Economic facts


Non-profit sector

photo:  (mojefoto.cz)

The non-profit sector is an important component in the economic and political environment of every developed country. It balances the pressure of the economic interests of the largest players in all types of markets.

Four types of non-profit organizations (NNOs) exist within the Czech Republic, each having a wide range of representatives.

  • Citizen-action associations
  • Foundation and charities
  • Legal entities established by the church or religious organizations
  • Generally beneficial associations

Non-profit organizations are not affiliated with the state and their efforts are aimed at helping all aspects of humanity. The basic motivation of their activities is not a return on investment, but is rather goodwill and the desire to help others. Any profits are reinvested into the organization.

The entities providing public services, entities working for their members, entities that finance the activities of other people, etc., belong to the non-profit sector. Non-profits operate in many publicly beneficial areas, such as social services, caring for the disabled, solving social issues, environmental protection, culture and the protection of cultural monuments and community development. Many of these organizations are also significantly involved in the area of sport.

The following non-profit organizations are among the most significant working the the Czech Republic:

  • Citizen-action associations: The Salvation Army, Bílý kruh bezpečí, Arnika, the Czech Red Cross
  • Foundations and charities: A Drop of Hope, The Tereza Maxova Foundation, The Foundation for Development of Civil Society, The Charter 77 Foundation, Naše dítě
  • Legal entities established by the church or religious organizations: Caritas Czech Republic
  • Civil Organizations: Man in Need, Finále Plzeň, Kühn’s Children’s Choir

Non-profit organizations obtain a large part of their financing from a wide variety of events for the general public. To date the most successful have included Run for a parapeligic, which was organized to support handicapped athletes; the Pomozte dětem or Help Children drive to support disadvantaged or threatened children under the age of 18; the White Crayon and Firefly projects, which collected funding and inform the public about the life of the blind; and yearly Advent concerts.

More information about types of non-profit organizations can be found under Non-governmental, non-profit organizations in the Czech Republic.

Basic legislative scope of non-profit organizations

Non-profit and non-governmental activities in the Czech Republic are regulated by the following laws, which determine the registration process, organizational structure, financial management, economical management and termination.

  • Citizen-action associations comply with Act No. 83/1990 coll., on citizens’ associations, as amended.
  • Generally beneficial companies comply with Act No. 248/1995 coll., on generally beneficial companies and on alteration and amendment of some acts, as amended.  
  • Foundations and foundation funds comply with Act No. 227/1997 coll., on foundations and foundation funds, and on alteration and amendment of related acts, as amended.
  • Churches, religious organizations and church legal entities comply with Act No. 3/2002 coll., on the freedom of religious worship and the status of churches and religious organizations, and on alteration of some acts, as amended.

NNOs and tax law

In European countries, tax relief for NNOs are usually linked to a specified definition of public benefit, which determines a partial selection of subjects for tax relief within various laws.

Assignation is another possibility. Tax assignation means that the taxpayer of physical persons’ income tax can decide which NNO receives 1-2% of the paid tax.From a fiscal point of view, the tax assignations are another source of funding for NNOs. Unlike in the system of government subsidies, public finances collected by the state are not distributed after parliamentary budget approval, but by the decision of individual taxpayers. 

Tax privileges for donors in the CzechRepublic:

  • Physical persons

(in compliance with § 15 section 5 of the act on income tax)                   

Physical persons can deduct the value of the donation from the tax base, if theoverall value of the donation in the tax period is greater than 2% of the tax base or is a minimum of CZK 1,000. A maximum of 10% can be deducted from the tax base.
For tax purposes, the donation or several donations must in one year exceed CZK 1,000, or a sum greater than 2% of the tax base.

  • Legal entities

(in compliance with § 20 section 8 of the act on income tax)

If the value of the donation is a minimum of CZK 2,000, the value of the donation can be deducted from the tax base of the legal entity. A maximum of 5 % can be deducted from the tax base that was already reduced. This deduction cannot be applied by taxpayers who are not established for business purposes. For tax purposes, the donation must be a minimum of CZK 2,000.


