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ვახტანგ ნაცვლიშვილი
2019
ეს კვლევა გამოიცა ევროკავშირისა და კონრად ადენაუერის ფონდის მხარდაჭერით,
პროექტის „სამოქალაქო საზოგადოების განვითარების ინიციატივა” ფარგლებში. მის
შინაარსზე პასუხისმგებელია „საქართველოს სტრატეგიული კვლევებისა და განვითა-
რების ცენტრი“ და შესაძლოა, რომ იგი არ გამოხატავდეს ევროკავშირისა და კონრად
ადენაუერის ფონდის შეხედულებებს.
კვლევის შესახებ 6
კვლევის მიზანი და სამიზნე აუდიტორია 6
კვლევის მეთოდოლოგია და წყაროები 6
კვლევის სტრუქტურა და ტერმინოლოგია 6
1. ინდივიდუალური მოხალისეობა.................................................... 17
სფეროს მიმოხილვა 17
სამართლებრივი გარემო 19
საგადასახადო პოლიტიკა 21
3. კორპორაციული შემოწირულება და
კორპორაციული მოხალისეობა..................................................... 27
სფეროს მიმოხილვა 27
სამარლებრივი მხარე 30
საგადასახადო პოლიტიკა 32
5. სექტორთშორისი თანამშრომლობა............................................... 37
სფეროს მიმოხილვა 37
სამართლებრივი მხარე 40
საგადასახადო პოლიტიკა 41
6. სოციალური მეწარმეობა............................................................... 43
სფეროს მიმოხილვა 43
სამართლებრივი მხარე 45
საგადასახადო პოლიტიკა 48
4
7. სათემო ფონდი............................................................................. 50
სფეროს მიმოხილვა 50
სამართლებრივი მხარე 52
საგადასახადო პოლიტიკა 53
ბიბლიოგრაფია............................................................................ 58
5
კვლევის შესახებ
6
კვლევის შესახებ
7
არასახელმწიფო დაფინანსება საქართველოში:
შემაჯამებელი მიმოხილვა
8
არასახელმწიფო დაფინანსება საქართველოში: შემაჯამებელი მიმოხილვა
5,5
5
4,5
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
9
არასახელმწიფო დაფინანსება საქართველოში: შემაჯამებელი მიმოხილვა
10
არასახელმწიფო დაფინანსება საქართველოში: შემაჯამებელი მიმოხილვა
8 1996 წელს მიღებული რედაქცია გრანტის გამცემ სუბიექტთა შორის სახელმწიფო უწყებებს
არ მოიაზრებდა. დამოუკიდებლობის მეორე ათწლეულის ბოლოს, 2009 წელს საქართველოში
შეიქმნა საზოგადოებრივი ორგანიზაციების სახელმწიფო დაფინანსების ერთიანი ფონდი (საქ-
მიანობა 2013 წელს შეწყვიტა, თუმცა ლიკვიდაციისთვის საჭირო პროცედურა არ გაუვლია),
ხოლო 2010 წელს შეტანილი ცვლილების შედეგად, გრანტების შესახებ საქართველოს კანონში
მოცემულ გრანტის გამცემ სუბიექტთა ჩამონათვალს საჯარო სამართლის იურიდიული პირი
დაემატა. 2011 წლის შესწორების შემდეგ, გრანტის გამცემ სუბიექტთა სიაში გაჩნდა საქართ-
ველოს სამინისტრო, ხოლო 2017 წლის ცვლილებით – საქართველოს სახელმწიფო მინისტრის
აპარატი და აფხაზეთისა და აჭარის ავტონომიური რესპუბლიკის სამინისტროები. იხ. გრანტე-
ბის შესახებ საქართველოს კანონი (პარლამენტის უწყებანი, 19-20, 30/071996).
9 საზოგადოებრივი ორგანიზაციების სახელმწიფო დაფინანსების შესახებ სამოქალაქო საზოგა-
დოების ინსტიტუტი მუშაობს. ინსტიტუტმა ევროკომისიის მხარდაჭერით მოამზადა სახელმწი-
ფო დაფინანსების შესახებ საერთაშორისო და ადგილობრივი პრაქტიკისა და კანონმდებლობის
კვლევა და, ამჟამად, ქართული მოდელის შემუშავების პროცესშია. ვრცლად იხ. სალამაძე, ფა-
ნიაშვილი 2017. შესაბამისად, ამ საკითხს ამ მიმოხილვაში ნაკლები ყურადღება დაეთმობა.
11
არასახელმწიფო დაფინანსება საქართველოში: შემაჯამებელი მიმოხილვა
12
არასახელმწიფო დაფინანსება საქართველოში: შემაჯამებელი მიმოხილვა
13
არასახელმწიფო დაფინანსება საქართველოში: შემაჯამებელი მიმოხილვა
18 საქართველო 139 ქვეყანას შორის 124-ე ადგილზეა მოხალისოების მაჩვენებლით, ხოლო 137-ე ად-
გილზე, – საზოგადოებრივი ორგანიზაციის მიმართ გაცემული ფინანსური შემოწირულების მაჩვე-
ნებლით. ვრცლად იხ. CAF, 2017.
14
არასახელმწიფო დაფინანსება საქართველოში: შემაჯამებელი მიმოხილვა
(ა) საზოგადოებრივი ორგანიზაციების წილი, რომლებსაც 2016 წელს დაფინანსება ჰქონდათ მი-
ღებული ბიზნესისგან: 9%
15
არასახელმწიფო დაფინანსება საქართველოში: შემაჯამებელი მიმოხილვა
16
1. ინდივიდუალური მოხალისეობა
სფეროს მიმოხილვა
17
1. თავი
ქვეყნის მონაცემებს უყრის თავს, 124-ე ადგილს იკავებს (ibid). კავკასიის კვლე-
ვითი რესურსების ცენტრის ბოლო კვლევის მიხედვით, 2016 წელს შესწავლილ
282 საზოგადოებრივ ორგანიზაციაში მოხალისედ 5901 ადამიანი მუშაობდა
(CRRC, 2018). ამავე დროს, ადგილობრივი გამოკითხვები აჩვენებს, რომ 2012
წლიდან 2015 წლამდე 8 პროცენტით გაიზარდა და 73 პროცენტი შეადგინა იმ
მოქალაქეთა რაოდენობამ, ვინც მიიჩნევს, რომ მოხალისეობა ღირსეული მო-
ქალაქეობის მნიშვნელოვანი ნაწილია (CRRC, 2015). 2018 წელს ჩატარებული
გამოკითხვის მიხედვით, მოსახლოების 37 პროცენტი მზადყოფნას გამოთქვამს
ითანამშრომლოს ისეთ საზოგადოებრივ ორგანიზაციასთან, „რომელიც თემის-
თვის და ქვეყნისთვის საჭირბოროტო საკითხების მოგვარებაზე ითანამშრომ-
ლებდა“ (CRRC, 2018).
როგორც ვხედავთ, ერთი მხრივ, მოხალისეობის მიმართ მოქალაქეთა და-
დებით დამოკიდებულებასა და, მეორე მხრივ, მოხალისეობის რეალურ პრაქ-
ტიკას შორის მნიშვნელოვანი შეუსაბამობა არსებობს. ასეთი დიდი სხვაობა
სხვადასხვა ფაქტორის გათვალისწინებით შეიძლება აიხსნას. სანამ მოხალი-
სეობის სამართლებრივ რეგულირებასა და საგადასახადო პოლიტიკას შევის-
წავლით, უნდა აღვნიშნოთ, რომ საზოგადოებრივი ორგანიზაციები, რომლებიც
მოხალისეთა შრომის უპირველესი მიმღებნი უნდა იყვნენ, ქვეყანაში დაბალი
ნდობით სარგებლობენ. ბოლო მონაცემების მიხედვით, საზოგადოებრივ ორგა-
ნიზაციებს მოსახლეობის 28 პროცენტი ენდობა (G-PAC, 2014); ამასთან, 2015
წელს მოსახლეობის მხოლოდ 27 პროცენტი მიიჩნევდა, რომ საზოგადოებრივი
ორგანიზაციები მათთვის მნიშვნელოვან საკითხებზე მუშაობენ (USAID, 2017).
2018 წლის კვლევის მიხედვით, საზოგადოებრივი ორგანიზაციების მიმართ მო-
სახლეობის ნდობა 28 პროცენტს არ აღემატება – დაახლოებით მსგავსი ნდობით
(32 პროცენტი) სარგებლობს სასამართლო ხელისუფლება, რომელსაც საზოგა-
დოებრივი ორგანიზაციები ხშირად აკრიტიკებენ (CRRC, 2018). ეს რიცხვები
მიანიშნებს, რომ თავად საზოგადოებრივ ორგანიზაციებსაც აქვთ სამუშაო მო-
სახლეობის ნდობის მოპოვებისა და, შესაბამისად, მოხალისეების მობილიზების
მიზნით.
აღსანიშნავია, რომ „ახალგაზრდული პოლიტიკის განვითარების პროგრამის“
ფარგლებში, 2015 წელს საქართველოს სპორტისა და ახალგაზრდობის საქმეთა სა-
მინისტრომ „მოხალისეობის განვითარების პროგრამა“ დაიწყო. პროგრამის მიზანია
ეროვნულ დონეზე მოხალისეობის ინსტიტუტის გაძლიერება, მოხალისეობის გზით
ახალგაზრდებში სამოქალაქო ცნობიერების ამაღლება და მოხალისეობით დაინტე-
რესებული ახალგაზრდების რაოდენობის გაზრდა ქვეყნის მასშტაბით. პროგრამის
ფარგლებში მოხალისეთა ერთიანი ელექტრონული ბაზა22 შეიქმნა. საგულისხმოა,
რომ ეს ბაზა არ არის საჯარო და საზოგადოებრივ ორგანიზაციებს მისი გამოყენება
პირდაპირ არ შეუძლიათ. საკუთრივ სამინისტრო მოხალისეთა შრომას სხვადასხვა
სპორტული და ახალგაზრდული ღონისძიების ფარგლებში იყენებს.
