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Self-regulatory initiatives: Improving Transparency and Accountability


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Nilda Bullain (European Centre for Not-for-Profit Law, Budapest)
Series of Internacional Conferences
Civil Society Organizations
Transparency and Responsibility
1st Conference "Good Governance and Regulation"
Held at the Goeth Institut Lissabon
Organized by Humaneasy Consulting and Friedrich Ebert Stiftung Portugal
More at

Published in: Business
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  • This presentation is based on a not yet publicly available study made by ECNL to the EU Commision.

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    There's some interesting data amongst these slides - especially, for me, slides 9-12 which deal with Common & Civil Law and national motivations.
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Self-regulatory initiatives: Improving Transparency and Accountability

  1. 1. Initiatives for self-regulation: improving transparency and accountability of NPOs in Europe March 31, 2009 Lisbon Nilda Bullain European Center for Not-for-Profit Law
  2. 2. Presentation structure <ul><li>Background: Study on recent public and self-regulatory initiatives improving transparency and accountability of non-profit organisations in the European Union </li></ul><ul><li>Findings on the initiatives </li></ul><ul><li>Issues in self-regulation </li></ul>
  3. 3. Background <ul><li>Study commissioned by the Directorate-General of Justice, Freedom and Security of the European Commission </li></ul><ul><li>R esearch started in February 2008 </li></ul><ul><li>Study presented February 12, 2009 </li></ul><ul><ul><li>not yet released to the general public </li></ul></ul>
  4. 4. Goals of the Report <ul><li>Map and assess the recent and most important public and self-regulatory initiatives enhancing non-profit organisations ’ (NPO) transparency and accountability in the 27 EU member states </li></ul><ul><li>Support increased knowledge and improved dialogue by identifying and helping to develop best practices through comprehensive case studies </li></ul>
  5. 5. Background <ul><li>Study originated in intention to enhance implementation of counter-terrorism policies within EU. </li></ul><ul><li>Scope and relevance go beyond that; nonprofit sector gained economic and social significance over the past decades. </li></ul>
  6. 6. Scope of R esearch <ul><li>G eographic : on the EU level and in the 27 Member States </li></ul><ul><li>S ubstantive : programmatic and financial accountability and transparency </li></ul><ul><ul><ul><li>public accountability to Government </li></ul></ul></ul><ul><ul><ul><li>accountability to donors or the general public </li></ul></ul></ul><ul><ul><ul><li>(“upward accountability”) </li></ul></ul></ul>
  7. 7. Definitions: Accountability <ul><li>Compliance with legal obligations; </li></ul><ul><li>Demonstrating how resources are spent; </li></ul><ul><li>Good governance; </li></ul><ul><li>Prudent financial management; </li></ul><ul><li>Demonstrating goodwill or an intent to meet certain professional and management standards; </li></ul><ul><li>Demonstrating regularly that it uses its resources wisely and does not take advantage of its special privileges (e.g., tax exemptions) to pursue activities contrary to its nonprofit status. </li></ul>
  8. 8. Definitions: Transparency <ul><li>Organizational transparency : regarding the establishment and registration of the NPO, to identify NPO and seek out its responsible officers ; </li></ul><ul><li>Programmatic transparency : regarding activities and services to assess the effectiveness and/or efficiency of the NPO ; </li></ul><ul><li>Financial transparency : publishing financial reports about incomes, expenses and general financial health . </li></ul>Obligation or willingness of NPOs to publish and make available basic data about their operations.
  9. 9. “ Third Sector” <ul><li>Common law </li></ul><ul><ul><li>(sector = charities) </li></ul></ul><ul><li>vs. </li></ul><ul><li>Civil law </li></ul><ul><ul><li>(sector = all NPOs) </li></ul></ul>
  10. 10. Factors to Consider <ul><li>Regulatory systems, regulatory agency </li></ul><ul><li>NPO role in social – economic policies </li></ul><ul><li>Government – NPO relations; general public – NPO relations </li></ul><ul><li>Level of sector development (“maturity”) </li></ul><ul><li>Size of country, relative size of sector </li></ul>
  11. 11. Legal, Welfare and Development Models Continental Legal : Civil Law Model : Corporatist Sector characteristics : Highly institutionalized, inter-dependent Mediterranean Legal : Civil Law Model : Emerging Sector characteristics : recently institutionalized New Member States Legal : Civil Law Model : Emerging Sector characteristics : weaker , dependent British Isles Legal : Common Law Model : Liberal (Anglo-Saxon) Sector characteristics : Highly institutionalised, independent Nordic Legal : Civil Law Model : Socio-democratic Sector characteristics : Less institutionalised, membership based
