www.onepercent.hu 

   What is percentage philanthropy?
   What is the impact of percentage laws?
   Percentage Laws and the Sasakawa Central Europe Fund
   Why is a Percentage Philanthropy Project needed?
   Activities in the first phase of the project (April 2003 - March 2004)
   Activities in the second phase of the project (April 2004- March 2005)
   Activities in the third phase of the project (April 2005 - March 2006)   
   Activities in the fourth phase of the project (April 2006 – March 2008)
   
   What is percentage philanthropy?   
   Percentage philanthropy refers to legal mechanisms that allow taxpayers to allocate a certain
   percentage of their previous year's paid income tax to beneficiaries entitled to receive such
   funds. By the spring of 2003, percentage type laws had been adopted in four countries in
   Central and Eastern Europe: Hungary, Slovakia, Lithuania and Poland. At the end of 2003,
   Romania became the fifth country to adopt a percentage provision. The legal framework and
   mode of operation of the percentage laws differ in each country. The number and types of
   beneficiaries also vary but largely include non-governmental organisations (NGOs) carrying
   out public benefit activities. 

   The first percentage type law was introduced in Hungary in 1996. It is commonly referred to
   as the "1% Law" which from 1997 has allowed payers of personal income tax to designate
   1% of their previous year's tax to an eligible NGO or a listed public cultural institution.
   (Since 1998, taxpayers in Hungary have also been able to transfer an additional 1% of their
   tax to support the running costs of their church or a special government fund.) 

   The Hungarian 1% Law has served as a model to other countries in the region. In 2002 and
   2003 individual taxpayers in Slovakia were able to assign 1% of paid income tax to NGO
   beneficiaries. In Slovakia NGOs that wish to be potential 1% recepients are required to
   registered in advance. Amendments to Slovakia's Income Taxes Act in 2003 have increased
   the portion of tax individuals taxpayers can allocate to an eligible NGO to 2%, applicable from
   2004 onwards. The changes also mean that a new element in Slovakia's percentage system -
   the allocation of corporate tax by companies to eligible NGOs - starts at the new 2% level in
   2004, not the 1% level initially foreseen. The Slovak "2% from companies" is unique in
   Central and Eastern Europe.  

   The Lithuanian "2% Law" adopted in 2002 took effect in 2003 and from 2004 onwards
   taxpayers are able to request transfers of up to 2% of paid income tax to a wide range of
   beneficiaries that include both state institutions, churches, trade unions as well as NGOs. 

   In April 2003 Poland adopted its own version of a 1% system which took effect in January
   2004. Due to the parallel process of registering Polish NGOs as public benefit organisations -
   to be the beneficiaries of taxpayers' 1% transfers - the Polish 1% system is only expected to
   become fully operational in 2005. Whereas in Hungary, Slovakia and Lithuania it is the tax
   authority that transfers the portion of tax designated by taxpayers to beneficiaries, in Poland it
   is the taxpayers themselves who are responsible for making the transfer through a bank or
   post office.

   The operational arrangements for the new Romanian 1% provision, adopted in December
   2003, are being worked out in 2004. Taxpayers in Romanian are expected to be able to make
   use of this new option from 2005 onwards.

   Detailed information on the workings of the percentage systems in each country can be found
   on the Legislation and Key Documents and Study pages of this website.
    
   What is the impact of percentage laws?
   Percentage laws allow taxpayers a direct say in the distribution of state funds. In the context
   of countries that have only relatively recently emerged from communist rule, percentage laws
   also promote the revival of good citizenship and awareness of the third sector. In Central and
   Eastern Europe where average earnings are low and the financial background of NGOs is
   fragile, percentage laws are especially relevant because they
   
  • generate much needed revenue for NGOs and other types of organisations serving the
    public good
    • 
   
  • encourage a new form of "giving" by the tax-paying public without loss of personal
    income
    • 
   
  • educate the general public about philanthropic behaviour (though this is a much-
    debate point).

   A further outcome of percentage laws is the increased visibility and outreach of NGOs as a
   result of campaigns run each year to maximise public participation in the percentage schemes.

   A key element in the first phase of the Percentage Philanthropy Project (April 2003 - 
   March 2004) was to commission a study on the effects of percentage laws - both positive
   and negative - and initiate deeper reflection and consideration of the issues involved of
   this new form of "philanthropy".

   Percentage Laws and the Sasakawa Central Europe Fund
   The Sasakawa Peace Foundation's Central Europe Fund is supporting the core funding of the
   Percentage Philanthropy Project (also called the Promotion of "Percentage" Philanthropy in
   Central and Eastern Europe). 

