Serbia’s EU Bid Threatens the Future of Its Social Sector

Today, Belgrade is a diverse, contemporary city with pop-up restaurants and brick-walled cafes. But just 20 years ago, the idea of a modern Serbia poised for integration into the European Union was unthinkable. When Slobodan Milosevic came to power in the mid-1990s, violence among different religious and ethnic groups plagued the region. Gas lines stretched for miles, medications ran low, and violence weakened the region’s infrastructure and economy. In Belgrade, the city’s historic café culture quieted as people stayed indoors, avoiding the military police on the hunt for draft dodgers. NATO bombings of Belgrade in the late 1990s, intended to induce the end of the Milosevic regime, only added to the uncertainty.

On October 5, 2000, nearly 500,000 protesters took to the streets of Belgrade to oppose the results of an unlawful election. They managed to oust Milosevic, who stood trial in 2002 at the International Criminal Tribunal for war crimes, including genocide and crimes against humanity. In jarring contrast to the rest of the city’s renaissance, the remnants of the former Yugoslav Ministry of Defense, cratered by the NATO bombings in 1999, still stand in the city’s center.

Serbians refer to the years of war under Milosevic as “the bad years,” but they are quick to point out how things have changed since then. Though Serbians will never forget their storied past, they are ready for a better future.

In 2003, the country’s new leadership began to negotiate the country’s pathway to membership into the European Union. By 2008, Serbia was on its way to full E.U. membership with a Stabilization and Association Agreement. This first step provides some of the benefits of E.U. membership, including freer access to European markets. In exchange, Serbia was required to fully cooperate with the International Criminal Tribunal for the former Yugoslavia. Four years later, the country was confirmed as a candidate for full membership. To secure this, the country must reform labor laws, curb corruption, and generally bring its policies more in line with the standards of the European Union. Though membership is expected to bring substantial economic benefits, it also has some less obvious drawbacks.

Under new leadership, the country’s isolation from the international community ended. Many NGOs, which had previously been persecuted for their focus on democratization and human rights, began to expand their activities, providing vital services that the fledgling government struggled to offer. Over the past 20 years, the NGO community in Serbia has continued to grow with the majority of its funding has come from EU grants. Today, Serbia’s strong civil society continues to play a critical role in improving the quality of life for the nation’s most vulnerable people.

But access to that support is quickly coming to an end. As Serbia moves closer to EU integration, a decline in funding from both the EU and other multilateral donors threatens the country’s thriving social sector. According to ForeignAssistance.gov, assistance from the United States has been reduced by close to 70 percent in the past 5 years, from $54.8 million in 2010 to only $16.5 million planned for 2015. Once, organizations like USAID, GIZ, and international NGOs were important donors, making grants for democratization and post-conflict projects. Today, they view the country as a much lower priority and are directing their funds elsewhere, leaving many of Serbia’s young grassroots groups searching for new resources.

Beyond declining funding, EU integration poses additional challenges for Serbian NGOs, including more stringent regulations and due diligence requirements that organizations must meet to be eligible for government grants. Higher compliance standards may be easily met by larger groups but present challenges for smaller grassroots organizations. The EU also focuses its funding on specific technical and service-oriented programs, which narrows the types of organizations that can apply for grants and further shrinks the opportunities for other organizations that may not match this focus.

Increasingly, these groups are looking to fill the gap with support from international and domestic companies that can support local nonprofits with their time, talent, and funds. The Ana and Vlade Divac Foundation was founded in 2007 by former NBA All-Star Vlade Divac and his wife to help care for and economically empower refugees. When it began, the Foundation received almost 80 percent of its income from government grants. But five years ago, they decided to focus on private-sector donors and individuals. The Foundation recognized that it could benefit from the business community’s acumen and best practices. They are currently hosting a team of three IBM Corporate Services Corps participants who are updating and streamlining the Foundation’s budget systems. The Foundation has also taken advantage of a capacity-building grant from the U.S.-based Mott Foundation to expand its ability to fundraise and to strengthen donor relations. Ana Koeshall, the Foundation’s director, says it can be more timeconsuming to build personal relationships with private donors, but it’s essential given the increasing withdrawal of more traditional multilateral donors. And, she acknowledges, she has it easier than others. “Divac Foundation is somewhat unique in that it is a private foundation with a famous founder,” she says. “So its brand is easier to understand for private-sector or individual donors.”

Neven Marinovic, the Director of SmartKolektiv, a group that promotes corporate social responsibility by applying business strategies to social problems, says that nonprofits are struggling to meet the requirements of this new reality. “The problem is from both sides,” he says. “Civil society organizations aren’t communicating in a way that is usable for businesses, and businesses don’t see an incentive to invest more meaningfully in a partnership.” In some cases, NGOs are perceived as anti-government, a legacy of their persecution under Milosevic, who painted them as CIA-funded, anti-Serbian groups. Though the war is over, those reputations haven’t faded. This presents a barrier to partnerships with companies that might otherwise be interested in supporting their work.

However, he does see a gradual trend toward private-sector involvement in social-impact organizations. For one thing, civil society is much more diverse than it was during the 1990s, meaning companies wary of anti-government organizations can more easily identify a non-political group. Nonprofits are also becoming more innovative and capable of interacting with businesses. For example, some social enterprises meld social impact with making a profit, which might appeal to businesses. Finally, Neven says, the private sector has realized the need for partnership to achieve social progress. “Businesses are fed up with central government partnerships and ministries,” he says. “So, they do not just turn to civil society organizations, but also public institutions to help get the job done.”

Biljana Djordjevic of the Trag Foundation agrees. She sees an increase in local companies looking for a strategic way to engage with their communities. Trag, a group launched to support Serbia’s democratization during the NATO bombings, realized an opportunity to help companies understand that corporate social responsibility can be a sustainable model of doing business and help create long-term community relationships. They have already helped one company create a local corporate volunteer program. Djordjevic says that nonprofits and businesses also tend to “speak different languages”—businesses focus on the bottom line, while social sector organization are more concerned with sustainable impact. The Trag Foundation is currently helping nonprofits communicate and articulate their impact in a way that can be better understood by the private sector.

To meet the funding gap, all nonprofits are going to have to get better at this kind of communication. Serbian law is not designed to encourage business partnerships with local nonprofit organizations, and while strategic corporate philanthropy is becoming more common, Djordjevic noted, it will not fill the gap left by withdrawing institutional donors. EU integration will open up new funding opportunities specifically focused on sophisticated, established groups, forcing grassroots organizations to explore other options. As Serbia moves toward full EU membership, groups like the Divac Foundation, SmartKolektiv, and the Trag Foundation, as well as a growing number of socially-minded companies, will play an important role in sustaining Serbia’s civil society. By fully embracing the new realities of EU membership, Serbia’s social sector can ensure the country’s continued economic growth and its sustained political stability for years to come.

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