Transparency and Accountability in the Age of Terrorism

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.