Individuals and businesses have more and more resources and willingness to tackle the most pressing social and environmental challenges. Companies are starting to operate in a responsible and sustainable manner, motivated by increasingly conscious employees, investors, and consumers. As many as 55% of Romanians are already willing to pay more for products and services offered by socially responsible brands.
Understanding what stands in the way to a greater social engagement of business and individuals, what barriers do they face, including tax and legal aspects, and what are the potential incentives that could positively impact their engagement and overcoming these barriers is in the best interest of us all.
It is our hope that the barriers and recommendations, prepared in collaboration with organizations that are shaping the Romanian social impact ecosystem, will be helpful in establishing priorities and directing further action.
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Consultations’ Participants
Association for Community Relations
Bucharest International School of Management
Concordia Employers’ Confederation
Family Business Network Romania
Foundation for the Development of Civil Society
French Chamber of Commerce in Romania
German-Romanian Chamber of Commerce and Industry
Government of Romania, Department of Sustainable Development
National Council of Small and Medium Private Enterprises in Romania (CNIPMMR)
Romanian Diversity Chamber of Commerce (RDCC)
Romanian Federation of Community Foundations
COUNTRY PROFILE
Romania, one of the largest countries in the CEE region, is taking steps to address a variety of social challenges and a number of initiatives have been launched in recent years to build social engagement. As a result, the appetite for social impact is growing, as is the market, but many barriers continue to hinder development. A major challenge to long-term engagement is the project-based approach of both, capital owners and impact providers. Many initiatives are limited by short timelines, detailed, inflexible budgets, and short-term goals. As a result, there is not enough space to focus on long-term impact and collaboration, or develop organizational capacity.
To read more, download the reportLEGAL & TAX
Barriers & Recommendations
Recommendation:The current form of tax redistribution is effective and enables the financing of numerous initiatives; however, it would be worthwhile to consider the introduction of tax deductions, as this outstanding generosity of the state, unparalleled in the region, may one day come to an end or be significantly reduced, in which case donations would play an important role in filling the resulting gap. A culture of giving needs to be developed before that happens.
To read more, download the reportRecommendation: Currently, non-profit organizations enjoy several tax exemptions for their economic activities. As the economic activity of non-profit organizations is highly scrutinized by the authorities, the latter should provide guidance regarding the approved types of economic activities in order to reduce the risk of activity reclassification. Creating a positive narrative around the commercial activities of social organizations is also important, because many organizations still fear that making money will be perceived badly by donors.
To read more, download the reportRecommendation: Implementing and improving the quality of public programs aimed at increasing investments in Romanian social enterprises is worth considering by the Romanian authorities. It is important to collect information about best practices and the most effective directions in this area, because especially in the younger generation there is an evident need to combine business with social activity, and it would be worthwhile to develop a formula that addresses this combination.
To read more, download the reportRecommendation: The government could issue guidelines to help companies demonstrate the links between their pro bono and business activities. This would reduce risk for companies, provided the guidelines are clear and unambiguous.
To read more, download the reportRecommendation: The first step in developing this area should be to promote education and raise awareness among investors and fund managers. Effective action in this area requires the exchange of experiences, proof points, and success stories. The example should come from the market’s biggest players, the industry’s leaders and trendsetters. It is also essential to develop the offer of start-ups and companies. Public authorities could motivate investors and fund managers to invest in sustainable solutions by reducing taxes on exit to compensate them for the slightly reduced profits.
To read more, download the report“SOFT” ACTIONS
Barriers & Recommendations
Recommendation: It is essential to raise awareness among capital providers, both private and public, of the need to provide core funding and build the capacity of nonprofits and other impact providers so that they can focus on delivering long-term, impactful solutions rather than going from one project to another.
To read more, download the reportRecommendation: What is needed is to encourage a shift in thinking from the short term to the long term and, most importantly, link the social engagement of companies to their everyday business operations. This can be achieved by demonstrating the business benefits of responsible action, promoting good practices, and initiating collaborations.
To read more, download the reportRecommendation: There is a need to build international relationships, transfer knowledge from more mature markets and create competence centers (physical or digital) that will provide unified sources of knowledge and enable the exchange of practices and inspiration.
To read more, download the reportRecommendation: Increasing the transfer of skills and knowledge between sectors would go a long way toward improving the situation. In the social sector, developing skills in the areas of fundraising, communication with donors, and donor database management would facilitate more effective fundraising now and in the near future.
To read more, download the reportRecommendation: More efforts should be made to simplify or even translate the EU requirements into a language that decision-makers in all sectors – private, public and social – can understand. One idea is to link regulations and actions more closely to the Sustainable Development Goals, which have already become familiar and are better understood by various sectors.
To read more, download the reportRecommendation: The lack of trust towards the social sector could be addressed through increased media activity aimed at raising awareness of how nonprofits work, and how important their role is to the society in general. The fear of tax authorities, stemming more from a lack of trust than from actual experience, could be addressed by encouraging authorities to place more emphasis on providing advice rather than meting out punishment, especially when the goal of the activities undertaken is to address social challenges.
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