Public funding of NPO in social services: Preliminary findings from Czech Republic

According to the theory, there are some reasonable reasons to assume that non-profit organizations behave specifically, in the way that is significantly different from the behaviour typical for both for-profit and public subjects. We believe that nonprofit organizations have several attributes predetermining them for publicly beneficial behaviour especially during the tough times of economic crisis; in such times they behave in a very different manner from their for-profit and public counterparts. And such specific “under pressure” behaviour represents the key topic of this paper. Paper investigates NPOs´ reactions to the distinctive change of the economic environment. We analyse the 2008 – 2012 period; Czech non-profit organizations have been relatively strongly affected by the crisis in this period, although this affection probably haven’t been as heavy as in some other European countries. Because of the complexity of the field, the paper does not explore changes of the amount and structure of the private philanthropy in detail, the strongest attention is being paid to the changes of the public finance support for the non-profit sector. This public support plays the major role in the resource portfolio of many Czech NPOs. During above mentioned period both the scope and structure of this public support have significantly changed. Government tried to substantially cut the public expenditures, unfortunately also in the field of social and health care, where many Czech NPOs operate. All this have influenced the strategies of the non-profit organizations. We analyse how those governmental activities influenced the scope and structure of the non-profit sector revenues, amount and structure of its assets, investments, production, and employment especially. Analysis of the above mentioned factors brings us valuable information concerning the “non-profit reflection” of economic changes. Our main contribution is to be in the proving that NPOs are able to adapt themselves to the changed conditions - essence of this ability consists of innovative behaviour and innovative strategies. We try to prove that accepting the non-distributing constraint has led Czech NPOs to specific behaviour patterns, different from the behaviour typical for companies or public subjects (public services providers). We come with the recognition of the long-term character the non-profit organizations´ strategies; this is particularly evident when examining the role of the non-profit sector employers with the clear preference of stable level of the employment. Generally speaking, we document the stabilizing potential of the non-profit sector. This analysis is being applied to the social care in the times of economic crisis. As the major sources we utilize the Satellite Account of the Non-profit Institutions and our own research of the Government Grant Policy towards Non-State Non-Profit Organisations, which delineates the support to non-state NPOs and preliminary finding from our research project “The Impact of public financing on the structure of resources and production of NPIs”.