-term and are directed at a long-term care (1-2 years) for beneficiaries of organizations: day care center, social integration of children and people with disabilities, rehabilitation, in-house services, inclusive kindergarten, publication of learning methodological handbooks, etc.

In total, in last two years the ministries have provided organizations with 1,108,428 GEL (Information Provided by Interviewed Organizations).

Currently, the procedure of state purchase of social services is regulated by Law of Georgia on Public Procurement. However, majority of interviewed organizations offering services to the state believes that this mechanism is not effective (Diagram #4). due to the following factors: difficulties in preparing the tender documentation, inefficient tender procedures, low prices established by the state on services, type of tender agreement, which is the state order and is taxed under the same regime as economic activity. In addition, tender-related information is not accessible to a part of welfare organizations, especially in the regions.

One of the main objectives of the Project “Creating Enabling Environment for Welfare Organizations in Georgia” is elaboration of effective mechanism of state financing of welfare organizations, which shall replace the current mechanism viewed as ineffective by welfare organizations. In this connection, Civil Society Institute works on elaboration of alternative model of state funding of welfare organizations. The model envisions elaboration of draft law on state grants and subsidies. Adoption of the law on state grants/subsidies will automatically replace the monetary means issued by the state in beneficial tax regime (as opposed to current mechanism, which is taxed as a commercial activity), which is one of the strongest arguments in favor of the model. This shall enable welfare organizations to conduct operations in usual tax environment and utilize the funds to achieve main objectives to a maximum extent (For a detailed information on the proposed model, please refer to: Georgian Not-for-Profit Legislation – Challenges and Perspectives ).

State Programmes in Social Field

• Order of Minister of Labour, Health and Social Protection of Georgia #40/N of February 7 2007 - 2007 Health Protection Programmes (Georgian Version)
• Order of Minister of Labour, Health and Social Protection of Georgia #102/N of March 26 2007 - 2007 State Program for Medical-Social Expertise and Social Rehabilitation of People with Disabilities, Elderly and Children deprived of Family Care (Georgian Version)