Journal of Social Research & Policy, Vol. 6, Issue 2, December 2015

Cooperation Characteristics of the Public and Civil Sectors that Endeavor to Eliminate Social Inequalities IBOLYA CZIBERE1 University of Debrecen, Institute of Political Science and Sociology, Hungary

ANDREA RÁCZ2 University of Eötvös Loránd, Department of Social Work, Hungary

Abstract This study aims to present the relations of the public and civil sectors that endeavor to eliminate social inequalities, primarily, as it describes the relational characteristics of the civil organizations, civilians and the local government. It highlights the practice of partnership that currently determines the relationship of the two sectors in Hungary, and presents the civil sector’s economic weight, stages of development and directions. We will also deal with the developmental stages of the relation between the third sector that emerged after the political transformation and the local government, as well as with the necessity for cooperation between these two sectors. The study presents the reasons why the Hungarian civil society cannot overcome particular difficulties and increase their social integration and activity through the characteristics of project activities and tendering practices. Ke ywords: Third Sector; Cooperation Characteristics of Civil Organization and Local Governments; Social Challenges; Projectification of the Civil Sector..

Introduction This study aims to present the relations of the public and civil sectors that endeavor to eliminate social inequalities, primarily, as it describes the relational characteristics of the civil organizations, civilians and the local government. It highlights the practice of partnership that currently determines the relationship of the two sectors in Hungary, and presents the civil sector’s economic weight, stages of development and directions. We will also deal with the developmental stages of the relation between the third sector that emerged after the political transformation and the local government, as well as with the necessity for cooperation between these two sectors. The study presents the reasons why the Hungarian civil society cannot overcome particular difficulties and increase their social integration and activity through the characteristics of project activities and tendering practices. Cooperation characteristics of civil organization and local governments The fundamental principle of democratic countries is the representative democracy, furthermore the endorsement of the citizens’ requirement to interfere in the development of their own environment, and not only during, but between the election periods too. In modern societies, the 1 2

Postal Address: H-4032 Debrecen, Egyetem tér 1. E-mail Address: [email protected] Postal Address: H-1117 Budapest, Pázmány Péter sétány 1/A. E-mail Address: [email protected]

