Fundamental flaws of EU funding – Projectitis II

European Union’s funding is plagued by a number of fundamental problems that affect in a profound and negative way the civil society in Eastern Europe. These problems seem to be treated superficially or ignored by the European Commission – the bureaucracy in charge of managing these funds (close to 100 billions Euros).

The European Funds transformed many NGOs in inefficient private companies that deliver social services.

Eastern European NGOs but particularly the less developed civil society organisations representing disadvantaged groups are the worst affected by these EU funds. The long-term effect on the Roma Watchdog NGOs as well as on the civil empowerment and development within Roma communities is catastrophic.

Flawed design

The way EU Funds are designed reflects a Western European concept that considers civil society as a legitimate and honest expression of citizens’ concerns. Such organisations are supported in Western Europe by governments and individuals that constitute the support base of those civil organisations and movements. The existence of a strong civil society is fundamentally linked in the collective mentality of the Western European countries with strong and functional democracies.

A functional/successful Western European civil society organization is one that manages to get a significant support (including financial) from its support base as well as from the government.

Accordingly, EU Funds were planned to include a minimum 20% contribution from the NGOs accessing funds and to impose strict rules about “ineligible” costs – things that cannot be purchased using EU money. This is indeed, on paper, a very good way to safeguard that NGOs will not try to access EU funding that is (much) over their administrative capacities.

As the decisional control of the design of EU Funds was/is in the hands of high level bureaucrats from the EU 15 (Western Europe) the rules for the EU Funding reflect poorly and in the case of Roma not at all the realities from the last 12 Member States (EU 12) than joined the EU since 2004. The majority of EU funds need to be accessed not by Western European NGOs but by Eastern, Central Europeans and South European NGOs; the design for EU funding is not at all appropriate for this to happen.

Differences that matter

The idea of the highest echelons of bureaucrats in the European Commission about what represents a functional civil society organization and how it functions and is financed doesn’t reflect the reality in the Eastern European context.

The civil society in Eastern Europe has been historically distrusted and considered a nuisance or the enemy of the state for the most part of the history of the region.

Most of the existing civil society in Eastern Europe is artificially created and indeed a result of foreign (North American and Western European) ideas and investments.

Due to the tensions of transition the democratic governments of the last 22 years in Eastern Europe have been many times aggressive against civil society and in general suspicious or defensive towards independent NGOs. Civil Society and especially watchdog and grassroots organisations of minorities and disadvantaged groups were for many years considered to represent suspicious foreign interests and are still perceived as having a hidden and sometimes destabilizing agenda against the “national interests”.

There are huge differences among the amount of money donated by Eastern and Western Europeans to NGOs. While Western European NGOs tend to be well financed, organized and with strong support at the grassroots the Eastern NGOs struggle with weak organizational structures and very limited national support. Funding at the EU level  (Structural Funds excluded) is open to all NGOs from all Member States. The administrative capacity of Western European NGOs fits indeed the design for these funds but their financial and organizational prowess can be hardly comparable with that of Eastern European NGOs. This creates an unfair competition. As a result a disproportionate number of European Networks and European NGOs that access the majority of available funds for NGOs are based in Western Europe and lead by Western Europeans that are logically mainly concerned about the situation of civil society in their countries and almost at all about the situation of Roma. The examples of Roma relevant European NGOs such as European Anti-Poverty Platform, European Women Lobby and European Disability Forum all with abysmal records in dealing with Roma issues as well as including Roma in their managements or decision-making are the most strident.

Incentives to change this situation are minimal. European Commission bureaucrats would need to work and design different strategies for a good number of the EU12 countries and most probably for some of the vulnerable groups that live in these countries. This translates in a lot more effort on behalf of the bureaucrats and significant changes in the way EU Funds are distributed. Change is not at all popular at the level of European Commission as unsettles the existing comfort zones of the European bureaucracy.

Most of the Senior Managers responsible for the regulations of the EU Funds are  from EU15; the majority of them have limited knowledge about the realities of civil society in the EU12 countries and very little interests to try to make the EU Funds more efficient in these countries.

Changes in the existing regulations need to be adopted by the European Council –therefore Member States need to approve such changes.

Help to develop a stronger civil society outside Western Europe means not only serious efforts of Senior managers in the EC to learn and understand the differences mentioned above but also a significant dent in the existing advantages Western European NGOs, local administrations, companies, trade-unions and governments have in accessing EU Funds compared with their Eastern counterparts. The main contributors to the EU 27 – the EU15 do not have any incentive to adopt (without being strongly pressured) rules that will cut down the amounts of money their citizens are able to get from the European Union.

Cutting corners and unfair competition

Unfortunately the unfair advantages Western European NGOs have had are rapidly addressed through “innovative solutions” most linked to corruption.

A widespread practice among Romanian NGOs is to submit proposals with maximum possible salaries. Those salaries are 30 to 50 times the average salaries and NGOs justify the requests for the maximum salaries as the only way to cover non-eligible costs. People that receive these salaries claim they will “donate” money back into the NGOs to cover the 20% own contribution requested by the EU funds.

In this way many NGOs that have no support base whatsoever but contracted good consultancies that wrote their projects in such a way to fit the EU requirements were able to win EU funded contracts that were much above their administrative capacities.