   According to Naotaka Oh, Associate Program Officer of the Sasakawa Central Europe Fund,
   percentage laws "return the right to determine distribution to citizens, serve both to provide a
   new source of funds to the third sector and to forge links between citizens and nonprofit
   activities". Speaking about the Percentage Philanthropy Project in the spring 2003 newsletter
   of the Sasakawa Peace Foundation, SPF Voices, Mr Oh expressed the Sasakawa Central
   Europe Fund's hope that "dissemination of the knowledge of percentage laws gained through
   the experiences of Hungary, Lithuania, Poland and Slovakia, including the process leading to
   the enactment of such laws and the lessons learned, will lead to further transnational transfer
   of the innovative ideas of percentage laws."

   In an article in the same newsletter, Marianna Török, Director of NIOK discusses Hungary's
   "groundbreaking" 1% Law, NIOK's 1% campaign to encourage giving and the "regional
   ripple effect" - the spread of percentage laws to other countries in Central and Eastern
   Europe. 
   (This article can be found in SPF Voices, Newsletter of the Sasakawa Peace Foundation No.
   37, Fiscal Year 2003, Vol.1 or on the website of the Sasakawa Peace Foundation at 
   www.spf.org/e/publication/newsletter/pdf/2003_1.pdf)

   Why is a Percentage Philanthropy Project needed?
   This new trend in tax legislation has generated wide interest in other countries. There is now a
   sizeable pool of know how and practice in initiating and operating percentage laws as well as
   demonstrable results of such laws in providing a new source of funding for NGOs. The first
   phase of the project (April 2003 - March 2004) aimed to analyse and disseminate the different
   lessons learned and results achieved in the different countries during the process of
   developing and implementing percentage laws including the various methods of lobbying,
   implementation and campaigning.
    
   Project activities in the first phase of the project (April 2003 - March 2004) 
   
  • disseminating news and other information via this website and presentations
    • 
   
  • collecting legislation and key documents on percentage laws and their operation
    • 
   
  • bringing together key actors and experts to compare legislation and practice in
    countries with percentage laws
    • 
   
  • compiling a comprehensive English language study on Percentage Philanthropy with
    inputs and case studies from Hungary, Slovakia, Lithuania, Poland and Romania
    • 
   
  • a major international conference in Budapest on 19-20 January 2004 to present the
    Percentage Philanthropy study to countries interested in developing percentage laws
    • 
   
  • providing assistance to countries interested in developing percentage laws
    • 
   
  • planning follow-up activities for the next phases of this project.

   
   Activities in the second phase of the project (April 2004- March 2005)

  • a)In 3 new countries a partner institution or person
    • 
    

  • b)Provide professional assistance to countries that already have a percentage law or
    a draft and need to fine-tune their percentage philanthropy drafts.
    Assistance is provided upon request.
    Potential countries: Poland, Czech Republic
    • 
   
  • c)Provide immediate professional assistance to countries interested in percentage philanthropy
    but not in the main focus of the program
    Possible countries: upon request
    • 
   
  • d)Provide know how to countries in focus of the project
    • 

    • provide training on how to write policy papers for partner institutions
      (16-20 October 2004, Budapest)
      • 

    • provide reading materials on the methodology of policy paper writing
      • 
(See details among News)
    

  • e)provide "percentage philanthropy" know-how via expert pool of the first phase of the project
    • 

    • generate exchange of ideas among old and new percentage philanthropy countries
      (meetings, webchat etc.)
    

  • f)Maintain www.onepercent.hu to provide resources online


   Activities in the third phase of the project (April 2005 - March 2006)


   Activities in the fourth phase of the project (April 2006 – March 2008)

   THE OBJECTIVE OF THE RESEARCH

   The Nonprofit Information and Training Centre (NIOK) has been supporting through its work the
   implementation of the 1 % law in Hungary since 1996. In terms of the CXXVI. Act, so-called 1 % law, 
   which was enacted in 1996 and has been amended several times since, organizations with public 
   benefit activities can receive one percentage of any money paid in by tax-payers to the benefit of 
   Hungarians living in and outside the homeland. The law was met with interest all around Europe, 
   inasmuch as several nearby countries have already introduced it, while many other states have started 
   on its implementation. Our foundation takes part in publicizing the 1 % law and in improving its 
   applicability and efficiency in order to achieve that as many tax-payers offer as much money to as 
   many civil organizations as possible.