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endorsement of participation policy implements this requirement, that is, through particip atory democracy, within the framework of social participation (through citizens and civil organizations). The participatory democracy is based on the principle that besides state actors, the economic and social actors (as full members) take part in the processes affecting their environment (Sartori, 1999). One of the most accepted approaches for participatory democracy (Chekki, 1979) defines this as the rule of people providing such authority to communities, by which people’s actions can influence the decisions makers. The citizens and civil organizations’ increasing and developing participation assume the civic consciousness of the society. This type of social capital means the duality of trust and mutualism based on common ethical standards, and saturates the entire civil society. In societies with a high number of civil organizations, and where the organizations are indeed active, the members of the local communities have better trust in each other (Fukuyama, 2000; Putnam, 1995). The human relations based on trust are inherent values in civil communities, but also essential for the long-term existence of the organizations (Szalai, 2013). Social participation is a prominent positive factor that strengthens the consciousness of individuals so as they can live as full members of the society, which can chiefly be an essential integrative factor in the participation of excluded social groups. Independence is also an important condition of civil existence. “ To be independent from (government) power, parties, business world, from traditional formations that shape society’s power relations generally, and last but not least from each other” (Sebestény, 2005, p. 51). However, this independence can be very dubious as regards reliance on state support. According to the data of Democracy Index for the year 2015, there is no "full democracy" in Hungary, as characterized by political instability, by undermining the value of democracy. The overall index of democracy in 2006-2015 significantly decreased (about 7.53 from 6.84). (Democracy Index 2015, 2016, p. 13) The study draws attention to the fact that after the 2008-2009 economic crisis, satisfaction with living conditions and social institutions of trust significantly decreased in Hungary. It also criticized the government's actions and the Prime Minister's statement of 2014 that the government is building a state and society that is democratic, but not liberal (Democracy Index 2015, 2016, p. 29). Hungary has significant civil traditions as compared to other Central and East ern European countries, since there were several active organizations already in the Reform Age (19 th century). After the political transformation, the sector underwent a very fast quantitative change in a very short time. Between 1989 and 1997, the sector was characterized by a dynamical growth, the number of the organizations increased more than five times. The period since 1997 was the time of “filling up”, qualitative transformation, strengthening (Kákai, 2013). In 2013, there were 64 500 organizations in Hungary, 22 500 of them were foundations and 42 000 were joint non-profit organizations. The foundations can be divided into three different activity areas: education (32%), social care (16%) and culture (14%). The joint non-profit organizations typically work on the field of leisure activities, but also the rate of cultural and sport organizations is the highest here. In 2013, 35% of the income of the whole sector came from government or local government budgets, the rate of private financing was 44% (income from base activity and enterprise) (KSH, 2014). Civil organizations fulfil numerous functions that may contribute to the effective operation of local governments. Tasks in the service function basically belong to the responsibilities of the local governments, (such as education, social and health care). When civil organizations participate, the tasks are outsourced to the various non -profit organizations via contracts. The function of creating sources provides access to several external sources, like tenders, private donations, 1% of taxpayers’ offer. In addition, they can convey information to the members of the local community (communicational function), participate in the preparation of decision making to support the professional work. Furthermore, the legitimacy function plays a key role as civil organizations legitimate local authority through a close cooperation or partnership; as well as there is the mobilization and prestige increasing function, since “it is the local government’s elementary interest as the legitimate, elected representative of the local society to present as favorable, an image of the represented community, as possible” (Sebestény, 2005, p. 70). A conspicuous participation is the common point in all of these functions (Sebestén y, pp. 68-72). There are one-way and two-way relations in the most fundamental forms of cooperation between civil organizations and local governments in Hungary: a) local governments provide financial and in-kind support for civil organizations 2) civil organizations participate directly in

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the local governments’ arrangement of services 3) civil organizations provide financial support and voluntary work for local governments 4) several decision -makers take part in civil organizations, and members of the civil organizations are present in the elected bodies (Brachinger, 2008). Despite these difficulties, the cooperation of two sectors is needed from both social and economic point of view. Co-operations are mutual learning processes to facilitate the utilizatio n of each other’s strengths and the available resources more effectively (Breiner, 2008). Social challenges and the third sector The local government system built up after the political transformation in Hungary opened a new era in the history of public and welfare administrations. By democratic elections, the leaders of towns and settlements gained real independence and sufficient legitimacy to represent the power they received. Consequently, the bearers of this power had a typical behavior so tha t they would not involve other partners (including civil organizations) into the management of local matters (Sebestény, 2005). At the same time, the civil society was building up , and these organizations primarily performed their activities at local level. The civil sector also has a role in professional policy forming as well as in supporting social integration, in a sense, that on one hand, they mediate in the process between the government and the citizens exchanging views, on the other hand, they have a very important activity, in our case, to communicate (might indicate) the unsatisfied and new social needs and demands to the professional decision-makers and politicians. All these might influence the shaping of certain policies, like social policy. An undoubtedly positive participation complements these when the organizations themselves also get actively involved in satisfying the arising social needs and demands, highlighting the situations when they recognize and satisfy uncommon, special needs, and thus they fulfill a suppletive role in the social-political system (Sebestény, 2005). Participating in the execution of public tasks, they are able to correct the drawbacks and deficiencies of the governmental system of social services, also to render serv ices more personalized and flexible. Nevertheless, we may presume that these functions and roles of the Hungarian civil organizations cannot be as successful as required, due to the collective effect of the legal changes to be presented later, and the “power orientation” and the “power dependence” as mentioned earlier. The transformation of the pluralist services system: the opportunities and limitations of the civil participation in the execution of local governments’ social duties after 2010 After the system transition, the local governments gained a prominent role in the organization of social public services, registered by Act III of 1993 on Social Administration and Social Benefits. They became responsible for the provision of financial and in -kind benefits, for the care of working-age inactive people within this framework. The municipal offices established and disbursed the additional income supplement in cash and in -kind benefits. The local governments became responsible for the provision of specialized services, but particularly in the care for the elderly, for the smaller local municipalities also widely ventured to run such institutions because of the relatively free regulations of undertaking these tasks. The basic service functions were distributed among the different-sized municipalities, based on the principle of differentiated authority installation. Hoffmann (2013) terms this social regime as settlementoriented that is characterized by placing social benefits onto municipal level, delegating the organization of basic services to the local level, and the option to take over the specialized services of the counties. The provisions of the Child Protection Act 1997 3 complemented all this as the child protection system was connected to the municip al social policy. The personal benefits for children were placed at the local and county governments with differentiated responsibilities and authority installation, while the child protection authority’s tasks were 3

