One of the key challenges CSOs in Armenia face is financial sustainability. The culture of giving is not yet quite developed among individuals and businesses. Organisations that raise major amounts through crowdfunding are typically foreign CSOs and/or raise funds among the Diaspora. Understanding better the landscape of philanthropy and identifying legal reforms that may be needed to promote the culture of giving is the first step towards improving practices.
With support from ECNL, the NGO Centre in Armenia just published its mapping of issues and specific recommendations on how the government, businesses and CSOs could improve the environment for philanthropy. The research studies the existing legal regulation on various methods for fundraising from both companies and individuals. It also explores to what extent the regulation is easily implemented in practice through crowdfunding platforms; donation text messages; credit card and online giving; street/public collections; charitable boxes; online collections; charitable lotteries and auctions; etc. In addition, it looks at bank practices; taxation of donations; reporting requirements as well as government oversight over the process; etc.
Key findings
Some of the main findings the report reveals:
- While there is a Law on charity that provides specific benefits for charitable projects, the incentives provided under the law are insufficient. Moreover, the incentives are available only if the projects are implemented or funded by foreign countries, their diplomatic missions, international intergovernmental organisations, etc. While the law may be useful for large-scale and long-term projects, in the case of small-budget, short-term projects, CSOs rarely apply for tax exemption.
- There are no or only minor benefits for provision of free services or donations in kind.
- There are no tax benefits for individual donors.
- While it is easy to open a bank account to collect donations, bank fees for donations from abroad are quite high and therefore the mechanism for collecting small amounts from many people does not work effectively.
- The use of crowdfunding platforms is not really developed in Armenia although a recent years have seen a positive trend.
While in Armenia diaspora fundraising is traditionally strong, local collection campaigns are not so effective and do not raise significant amounts. However, the war in Nagorno-Karabach has brought an outpour of support and donations from within Armenia too. According to Hayastan All-Armenia Fund, the amount of collected funds in the humanitarian campaign called “We are our borders” has reached 150 million USD from 73 countries. The largest amount of funds for the campaign comes from the US but at the second place with more than 33 % of the total donations is Armenia itself.
What’s next?
The report provides a number of recommendations addressed to the government, as well as to companies and CSOs. As a next step, the NGO Centre will engage in advocacy for addressing the problems identified in the research. ECNL will continue to support a more enabling environment for philanthropy in Armenia.
Find the full report below: