European Commission publishes ECNL Study on Transparency and Accountability of NPOs in the EU
The European Commission Directorate-General of Justice, Freedom and Security (DG JFS) published the Study on “Recent Public and Self-Regulatory Initiatives Enhancing NPO Transparency and Accountability of Non-profit Organizations (NPOs) in the European Union”, which was developed by ECNL.
DG JFS commissioned ECNL to conduct a research and develop a Study in order to: map and assess the recent and most important NPO public and self-regulatory initiatives enhancing transparency and accountability in the 27 EU member states; to support increased knowledge and improved dialogue by identifying and helping to develop best practices through comprehensive case studies; and to provide recommendations to EC, Member states and NPOs in order to enhance implementation of EC COM (2005) 620 across the EU. The Study aimed to deliver a useful reference tool for policy makers, regulators and NPOs.
It is the first time that a research of this scale has been conducted on this topic. The Study identified over 140 initiatives in the field of public regulation and self-regulation (which are presented in two separate charts accompanying the Study). Of these, 19 are analysed in-depth.
The Study considers measures to improve NPO transparency and accountability in the overall context of international and European initiatives to address the risk of NPOs being used as a conduit for terrorist financing. Hence, it analyses the response of EU countries to the requirements of the Special Recommendation VIII of the Financial Action Task Force (FATF SRVIII) as elaborated in three basic documents: the Commission Communication on the Prevention of and Fight against Terrorist Financing through enhanced national level coordination and greater transparency of the NPO Sector (EC COM (2005) 620); the Interpretative Note to FATF SRVIII; and the Best Practices Paper on FATF SRVIII.
The research showed that there is a great deal of interest in accountability and transparency in the EU, mainly as a result of the increasing scale and impact of the NPO sector. The most common trends identified in the initiatives are: the promotion of accountability and transparency, developing comprehensive frameworks for NPOs, making registration data more accessible, focusing on NPOs that provide public benefit, tightening the regulation of fundraising, improving NPO governance through self-regulation, and strengthening supervision and investigation powers.
The Study is structured in several chapters:
(1) Introduction (which provides an overview of project goals and expected results, scope of research and definitions, and general issues to consider in the assessment of accountability and transparency of NPOs, and their potential for transferability)
(2) An overall analysis of trends in regulation and self-regulation of NPOs in the EU
(3) Overall assessment of the extent to which NPO-related FATF and EC COM recommendations are reflected in the initiatives
(4) Description and analysis of selected public and self-regulation initiatives
(6) Recommendations for EC, Member States and NPOs
Importantly, the Study highlights several learning points, some of which include:
The Study also enumerates several recommendations that could be undertaken by EU, Member States and NPOs in order to improve transparency and accountability. Specifically, at an EU level, the Study identifies the need for proactive facilitation and recommends considering the creation of a “Centre of Excellence”. Member States should support and supplement the EU-level processes for information-sharing and research, while NPO self-regulatory initiatives should seek synergies with other self-regulatory initiatives, and also Government and EU-level processes.
The Study analyses 19 initiatives, selected based on pre-agreed criteria and the level of information received from local partners:
1. The Charities Regulation Bill 2009 – Ireland
2. Reforming the Legal Structure for NPOs in Malta
3. The Charity Commission for England and Wales
4. Model of Supervision of Public Benefit Organizations in Poland
5. Regulating Public Benefit in Netherlands
6. The Counter Terrorism Strategy of the Charity Commission for England and Wales
7. The Statement of Recommended Practice for Charity Accounting In The United Kingdom
8. Central Registry of Associations in Austria
9. Central Registry for Public Benefit Organizations – Bulgaria
10. Guidestar UK and Europe – Creating Comprehensive Databases on NPOs through a Collaborative Effort of Public And Self-Regulation
11. The Mixed Regulatory Model for Fundraising In Ireland
12. The Finland Money Collection Act
13. A “Live” Code of Ethics of Non-Profit Organizations – Estonia
14. Irish Development NPOs Code of Corporate Governance
15. Certification of Fundraising Organisations in Europe – The International Committee on Fundraising Organisations and the Central Bureau on Fundraising – The Netherlands
16. Trademark of Trust – A Locally Developed Certification System in Hungary
17. Austrian Seal of Quality for Donations
18. Improving Accountability of Humanitarian Organizations – The Humanitarian Accountability Partnership Initiative
19. A Stringent, FATF-Inspired Code of Conduct – The Montreux
The Study was authored by ECNL experts Ms Nilda Bullain and Ms Katerina Hadzi-Miceva, with the support of Andrea Judit Toth, ECNL Program Manager, and in collaboration with a team of independent experts, including Mr James Shaw-Hamilton (The Humanitarian Forum), Mr Benjamin R. Evans (Charity Commission for England and Wales, International Programme) and Ms Marilyn Wyatt (consultant).
ECNL expresses its thankfulness to partners from governments and NPOs in the EU member states, which provided information and supported the research and case analysis.
ECNL is grateful to DG JFS for providing the opportunity to conduct the research, and for their ongoing support and guidance in the development of this Study.