1997 XXXI. Law on Protection of Children and Guardianship Administration

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installed at notaries and the child welfare agency in towns (the executive administrators in the municipal office). Before 2010, state subsidy was gradually reduced, the maintenance expenditure of the institutions grew, new needs and tasks arose, and consequently, the local governments aimed for the involvement of resources from outside and sought to outsource tasks to ensure adequate services. As alternative solutions, mostly public services were outsourced; and there were privatization, concessions and non-profit organizations (Kákai, 2013). After 2010, the management of the system of social public services, particularly the municip al social public services, has been significantly transformed at the system level. The transformation of the management of the financial and in-kind social benefits have clearly reduced municipal responsibilities and increased state administrative duties. However, the most significant changes have occurred in the management of personal social services. A robust and far-reaching centralization has occurred (Hoffman, 2013), as the first step in 20114 , the social and child protection institutions performing specialized services were placed under the state administrative jurisdiction, which had been maintained by county governments until then, that is, the county governments’ role to maintain the institution was abolished. As the next step in centralization in 20125 , the social and child protection institutions maintained by the local governments and their associations until then, came under state administrative control. Because of all these, at present, the local governments have only tasks and powers in the specialized services in the field of elderly care. After the change of government in 2010, the new Civil Code "supplemented" the above described, which, however, fundamentally changed the previously established operating structure, the relationship between civilians and local governments. The concept of civil law merged the formerly fragmented legal environment, and a single law recorded 6 the regulation of the sector. The law has further complicated the civil engagement and activity in the organization and commitment in the task of social-welfare benefits. One reason is that the task funding rules have changed. The law has brought the biggest change in that, unlike previou s regulations that controlled activities, it assesses the management environment, hence, the acquisition of non profit status is not based on whether the organization performs the activities listed by law, but whether it possesses such social support and adequate resources that presume the service of the community. Such indicators are the revenue from 1% from the personal income tax, the amount of the total revenue and number of volunteers. Changing funding rules in this regard and the new task-financing do not promote the spread of alternative service forms , but state solutions. Nor did the new law confirm the role of social organizations in performing public services (Horváth , 2012), with the exception of public services carried out by the Churches, the re gulation has become more differentiated in this context, the state’s attitudes openly and admittedly are not neutral as concerns either the actors or the activities. 7 Both the new regulations governing the operation of civil organizations and the social and child protection measures will result in changes that are expected to make further serious impact on the civil organizations’ activity, on the collaborations of local governments and civil organizations in the field of welfare services , as well as on the opportunities for new fund raising forms, especially for involving tender resources. Projectification of the civil sector The massive amounts of projects in the society has an exceptionally powerful effect on the extent of redistribution processes and the directions of the distribution, the behavior and hierarchical proportion of economic actors, and the operation of the inst itutional or decision-makin g 4

