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10 Questions

with Pavlína Kalousová
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November 21st, 2007 issue

VLADIMÍR WEISS/THE PRAGUE POST
Kalousová says CEOs do more than give Christmas gifts to orphans.
THE KALOUSOVÁ FILE

Job title: Executive director, Czech Donors Forum
Age: 32
Nationality: Czech
Previous position: Director, Civilia Foundation
Education: Faculty of Philosophy and Arts, Charles University, Prague

Over the past few years, corporate philanthropy has grown both in size and in profile. Many companies are beginning to realize that the attendant goodwill generated by charitable works can significantly strengthen their public images and also leave a positive mark on local communities. Pavlína Kalousová of the Czech Donors Forum, an umbrella organization for charitable foundations and companies, talks to The Prague Post about Corporate Social Responsibility (CSR), tax incentives and why Czech companies give twice as much as their Slovak counterparts.
➊ Tax breaks are often essential for encouraging businesses to make charitable donations. Will the recently passed tax reforms change charitable giving at all?
All of the tax incentives remain the same, with companies receiving breaks to donate up to 5 percent of their taxable income. However, since the reforms will also lower the corporate income tax rate, this could actually encourage companies to donate more.
➋ Are you working with the government on any current legislation?
One of the priorities of the government is to improve the framework in which nonprofit organizations work. We have started to work on a strategy for the development of the nonprofit sector. Also, we are assisting in assessing current fiscal mechanisms so that the government can make future funding more effective. We will also look at what partnerships can be formed between NGOs, companies and the government.
➌ Are there any other legislative changes that you would like to see?
Yes. One thing we see among many small and midsize enterprises is that they usually donate more than 5 percent of their taxable income. In the United States, for example, you can spread your donations to make them tax effective over the ensuing three years. In the Czech Republic, you have to keep them within one year. Changing this rule could help give more motivation to small businesses in their public engagement.
➍ Beyond legal advocacy, what other work does the forum do?
We also work as a development agency for philanthropy. We bring in best practices from abroad. We also develop our own projects to stimulate people and companies in developing their CSR strategies.
In the last three years especially, we’ve helped to shift the perspective of corporate giving from only being about charity to being part of a company’s general business strategy.
➎ Why should charity be part of a company’s strategy?
Historically, it’s just good conduct as a corporate citizen to give back to the community from which you have profited.
But, in the past few years, we’ve seen corporate philanthropy become a key part of the corporate structure. This can have a significant impact on a company’s value on the market, especially after reputation scandals like Enron. It is important that companies think not only about making money but also about how they integrate into the surrounding society as well as issues related to transparency, customer relations and corporate governance.
➏ What was corporate philanthropy like 10 years ago?
There is a huge difference between the1990s and now. Back then, it was only about charity. We’d have a joke that every year before Christmas, the CEO would feel this urge to give to the community, so he’d go to the children’s orphanage and give away some gifts. Or we had Czech companies that said, “This is not for us. This is for rich multinationals. We are going through a restructuralization and corporate giving is a luxury we cannot afford.”
Now, among the big companies, you won’t find a single one that doesn’t get involved in the community to some degree. Even Czech-owned companies are moving toward CSR. The situation in society has changed. People want companies to behave responsibly.
➐ What are some recent examples of companies taking social responsibility seriously?
The biggest Czech corporate donor is the energy group ČEZ. One interesting example was a project they had to protect birds from the company’s electrical cables. This represents a shift from just supporting traditional charity work to general responsible behavior by a company.
Another example is Česká spořitelna. They have a complex strategy of corporate involvement, supporting areas that are not popular among other companies, like drug prevention and the rehabilitation of drug addicts. They also allow their staff to go volunteering on paid time.
➑ How does corporate giving in the country compare to Slovakia or Hungary?
The top Czech donors give more than twice as much as those in Slovakia and Hungary. In Slovakia, there are simply no tax incentives for corporate philanthropy. They have a law where companies allocate 2 percent of their taxes for the public benefit, but it is not their money, it is their tax obligation. In the United Kingdom or United States, companies give somewhere around 0.7 percent to 2 percent of pretax income. The biggest Czech companies give around 0.4 percent, and only a few give more than 1 percent. But I believe that this figure will increase over the next few years by including staff time and in-kind donations.
➒Where should the line be drawn between state-funded social and environmental projects and those supported by private money?
In the past, Czechs relied excessively on the government. There was this passive expectation that when we pay taxes, the state will take care of everything. I hope that this will change. I don’t believe that we will ever achieve a situation like in the United States, where most of the money for these purposes comes from private sources. Because Europe has this social welfare model, and as members of the European Union we are becoming more like this, with the state purchasing services from nonprofit organizations and taking care of the environment.
➓ Do you believe any EU programs support CSR?
For corporate philanthropy, no. It is simply viewed as a private initiative of companies. But, for certain areas of CSR, like health and safety or the environment, there are some programs.
CSR is also massively supported in the United Kingdom. This is a country that has a minister responsible for CSR. They have also tried to push this agenda at the EU-level as well.
Do you want your manager to answer our 10 Questions? Send a message to Paul Voosen at pvoosen@praguepost.com


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