Civic Association or Non-Profit-Making Organisation?

From the view of legal aspects, it is possible to cover many sides with writing about the subject of partnership. We are not going to analyse a business or marital partnership here, but we will focus only on partnership from the view of self-governing units, business community and non-governmental organizations, with regard to the programmes of the European Union.

A partnership conclusion is a legal act. It begins with an agreement conclusion in our case - preferably with a written agreement. Each contractual party mostly has its own rights, and of course, obligations too. The self-governing units or their associations: local authorities, towns or unions of local authorities, business people,  whether business companies or tradesmen, and non-governmental organisations, can conclude agreements between each other on basis of which they become partners.

If some of the entities mentioned wants to prove the partnership e.g. within a project implementation, they must substantiate it with a specific kind of an agreement, from which this fact follows. The future partners can choose the legal form of their partnership from the Czech Rule of Law.

The principal aspects of partnership lie in voluntariness and active teamwork of the parties participated in. Should this contractual relation work at the level of self-governing, business and NGO sphere, an active and constructive communication among partners is necessary. That is why it is very important to thing about separation of competences and about decision-making powers of individual members already by creation of basic documents, as for example statute, by-laws and similarly, or to set a system with firm rules according to which the decision-making and the management will work.

Of course it is also necessary to think about the control mechanisms and their operation linked with the feedback to the management and the organisation founders. It is suitable to set the whole management and control system so that possible disputes among partners, certainly appearing to a larger or smaller extend, could be resolved within the specified society without an interference of the third person; namely without the need of appearance in a court.

Further it is necessary to consider all kinds of activities, run in all likelihood by the organisation set up by partners in the future, in advance and in time. That way, the possible difficulties, related to activity expansion of the organisation, can be avoided. An understandable definition of activities which the organisation is to be busy with, will eliminate the possible speculations if they can be busy with a specific activity, or if it concerns another kind of activity.

The partnership among local authorities or towns usually begins with establishment of a union of local authorities; among business people, e.g. with establishment of a business company; and for physical entities, there is a civic association. From all possibilities of partnership conclusion that can be used by local authorities and towns with business community and NGOs, and with regard to European Union programmes, a non-profit-making organisation seems to be the possibly best option.

The advantage of a non-profit-making organisation lies in that it is, indeed, included in NGOs and within that meaning it disposes of certain benefits: for example, they can apply for grants and subsidies, but also for allowances: e.g. tax ones.

Unlike the other NGOs, which cannot have business as their main subject of enterprise, the non-profit-making organisation can do business as its main activity. However, such subject of enterprise must be so-called generally useful service provided to public under the conditions stipulated in advance and the same for all users. Additionally, the non-profit-making organisation can be busy with other activities too, e.g. another sphere of business.

The economic result, profit reached by the non-profit-making organisation, however, must not be used in favour of founders, members or its bodies or employees; but for providing generally useful services which the organisation has been established for. In our case we can say that the profit is, in fact, reinvested in the given area and contributes thus to further development of the locality.

So if you are going to conclude a partnership, for example, within the Leader programmes, the non-profit-making organisation is to be recommended, with regard to its transparency and setting of control mechanisms, as one of the most appropriate legal forms that can be chosen.