What drives the global crackdown on foreign funding for not-for-profit organisations?

Future World Giving

Global crackdown on foriegn funding – Image by epSos.de via Flickr

There is a growing global trend for regressive policies that restrict access to foreign funding for not-for-profits. Those of us who would like to elicit change through our donations are vocal in our concerns, but have we made the case for why governments should not impose such restrictions?


As reported on the excellent International Center for Not-for-profit Law (ICNL) website in May, the UN Special Rapporteur on the rights to freedom of peaceful assembly and association Maina Kiai highlighted “increased control and undue restrictions” on funding, particularly foreign funding as one of two key issues (the other being freedom of assembly) as currently being “the most significant ones of his mandate”.


The most recent edition of ICNL’s Global Trends in NGO Law highlights recent and proposed laws in 14 countries around the world which will limit access to foreign funds. The next Future World Giving report, ‘Building trust in Charitable Giving’ will highlight some of these examples including a case study of the situation in Russia where a law requiring not-for-profits receiving foreign funding and conducting “political” activities to register as ‘foreign agents’ is being implemented.


Singling out organisations receiving foreign funds for special scrutiny has two principle negative  effects on public confidence in charitable giving. The first, and most obvious is that it encourages public suspicion about foreign organisations. Citizens might reasonably assume that if foreign funded organisations need more regulation, they must therefore be less inherently trustworthy.


But the second and less obvious effect of the law may be even more troubling. Because if the regulatory framework which governs all charities is not fit to regulate one group, then surely it is not fit for purpose for the rest. Add to this the direct impact to beneficiaries of any loss in funding brought about by hindering the transfer of foreign funds and the chilling effect of such policies is all too apparent.


So if we accept that the consequences of regressive policies on foreign funding for not-for-profit organisations can be negative, it leads us to ponder ‘what motivates policy makers to enact them?’


One reason could be that policy makers believe that civil society organisations threaten state sovereignty. When trying to centralise power to the state, limiting access to foreign funds supporting organisations that campaign against government policy makes a good deal of sense. But systems of government which are accountable to a independent and free civil society are generally amongst the worlds most stable and as my previous blog shows, even highly state centric economies can support a thriving civil society.


There is an argument to say that foreign funds for organisations distort the civic culture of a nation and extend the hegemony of donor country culture over domestic values. It is easy for those of us in the West to see the funding of human rights and environmental campaigns as progressing normative universal concerns, but if the balance of wealth in the world were different would we feel the same?


Imagine if you can a hypothetical situation in which a global super-power arose with cultural values that you found abhorrent. Would you welcome the funding of not-for-profit campaigning organisations in your country from its wealthy donors and aid agencies without discretion? I doubt it.


The answer here then is not to advocate that governments turn a blind eye to foreign funding, quite the reverse in fact. Rather, they should have a public conversation about what society considers to be of public benefit. Once this has been clearly defined through an open and transparent process it should be possible to create a legal and regulatory framework that works as well for large campaigning organisations funded from overseas as it does for small domestic organisations without having to create a two-tier system or the problems associated with it.


Perhaps we ought to be advocating better and more holistic regulation to counter the current wave of selective regulation that threatens foreign funding.


Adam Pickering

8 responses to “What drives the global crackdown on foreign funding for not-for-profit organisations?

  1. I am not an attorney so I do not bring legal expertise to this discussion. But I have taught and been asked to advise many in the developing world and, notably, in the post Soviet Union bloc, about what they should know to make the ng0-nfp sector to be credible. In many of these societies, concepts which we take for granted [even if we don’t always honor] such as “conflict of interest” are essentially not concepts they even recognize in societies with very different cultural and political legacies.
    It seems to me that we need to work across borders to develop internationally recognized standards/best practices/etc. If there were to be some commonly accepted voluntary standards and some sort of accreditation, it would begin to establish the credibility for what the voluntary sector does and can mean.
    One of the areas which could be a part of this process is to develop model civil statutes – countries which are ready to adopt them can; others can at least know that such standards do exist.

    Clearly, a USA set of standards won’t make sense everywhere, and any development of international standards must include the voices of those throughout the world. This approach does NOT solve the problem presented in the op-ed piece above, but it would give ammunition to the international community to be supportive of ngo’s which can be shown to be acting responsibly and in keeping with the developed standards.


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  5. One aspect of NGO funding by Foreigners that is not mentioned in the article by Adam Pickering, is the fact that such funding has become a convienient channel for laundering money. I do not remember the exact details of how it functions (not being in the money laundering businesss), but essentially the deal is that the NGO gets a (Large) sum of money (no questions asked by anyone – not even the tax-man) and passes 90% of it on to the final destination(s) as ficticious fees for services etc. keeping 10% for the use of the NGO. 90% thus turns up at the target destinations as legitimate “white” money where 100% was previously “Black” money.
    The other aspect – which Adam Pickering mentions – is:
    “Imagine if you can a hypothetical situation in which a global super-power arose with cultural values that you found abhorrent. Would you welcome the funding of not-for-profit campaigning organisations in your country from its wealthy donors and aid agencies without discretion?”
    Why pose such a “hypothetical” question when we have the conrete example of the Saudi Wahabite establishment financing Moschees and Madrassas they have established in many countries which teach/export – among other things – the value-systmes of the Saudi-Wahabite culture? Value-systems which – to say the least – take us all back to the values in the days before the French revolution in Europe.


  6. Thank you for your comment Homi.

    The two points that you raise are valid and currently being used to justify restrictions on foreign funding in various countries. However, the fact remains that effective regulation for the whole sector should be sufficient to protect against the dangers, perceived or real, of foreign donations. Policies that single out foreign donors for special scrutiny reveal either the weakness of the general standard of regulation or else a policy of isolating domestic civil society. Either would be regressive.


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