Enacting these measures could remove hurdles which currently provide a “significant obstacle to the free flow of philanthropy across borders”.

This is according to the Brussels-based philanthropy organisation Philea. Last year, a report by Philea outlined six key ways in which cross-border philanthropy is thwarted, including what it called “discriminatory tax treatment”; difficulty in accessing banking services, and the “worrying phenomenon” of restrictions being placed on so-called foreign agents.

As Fundraising Europe has highlighted previously, there are growing concerns about the ‘foreign agent’ narrative in a range of countries including Slovakia, Hungary, Georgia and more.

Philea says that foundations and philanthropy organisations should advocate for change by engaging with governments to ensure implementation of the recommendation by the deadline of November this year.

The council’s recommendation, made in 2023, covers a broad range of issues relating to the social economy, rather than just to donations to registered charities. The legal text includes this explanation:

“Social economy entities and their definition can vary slightly between the Member States, and can take various legal forms and statuses, such as cooperatives, mutual societies, associations, foundations and social enterprises. They share the common principles of reinvesting all or most of their profits to pursue their social or environmental purposes and practicing democratic or participatory governance.”

Hanna Surmatz, head of policy at Philea, tells Fundraising Europe that the council’s recommendation, alongside upcoming Commission-led training on social economy topics, will “create a real momentum” to support better cross border philanthropy. She adds:

“Legislative changes and simplification of procedures are essential to create a functioning cross-border philanthropic space. We call on member states to implement them swiftly.”

Picture by Aron Visuals on Pixabay

The European Catalogue of nonprofit organizations from Transnational Giving Europe (TGE) showcases TGE-registered charities through online donation pages.

Users can search for organizations by name, cause, or donors’ country of tax residence. To donate, donors must select their country of tax residence from a drop down menu. The approach aims to streamline the fundraising process for charities and connect donors with the causes they are passionate about.

In addition, the platform will introduce a “Projects of the Month” section, spotlighting three charities each month.

By providing a centralized hub for donors to explore and contribute, the platform seeks to enhance engagement on key generosity occasions and events.

Picture by Karolina Grabowska on Pexels

EFA has been in support of a proposal to facilitate cross-border activities of nonprofit associations in the EU. Now that an EU Commission initiative has in fact been tabled, the European Parliament, as well as the EU Council, will have to study the proposal and introduce amendments as they see fit. This round of decision-making provides an opportunity for non-institutional organizations, such as EFA, to offer input to the decision-makers as to which amendments would be needed to either protect or further strengthen the civil society sector. As such, EFA has joined a consortium of civil society organizations that align on specific matters, in order to strengthen the voice of its members in Brussels.

In the last edition of Fundraising Europe, I wrote that the European Commission adopted a proposal for a Directive on European cross-border associations, which aims to facilitate intra-EU cross border activities for NPOs, by removing some of the legislative and administrative burden. The Commission’s proposal introduces an additional legal form of a European cross-border association (ECBA) in Member States’ national legal systems, “which is specifically designed for cross-border purposes and will reduce legal and administrative burden when it comes to the recognition and establishment of nonprofit associations engaging in activities in another Member State”.

Points to address

Whilst the consortium supports the creation of an ECBA, it needs to be addressed that the ECBA proposal does not effectively cover foundations and does not provide for the creation of a European cross-border foundation. Therefore, in the future, a specific legislative initiative, similar to the ECBA, should also be proposed for foundations. The consortium also argues that guarantees against arbitrary restrictions based on ‘public interest’ should be strengthened.

Another problem has been identified in that the Directive seems to be exclusive towards non-Europeans. The consortium argues that for the ECBA Directive proposal to be effective, it must ensure that non-EU based people or associations (and other non-profit legal entities) can be members of an ECBA and hold leadership positions. The same exclusivity also seems to make it prohibitive for associations that include non-EU members to be converted to an ECBA.

Lastly, while taxation is not covered by the Directive proposal, the consortium expects that at the national tax law level, Member States could consider that foreign-based ECBAs will be considered comparable to local/resident ECBAs and hence donors giving to an ECBA registered abroad would receive the same tax incentive as if they were giving to a local ECBA.

