European Non-profit Oversight: The Case for Regulating From the Outside In

When it comes to the regulation of non-profits, the European Commission experiences many of the same pressures and constraints faced by national charity regulators. It suffers, however, from an added disadvantage in that, arguably, it lacks jurisdictional competence to regulate non-profits qua non-profits. This article explores the consequences of the Commission’s unsuccessful attempt to secure the passage of its proposal for a European Foundation Statute (“EFS”). Notwithstanding the European Council’s inability to muster the necessary Member State unanimity required to pass the proposal and its subsequent demise, the Commission is still dogged by the problems it identified as giving rise to the need for the EFS in the first instance. Against this background, Part I reviews the rationale for the EFS proposal, the political concerns that left it vulnerable to veto and the structural challenges faced by the Commission in legislating for non-profits at a European level. The argument is advanced that extant a purely functional approach, European regulation of nonprofits from “the inside out” is difficult in the absence of a valid treaty basis. Part II proceeds to examine recent NGO attempts to influence the Financial Action Task Force (“FATF”) reform process (supported by the European Commission) and to demand a fairer process under FATF Recommendation 8 for dealing with NGOs. The European Commission’s role in assisting NGOs to bring pressure on the FATF to be more accountable and transparent in its dealings presents an interesting vignette of one regulator laying siege to another for the greater good of better non-profit oversight. Arguably, the Commission’s attempts at “regulating from the outside in” have led to it demanding a higher level of transparency of the FATF than it has been willing to provide to NGOs itself in the past, while simultaneously enhancing Commission-NGO relations. This article concludes that it is now timely for the European Commission to be alert to the possibilities of regulating from the outside in on occasions when it may not be so possible to regulate from the inside out

Cross-Border Issues in the Regulation of Charities: Experiences from the UK and Ireland

Drawing on the specific experiences of the three authors across the jurisdictions of England and Wales, Scotland, Northern Ireland, the Republic of Ireland, this article outlines the new legal-regulatory framework for charities in each jurisdiction, providing an overview of their respective treatments of external charities (i.e. non-domestic charities operating in a host jurisdcition) before assessing the operational challenges posted by these regimes for such cross-border charities. It shows that the treatment of external charities across the four jurisdictions in not the product of a fully coordinated and coherent joint approach by the four sets of legislators. The article concludeds by offering some preliminary recommendations intended to address the burdens caused by these overlapping regulatory systems

Charity Law and the Legal Syllabus: Breaking Free from the Equity Straitjacket

The Future of Charity Law: Teaching, Scholarship and Research Symposium, University of Liverpool, United Kingdom, 28 April 2017For most undergraduate law students, the study of charity law is pigeonholed somewhere after extensive discussion of express trusts and resulting trusts and often between lectures on constructive trusts and trustees’ duties and liabilities. Charities are discussed in the context of charitable trusts and their difference from the private trust concept studied almost exclusively up until that point. In the 1980s and 1990s, a trust law lecturer would aim, in the few hours at his/her disposal to teach charity law, to cover the Pemsel heads of charity with a seam of case law for each, unpack the anomalies in the treatment of public benefit, recounting the tales of poor and worn out clerks and poor relations and, if lucky, elaborate on the doctrine of cy près and the different treatments of initial and subsequent impossibility. A bountiful year might yield an extra hour somewhere to devote to private purpose trusts, allowing students to contemplate the mysteries of pet animal trusts, statues to commemorate oneself and the difficulties caused by well-meaning people who set out to promote the ‘maintenance . . . of good understanding . . . between nations’ and ‘the preservation of the independence and integrity of newspapers

Should NPOs follow international standards for financial reporting? A multinational study of views