18
ინდივიდუალური მოხალისეობა
სამართლებრივი გარემო
19
1. თავი
20
ინდივიდუალური მოხალისეობა
საგადასახადო პოლიტიკა
21
1. თავი
22
2. ინდივიდუალური შემოწირულება
სფეროს მიმოხილვა
23
2. თავი
სამართლებრივი გარემო
24
ინდივიდუალური შემოწირულება
საგადასახადო პოლიტიკა
25
2. თავი
26
3. კორპორაციული შემოწირულება და
კორპორაციული მოხალისეობა
სფეროს მიმოხილვა
27
3. თავი
28
კორპორაციული შემოწირულება და კორპორაციული მოხალისეობა
40 ეს, სხვა საკითხებს შორის, განსხვავებული ტიპის საწარმოთა მიმართ განსხვავებული მიდგომის
დანერგვას საჭიროებს. მაგალითად, ევროპული კომისია ცალკე გამოყოფს სოციალური პასუხისმ-
გებლობის რეკომენდაციებს მცირე და საშუალო ბიზნესისთვის (European Commission, 2013).
41 უნდა აღინიშნოს, რომ კორპორაციული სოციალური პასუხისმგებლობის მიმართ ადეკვატური
მოლოდინების განსაზღვრა ერთ-ერთი უმნიშვნელოვანესი საკითხია. ხშირად ისე ხდება, რომ
მის მიმართ უფრო მაღალი მოლოდინი არსებობს, ვიდრე ეს პრაქტიკულად შესაძლებელია.
ყველა სოციალური და გარემოსდაცვითი პრობლემის მოგვარება, ცხადია, ბიზნესის კეთილი
ნების საფუძველზე ვერ მოხდება. თუმცა, ბიზნესქცევის ეთიკურ სტანდარტებს ამ პრობლემების
მოგვარებაში წვლილის შეტანა შეუძლიათ.
42 გაეროს განვითარების პროგრამის შიგნით ჩატარებული კვლევის მიხედვით, შრომითი უფლებები
საქართველოში ყველაზე ხშირად დარღვეულ უფლებად სახელდება. ვრცლად იხ. UNDP, 2017.
43 მაგალითად, სერვისის მიმწოდებელი, მოდარაჯე (watchdog), ანალიტიკური (Think Tank)
საზოგადოებრივი ორგანიზაციები.
29
3. თავი
სამართლებრივი გარემო
30
კორპორაციული შემოწირულება და კორპორაციული მოხალისეობა
31
3. თავი
საგადასახადო პოლიტიკა
32
კორპორაციული შემოწირულება და კორპორაციული მოხალისეობა
33
4. სოციალური და გავლენის მქონე ინვესტირება
სფეროს მიმოხილვა
51 GIIN 2009 წელს დაფუძნდა და მხარს უჭერს სოციალური ინვესტირების შესახებ ცნობიერების
ამაღლებას საერთაშორისო დონეზე.
52 2000 წელს შვედეთში, 5 პარტიის კონსენსუსის საფუძველზე, პარლამენტმა მიიღო კანონი, რომე-
ლიც სახელმწიფო საპენსიო ფონდების მართვის ორგანოს ავალდებულებს, ყოველწლიურად მოამ-
ზადოს ანგარიში; ანგარიში შეიცავს ინფორმაციას იმის შესახებ, თუ რამდენად ითვალისწინებს
მმართველი ორგანო საპენსიო ფონდების დაბანდებისას სოციალური გავლენის მქონე ინვესტირე-
ბის მოთხოვნებს.
34
სოციალური და გავლენის მქონე ინვესტირება
სამართლებრივი გარემო
35
4. თავი
საგადასახადო პოლიტიკა
36
5. სექტორთშორისი თანამშრომლობა
სფეროს მიმოხილვა
37
5. თავი
38
სექტორთშორისი თანამშრომლობა
39
5. თავი
სამართლებრივი გარემო
62 სამოქალაქო კოდექსის 147-ე მუხლის მიხედვით, ქონება არის ყველა ნივთი (უძრავი და მოძრავი),
ასევე არამატერიალური ქონებრივი სიკეთე (მაგალითად, მოთხოვნის უფლება), რომელთა ფლობა
აკრძალული არ არის კანონით ან არ ეწანააღმდეგება ზნეობრივ ნორმებს.
63 გარდა ადგილობრივი თვითმმართველობისა – ადგილობრივ თვითმმართველობას უფლება არ აქვს
გასცეს გრანტი.
64 გრანტების შესახებ საქართველოს კანონის მე-4 მუხლის მიხედვით გრანტის მიღების უფლება აქვს
საქართველოს სახელმწიფოს საქართველოს პრემიერ-მინისტრის მიერ უფლებამოსილი ორგანოს
სახით, საქართველოს მთავრობას საქართველოს მთავრობის მიერ უფლებამოსილი ორგანოს სა-
ხით, საქართველოს სახელმწიფო და ადგილობრივი თვითმმართველობის ორგანოს, საქართველოს
საჯარო სამართლის იურიდიულ პირს.
40
სექტორთშორისი თანამშრომლობა
საგადასახადო პოლიტიკა
41
5. თავი
42
6. სოციალური მეწარმეობა
სფეროს მიმოხილვა
43
6. თავი
67 თავისთავად იგულისხმება, რომ სოციალური საწარმოს სამუშაო სფერო ვერ იქნება ე.წ. არაეთიკუ-
რი ეკონომიკის სფეროები, მაგალითად, თამბაქოს ან იარაღის ბიზნესი. სხვა შეზღუდვებზე მინიშ-
ნება არ გვხვდება შესაბამის ლიტერატურაში.
68 საგულისხმოა ისიც, რომ ქართულ საზოგადოებრივ ორგანიზაციებს ხელი მიუწვდებათ საერთა-
შორისო დახმარებაზე, განსხვავებით ევროპის ქვეყნებისგან, სადაც საერთაშორისო დონორების
დაფინანსება შეზღუდულია.
44
სოციალური მეწარმეობა
სამართლებრივი გარემო
45
6. თავი
46
სოციალური მეწარმეობა
47
6. თავი
საგადასახადო პოლიტიკა
48
სოციალური მეწარმეობა
49
7. სათემო ფონდი
სფეროს მიმოხილვა
50
სათემო ფონდი
51
7. თავი
სამართლებრივი გარემო
52
სათემო ფონდი
საგადასახადო პოლიტიკა
53
7. თავი
54
8. ფონდების მასობრივი შეგროვება
სფეროს მიმოხილვა
55
8. თავი
სამართლებრივი გარემო
56
ფონდების მასობრივი შეგროვება
საგადასახადო პოლიტიკა
57
ბიბლიოგრაფია
მურღულია, შ., მოდებაძე, ზ., მხეიძე, ი., დათუაშვილი, ე. (2017). სოციალური მეწარმეობის
სახელმძღვანელო (მეორე გამოცემა). საქართველოს სტრატეგიული კვლევებისა და განვი-
თარების ცენტრი.
ნაცვლიშვილი, ვ. (2011). მოხალისეობა – საერთაშორისო პრაქტიკა და საქართველო. სამო-
ქალაქო საზოგადოების ინსტიტუტი.
სალამაძე, ვ., ფანიაშვილი, ლ. (2017). საქართველოში საზოგადოებრივი ორგანიზაციების
სახელმწიფო დაფინანსების მექანიზმები. სამოქალაქო საზოგადოების ინსტიტუტი.
სალამაძე, ვ. ლაცაბიძე, მ. (2017). საზოგადოებრივი ორგანიზაციების სახელმწიფო დაფი-
ნანსების მექანიზმები – საერთაშორისო პრაქტიკის კვლევა. სამოქალაქო საზოგადოების
ინსტიტუტი.
საქართველოს სპორტისა და ახალგაზრდობის საქმეთა სამინისტრო (2015). საქართველოს
სახელმწიფო ახალგაზრდული პოლიტიკა.
საჯარო პოლიტიკის, ადვოკატირებისა და სამოქალაქო საზოგადოების განვითარება საქარ-
თველოში (G-PAC) (2014). ანგარიში სამოქალაქო ჩართულობის შესახებ.
ხოფერია, ლ. (2012). კორპორაციული სოციალური პასუხისმგებლობის სახელმძღვანელო.
საქართველოს სტრატეგიული კვლევებისა და განვითარების ცენტრი.
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Bakan, J. (2015). The Invisible Hand of Law: Private Regulation and the Rule of Law. 48
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ბიბლიოგრაფია
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60
2019
კვლევა
Center for Strategic Research and
და პრაქტიკის Development of Georgia
კანონმდებლობისა
Vakhtang Natsvlishvili
Non-state
Funding of
Civil Society
Organizations
in Georgia
saqarTveloSi
dafinanseba
arasaxelmwifo
organizaciebis
sazogadoebrivi
ვახტანგ ნაცვლიშვილი
Legislation and
Practice
Research
2019
Non-state Funding of Civil Society
Organizations in Georgia
Vakhtang Natsvlishvili
2019
This publication has been produced with the assistance of the European Union and
Konrad-Adenauer-Stiftung within the frameworks of “Georgian Civil Society Sustainability
Initiative”. Its contents are the sole responsibility of Center for Strategic Research and
Development of Georgia do not necessarily reflect the views of the European Union or
Konrad-Adenauer-Stiftung.