EFA will continue to monitor the proposal as it makes its way through the stages of EU decision-making.

Patrick Gibbels, Gibbels Public Affairs

About Patrick Gibbels

Patrick is EFA’s public affairs columnist in Brussels.

He is the director of Gibbels Public Affairs.

Follow Patrick @GPA_Brussels.

Read more from Patrick in our View from Brussels column here.

Picture by Antoine Schibler on Unsplash

On 5 September 2023, the European Commission adopted a proposal for a Directive on European cross-border associations, which aims to facilitate intra-EU cross-border activities for NPOs by removing some of the legislative and administrative burden. EFA has been in support of the European Parliament’s legislative initiative procedure of a similar name, calling for legislative action by the European Commission in this regard. As such, EFA is pleased to see that the EU Commission has now tabled this proposal.

The history of the proposal

In 2020, led by Rapporteur MEP Sergey Lagodinsky, the European Affairs Committee tabled a report calling on the Commission to put forward a directive on common measures for NPOs and also a Regulation establishing a statute for European cross-border associations and nonprofit organisations. The proposal recognised that NPOs in particular faced multiple legal and administrative challenges when attempting to operate across borders. It argued that minimum EU standards and being able to acquire a legal personality would help NPOs overcome these barriers.

In February 2022, the European Parliament adopted this proposal with an overwhelming majority. On 5 September 2023, the Commission followed through with their proposal for a Directive. Currently, national legal provisions for NPOs are patchy, and insufficient to build a real pan-European civil society. NPOs do not receive uniform acknowledgment of their legal personality and capacity, and often need to register for a second time or even form a new legal entity in that Member State. An estimated 310,000 nonprofit associations are currently affected by those obstacles.

What’s proposed

The Commission’s proposal introduces an additional legal form of a European cross-border association (ECBA) in Member States’ national legal systems, “which is specifically designed for cross-border purposes and will reduce legal and administrative burden when it comes to the recognition and establishment of non-profit associations engaging in activities in another Member State”. Once established in one Member State, an ECBA will be recognised automatically and will be able to engage in activities in all Member States, including economic activities, thereby allowing non-profit associations to flourish across the EU with minimal barriers to their operations.

Whilst the European Parliament had asked for Regulation as well, which is arguably a better tool for harmonization, the Commission chose to propose a Directive instead, which offers more flexibility for implementation by the Member States. The likely reason for this will be the difficulty to harmonize what has been described as a patchwork of 24 legal systems.

What’s next

Since this proposal was born in the European Parliament, it is likely to receive continued support from this institution, which will ultimately enter into negotiations with the EU council. The question is which amendments to the Commission proposal the Parliament might table and whether these will be good for NPOs. It is important for civil society to monitor these developments closely, and to inform decision makers when and where necessary regarding the potential impact their proposals and amendments might have on NPOs’ operations, thereby shepherding the proposal to a positive outcome.

For more on this: read our news story here. 

Patrick Gibbels, Gibbels Public Affairs

About Patrick Gibbels

Patrick is EFA’s public affairs columnist in Brussels.

He is the director of Gibbels Public Affairs.

Follow Patrick @GPA_Brussels.

Read more from Patrick in our View from Brussels column here.

Picture by Jonas Horsch on Pexels

With support urgently needed for people fleeing Ukraine and the organisations providing aid both there and in neighbouring countries, DFRV wants to see an end to the bureaucratic hurdles that can mean long delays to donations getting through.

Martin Georgi, chairman of the DFRV, said:

“In past emergency situations, such as the flood disaster in July 2021, it has already been shown that civil society helps quickly with thousands of dedicated helpers helping and many millions in donations collected.”

However, the legalities and documentation required before donations can be put to use by aid organisations working in the field can lead to delays in them getting through.

Georgi added:

“This prevents the organisations from doing their actual work for many months.”

The DFRV is therefore calling for simpler regulations for donations given in emergencies and disasters, and for the tax code to be updated and simplified to enable emergency and disaster aid work to be recognised as nonprofit and therefore eligible for support, whether or not it is organised by a registered charity.

