After more than a year of preparation and public and professional consultation, the Ministry of Public Administration and Justice today submitted to Parliament the bill on the Right of Association, Non-profit Status, and the Operation and Funding of Civil Society Organisations (or NGOs).

NGOs will be able to rely on stable, transparent rules and less administration; citizens will be able to rely on much more precise and clearer rules regarding the right of association, and reassuring guarantees regarding the utilisation of public funds for NGOs. The Government expects more legitimate and transparent functioning in the civil society sphere, and thereby increased trust in NGOs, and a growth of assertiveness in the civil sphere that will play a role in easing our country’s problems.

Both the Government and the civil sphere have made it clear that the new legislation is needed. The problems and changes in economic, social, political and legal environments occurring since the introduction in 1989 of Act II on Association have made reform an urgent cause. One of the characteristic problems in this sphere is that trust in NGOs is lower than in other countries. Citizens have become disillusioned over the last twenty years, as organisations styling themselves as NGOs have abused their trust and financial support. The processes around us indicate that the basis of a successful society that can truly face up to its problems is public assertiveness and confidence. This means an active, enterprising society, and civil society organisations which act responsibly – including with regard to public funds.

In summary, behind the bill now before Parliament there is more than 16 months of specialist preparation, the experiences of the past twenty years, more than one hundred meetings with all affected parties, and the processing of nearly two thousand written suggestions. As a result the Ministry believes this to be a bill that everyone can claim ownership of, and that this will aid in the effectiveness of the subsequent legislation.


The regulation of NGOs in Hungary is based on the declaration of freedom of association in the Constitution. The regulation is determined by Act II on Association, enacted in 1989.

In comparison, before 1989 (except for a short period) the right of association only existed in a form which was governed by rather restrictive rules.

After the Act entered into force, an increasing number of individuals and legal entities took advantage of their new right to associate. Today there are over 78,000 NGOs (e.g. associations and foundations) registered in Hungary.

Current situation

The present legal regulations affecting the establishment and operation of NGOs are complicated, ambiguous and difficult to amend. Difficulties facing NGOs in carrying out their social duties include: administrative burdens, duplicated data records, uncoordinated registration and complicated grant systems.

New regulation

Prior to the drafting process, a public request was issued by the relevant minister of state, asking for NGOs’ recommendations on legislation related to civil society. The request was very successful, with hundreds of NGO representatives sending opinions and proposals. The total number of organisations involved in submitting recommendations was close to 1,000.

The bill sent to Parliament ensures freedom of association and its guarantees, while also ensuring legal certainty and calculability. The legislation provides new opportunities for citizens through the introduction of a new type of organisation classed as a ‘civil corporation’. This new category expands freedom of association and creates the opportunity for establishment of an organisation without legal entity that operates with a more flexible structure and has fewer administrative restrictions compared to other NGOs.

One of the main goals of the bill is to integrate into a unified statutory instrument several laws dealing with the management of civil society.

A major issue identified by NGOs during the process of public dialogue was the administrative obstacles encountered when preparing annual reports (balance sheets, P/L accounts, public benefit reports and statistical reports), as civil society organisations are currently required to submit an increasing number of reports. The new regulation addresses this administrative issue by merging the reports required, and thus reducing their number.

Another significant element of the bill is that it clarifies different NGO categories. A highlighted goal of the new legislation is to restore the prestige of civil organisations’ public benefit status through introduction of an objective, verifiable system of conditions. A prerequisite of the status is that NGOs choose any public duty defined in any law. In addition, the law will require organisations to meet two basic criteria: organisations will need to prove they have support within society and that they have appropriate resources.

A major innovation in the bill is the establishment of the National Cooperation Fund (NEA), designed to provide NGOs with state subsidies. The new body replaces the National Civil Fund, which over the last seven years has been unable to increase efficiency and ensure sound financial management either for itself or for the organisations it has financed. Changes in the operation of the new fund are also necessary in order to avoid misuse of funds and abuse of the grants system. The new legislation is therefore aimed at setting up a more transparent, verifiable and traceable grants scheme. Unlike under the previous system, the NEA will not allow financial support to be granted to NGOs with links to decision makers  within its own ranks.

Expected results

In a democracy, provision and protection of fundamental rights is an incontestable right and responsibility of the state. Consequently, the new Act meets these expectations and contributes to the development and strengthening of civil society with legislation that creates a supportive operational environment.

The operation of NGOs will thereby become more transparent, both for others in civil society and for society as a whole, resulting in an increased level of trust in civil society organisations. All in all, the quality of the change in civil society will be reflected in the improvement of programmes and services provided by Hungarian NGOs.