The establishment of the Central Office of Associations in 1998 enabled the centralization of a great portion of funds from the state budget, dedicated to associations that were previously secured through the budgets of individual Government ministries and offices. Because of the unification of procedures (public competitions, etc.) the public financing of association has improved greatly. In 2002, the process turned back to decentralization, from the accounts of the Office of Associations to the budgets of Governments ministries and offices. The New Model of the Organizational Structure for Civil Society Development in Croatia resulted from a two-year process led by the Government Office for CSOs. The aim was to decentralize cooperation and state funding from one office to diverse stakeholders (government bodies, local and regional authorities, National Foundation, Government Office for CSOs, and Council). Specifically, Ministries and Government offices and institutions are now responsible for channeling state funds directly to CSOs active in their fields of jurisdiction. The New Model encourages Ministries to designate a person or unit responsible for cooperation with CSOs. The decentralization stems from the need for direct communication between various Ministries and CSOs, in order to enhance their cooperation in addressing particular social needs. It also opens the possibilities of diversifying funding sources for CSOs and of tapping alternative and matching funds for joint CSO-government activities. In addition, the Government Office for CSOs launched the drafting of a Code of Good Practice and Standards for the Financing of Programs of Civil Society Organizations out of State and Local Budgets / Code of Good Practice, Standards and Benchmarks for the Allocation of Grants for Programmes and Projects of NGOs (year of adoption 02/2007.) The Code is intended to guide bodies that channel public funds to do so in a transparent manner.

The Croatian government provides considerable CSO funding through various ministries and state offices. In 2008, overall central government funding, including grants awarded by the National Foundation for Civil Society Development, amounted to 86.7 million EUR. This represents a 33% increase from 2007 and continues a trend for increased government support to civil society. While this would have once included both direct budgetary transfers and ad hoc funding of projects and service delivery, today it is required that all funds are allocated by means of public calls for proposals according to transparent and previously defined criteria. The grant-making process is regulated by a “Code of Good Practice, Standards and Benchmarks for the Allocation of Grants for Programmes and Project of NGOs,” adopted by the Croatian Parliament in February 2007 and coordinated by the Government Office for Cooperation with CSOs.

Ministries providing grant assistance to CSOs include: the Ministry of Health and Social Welfare (CSOs representing people with disability ‐ PWDs), the Ministry of Culture grants (cultural associations), and the Ministry of Science, Education and Sport (professional NGOs working in the field of science). Opportunities are available to CSOs to finance activities by competing for direct service contracts from both local and national governments. CSOs have been awarded many such contracts at both levels for services to the elderly, victims of domestic violence, PWDs, and the homeless. The contracting of social services, however, remains unregulated and in general the field remains undeveloped and on all levels (regional and local in particular) there is lack of understanding of social contracting methodology and its benefits.

 It is important to emphasize that from total amount of state financial (central) assistance to CSOs, biggest amount of funds, more than one quarter of funds, goes for the sports purposes, little less than another quarter goes in the field of culture and 12,3% goes on those with disabilities. Less than 7% of that amount is directed to different democratization projects (5,81%) and to protection and promotion of human rights (0,79%).

In the domain of protection and promotion of human rights there is an eveident decrease of state funding of 26%, compared to year 2007.

In 2008, people with disability were the most frequent direct beneficiaries of government project funding, followed by children, youth and war veterans. The most commonly funded projects were those focusing on informal educational activities and training (25%).

National Foundation for Civil Society Development (NFCSD) is a public foundation established in 2003 with a broad mandate to promote and develop civil society in the Republic of Croatia. It is a public, not-for-profit entity established by the Croatian Parliament (Sabor) and acts outside the structures of state and local administration. In addition to providing a range of capacity‐building assistance to CSOs and conducting research on civil society, the NFCSD has become a major grant‐making facility. Its main source of funds is the state lottery, but it has also received support from the state budget and a number of foreign donors, including USAID, DFID, the European Commission and the Charles Stuart Mott Foundation. In 2008, its annual income amounted to 46 million HRK (approx 6.3 million EUR), of which 43 million HRK was provided by the lottery.

