Shortly after September 2001, the United States Administration began to look at the charity sector and its possible role in funding, perhaps inadvertently, terrorist organizations and activities. ICFO, because of its international nature, and primarily Eurocentric focus, became aware of this new emphasis, both in the United States and in the European Commission (EC). Thus, in May 2005, the ICFO membership, during its Annual General Membership meeting in the Washington, DC area received a briefing from the leadership of the U.S. Department of Treasury concerning this initiative.
Then, in early January 2009, ICFO received a letter from the European Commission Directorate-General Justice, Freedom and Security. According to this letter, improving transparency and accountability of non-profit organizations in the European Union was one of the key objectives in the counter terrorist financing context. There had been several studies and meetings in Brussels on this subject over several years.
As a result, several of us as members of the Board of ICFO were invited to Brussels to participate in an EC meeting of representatives from Member States and the civil society sector to be held on February 12, 2009. The EC had contracted with the European Center for Not-For-Profit Law (ECNL) for a study on Recent Public and Self-Regulatory Initiatives Improving Transparency and Accountability of Non-Profit Organisations in the European Union. Thus, the focus of this meeting at the EU headquarters in Brussels was to encourage discussions on the outcome of this study, its recommendations, and possible follow-up.
With this focus, the invitees to the meeting included representatives to the meeting included representatives from the Finance Ministries of approximately 20 Member States of the EU, two representatives from the U.S., representing the Department of Treasury and the U.S. Mission to the EU, the Financial Action Task Force (FATF) Secretariat, and the Executive Director of the European Center for Not-for-Profit Law. Additionally, there were representatives from several European based charity monitoring organizations and from ICFO.
Burkhard Wilke, the ICFO Secretary General, Adri Kemps, the ICFO Treasurer, and I attended the meeting representing ICFO. Additionally, there was one representatives from an ICFO member organization in attendance as well.
Over the next several weeks, I will be posting my observations and impressions about this meeting and the general thrust of the recommendations presented by FATS and ECNL. I hope to also include in my discussions of this topic, the effect of a recent decision by the European Court of Justice in the Hein Persche v. Finanzampt Lüdenscheid case. Briefly, the Hein Persche v. Finanzampt Lüdenscheid decision addressed the tax deductibility of a gift-in-kind given by a taxpayer in one country to a charity located in another country.
Thursday, July 30, 2009
Tuesday, July 28, 2009
The Journey Begins, But First -
Since its inception over 50 years ago, ICFO has provided a forum for the exchange of information. My goal here is simply to expand the arena in which that discussion and exchange of information can take place. But for now, focusing on ICFO, it is sufficient to say that for the most part, a purpose of this exchange has been to inform each of us from different countries and histories, of the problems and practices involving the monitoring of charities within our respective countries. Of course, what we mean by monitoring may now be changing as the sector increases in importance. But, that is the subject for another day.
However, this exchange of information also took place in the context of problems relating to cross border fundraising. I remember when I first discovered the importance and benefit of this some twelve or fifteen years ago. For most of its history, ICFO was largely a European focused activity. Yes, there were a few non-Europeans, such as the National Charities Information Bureau (NCIB) based in the US, involved in ICFO. But that was it, and even then, the significance of this participation by non-European entities may have been of questionable value to the US entity.
As some will know, NCIB dropped its membership in ICFO sometime in the late 1990s and subsequently merged with the Council of Better Business Bureaus Foundation (which housed the Philanthropic Advisory Service) in 2001. Thus, the birth of the BBB Wise Giving Alliance (http://www.bbb.org/us/charity/).
As a result, there had been reluctance on the part of some of the monitoring organizations in the United States to participate in ICFO. For the most part, American monitoring organizations simply had not heard of ICFO, or were not familiar with it.
Moreover, the reluctance on the part of those who were familiar with ICFO to participate in ICFO, was due, in part, to several factors. These included the belief that there was little relevance to the American charitable sector resulting from the exchange of what was believed to be Eurocentric information and the idea that the legal, political, and cultural contexts between the United States and European countries were significantly different and that the cross-fertilization of information would not prove useful to either the Europeans or Americans. Further, the costs associated with the membership fees and cross-Atlantic travel to European destinations did not seem to justify the relationship between North American organizations and ICFO.
This changed when the president of the Evangelical Council for Financial Accountability (ECFA, http://www.ecfa.org/) was contacted by the Director of one of the monitoring organizations in Europe concerning fundraising in that country by a charity which had been accredited by ECFA. The solicitation for funds by that American charity carried the ECFA Seal of Approval, indicating that it had been accredited by ECFA. This matter was resolved by the removal of the ECFA seal from the solicitation since there was no extraterritorial reach to the ECFA accreditation. But, it also led to an active relationship between ECFA and ICFO leading to ECFA's membership in ICFO.
