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Is there life after George Soros? Not for these Hungarian NGOs

Translated from the original Hungarian by Justin Spike.

Several NGOs that work with Roma have been pushed to the brink of extinction because they say they don’t know where to get money. Until now they subsisted on money provided by George Soros or the Norwegian Fund, neglecting to diversify their support or to build a donor base. It is true that things are tough for Hungarian NGOs but how can they survive? Some of them are figuring it out.

In September, four Roma legal aid organizations decided to close their doors citing lack of funds. The news came as a surprise, because the organizations weren’t recently arrived activists but decades-old foundations that had survived several regime changes, a financial crisis and investigations ordered by the Orbán government. The National Ethnic Minority Legal Defense Office (NEKI) was founded in 1993, the Roma Press Center (RSK) in 1995, Romaversitas in 1996, and the Chance for Disadvantaged Children Foundation (CFCF) in 2003.

Now they have all declared simultaneously that their money has run out, citing as the cause the disappearance of their former big supporters, primarily financier and philanthropist George Soros and his Open Society Foundation (OSF).  The Beacon’s sister publication, daily online abcug.hu, was curious whether mere circumstance had driven the organizations to this point, or if they could have done more to stay alive.

Where do NGOs get their money?

  • Organizations dealing with legal defense and advocacy can obtain money from several sources. They can, for example, contact a large international foundation which considers the cases they represent important, and can sign a support contract with them. It is, of course, important to the donors where they spend their money, so they constantly monitor whether the foundation adheres to the contract and whether their activities are truly useful. Before Hungary joined the EU in 2004, there were several large donors present, but after 2004 more and more moved out because they thought that there could no longer be problems here in a rule of law state. The local OSF organization, the Open Society Institute (OSI) Budapest, remained the largest domestic operator that gives money for operations and concrete projects.
  • Since 2004, NGOs can also apply to the European Union. A part of this is via the state, which makes the organizations’ task more difficult, but money can be acquired directly from the European Commission as well. The EU gives money almost exclusively to projects that can spend a maximum of 7 percent on administrative costs (office rental, telephone bills, and other expenses.) The EU’s expectations are not easy to meet. The application system can be learned with blood and sweat but auditors from Brussels strictly ensure that the accounting is correct to every last euro cent. This is, therefore, a much more difficult road to acquiring money.
  • There are a number of other tender sources, such as Norway and Swiss-based funds, which also focus on projects. This is precisely why NGOs don’t like them: the NGOs often base their current activities on what was written in the tenders, and not on what they would actually like to do.
  • The organizations can turn to their own sympathizers to provide them a percentage of their taxes or simply support them with a certain sum. The Hungarian Two-tailed Dog Party and some internet news sites such as Átlátszó and Direkt36 were able to conduct successful crowdfunding campaigns. It seems that successful NGOs are focusing more and more on building a base, and are trying to find those two or three thousand people who are able and willing to consistently give money to the cause they represent. This kind of fundraising is also done by turning to the business community and trying to find sources of funding among companies.
  • Additionally, funding can be applied for from the state, but the National Cooperation Fund (NEA) created for these purposes mostly supports organizations close to Fidesz and the government, as we saw in 2013, 2014 and 2015.

They relied completely on the Soros money-tap

Among the four organizations close to elimination, it is true for each of them that they are funded mostly by large, international donors, primarily by OSI. The data we collected in the following table shows, based on public benefits reports accessible on the internet, what percent in a given year was given by OSI or from the closely-related Roma Education Fund (REF). (The RSK doesn’t appear here, because they haven’t received any OSI money since 2012 and their earlier reports are not on their website. We tried to request them, but they couldn’t send them.)

The data shows that three of the four organizations relied almost completely on Soros support, and they received several tens of millions of forints every year. Romaversitas spent more than HUF 28 million of OSI and REF money last year, but in previous years always between HUF 50-60 million. At CFCF this number was always around HUF 30 million, while NEKI moved around between HUF 10-30 million. (The exact data can be viewed in the organizations’ public benefits reports on their websites.)

The OSI tolerated this situation for awhile, but around 2012-2013 new leadership made changes in the organization’s policies. For one, they wanted to increase their own global influence, so they began spending more money in other, much less developed regions (South America, Southeast Asia and Africa). Since their funds weren’t bottomless either, this money had to be taken from somewhere.

On the other hand, they were striving to get the supported NGOs to depend less on them, and to stand on their own two feet. This is why they began more strictly enforcing the “one-third” rule, which states the supported organization can only receive one-third of its total support from OSI.

“These organizations said that they could only get money from OSI so many times that they started to believe it. But it isn’t true,” said one of our sources, a senior at OSI who requested anonymity. “Regardless of this, OSI is not giving up Europe, it’s just changing its priorities.” Even though OSI informed the organizations several times that it would be getting stricter, it wasn’t really taken seriously. “They don’t believe it until it happens,” another OSI senior employee wrote.