1. Individual Volunteering............................................................. 15
Overview of the field 15
Legal framework 16
Tax policy 18
2. Individual Donation.................................................................... 20
Overview of the field 20
Legal framework 21
Tax policy 21
5. Cross-sector cooperation........................................................ 31
Overview of the field 31
Legal framework 33
Tax policy 34
6. Social entrepreneurship........................................................... 36
Overview of the field 36
Legal framework 38
Tax policy 40
4
7. Community foundation............................................................... 42
Overview of the field 42
Legal framework 44
Tax policy 45
8. Crowdfunding............................................................................ 47
Overview of the field 47
Legal framework 48
Tax policy 48
Bibliography................................................................................ 49
5
About the study
Our aim is to study the legal framework and corresponding practice concerning
the non-state funding of civil society organizations (CSO) in Georgia. The research
analyzes various non-state funding forms and identifies shortcomings in this area.
The research does not discuss the funding of CSOs by international donor organi-
zations and state entities.
The key target audience of the research includes CSOs, public entities and busi-
ness companies. We hope, the assessment of non-state funding forms of CSOs
will trigger civil and political discussions about this field. We also hope that the
research will prove useful to anyone interested in the development of CSOs and
in general, civil society in Georgia, including to international organizations, media
outlets, political parties, scholars and researchers.
In conducting the research we used the following sources: (a) Georgian legislation
and regulations; (b) court decisions; (c) requested public information; (d) reports of
international and local organizations; (f) academic literature.
The study often uses the term “civil society organization” which applies to non-en-
trepreneurial (noncommercial) legal entities specified in the Georgian legislation.
We do not use the term “nongovernmental organization” as it is the definition with
negative connotation.
6
About the study
During the research, we had to search for Georgian equivalents to several forms of
non-state funding of CSOs. We do hope the Georgian equivalents convey relevant
meaning. These terms are: Individual Volunteering; Individual Donation Corporate
Donation; Corporate Volunteering; Community Foundation; Social Entrepreneur-
ship; Corporate Social Investment; Impact-Oriented Investment; Cross-Sector Co-
operation; Crowd-Funding.
7
Non-state funding in Georgia:
general overview
1 Under the term “civil society organizations” we imply non-entrepreneurial (non-commercial) legal
entities registered in accordance with the Civil Code of Georgia (The Legislative Herald of Georgia,
31, 24/07/1997). In civil life they are usually referred to as nongovernmental organizations; how-
ever, we believe that the term “nongovernmental organizations” is inaccurate as it includes not only
noncommercial associations of citizens, but also professional unions and entrepreneurial entities.
2 According to a survey by the Caucasus Research Resource Center, the highest number of CSOs
work on issues of education and science, youth and civil society development whereas the lowest
number of CSOs work on topics of healthcare, refugees, agriculture and environment. See, CRRC,
2018.
3 The memorandum of cooperation between the Georgian Parliament and CSOs is signed by the
Speaker of Parliament and more than 200 CSOs.
4 See Open Parliament Georgia Action Plan 2017 of Georgia, commitment N1.8.
8
Non-state funding in Georgia: general overview
5,5
5
4,5
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
5 According to authors of the research, it proved difficult to obtain data on financial turnover from
CSOs. Around 22% of respondents did not provide information on the financial turnover in 2016.
Consequently, in the authors’ view, caution must be exercised in interpreting the data, though
some conclusions may be drawn out. See CRRC, 2018.
6 It is noteworthy that according to the CRRC research, the total turnover of CSOs in 2016
comprised GEL 69.3 million. However, more than 80% of the total turnover accounted for
one fifth of CSOs; three fourth of the latter category (29 CSOs) are registered in Tbilisi. See
CRRC, 2018.
9
Non-state funding in Georgia: general overview
The above data is indicative even without any additional analysis. However,
with the change in the paradigm of international donor funding, the financial
sustainability of CSOs may further deteriorate. As the data of Organisation
for Economic Co-operation and Development (OECD) shows, international
funding of Georgia has been decreasing over the past three years: in 2013,
Georgia received 646 million worth international development assistance; this
indicator decreased by around 100 million in 2014 and further to 448 million in
2015 (see Table 3).7 For its part, the EU, one of the largest donors alongside
USAID, favors the award of large grants, which notably decreased the number
of beneficiary CSOs (USAID 2017). Furthermore, according to the World Bank
classification, Georgia fluctuates between lower-middle- and upper-middle-in-
come economics in the last few years (World Bank, 2017). Experts reckon that
along with the improvement of Georgia’s economic indicators, the international
funding for Georgian CSOs will further decrease.
Such a state of affairs poses a challenge to CSOs: they should start working on
diversifying their sources of funding. Although since 2012, the state is authorized to
award budget grants to CSOs,8 a state grant cannot become a substantial source
of funding. The state funding of CSOs is instable and chaotic and normally given to
implement existing state approaches in this or that area (Salamadze, Paniashvili,
2017; Samaladze, Latsabidze, 2017). There is no public entity that would award a
grant for the assessment of accountability of political authorities, while local gov-
7 This indicator does not differentiate between the assistance received by the state and CSOs.
However, in experts’ view, the decrease in total indicator proportionally affects the amount of inter-
national funding of CSOs.
8 The wording adopted in 1996 did not include state entities among grant giving subjects. At
the end of the second decade of independence, in 2009, Georgia set up a common fund for
financing CSOs (which stopped functioning in 2013, though without undertaking a liquida-
tion procedure) while the amendment to the Law of Georgia on Grants, adopted in 2010,
extended the list of grant giving subjects to include a legal entity in public law. The 2011
amendment added a Ministry of Georgia to this list while the 2017 amendment further ex-
tended the list of grant giving subjects to include an Office of State Minister of Georgia and
ministries of Autonomous Republics if Abkhazia and Adjara (Legislative Herald of Georgia,
19-20, 30/07/1996).
10
Non-state funding in Georgia: general overview
ernments have no grant-making power.9 It is also worth to note that more than 80%
of grants awarded by public entities accounts for organizations registered in Tbilisi
(CRRC, 2018).
The legislation does not prevent CSOs from receiving non-state funding. The
Civil Code of Georgia and other sectoral laws allow CSOs to apply various
forms of non-state funding. The Law of Georgia on Volunteering, adopted by
the Parliament in 2016, notably simplifies the use of volunteer work by CSOs.
The Tax Code of Georgia, normally, taxes CSOs in a way similar to business
companies. Under the so-called Estonian tax model that entered into force on
1 January 2019,10 the taxable amount for levying the profit tax on a CSO is not
a type of income, but the conformity of the spending of CSO to charitable pur-
poses declared in its charter.11 Such approach exempts CSOs from profit tax.12
Furthermore, the Tax Code provides mechanisms for encouraging corporate
funding of CSOs.13 At present, the Parliament of Georgia is in the process of
considering draft legislative amendments concerning social entrepreneurship,
whereby the state aims at supporting the development of social entrepreneur-
ship and enhancing opportunities for social entrepreneurs to obtain soft loans
and grants; furthermore, according to the draft law, the state commits itself
9 Civil Society Institute works on the issue of CSO state funding. With the EU support, the Institute
has conducted a research on international and local practice of state funding and is now in the
process of developing a Georgian model. For more information, see Salamadze, Paniashvili 2017.
Consequently, this issue will not be discussed in detail in this review.
10 The Estonian tax model has been in force for enterprises since 1 January 2017.
11 Article 10 of the Tax Code of Georgia lists forms and types of charitable activities which include:
human rights protection, protection of environment, development of democracy, culture, art, sport,
education, science, health protection, development and protection of social welfare. See Tax Code
of Georgia (Legislative Herald, 3591, 17/09/2010).
12 The explanatory note of the tax amendment says that “From 2019, the taxation of organiza-
tions performing economic activities will be carried out according to new principles of levying
profit tax, which actually means that they are exempt from this tax because they do not distrib-
ute the profit.” See https://info.parliament.ge/file/1/BillReviewContent/177558? [Last accessed
on 18.03.2019]. Characteristics of so-called Estonian tax model are discussed in detail in
relevant chapters.
13 Article 117 of the Tax Code allows business to deduct the amount given to a charitable orga-
nization as well as the market price of goods and/or services provided for free from taxable
income, “but not more than 10 percent of the amount remaining after the deductions from
gross income, envisaged under this Code.” See Tax Code of Georgia (Legislative Herald of
Georgia, 3591, 17/09/2010).
11
Non-state funding in Georgia: general overview
Unarguably, CSOs share the responsibility for not using forms of non-state funding.
Georgian CSOs, having developed with the international financial assistance, did
not consider, from the very outset, a membership-based and participatory model of
management. Studies show that a large number of CSOs are not seen as associa-
tions accountable to citizens (Pino Puig, 2016) and that their agenda does not often
consider real needs of the population (Reisner, 2018). It is noteworthy that CSOs
do not, usually, speak in media about those issues which in the population’s view
are the most serious problems (NDI, 2018).16 According to one study, Georgian
CSOs see the professionalism of their employees as their main strength,17 while
influencing a political process as their main purpose (Lutsevych, 2013); the same
study shows that CSOs approach citizens as their “beneficiaries.” According to the
CRRC Barometer, the trust of population in CSOs dropped by 12 points between
2008 and 2015 and comprised 23% (USAID, 2017). According to the CSO Sustain-
14 The draft amendments to the legislation on social entrepreneurship was prepared by the Center
for Strategic Research and Development of Georgia and submitted to the Parliament of Georgia
for consideration. See the chapter on social entrepreneurship.
