What are the differences between a civic association and a non-profit organization?

Non-governmental non-profit organizations, the third sector, non-profit organizations, or simply NGOs, all these terms refer to specific types of legal entities. The most common legal forms of non-governmental non-profit organizations in Slovakia include:

1. Civic associations
2. Non-profit organizations providing generally beneficial services
3. Foundations
4. Non-investment funds
5. Associations of legal persons with a common interest
6. Purpose-built facilities of churches and religious societies
7. Organizations with an international element

As it can be seen from the list provided, both legal forms belong to non-governmental non-profit organizations. Therefore, if you are determined to establish a non-profit organization, you have several legal forms to choose from, and it is not limited to just the non-profit organization providing generally beneficial services (NPO). Civic association (C.A.) is also an equal non-governmental non-profit organization.

To establish a civic association (o.z.), a minimum of three natural persons is required, of which at least one must be over 18 years old. The minimum age of a founder is not specified by law, but from practice, we recommend that they be at least 12 years old. A founder of the association can also be a foreigner (a person with residence outside the territory of the Slovak Republic), or multiple foreigners, but at least one of the founders must be a citizen of the Slovak Republic. The structure of the bodies is not determined by law. It can be complex and consist of several individuals (presidium, executive board, supervisory board, etc.), or it can be simple and consist of only one person (e.g., the chairman). The structure of the bodies is determined in the association's statutes. After its establishment or formation, there is no legally prescribed minimum number of members. This means that after formation, a civic association can have just one person/member. There is no legal restriction on the maximum number of members in the association.

A non-profit organization providing public benefit services (n.o.) can be established by a natural person or a legal entity as a founder. There can be one or more persons as founders. To properly establish the bodies, a minimum of 5 natural persons is required (3 members for the executive board, 1 director, and 1 auditor). Unlike civic associations, these bodies are mandatory and must be maintained throughout the existence of the non-profit organization. The competencies and obligations of each body in a non-profit organization are explicitly regulated by law. A non-profit organization can also be established by a foreigner (a person with residence outside the territory of the Slovak Republic), or multiple foreigners, who can also serve on its bodies. Unlike civic associations, non-profit organizations do not have ordinary members; only individuals who are part of its bodies (executive board, director, etc.) are involved. Similar to civic associations, in a non-profit organization, you have a certain degree of freedom to create your own bodies beyond those established by law if your statutes allow for it.

The law precisely defines the list of public benefit services that a non-profit organization can provide. A non-profit organization is entitled to provide the following public benefit services:

a) Providing healthcare,
b) Providing social assistance and humanitarian care,
c) Creation, development, protection, restoration, and presentation of spiritual and cultural values,
d) Protection of human rights and fundamental freedoms,
e) Education, upbringing, and development of physical culture,
f) Research, development, scientific and technical services, and information services,
g) Creation and protection of the environment and protection of public health,
h) Services to support regional development and employment,
i) Ensuring housing, management, maintenance, and renewal of the housing fund.

The objectives and activities of a non-profit organization must fall under one or more of the above-mentioned points. A non-profit organization can engage in multiple activities simultaneously.

Non-governmental organizations (NGOs) can perform any charitable activity without restrictions on the type. The basis for their activities is the goal for which they were established and which they aim to achieve, as determined in their statutes. Therefore, an NGO can engage in all activities that a non-profit organization providing public benefit services (n.o.) can and even more.

Regarding obligations, if an NGO does not engage in any activities and does not generate any income, it has no obligations (tax, accounting, etc.). In such cases, it may not even be required to submit a tax return.

On the other hand, a non-profit organization has the obligation to publish an annual report in the register of financial statements by the 15th of July each year.

Additional obligations for both NGOs and non-profit organizations depend on the nature of their activities and their income. Therefore, it is important to assess the obligations of each entity on a case-by-case basis.

Regarding subsidies, taxes, and accounting, opportunities to obtain grants are often open to both NGOs and non-profit organizations. Both legal forms are required to maintain simple accounting. Double-entry accounting is only mandatory for entities engaged in business activities or with annual incomes exceeding 200,000€.

In terms of taxes, contributions, and the collection of 2% of income tax, both legal forms are treated similarly. Both are eligible to receive financial support in addition to their charitable activities.

Both a civic association and a non-profit orrganization providing general benefit services play a crucial role in society in achieving public benefit goals. Both legal forms have their pros and cons and some slight differences. If you are still unsure about whether to establish an civic association or a non-profit organization, do not hesitate to contact us through our website using the contact form, by phone, or via email.