STATEMENT H.E.Mr.Marat Azilkhanov, Deputy Minister of Culture and Sports of the Republic of Kazakhstan at a briefing on a Draft law on NGOs in the Ministry of Foreign Affairs

The Draft law “On amendments and additions to some legislative acts of Kazakhstan on the activities of NGOs” is evolved on the basis of discussions that for many years have been underway in the Kazakhstan society on the improvement of legislation on NGOs.
The Draft law reflects the standards, which are most expedient for the development of the “third” sector: grants for NGOs, Bonuses for NGOs, and a special procedure for the allocation of funds for NGOs. To implement this procedure there is being established a separate non-profit organization – Operator, which will give out grants.
Adoption of the Draft law will create new opportunities for NGOs, will create favorable conditions for the development of partnership between the government, NGOs, business, and foreign donors.

Grants
Financing of NGOs on a grant basis is a common way of state support, and exists in all European countries, the USA, the CIS, in Ukraine, Russia.
The method of financing NGOs by “grants for NGOs” has the following advantages.
Firstly, Grants will be allocated for financing projects and programs developed by the NGOs themselves. That is, NGOs may formulate a social problem themselves and offer a solution to Operator. NGOs know better the needs and demands of the population, and the grant allocation will be arranged exactly for this purpose.
Secondly, NGOs will be able to use part of the grant for their own institutional development, including strengthening their material and technical basis, or for upgrading qualification of their staff members. At present Kazakh NGOs lack such a possibility. With this capability, NGOs will be able to develop and strengthen their material potential.
The present legislation envisages only one type of NGOs financing from on the part of the state – ie, through the state social order. However, the state social funds have to be spent only on servicing the state order. NGOs cannot spend any of these funds for their own development.
Thirdly, distribution of grants will be arranged according to a special procedure designated for NGOs procedure. It will be organized under the new rules, which are specially adapted for NGOs and developed in collaboration with NGOs.
This procedure will not be guided by the law on public procurement. Thus, the process of tender for NGOs will be free of the complicated bureaucratic procedures, will become more transparent, and distant from the immediate customer, ie from the state agency.
Grants will be another opportunity for the realization of social projects of NGOs in the long term, including maintaining a constant work of hospices, rural resource centers, information services, human rights organizations and other.

Bonuses
The Draft law also proposes introduction of “Bonuses (awards) for NGOs.” Bonuses will be yielded on behalf of the Government to organizations that have successfully implemented the social projects.
Bonuses are offered to give to the candidates on the basis of public offerings and public evaluation of their activities.

  • A fully transparent procedure for granting Bonuses is envisaged:
    any individual or legal entity may submit candidates for Bonuses;
  • selection of candidates will be carried out by the Coordination Council for Cooperation with NGOs under the authorized body in the field of NGOs. The Council will include representatives of government agencies, NGOs, and prominent public figures;
  • each application for the Bonuses will be assessed by a Expert Committee formed from among the Council members and independent experts;
  • Bonuses will be distributed among the members of NGOs, and will be spent on statutory objectives of the organization, institutional development, upgrading qualification of the staff, and their strengthening material base;

    Bonuses are another tool for financial support to NGOs.

Both grants and awards will create new opportunities for the development of non-governmental sector. We do not limit the means for NGOs within the present a crisis. On the contrary, we diversify the assistance that we can provide, and build the most favorable environment for the development of civil society in Kazakhstan.

Operator for grants funding
Operator will be created as a non-commercial joint stock corporation. This is potentially an open structure that is focused on the future involvement of the shareholders of the business or foreign donors.
Operator will perform the role of the Fund to generate financial means for working with NGOs. This mechanism of funding NGOs works abroad since long ago. For example, in Germany and other countries there are sectoral funds to support NGOs projects.
Draft law also proposes introduction of this practice of financing in Kazakhstan. It will NOT monopolize the sphere of state funding of NGOs, because the mechanism of state social order still remains at the disposal of NGOs and government agencies.
It is also NOT intended as a sole or “single” fund. In future we plan to use the German model and create similar sectoral funds. For example, now Operator on grants is being established in the form of a similar fund under the Ministry of Culture and Sports. Further on, similar funds might be created in the agencies in charge of medicine, education, and social protection.
Creation of Operator in the form of non-profit and non-commercial joint-stock corporation will provide a high level of transparency of its work.
The Operator’s Board of Directors will also consist of the representatives of NGOs and the expert community. This composition will change every two years on a rotational basis.
The Board of Directors is the main executive body and will collectively make decisions on arrangement of Operator’s work.
NGO projects will be selected for grants by an Expert Committee. It will work on the principle of similar committees organized by USAID for selection of projects. It will include only experts and social activists independent of the Operator.
Thus, Operator will work as the Fund and will be open and transparent to public scrutiny.

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Operator’ work does NOT create a monopoly on the allocation of grants to NGOs in Kazakhstan. Adoption of the Draft law in NO way affects the current procedure for funding Kazakhstani NGOs projects by foreign donors.
Our legislation is very much liberal in matters of foreign funding of NGOs. Our country demonstrates maximum openness and trust of foreign partners and donors.
Many countries have set a tight control over NGO funding from abroad, whereas in Kazakhstan, the government annually replenishes the list of donors, which can enjoy a variety of tax benefits. All of them are fixed in the Budgetary and Tax Codes. The present Draft law does NOT propose any changes to the mentioned above Code.
Moreover, in future, Government does not intend to limit the possibility of financing the “third sector”, especially within the context of the global economic crisis.