Financial reporting is an important aspect of not-for-profit organisations' (NPOs') accountability. Globally, numerous and varying regimes exist by which jurisdictions regulate NPO financial reporting. This article explores whether NPOs should be required or expected to follow sector-specific international financial reporting standards. We investigate stakeholder perceptions on the nature and scope of any such developed standards, interpreting our findings through the lens of moral legitimacy. Using an international online survey of stakeholders involved in NPO financial reporting, we analyse 605 responses from 179 countries. Based on our findings, we argue that diverse stakeholder groups, especially those who are involved with NPO financial reporting in developing countries, are likely to grant moral legitimacy to developed NPO international accounting standards if the consequences are to enhance NPO accounting and accountability information, subject to agreement as to whether all or only NPOs of a certain size should comply and whether any such standards should be mandatory

Independent Review of Charity Regulation in Northern Ireland

The Department for Communities has published the Report on the Independent Review of Charity Regulation, commissioned by the Minister for Communities in January 2021. The Independent Review Panel was chaired by Dr Oonagh Breen, Professor of Law at the Sutherland School of Law, University College Dublin, whose research focuses on comparative charity law regulation and governance. Dr Breen was supported by Noel Lavery, former Permanent Secretary of a number of NICS Departments and Fellow of the Institute of Chartered Accountants in Ireland, and the Reverend Dr Lesley Carroll, the NI Prisoner Ombudsman and former Deputy Chief Commissioner of the Equality Commission. In fulfilling its Terms of Reference, the Panel’s comprehensive review report contains findings and recommendations in relation to the regulatory framework, the Commission’s performance, the Department’s leadership and oversight of the regulatory framework and best practice in relation to all of these, taking lessons from across the UK, Ireland and elsewhere. Through its inclusive engagement process, it heard from 306 community engagement webinar attendees, and attendees at 20 other meetings with other regulators and their responsible government bodies, the Department for Communities, the Charity Commission and other interested stakeholders. It received 145 written submissions. The report finds that the Charity Commission NI was constrained from its earliest days as a result of flawed legislation made by the former Department, and as a result, the sequencing and focusing of its work was disproportionately focused on compliance, at the cost of completion of the charity register, with a need for a reset of the Commission’s communications and engagement approach to recalibrate its culture and relationship with the charity sector. The Report makes 93 recommendations, all of which the Panel see as important and includes, as a matter of priority, the completion of the charity register. In addition, it recommends changes to accounting and reporting requirements, and the commencement of the provisions for Charitable Incorporated Organisations in NI. The full Independent Review of Charity Regulation report is available at the Department for Communities website.Department for Communities Northern Irelan

Global Philanthropy : Does Institutional Context Matter for Charitable Giving?

In this article, we examine whether and how the institutional context matters when understanding individuals' giving to philanthropic organizations. We posit that both the individuals' propensity to give and the amounts given are higher in countries with a stronger institutional context for philanthropy. We examine key factors of formal and informal institutional contexts for philanthropy at both the organizational and societal levels, including regulatory and legislative frameworks, professional standards, and social practices. Our results show that while aggregate levels of giving are higher in countries with stronger institutionalization, multilevel analyses of 118,788 individuals in 19 countries show limited support for the hypothesized relationships between institutional context and philanthropy. The findings suggest the need for better comparative data to understand the complex and dynamic influences of institutional contexts on charitable giving. This, in turn, would support the development of evidence-based practices and policies in the field of global philanthropy.Peer reviewe

International practices, beliefs and values in not-for-profit financial reporting

Financial reporting is an important aspect of not-for-profit organisations’ (NPOs’) discharge of accountability, particularly for donations and funding. Nevertheless, NPO financial reporting lacks a global approach. Drawing on a multi-national survey attracting more than 600 respondents, this paper utilises a pattern-matching methodology to capturing institutional logics. We uncover tension between NPO financial reporting practice (underpinned by symbolic and material carriers of a local financial reporting logic), and a majority belief that NPO international financial reporting standards should be developed and followed. Conflict between local practice and stakeholder beliefs is evident. Significant belief differences across key stakeholder groups will likely impact NPO financial reporting development