Although ECFA had been involved on a somewhat advisory capacity with ICFO prior to this time, it became clear that the issue of cross-border fundraising in a global economy with funding from the more wealthy northern hemisphere for relief and development and religious ministry purposes in the southern hemisphere, represented the opportunity and benefit of international cooperation.
What we in the United States and Canada learned from this experience, of course, had long been common knowledge and the common experience in Europe among those early pioneer members of ICFO. My guess is that the charity sectors in the United States and Canada have benefited from this exchange of relationship, just as I would hope that our European friends, and now Asian friends, have benefited from this collegial effort on all of our parts.
However, this exchange of information also took place in the context of problems relating to cross border fundraising. I remember when I first discovered the importance and benefit of this some twelve or fifteen years ago. For most of its history, ICFO was largely a European focused activity. Yes, there were a few non-Europeans, such as the National Charities Information Bureau (NCIB) based in the US, involved in ICFO. But that was it, and even then, the significance of this participation by non-European entities may have been of questionable value to the US entity.
As some will know, NCIB dropped its membership in ICFO sometime in the late 1990s and subsequently merged with the Council of Better Business Bureaus Foundation (which housed the Philanthropic Advisory Service) in 2001. Thus, the birth of the BBB Wise Giving Alliance (http://www.bbb.org/us/charity/).
As a result, there had been reluctance on the part of some of the monitoring organizations in the United States to participate in ICFO. For the most part, American monitoring organizations simply had not heard of ICFO, or were not familiar with it.
Moreover, the reluctance on the part of those who were familiar with ICFO to participate in ICFO, was due, in part, to several factors. These included the belief that there was little relevance to the American charitable sector resulting from the exchange of what was believed to be Eurocentric information and the idea that the legal, political, and cultural contexts between the United States and European countries were significantly different and that the cross-fertilization of information would not prove useful to either the Europeans or Americans. Further, the costs associated with the membership fees and cross-Atlantic travel to European destinations did not seem to justify the relationship between North American organizations and ICFO.
This changed when the president of the Evangelical Council for Financial Accountability (ECFA, http://www.ecfa.org/) was contacted by the Director of one of the monitoring organizations in Europe concerning fundraising in that country by a charity which had been accredited by ECFA. The solicitation for funds by that American charity carried the ECFA Seal of Approval, indicating that it had been accredited by ECFA. This matter was resolved by the removal of the ECFA seal from the solicitation since there was no extraterritorial reach to the ECFA accreditation. But, it also led to an active relationship between ECFA and ICFO leading to ECFA's membership in ICFO.
Although ECFA had been involved on a somewhat advisory capacity with ICFO prior to this time, it became clear that the issue of cross-border fundraising in a global economy with funding from the more wealthy northern hemisphere for relief and development and religious ministry purposes in the southern hemisphere, represented the opportunity and benefit of international cooperation.
What we in the United States and Canada learned from this experience, of course, had long been common knowledge and the common experience in Europe among those early pioneer members of ICFO. My guess is that the charity sectors in the United States and Canada have benefited from this exchange of relationship, just as I would hope that our European friends, and now Asian friends, have benefited from this collegial effort on all of our parts.
Sunday, July 26, 2009
Where to Start?
Although my mind is buzzing with thoughts about the importance of charities and indeed of institutions in the civil society movement, and about the importance of accountability and transparency in that sector, I find it difficult to know just where to start this conversation.
There are so many things one might say to set the stage. Charities and other nonprofit institutions have been around since the beginning of time. But there is the question of the government's role in providing the needed services provided by charitable and educational institutions, for example. There is also the question of the level of government regulation and oversight of the sector that should be required in order to ensure transparency and accountability.
This emphasis on transparency and accountability, and all the board governing structures that are required to assure appropriate levels of accountability, raises also the question of independent monitoring by national and independent nongovernmental bodies, either through some form of self-regulation or by a separate independent monitoring body.
This then is the story of those independent, nongovernment monitoring organizations that seek to provide guidance and oversight within the sector. How did these organizations develop? What are the biases and assumptions that support the role of these types of organizations versus the regulation of the sector by government? Are governments competent to provide the kind of regulatory scheme and oversight necessary to ensure an acceptable level of transparency and accountability? Can independent, nongovernment monitoring organizations provide the credibility necessary to assure the donor public, and indeed the public generally, of the quality of the transparency and accountability of accorded various organizations within the charity sector? These are just a few of the questions to be addressed in this conversation.