15 Discussions underway in Georgia show that there is an inadequately high expectation, for
example, in regard to benefits of the principle of corporate social responsibility (CSR) of busi-
ness. Literature on this topic is explicit that all social and environmental problems cannot be
settled based on a good will of the business; however, standards of ethical business conduct
may contribute to settling these problems. See the chapter on corporate contributions and
volunteerism.
16 According to NDI’s Public Attitudes Survey, the population thinks the most important problems are
jobs, poverty, territorial integrity, rising prices and inflation, affordable medical services, pensions
and salaries. According to 2018 Sustainability Index, CSOs hardly speak about these issues in
media. See, USAID 2018.
17 Only 27 of surveyed CSOs view membership-based management as their strength. See, Lut-
sevych, 2013.
12
Non-state funding in Georgia: general overview
ability Index, only 1% of population would like to receive information from CSOs
(USAID, 2018). Consequently, it does not come as a surprise that citizen donations
do not represent a significant source of CSO income. According to official data,
only 6% of Georgia’s population donates to CSOs and only 9% has participated in
volunteering (CAF, 2017).18
(c) Share of business operating in Tbilisi, which has cooperated with CSOs: 13%
(d) Share of business operating in regions, which has cooperated with CSOs: 4%
On the other hand, business donation is not acceptable for a number of CSOs. An
especially acute issue that has been raised on the social agenda in recent years is
the protection of human rights, especially labor and environmental rights.19 Several
CSOs refuse to accept business donations as they think that business neglects
human rights and in giving charitable donations pursues corporate interests alone.
One may use a quantitative and qualitative survey of CRRC to illustrates this at-
titude, according to which only 20 out of 282 surveyed CSOs accepted business
18 Georgia is 124th among 139 countries by the indicator of volunteering and 137th by the indicator of
donations to CSOs. See, CAF, 2017
19 According to UNDP survey, the labor rights are the most frequently violated rights in Georgia. See
UNDP 2017.
13
Non-state funding in Georgia: general overview
donation (CRRC 2018).20 CSOs interviewed in one of the surveys assert that their
aims starkly differ from those of business and that they consider any effective bi-
lateral cooperation as a possibility of a very distant future (CRRC, 2018). In this
regard, a Corporate Social Responsibility Club, which was established in 2015 and
includes representatives of up to 90 CSOs, public entities and academic institu-
tions, has failed to achieve any tangible results yet (USAID, 2018).
As the available quantitative and qualitative studies show, the use of non-state
funding mechanisms is of spontaneous and one-off nature and does not rest on
a long-term strategy. This means that CSOs themselves have to take efforts to
gain trust among population and to mobilize volunteers and donations. The use of
non-state funding mechanisms is not supported by the state policy either. In this
research we will explore the legal framework of each and every non-state funding
form, tax policy and a relevant practice.
20 As of today, CSOs do not have an obligation to make public received business donations or joint
projects with business. In order to prevent any illegal and corrupt deal between a CSO and a
business company, it is important to impose an obligation of CSOs to publish information about
received financing.
14
1. Individual Volunteering
Studies show that volunteering is not widely practiced in Georgia (USAID, 2017).21
Experts attribute this to the Soviet experience where a mandatory, state-imposed
volunteering led to the distortion of the concept of volunteering (G-PAC, 2015).
However, this cannot be the only or major reason; to neutralize this opinion it is
suffice to say that youth, who should comprise a large group of volunteers, have
not experienced the forced volunteerism but do not engage in volunteer work.
Moreover, instead of increasing, the number of volunteers in Georgia has been
decreasing.
According to the World Giving Index, 18% of Georgian population did volunteer
work in 2015 (CAF, 2016) as compared to 21% in 2014 (CAF, 2015). The indicator
further deteriorated in 2016, as according to the data of Charities Aid Foundation,
only 9% of Georgia’s population did volunteer work (CAF, 2017). In the Rating for
Global Volunteers Georgia is ranked 124th among 139 countries (ibid.). Accord-
ing to a most recent CRRC survey, 5,901 persons from 282 surveyed CSOs did
volunteer work (CRRC, 2018). At the same time, local opinion polls showed 8%
increase, between 2012 and 2015, in people who believed that volunteering was
an important aspect of good citizenship, with the indicator of such people standing
at 73% (CRRC, 2015). According to 2018 survey, some 37% of population is will-
ing to cooperate with CSOs which would work on tackling important issues for the
community and country (CRRC, 2018).
21 It must be noted that indicators of volunteering vary in European countries. According to a survey
conducted in the EU, the highest indicators of volunteering, around 40%, are seen in Austria, Great
Britain, the Netherlands and Sweden; a corresponding indicators of Germany, Denmark, Luxem-
bourg and Finland range between 30% and 40%, whereas the lowest indicators – below 10%, are
seen in Greece, Lithuania, Italy and Bulgaria (GHK, 2010).
15
1. chapter
It should be noted that in 2015, the Ministry of Sport and Youth Affairs began to im-
plement the Volunteer Work Development Program within the framework of Youth
Policy Development Program. The program aims at strengthening the institute of
volunteering on the national level, raising civil awareness of youth through vol-
unteering and increasing number of youth willing to volunteer across Georgia. A
common database of volunteers was set up under the program.22 However, this
database is not public and CSOs cannot use it directly. The Ministry itself uses
volunteer work of youth in various sports and youth events.
Legal framework
According to the law, “volunteering is a socially useful activity voluntarily and gratu-
itously performed by natural persons, using their knowledge and skills, under orga-
nized conditions.” A socially useful activity, according to Article 2(2) of the law, is an
16
Individual Volunteering
activity in any of the following areas: “protection of human rights, democracy, devel-
opment of civil society and mass media, education, science, culture and art, poverty
reduction and social security, healthcare, protection of the environment, youth and
children’s issues, gender issues, conflict resolution, support to refugees and internal-
ly displaced persons, migration, promotion of business and economy, support of agri-
cultural development, physical education and sports, protection of animal rights, civil
security emergency response and fields related to the preparation of the population
for such emergencies.” Thus, the notion of socially useful activity is broad enough to
encompass all types of CSO activities.
The Law allows to establish volunteer relations in oral or written form; though if
volunteer relations last for more than one month, a written agreement is required.
In this case, an agreement must specify the nature and duration of volunteer
work, the rights and obligations of the parties, and, if applicable, the benefits
related to volunteer status. Apart from traditional grounds, an agreement may be
terminated due to gross violation of the conditions of the agreement and other
circumstances that make it impossible for the volunteer to perform the activities
under the agreement. In addition, at the request of a volunteer, the host organiza-
tion issues a volunteer certificate containing details of the work performed by the
volunteer (Article 8).
25 According to principles of international law on child’s rights, volunteer relations shall not
conflict with the minors’ best interests, or prejudice their moral, physical and mental de-
velopment, or restrict their right and opportunity to acquire compulsory primary and basic
education. An identical provision is included in Article 3(3) of the Law of Georgia on Volun-
teering.
26 Due to the absence of such provision a citizen, for example in the Czech Republic, could be
stripped of unemployment allowance in case of engaging in volunteer work (ECNL & ICNL,
2009). The threat would be similar in Georgia, had this provision was not included in the law.
17
1. chapter
Rights and obligations of volunteers and host organizations arise upon en-
tering into volunteer relations. According to Article 4 of the Law, a host or-
ganization shall inform the volunteer of his/her rights and obligations. Upon
the request of a volunteer, the host organization shall compensate him/her
for expenses incurred by him/her in the performance of volunteering activi-
ties, including travel, food, communication, accommodation and if need be,
consular service expenses. The host organisation also has the obligation to
ensure a safe environment to volunteer and provide a volunteer with timely
and full information about expected threat and danger. It must be underlined
that the host organisation shall compensate volunteers for any harm to health
of a volunteer in the course of performing volunteering activities and for nec-
essary costs of treatment (Article 6). Moreover, Article 7 of the Law imposes
an obligation on the host to compensate any damage to a third party caused
by a volunteer’s unlawful actions during the performance of volunteering ac-
tivities. This rule is in full compliance with fundamental principles of civil
law.
A volunteer also has obligations to a host organization. Article 4 of the Law requires
from a volunteer to perform his/her activities in accordance with legal and ethical
principles and the agreement entered into with the host organization; also, to take
care of the property of the host organization and in a timely manner inform the host
organization of any circumstances which preclude him/her from performing agreed
activities.
Tax policy
When the Law on Volunteering was adopted, the author of the draft, Civil Society
Institute, asserted that in addition to regulation of volunteer relations, it was neces-
sary to amend the Tax Code so as to establish a preferential tax regime encourag-
ing volunteering. The Parliament, however, disapproved of this opinion and made
no relevant amendments to the tax law.
Although volunteers do not receive salaries, their work for CSOs requires some
expenses such as, for example, transportation and communication expenses. Ac-
cording to the Law on Volunteering, such expenses shall be covered by a host
organizations (Article 5). The Tax Code qualifies the compensation for volunteer
18
Individual Volunteering
Apart from tax benefits, the international experience knows numerous mechanisms
of promoting volunteering. Such mechanisms include a state program for volunteer
education, a possibility to receive academic credits for volunteer hours, discount
vouchers for volunteers for various cultural institutions, et cetera28 (ECNL & ICNL,
2009). The Georgian legislation does not provide for any of the instruments.
27 According to Article 100(3) of the Tax Code, gross income shall be income earned in any form and/
or through any activity, namely: a) salary income; b) income earned from economic activity, which
is not related to employment; c) other income not related to employment and economic activity.
Thus, compensation for expenses given to a volunteer shall be viewed as income and a host orga-
nization, as a tax agent, shall deduct income tax (except for exemptions set in the Tax Code).
