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Financial contribution

“The assets of churches (…) shall be composed primarily of the donations and other contributions…” (Act CCVI/2011. §19/A.(1)). Churches are free to raise funds. Public authorities are not entitled to get any kind of information on these revenues, that is churches manage and administer these funds free. Local church communities are usually able to maintain themselves from the donations of the community members and rely on the financial assistance of their diocese/sister churches only in special cases, like a construction or a renovation project. Besides donations of the faithful, some local communities engage into “business” to a limited extent. For example church towers are often rented to mobile phone companies to run antennas, many rural parishes own cemeteries and newly a number of urban parishes open crypts as burial places of urns.
Besides donations and contributions from members, churches receive public subsidies on various titles.

1. Direct funding to religious communities

1.1. Restitution of nationalised property and compensation for expropriations

Mainstream religious communities – especially the Catholic Church – used to own vast properties, especially land and forest, until 1945. Endowments used to secure the operation of ecclesiastical institutions, on the one hand, patronships, on the other hand, played a special role in Hungary: even between World War I and II about 2/3 of the Catholic parishes had a patron (a landowner, an ecclesiastical entity or often an urban municipality or a company) covering the expenses of the church building and the clergy.
Communist takeover after World War II has brought a radical change: almost all church property was confiscated, education and health care nationalised, practically only church and parish buildings and a very limited number of church institutions remained in the hands of churches. The churches maintained their institutions during the decades of socialism primarily from donations of the faithful and to a smaller extent from government aid. In the second half of this period, considerable foreign financial help completed these resources.
With the collapse of the communist regime it became evident that churches are in need of some kind of public assistance to be able to function, but the state control has to be overcome once and for all. Autonomy became a top concern in more ways: churches had to gain autonomy from the state, on the one hand, on the other hand, they had to become able to function and fulfil activities they had been deprived of for decades. The state had to fulfil its responsibility to enable the operation of churches as this was regarded as a condition of religious freedom, but it was keen on not getting involved with their internal affairs.
In Hungary, there was no re-privatisation after the transition. Nationalisation was regarded to be unjust, harmful and also illegal, but not invalid. The economic situation which the “real socialism” left behind, however, did not enable a full restitution or a full compensation. Private individuals who lost their property got partial compensation receiving compensation vouchers that they could use in the course of the privatisation process. Churches were the only juridical persons compensated on the basis of a special law. Other legal persons – associations, trade unions, political parties – did not have the same continuity as churches, as they were usually dissolved, many of them, however, received some property (like office space) at the early period of the democratic transition.
Based upon the Act on the Settlement of Ownership of Former Real Properties of the Churches of 1991 churches could reclaim buildings (together with the plot of the building) expropriated after 1948 and originally used for specific purposes in so far as these properties were – at the time the Act came into force – the property of the state or a local municipality. Restitution was meant to be partial as the purposes defined by the Act did not cover economic utilisation (e.g. agricultural properties, land, vineyards, forests, apartment houses, press were excluded), but a wide range of religious and non-profit activities like religious life, education, culture, health care institutions and houses of religious orders. The building reclaimed was to be used for one of these purposes, too, but not necessarily for the same purpose as before nationalisation (eventually a convent of a religious order may be turned into a dormitory of university students). The restitution process took two decades (1991-2011). About 3,000 buildings were restituted to 13 denominations.
Beginning in 1998 (after an agreement with the Holy See) the possibility was open to religious communities to turn the value of non-restituted property into a virtual fund that grants a sum every year to the church concerned. Six denominations made use of this possibility giving up about 1,500 claims for an annuity. This way compensation is a source of income for some denominations that can be administered freely.

2.2 The tax assignment system

Since 1998 a major way of public funding is a tax assignment system, as income taxpayers got the right to assign 1% of their tax to a religious community of their choice or to alternative public funds. Since the introduction of a multi-tier system for religious communities, the possibility has been reserved to recognised churches. As the Constitutional Court has found this distinction discriminative (Decision 17/2017. (VII. 18.) AB) the possibility is now available to all religious communities. For recognised and registered churches, the state budget supplements the sum that has been offered to their religious communities up to 1% of all income tax paid to the state.

Funds assigned to churches in a year (on the income of the previous year) are transferred to churches in the year following the assignments. Funds raised in the tax assignment system are freely administered by the respective churches, without any kind of public control.

2. Indirect Financing of Religious Communities

2. 1 Public funds for religious activities

Churches are exempt of various taxes and fees. For example, ecclesiastical legal entities do not have to pay local taxes and fees when purchasing or inheriting real estate or become parties of civil or administrative procedures. The stipend given by private individuals to clergy for religious services is free of tax.

The state contributes to some church activities, like the reconstruction projects of architectural heritage or the expenses of major events (like the International Eucharistic Congress scheduled for September 2021 in Budapest). These subsidies have reached a significant amount in course of the last decade.

Since 2002, churches receive a special fund to contribute to the salary of their staff (clergy or other full-time church employees) serving and living in rural settlements of fewer than 5,000 inhabitants. With this contribution the government acknowledges that churches play a vital role in keeping the rural areas alive. The clergy does not receive state salaries, but the that receives a public fund to assist their staff who – besides their genuine religious duties – also contribute to the general welfare of villages.

Religious instruction is sponsored by the state. The churches have to submit the number of the religion classes they run to receive a per class fund. Teachers are paid by their church, but the churches receive a subsidy to cover the salaries.

Institutions providing higher education in theology are maintained by the relevant religious communities. The religious community maintaining the institution can enter an agreement with the government to get the training funded (in the case of university-level training, the funding equals the funding of the teacher training quota at arts faculties).

In Hungary army chaplains qualify as officers, prison chaplains of mainstream denominations as public employees. This way the personnel of the four “mainstream” religious communities (Catholics, Calvinists, Lutherans and Jews) at the army and the prisons are directly paid by state organs. Ministers of other denominations have free access to military and penitentiary facilities, but receive no public salaries.

2.2 Funding for public activities carried out by churches

Education, health and social care are considered as state duties. Religious communities are free to perform any public activity that is not reserved to the state. If a religious entity provides public services on demand of the citizens, it is entitled to the same subsidy that the state is providing for public institutions. Church-run museums, archives and libraries may receive public funding if they fulfil certain criteria. Neither of these subsidies is considered as funding of religion or core religious activities. Social and health care are important fields of the public activity of churches, however, the most significant is the presence of churches in the education. Pursuant to the relevant provisions of law, churches performing public activities (maintaining schools or providing social care) are granted by the budget normative support equal to the support granted to public institutions for the same purpose. The principle of equal funding was also reinforced by the agreement with the Holy See concluded in 1997 as well as the agreements concluded between the government and the mainstream Protestant denominations in 1998. The law on Church finances of the year 1997 also restates the principle. It is important to note that these subsidies are due to the Church maintaining the institution and not directly to the institution itself.

D 11 February 2021    ABalázs Schanda

CNRS Unistra Dres Gsrl

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