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Changes in principles of financing sports

During the State Budget negotiations of 2015, the Minister of Culture and the Minister of Finance agreed that the principles of financing sports would be reviewed with representatives of the sports sector, after which necessary amendments would be submitted to the Government of the Republic for approval. In November of 2015, a working group on sports, which had been convened by the Ministry of Culture, began work; it brought together representatives of the Ministry of Finance, Estonian Olympic Committee, sports federations and regional sports associations, who took to evaluating current principles and the model of financing.

 

 


Why is it necessary to change the current system and its fundamental principles?


The national system for financing sports, which has been enforced for nearly 15 years, is complex and lacks transparency in several aspects. Financing is fragmented, some activities receive funding from multiple sources, the principles of financing are not clear for applicants or the general public. One-off grants provided by state-owned enterprises and the Riigikogu have become an important form of support for sport organisations.


Significant developments of this sector so far:

 

  • The state started providing remuneration support for children and youth coaches with a high professional level in the beginning of 2015. The aim of the remuneration support is to enhance the opportunities to practice sports of children and young people, ensure social guarantees for coaches and that there will be coming generations of highly qualified coaches. In 2015, 1,034 coaches, who were instructing a total of 31,900 children, received this support. In 2016, the remuneration support will be paid to 1,195 coaches with a high professional level, who instruct more than 37,000 children all together.
  • In the end of 2015, the Government approved and confirmed the criteria for allocating support to large-numbered teams that have qualified for the finals of international title competitions. This support gives athletes, coaches and assisting staff a sense of certainty and enables maximum preparations for a successful representation of Estonia. A qualified team will receive up to 200,000 euros from the State Budget as support.

Proposals of the working group convened by the Ministry of Culture:


In the beginning of 2016, the convened working group submitted their proposed amendments to the Minister of Culture. Three of the proposed amendments were discussed during the negotiations of the State Budget Strategy 2017-2020, which were held in the cabinet in the spring.

The Government approved the following amendments:

  • Increasing the funding of sports federations by 1.5 million euros. 

Sports federations received an additional 1.5 million euros of funding. This is a systematic addition to the current operational support provided to sports federations, which will help bring sports management to a new, more professional level and support an important elite sport goal in the development strategy “Sport 2030”, which is to be successfully represented on the international level.

  • Providing remuneration support for up to 100 additional youth coaches.

When compared to 2016, the salary fund of youth coaches with high professional qualifications was increased by 352,000 euros, which, in 2017, makes it possible to provide remuneration support and a social guarantee for additional 100 youth coaches with high professional qualifications.

  • Exempting employers from the fringe-benefit tax regarding the sport costs made to enhance the health of employees.

The cabinet decided to exempt employers from the fringe-benefit tax regarding the health and sport costs of employees in the extent of up to 400 euros per employee in a year. The tax exemption will be enforced as of 2018.

Resulting from the discussions continued in the cabinet in autumn 2016, the government approved the following proposals:

 

  • In the future, the Estonian Olympic Committee (EOC) will allocate the support to the sports federations

Beginning from 2018, the EOC will be responsible for allocation of operational support of sports federations and the support of youth sports, based on new criteria. The allocation will be based on the regulation of the Minister that comprises the new criteria that were elaborated together with the sports federations in 2016. The Ministry of Culture will support sports mainly via umbrella organisations and will continue to support separately, for example, international sports events.

 

  • Discussions continue

The discussions continue with the Ministry of Finance about the principles of allocation of the financial means received from the gambling tax. Pursuant to the current Gambling Tax Act, 22% of the financial means of the Gambling Tax Council (GTC) are directed to support the projects established for the preparation for the Olympic Games and 10% are allocated by the GTC to other projects in the field of sports, based on receiving applications. The Minister of Culture has made a proposal to direct all the support provided by the GTC to the sports, as required by the law, in full amount to support the projects established for the preparation for the Olympic Games. 
A proposal to the Supervisory Board of the Cultural Endowment of Estonia and to the Physical Fitness and Sports Endowment to change the procedure of providing rewards, scholarships and support, so that the Endowment would provide support mainly to projects promoting physical fitness, preparation of youth and junior national teams and their participation in international competitions. The endowment would also support projects of sports clubs, regional initiatives and, in a project-based manner, the activities of those sports federations, who do not qualify for the operational support according to the criteria set out by the Minister of Culture.

 

Result of the reform:


The implementation of aforementioned activities will make the financing of sports federations and other sports organisations a lot more transparent, and significantly decrease bureaucracy for sports organisations and public sector sources (the Ministry of Culture, the Council of the Gambling Tax and the Cultural Endowment of Estonia).

 

More information
Tarvi Pürn
Undersecretary for Sport at the Ministry of Culture
Tarvi.Purn@kul.ee