28 These issues will be reviewed in the research of international practice of non-state organizations.
19
2. Individual Donation
29 When assessing the wealth of countries, the index uses World Bank data.
30 This data reflect only monetary donations.
31 However, it is worth to note that, within this survey, to a questions whether they would decrease
donations if income deductions are eliminated, 417% of respondents responded positively and
48.3% - negatively (Indiana University, 2014).
32 There is a need of one clarification here: according to the same index, the number of tax benefits
for donations is higher in rich countries. Therefore, only one variable such as the availability of tax
benefits may not be a determining factor of high indicator of individual donations.
20
Individual Donation
that CSOs worked on important issues (USAID 2017). According to the 2018 sur-
vey, the trust of population in CSOs stands at 28%33 (CRRC, 2018). No doubt that
the trust towards CSO activities is an important factor stimulating giving.
Legal framework
Giving of individual donation is regulated under the contract law of the Civil Code
of Georgia. Article 524 of the Code defines the concept of gift which means trans-
fer of property for free under a contract of gift. One of the types of such contracts
is a donation;34 donation is a type of contract the validity of which depends on the
achievement of a particular objective (Article 528). The concept of property, un-
der the Civil Code, includes all things and intangible property “which may be pos-
sessed, used and administered by natural and legal persons, and which may be
acquired without restriction, unless this is prohibited by law or contravenes moral
standard” (Article 147). A thing may be immovable, for example, land or building, or
movable (Article 149); while intangible property means claims and rights that are
intended to generate material benefit (Article 152).
Based on above cited provisions of the Civil Code, it may be said that natural per-
sons may transfer money as well as movable and immovable things, securities and
the right of claim35 in the form of donation to CSOs. Donation specified in the Tax
Code enables a natural person to demand that the donation be used for supporting
a particular charity or common good.
Tax policy
Individual donation is not a taxable income of CSOs in many countries; had it been
so, either a giver or a receiver of donation would have had to seek additional sums
to pay a corresponding tax to a state budget (ICNL & CSI, 2011).
According to Article 99 of the Tax Code of Georgia, which was effective until 1
January 2019, profit tax exemption applied to grants, membership dues and dona-
tions to a CSO. Donation, according to Article 8(40) of the same Code, was defined
as goods, services and funds received by a CSO as gifts. This meant that individual
donations to CSOs were exempted from the profit tax.
33 Almost the same level of trust is enjoyed by courts (32%) and the Parliament of Georgia (30%).
See, CRRC, 2018.
34 According to civil law experts, the word used in the Civil Code to denote donation [in Georgian] is
the same as donation; the difference is in term used, not content.
35 The right of claim, according to the Civil Code, includes many legal benefits. For example, a
pensioner may transfer his/her right to receive and use pension to another person, for example, a
CSO; a person renting immovable property may transfer the right to claim rent from renter and use
rent to another person, for example, a CSO; many examples may be cited of this kind.
21
2. chapter
On 1 January 2019, the so-called Estonian model of levying profit tax entered into
force, fundamentally changing the peculiarities of CSOs taxation. The provisions
exempting the donations to CSOs from the profit tax were deleted from Article 99 of
the Tax Code. An explanatory note on the tax amendments states that the transfer
to a new model of levying profit tax means the exemption of CSOs from the profit
tax because the profit is not distributed among CSO founders.
More specifically, since 1 January 2019, a taxable amount for levying the profit
tax on an organization is not a type of income – be it a grant, donation or ancillary
economic activity, but the conformity of spending by an organization to the organi-
zation’s goals declared in its charter. Consequently, if individual donation received
by a CSO is used towards charitable goals defined in the organization’s charter or
the Code, it is exempted from the profit tax. Article 10 of the Tax Code of Georgia
lists forms and types of charitable activities which include: human rights protection,
protection of environment, development of democracy, culture, art, sport, educa-
tion, science, health protection, development and protection of social welfare.
It should be noted that the Tax Code of Georgia does not provide any incentive
mechanism for natural persons who make individual donations. Such mechanisms
can be found in abundance in legislations of various countries (ECNL, 2015).
22
3. Corporate Donation and Corporate Volunteering
CSR is a relatively new phenomenon in Georgia (OECD 2016). However, one may
already observe some activity in this area. The state has yet to develop a common
strategy to promote this practice, but non-state actors have stepped up their activity.
With a joint effort of UNDP and the Civil Development Agency (CiDA), a corporate
social responsibility club (CSR Club) was established in Georgia, bringing together
around 90 business companies, CSOs, academic institutions and public entities. The
CSR Club aims at promoting and streamlining CSR in practice (OECD, 2016). In addi-
tion, the Europe Foundation37 and the Center for Strategic Research and Development
of Georgia (CSRDG) support the development of SCR; they take efforts to make CSR
part of university education and plan other awareness raising initiatives (OECD, 2016).
According to information provided by CiDA, business companies donated more than
GEL 1 billion for mitigating flood results in Tbilisi on 13 June 2015. Moreover, since
2018, the Center for Strategic Research and Development of Georgia organizes an
annual CSR contest “Meliora” with the aim to encourage social responsibility of busi-
23
3. chapter
ness.38 In 2015, under the guidance of the same organization Pro Bono Network was
established. The member companies take the responsibility to provide free-of-charge
professional expertise to civil society organizations working on social and environmen-
tal issues; According to the official website of the network, it unites up to 20 entrepre-
neurs, including large banks and other financial companies 39.
Despite some step-up observed in CSR area in Georgia, the results of survey con-
ducted by CRRC in 2018 show that giving by business accounts for the smallest
share in total CSO income (CRRC, 2018). Moreover, one fifth of surveyed business
companies has never heard of the CSR concept whereas those, who implement
social responsibility projects, decide themselves what type of public benefit project
is acceptable to them and do not cooperate with CSOs in this regard. Only 8% of
surveyed business companies say that they have implemented any type of project
in cooperation with CSOs (CRRC, 2018).
Such a state of affairs may be caused by several reasons. Local experts cite the
absence of consistent state policy encouraging business towards CSR and CSO
funding, as one of the reasons. In OECD’s assessment, governments play a spe-
cial role in institutionalizing this approach. This means building an adequate legal
framework,40 introducing forms of business supervision and shaping adequate ex-
pectations to this approach41 (OECD, 2016).
38 The contest is held with the support of European Union and Konrad Adenauer Stiftung. Contest
categories cover all major areas of CSR. Contest is open to the companies operating in the coun-
try, “that have found responsible ways of making an enduring difference to the well-being of their
workers, customers and suppliers, to the communities, and to the environment.” As many as 41
companies participated in the 2018 contest. See www.meliora.ge [last accessed on 18.03.2019].
39 See www.probonogeorgia.ge [last seen: 18.03.2019].
40 This, among other issues, requires the introduction of different approaches to various types of en-
terprises. For example, the European Commission sets separate CSR recommendations for small
and medium-sized enterprises (European Commission, 2013).
41 It should be noted that shaping adequate expectations with regard to CSR is one of important is-
sues. Often expectations are too high than practicable. Clearly, all social and environmental prob-
lems cannot be tackled through good will of business; however, ethical business standards may
contribute to overcoming these problems.
42 According to the UNDP survey, labor rights are the most frequently violated right in Georgia. See,
UNDP 2017.
24
Corporate Donation and Corporate Volunteering
Hence, some CSOs reject donations from business as they believe that in mak-
ing charitable giving they pursue corporate aims alone. In one of surveys, CSOs
often assert that they pursue aims that starkly differ from those of business and
declare any effective cooperation as a possibility of a very distant future (CRRC,
2018).
Based on the above overview it may be said that corporate donations and corpo-
rate volunteering depend not only on the development of policy in this area but also
on CSOs and business. In discussing CSR and devising policy in this sphere, it is
important to ensure a nuanced approach towards various CSOs43 and business
companies. In order to exclude any unlawful and corrupt deal between CSOs and
business companies, CSOs must have an obligation to publicize the information on
funding received from business.
The next subchapter overviews legal grounds and tax policy in regards with corpo-
rate donations and volunteering.
Legal framework
One should start with a concept of gift envisaged in the Civil Code of Georgia,
which implies the transfer of property for free (Article 524). The Georgian civil law
views donation as a type of gift; according to Article 528 of the Civil Code, the
parties may determine that the validity of the contract of gift depends on the per-
formance of certain conditions or the achievement of a particular objective (this ob-
jective, according to the same article, may be the common good). Analyzing these
two articles, it may be said that the Georgian legislation allows an entrepreneurial
entity to transfer a property to CSO as a gift for the implementation of a charitable,
public benefit activity. One cannot qualify this institution as a grant, but these two
do not differ much in essence.
25
3. chapter
Yet another form that enables business to provide financial support to CSOs is
the establishment of non-entrepreneurial (noncommercial) legal entity. Such a
noncommercial entity, regardless of tis entrepreneurial activity, may give CSOs
not only a donation but also a grant which may be a more flexible and effective
form of financial assistance. Several Georgian companies already apply this
form.
As regards corporate volunteering, the Georgian legislation does not know this
concept. Corporate volunteering means companies enabling their employees to
use some of paid time to do volunteer work; in addition, corporate volunteering
means business rendering services to CSOs free of charge.46 In this regard, it
must be said that the law which the Georgian Parliament adopted on 30 December
2016, regulates only volunteer relations with a host organization. Consequently,
the provisions of this law do not apply to corporate volunteering. Nevertheless, the
Georgian legislation does not prohibit business to allow its employees to use some
of their paid time towards public benefit activity or become a CSO volunteer.
44 For example, one of the largest donors, the company Oracle, gives software program for free to
schools, colleges, universities in 100 countries; pharmaceutical companies in the United Kingdom,
give medications for free to various medical organizations.