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I assume that these issues arise because the Draft law contains the notion “Grant for NGOs”, which is associated with the notion of “Grant” in the Tax Code.
These are completely different notions, and it is important to distinguish between them.
Firstly, the notion “Grant for NGOs” is used only in the framework of the present Draft law. It refers to funds that Operator provides to NGOs to implement their initiatives in the form of social programs and projects.
In turn, the notion “Grant” in the Tax Code is used to designate the property or funds which donors provide to NGOs. This term is used only in order that donors had tax privileges on the transferred property or funds.
Draft law was actively discussed by the Working Group under the Ministry of Culture and Sports of the Republic of Kazakhstan, which included Kazakh and foreign NGOs.
It is upon their recommendations the Draft law includes a separate rule, which guarantees Operator’s non-interference in the activities of foreign donors when they render grants to Kazakh NGOs.
Article 6, Item 1, i.e “Grants”, has been supplemented by a separate paragraph 5. In particular, it reads: “This Article shall not apply to relations arising in the process of awarding grants, which are governed by the Code of the Republic of Kazakhstan” On taxes and other obligatory payments to the budget ” (Tax Code) and other laws of the Republic of Kazakhstan.”

Secondly, the Draft law divides “grants to NGOs” allocated by Operator, into government and non-government grants. The government grants will be formed at the expense of the state budget.
Non-government grants to NGOs are intended to be formed from the financial means, which will be voluntarily transferred to Operator from the extra-budgetary sources. These sources might be any non-state actors, including the Kazakhstan’s business structures or foreign donors.

Thus, the Draft law provides only for the opportunity for Operator to work with a number of foreign donors and international organizations. This feature is borrowed from the practice of foreign countries («fund raising»). The Draft law contains NONE of any restrictions or additional rights of Operator on the property or funds rendered to NGOs by donors.
Thus, we see that the Draft law does not contain any provisions that could restrict or block donors from funding Kazakhstani NGOs.

Financing NGOs that are engaged in human rights from the state social order and from grants system.
Allocation of grants envisages a wide range of areas of NGOs’ participation in the implementation of social projects, including on the issues of human rights and democracy.
Sub-paragraph 10) of Article 5 contains the thematic area – “protection of rights and legal interests of citizens and organizations.” In accordance with Article 6 of the Law of the Republic of Kazakhstan “On Citizenship of the Republic of Kazakhstan”, “foreigners and stateless persons enjoy in Kazakhstan the rights and freedoms and bear the responsibilities established for citizens, unless otherwise provided by the Constitution, laws and international treaties.”
In other words, the scope of the state social order and grants for NGOs would cover, inter alia, the rights of migrants, foreigners and stateless persons.
It is also worth noting that NONE of the areas of implementation of the state social order within the existing Law “On the state social order” have been excluded within the framework of the present Draft law.
Human rights NGOs while interacting with Operator may freely implement their ideas and projects.

Database of NGOs
The proposed introduction of the NGOs database is a modern and important element for the development of the civil society.
It aims to address many sensitive issues, which are necessary for the development of NGOs.
Firstly, it will simplify the work on the arrangement of tenders for NGOs.
Due to the fact that all of the information about the NGOs will be on an open and unified information resource of NGOs, contests for NGOs will turn into a competition of ideas and projects, without excessive legal and bureaucratic complications.
Secondly, the database will allow to structure the work of the civil society sector as a separate participant of economic relations in the society.
At present no one knows the exact number of NGOs in the country, nobody knows what they are specifically involved in, how many jobs their sector creates, what are the professional skills of the NGOs staff, and which requirements and needs of the population these NGOs are focused.
The NGOs database will allow to answer all these questions and help build up a clear structure of partnership between the state, the society, businesses and NGOs.
Thirdly, the database introduces the principle of transparency of non-governmental and charity organizations. This principle is inherent for the success of NGOs in the society and for enhancement of confidence on the part of business and major donors.
As part of the reforms this principle is introduced not only for NGOs. It will allow make all the processes of interaction between government, business and NGO transparent, open and comprehensible to the public.

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In many democratic countries, the principle of transparency is in the basis of relations between the state, society and non-governmental organizations.
This principle is based on different approaches in the different countries. In America and Russia a very detailed mandatory transparency of foreign investments is of paramount importance.
In the UK, to have a special status and privileges, NGOs must be transparent for all charitable funds being transferred to their accounts, and to comply with a special code of ethics.
In Germany and France it is important to observe the principle of professional preparedness and meet the declared sectoral specialization.
Kazakhstan proposes to introduce the principle of common transparency and public awareness.

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The proposed in the Draft law NGOs database will not contain anything new. It will contain just information, which NGOs had been required to submit to different agencies for many years in accordance with current legislation.
The database will combine this information and will allow to highlight the civil society sector as a self-sufficient, confident and open participant of socio-economic processes.

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Transparency and openness is an important step towards strengthening the role and importance of NGOs in the society.
As for the rules that provide for the responsibility for submitting complete information on their activities, are intended only to ensure equal participation in this process of all the representatives of the civil society sector. No liability – no clear compliance to law.
The Draft law heavily focuses just on the conscientiousness and law-abiding of NGOs themselves, because the measure of liability provided for in the Draft law, are quite soft. Many countries of the world use much tougher approach.

The authorized body in the field of NGOs
It is also proposed to designate an authorized body for interaction with NGOs. The authorized body will coordinate the activities of Operator, as well as all other state bodies in the field of cooperation with NGOs.
In addition the authorized body will ensure the work of the Coordination Council for Cooperation with NGOs.
The authorized body on NGOs is NOT given the right to terminate the activities of NGOs. This issue, if it occurs, will be decided by the Court.

I wish to emphasize once again the following.
The Draft law aims to support the non-governmental sector, the development of the NGJS capacities, and to create conditions for greater transparency and openness of the non-governmental sector. The Draft law does Not squeeze the activities of NGOs, does NOT prohibit foreign funding, but rather complements it with new amounts of funding from the state budget.