Kanalas started out as a cleaner at the center. She got the job as part of a work-program employing women from under-privileged backgrounds. She showed considerable success in dealing with severely-disabled children. That is when ESE began training her as a caregiver.

She becomes emotional when talking about those who took a chance on her. “I have very much to thank them for,” she said, “they always give me strength, and I will always remember their kindness. I have learned a lot of good things from them.”

Without the job, Kanalas shudders to think what could have happened. She does not just have ESE to thank, however. The non-governmental organization (NGO) employing her is one of thousands helping out under-privileged people in Hungary – and many achieve their goals because of grants made available by sources like the European Union (EU).

The road to riches
Before Hungary joined the EU last year, Hungarian NGOs had access to grants through the PHARE (Poland and Hungary Assistance for the Reconstruction of the Economy) program. The main goal of PHARE was to assist all of the Central European countries in their preparations to join the EU. The National Development Office (NDO) is the main coordinator of EU funds in Hungary.

According to a statement released by the NDO last year, Hungary spent over 90 percent of allocated PHARE moneys. The rest went into the Cohesion Fund, financing large environment and transport projects. Since their May 1, 2004 accession, the 10 new EU members have been allowed access to the Cohesion Fund and EU structural funds which strive to reduce economic and social disparities between EU countries. The NDO is pleased with Hungary’s ability to use the funds, and is looking forward to 2007 when the amount of available funds is expected to triple.

THE ASSOCIATION for Mutual Assistance is selfsufficient, selling handmade rugs to the communy.

When making funds available to NGOs, the EU sends out calls for proposals, listing specific grant amounts and the criteria needed by organizations to apply. Some funds are specifically directed toward Hungary, while others are put up for competition with organizations around Europe. This competition is stiff; the funding available to NGOs is less than what is available for the private sector. And according to the National Statistics Office, in 2003 there were over 53,000 registered NGOs in Hungary alone.

ESE was the 43rd NGO to register with the Hungarian government after the democratic transition in 1989, according to founding president Mária Némethy, and the organization received donations from a vast array of organizations in the early 1990s.

Dutch volunteers even helped build the small center Némethy works from in the town of Pécel. But EU funding was responsible for ESE’s larger complex in Isaszeg, where Kanalas works. Némethy said her organization received much assistance from PHARE and with such aid she became more informed about the process of grant application. “I got to know the soul of PHARE, and its body,” said Némethy. The soul she refers to is the base of ideas behind project applications. The body is a mountain of paperwork.

Long, long paper trail
Application forms for grants can be intimidating to a first time applicant considering the amount of paperwork involved. Némethy said she was frustrated with the process in the beginning. “We had to account for everything,” she said, “we had to put the most natural things like volunteers and provisions for workers into terms of hours and wages—everything must be quantifiable.” On top of this, Némethy said during the PHARE days, the procedures were even easier than today. After accession she said there were more parties involved … and more paperwork.

JUDIT MOLNÁR said the waiting period for funds is too long.

Judit Molnár, PHARE assistant coordinator at the Budapest-based firm Kurátor Kft, sympathizes with first-timers attempting to tackle application forms. “How to fill it out is very complicated,” she said. “There are several annexes to the application form and the beneficiary has to fill it out perfectly, without any mistakes. The evaluation committee will reject proposals which have any mistakes.”

There are two general rules for every NGO grant application. First, the organization must have been active for two years previous to applying for the grant. Second, the NGO must put 10 percent of their own funding to the project, an amount that can be hard to raise for small NGOs with no money, not even for a professional project staff.

Kurátor was founded in 1989 and is primarily involved in the financial management of NGOs in Hungary. They also assist NGOs in the application procedure for EU grants. Kurátor is currently working with 24 NGOs applying for EU funding, many of which are co-financed by the Hungarian government. These co-financed grants can present a problem to many NGOs said Andrea Kahulits, Kurátor’s managing director.