45 Data varies in different countries of the world. According to a survey, commissioned by UNESCO,
each of 132 surveyed US companies spends, on average, $78 million; each of 94 surveyed Chi-
nese companies spends, on average, $5 million; each of 14 surveyed Swiss companies - $38
million; each of 29 surveyed German companies - $18 million (BBE & EPG, 2015).
46 That’s why we discuss corporate volunteering in this chapter and not in the chapter on volun-
teering.
26
Corporate Donation and Corporate Volunteering
Tax policy
According to Article 99 of the Tax Code of Georgia, which was effective before
1 January 2019, profit tax exemption applied to grants, membership dues and
donations to CSOs. Donation, according to Article 8(4) of the same Code, was
defined as goods, services and funds received by a CSO as gifts. This meant
that individual donations to CSOs were exempted from the profit tax.
On 1 January 2019, the so-called Estonian model of levying profit tax entered
into force, fundamentally changing the peculiarities of CSOs taxation. The Par-
liament of Georgia deleted those provisions from Article 99 of the Tax Code,
which exempted grants and donations to CSOs from the profit tax. An explana-
tory note on the tax amendments states that the transfer to a new model of
levying profit tax means the exemption of CSOs from the profit tax because the
profit is not distributed among CSO founders.
More specifically, since 1 January 2019, a taxable amount for levying the profit
tax on an organization is not a type of income – be it a grant, donation or an-
cillary economic activity, but the conformity of spending by an organization
to the organization’s goals declared in its charter. Consequently, if corporate
donation received by a CSO is used towards charitable goals defined in the
organization’s charter or the Code, it is exempted from the profit tax. Article 10
of the Tax Code of Georgia lists forms and types of charitable activities which
include: human rights protection, protection of environment, development of
democracy, culture, art, sport, education, science, health protection, develop-
ment and protection of social welfare.
The Tax Code of Georgia also provides an incentive mechanism for business
companies to make corporate donations.47 Article 117 of the Code enables busi-
ness to deduct from taxable income the amount donated to a charitable organiza-
tion, also the market price of goods48/services supplied free of charge, but “not
more than 10% of the amount remaining after deductions under this Code from
47 Similar mechanism is practiced in many countries across the world and is aimed at encouraging
corporate charity (BTD, 2013).
48 Other than immovable property; the Tax Code does not apply the procedure specified in Article 117
to immovable property donated by business to a charity organization.
27
3. chapter
gross income.” A similar rule has applied to entrepreneurial subjects under the
so-called Estonian tax model enforced since 2017: a donation made to a charity
organization during a calendar year not exceeding 10 % of the net profit gained
by the organization during a previous calendar year shall not be subject to profit
taxation (Article 983).
It must be stressed that incentive mechanisms provided in Articles 117 and 983
apply only in case if business donates to a charity organization and not all CSOs
(non-entrepreneurial legal persons). The rule of granting a status of a charitable
organization is defined in Article 32 of the Tax Code; according to official data, there
are only up to 150 organizations in Georgia with the status of charitable organiza-
tion49 against over 20,000 organizations registered as SCOs.50 Therefore, these
mechanisms cannot have any significant impact on CSO funding.
49 In the assessment of many CSOs, the status of charity organization does not ensure them with
many tax benefits; consequently, they do not see any sense in obtaining this status. Moreover,
charity organizations are required to submit annual activity reports and financial statements certi-
fied by an independent auditor to the Revenue Service (Article 32 of the Tax Code).
50 Official data of the Public Registry.
28
4. Social and impact-oriented investments
In the past few years, social and impact-oriented investing has often attracted at-
tention of state, business and CSO. It is an investment strategy that aims to com-
bine financial profit with social impact benefit and generate their simultaneous and
balanced growth (Oliver Wyman, 2016). Under this concept, the aim of investors to
gain profits is combined with social, environmental and ethnical goals; social and
impact-oriented investment may be understood as corporate social responsibility
translated and materialized in investment decisions; thus, it means streamlining
social issues in capital investments implemented for the aim of generating profits
(CSRDG, 2012).
51 GIIN was founded in 2009 and aims at raising awareness of social investment on the international
arena.
52 In 2000, in Sweden, based on the consensus of five political parties, the Parliament adopted the
law obligating the state pension fund management body to annually prepare a report; the report
shall contain information as to what extent the management body considers requirements of social
impact investment when investing social funds.
53 A signatory to the UN Principles for Responsible Investment may be a shareholder, investment
manager and service providers in investing sphere.
29
4. chapter
Legal framework
The Georgian legislation does not contain special provisions regulating social and
impact investments. In such cases relevant persons apply those legal acts54 that
concern starting and running a business, or partnership between business and
CSOs. Moreover, there is no strategy which would identify those spheres that re-
quire social investments and would determine a legislative regime encouraging
such activity. State programs for funding startups do not envisage incentives for
impact investments.
Tax policy
Tax benefits are one of incentives for social and impact investments. Many coun-
tries have financial incentive and tax benefit schemes in place, which facilitate
socially responsible companies to conduct their activities. The tax legislation of
Georgia does not provide benefits for such type of activity. However, the govern-
ment of Georgia, sometimes, exempts various investments of state importance
from tax.
54 This mainly implies the Law of Georgia on Entrepreneurship, Civil Code, Tax Code and other sec-
toral laws.
30
5. Cross-sector cooperation
Governments across the world broadly apply the model of cross-sector coopera-
tion. This approach is especially popular in Canada, India, Australia and the United
Kingdom. Many countries support the development of cross-sector cooperation: for
example, in 2010, the government of France allocated 10 billion euros towards this
goal, while the Portuguese government allocated 7 billion euros; the government
of South Korea earmarks 15% of its fiscal incentive budget for this cause; some
governments have special state departments set up to promote public-private part-
nership (Hawkesworth, 2010).
55 The state implies entities of central government as well as of autonomous republics and local self-
governments.
56 The public-private partnership dates back to the Roman Empire. There may be recalled a number
of initiatives form history when state, business and society worked jointly on this or that issues.
However, PPP as a concept of consolidation and its promotion started in the 1970s.
31
5. chapter
The idea of PPP has attracted justified criticism too. In researchers’ view, the
majority of PPP-related decisions has served the aim of business gains to the
detriment of public interest. PPP was often employed in privatization of public
property and handing this or that public service to private sector, which, despite
possible positive results in the short run, led to the increase in citizens’ spend-
ing and decrease in the access of society to privatized services (Horvat, 2019).
In response to this criticism, a new model of cross-sector partnership – Public-
Civil Partnership has been developing, which envisages addressing public and
social problems through cooperation and partnership between public entities
and civic associations. Although this concept is in its nascent stage, examples
can already be seen in the municipal governments of Barcelona, Zagreb, Vi-
enna, Bologna, Hamburg (Horvat, 2019). The idea of Public-Civil Partnership
places a special emphasis on the participation of citizens and views state and
municipal budgets as well as citizen and civil association donations as sources
of funding.
Apart from the above mechanisms there is no document which would determine
areas or cooperation between public, private and civil sectors and the role of state
in promoting it. Probability of spontaneous, un-concerted cooperation on the part
of the state is not high: on the one hand, business shuns cooperation with CSOs
as perceives them as politicized actors and hence, tries to avoid a possible dete-
rioration of relation with the government (USAID, 2017) while on the other hand,
57 For example, in 2003, upon the initiative of Federal Government of Germany, a program of PWD
employment began, within the scope of which private companies and CSOs, along with state pro-
grams, provided PWDs with opportunities to develop vocational skills. Another example of this is
the international initiative of AIDS vaccination which was established by public and private entities
in 1996 with the aim to develop HIV/AIDS vaccine.
58 These mechanisms which, typically, rely on voucher funding, are among state0fundign forms and
consequently, not discussed in this research.
59 This mechanism as well is viewed as a state funding and not cross-sector cooperation.
32
Cross-sector cooperation
business sector does not enjoy a high level of trust in society and therefore, CSOs
shun cooperation with it (CRRC, 2018).
The following subchapters provide the analysis of legal framework and tax environ-
ments for cross-sector cooperation.
Legal framework
According to the Civil Code of Georgia, legal persons may regulate their relations
and determine rights and responsibilities in agreement unless it is not prohibited
by law or does not conflict with the established order. The institution of donation
envisaged in Article 528 of the Civil Code enables CSOs to receive donations from
business for the achievement of particular objectives. Donors may determine an
objective and give financial means and other property for its achievement;62 this
objective may be the “common good” (Article 528).
As noted above, the state must be one of the parties to public-private partnership.
According to Georgian legislation the state may be a party to contractual rela-
tionship; moreover, in specified cases, it may assume contractual obligations and
demand the fulfillment of contractual terms from other parties to agreement. More-
60 Open Society Georgia Foundation is a CSO in Georgia; the author and implementer of the idea of
children’s hospice was Nino Kiknadze, an employee of Open Society Georgia Foundation.
61 Interview with Nino Kiknadze.
62 According to Article 147 of the Civil Code, property is all things (movable and immovable) and
intangible property (e.g. right of claim), which may be possessed or does not contravenes moral
standards.
33
5. chapter
over, according to the Law of Georgia on Grants, ministries, office of state ministers
and legal persons in public law63 may give grants (Article 3) which may become a
ground for cross-sector cooperation. A state organ64 may itself be a grantee (Article
4 of the Law on Grants) to implement an initiative. A different regulation is applied
to self-government bodies: according to the Law of Georgia on Grants and the Lo-
cal Self-Government Code, local self-government may be a grantee but municipal
bodies have no grant-making power.