Some of this discussion over the next few weeks will focus on several issues that have dominated the landscape throughout the fifty year history of ICFO. One is the matter of cross-border fundraising for charity. The second is the treatment and monitoring, if any, of large international charitable institutions, such as, Amnesty International, Doctors without Borders, Greenpeace International, Oxfam, Plan International, and World Vision International, and similar relief and development organizations that operate internationally with little accountability within the countries of their origins.
These primary subjects raise a number of subsidiary issues we hope to discuss in the weeks ahead.
There are so many things one might say to set the stage. Charities and other nonprofit institutions have been around since the beginning of time. But there is the question of the government's role in providing the needed services provided by charitable and educational institutions, for example. There is also the question of the level of government regulation and oversight of the sector that should be required in order to ensure transparency and accountability.
This emphasis on transparency and accountability, and all the board governing structures that are required to assure appropriate levels of accountability, raises also the question of independent monitoring by national and independent nongovernmental bodies, either through some form of self-regulation or by a separate independent monitoring body.
This then is the story of those independent, nongovernment monitoring organizations that seek to provide guidance and oversight within the sector. How did these organizations develop? What are the biases and assumptions that support the role of these types of organizations versus the regulation of the sector by government? Are governments competent to provide the kind of regulatory scheme and oversight necessary to ensure an acceptable level of transparency and accountability? Can independent, nongovernment monitoring organizations provide the credibility necessary to assure the donor public, and indeed the public generally, of the quality of the transparency and accountability of accorded various organizations within the charity sector? These are just a few of the questions to be addressed in this conversation.
Some of this discussion over the next few weeks will focus on several issues that have dominated the landscape throughout the fifty year history of ICFO. One is the matter of cross-border fundraising for charity. The second is the treatment and monitoring, if any, of large international charitable institutions, such as, Amnesty International, Doctors without Borders, Greenpeace International, Oxfam, Plan International, and World Vision International, and similar relief and development organizations that operate internationally with little accountability within the countries of their origins.
These primary subjects raise a number of subsidiary issues we hope to discuss in the weeks ahead.
Sunday, July 19, 2009
What is This All About?
I am launching this blog, Perspectives on Charity Accountability, as President of the International Committee on Fundraising Organizations (ICFO). While I am a neophyte at this new media stuff, I felt it is time to engage a conversation about charity accountability and monitoring around the world. Therefore, the purpose of this site is to provide some commentary on issues arising out of the work of monitoring those organizations and institutions that are important to the civil society movement, with particular emphasis on public benefit organizations.
This site is not primarily directed to providing commentary on issues in the non-profit sector that are of principal concern to donors and the public generally with respect to the raising of funds and accountability, and how funds are used in advancing the mission of the charity or public benefit organization. Rather, the emphasis will be on how charities can be accountable to their constituencies through the application of legislative and regulatorily imposed requirements and by standards issued and enforced by independent monitoring organizations and self-regulatory bodies.
Just over fifty years ago, representatives from Denmark, Germany, Finland, Norway, Sweden, and Switzerland, and later, The Netherlands, gathered in Bonn, Germany to form an association of monitoring organizations. Over the next few years, this informal association of like-minded foundations became more formally established as the Commission Internationale Pour Le Controle Des Dons, International Kommission Für Spendenordnung, Internationella Kommissionen För Inslamlingskontroll, and International Commission for Donations-Control. But, more about how these foundations and organizations functioned in performing their monitoring activity, such as it was fifty years ago.
The agendas of those early meetings appeared to deal was the gathering and exchange of information from national foundations monitoring charitable activity. The goal was to advance the missions of national monitoring foundations and promote interest in unaffiliated countries, such as France, the United Kingdom, and Belgium. In time, the agendas included establishing international standards and monitoring practices.
What is clear from this early history is that there was great interest in understanding the nonprofit sector, and specifically how it operated across national boundaries. As its organizing purpose became clearer, the organization was formally established as the International Committee on Fundraising Organizations (ICFO) and chartered in The Netherlands. Since its founding, the membership of ICFO has grown to include representative groups from Austria, Canada, France, Germany, Italy, The Netherlands, Norway, Spain, Sweden, Switzerland, Taiwan, and the United States, with supporting membership organizations from Belgium and the United Kingdom. See http://www.icfo.de/. This site will describe some of the history and role of the national members of ICFO, and how they have evolved over time to find common means of monitoring the nonprofit sector.