Larissa Probst, managing director of the DFRV commented:

“Emergency and disaster relief and work for human rights and peace should be recognised as nonprofit. Rigid and no longer up-to-date demarcations between aid in the area of ​​private individuals and small businesses must be abolished.”

“A modernisation of nonprofit law should support the strength and solidarity of civil society and break down bureaucratic barriers for organisations and helpers.”

Picture by Markus Spiske on Pexels

The aim of the initiative is to unlock the potential of philanthropy in the recovery and future of Europe, mobilising complementary private resources for the public good and facilitating cross-border giving and philanthropic action. It was welcomed by EC Commissioner Mairead McGuiness, who stressed the importance of the philanthropic sector in Europe, saying:

“Philanthropy can help us catalyse a more holistic response to the vast challenges that lie ahead, from climate change to vaccination and social innovation.”

Several MEPs also contributed, including the initiators of the debate, European Parliament Vice-President Nicola Beer and MEP Ilhan Kyuchyuk.

They called for bold action, highlighting the quick response of philanthropic organisations to the pandemic, particularly in helping to bridge gaps in public provision by supporting the most affected communities, and saying:

“However, the potential of philanthropy cannot take full effect yet, even within the European Union. Complex rules continue to hinder cross-border philanthropy in the form of multiple legal, administrative and fiscal barriers.” 

Also speaking in support of the initiative, MEP Seán Kelly underlined the key role philanthropy plays in upholding community cohesion, sharing European values, tackling rising inequalities and helping to meet citizens’ needs and deliver change. MEP Milan Brglez highlighted how philanthropic organisations have the necessary agility to work cross border that is essential to address the big challenges of the current times, including the green and digital transition.

In his contribution, MEP Sergey Lagodinsky called for the creation of a supranational legal form and special regulatory regimes for European associations, nonprofits and foundations to enhance cooperation in Europe. He said:

“We should emphasise and strengthen the non-discrimination principle based on the free flow capital principle in our European Union, as the European Court of Justice has proposed. We need to lower or mitigate financial burden for cross-border finances. Only by doing so will we be able to strengthen cooperation across border in the European Union. It is of outmost importance to have a regime which would help civil society, not just economy, to be really European.”

In support of the debate, Hanna Surmatz, Enabling Environment Manager and co-lead of the joint Dafne and EFC Philanthropy Advocacy initiative stated:

“We welcome this timely debate and the related initiatives in the European Parliament and the European Commission. The challenges for our society, such as the ongoing Covid-19 pandemic and climate change, do not stop at national borders, but legal frameworks for philanthropic giving do. Therefore, we fully support this call for introducing a single market for philanthropy and public good across the EU.”

More information on the single market for philanthropy is available in the European Philanthropy Manifesto as well as the legal analysis across 40 countries in Europe in the recent Comparative Highlights of Foundation Laws published on 1 October.
 

Picture: European Parliament building by Erich Westendarp from Pixabay

The Transnational Giving Platform, built by the Transnational Giving Europe Network, aims to simplify the process of European online cross-border donations by allowing individuals and companies to donate digitally to causes and organisations of their choice across Europe, while benefitting from tax deductions in their country of residence.

The initiative is co-funded by the Creative Europe programme of the European Union, and the Swiss Philanthropy Foundation in Geneva, with the support of the King Baudouin Foundation in Brussels, with iRaiser behind the technology.

Ludwig Forrest, head of international philanthropy of the King Baudouin Foundation, commented:

“As coordinator of the Transnational Giving Europe Network, the King Baudouin Foundation is pleased to introduce this innovative digital solution that will finally facilitate cross-border generosity in Europe. Now, more than ever, European philanthropy will be able to play its complementary role to public action. Many European donors will be able to use this platform to support projects of general interest in most European countries under the best conditions.”

