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Regional Management of Funds for Micro-Projects Implemented by NGOs as a Catalyst for Economic Activity of Local Communities on the Example of the Program “Społecznik 2017-2024”

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European Research Studies Journal
Volume XXVI, Issue 1, 2023
pp. 560-571
Regional Management of Funds for Micro-Projects
Implemented by NGOs as a Catalyst for Economic Activity of
Local Communities on the Example of the Program
“Społecznik 2017-2024”
Submitted 05/02/23, 1st revision 22/02/23, 2nd revision 21/03/23, accepted 30/03/23
Rafał Szymański
1
, Joanna Rzempała
2
, Agnieszka Bretyn
3
Abstract:
Purpose: The article seeks to systematize knowledge on the principles of financing micro-
projects implemented by the NGO sector in the West Pomeranian Voivodeship in 2017-2022
on the example of the "Społecznik" program carried out with funds from the budget of the
West Pomeranian Voivodeship through a literature review and analysis of available regional
reports. The discussion and conclusions elaborate on the topic of NGO financing, with a
particular focus on foundations and associations, from the perspective of their importance to
strategies for building and strengthening local communities and enhancing regional
economies.
Design/Methodology/Approach: In order to achieve the goal, the following research
questions were formulated: 1. Definition of basic terms related to the topic of the article:
financing of micro-projects implemented by NGOs 2. What are the reasons why the
phenomenon of implementation of grassroots social initiatives is important for the
management strategy of NGO financial support? The structure of the article corresponds to
the stated objectives. The introduction describes the genesis, research problem and basic
definitions related to the phenomenon of grassroots local community initiatives, including
micro-projects. A literature review of socioeconomic issues related to types of NGOs, their
sources of funding and NGO needs was conducted.
Findings: Micro-project financing under the advance payment system, is an important
element in the management of social economy entities in regional economies, hence this
choice of keywords.
Practical implications: NGOs can influence the local economies in a variety of ways, for
instance, by initiating development projects, supporting social entrepreneurship, providing
social services, or raising public awareness. Their activities contribute to increasing the
potential of the local economy, creating jobs and improving the quality of life of local
residents.
1
PhD, Assistant Professor at the Department of Tourism and Spatial Organization, Institute
of Spatial Management and Socio-Economic Geography, Faculty of Economics, Finance and
Management, University of Szczecin, rafal.szymanski@usz.edu.pl;
2
PhD, Assistant Professor at the Department of Organization and Management, Institute of
Management, Faculty of Economics, Finance and Management, University of Szczecin,
joanna.rzempala@usz.edu.pl;
3
PhD, Assistant Professor at the Department of Economics, Institute of Economics and
Finance, Faculty of Economics, Finance and Management, University of Szczecin,
agnieszka.bretyn@usz.edu.pl;
Rafał Szymański, Joanna Rzempała, Agnieszka Bretyn
561
Originality value: The present study is related to Micro-projects implemented under the
“Społecznik” Program as an example of how, even the smallest grants with an average value
of PLN 5,000, can influence the activity of local small communities.
Keywords: NGOs, European funds, social economy entities, regional economy.
JEL classification: L31, L38, M19, M21, R11, R19, R58.
Paper type: Research article.
Acknowledgments: The project is financed within the framework of the program of the
Minister of Science and Higher Education under the name “Regional Excellence Initiative”
in the years 2019 2022; project number 001/RID/2018/19; the amount of financing PLN
10,684,000.00.
1. Introduction
Third sector entities, or non-governmental organizations (NGOs), play an important
role in the development of the local economy. They can influence its development in
a variety of ways, for instance, by initiating development projects, supporting social
entrepreneurship, providing social services, or raising public awareness. Their
activities contribute to increasing the potential of the local economy, creating jobs
and improving the quality of life of local residents.
Thus, cooperation with NGOs can be a valuable part of the development strategy of
the local economy. NGOs can additionally have a significant impact on the local
economy by promoting sustainable development, improving social services,
supporting entrepreneurship and raising public awareness of important issues. One
way for NGOs to influence the local economy is to initiate and support community
projects that promote sustainable economic development. This can include initiatives
that focus on agriculture, tourism and small business development, to name a few.
By providing training, resources and support to local entrepreneurs and small
business owners, NGOs can help create jobs and stimulate economic growth. NGOs
can also improve the quality of social services in the local community by providing
services that may not be available through government agencies or private
companies. This can cover health care, education and housing services, among
others. By providing these services, NGOs can help support vulnerable community
members and improve the overall quality of life.
In addition, NGOs can promote entrepreneurship and economic development by
providing access to capital, business training and other resources to individuals and
groups interested in starting their own businesses. This can lead to the creation of
new businesses, which in turn can create jobs and generate economic growth.