  12. 12. General Findings <ul><li>Large number of initiatives to improve NPO accountability and transparency. </li></ul><ul><li>Driving force : growing social and economic importance of the sector. </li></ul><ul><li>Specific motivations include: </li></ul><ul><ul><li>Transparency; </li></ul></ul><ul><ul><li>Value for (public) money; </li></ul></ul><ul><ul><li>Clarification of role – legal and societal; </li></ul></ul><ul><ul><li>Improved governance and effectiveness; </li></ul></ul><ul><ul><li>Prevention of fraud / crime; </li></ul></ul><ul><ul><li>Countering terrorist financing/money laundering threat. </li></ul></ul>Close to 140 initiatives from 27 EU member states and EEA: including over 65 public and over 70 self-regulatory
  13. 13. Map of Public Regulation Initiatives Legal Status & Registration (28) Transparency & Reporting (32) Governance & Internal Rules (18) Fundraising (11) Public Funding & Tax (22) Supervision & Investigation (18) Unknown/Other (5)
  14. 14. Map of Self-Regulation Initiatives Certification & Accreditation (22) Standards, Guidelines, Codes of Conduct (41) Quality Management Systems (15) Databases (9) Other (2)
  15. 15. Trends in Self-Regulation <ul><li>Standards, guidelines, and codes of conduct remain by far the most widespread type of effort. </li></ul><ul><li>Certification and accreditation schemes usually focus on fundraising and the use of donor contributions. </li></ul><ul><li>Quality management schemes enhance good governance across the organization. </li></ul><ul><li>Development of databases of NPOs is accelerating – use of internet. </li></ul>
  16. 16. Trends in Self-Regulation <ul><li>As many international as national initiatives identified. </li></ul><ul><li>Sub-sectoral initiatives underrepresented in survey (language issues). </li></ul><ul><li>Self-regulatory initiatives originate in countries with more mature and diversified NPO sectors. </li></ul><ul><li>In new member states, more donor driven, less sustainable initiatives (now changing). </li></ul><ul><li>Generally “more meat” and “more teeth” when initiatives concern a more narrow, clearly defined group of NPOs. </li></ul>
  17. 17. Convergence trends <ul><li>Co-regulation </li></ul><ul><ul><li>Ireland (Charities Act – Fundraising Code) </li></ul></ul><ul><ul><li>Estonia – National Foundation – Code of Conduct (for funding applications) </li></ul></ul><ul><ul><li>Netherlands – CBF – municipalities (for collection permits) </li></ul></ul><ul><ul><li>Guidestar model (NPO database linked to government registry) </li></ul></ul><ul><ul><li>Public Benefit Legislation? </li></ul></ul>
  18. 18. Main methods of self-regulation <ul><li>Databases </li></ul><ul><li>Codes of conduct </li></ul><ul><li>Certification/accreditation schemes </li></ul><ul><li>Quality management systems </li></ul><ul><li>Watchdog organisations </li></ul>
  19. 19. Goals for self-regulation <ul><li>Who do we want to please and why? </li></ul><ul><ul><li>Accreditation schemes: the public, to give more donations </li></ul></ul><ul><ul><li>Databases: the public, to give responsibly </li></ul></ul><ul><ul><li>Codes of conduct: ourselves, to trust each other // the government, to leave us alone </li></ul></ul><ul><ul><li>Quality systems: our users to turn our services // the government to finance our services </li></ul></ul>
  20. 20. Issues in self-regulation <ul><li>Minimum standards / low entry scheme </li></ul><ul><ul><li>Aim to reach out to all NPOs, increase overall level of transparency & accountability </li></ul></ul><ul><li>or: </li></ul><ul><li>“ Club of excellence” / high entry scheme </li></ul><ul><ul><li>Aim to set example, or hold to account the most funded or most visible NPOs </li></ul></ul>
  21. 21. EFQM European Award EFQM National Award EFQM R4E / PQASSO 3 rd level EFQM C2E / PQASSO 2 nd level ISO 9001 Investors in People PQASSO 1 st level Plan, Do, Check, Act Quality is not an issue for the organization. The Quality Ladder © Accountability standards e.g. Trademark of Trust © Civil Society Development Foundation Hungary
  22. 22. Issues in self-regulation <ul><li>Implementation – “compliance” </li></ul><ul><li>Codes of conduct: </li></ul><ul><ul><li>Declarative (principles, e.g. Slovakia Foundations’ Code of Ethics) </li></ul></ul><ul><ul><li>Guidance (general; no compliance mechanism – e.g. Italian Charter for Donations) </li></ul></ul><ul><ul><li>Standards (specific; with compliance mechanism – e.g. Ireland Statement of Guiding Principles for Fundraising) </li></ul></ul>
  23. 23. Issues in self-regulation <ul><li>Financing: who pays? </li></ul><ul><li>Government: e.g., Guidestar (database); introduction of quality assurance schemes </li></ul><ul><li>Users: accreditation schemes, maintenance costs of QA </li></ul><ul><li>Donors: introduction of codes of conduct </li></ul><ul><li>Members: maintenance of codes of conduct </li></ul><ul><li>Won’t work without a “business model”! </li></ul>
  24. 24. <ul><li>Thank you! </li></ul><ul><li> </li></ul>