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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.

Decisions made in 2018


The creation of a support system for athletes and teams at the group level. Based on the budgetary strategy for 2019-2022, in April of 2018, the Government of the Republic decided to allocate €8 million for the next four years for the training and participation of athletes and teams at the group level in title competitions. In 2019 and 2020, the amount of the grant will be €1 million and starting in 2021, €3 million. The grants will be allocated to the sport federations through the Estonian Olympic Committee.

In cooperation with the sports organisations, the grants for coaches’ labour cost will increase by more than €1 million compared to 2018, thereby ensuring that coaches working fulltime with young people will receive gross earnings of €1,000 per month in 2019.

In order to promote exercise, the government decided to create a programme to support regional health sports centres. In order implement the programme, the Government of the Republic has allocated €600,000 per year started in 2019. A total of €2.4 million has been earmarked for four years. The total self- and co-financing by the owners of the centres is at least 50%. The Ministry of Culture will carry out the programme in cooperation with the local governments, country sports associations and the Eesti Terviserajad Foundation.

Between June and August of 2018, the Ministry of Culture and Ministry of Social Affairs met with the Estonian Paralympic Committee (EPOK) and all the sports organisations receiving grants from them, as well as the Special Olympics Association (EOEÜ), in order to map out the current situation related to the activities of the organisations and the sustainability of their financing. In order to improve the organisation of sports for people with special needs, the EPOK and the EOEÜ will be included in the area of responsibility of the Ministry of Culture. The EPOK and EOEÜ asked for this, because they believe that their activities are part of the sports system. In regard to the social sphere, by helping people with special needs to participate in sports and exercise, it will be possible to save on social costs, create a coherent society, reduce crime, be represented internationally and increase the level of exercise among Estonians. The insufficient budgets of the organisations have been a stumbling block for sustainability and an obstacle to continued development and achievements. Therefore, the Government of the Republic decided to allocate an additional €400,000 in 2019 to the umbrella sports organisations for disabled people, with an additional €200,000 in 2020.

On 3 May 2018, the cabinet meeting of the Government of the Republic approved the draft act to amend the Gambling Tax Act and the Cultural Endowment of Estonia Act, which, among other things, will clarify the system for the state financing of sports. On 17 October 2018, the Riigikogu approved the draft act, and as a result the Gambling Tax Council will be eliminated, and the state budget will allocate costs for the Ministry of Culture in an amount corresponding to 14.1% of the planned gambling tax receipts, of which 58.2% will allocated to support preparatory Olympic projects; 3.5% to support the competitive sports projects of the umbrella sports organisations of disabled people; 26.2% to support other sports projects; 10.5% to support cultural projects; and 1.6% to activities related to combatting manipulation of sports competitions. As a result of the changes, the administrative burden of the sports organisations will be reduced. Starting in 2019, the Ministry of Culture will support the activities of the umbrella sports organisations and the organisation of international competitions in Estonia. As a result of the changes the Physical Education and Sports Foundation of the Cultural Endowment of Estonia will hereafter primarily support projects promoting exercise, and the preparation of youth and junior national teams and their participation in international competitions. The foundation will also provide project-based support for projects organised by sports clubs, regional initiatives and the activities of sports federations, which do not qualify for activity grants based on the criterion established 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 and the Cultural Endowment of Estonia).

 

 

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

Last updated: 14 May 2019