The biggest funding problems are: the need of clarification of the existing tax laws for the sector and lack of diversification of financial sources. According to two surveys of the non-profit sector, conducted by Partners Albania in 2002 and 2005, donors are almost the only contributors to the CSOs annual budgets and other source (including the funding from the Government) represent only a small portion of funds. For example, the figures for 2004 (made on a sample of 131 CSOs were as follows: donors 80%, membership fees 10%, business 6%, fees for services 2% and the Government 2%).
Even nowadays NGOs in all fields of activities working at all levels are experiencing rough times due to a decrease in funding. Many have become inactive, while the role of those that remain is very limited. Simultaneously, corruption, bad governance, unemployment, poverty and all related phenomena remain, while the state continues to be incapable of providing solutions. Membership for associations varies from 25 to 1500 people. The maximum financial contribution of NGO members is around 10% of the total budget; therefore NGOs can not rely on the financial contributions of their members.
Think tanks are also experiencing difficult times. They now operate in a policy environment that is more competitive than the one in which most of them started. The research work of think tanks has also been reduced because of a lack of funding. This has reduced the quality of public debate as less independent information is available. The only documents on public debate come from international institutions such as the EU, World Bank and IMF. However, these reports are usually highly technical and therefore not accessible to the public and so are susceptible to distortion and manipulation by politicians, who highlight specific elements in their favor.
Funding of civil society depends largely on foreign donor financing. Coordination mechanisms to enhance NGO participation in policy decisions remain weak. The third sector should increase its capacity for advocacy and public relations, networking, and development of partnerships with the Government and the private sector. Financial and management capacity need also to be strengthened to ensure the future sustainability of the third sector. Some NGOs have even changed their profiler, although the registered mission and objectives have remained the same. This has resulted in fund driven rather than issue driven activities, which does not always maximize project effectiveness.