In many of these cases the own contribution part needed for EU Funds as well as the way these NGOs cover their ineligible costs is done illegally or at the border of legality. The Management Authorities (MAs) in charge of monitoring and controlling the way EU Funds are used are well aware of this practice and accept it as it happens also with the projects run by governmental institutions and local administrations. The MAs also know that regulations and the situation in Romania make it practically almost impossible for an NGO not to have “financial corrections” – meaning penalties- that on paper NGOs would need to cover from other sources than European Funds. Official representatives of the Management Authorities for the European Social Fund in Romania said publicly at a meeting in October 2012 that they are not aware of even a single project without such corrections (meaning financial penalties).

The more Structural Funds a NGO attracts the highest the probability to attract other EU and non-EU funds is. This tendency forced most of the existing NGOs to try to access Structural Funds and deploy the same unethical (and sometimes illegal) tactics as the ones mentioned above.

The case of Roma organisations

Roma NGOS are in a much worst situation than the rest of the “mainstream” civil society in their countries. Roma civil involvement and civil society was practically non-existent during communist times. Roma were and are still perceived mainly as “foreigners” in their own countries and have no tradition of supporting any type of organized political or civil movement.

The Roma civil societies in all Eastern Europe resulted mainly due to foreign investment and stimulus. The ideas of a unique Roma identity as well as of a united Roma civil society are artificial creations of American and Western European organisations concerned with the explosive situation of different Roma groups in Eastern Europe. The majority of Roma organisations were created without taking in account community support or consultations about what were the needs of the communities. There is no significant support base for any Roma organization in Eastern Europe and the probability that Roma NGOs will be able to attract significant funds able to support their institutional costs and compete fairly with the much more successful and skilled Western European NGOs for European Projects is unreasonable.  It is also unreasonable to think that Roma NGOs will be able to compete easily with majority ‘s NGOs in their own countries and successfully attract and implement Structural Funds.

Most of the funding accessed by Roma organisations in the past were institutional funds; such funds are much more flexible than any of the European Funds available at this moment. The flexible funds almost disappeared, as most of the active donors in Eastern Europe are now, themselves, recipients of EU Funds and adapted their funding policies to the EU rules. As there was no well-planned or efficient transition from the flexible funds to the EU funds, Roma NGOs are facing at this moment serious problems in administrating EU funds and many are at the risk of financial insolvency.

Some of the best-paid directors of Roma NGOs received salaries from EU Funds that sometimes were over 100 times more than the average income of a Roma family in the communities they worked. Do to a series of corruption scandals exposed in the mainstream press these salaries are widely known and lead to a significant decrease in the trust Roma NGOs have within the Roma and non-Roma communities. The overall perception at the national level in Eastern Europe is that Roma NGOs steal or misuse the money Roma communities themselves should receive from the European Union.

Considering that it is almost impossible for Roma NGOs to attract funds that could cover the required 20 % own contribution or the ineligible costs of European Funds there is no other source for getting the money other than the EU Funds themselves. In this way the leaders of Roma NGOs can justify to themselves and their boards their inflated salaries. Such practices require a rather complicated financial procedure and many times Roma NGOs end up using unethical or illegal procedures to avoid bankruptcy.

This situation makes impossible for Roma watchdog NGO accessing Structural Funds to claim a higher moral ground. This higher moral ground is needed for an efficient watchdog organization; lack of it makes these organisations vulnerable to pressure or blackmail.

The lack of awareness about the incentives Eastern European organisations, local administrations and governments have towards bending the rules and cutting the corners resulted in European Funds being mostly an incentive for corruption rather than one for civil and financial involvement of citizens in the activities of NGOs.

Governments and political parties in Eastern Europe were able and are increasingly better at using EU Structural Funds as a tool to control and intimidate civil society and as a way to silence or curb anti-corruption efforts.

The interest of the public authorities in Eastern Europe is not to curb the possible corruption of NGOs in general as that will lead to less absorption of Structural Funds.

Their interest is to find ways to mask such corruption and prevent any significant development of strong independent Watchdog organisations that could expose the many existing problems.

Independent Watchdog NGOs are essential for curbing corruption and improvement of the design and effects of the existing financial tools at the EU and National level.

Independent national Roma watchdog organisations are a sine-qua-non condition for successful social inclusion policies and implementation. The existing funding at this moment not only it doesn’t support such organisations but is rather destroying them. In order to survive in Eastern Europe such organisations have very little chances besides bending rules and making unethical compromises that make them easy to control or blackmail by those in power.

This is a vicious circle that needs to be stopped.  Breaking the vicious circle is not complicated- long term European institutional support for Roma watchdog organisations is the solution. This type of support should be conditioned by a very clear working program, involvement in the communities and the impossibility for such organisations to access any other funds besides those dedicated to watchdog NGOs.

Not taking measures will result in a slow but sure disappearance of essential civil society and an abrupt worsening of the situation of vulnerable groups and especially of Roma situation. Inaction will also badly damage the relatively good image the EU funds and EU institutions have at this moment in Eastern Europe.

This is to be read as a complementary article to an older article…

Projectitis *- the Dutch disease of EU funding targeting Roma

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