The political landscape in Europe: key updates for nonprofits

The European Fundraising Association is collaborating with Philea, the European philanthropic network, and ECNL (European Center for Not-for-Profit Law) to strengthen the sector’s voice at a European level. Sarah Bertail, Pauline Hery, and Laurence Lepetit from EFA member France générosités (and EFA’s public affairs working group) share how, as well as the latest public affairs news affecting the sector.

On 26 and 27 September, EFA organised its 15th Annual Skillshare ‘Shaping the future of fundraising in Europe: technology, trends and the political landscape’. It was an opportunity to take stock of the impact on the charitable sector of the rise of far-right nationalism in Europe, and of current and forthcoming regulations in Europe.

Laurence Lepetit, executive director of France générosités and member of EFA’s board and public affairs working group, moderated a round table on the European political context with MEP Sergey Lagodinsky and Esther Meester from ECNL. The following week, Sarah Bertail, legal and public affairs director (and also in the working group), alongside Pauline Hery, public affairs officer, and Pia Tornikoski, secretary general, VaLa Finland (and again member of EFA’s board and its public affairs working group), attended the annual meeting of Philea’s Legal Affairs Committee (LAC).

Below is a summary of current and upcoming topics of interest in Europe.

1. Implementation of the Action Plan for the Social Economy

Last June, the European elections took place, during which the Members of the European Parliament were elected. This was followed by the re-election of the President of the European Commission, Ursula Von Der Leyen, who appointed the new European Commissioners. The new Commissioners are due to be sworn in shortly by the European Parliament, after being interviewed by MEPs.

Philea is urging the new European political decision-makers to continue implementing the European Commission’s Action Plan on the Social Economy, and to strengthen the place and role of philanthropy in Europe. In addition, Philea is lobbying, alongside other European organisations (notably Social Economy Europe), for the renewal of the Social Economy Group in the European Parliament.

2. The proposed European Cross-Border Association Directive

In January 2022, MEP Sergey Lagodinsky published a report containing recommendations for the Commission on a statute for European cross-border associations and nonprofit organisations. The Commission then worked on a proposal for a directive to be adopted by the Parliament. Throughout this process, EFA mobilised alongside its partners in Europe (find all our articles here).

Amended and passed by the European Parliament in March 2024, the draft directive is now being discussed by the European Council. The Council members are expected to reach a common position in 2025, after which trialogue discussions will begin.

However, outcry from many governments in Europe means the prospect of this directive being adopted is receding. Sergey Lagodinsky addressed this issue at both the roundtable with the EFA and the LAC in Brussels with members of Philea and representatives of the European Commission’s DG GROW and DG TAX.

At the EFA roundtable, MEP Sergey Lagodinsky called on national representatives to contact their governments in support of the directive. He was disappointed that, given the European political landscape and the rise of far-right nationalism, countries such as France did not fully support the text.

One of the main concerns raised by Member States is the risk associated with money laundering and terrorist financing.

EFA and its partners consider this risk to be limited, particularly as safeguards were included in the directive when it was adopted by Parliament (see Q&A by Civil Society Europe). We call on members to mobilise their national bodies to ensure their full support for this proposed directive, which aims to simplify the life of associations operating in several Member States and to promote associative freedoms.

3. Application of the legislative package to combat money laundering and terrorist financing

The legislative package on the fight against money laundering and terrorist financing (EU AML/CFT) was published in the Official Journal of the European Union on 19 June 2024, after being adopted by the European Parliament and the Council.

It comprises an Anti-Money Laundering and Combating the Financing of Terrorism (AMLR) Regulation, which will be formally implemented on 10 July 2027, a 6th Anti-Money Laundering Directive, which must be transposed into national law by 10 July 2027, and the Regulation establishing the Anti-Money Laundering Authority, which will be formally implemented from 1 July 2025.

During EFA’s 15th Annual skillshare, Esther Meester from ECNL gave us an insight into the consequences of these new provisions for the charitable sector.

The major changes highlighted include the extension of the scope of regulated entities (‘obligated entities’), harmonised rules for the transparency of ‘beneficial owners’, more detailed guidance on customer due diligence, an EU-wide ban on cash payments above €10,000 and a harmonised approach to ‘high-risk’ third countries.

