Private Giving: New Rules, New Hopes?

In July, the Parliament of Lithuania passed a new law on charity and support. What changes have been brought about by the enactment of this law?
One of the most needed amendments refers to the simplification of procedures of giving support and charitable donations. A clear dividing line has now been drawn between charity and support. Until now, hardly anyone could tell how, specifically, these two forms of giving differed from each other. According to the new law, charity is defined as help extended to people who are in a difficult financial situation. Support is seen as assistance to an organisation performing cultural, scientific, health care, educational or other activities.
The legalization of anonymous support is another important change. Recipients of anonymous donations will not be required to indicate who the donor is.
According to the new law, recipients of support will be allowed to receive it without having to draw grant programmes that were required in order to carry out one or another activity. Financial support will simply be given to an organisation. The requirement to draw grant programmes used to cause much confusion in giving and administering assistance funds.
However, a number of ill-considered regulations remain. Organisations will be required to report about support that was given or received both to tax authorities and to the Department of Statistics on a quarterly basis. These reports are identical, while their necessity is questionable. This provision seems to be out of place in the context of the current governmental initiatives aimed at eliminating overlapping functions performed by different state institutions.
Another provision that drew strong criticism states that only those organisations that will be included in an official register will be allowed to receive charitable donations. This, according to the government, is expected to help prevent abuse of concessions applicable to private giving. In fact, such a register of recipients already exists – they are all non-profit organisations that have been registered with state authorities. According to the new law, non-profit organisations will have to declare whether they are willing to receive support or not. Yet, this procedure may become more complex, as the government has been delegated with the task of formulating detailed regulations of how the status of support and charity recipient is to be conferred to an organisation.
If any more restrictions are going to be imposed on non-governmental organisations regarding the receipt of donations (and such a danger is very realistic), all the improvements in the law will be futile. They will increase bureaucracy as well as lead to dissipation of public and private funds, wasting of time and the collapse of many good initiatives.
A frequently cited question whether private giving will increase after these improvements in the regulation of charitable giving have been endorsed is not easy to answer. Laws do not create wealth. All they can do is to not interfere in creating wealth and to stop others from doing so. Indeed, the new law will significantly facilitate private giving, but the question whether private giving will expand or not depends solely on people’s will.