According to OSI, the problem is that the organizations were unable to build an adequate base around themselves. The affected NGOs usually argue that Roma issues today aren’t attractive enough to get people to give money. “It’s definitely like this, but it’s also certain that there are 3,000 people who devote 500 forints to this per month,” said one of the OSI employees. “That’s HUF 18 million per year. It’s not necessary to make a mass movement, it’s enough to find those people who are willing to give money. This isn’t an impossible undertaking. Of course it’s more difficult than picking up the money each year at OSI, but they totally gave up.”

Péter Küllői was the director at the headquarters of an international investment bank in London until 2000, when he came home to Hungary and founded the Smile Foundation. He is also the president of the Board of Trustees for Bátor Tábor (Camp Courage.)

“An NGO and a legal aid organization both have to build a brand, like Apple does,” he said. “There is a great need for advocacy organizations and it would be a great shame if they were eliminated, but it’s a question of whether they reach out to people and make what they represent cool. I don’t know any of the four organizations’ work, so I can’t criticize them, but I think generally this attitude is missing in Hungary.”

He continued: “You can make anything cool in people’s eyes, even gathering trash in the street. Of course it is more difficult to sell the issue of drug addicts or of Roma than, say, kids with cancer, because there are no prejudices against them. But regardless of this, there are ways.”

Küllői thinks that such professionals are necessary who learned how to build a brand in the for-profit sector. “There are such people that would gladly give their knowledge to an NGO, even for free. Today’s world is more and more about not creating new knowledge within the organization, but addressing knowledge which is outside the organization. But for this, some kind of vision and professional program is necessary. After a while, of course you can’t save on hiring several professionals who deal with this. I’m not saying that there aren’t professionals in the non-profit sector, but there is less of this knowledge than there should be.”

Another source put it this way: it is usually professional lawyers and sociologists who work at advocacy organizations, but accountants and fundraisers would be at least as important.

If you wouldn’t get by from the open market, then there’s a problem

Only a handful of civil advocacy organizations have been able to achieve good social embeddedness, such as the Hungarian Helsinki Committee and the Menedék Association for Migrants. According to András Kováts, the director of the latter, a well-defined strategy is necessary for proper functioning, but a lot of organizations simply don’t count on the possibility of running into problems. But from this perspective there is no difference between an NGO and a profit-oriented enterprise.

“We too came into a crisis not long ago, when in 2014 at the end of the budget cycle we ran out of EU support,” Kováts said. “But we had a pre-written crisis plan, which we just had to execute. We knew months ahead of time which of our projects we were going to cut, and our colleagues also knew from when they wouldn’t have a job. That’s not a problem in itself, if someone primarily relies on a private foundation, but at the same time you must pay attention to whether the product which is generated is sellable on the open market.”

The Hungarian Helsinki Committee always considered regular management and accounting important. “The donors are always monitoring whether we are precise enough. If we can’t deal with a smaller amount, then why would they give us 10,000 euros?” asked Márta Pardavi, the organization’s director. “We complied with OSI’s one-third rule even when they didn’t take it that seriously.”

Helsinki – in contrast to Menedék – receives significant support from OSI but it also successfully applies directly to the European Commission for tenders, and from other international donors (for example the UN High Commission for Refugees.) “We’ve seen for a long time that we have all different kinds of support, because if one falls out, then there’s a problem without it,” Pardavi said. “I think that careful operation and management saved us from the crisis.”

Instead of elitism, an acceptable product

According to one of OSI’s employees, “the entire advocacy sphere is in a serious crisis. Something else is needed than what we had in the 1990s. They have to communicate more dynamically and fashionably. Instead they are boring, constantly complaining, and they don’t arouse any kind of echo because people don’t even hear them.”

Although Menedék and Helsinki have worked predictably for some time, several years ago they realized that their bases weren’t wide enough. “We became a big, bureaucratic system, our clients referred to us as the Menedék Office,” Kováts said. “We weren’t close enough to the people, which is why we started organizing film clubs and all kinds of other afternoon programs outside of work hours, where they can get to know us better and identify with us.” There are material benefits to this as well: a running club recently collected money for a Menedék women’s group. But like the Roma, migrants are not too popular these days in Hungary.

Something similar happened at Helsinki. According to Pardavi, the environment at the organizations changed so much recently that it was essential to make themselves more consumable. “Today, you don’t reach a breakthrough with 15 open letters by intellectuals, but by, say, one Facebook video. Instead of elitism, we have to generate an acceptable product.”

At Helsinki, a separate colleague works individually on organizing donations, another colleague organizes public events (Helsinki Nights), and someone else is responsible for their communications. Menedék is also looking for such a colleague for an OSI-supported project. While it has sponsors from the business sphere, this doesn’t mean regular support. “It is worth working on this even if they don’t gladly give here at home,” Kováts said. “We go to Scandinavia and we see whether the Swedes would more gladly support our work here at home.”

By comparison, we heard that one of the now-defunct organizations several years ago didn’t know that respectable NGOs have a press list where they can send their announcements.

