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State Support and Financing

International Standards


      Recommendation CM/Rec(2007)14 on the legal status of NGOs in Europe, Paras. 6, 8, 57, 58, 59, 60 and 61

I. Basic principles
6. NGOs should not be subject to direction by public authorities.
8. The legal and fiscal framework applicable to NGOs should encourage their establishment and continued operation.

VI. Fundraising, property and public support
 C. Public support
  57. NGOs should be assisted in the pursuit of their objectives through public funding and other forms of support, such as exemption from income and other taxes or duties on membership fees, funds and goods received from donors or governmental and international agencies, income from investments, rent, royalties, economic activities and property transactions, as well as incentives for donations through income tax deductions or credits.
  58. Any form of public support for NGOs should be governed by clear and objective criteria.
  59. The nature and beneficiaries of the activities undertaken by an NGO can be relevant considerations in deciding whether or not to grant it any form of public support.
  60. The grant of public support can also be contingent on an NGO falling into a particular category or regime defined by law or having a particular legal form.
  61. A material change in the statutes or activities of an NGO can lead to the alteration or termination of any grant of public support.

Explanatory Memorandum

Paragraph 6
28. Although subject to the law like everyone else, the freedom from direction by public authorities is essential to maintain the “non-governmental” nature of NGOs. This freedom should extend not only to the decision to establish an NGO and the choice of its objectives but also to the way it is managed and the focus of its activities. In particular there should be no attempts by public authorities to make NGOs effectively agencies working under their control (see the finding of a violation of Article 11 of the European Convention in Sigurdur A Sigurjónsson v. Iceland, no. 16130/90, 30 June 1993 as a result of an attempt to use a taxi association to administer the provision of taxi services) or to interfere with the choice by an NGO of its leaders or representatives (see the finding of violations of freedom of religion under Article 9 of the European Convention, which imposes a similar obligation to Article 11 in this regard, in Serif v. Greece, no. 38178/97, 14 December 1999, Hasan and Chaush v. Bulgaria [GC], no. 30985/96, 26 October 2000 and Metropolitan Church of Bessarabia and Others v. Moldova, no. 45701/99, 13 December 2001 following such interferences).
29. This does not mean that public authorities cannot choose to provide particular assistance to NGOs pursuing objectives that they consider to be of particular importance but the latter should be free to decide whether to accept or continue to receive such assistance. Furthermore neither legislation nor other forms of pressure should be used to make NGOs undertake particular activities considered to be of public importance.

Paragraph 8
31. In view of the contribution that NGOs can make to the achievement of a wide range of societal objectives, it is appropriate to have a legal and fiscal framework applicable which facilitates their establishment and continued operation. The former entails in particular a flexible regime governing the acquisition of legal personality and an approach towards the regulation of their activities that is not overly strict or heavy-handed. The latter can be best achieved through non-taxable grants, direct relief from certain taxes on income and expenditure and the provision of incentives to taxpayers to support the activities of NGOs (see further Paragraph 57 of the Recommendation).

Paragraph 57
109. It is appropriate to grant public support to NGOs since they are often able to answer the needs of society in ways that public bodies cannot. The forms that such support can take will be wide-ranging and will need to be settled according to the conditions prevailing in a country at a particular time. However, various forms of tax exemption, whether directly to the NGOs themselves or indirectly to those who might thereby be encouraged to make donations to them, are likely to be the most useful as they enable NGOs to determine the best use of the resulting income.

Paragraph 58
110. It is essential that clear and objective criteria should govern the grant or refusal of any form of public support to NGOs so that any such decision can be scrutinised by all who may be interested in it - not only the NGOs concerned but also other NGOs working in the same field and members of the public interested in the use made of public resources - and subject to challenge in a court where it is considered that they have not been properly applied.

Paragraph 59
111. In deciding whether to grant public support, or particular forms of it, to an NGO or a certain category of NGO, it will be appropriate to take into account the nature and beneficiaries of any activities undertaken by such an organisation or category of organisation and thereby establish whether they address those needs of society considered to be a particular priority. What is seen as a priority and thus what forms of activity are regarded as worthy of public support can change over the course of time.

Paragraph 60
112. The provision of public support (in the form of financial or other benefits) for the activities of NGOs is something that can be made contingent upon them qualifying for a special category or regime (e.g., a charity), or even a specific legal form (e.g., a trade union, church or religious association). A failure to obtain such a status or classification or to be allowed to take on such a legal form should not, however, lead to the loss of any legal personality already acquired.

Paragraph 61
113. Since the granting of public support can be conditional upon certain objectives being pursued or certain activities being undertaken, it should be expected that a material change in either those objectives or activities will lead to a review of the provision of this support and possibly its modification or termination.]


      Fundamental Principles on the Status of Non-Governmental Organisations in Europe, Principles 6, 57, 58 and 59

Basic principles
6. NGOs come into being through the initiative of individuals or groups of persons. The national legal and fiscal framework applicable to them should therefore permit and encourage this initiative. (...)

Public support
57. There should be clear, objective standards for any eligibility of NGOs for any form of public support, such as cash and exemption from income and other taxes or duties on membership fees, funds and goods received from donors or governmental and international agencies, income from investments, rent, royalties, economic activities and property transactions, as well as incentives for donations through income tax deductions or credits.
58. In granting such support, relevant considerations may be the nature of activity that the NGO undertakes and whether or not it exists for the benefit of its membership or for the benefit of the public (or a section of this). Such support may also be contingent on an NGO having a particular status and be linked to specific requirements for financial reporting and disclosure.
59. A material change in the statutes or activities of an NGO may lead to the alteration or termination of public support.

Explanatory Memorandum

62. NGOs are sometimes better placed than the state to answer certain needs of society, for instance in welfare and health matters. As a result, states often decide to grant them support, in the form of direct grants or preferential tax treatment.
63. The eligibility for public support should be based on clear, objective criteria. The public should also be able to ascertain which NGOs have received support and on what grounds. The authorities must also be able to verify that associations seeking support or preferential tax treatment do, indeed, serve a non-profit-making purpose, as in some countries tax advantages attract certain entities to apply for NGO status when it would have been more appropriate for them to have been established as commercial companies.
64. As a result, the majority of states make the granting of public support contingent on compliance with certain criteria and, above all, with the NGO’s fulfilment of a public interest objective. In some states this may entail recognition of a special status or classification as an organisation in the public interest, which enables the NGO to receive donations and enjoy tax advantages, while at the same time ensuring the protection of third parties.
65. Since the granting of public support is to a large extent conditional on the objectives and activities of an NGO, it is normal that any major change in those activities or objectives may result in review, alteration and even termination, of public support.



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