Transparency and accountability

The European Foundation Centre is firmly committed to transparency and accountability of foundations in Europe, as illustrated by its work on EFC standards since 1994. Though, the EFC wants to ensure that transparency and accountability measures taken at EU level do not hamper the work and development of foundations.

EU policy resources and studies

Since 2005 accountability issues have stemmed from EU policy steps on counter terrorism policy and the prevention of financial criminal practices.The Commission has issued a series of policy resources and studies on the matter as follows:

1. The Prevention of and Fight against Terrorist Financing through enhanced national level coordination and greater transparency of the non-profit sector.
European Commission Communication (2005) 620 final - 29 November 2005

In 2005 the Commission released a communication assessing the financing of terrorism and the coordination between Member States and other relevant actors required to fight terrorist financing (Part I). The Commission also addresses the vulnerability of non-profit organisations and issues a Recommendation to Member States to assess their progress in improving transparency of the non-profit sector (Part II). In this context, the Commission has proposed a Framework for a Code of Conduct for Non-profit organisations.

> Go to the Communication summary
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2. “Study to Assess the Extent of Abuse of Non-Profit Organisations for Financial Criminal Purposes at EU Level”

On 25 April 2008, the European Commission Directorate-General Justice, Freedom and Security convened a meeting with representatives from the non-profit sector and public sector to discuss the findings of the report titled “Study to Assess the Extent of Abuse of Non-Profit Organisations for Financial Criminal Purposes at EU Level” which was commissioned by the EC to the Matrix Knowledge Group. The report analyses the most serious types of financial criminal activity affecting the non-profit sector and sets out recommendations for policy responses to reduce NPO vulnerability to financial criminal abuse.

Among its key findings, the Report highlights the lack of evidence base - sufficient information could not be gathered to assess the extent of financial abuse of NPOs, but current indications suggest limited abuse of foundations. As the true nature of the threat is not always clear, any response taken to tackle the problems needs to be effective and proportionate to the threat, and should be discussed with the NPO sector in the framework of the “5 principles” agreed by the Council of the EU Ministers for Justice and Home Affairs in December 2005, namely

Shared responsibility of states and non-profit organisations
Dialogue between Member States, the non-profit sector and other relevant stakeholders is essential to build robust defences against terrorist finance
Member States should continually develop their knowledge of their non-profit sector
Transparency, accountability and good governance lie at the heart of donor confidence and probity in the non-profit sector
Risks of terrorist finance are managed best where there are effective, proportionate measures for oversight
“Safeguarding the integrity of the non-profit sector is ae are effective, proportionate measures for oversight

3. “Recent public and self-regulatory initiatives improving transparency and accountability of non-profit organisations in the European Union”

On 12 February 2009, the European Commission Directorate-General Justice, Freedom and Security convened a meeting with representatives from the non-profit sector and public sector to discuss the findings of the report titled “Recent public and self-regulatory initiatives improving transparency and accountability of non-profit organisations in the European Union” which was commissioned by the EC to the European Center For-Not-for-Profit law (ECNL). The Report aims to map and assess the recent most important public and self-regulatory initiatives enhancing NPOs transparency and accountability (T&A). The Report outlines the growing number of T&A initiatives -it identifies some 140 initiatives- while stressing a “disconnect” between the areas covered by ongoing public and self regulation initiatives and the recommendations of the EC and Financial Action Task Force on the prevention of the abuse of NPOs for criminal/terrorist financing purpose. This signals the difficulties Member States face when atte mpting to implement due diligence recommendations in their national contexts, especially the “know your beneficiary” and “know your donor” rule. The Report also makes recommendations for possible follow-up action at the EU and at the national level to enhance NPOs T&A among which:

Facilitating ongoing information-sharing, discussion and research at EU level
Building the capacity of member States to address NPOs T&A issues
Discussing further aspects of T&A policy implementation with stakeholders

European Foundation Centre’s contribution

The EFC monitors EU policy on transparency and accountability affecting foundations. It contributes to debates with the European Commission and other concerned stakeholders on these issues. Listed below are official EFC statements and resources related to this topic.

EFC Contributions

For more information, contact us at: eu@efc.be