The State did not dispose of precise information about subsidies distributed to non-profit organisations

Press release to audit No. 18/03 - 25 March 2019

The Supreme Audit Office examined the subsidies from the state budget which had been distributed to the non-government non-profit organisations (NGOs) by the Office of the Government of the Czech Republic and by four ministries — the Ministry of Regional Development, the Ministry of the Interior, the Ministry of the Environment, and the Ministry of Agriculture — between 2016 and 2017. The national NGO policy was not based on an analysis of what services the general public actually needed from these organisations. The Offices did not use a unified system of distribution of subsidies and did not share information about approved projects on an ongoing basis, although they were supposed to. The audit also found differences of billions of Czech crowns in information on how much the state had granted NGOs on subsidies in 2015 and 2016. In the case of grant beneficiaries, the audit found that in several cases they had not complied with the terms of the subsidy.

According to the Czech Statistical Office (CSO), at the beginning of 2016, there were almost 121 thousand NGOs in the Czech Republic, about 7 thousand of them received a subsidy from the state. Based on data from the budget information system of NGOs, the state allocated a total of CZK 11.88 billion in 2016 and CZK 14.38 billion in 2017. However, the government’s strategy towards NGOs for the period 2015 to 2020 came into existence without a prior analysis of what services the government really needed from the NGOs. In the period under review, there were more representatives of the NGO sector than state representatives in the Government Council for NGOs, so they were in a position to exercise a decisive influence on the content of such strategic materials.

At the same time, the Office of the Government did not perform checks on a continuous basis how the objectives of the strategy were being met by means of the aid. It will evaluate everything in 2021 when the aid will have been finished. Some objectives then depend on changes in legislation which, however, are still missing. These are, for example, the Donation Law, the Law on Social Entrepreneurship, or the Public Utility Status.

Auditors also found a difference in the information about how many funds the state provided to NGOs within subsidies in 2015 and 2016. The analysis of the funding provided by the Office of the Government varied by more than CZK 3 billion from the information from the budget information system. NGOs, which processed the analysis of funding for the Office of the Government, had received supporting documents only from selected ministries and had not used the budget system at all. Moreover, the NGOs were adjusting data from the Ministries. However, it was not clear what kind of adjustment was involved. Therefore, the information on the distributed subsidies, which the government and the public had received in the funding analysis, did not reflect reality.

The data differences also apply to the Central Register of Subsidies. The audited ministries and the Office of the Government did not publish all the mandatory information on the NGO subsidies granted in the Central Register in 2016. The overall gap between the Central Register and the budgetary system for all subsidy providers was CZK 3.51 billion. Therefore, due to the lack of information, the data from the subsidy system was not used to evaluate grant applications or to check whether the conditions of a maximum grant of 70 % of the costs had been kept. Neither was included the complete information in the information system of the NGO’s register operated by the Ministry of the Interior. The information should have been uploaded by the organisations themselves and these were not obliged to update it.

When allocating subsidies, individual departments should work together to evaluate applications, for example by delegating members to the evaluation committees, or to provide information on distributed subsidies on an ongoing basis. However, this was carried out only by the Office of the Government and partly by the Ministry of the Interior. Thus, individual departments could not ascertain whether grant applicants were seeking aid for the same project also in other areas or whether the maximum grant threshold of 70 % had been complied with. There was only information available from applicants. At the same time, they set objectives for subsidies to be achieved, very generally, or did not set them at all. Therefore, it was not possible to evaluate whether a subsidy was fit for its purpose.

For 10 out of the 17 beneficiaries audited, auditors detected a breach of the grant conditions. For example, the beneficiaries did not follow the budget of the project, did not carry out the activities for which they had received the grant, or paid ineligible costs from the subsidy.

Communication Department
Supreme Audit Office

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