2011 CLIV. Law 2012 CXCII. Law 6 2011 CLXXV. Law on the right of association, a non-profit legal status, as well as the operation and support of civil society organizations 7 2011 CCIV. tv. Law on the right to freedom of conscience and religion, as well as churches, denominations and legal status of religious communities 5

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mechanism (Voszka, 2006). In a sociological sense, all this means that the project, as an operative form, is gradually becoming the organizational strategy of the society, which enables a more effective management of the increasing complexity and dynamics of the society and its environment (Czibere, 2013). Tender systems that has built up after EU affiliation have fundamentally rearranged the developmental systems (Kovách , 2008), demanding a projectbased and project-oriented decisional and management logic, even in certain fields of the administration that include preparing solutions for social problems. As compared to the past, this is a superior form of intervention, much more suitable to solve unpredictable, unexpected or unconventional situations (Sjöblom, 2006) than the previous ones. “Projects can be considered as organizational reactions to the modern market economy’s turbulent circumstances” (Jarjabka, 2009, p. 36). Projectification is constantly taking place in the admin istrative as well as in the business systems. Project interests and projectification processes appearing in the public and the private sectors operate, and prevail much the same way. Incorporating projects into bureaucratic systems creates a chance to link vertical and horizontal structures, “which, as an operating principle, would not be able to characterize bureaucratic administrative systems until the temporary organizations (projects) have occurred in a large number and loosened the otherwise traditional linear structural order, and created a need for this new type of organizational form and the relevant, new type of expertise” (Czibere, 2013, p. 109). In the public sector, projects chiefly serve stability and work as tools of exceeding bureaucracy (Sjöblom, 2006). This project-oriented social logic means the usage of new kinds of cooperation and power distribution techniques for the interest groups generated by the projects (Kovách & Kristóf, 2005). Projects only occur in and serve the appropriate interest spheres, and they are capable of operating by group interests. Mainly external and internal power relations influence their dominance wherein power values and power mentality prevail (Czibere , 2013). The flo w of knowledge, ideas, practical experience and public funds dedicated to development occur via the projects (Kovách, 2000). Tendering activity An important indicator of the civil organizations’ maturity is their weight in the national economy. In Hungary, the income of civil organizations had been growing exponentially for the last two decades, but this tendency stopped in 2012, and it paused in 2013 (KSH, 2014). The increase is likely due to the involvement of tender funds, and to the fact that the development of civil society and local communities has become a priority in the European Union. The tendering activity of the Hungarian civil organizations after EU affiliation emerged as an essential question in several aspects. The weight of the non-profit sector was increasing continuously since the political transformation, due to the organization of certain public duties taken over from the state and the local governments. Since 2008, a significant slowdown has occurred because of the global economic crisis that has deeply affected the private sector as well. In particular, the reduction of state aid, the lagging normative -based payments of the undertaken state responsibilities, the uncertainty of payments, or the decreasing amount of duties to take over resulted in significant uncertainties. In addition, a serious impact was the substantial reduction in operating subsidies funded by the National Civil Fund (Kákai, 2010). The change of government in 2010 further aggravated the situation as the political changes and the central government deficit significantly restructured the support of civil organizations. As a result, operational-based, non-normative subsidies are awarded on the primary criterion of the tasks carried out and their social significance. The government has abolished The National Civil Fund and replaced it with the National Cooperation Fund as an organization to distribute resources, where the civilians can delegate only three people into its nine-member board. As state support continuously decreased, EU funds were gaining more and more significance. All this resulted in a substantial increase in the non-profit sector’s support. Thus, resources could be swapped, that is, the possibility to substitute declining st ate funds with tender resources. The great variety of projects has opened up new perspectives in the relationships of civil organizations, and between the civil parties and local governments; nevertheless particular

