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Last month the OECD (the Organisation for Economic Co-operation and Development) released amendments to its Common Reporting Standard (CRS) in recognition of the burden of reporting it placed on nonprofits.
Prior to this change the taskforce had argued, the OECD policy, which aims to better detect financial crimes, had an unintended negative impact on the sector by adding significantly to their workload. The taskforce made the case that putting public benefit foundations under the additional reporting duties it required appeared neither risk based nor proportionate.
The OECD has announced that it now recognises that “representatives from the philanthropy sector have highlighted that the application of the standard can lead to highly undesirable outcomes, requiring genuine public benefit foundations to apply due diligence procedures in respect of all beneficiaries of grant payments and report on grant payments to non-resident beneficiaries, such as for instance disadvantaged students receiving scholarships”.
At the same time however, some governments expressed concerns that such a carve-out from the CRS could lead to some organisations circumventing their reporting obligations by improperly claiming nonprofit status if no checks are in place. In response, the CRS now contains an optional new Non-Reporting Financial Institution category for genuine nonprofits, to enable them to be verified by public authorities.
Philea calls the change “a success story for national and European level collaboration around sector policy asks”.
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