Regional Management of Funds for Micro-Projects Implemented by NGOs as a Catalyst
for Economic Activity of Local Communities on the Example of the Program “Społecznik…...
562
Finally, NGOs can help raise public awareness of important issues such as
environmental protection, social justice and human rights.
By raising awareness and encouraging public action, NGOs can help create more
engaged and informed citizens, which in turn can help promote economic and social
progress. However, in order to carry out all of the above tasks, NGOs need financial
support.
2. Literature Review
Nonprofit organizations play a crucial role in addressing social, economic, and
environmental challenges, relying on various sources of funding to sustain their
operations and fulfill their missions. This literature review examines 72 publications
that shed light on the strategic planning, governance, financing, and impact of
nonprofit organizations, as well as the role of external factors such as government
collaboration, EU funding, and global civil society. The review provides insights
into the challenges and opportunities faced by nonprofits in securing financial
resources and navigating the complex landscape of funding.
Strategic planning and governance are essential for the success of nonprofit
organizations. Allison and Kaye (2005) emphasize the importance of strategic
planning as a practical guide for nonprofits. Similarly, Behrendt and Braun (2020)
highlight the governance structures that underpin effective nonprofit management.
Funding is a critical aspect of nonprofit sustainability, and understanding the
dynamics of funding sources is vital.
Anheier and Daly (2014) develop an analytical framework for understanding the
politics of nonprofit funding, while Eikenberry and Kluver (2016) discuss the
marketization of the nonprofit sector and the potential risks it poses. The impact of
EU funding on nonprofits in Central and Eastern Europe is examined by Bădescu
and Moldovan (2013), Balsiger and Trappmann (2018), and Fohlin (2015).
The opportunities and challenges of financing NGOs in specific contexts, such as
Romania (Dolea and Bodislav, 2017) and Poland (Kasprowicz and Kasprowicz,
2014; Oleksy, 2011; Widera, 2017), are also explored. Development NGOs and their
contributions to global justice are discussed by Biekart and Fowler (2018). The
challenges faced by nonprofits engaged in political advocacy are examined by Fisher
(2017), Minkoff (2015), and Saxton and Wang (2014).
The impact of European integration and EU accession on financing civil society
organizations is explored by Bruszt and McDermott (2013) and Ruta (2014). The
globalization of the nonprofit sector and its responses to economic, political, and
social changes are discussed in Calabrese and Seibel (2019) and Lipski (2010).
Rafał Szymański, Joanna Rzempała, Agnieszka Bretyn
563
In conclusion, this literature review provides a comprehensive overview of the
strategic planning, governance, financing, and impact of nonprofit organizations.
The publications examined shed light on the challenges and opportunities faced by
nonprofits in securing funding from diverse sources, navigating the changing
landscape of global civil society, and engaging in effective advocacy. This review
serves as a valuable resource for researchers, practitioners, and policymakers
interested in understanding and supporting the nonprofit sector's vital contributions
to society.
3. Data and Methods
The authors based their study on a literature review of access to NGO funding
sources in Poland. The bibliography contains 72 publications, including scientific
articles, books, specialist literature and electronic sources from 20022020, with the
most recent ones from 2017-2020 regardless of their origin.
During the desk research analysis, the authors used the following database: Scopus
and Web of Science. The authors used these databases because of the ability to
access them through their accounts and to enable the preparation of a complete
literature list for the article. All publications were analyzed in the Web of Science
and Scopus databases. The order of words used to select articles is: “NGOs,”
“European funds,” “social economy entities,” “regional economy”.
As part of the analysis of micro-project financing in the West Pomeranian
Voivodeship, the authors based their study on a review of information on the results
of the 2017-2022 competitions of the "Społecznik" program, which they further
deepened with expert analysis using the Delphi method, which is one of the tools for
structuring the group communication process. In the context of the study in question,
the Delphi method was used to obtain an assessment of the local communities that
managed the micro-projects concerning their effectiveness and attractiveness to the
final beneficiaries.
4. Research Results
4.1 Structure of the NGO Sector in Poland
In Poland, as of the end of December 2021, there were about 138,000 NGOs,
including more than 107,000 associations and nearly 31,000 foundations, registered
in the REGON National Business Registry. Of these legal forms, associations make
up the majority of registered NGOs in Poland.
In addition, some 16,500 voluntary fire brigades also take the legal form of an
association. It is worth pointing out that the number of registered NGOs does not
reflect the number of organizations actually operating. It is estimated that only about
Regional Management of Funds for Micro-Projects Implemented by NGOs as a Catalyst
for Economic Activity of Local Communities on the Example of the Program “Społecznik…...
564
50% of registered NGOs are actively operating, while the remaining organizations
have suspended their activities or ended their activities, but have not deregistered.
