Leiden Law Blog

Cutbacks in subsidies lead to imagination

Posted on by Jacobine van den Brink in Public Law
Cutbacks in subsidies lead to imagination

Last week the news was flooded with reports that the Dutch governments, central and local, are going to cut back on the granting of subsidies. For example, last Thursday evening the council of Sint-Michielsgestel decided to reduce subsidy spending to associations and professional welfare organisations by almost € 200,000. Furthermore, the city of Amsterdam announced last week that as of January 1st 2013 all grant applications will be evaluated by one central office. This measure prevents not only a fragmented granting policy, but must also lead to money saving. In addition, the newly reopened Stedelijk Museum in Amsterdam was notified by the city of Amsterdam that extra subsidies will not be available in the years to come.

Pruning subsidies can have substantial consequences for the recipients of subsidies. In particular if organisations have been counting on financial injections for many years, this will be incorporated in their budgets. When confronted with cutbacks in subsidies, the very existence of the particular organisation can be endangered. Although the subsidy paragraph of the Dutch General Administrative Law Act offers some protection to subsidy recipients if they have received a subsidy for three or more successive years, this protection does not amount to much: It suffices that the granting government shows that the cutbacks in subsidies are necessary and that the cutbacks were announced within a reasonable time period before their actual implementation. 

However, pruning subsidies also has positive sides. For example, last Saturday nature organisations announced in the newspaper Trouw that they are going to change course radically. They want to be less dependent on subsidies and are planning to earn their own money using nature itself. Government funds can no longer be relied on, so it is time, according to these organisations, to search for other ways of acquiring money. The Dutch Forestry Commission is even planning a transformation to become a National Trust, similar to the situation in the UK. As a result, sponsoring as well as commercial collaborations will become possible.
The above shows that pruning subsidies not necessarily leads to demolition, but can also lead to other, more creative ways being developed to finance organisations. The big question is which other subsidy recipients will follow the lead of the nature organisations and remove the subsidy drip, before the government pulls the plug.

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