EU-level issues and initiatives affecting CSOs

1. EU-level issues and initiatives affecting CSOs Nilda Bullain European Center for Not-for-Profit Law This presentation is made possible by the generous support of the American people through the United States Agency for International Development (USAID) within the framework of Moldova Civil Society Strengthening Program. The contents are the responsibility of ECNL and do not necessarily reflect the views of USAID or the United States Government.

2. Overview of issues • Tax effective giving across borders • European Foundation Statute • VAT • Public Services Directive • „Code-of-conduct” for NGOs • ECNL study on NGO T&A • Review of Financial Regulation • Consultation and participation • 2011 European Year of Volunteers

3. VAT • EU 6th Directive applied in all Member States: focus on type of services, not on legal form of taxpayer • List of exempt services related to some kind of public benefit (or internal) purpose • NGOs lose out -> ECCVAT initiative • Research in EU27, propose possible alternatives (e.g. compensation) www.eccvat.org

4. Public Services Directive • Adopted in mid-2008 after long perparatory and consultation process • New policy framework for financing of public services through non-state actors • „Compensation” versus „procurement” • Key is beneficiary who must be „disadvantaged” • Provider is sole supplier and may be compensated for expenses through a sophisticated system of cost calculations including „reasonable profit”

5. „Code-of-conduct” • Communication of the DG Justice, Freedom and Security (2005) • Dilemma: How to apply the international counter-terrorism policy framework regarding NGOs in the EU? (FATF SRVIII) • Initial idea of the Code of conduct met resistance from NGOs as well as some member states • DG JFS commissioned two studies to help determine relevant policies • European Parliament taking a more active role to speak up against more restrictions on NGOs

6. Study on recent public and self-regulatory initiatives improving transparency and accountability of non-profit organisations in the European Union • Commissioned to ECNL by DG JFS • Research started in February 2008 • Published August 2009

7. Key Reference Documents • Commission Communication to the Council, the EP and the European Economic and Social Committee: “The Prevention of and Fight against Terrorist Financing through enhanced national level coordination and greater transparency of the non-profit sector” COM (2005) 620 final; • FATF SRVIII (2001) and the Interpretive Note (2006); • The Best Practices Paper on FATF SRVIII (2002).

8. Goals of the Report • Map and assess the recent and most important public and self-regulatory initiatives enhancing NPO transparency and accountability in the EU 27; • Help develop best practices; • Provide recommendations to EC, member states and NPOs to enhance implementation of EC COM (2005) 620 across the EU.

9. Scope of Research • Geographic: on the EU level and in the 27 Member States • Substantive: programmatic and financial accountability and transparency • public accountability to Government • accountability to donors or the general public (“upward accountability”) • Research of this scale not conducted before • 130 people contacted • 19 in-depth case studies

10. Findings

11. General Trends • Large number of initiatives to improve NPO accountability and transparency. • Driving force: growing social and economic importance of the sector. • Specific motivations include: • Transparency; • Value for (public) money; • Clarification of role – legal and social; • Improved governance and effectiveness; • Prevention of fraud / crime; • Countering terrorist financing/money laundering threat. Close to 140 initiatives from 27 EU member states and EEA: including over 65 public and over 70 self-regulatory

12. Public Regulation Initiatives

13. Map of Public Regulation Initiatives Transparency & Reporting (32) Legal Status & Registration (28) Public Funding & Tax (22) Governance & Internal Rules (18) Supervision & Investigation (18) Fundraising (11) Unknown/Other (5)

14. Map of Self-Regulation Initiatives Standards, Guidelines, Codes of Conduct (41) Certification & Accreditation (22) Databases (9) Quality Management Systems (15) Other (2)

15. Trends in Public Regulation • Developing comprehensive NPO legal frameworks; • Creating national registries or making existing registration data more easily accessible; • Introducing PBO status and/or strengthening accountability requirements for PBOs; • Tightening regulation of fundraising and management of funds; • Strengthening supervision and investigation powers; • Increasing transparency in public funding for NPOs.

16. Trends in Self-Regulation • Self-regulatory initiatives originate in countries with more mature and diversified NPO sectors; • Initiatives in the NMSs tend to reflect donor priorities; • Self-regulatory initiatives are growing in complexity and comprehensiveness; • Most certification and accreditation schemes focus on fundraising and the use of donor contributions; • Development of databases of NPOs is accelerating – use of internet; • Standards, guidelines, and codes of conduct remain by far the most widespread type of effort.

17. Convergence trends • Co-regulation • Ireland (Charities Act – Fundraising Code) • Estonia – National Foundation – Code of Conduct (for funding applications) • Netherlands – CBF – municipalities (for collection permits) • Guidestar model (NPO database linked to government registry)

18. Issues of transferability and applicability

19. “Third Sector” Common law (sector = charities) vs. Civil law (sector = NPOs)

20. Factors to Consider Regulatory systems, regulatory agency NPO role in social – economic policies Government – NPO relations; general public – NPO relations Level of sector development (“maturity”) Size of country, relative size of sector

21. Legal, Welfare and Development Models British Isles Legal: Common Law Model: Liberal (Anglo-Saxon) Sector characteristics: Highly institutionalised, independent Nordic Legal: Civil Law Model: Socio-democratic Sector characteristics: Less institutionalised, membership based New Member States Legal: Civil Law Model: Emerging Sector characteristics: weaker, dependent Continental Legal: Civil Law Model: Corporatist Sector characteristics: Highly institutionalised, inter-dependent Mediterranean Legal: Civil Law Model: Emerging Sector characteristics: recently institutionalised

22. Third sector models typology MORE INDEPENDENT LIBERAL / ANGLO-SAXON NORDIC/ SOCIO- DEMOCRATIC MORE INSTITUTION- ALIZED „laissez-faire” LESS INSTIT. Compact-contract CONTINENTAL/CORPORATIST EMERGING (MED & CEE) subsidiarity LESS INDEPENDENT

23. Common Principles of Successful Initiatives • Genuine and widespread consultation. • Proportionality. • Understanding of impact and consequences. • Promoting/ensuring best practice across and within all NPOs encompassed by the regulations. • Appropriate balance between public and self-regulation.

24. Role of EU in European level regulation of NGOs Regulator “Qualifier” Facilitator ?

25. Thank you! www.ecnl.org