Thus, it can be estimated that there are actually about 70,000 associations and
foundations in Poland. At the same time, it should be stressed that the definition of
the non-governmental sector in Poland is relatively narrow and includes only
associations and foundations.
Indeed, there are more than 70,000 other entities belonging to the broader social
sphere, such as hunting clubs, labor unions, social cooperatives, employers'
organizations, housewives' circles, farmer's circles, craft guilds, church institutions
or political parties.
Figure 1. Number of non-governmental organizations registered in Poland frrom
2002 to 2021
Source: Own elaboration based on REGON and KRS databases.
The number of registered associations and foundations varies by region in Poland.
The largest number of registered NGOs more than 24,000 is in Mazovia, with
more than half of the registered organizations located in Warsaw.
More than 12,000 organizations are registered in Greater Poland, Lesser Poland,
Silesia and Lower Silesia. In turn, the smallest number of NGOs is registered in the
Opole, Lubusz, Podlaskie and Świętokrzyskie Voivodeships about 3-4 thousand
each.
It should be recognized that the number of foundations in Poland is growing much
faster than the number of associations. In 2021, over 5,000 new NGOs were
established, with only 800 more associations than foundations. Whereas in relation
Rafał Szymański, Joanna Rzempała, Agnieszka Bretyn
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to previous years, for example, in 2011 three times as many associations were
established as foundations, and in 2007 the difference was as much as seven times.
3.2 Program “Społecznik” in the West Pomeranian Province in the Period
2017-2024
The solution initiated by the Marshal of the West Pomeranian Voivodeship was to
implement a public task by awarding micro-grants in a minimum number of 500 in a
given calendar year, with at least 100 for each of the five subregions of the West
Pomeranian Voivodeship.
The manner of implementation of this public task was in accordance with the
Program of Cooperation of the West Pomeranian Voivodeship with Non-
Governmental Organizations and ensured compliance with the relevant cooperation
programs for 2017-2024. Separate calls were announced for each subregion, and
subregion membership was determined on the basis of where the initiative was
implemented or where the recipients of the measures lived.
All projects implemented through micro-grants had to comply with the main and
specific goals of the 2017-2018, 2019-2021 and 2022-2024 Społecznik Program,
which sought to build the identity and cohesion of the region, including by
supporting and promoting initiatives of West Pomeranian residents, strengthening
trust and ties between citizens, the ability to work together in the immediate
environment to achieve common goals and strengthen converging values.
In addition, projects implemented within the framework of the 2019-2021
Społecznik Program had to demonstrate community involvement, which meant
working with the local community, partners and undertaking activities that actively
involve the immediate environment for the implementation of the project.
Specific objectives included, inter alia, supporting and disseminating open and
active civic attitudes, sensitization to the needs of the immediate environment,
supporting and promoting volunteering, transferring good practices and experiences
between subregions, and involving citizens in deciding the directions of cooperation
and development of the region.
The applications, evaluated by experts hired by the program operator, were subject
to formal and substantive evaluation. Failure to meet the regulatory requirements
under any of the categories in these evaluations resulted in rejection of an
application. Those that met all the criteria were ranked according to the number of
points obtained.
The allocation of funds for each subregion defined the final list of applications
approved for funding, as well as those that were placed on the reserve list.
Regional Management of Funds for Micro-Projects Implemented by NGOs as a Catalyst
for Economic Activity of Local Communities on the Example of the Program “Społecznik…...
566
Table 1. Applications for funding of microprojects implemented under the
“Społecznik” Program successfully evaluated in 2022-2023.
Results of expert evaluation
Approved applications
Reserve
applications
Year of evaluation in the first
call
2022
2023
2023
Subregion A
118
82
59
Subregion B
117
82
45
Subregion C
117
82
66
Subregion D
120
82
70
Subregion E
118
82
45
Source: Own elaboration based on https://spolecznik.karrsa.eu/.
The 2019-2021 Społecznik program also focused on supporting activities that
increase youth involvement in the life of local and school communities, strengthen
the civic awareness of students and pupils, and stimulate young people to create their
own initiatives for the benefit of their immediate environment. These goals covered
many areas, such as new technologies and innovation, education, climate policy.
5. Summary and Discussion
Assessing changes in the wealth of NGOs is crucial to understanding the sector's
financial situation. For this purpose, the average values of an organization's revenues
in a given year and the percentage distribution of organizations whose revenues fall
within each range are often used. Average revenues are determined based on the
median, meaning that half of the organizations have less revenues and the other half
have more revenues than the median value.
A comparison of the nominal value of organizations' average revenues between 2001
and 2020 shows a gradual increase in revenues, albeit with some halting of the
upward trend between 2003 and 2007, as well as in 2011 and 2020. However, to get
a more complete picture of the sector's financial situation, it is necessary to take into
account the inflation rate. After accounting for inflation, the picture of changes in
NGO wealth is much less optimistic.
