As of 2008 there were 22,723 foundations in Hungary, compared to 34,410 associations. This gap is likely to grow as the current trend sees the number of associations increasing twice as rapidly as the number of foundations (11).
Foundations, like other non profit organizations in Hungary, saw their heyday in the 1990s. Many were established by foreign donors with aims of promoting democratization (i.e. USAID, George Soros). In the late ‘90s and early 2000s, many of them closed down their offices, choosing to invest their resources in more “needy” countries.
The Soros Foundation-Hungary was the largest private non-state grantmaking organization in Hungary. It shut down its activities in Hungary in 2007 and also ended its institutional grant program funded by the Trust for Civil Society in Central and Eastern Europe. After the departure of such foreign donors, local private foundations have not taken over.
Currently, there is a real lack of private grantmaking foundations in the country, which could support the start-up of new organizations, bridge funding for those struggling with cash-flow problems and give institutional assistance for advocacy and watchdog organizations. USAID’s 2008 NGO Sustainability Index reports that the “although the Hungarian NGO sector is considered to be well funded, the structure and nature of funding do not support the development of independent, issue-based NGOs” (11).
Private foundations by definition are grantmaking foundations with an endowment. Their scarcity derives from the fact that endowments are all but inexistent in Hungary. For the most part, due to the economic situation, neither government nor individuals have provided the funds need to set up endowments. Foundations generally lack the financial and management capacities to administer an endowment. On top of this, there are a number of legal barriers, which impede the establishment and management of endowments (17).
No real demand has developed for endowments also due to the strong influence of state public foundations on the civil sector, which has led organizations to rely on state funds. A public foundation is a hybrid organization, belonging financially to the state and legally to the non profit sector, and established by government to ensure the provision of pubic duties (prescribed by law). Public foundations receive annual budgetary support from ministries. They “are not required to perform public duties by themselves, but rather to organize the fulfillment of public services, to ensure the continuity of the service, to conclude the necessary contracts, or to arrange financing” (18).
