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.
Download the study from our Publications page.
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:
- 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)
- An overall analysis of trends in regulation and self-regulation of NPOs in the EU
- Overall assessment of the extent to which NPO-related FATF and EC COM recommendations are reflected in the initiatives
- Description and analysis of selected public and self-regulation initiatives
- Conclusions
- Recommendations for EC, Member States and NPOs Importantly, the Study highlights several learning points, some of which include:
- Accountability and transparency can be achieved in a number of ways – and therefore it is not practical to look at a single system or initiative as a model for all EU member states.
- There is a need for adopting a broader understanding of NPO accountability and transparency in the policy implementation.
- Public regulation and self-regulation should be considered as complementary, not competing tools in achieving an optimal state of accountability and transparency.
- While there are initiatives which closely reflect FATF and EC recommendations (e.g., public databases), many of them are addressing a range of important areas that go partly beyond the three documents. The only FATF and EC recommendations which are scarcely covered through regulation are the “know your beneficiary” and “know your donor” rules.
- The success of the initiatives depends to a large extent on the buy-in of NPOs; the most successful initiatives have relied specifically on consultation with – and in some cases joint design by – the sector.
- There is a need for an ongoing information-sharing and research to identify needs, best practice and practical tools; and to achieve a more in-depth understanding of the NPO sector and how it works, the way accountability and transparency fits into this, and the specific challenges of humanitarian response.
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:
- The Charities Regulation Bill 2009 - Ireland
- Reforming the Legal Structure for NPOs in Malta
- The Charity Commission for England and Wales
- Model of Supervision of Public Benefit Organizations in Poland
- Regulating Public Benefit in Netherlands
- The Counter Terrorism Strategy of the Charity Commission for England and Wales
- The Statement of Recommended Practice for Charity Accounting In The United Kingdom
- Central Registry of Associations in Austria
- Central Registry for Public Benefit Organizations - Bulgaria
- Guidestar UK and Europe – Creating Comprehensive Databases on NPOs through a Collaborative Effort of Public And Self-Regulation
- The Mixed Regulatory Model for Fundraising In Ireland
- The Finland Money Collection Act
- A “Live” Code of Ethics of Non-Profit Organizations - Estonia
- Irish Development NPOs Code of Corporate Governance
- Certification of Fundraising Organisations in Europe – The International Committee on Fundraising Organisations and the Central Bureau on Fundraising - The Netherlands
- Trademark of Trust - A Locally Developed Certification System in Hungary
- Austrian Seal of Quality for Donations
- Improving Accountability of Humanitarian Organizations – The Humanitarian Accountability Partnership Initiative
- 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.