Serbia Tries to Revive Charitable Instinct

A new charitable foundation appeared in Serbia this year. Founded by Srpska Banka in January, “Fond za plus 5” aims to help children from poorer background to develop their talents.

One of the members of the foundation board, the Democratic Party MP Dragoljub Micunovic, said Fond za plus 5 will financially support a group of children each year and observe their progress. The MP said Serbia’s new law on endowments enabled foundations like this to function in a responsible manner, benefitting from simplified administration procedures and tax reliefs.

“Many people prefer giving their money to foundations to paying taxes, because it makes their care for the community more visible”, he noted.

Micunovic was referring to the new Law on Endowments and Foundations, which Serbia’s parliament adopted lat last year and which aims to revive a long-forgotten tradition of endowments.

The idea behind the law is to give fresh momentum to philanthropy, whose development has been obstructed by complex tax policy and endless administration procedures.

One of the authors of the new law, Professor Vladimir Vodinelic, says that this law, unlike an earlier law passed back in 1989, does not require big amounts of money to set up an endowment and also allows private endowments.

“Endowments now can be private and focused around an idea, as is done abroad,” he says.

In this way, talented young musicians, for example, might obtain the support of endowments to attend top music schools.

But although the new law aims to stimulate philanthropy through various measures such as tax reliefs and through rewards for those setting up endowment, it is still not clear whether the tradition of giving can be revived that easily.

The concept of philanthropic endowments became totally unfamiliar in Serbia during the long decades of Communist rule and and the country is now badly hit by an economic crisis.

New Golden Age?    

Long before the Communist takeover at the end of the Second World War, philanthropy played a major role in Serbia.
The era really began with the adoption of the first law on endowments in 1896.

From then on, until the Second World War, Serbia saw what some see as a golden age of philanthropy. Many leading institutions, such as the Royal Academy of Arts and Belgrade University were originally set up by means of endowments. Such investments were seen at the time as a civic duty.

But with the arrival of Communism, endowments were nationalised and their properties were turned into residential premises. Whatever remained of endowments existed strictly under state control.

Tanja Bjelanovic, from the Balkan Community Initiatives Fund, BCIF, says people today struggle to understand the underlying concept because they are no longer familiar with it. They tend to see philanthropy purely in terms of donations by the wealthy to the poor, or as charity to cure sick children.

She believes that it is encouraging that, at a time of economic crisis, the new law will enable ordinary people to engage in philanthropic work without necessarily having significant start-up capital.

“We hope that many ordinary people will want to found endowments, not just people from big cities with a lot of money but people with determination to do good for the community,” she said.

Bad experience:

But scepticism remains. Many people remember the way endowments were abused in the past and money mislaid or diverted to improper causes through the accounts of so-called foundations.

The corruption of endowments during the time of Slobodan Milosevic still casts a long shadow over the very idea.

In the mid-1990, for example, many people who lived in buildings that were the property of nationalised endowments were allowed to privatise them. Although the law said that only premises of endowments that had no plans to re-commence their old activities could be privatised, many properties located in buildings owned by active endowments were also sold off.

Responding to pressure from endowments to stop this process, the new law includes an article temporarily banning the alienation of all nationalised endowment property until a full Restitution Law has been passed. Scandals concerning endowments and charities have continued since the fall of the Milosevic regime.

One of the worst was the “Katarina Rebraca Affair”, which involved money collected by a foundation to fight breast cancer being embezzled. Last year, Rebraca, a former model, was arrested and accused of embezzling hundreds of thousands of euros from her cancer charity.

“A 2009 survey showed that citizens are prepared to donate to charity but the level of trust remains low,” Tanja Bjelanovic said, adding that sensationalist media reports about the work of foundations had fuelled popular distrust.

As a result, it was up to endowments and foundations to make their work more transparent, she continued. This means good communications with citizen donors, who need to have clear insight into where their money is going and how it is being used.

To that purpose, the BCIF will start a series of training sessions in Belgrade, Nis and other Serbian cities with aim of informing endowments and foundations of the new rules.

This article is funded under the BICCED project, supported by the Swiss Cultural Programme