The waiting game
While the EU is punctual with their promised payment, they claim, the funds coming from the Hungarian government tend to arrive slower. “The first 50 percent arrives two months after the signing of the contract,” said Kahulits, describing a typical scenario. “That creates a lot of problems for the NGOs because they have to realize the amount, in the meantime, from other sources.” Kahulits said this is not just the case for NGO grants, but for company grants as well. “Then they write an interim report,” added Molnár. “If the interim report is accepted, they will receive the other 40 percent later… and then the final 10 percent.”

ANDREA KAHULITS recommends NGOs work in small teams.

Both Kahulits and Molnár strongly agree it would be better if money came from the EU, and the Hungarian bureaucracy was streamlined. “We had a big project and one part of the applicant’s grant came direct from Brussels and the other came from the Hungarian Treasury,” said Molnár. “The amount from Brussels came in about two weeks, from the Hungarian Treasury it took six months.”

Kahulits said in the meantime, NGOs look to other places for some kind of financing. She said getting a loan from a bank is difficult because banks see NGOs as too much of a risk to lend money to. Small NGOs might have less of a chance individually, but Kúrator recommends they work together. “Five or 10 NGOs dealing with the same field of society have to work together,” said Kahulits. “In this case they may have more chances for EU funds.”

Hungarian EU Parliamentarian Katalin Lévai said about 90 percent of the NGOs are small or have small budgets. “If they want to win a tender they must get financial partners,” she said. “The idea of working together is new in the country, but shows a positive developing tendency.”

Lévai said many offices financed by the government help these companies. Sixty percent of their yearly income still comes from the state and it does not look like bureaucracy will be phased out soon. “It’s not a unique problem to Hungary,” said Lévai. “Especially among the new members, they don’t have the experience of dealing with the system yet.”

Organizations sometimes apply for more funding through other means. This leads to an interesting situation for smaller NGOs if they start winning all the grants they apply for. Major organizations are accustomed to handling large sums of money, but the experience can overwhelm smaller NGOs.

“Sometimes they have no financial knowledge and they don’t know the tax laws, they do crazy things,” said Kúrator’s Kahulits. “There is no controlling system between the big money makers or money distributors in Hungary and sometimes one project is double-funded, I think that’s a problem. If [the organization’s] budget is EUR 100,000 and they have two [funding] resources, it becomes EUR 200,000. They don’t know how to handle such a large amount of money and they sometimes use it for private resources.”

Learning from rejection One person who did not shy away from an excess of funding was György Szabó, director of the Trafó Contemporary Arts House in Budapest. Szabó was able to access some of the pre-accession funds available for cultural NGOs in Hungary. When applying for a grant for his Workshop Foundation, the educational foundation received a large sum of money, climbing into the neighborhood of EUR 150,000. “In this case, we asked for the grant but it needed huge resources and activity for its value,” said Szabó. “It was a positive effect on our foundation though because we had to triple our activity. We conceived several other projects and launched many programs under the umbrella of this grant.” Szabó is currently involved as a partner in six projects, four dealing with the visual arts and two in the performing arts. Applications have been handed in, and the waiting game has begun.

MÁRIA NÉMETHY, ESE’s president, was frustrated with EU paperwork at first, but has learned a lot from the application process.

Szabó also laments the paperwork, although he has a background in economics which comes in handy. He understands, however, how the sheer logistical scale of applying could baffle smaller NGOs.

“The first time we applied we were rejected,” said Szabó. “We had to redo it again. But it was a kind of educational process for us and the second time it was much easier.” Szabó also said chances for making international contacts were greater, as the types of grants he applied for required them.

At ESE, Némethy also said the more her association applies for grants, winning some and losing some, the better they get at handling the procedure. She’s even been able to prepare for the waiting period between being awarded the grants and actually receiving the money. She’s not as bothered by the wait anymore, even sympathizing with the people involved in getting the money to her. “They are not doing it on purpose, it’s just slow,” she said. “I’m patient. The country is going in a positive direction. Unfortunately politics are not as fast as civil life.”