As a public funding entity, it is unique in the region in its ability to act independently from state government, owing to the inclusion of a majority of civil society representatives in its governing body. Since its establishment, it has contributed significantly to an increase in CSO funding available from grant programmes. In 2008, the NFCSD disbursed 22 million HRK (approx 3 million EUR) in grants issued by public calls for proposal. It is the largest donor oriented towards institutional support, enabling CSOs to concentrate on the development of longer‐term programmes and the challenges of organizational strengthening. It is also an important patron of development NGOs working in areas such as human rights, the development of democratic institutions, sustainable development, and the rule of law, which are otherwise often overlooked by government and private donors in Croatia. In 2007, the NFCSD decentralized its grant‐making function by delegating responsibilities to four regional foundations in Split, Zagreb, Osijek and Pula, established by local resource NGOs, in order to respond better to CSO needs at the local level.

 Regional level: In 2008, counties administrations allocated approximately 54 million EUR (397.653.853 HRK) to supporting CSOs. In financing from this level there is obvious huge centralization of support – there is big difference between allocated amount by the City of Zagreb (that has status of county) and in the other 20 counties in Croatia. The City of Zagreb allocated 71,80 % of all funds allocated on the regional governments levels, to CSOs located on its territory. The rest of 20 counties allocated only 28,20% of funds, altogether. It can point out on two different, but also interrelated reasons – first, number of active CSOs in the City of Zagreb, the most urban area in Croatia, is significantly higher than the number of CSOs in the rest of the Country and second, bodies of regional governments in Zagreb (in Capital) are more in favor of supporting programmes and projects of CSO, than the regional governments bodies ion the rest of the country. For example, in relation to 285.523.036,77 HRK (71,80 %) allocated from the City of Zagreb, Split-Dalmatians county, where is second town by size in Croatia – the City of Split, allocated only 12.741.312,00 HRK, which is 3,20 % of total.

Analyze of allocations in relation to the field of CSOs work shows that approximately 2/3 of allocations, 64% went to the sports, 11% went to the culture and preservation of historic and natural heritage and the rest of fields of CSOs engagement are represented with less than 5% of total amount (promotion and protection of human rights are represented with 0,44 % of total amount).

The interesting data is that on the regional governmental bodies levels in Croatia, in 2007., from the total amount of funds allocated to CSOs for all purposes (397.653.853 HRK), on fighting corruption (problem stated as one of the leading problems on process of Croatia accession to EU) was allocated 2.000 HRK in total, which is approximately 275 EUR, or 0,000005%.

Approximately 40% of allocations were managed through public call, but there are still 18% of the funds that were allocated upon of the discretion decision of one person – heads of the regional governments. Even when managing funs is happening through public call, in significant number of cases one person decides which projects should be funded and which shouldn’t.

In 11 of 21 units (55%) of regional government decision on funding is final and without right and possibility to file a complaint.

Local level: In 2008, cities administrations allocated approximately 29 million EUR (211.468.876 HRK).

Analyze of allocations in relation to the field of CSOs work shows that approximately half of allocations (96.097.240,99 HRK) went to the sports and 10% went to the culture and preservation of historic and natural heritage. Other allocations are significantly smaller and promotion and protection of human rights, for example, is represented with 1,33 % of the total amount of funds allocated on the local governments levels.

From stated data it is clear that level of state funding on all levels (central, regional and local) to important democratization initiatives of CSOs (in particular to watch-dog anti-corruption and human-rights CSOs) is very low in relation to total of funds allocated! Also it is clear that there are still some difficulties in Code of Good Practice, Standards and Benchmarks for the Allocation of Grants for Programmes and Projects of NGOs implementation, in particular on regional and local levels that tends to be not satisfactory transparent in managing the public funds.