From a legal standpoint, here are two main types of nonprofit organizations: "foundations" and "civil associations." There are also a limited number of nonprofit organizations registered under a third category: "organizations with a foreign component." The only difference between "foundations" and "associations" is the process of registration. The approval of the municipal (local) authority is sufficient for the registration of a foundation. An association of citizens must be registered with the Ministry of Internal Affairs. For both types of organizations, the other regulations are the same. The citizenship (whether foreign or Slovak) of the founders of the organization is not a factor. Registration involves only the submission of a description of the goal of the organization and the expected sources of financing. Internal statutes must also exist for the organization. The founders are obliged to submit the articles of association linking them, as well as data on statutory representatives and anticipated sources of income.

NGO representatives evaluate the process of registration as satisfactory, although they tend to feel it would be improved if registration (incorporation) was supervised by commercial courts rather than public administration offices, since NGOs also develop commercial relationships. In addition, regulations governing the establishment of voluntary organizations, foundations and other NGOs, and their status ascribed in the civil code, are considered somewhat unclear. The third sector and the public administration feel the need for a clear, comprehensive set of regulations, or at least a change in this direction in the current regulations.

Proposed legislation on the third sector was on the agenda of the previous government in 1994. Members of the Stupava "Gremium of the Third Sector," who are representatives of nonprofit organizations, cooperated closely with the deputy prime minister, who was in charge of legislative affairs. Nonetheless, the current government does not intend to improve the legal framework for NGOs. On the other hand, the main effort of NGOs is aimed at preventing acceptance of any legislation which would maintain the status quo.

Since 1992, the right of individual entrepreneurs and legal entities supplying social services to promote their activities has been recognized. A contribution is usually provided by local municipalities. Public authorities do not have their own funds for financing public social sector facilities. The biggest problems are caused by legislation regarding the financing of the third sector. According to the more radical view, current legislation tends to favor the elimination of the third sector and thus undermine democracy. Legislation in the sphere of financing of the third sector did not solve the problem of support by entrepreneur subjects (sponsorship) successfully up to now. It resulted in the third sector being strongly dependent on state financial sources. Because of this dependency, the development of the third sector cannot be free in all necessary directions. Distribution of finances can be influenced by political decisions or subjectivism. Eventually, this could sharply erode third sector activities and greatly diminish alternative possibilities for solving societal problems .(Jozef Sabo, IFO; Peter Mariánek, Movement Human).

In the first place, taxes are a matter of concern. The system of taxation favors only to a very limited degree, enterprises which may wish to sponsor NGO projects. It makes it possible to give a donation and thereby decrease taxable income, but only up to 2 percent of net profit. NGO representatives consider that the optimum solution would involve enabling business entities to donate a part (approximately 5 percent) of their tax bill directly to voluntary organizations as is the practice elsewhere in Europe and in other regions.

Nonprofit organizations are taxed in the same way as business entities. They must pay taxes on all activities which generate profits. NGOs are also liable to pay the value added tax (6 or 25 percent, depending on the situation) whenever they make any purchase, as well as when they receive donated goods from abroad. In practice, this leads to situations in which valuable instruments from abroad (for example, hospital equipment) or donated books are blocked at the border because the beneficiary institution does not have the money to pay the value added tax on these items. Charitable organizations have been exempted from the payment of customs duties by a 1994 decree of the Ministry of Finance, but whether this also applies to the value added tax is not clear. In any case, the exemption involves only a limited number of organizations. An objective is to extend the exemption to the entire third sector. However, this is impossible without clear legal recognition of the status of the third sector.

Insurance for health care, the welfare system and pensions represent significant problems for NGOs. Thirty-eight percent of each employee wage must be paid out for insurance coverage. The employee pays 12 percent, and the employer, including NGOs, must pay the remainder. In addition, the rest of the wage is progressively taxed between 10 to 42 percent. According to regulations, NGOs are liable to pay insurance even for those who are otherwise unemployed, to whom they offer jobs within the framework of community service programs. However, the unemployed status of these people is not legally changed; and, therefore, the state should probably be responsible for the insurance coverage.

The current situation in parliament, as well as the legislative program of the government, does not offer much hope that changes will soon be made. The Constitution provides that only these two bodies&##151;not the president&##151;can initiate legislation.

The former government, which was in office for just six months (from March 1994 until the elections on September 30, 1994), was mainly concerned with trying to enforce all laws and measures that would guarantee the irreversibility of the transition to a market economy. The significance of the third sector was not appreciated. Despite this, in October 1994, the Ministry of Finance submitted the Foundations Act, which was examined by the Legislative Committee of government, as well as by lawyers and NGO representatives. It was found to be insufficient, hence a seminar has been planned to discuss suggested changes. This was to have been organized under the auspices of the Ministry of Finance and the Gremium of the Third Sector.

The present government came into office in December 1994. Since then, nothing has been done in this area.