By the time we awoke …

“We only noticed after 2010 that we needed to open up toward society, and it was already too late,” said Erika Muhi, former director of NEKI. “We were the best advocacy organization in the country, but three lawyers and a worker cannot fundraise next to their professional work. Our communications colleague only came in 2013.”

Muhi said their late awakening cut them off from international funding as well. “A person doesn’t win EU and other foreign tenders right away, it takes a couple of years and some unsuccessful applications, after which it starts to tip and they start giving support. If we had started sooner, maybe we would have been more successful. But by now everyone is tired. I resigned from the directorship in February because I felt that I was going to jump out the window if I had to write one more application. We need fresh blood.” If NEKI survives, Muhi added, a manager-type leader wouldn’t hurt, one who would direct the organization not with a legal eye but an eye for the market.

“Hungarian NGOs are clinging onto OSI, there’s no way to make it sound pretty,” she acknowledged, but knowing Hungarian conditions, she thinks the one-third expectation is excessive. “This is not the place where civilians support civil society organizations. Companies are reluctant to give money to organizations in litigation, they would rather paint the school fence, and they can write this off as charity. We looked for companies too, but we aren’t fundraisers, we surely didn’t do it well either. They didn’t even answer.”

CFCF director András Ujlaky admitted: “We were pretty bad fundraisers, and the others might have been worse. But this isn’t really common in Hungary; a good professional wouldn’t even have been covered by an entire annual budget. We tried in the business sector, mainly at banks, but we weren’t successful. I don’t think it was because we work with Roma but because we filed segregation lawsuits against the state and municipalities, which was too confrontational for a business. The European Commission has never written a grant for litigation.”

Péter Küllői thinks it is a reasonable argument that businesses are reluctant to give money to politicized and divisive issues, but the organizations could make the causes they represent fit within the company’s brand. According to Küllői, this requires attractive packaging and a clear strategy, about which we wrote above. “There is a lot to learn in this for the Hungarian NGOs.”

RSK director Gábor Sárközi doesn’t think the Roma issue is very marketable, but admits that they made a mistake in not engaging at all in fundraising. Among the four organizations, RSK is the only one that hasn’t received OSI money in recent years. It operated on nothing but Norwegian Fund money in 2013 and 2014. Last year it had to get money from elsewhere: the largest sums came from the Rockefeller Bros Fund, the Budapesti Szakpolitikai Elemző Kft., and from Árpád Göncz. This year, however, RSK didn’t win any of the grants. It is a typical example of when an organization lives from grant to grant and reshapes its activities accordingly. RSK initially worked as a news service, and in recent years picked up several cases as campaigns, such as misdemeanor fines against Roma, or the Gold Pan award.

It doesn’t have a strategy as of now, and according to Sárközi there aren’t good examples of strategy in Hungary in the area of equal opportunity and poverty. “We got used to always winning two out of every ten grants, that’s why we didn’t need one.” Now, however, RSK is negotiating with business leaders from whom they’ve received promises. “If we manage to get some money, we will permanently switch to new, alternative sources.”

They don’t see what OSI wants

Ujlaky thinks that they would have only had a chance if they changed the profile of their organization, which they didn’t want to do: “The segregation problem came into the public discourse in vain, we weren’t able to turn it into money.” OSI turned a blind eye for a while to them substantially exceeding the one-third limit, but since they weren’t able to address it and didn’t satisfy other criteria as well, they didn’t win the next grant. Regardless, Ujlaky is grateful to OSI for supporting them for so many years, and he doesn’t complain, because CFCF did what they could to eliminate the segregation of Roma.

According to Romaversitas Foundation director Gábor Daróczi, so many organizations have ended up in such a situation that it can’t be blamed on their own “lameness”. “While the OSI expects compliance with the one-third rule, it forces us to compete with CEU,” he said. Daróczi was referring to a 5 million euro Roma program that was initiated this summer at Soros-founded Central European University (CEU.) The program is partially funded by the Danish Velux Foundation, and Daróczi doesn’t find it fair that they should have to step into competition with CEU for these funds.

“It’s not my business what they want with the one-third rule, but it would be really good to know what the hell OSI wants to do with the Roma issue in Hungary. Because unfortunately I don’t see it,” he said.

Daróczi thinks the process isn’t fair because Romaversitas was established out of the Soros foundation scholarship program, and other organizations of the same name have been created on its model in different countries. Romaversitas didn’t get by on EU grants either, Daróczi said, because they weren’t big enough to lead an international consortium, and as a simple member they didn’t get important tasks. “Before the crisis we got a third of our income from the business sphere, from medicine factories for example. Other than that, Budapest supported us too. Today that’s no longer possible.”

Based on the current state of Romaversitas, it can continue to operate for another eight months, which is why it – with OSI money – is trying to construct a base. The organization’s 20th birthday will be in November, when different events will attempt to reach out to their former students and to small and large businesses. “We would like to build up a potential donor circle. It is certain that additional support should be involved. But I have no idea what’s going to happen in eight months,” said Daróczi, who says that he’s thinking about working with not only university students but also school-aged Roma, because there’s a need for it, and it would be cheaper.

 

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