   This present research aims to measure the effectiveness of the 1 % law and of our work. On the basis 
   of national and international data we examine how philanthropy based on the 1 % tax regulation and 
   other donation techniques were changing in Hungary and in one of the nearby countries during the 
   last decade. Furthermore, we attempt to discover on the grounds of our hypotheses the nature of the 
   social and economic processes lying behind these changes. In our work we make use of the available 
   macro-economic, social and sociographic data, and the information concerning donation and the 
   incomes and resources of the civil sector, and last but not least of the findings of the researches and 
   analyses in connection with national and international philanthropy and with the activity of the civil 
   sector, applying them on the one hand to Hungary and on the other to the chosen nearby country, 
   while also analysing their changes in time.

   THE EXAMINED MULTITUDE (THE TARGET GROUP)

   Deriving from the nature of our analysis, the examined multitude includes on the one hand the entire 
   population of Hungary and of the chosen country (with special attention to the tax paying population) - 
   adding that other groups of philanthropists, as company sector, donating nonprofit organisations, 
   public sector and foreign donors, are also analysed tangentially - , on the other hand the entire circle 
   of the organisations of the civil sector in Hungary and in the given country. 
   According to our plans by examining the process of donation from two directions, from the 
   perspectives both of the donors and of the beneficiaries, we will be able to complement those 
   analyses, researches and series of figures which tackle the issue fundamentally only from one of the 
   above mentioned perspectives. 

   HYPOTHESES

   Our researches essentially rest on the following five hypotheses, confirming or refuting their validity.

   The first working hypothesis:
   If in two countries the macro-economic and social characteristics are similar (or the reasons behind 
   their differences can be clearly demonstrated), then the factors and processes influencing the 
   countries' philanthropy culture and the changes in the population's inclination to donate can be 
   compared with the variables characterizing the 1 % donation, by taking as a starting point the way how 
   the 1 % legal regulation was changing in that given period of time.

   The second working hypothesis:
   The implementation of the 1 % law and its continuous application have an effect on the formation of 
   the inclination towards donation.

   The third working hypothesis:
   The development of the 1 % philanthropy and other techniques of donation mutually influence each 
   other.

   The fourth working hypothesis:
   The 1 % law exercises influence with its primary and secondary effects over the activity of the civil 
   sector and also over its social, economic and legal environment.

   The fifth working hypothesis:
   The activity of a certain civil organisation is influenced by the implementation of the 1 % law. This 
   effect is different concerning organisations of various types. 

   THE RESEARCH METHODOLOGY

   Our research is conducted by combining the following three methods.

   a) examining the connection between the percentage mechanism and philanthropy 
   development, investigating the effect of the percentage mechanism over the whole of donation

   The processes in Hungary and in the selected country are analysed separately but from the same 
   aspects.

   1) We analyse on the basis of macro-economic data how the figures connected with and influenced by 
   the 1 % and other donations in the different countries were changing during the relevant period of time 
   after the implementation of the 1 % donation - which is in Hungary during the last decade (the period 
   lasting from 1996, 1997 to 2005).

   2) We describe the changes in the environment of the legal and economic regulation and their effects 
   on the whole of the social and political milieu.

   With the help of interviews, background researches and situation analyses, in which we explore the 
   effects that the legal and economic regulation and the related processes and social transformations 
   produced on the formation of philanthropy culture, and the influences they exercised over the trends, 
   changes and interrelatedness of the different forms of donation.

   b) describing the characteristics of the beneficiaries of percentage philanthropy, comparing it with 
   other forms of donations

   The processes in Hungary and in the chosen country are analysed separately but from the same 
   aspects.

   We examine the extent the actors of the civil sector in Hungary and in the chosen country had a share 
   in the 1 % and other donations. We compare in time the civil organisations which work in different 
   fields of activity, are different in size and are located in different regions according to the extent they 
   received 1 % and other donation.

   c) analysing the effect of percentage philanthropy over the life of the beneficiaries in practice 
   (communication, resource mobilization, work efficiency)

   We gather the information as the background analysis of the research and analyse the connection 
   between the civil organisations' collection of percentage donation and their efficiency in other fields. 
   The analysis covers the different types of civil organisations in the selected countries. 

   Making a comparative and summary analysis and anthology of studies

   Comparing the findings of the sub-researches, collating their experiences in accordance with the 
   objectives of the research.

   NIOK is planning to publish the findings of the researches not only through the www.onepercent.hu
   website, but in a form of a separate booklet, which is disseminated among NGOs and decision makers 
   of the countries interested in introducing percentage mechanisms and other interested parties.

   PERCENTAGE DESIGNATION AS PART OF A CULTURE PHILANTHROPY


   top of the page
Sasakawa Peace FoundationSasakawa Central Europe Fund