Two organisations (FEDORA and Common Goal) participated in the development of the system and are the first non-profit organisations in Europe to use the new online donation platform. FEDORA is the European Platform supporting innovation and intercultural dialogue in the fields of opera and ballet, while Common Goal is a philanthropic movement that encourages professional football players, managers and businesses to pledge a minimum of one percent of their earnings to sports-based non-profit organisations that advance the United Nations Sustainable Development Goals. 

Cvjetana Plavsa-Matic, Transnational Giving Europe chair, said:

“This project puts a digital tool at the service of the pure human need to give to causes close to one’s heart. With this new online giving solution, we bridge the gap between European donors and the non-profit sector and move one step closer to a single European market for philanthropy.”

At the moment, individual and corporate residents from the following countries can benefit from national tax deductions on their donations through Transnational Giving Europe’s collaboration with national partner foundations:

– Austria – Philanthropie Stiftung Österreich

– Belgium – King Baudouin Foundation

– Bulgaria – BCause

– Croatia – European Foundation for Philanthropy and Society Development (EFPSD)

– France – Fondation de France

– Germany – Maecenata Stiftung

– Greece – Higher Incubator Giving Growth & Sustainability – HIGGS

– Hungary – Carpathian Foundation Hungary

– Italy – Fondazione Lang Europe Onlus

– Romania – Odorheiu Secuiesc Community Foundation

– Spain – Empresa y Sociedad Fundación

– Switzerland – Swiss Philanthropy Foundation

– United Kingdom – Charities Aid Foundation 

The pilot version of the online Transnational Giving Europe Platform will now be scaled up to include more European countries and as many beneficiaries as possible by 2021, with the goal being to make it accessible to the entire European non-profit sector by enabling any non-profit organisation to raise funds across Europe.

The financial uncertainty and widespread fear brought on by the COVID-19 crisis is dramatically impacting charities around the world. Without immediate access to the vital funds they rely upon from international donors, their work—and even their organisation itself—is at risk.

Chapel & York has announced the launch of an emergency programme to accelerate the process through which charitable organisations can receive urgent funding. Offered through Chapel & York foundations in the UK, US, Netherlands, Singapore and Hong Kong, charities will be given a cost-free designated membership, allowing them to offer their international donors an immediate and effective method for giving.

“Many charities are desperate for funds to maintain or increase their work right now,” says Nancy Bikson, Managing Director of Chapel & York.

“Working closely with the fundraising and charity sectors, we’ve seen a significant lag in getting resources where they are needed. We are trying to be responsive to that need.”

In light of the many logistical and physical obstacles people are facing globally, this emergency programme intends to smooth the journey of giving internationally for donor and charity alike.

The manifesto, developed by the European Foundation Centre (EFC) and Donors and Foundations Networks in Europe (DAFNE), includes four recommendations to achieve a single philanthropic market, including better recognition of philanthropy within the legal framework of the EU and taking steps to reduce the barriers for cross-border giving.

Institutional philanthropy in Europe currently includes more than 147,000 foundations with accumulated annual giving of nearly 60 billion EUR

At the launch, EFC chair Massimo Lapucci said:

“The Philanthropy Manifesto is the first concrete result of the joint advocacy work of the EFC and DAFNE for the development of a single market without frontiers for the entire sector. It is, in fact, only in the presence of a favourable environment that institutional philanthropy can fully perform its role of building social capital: an essential ‘glue’ in today’s Europe, given the fragmentation caused by centrifugal forces and by an increasing disconnect between citizens and institutions.”

Gosse Bosma, EFA President and director of Goede Doelen Nederland, welcomed the initiative, saying:

“This is a strong step forward to develop a more enabling environment for philanthropy, encouraging collaboration across civil society and working towards better recognition of the enormous societal value of philanthropy at a European level.”

Organisations are being encouraged to sign up and pledge their support for the manifesto at philanthropyadvocacy.eu.

You may well have heard of blockchain technology – most likely as the thing that makes cryptocurrencies like Bitcoin possible. However, there is growing awareness that the technology has far wider potential applications.

That is why tech companies, banks and governments around the world are piling money into experimenting with blockchain in everything from supply chain management to voting systems. And the technology also has profound implications for civil society and philanthropy, as we have been exploring at CAF for the last few years.

