European Foundation Centre—Committed to accountability of foundations

The European Foundation Centre (EFC) is an international membership association of foundations and corporate funders whose mission is to strengthen the independent funding element of European philanthropy through robust cooperation with an array of partners. The EFC recently shared with the network a few important points on its work in the issue of transparency and accountability.

How does the EFC monitor EU policy on transparency and accountability affecting foundations?

The EFC is firmly committed to transparency and accountability of foundations, as illustrated by its work on EFC standards since 1994. The EFC also wants to ensure that measures taken at an EU level do not hamper the work and development of foundations. To this effect, the EFC is actively monitoring EU policy on transparency and accountability affecting foundations and has contributed to debates in Europe with the European Commission and other concerned stakeholders on these issues.

In particular, the EFC has worked with foundations and NPO partners to successfully prevent unnecessary regulation at EU level, including an EU code of conduct for NPOs or so-called voluntary guidelines, suggested in 2010, which had proven very problematic in the US. Since 2005, accountability issues at EU level have stemmed from policy steps on counter terrorism policy and the prevention of financial criminal practices as a direct consequence of the work of the Financial Action Task Force (FATF).  Since 9/11, FATF has increased its focus on the regulation of financial services and nonprofit organisations, including foundations, with negative consequences for free civil society around the globe. An international civil society coalition (of which the EFC is part) has emerged with the aim to influence FATF in a positive direction.

Describe EFC’s work on standards since 1994.

2006 was the last overhaul of the EFC Code of Practice, which led to a set of seven Principles of Good Practice. Several EFC events over the past years have highlighted the need for the EFC to revisit and update the Principles of Good Practice. A Task Force was created in 2012 to review, strengthen, and bring to life the EFC Principles of Good Practice with the goal of raising the profile of the Principles. A revised set of principles is currently being reviewed by the EFC membership.

Since 2000, the EFC has joined forces twice with the US Council on Foundations on projects aimed at advancing good practice and improving accountability in foundations’ engagement in international development. Joint Working Groups produced two sets of tools: Disaster Grantmaking: A Practical Guide for Foundations and Corporations (2001, updated in 2007) and Principles of Accountability for International Philanthropy (2007). Most recently, WINGS, the EFC and the Council collaborated, through the Global Philanthropy Leadership Initiative; on advancing further the work on accountability in international philanthropy—by convening a process aimed at identifying and articulating southern philanthropic organisations’ experiences, perspectives and recommendations.

What’s happening now with transparency and accountability in the EU that might resonate with WINGS members in other regions?

In 2011, the EFC and DAFNE mapped and analysed how the transparency and accountability of foundations is framed by legal and tax legislation and self-regulatory initiatives across Europe. While the overall picture painted by the study’s findings is positive, there is inevitably room for improvement in some countries. Foundations, with the support of peer networks and associations like DAFNE and the EFC, must take this opportunity to reinforce the good work that has already been done in the field of transparency and accountability; to maintain foundations’ reputation for integrity.

Download the full 2011 EFC and DAFNE study here.

In 2009, the European Commission commissioned a study which assessed public and self-regulatory initiatives enhancing the transparency and accountability of NPOs in the EU. The Report carried out by the European Center for not-for-profit law outlines the growing number of initiatives, while stressing a “disconnect” between the areas covered by ongoing public and self-regulation initiatives and the recommendations of the European Commission and Financial Action Task Force on the prevention of the abuse of NPOs for criminal/terrorist financing purpose.

For more on our accountability work in international philanthropy, visit our transparency and accountability page. Visit the EFC online.

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