Philanthropy for the People
12 September, 2013
There is a new draft law about philanthropy, charity and volunteerism. This law takes several important steps desperately needed in Georgia. For many years, legislation has suffered from a problem that mirrored a wider issue in Georgian society. Georgian laws, most importantly tax laws, have assumed that all people are selfishly motivated, will cheat every chance they can and are only interested in getting as much money for themselves as possible. With the neoliberal worldview of the previous government, many
senior officials believed that all businesses should peruse only money and pursuing any other goals was somehow socialistic and dangerous. Much of this is a product of the Soviet and communist systems, that talked of higher goals but were the most cynical regimes in history. Even now more than twenty years after the death of these systems, Soviet countries have the lowest social trust of any countries in the world.
But people are not completely selfish and businesses do not have to be motivated only by money. Some people are more selfish than others but that doesn't mean that many people in Georgia don't spend a great deal of their time and money helping other people or the environment. And businesses around the world often have goals other than making money. Self-interest can mix with selfless goals quite easily. Do people that work for NGOs do it for the salaries and travel opportunities or to help society? Both. Do Georgia's billionaires and millionaires give away money because they are nice or to build alliances? Both. Did Ilia and Akaki set up educational, cultural, and financial institutions to further their own national and political goals or because they were noble men with longterm points of view? Both.

The question this new draft law addresses is how can Georgian society begin to leave aside it's simplistic views about these issues. It defines terms and gives society and lawmakers a path to legislate these complexities. But it does another important thing, it gives Georigan citizens who pay income tax the ability to decide where 1% of their tax will go. This is a common and growing trend in many central European countries, started in Hungary, now in Poland and many others. The amount of money in tax an individual pays doesn't change, but all income tax payers can fill out a form that will say that one percent of their income will go to which ever NGO they designate. The eligible NGOs are held to very high standards of transparency and accountability.

Currently almost the only source of revenue for charitable and philanthropic activity is international. In practice in Georgia this generally means foreigners, mainly from America and Northern Europe, giving money to organizations operating in Georgia. But this system creates a group of people who know how to run organizations to get grants from foreigners. The assumption in Georgia when we talk about NGOs that they are organizations that get money from foreigners. But if Georgia adapts this 1% law, then organizations would have an opportunity to get funds via Georgians rather than by pleasing foreigners. And 1% of income tax revenue is a serious amount of money. If all citizens took advantage of this, then around eighty million lari a year would go to Georgian organizations, much more than currently comes from international donors. Even if only one quarter of citizens organized themselves to do the paperwork that would be more than international donors give to Georgian organizations.
Currently the system dominated by foreigners is not very transparent. This newly proposed system by it's very nature would be much more transparent which would be an important step forward. Currently Georgia is very politically polarized into two political camps. The most polarized people in each political camp then to try to force everybody else to be on one side or another. But this is not really how most people are; they may lean one way or another but they see advantages and disadvantages of each team. Greater transparency among NGOs, and a mix of international and domestic involvement in giving would help to prevent the perception by some that everybody and every organization is biased and has some hidden or not so hidden political agenda.

And finally, NGOs need to be able to get revenue besides just from writing proposals to donors. Currently the tax law will not allow for-profit entities to do anything other than make a profit. So for example a commercial law firm that wants to help poor people with legal representation for free creates suspicion at the revenue service. An NGO that prints books, cannot sell them at a cheap price below cost without problems. So just as for-profit companies should be able to donate time and money to good causes, NGOs should be able to make some money on their own in addition to their grant revenue, as long as whatever money they make is spent on their goals rather than on themselves. And that is fairly easy to legislate and this law does a good job of it.

Keep an eye on this law, it is very important. If it passes the way it is now, with it's one percent provisions, then the people of Georgia will be handed a powerful responsibility to designate where some of their tax funds go. Let's hope they don't push back the start date too much.