Much has changed in the 50 years since the founding of the International Committee on Fundraising Organizations or ICFO as it is known. This site will explore some of those changes, including the return of the concept of civil society, the nature, functions, and roles of nonprofit, charitable, and Non-Government Organizations (NGO) in meeting human and societal needs, the role of governments in providing human, social, and quality of life services verses that of the charitable institutions, and the role of governmental monitoring of charitable organizations and activities verses independent monitoring or self-regulation.
The ICFO website (http://www.icfo.de/) contains contact information about the member organizations performing some form of monitoring, the Board, the ICFO Constitution and International Standards, publications that have been presented by individuals associated with ICFO, press releases, the annual reports of activities, and the minutes from the Annual General Membership meetings.
The Constitution, the International Standards, the Annual Reports prepared by the ICFO Secretary General and approved by the membership, and the approved minutes of the Annual General Membership meetings all represent the official voice of ICFO. My commentary on this site, while hopefully consistent with the approved official positions of ICFO, represents my opinions and hopefully opinions that will spark discussion both within ICFO and on this site.
Consistent with the primary goals of ICFO, this column encourages the exchange of information and experience relating to public benefit organizations and their accountability. Because of the international nature of ICFO, this column will attempt to address those issues that cut across the various cultures and jurisdictions, suggest areas of interest for cooperation between independent non-government monitoring organizations, and matters relating to cross-border fundraising. Therefore, comments are encouraged.
This site is not primarily directed to providing commentary on issues in the non-profit sector that are of principal concern to donors and the public generally with respect to the raising of funds and accountability, and how funds are used in advancing the mission of the charity or public benefit organization. Rather, the emphasis will be on how charities can be accountable to their constituencies through the application of legislative and regulatorily imposed requirements and by standards issued and enforced by independent monitoring organizations and self-regulatory bodies.
Just over fifty years ago, representatives from Denmark, Germany, Finland, Norway, Sweden, and Switzerland, and later, The Netherlands, gathered in Bonn, Germany to form an association of monitoring organizations. Over the next few years, this informal association of like-minded foundations became more formally established as the Commission Internationale Pour Le Controle Des Dons, International Kommission Für Spendenordnung, Internationella Kommissionen För Inslamlingskontroll, and International Commission for Donations-Control. But, more about how these foundations and organizations functioned in performing their monitoring activity, such as it was fifty years ago.
The agendas of those early meetings appeared to deal was the gathering and exchange of information from national foundations monitoring charitable activity. The goal was to advance the missions of national monitoring foundations and promote interest in unaffiliated countries, such as France, the United Kingdom, and Belgium. In time, the agendas included establishing international standards and monitoring practices.
What is clear from this early history is that there was great interest in understanding the nonprofit sector, and specifically how it operated across national boundaries. As its organizing purpose became clearer, the organization was formally established as the International Committee on Fundraising Organizations (ICFO) and chartered in The Netherlands. Since its founding, the membership of ICFO has grown to include representative groups from Austria, Canada, France, Germany, Italy, The Netherlands, Norway, Spain, Sweden, Switzerland, Taiwan, and the United States, with supporting membership organizations from Belgium and the United Kingdom. See http://www.icfo.de/. This site will describe some of the history and role of the national members of ICFO, and how they have evolved over time to find common means of monitoring the nonprofit sector.
Much has changed in the 50 years since the founding of the International Committee on Fundraising Organizations or ICFO as it is known. This site will explore some of those changes, including the return of the concept of civil society, the nature, functions, and roles of nonprofit, charitable, and Non-Government Organizations (NGO) in meeting human and societal needs, the role of governments in providing human, social, and quality of life services verses that of the charitable institutions, and the role of governmental monitoring of charitable organizations and activities verses independent monitoring or self-regulation.
The ICFO website (http://www.icfo.de/) contains contact information about the member organizations performing some form of monitoring, the Board, the ICFO Constitution and International Standards, publications that have been presented by individuals associated with ICFO, press releases, the annual reports of activities, and the minutes from the Annual General Membership meetings.
The Constitution, the International Standards, the Annual Reports prepared by the ICFO Secretary General and approved by the membership, and the approved minutes of the Annual General Membership meetings all represent the official voice of ICFO. My commentary on this site, while hopefully consistent with the approved official positions of ICFO, represents my opinions and hopefully opinions that will spark discussion both within ICFO and on this site.
Consistent with the primary goals of ICFO, this column encourages the exchange of information and experience relating to public benefit organizations and their accountability. Because of the international nature of ICFO, this column will attempt to address those issues that cut across the various cultures and jurisdictions, suggest areas of interest for cooperation between independent non-government monitoring organizations, and matters relating to cross-border fundraising. Therefore, comments are encouraged.
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