The most significant concerns for the not-for-profit sector are as follows:

– From July 2027, crowdfunding platforms will be considered regulated entities for the first time.

– The new rules do not provide the desired clarity on the identity of beneficial owners of non-profit organisations (NPOs).

– Due diligence measures will be strengthened for occasional transactions and business relationships involving entities in high-risk third countries, which will most likely lead to greater scrutiny when civil society organisations (CSOs) want to transfer funds to international partners.

– Reducing the anonymity of crypto-assets and virtual currency transfers further limits the possibilities for anonymous donations and the use of crypto-asset exchanges by CSOs and activists who are excluded from the financial system or not allowed to receive foreign funds.

ECNL shares its concern that complex legislation could have an impact not only within the EU but also in other regions where there are not adequate safeguards against over-regulation and incorrect implementation.

ECNL and Philea are working on a detailed briefing note outlining the potential changes and impact for the not-for-profit sector. Finally, advocacy will be developed when the more detailed technical guidelines are developed and before they are transposed into national legislation.

EFA will be following this dossier closely.

4. Impact investing: is the debate moving forward at European level?

To mark European Foundation and Donor Day, Philea and Impact Europe organised a roundtable on ‘How can policy-makers stimulate impact investment activities by philanthropic organisations?’ at the European Parliament’s Info Hub.

The roundtable featured contributions from a number of European players, including MEP Katrin Langensipen (Germany, Greens/EFA) and a number of European officials from the European Commission (DG GROW and DG EMPL), the European Investment Bank and the European Investment Fund.

On this occasion, Philea and Impact Europe published a joint position paper calling on national and European political decision-makers to provide a legal and financial framework favourable to the development of impact investments by philanthropic organisations.

Across Europe, philanthropic organisations have begun to engage in impact investing, in particular by supporting players in the social economy. However, national and European laws are often an obstacle to this type of investment. Philea and Impact Europe support the following recommendations to develop the investment activities of philanthropic organisations:

1. Allow philanthropic organisations to support social economy organisations;
2. Develop a co-investment mechanism within the InvestEU programme;
3. Facilitate impact investment by endowment funds;
4. Integrate philanthropy into the European Union’s next multi-annual financial framework.

Upcoming events

On 12 November, from 10am to 11.30am, there will be a webinar to present the scope and (potential) implications of the anti-money laundering and combating the financing of terrorism legislative package to CSOs, philanthropic foundations, crowdfunding platforms and other stakeholders. (To register, click here).

On 3 December, Philea is organising its annual EuroPhilantopics event with this year’s theme being: ‘New EU mandate, new partnerships with philanthropy’. It will bring together organisations from the philanthropy sector and representatives of the European Union institutions.

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Who is Philea?

Philea is a European organisation that brings together associations, foundations and networks of philanthropic organisations in Europe (Centre français des fonds et fondations – CFF, Fondation de France, Fondation Roi Baudoin, Fundaciones etc.). On a day-to-day basis, it defends the interests of its members in dealings with the European institutions and political players, and works to create an environment conducive to European philanthropy (see European Philanthropy Manifesto).

The LAC (Legal Affairs Committee) is made up of the legal and public affairs officers of Philea’s members, under the supervision of Philea’s public affairs team. LAC meetings provide an opportunity to review members’ legal and political news and to exchange views on European regulatory and political developments in the field of philanthropy. It is also an opportunity to coordinate members’ advocacy activities in Europe.

Who is ECNL?

The European Center for Not-for-Profit Law Stichting (ECNL) is a non-governmental organisation based in The Hague, the Netherlands, which works to empower civil society through the creation of supportive legal and policy frameworks.

Its mission is:

• to protect human rights, including the freedoms of association, assembly, expression and privacy
• support the development of civil society and public participation at local, national and international levels
• promote the democratic legal order
• support the development of appropriate policies and legislation on civil society, philanthropy, impact investment, social enterprise, international development cooperation and the impact of new technologies on human rights and civil society
• provide support to other organisations and undertake research and education initiatives to advance the above objectives.

Picture by Antoine Schibler on Unsplash