According to the Law of Georgia on State Property, the state has the right to trans-
fer property to legal persons of private law, including CSOs, into their ownership,
or for use without charge, for a definite or indefinite period. This right is a crucial
issue for cross-sector cooperation. In addition, in accordance with the established
procedure, a local self-government has the right to transfer to a CSO or business
company the municipality’s movable and immovable property by direct transfer,
without auction, with the right to use without charge, conditionally or uncondition-
ally. A decision on the transfer of municipality’s property with the right to use with-
out charge is made by the executive body of self-government (Mayor) with the
approval of representative body of self-government (Sakrebulo) (Article 54 of the
Local Self-Government Code).
Tax policy
The Tax Code of Georgia does not contain special provisions concerning cross-
sector cooperation. Operations within the scope of such cooperation are subject
to the tax regime similar to the regime applied to other entrepreneurial and social
activities.
34
Cross-sector cooperation
The so-called Estonian model of levying profit tax, which entered into force on
1 January 2019, exempts an organization’s income, including grants and dona-
tions, from the profit tax if it is used towards charitable activities defined in the
organization’s charter or the Code. Article 10 of the Tax Code of Georgia lists
forms and types of charitable activities which include: human rights protection,
protection of environment, development of democracy, culture, art, sport, edu-
cation, science, health protection, development and protection of social welfare.
Furthermore, the Tax Code enables business to deduct from taxable income the
value of donations.65 This incentive mechanism applies only in case when busi-
ness donates to a charity organization and not all CSOs (non-entrepreneurial
legal persons). The rule of granting a status of a charitable organization is de-
fined in Article 32 of the Tax Code; according to official data, there are only up to
150 organizations in Georgia with the status of charitable organization against
over 20,000 organizations registered as SCOs.
65 “not more than 10% of the amount remaining after deductions under this Code from gross income”
(Article 117 of the Tax Code). A similar rule applies in case of so-called Estonian tax model which
entered into force in 2017 a donation made to a charity organization during a calendar year not
exceeding 10 % of the net profit gained by the organization during a previous calendar year shall
not be subject to profit taxation (Article 983).
35
6. Social entrepreneurship
Social entrepreneurship has been attracting a growing interest over the past few
years. It implies the use of entrepreneurial methods and approaches for attaining
social objectives. In other words, social entrepreneurship is a business pursuing
not only the goal to generate profit or personal financial gains but also the mission
to generate public benefit. Social entrepreneurship normally means the implemen-
tation of economic activity by social, non-entrepreneurial entities. A dual nature of
social entrepreneurship – an underlying social objective, on the one hand, and on
the other, entrepreneurial means and methods for achieving it, makes this concept
somewhat difficult to handle.
Although the signs of such type of activity can be traced back to the 19th century
US and European countries, the concept of “social entrepreneurship” appeared in
the 1970s while its intensive development started in the 1990s (OSGF, 2017). That
coincided with the period when the formation of a new world order began: the idea
of great power was experiencing crisis in the US and Europe while entrepreneurial
and individual initiatives were declared as a key solution to it. Today, social entre-
preneurship takes on different forms and directions in various countries. Though
lacking a universal definition,66 social enterprise has several characteristic features
(ICNL, 2015):
36
Social entrepreneurship
is believed that a social enterprise cannot rely on volunteer work alone, it must use
the work of at least one paid employee.
(3) Social purpose. A social enterprise has an explicit, identified social purpose
towards which it employs production methods. Profit of a social enterprise is not
distributed among its founders, but used for the achievement of social objectives.
A social enterprise may allow a limited distribution of profits among its founders/
shareholders, but it is prohibited to distribute the entire profit – the use of produc-
tion methods to further social goals must remain underlying principles.
68 It is noteworthy that Georgian CSOs have access to international assistance in contrast to Euro-
pean countries where international donor assistance is restricted.
69 For example, LEPL Enterprise Georgia of the Ministry of Economy and Sustainable Development;
see, http://enterprisegeorgia.gov.ge/ [last accessed on 18.03.2019]. Also, Startup Georgia, founded
by the state investment fund/joint stock company partnership fund; see, http://startup.gov.ge [last ac-
cessed on 18.03.2019]. None of these programs prioritize social enterprise.
37
6. chapter
Legal framework
The Georgian legislation does not provide a specific legal form of social enterprise.
Nonetheless, CSOs are not deprived of a possibility to implement such activity.
Any civil, non-entrepreneurial legal person may perform any activity which is not
prohibited under the Georgian legislation. In addition, according to the Civil Code
of Georgia, non-entrepreneurial person may engage in an auxiliary entrepreneurial
activity70 the profit from which shall be used for achieving public benefit objectives
of the non-entrepreneurial legal person. In other words, according to Article 25(5)
of the Civil Code, profit from auxiliary entrepreneurial activity cannot be distributed
among founders, members, donors, management and persons with representative
powers of the legal entity,71 but used for the achievement of objectives that benefit
public.
In this regard, it must be noted that CSOs find it difficult to separate income, profit
and expenditure of entrepreneurial activity from those of non-entrepreneurial ac-
70 The Civil Code does not define social entrepreneurship. According to the Law of Georgia on Entre-
preneurship, entrepreneurial activity is “legitimate and repeated activity carried out independently
and in an organized manner to gain profit” (Article 1).
71 Even in case of liquidation of a non-entrepreneurial legal entity, the property remaining after the
liquidation is not transferred to founders, members, donors or managers. According to Article 38 of
the Civil Code, the property remaining after the liquidation is transferred to another non-entrepre-
neurial legal person pursuing similar objectives, or the state, in accordance with the rule stipulated
in the law.
72 According to the decision #3k/939-01 of the Supreme Court of Georgia, “registration may only be
abolished when this organization materially moves to commercial activity […]. This will occur only
when it becomes established that the profit generated by economic activity is distributed among
members of the association.”
38
Social entrepreneurship
tivity. With two types of revenue – taxable and non-taxable, CSOs find it difficult,
for example, to exactly identify when separate resources were used for entrepre-
neurial and non-entrepreneurial activities. To eradicate this and similar problems,
the Georgian legislation allows a non-entrepreneurial legal entity to establish an
entrepreneurial legal entity. Such entrepreneurial legal entity will be able to engage
in economic activity without any limitation while the sole beneficiary of the profit will
be the founding non-entrepreneurial entity which shall sue the profits for furthering
social objectives. An enterprise established in this form is a social enterprise as it
channels all its profit towards attaining a social goal.
Along with the regulatory legislation, we should mention the access of social en-
terprises to finances. According to the Law of Georgia on Grants, entities specified
in the Law on Entrepreneurship,73 are not eligible for grants. Moreover, means ob-
tained by CSOs engaged in economic activity for entrepreneurial aims shall not be
regarded as grants74 (Article 2). Thus, the Georgian legislation does not qualify the
means used for entrepreneurial purposes as grants regardless of legal status of a
giver or receiver of these means.
It is worth to note that the Parliament of Georgia is now in the process of considering
the draft legislative amendments prepared by the Center for Strategic Research and
Development of Georgia,75 which aim to regulate social entrepreneurship and de-
termine the state policy framework for its development. According to the proposed
amendments, a social enterprise shall be defined as a legal person76 duly registered
under the Georgian legislation, which (a) is established to promote social equality,
employ vulnerable groups, also achieve social aims in the fields of education, cul-
ture, health care, sport and environmental protection; (b) carries out entrepreneurial
activity and a large part of its income is made up of proceeds from entrepreneurial
activity; (c) reinvests at least 70% of its profit into activity carried out towards the
achievement of social goals declared in its charter; (d) is run by democratic princi-
ples and can make changes to its charter and the goals declared in its charter by at
least 80% of the votes; (e) is not linked or subordinated, either directly or indirectly,
to central or local government bodies. According to the package of amendments,
decision making in a social enterprise does not depend on the amount of share or
stocks of founders, but on the principles of free will, democratic management, social
responsibility, justice, equality, transparency and sustainability.
73 Entities specified in the Law on Entrepreneurship are: a limited liability company, joint-stock com-
pany, cooperative, general partnership, limited partnership, individual entrepreneur.
74 The exception to this rule under the law is means received by an entity having the status of agri-
cultural cooperative and amount received to attain political aims.
75 The draft legislative amendments, relevant conclusions, explanatory notes and other material are
available at the website of the Parliament. See https://info.parliament.ge/#law-drafting/12813 [last
accessed on 18.03.2019]
76 According to draft legislative amendments, a social enterprise may register as a limited liability
company, a joint stock company and a cooperative.
39
6. chapter
In the event of adoption of the draft law, the state will assume an obligation to
support the development of social entrepreneurship and enhance possibilities for
social enterprises to obtain soft loan resources and grants. Furthermore, according
to the draft law, the state will assume an obligation to give, in the event of equal
conditions, preference to goods and services of social enterprises in public pro-
curements.
Tax policy
the Georgian legislation does not specify a special status of social enterprises.
Consequently, the Tax Code of Georgia does not contain provisions which would
set a different tax regime for social enterprises. The taxation of a Georgian social
enterprise depends on its legal form.
On 1 January 2019, the so-called Estonian model of levying profit tax entered into
force, fundamentally changing the peculiarities of CSOs taxation. According to the
amendments, a taxable amount for levying the profit tax on an organization is not
a type of income – be it a grant, donation or ancillary economic activity, but the
conformity of spending by an organization to the organization’s purposes declared
in its charter. According to a new wording of Article 97 of the Tax Code, an orga-
nization engaged in an ancillary economic activity will be subject to the profit tax
if it has: (1) made the spending that is not related to economic activity; (2) made
the spending that is not related to purposes of its activity or charitable activity
specified in the Tax Code;77 (3) made the spending that is not related to the aim of
grant agreement; (4) provided goods/services free of charge, that is not related to
purposes of its activity; (5) made a representative spending that exceeds the limit
set in the Tax Code.