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problems have also emerged. Those organizations can compete successfully for tender resources and gain greater financial support that have greater capital, operating revenues, professional human resources, and relevant tender and fundraising experience (Ajkay, 2011). The worse conditions a settlement has, the worse the civil organizations’ capabilities become gradually, especially in the most disadvantaged, mainly small and middle-sized settlements. Revenues of non-profit organizations in 2013 were close to HUF 1,242 billion, of which 56 percent were concentrated in the capital, while the share of municipalities was only 7 percent (KSH, 2014). 15 thousand NGOs won tenders in 2013, a total of HUF 136 billion in subsidies, from which, NGOs in Budapest won 46 percent of the funds (KSH, 2014). Civil organizations bid primarily in tenders for operational purposes, based on organizational routines, built on activities practiced for years (Milicz, 2011). This also means that the number of those novel projects is still low, projects that aim at the innovation and initiatives and the consequent service improvements. Developments that function well abroad are often not typical, or they are not yet widespread and known in Hungary; the number of those pioneering development initiatives is exceptionally low, th at react to new situations or seek to solve an old problem with new methods; and cooperation with partners is also not typical, just as ideas, good practices adapted from other sectors. In connection with this, one research highlights the fact that civil organizations – typically the ones working in fields of social services, medicine, education – often fulfil basic administrative tasks, therefore, innovations in their specialization and methodology are neglected (Rácz, 2013). Conclusion Hungarian civil organizations are typically not cooperative and basically do not work in partnerships (Milicz, 2011). The existing network relations are fundamentally scarce and weak, moreover not based on strategy or value, but rather on interest – for example, if a tender requires them to work in a consortium; but otherwise, organizations do not seek cooperation without a specific tender goal. These factors do not promote the search for potential answers or solutions to social problems and challenges. All this happens in a critical period, when continuously increasing poverty obviously cannot be resolved with gov ernmental welfare measures, in a situation when project-generating interest groups competing for the project resources clearly do not seek cooperation and connection with the poorest members of the community. Civil organizations cannot remedy this lack of connections and the consequent lack of innovation, even in certain projects-aided fields of welfare services, although the innovative solutions would be vital to restrain the reproduction social disadvantages and the polarization of the society. This deficiency does not only cause irreplaceable losses from a socio -political point of view, but indirectly affects the means of participation, or in other words, the quality and model of democracy’s institutional system. If the local government and the local civil society are not strong enough, then adverse consequences should result from the operations of adhocracies, informal networks and corporative institutions established to execute development programs and perform certain tasks (Pálné Kovács , 2008). Direct participation, transparency and equal opportunities in exercising interest can be diminished. Civil organizations in the most disadvantaged regions can neither compete for development resources, nor strengthen, facilitate the operation of the socio -political institutional system, nor alleviate social problems, because they lack own resources, expertise and information. In recession, efficient organizational behavior typically seeks outward orientation and internal stability, to strive for entrepreneurship, creativity to meet new challenges, experiment with new projects and find new challenges and opportunities that can help them recover from the recession (Szabó & Csepregi, 2009). An efficient means for the above could be the project, and an effective participant could be the civil society, but today they obviously cannot fulfil these roles in Hungary. The civil organizations’ active role in shaping policy is unquestionable, besides they have significant role in shaping social policy measures, moreover, their active involvement and role contribute to directly meeting social needs and demands. However, the current legislative changes and the civil sector’ power dependence hinder the civil organizations in enforcing the mentioned social policy interventions effectively, as civil organizations would be expected. The

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new civil law, for example, clearly impedes the active involvement of the civil organizations in the social welfare services, so does the spread of alternative solutions besides the existing public services. After a severe withdrawal of state funds in the sector, the EU projects have facilitated to stabilize the sector’s activity by an exchange of resources. The gradually increasing project orientated social logic influences the operation of the civil sector and its relations with the local governments, mainly due to that, in project goals and their implementation, a new type of interest relation is being established between the civil organizations, and the local authorities and the decision-makers of social policy, which affects the local public services, and the enforcement of welfare pluralism in a broader sense. References 1.

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