Generally beneficial companies are free of the donation tax. All donations that the company gains can be used for the company’s activities in a reduced amount.  

Phases of the non-profit sector's development since 1989

The non-profit sector has a long and established tradition in the Czech lands. Foundations and associations have always had an important share in national, cultural and political emancipation (for example, the National Renaissance, the establishment of the Czechoslovak Republic in 1918, and the Velvet Revolution in 1989).  These organizations and associations were disbanded during the totalitarian, fascist and communist regimes, when such independent public initiative was deemed undesirable.

In 1989, a fundamental change was seen in this area. Thousands of NNOs began to operate and the non-profit sector underwent many changes. Since then, four stages of development within the non-profit sphere can be seen. 

1990–1992The atmosphere of the time resembled the first legal amendments regarding the non-profit sector (act on associating and legal regulations of the foundations) and in the establishment of the Foundation Investment Fund. The Council for Foundations was established as the advisory body of the government for issues regarding NNOs. The liberal politics of the state created conditions for the rapid development of the non-profit sector. Foreign donors also gave significant support with the aim of further developing this pillar of democratic society.

1993–1996The state’s attitude toward the non-profit sector was skeptical and reserved (due to the lack of will to divide the Foundation Investment Fund, and hesitation over new laws regarding the foundations). The concept of the non-profit sector was influenced by the debate between two leading political figures, Václav Havel and Václav Klaus, on the subject of a so-called civil society.  State politics fell behind the natural development of the non-profit sector, but state support for the non-profit sector remained stable (CZK 2 million to 3 million). 

1997–2001The attitude of the state regarding the non-profit sector was becoming more intense and exact. New laws regarding foundations resulted in the stabilization of the foundation sphere; new bills were prepared and donation regulations were specified in individual ministries.RNNO, a the government council for non-governmental and non-profit organizations, was reinstated and the first financing from the Foundation Investment Fund was distributed. 

2002 to todayTwo big changes occurred in this period. Firstly, the reform of the public administration established the regions that influence the NNO situation. Secondly, EU membership brought an opportunity to enter into partnerships and utilize EU funds to support the activities of non-profit organizations.

The Czech Republic’s membership in the EU could in the future significantly strengthen the importance and influence of non-profit and non-governmental organizations and better help those who are dependent on their activities.

NNO members

Citizen-action associations, which are established on the basis of associating citizens as members, are a type of NNO. Nearly half the adult Czech population (47%) are members of citizen-action associations.

Five years ago, only one-third of the population claimed membership in these associations. The difference can be attributed to improved public awareness of these organizations as well as a tendency for people to see these organizations as a way of spending their free time. Possibly the educated and relatively well-provided middle classes are growing, which traditionally supports the activities within the non-profit sector. In any case, the trend is noticeably positive.

Czechs are mostly members of sporting organizations (16%) and are often members of interest organizations such as gardening and cultivation (6%), volunteer firemen (6%) and fishermen organizations (5%). Fishermen have a greater membership base than Czech political parties.

The number of men registered in an association is slightly higher than that of women; 53% of men are members of some civil-action group, whereas only 42% of women are registered. Association members usually come from a social group with an average or above-average monthly income. On the contrary, people with low incomes and with limited education, mostly do not register for membership. The highest membership base is among ODS and KDU-ČSL supporters. 

The activity of the civil-action associations is proved by the fact that they record less people who do not vote, unlike in the rest of the population. In other words, members of the civil-action groups are active citizens – voters.

The Information Center for Non-profit organizations (ICN) is focused on the development of non-profit organizations. Its goals are to encourage professionalism in the work that non-profits do, as well as support mutual cooperation. It is a transparent organization that works with donor organizations, public administration and business subjects.

The ICN offers non-profit organizations important services, operates a public library of specialized literature, administrates both a database of non-profits in the Czech Republic and a database of financial resources, organizes seminars and facilitates specialized consultations.

More information about the activities of non-profit organizations in the Czech Republic can be found at www.neziskovky.cz.



Added: 30.12.2009

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