77 Article 10 of the Tax Code of Georgia lists forms and types of charitable activities which include:
human rights protection, protection of environment, development of democracy, culture, art, sport,
education, science, health protection, development and protection of social welfare.
40
Social entrepreneurship
As regards social enterprises with entrepreneurial status, they do not enjoy tax
benefits of other type. Much like legal entities specified in the Law of Georgia on
Entrepreneurship, they are exempt from profit tax except in cases when obtained
profit is distributed in the form of dividend or envisages such distribution that is not
related to the business activity of the entity. Thus, the new model envisages taxa-
tion not upon the receipt of profit but upon the distribution thereof.
Apart from profit tax, benefits are established for organizations on property tax too:
property tax is not levied on the property78 of an organization if it is not used for eco-
nomic activity whereas the property which is used for economic activity is subject
to the property tax. Consequently, a CSO that carries out ancillary entrepreneurial
activity is not exempt from the property tax.
78 This does not apply to the property of organization in the form of the land.
41
7. Community foundation
The first community foundation was created in the United States, Cleveland (Ohio)
in 1914 and then spread to other US cities and towns. According to the data of
Community Foundation Atlas,79 1,863 community organizations exist across the
world.80 The total budget of community foundations exceeds $5 billion. Community
foundations largely support education of community members, social services, de-
velopment of arts and culture and health care81 (CFA, 2014).
79 Community Foundation Atlas is a project of Cleveland community foundation, which was created
in 2014 to mark the 100th anniversary of the foundation. The project aims at gathering information
about community foundations worldwide and promoting them. For additional information see, com-
munityfoundationatlas.org [last accessed on 18.03.2019].
80 According to the same data, community foundations operate in North America – 1032, Europe –
678, Asia – 62, Oceania – 56, Africa – 31 and South America – 11.
81 Other priority areas are: environmental protection (9.6%), child support (8.7%), economic develop-
ment of community (5.9%), housing issues (3.3%). For additional information, see communityfoun-
dationatlas.org [last accessed on 18.03.2019].
42
Community foundation
tion of social problems, but cannot take efforts which must be undertaken by the
state (Harrow & Jung, 2016).
As many as 70% of current community foundations have been created over the
past 25 years. According to a global research, the establishment of community
foundations is, more frequently, the result of efforts of community leaders and com-
munity activism. Among important factors encouraging the creation of a community
foundation is the desire of community to make change in their economic situation
and a preferential legal and tax environment ensured by the state (CFA, 2014).
The key area in the activity of community foundation is grant-making in prioritized
areas. A grantee may be a natural as well as a legal person. Community founda-
tions often cooperate with schools, universities CSOs and enterprises operating in
their defined territory. A community foundation is, typically, governed by a council
comprising representatives of various interest groups (Hoyt, 1996).
82 Taso foundation is a Georgian CSO, affiliate of Open Society Georgia Foundation, which works on
women’s right and supports philanthropic activities. Taso Foundations defines a community foun-
dation as “such conscious activity of community, which helps perceive common work as personal
work; this is a responsibility not only for personal but also shared property, interests, environment
and people. This is a will to make change in joint effort, to facilitate social changes and to live a
decent life.”
83 According to information provided by Taso Foundation, community foundations operate in Kakheti,
Shida Kartli, Mtskheta-Mtianeti, Samtskhe-Javakheti, Samegrelo and Imereti.
84 Interview with Marina Tabukashvili, the manager of Taso Foundation.
43
7. chapter
Legal framework
The Georgian legislation does provide a special legal status of community foun-
dation. However, the existing legislative framework allows the establishment and
operation of community foundation.
It should also be noted that at the end of 2016, the Parliament of Georgia adopted
the Law on Volunteering which enables non-entrepreneurial legal persons, includ-
ing community foundations, to use work of volunteers.88
85 Donations include all movable and immovable property, intangible assets and financial means
(Civil Code of Georgia, Articles 528 and 147).
86 It should be noted that procedures for awarding grants, approved by ministries of Georgia, are not
uniform.
87 The manager of Taso Foundation regards prohibiting local self-governments to award grants as
one of most important shortfalls of the legislation.
88 A volunteer is a person who voluntarily and gratuitously helps a CSO in attaining it objectives. A
volunteer may be a natural person who has attained the age of 16. See, the Law of Georgia on
Volunteering.
44
Community foundation
Tax policy
The Tax Code of Georgia does not set a special taxation regime for community
foundations. Consequently, they are taxed as other non-entrepreneurial legal per-
sons. In the following paragraphs we will review those provisions of the Tax Code,
which have a special meaning for community foundations.
According to the Tax Code of Georgia, effective before 1 January 2019, profit tax
exemption applied to grants,89 membership dues and donations to community
foundations. Donation, was defined in Article 8(40) of the Code as funds, goods
and services provided as gifts. According to the wording enforced on 1 January
2019, a community foundation having the status of non-entrepreneurial legal entity
is exempted from profit tax in accordance with the procedure specified in Article
97(3) of the Tax Code.
There is another important issue that concerns the taxation of community foun-
dations. Although volunteers do not receive salaries, activities performed by
them for community foundations involve some costs, for example, transpor-
tation and communications costs. Such expenses, according to the Law on
Grants, shall be compensated by host organizations (Article 5). It is noteworthy
that the Tax Code qualifies such compensation to a volunteer as a taxable in-
come and accordingly, levies income tax.90 As a result, the cost of the use of
volunteer work increases for community foundations, as they have to “top up”
a compensation intended for volunteer with the income tax. Such approach is
known as “volunteer tax” in literature.
Donors to community foundations may be both natural and legal persons.91 Ac-
cording to the Tax Code, if individual donations to an organization are used for
charitable purposes declared in a charter of the organization or defined in the tax
Code, the organization is exempted from the profit tax.
89 A grantee who buys goods provided in the grant agreement and/or receives services under the
same agreement in compliance with the legislation of Georgia, may obtain a deduction or refund
under this article of the value added tax paid for such goods/services (Article 63(5) of the Tax
Code). Moreover, the import of goods under the grant agreement is exempted from the tax (Para-
graph 3, Article 63 of the Tax Code).
90 According to Article 100(3) of the Tax Code, gross income is income earned in any form and/or
through any activity, namely: a) salary income; b) income earned from economic activity, which is
not related to employment; c) other income not related to employment and economic activity. Thus,
compensation given to a volunteer is income and a host organization, as a tax agent, shall deduct
income tax (save the exceptions stipulated in the Tax Code).
91 See, Articles 983 and 117 of the Tax Code of Georgia which specifies incentive mechanism for
business donations.
45
7. chapter
The Tax Code of Georgia also provides an incentive mechanism of corporate dona-
tions for business companies.92 Article 117 of the Code enables business to deduct
from taxable income the amount donated to a charitable organization, also the
market price of goods93/services supplied free of charge, but “not more than 10%
of the amount remaining after deductions under this Code from gross income.” A
similar rule has applied to entrepreneurial subjects under the so-called Estonian
tax model enforced since 2017: a donation made to a charity organization during
a calendar year not exceeding 10 % of the net profit gained by the organization
during a previous calendar year shall not be subject to profit taxation (Article 983).
This rule may be applied by entrepreneurial subject to community foundations hav-
ing a status of charitable organization. The rule of granting a status of a charitable
organization is defined in Article 32 of the Tax Code.
92 Similar mechanism is practiced in many countries across the world and is aimed at encouraging
corporate charity (BTD, 2013).
93 Other than immovable property; the Tax Code does not apply the procedure specified in Article 117
to immovable property donated by business to a charity organization.
46
8. Crowdfunding
Crowdfunding is typically carried out via electronic platforms. There are inter-
national as well as regional and national platforms96 that connect CSOs with
citizens and offer them online modules of money transfer. According to the
European Center for Not-for-Profit Law (ECNL), national platforms are more
effective as citizens of a relevant country better understand the context of a
particular activity and also, are not charged a high banking fee on the transfer
of donation (ECNL, 2014).
94 Crowdfunding mechanism is used by business too when, for example, reis to raise funds for a busi-
ness initiative through public offer of shares. Such relations in Georgia is regulated by the Law of
Georgia on Securities Market. This issue is not addressed in this research.
95 There are various models of crowdfunding. One of them is citizens’ donation to CSOs and this form
is applied by CSOs. Other forms, for example, when small investors get share in equity instead of
funding, is not virtually used by CSOs.
96 Examples of international platforms are: Causes.com, Kickstarter.com, Crowdrise.com. As regards
national platforms, the Czech Republic has darujme.sz, Slovakia - Darujme.sk and startlab.sk,
Poland - Dobroczynnosc.com [last accessed on 18.03.2019].
47
8. chapter
Legal framework
Crowdfunding is a legal activity under the Georgian legislation. CSOs are al-
lowed to perform any activity not prohibited by law. True, the legislation does
not mention the concept of crowdfunding, but the institution of gift and donation
enables such legal relationship. According to Articles 524 and 528 of the Civil
Code, CSOs may receive gifts and donations from natural and legal persons. The
Civil Code does not differentiate between an individual donation and a donation
through crowdfunding.
Tax policy
The Tax Code of Georgia does not contain any special provisions for regulating
crowdfunding campaigns. However, any donation from a natural person to a CSO
is exempt from profit tax regardless of the amount of donation (see the chapter on
individual donations). Tax regulation of corporate donations in case of crowdfund-
ing was discussed in the subchapter on corporate donation.
48
Bibliography
49
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