As announced in the last EFC Update, on 25 June, the European Commission (EC) Directorate General for “Home Affairs” has released a discussion paper on voluntary guidelines for EU-based non-profit organisations (NPOs) and is now calling for comments from foundations and other concerned stakeholders. At the request of the EFC and partner NPOs, the Commission has extended the consultation period until mid September.  EFC Members are invited to provide input by 25 August.

The EC discussion paper on voluntary guidelines for EU-based NPOs addresses 6 issues, namely:

• Basic principles for good non-profit organisation practice
• Good governance
• Accountability and transparency
• Relations to the donor
• Relations to the beneficiary
• Suspicious activity reporting

 The EC discussion paper is available here

 The initiative is part of the EU institutions efforts to address the perceived “vulnerability” of NPOs and prevent the abuse of NPOs for financial criminal purposes and terrorist financing under the lead of the Financial Action Task Force the global standards-setting organisation to combat money laundering and terrorism financing. The discussion paper is also a part of the implementation plan of the EU Programme in the area of justice, freedom and security for 2010-2014, the so-called Stockholm programme adopted by the Council of EU ministers last December. It is the latest step in a discussion that the EFC and partner NPOs have had with the EC since 2004 to avoid any EU legal bindings rules in the field.

 The discussion paper was discussed at a meeting with the Commission and EU member states representatives on 2 July 2010 at which the EFC was invited to speak and present self-regulation accountability and transparency guidance in the foundation sector.

In preparation of the July meeting the EFC had gathered preliminary input on the EC discussion paper. EFC’s preliminary comments are available here

-        Acknowledging the role of the NPO sector. The EC discussion paper should acknowledge the role of NPOs in general, their contribution to stable and healthy societies, not to mention their vital contribution in areas such as conflict resolution or addressing violent radicalisation.

-       Clarifying the scope and application, clarification is needed on the scope and use of the “voluntary” guidelines.

-       Avoidance of “one-size-fits-all” approach, the paper should cater for smaller organisations. Some current proposals should be reviewed as they create excessive burden in particular for small NPOS (e.g. audit requirements, independent oversight of charitable operations, on-site audits of beneficiaries)

-       Clarification of the recommendations. The paper combines a set of general recommendations and in some instances “prescriptive suggestions” about what constitutes “good practice”. Some of the proposals need to be clarified as they may leave room for uncertainty and misinterpretation or are merely inapplicable in areas such as risk identification, independent oversight, disclosure, due diligence and suspicious activity reporting to mention but a few.

The EFC will submit its final comments on the discussion paper by mid September.  EFC members are invited to contribute and send their input to the EFC secretariat by 25 August 2010. Please send your comments to efaure@efc.be .

 A revised EFC commentary will be shared with the membership before its submission to the European Commission DG Home Affairs in September.

 DG Home affairs will review comments and proposals in the autumn and will decide upon the next steps in the first half of 2011. One of the possible options is the publication of a European Commission communication – a policy document not legally binding - addressed to the Council of Ministers (EU Member States) and the European Parliament, which would include the voluntary guidelines. It would then be up to the institutions, and individual Member States to take it further...

EFC members are invited to contact Emmanuelle Faure at the EFC secretariat for further information.