POLAND: Commercial activities. Outlawing vs. regulating.

On Oct. 25th, the conference on legislation regulating the work of the nonprofit organizations in Poland was held at the Ministry of Labor and Social Policy. The aim of the conference was to bring together representatives from the nonprofit sector and public administration and discuss the regulations that are currently in place and proposed amendments. The main part of the conference was devoted to the discussion on the proposed amendments to the Act on Public Benefit and Volunteer Work, which is the most important law for the nonprofit sector in Poland, passed in 2003. The proposal to take away from the so called organizations of Public Benefit status the right to conducting commercial, for-profit activities triggered most controversy. Nonprofit organizations in Poland that have this Public Benefit status, have more privileges than other nonprofit organizations, with the right to get from taxpayers 1% of their tax liabilities. The idea behind the proposal is that many organizations abuse their status and illegitimately mix their mission-related and business-oriented activities. Although such organizations, in theory, have to pay taxes from their commercial activities as other regular businesses, in practice, even if they pay taxes from the earned profit, they use for these activities the office and other resources awarded to organization solely for mission-related activities. And this creates the unfair competition with private businesses. The proposal to take away from these organizations of public benefit the right to conduct commercial activities might indeed limit the cases of these abuses and unfair competition. At the same time, however, it deprives them from the opportunity to earn additional money for their mission-related activities and to cover the costs of conducted activities not covered by received grants. It also makes these organizations more dependent on grants and donations, which do not constitute a stable source of funding. It seems then, that not ?to throw the baby out with the bathwater?, instead of outlawing for-profit activities of discussed organizations, the better solution would be to introduce more control measures that would discourage organizations from current abuses as well as carry out campaigns to make the organizations aware of the problem. For many organizations do not know that they are breaking the law or acting on the verge of it.