Explaining blockchain
In short, a blockchain is a distributed public ledger: a way of keeping a record of transactions and ownership within a system without the need for a traditional trusted third party. (In reality things are slightly more complicated- for instance there is growing disagreement between those who believe blockchains must be entirely public and those who want to create private or ‘permissioned’ ledgers- but we can gloss over that for now).

Let’s focus on the key features of the technology and what they enable. In the context of cross-border giving ─ at least in the short term – the main impact is likely to come from three things: disintermediation, non-geographic transactions and radical transparency.

Removing the need for middlemen
A public ledger on which entries are immutable (i.e. cannot be altered after the fact) gives users a trusted shared record to work with. It is then possible to build self-executing computer protocols known as ‘smart contracts’ on top of this which can perform set functions when certain criteria are met (i.e. “If X happens, then do Y”). This creates a disintermediating framework in which you can have trustworthy transactions without the need for a third party, enabling the removal of many traditional middlemen.

Non-geographic transactions
The fact that blockchains are distributed (i.e. they are spread across all users of the system and not kept in any one place) is also important, as this means that they are not tied to any particular geographic location.

Combined with the removal of intermediaries, reducing associated legal and banking costs, this could significantly reduce the cost of cross-border giving. If it is possible to transfer financial value using a distributed framework that is not tied to a particular country, this could avoid the FX costs that currently make up such a large proportion of the expense of moving money internationally. It could also make it easier to get money into parts of the world where traditional financial infrastructure is lacking or undermined by corruption.

Radical transparency
The other major implication of blockchain technology is radical transparency. The ability to create unique and non-fungible units, when combined with the public nature of the ledger, means that assets can be tracked through a chain of transactions. When it comes to philanthropy, this means that a donor might be able to trace their individual gift all the way through a recipient charity and see exactly how it is spent.

This could help reduce fraud and corruption, making donors and funders more confident that their money was being spent effectively. But it could also pose a significant challenge in contexts where keeping the identity of donors or beneficiaries hidden is justifiable and necessary. For instance, a funder supporting gay rights advocacy in a country where homosexuality is illegal would need to ensure that by using a blockchain-based platform they weren’t inadvertently publicising the identity of organisations or individuals receiving grants, and thus putting them in danger of imprisonment.

Putting blockchain into practice
The idea of using blockchain for cross-border giving is already being tested. Large INGOs and aid agencies like UNICEF and the World Food Programme are experimenting with using blockchain for their internal money flows. Meanwhile, start-ups like Disberse are trying to build platforms that can harness blockchain technology to make cross-border payments more efficient, transparent and cost-effective.

These efforts face a number of challenges. There is still little clarity about the regulation of blockchain or cryptocurrency, and regulators and governments around the world are taking widely differing views of the technology. There is also a significant ‘last mile’ problem: even if you move money on a blockchain, you will reach a point where you need to spend it on goods and services on the ground. Unless you can spend cryptocurrency directly, or have some way of turning your blockchain-based token back into real money, it is not much use. This may change in the future if the technology becomes more widespread, but for now it remains a big challenge.

The potential for using blockchain technology to improve cross-border giving is huge. But there are also a number of big challenges that need to be overcome. We need to find ways to bring funders and NGOs together with the tech sector to identify meaningful use cases where blockchain could bring real benefit, and find solutions to some of the challenges. Only then will we have a chance of realising the technology’s true potential for cross-border giving.

About Rhodri Davies
Head of policy at Charities Aid Foundation (CAF), Rhodri leads Giving Thought, – CAF’s in-house think tank focusing on current and future issues affecting philanthropy and civil society. He is the author of Public Good by Private Means: How philanthropy shapes Britain, which traces the history of philanthropy in Britain and what it tells us about the role of modern philanthropy. Beyond that, he has researched, written and presented on a wide range of topics – from social investment to the charitable applications of cutting-edge technologies such as artificial intelligence and blockchain – and is much in demand as an adviser to governments, businesses, charities and philanthropists.