2% law: a milestone towards CSO sustainability in Moldova
Taxpayers can designate 2% of their paid income tax to CSOs from 2017 onwards. The mechanism became a reality thanks to our and partners joint effort and good cooperation with local CSOs and authorities.
The adopted designation mechanism allows taxpayers to allocate 2% of their paid income tax to CSOs and religious organizations.
Through Moldova Partnerships for Sustainable Civil Society Program (MPSCS) ECNL has been supporting the development of the 2% mechanism in Moldova since 2009 by providing technical assistance in drafting the legal framework, organizing conferences and study visits for state officials and CSOs, developing comparative case studies on European good practices of promoting the mechanism. The process of policy development has been very valuable, as the adopted mechanism was prepared in a participatory manner with active leadership of the civil society, and specifically, Legal Resources Center Moldova (CRJM).
Moldovan government also adopted the implementing regulation, which came into force in December. As of December 31, 2016, 413 CSOs registered as potential beneficiaries of the mechanism in the Ministry of Justice and the first results in raising funds will be available in Fall 2017.
Percentage designation mechanism is one of supplementary sources for financial sustainability of the CSO sector in Central and Eastern Europe. This is an indirect state support mechanism, which allows CSOs to mobilize domestic resources and diversify their income base. It is especially appealing to Moldovan CSO sector, which is heavily dependent on resources from foreign donors (almost 90% of funding for the sector is allocated from abroad) with few opportunities of state funding.
To share experiences of the counterparts in Central and Eastern Europe, in September 2016 ECNL presented case studies on practical issues with implementation of the percentage mechanism and facilitated discussion with participation of international experts at the Highlight Workshop on Domestic Resource Mobilisation in Chisinau. The case studies are available in English and Romanian.