Organizations' real revenue levels have not increased since 2001, and at most have
remained at similar levels or declined, as was the case between 2003 and 2011 and
in 2020. It is worth noting that the average revenue of an organization also depends
on many other factors, such as the type of activity, organizational form, geographic
coverage, size of the organization and many others. Therefore, in addition to the
value of average revenues, it is also worth noting the structure of revenues within the
sector to get a more complete picture of the financial situation of NGOs.
Non-governmental organizations have a variety of sources of funding for their
activities, including collecting membership fees, applying for grants from local
Rafał Szymański, Joanna Rzempała, Agnieszka Bretyn
567
government or government/central institutions, and acquiring donations from
individuals, companies or institutions, among others. Over the past two decades,
several changes can be seen in the level of use of these five most popular sources of
financing.
It can be concluded that in Poland, the share of public funds in financing
organizations has increased slightly, and the level of use of philanthropy has
diversified donations from individuals have become more popular, while donations
from companies and institutions have become less popular.
However, it is worth noting that there has not been a fundamental change here still
the largest number of organizations fund their activities with the help of grants. The
research shows that the share of local government funds in organizations' budgets
increased over the 2001-2017 period, with a particularly marked increase between
2005 and 2017 (by 18 percentage points). However, due to the COVID-19
pandemic, a decrease in this trend was observed in 2020 (by 8 percentage points
compared to 2017).
The use of government funds also increased by 10 percentage points between 2001
and 2020, despite a marked break in the upward trend in 2011. Sources of revenue
are crucial to the operation of NGOs and determine their financial stability. The
most important sources of revenues for NGOs are membership fees, grants from the
local government or government/central institutions, donations from individuals and
companies or institutions. Several changes in the level of use of these sources have
been observed over the past 20 years.
There has been little increase in access to public sources, while the level of use of
philanthropy has diversified, with donations from individuals becoming more
popular and donations from institutions and companies less so. The share of local
government funds in organizations' budgets has increased, with the largest increase
between 2005 and 2017 (by 18 percentage points). However, the 2020 pandemic
caused this trend to drop by 8 percentage points compared to 2017. The use of
government funds also increased (by 10 percentage points between 2001 and 2020),
despite a clear break in the upward trend in 2011.
The importance of an organization's revenue sources can also be assessed from the
perspective of their weight in the budget of the sector as a whole. Such a take makes
it possible to see what share of the revenues of all organizations came from each
source.
However, it should be borne in mind that the proportion of funds from different
sources in the budget of the entire sector is influenced primarily by the revenue
structure of the most affluent organizations (the revenues of the 10% most affluent
organizations accounted for 85% of the value of the budget of the entire sector in
2020).
Regional Management of Funds for Micro-Projects Implemented by NGOs as a Catalyst
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In addition, an increase or decrease in the share of a source does not necessarily
mean a change in the nominal value of the funds flowing from it. This is because if
the overall amount of an organization's budget changes, the percentage of funds
from a particular source (even if the amount from it is the same) is affected.
Interpretation of shifts in the composition of revenue sources used by organizations
over the past 20 years is complicated because of various objections and data on the
share of each source in the sector's budget in successive years.
6. Final Remarks and Recommendations
The funding of even the smallest projects in terms of budget has a significant impact
on the formation of civic attitudes and the development of NGOs. Micro-projects
implemented under the “Społecznik” Program are an example of how even the
smallest grants with an average value of PLN 5,000 influence the activity of local
small communities. The continued number of correct applications submitted, with a
slight upward trend, testifies to the project maturity of applicants at the stage of
writing applications, but also their implementation, as evidenced by the almost 100%
completion of signed contracts.
The importance of this micro-assistance remains closely linked to the development
of local economies. This is mainly due to the fact that the projects are implemented
with the involvement of local companies, and funds are transferred to them as a
result of purchases made as part of the projects. In addition, those involved in
volunteer projects very often continue their involvement by returning to work
(people 65+) or become involved in mentoring young project participants just
entering the labor market.
The authors recommend that entities utilizing support for their non-profit
organizations, not only within the Społecznik Program, focus primarily on pre-
project needs analysis of the ultimate beneficiaries when preparing their projects.
Based on a literature review and practical experiences, we also recommend active
involvement of the management boards of the project-implementing entities. An
example set by top management is always a great motivation for project team
members. Best practices in preparing such projects demonstrate the value of
consulting not only within the team developing the project assumptions but also
among all stakeholders accessible to us. Such an approach, in the authors' opinion,
will help avoid most errors resulting from a mismatch between the project scope and
the needs of its beneficiaries.
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