Budgetary Impact of NGO Funding
in the last 10 Years
Manfred Kraff, Deputy Director-General of DG Budget
Brussels, 30th January 2014
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AGENDA
I. What is a Non-Governmental Organisation (NGO)?
II. How much of the EU budget is paid to NGOs in
"direct management" to implement EU policies?
III. The transparency, simplification and accountability
of funds implemented through NGOs; how is it
ensured?
IV.Conclusions
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I. What is an NGO (1)?
•
Diversity and complexity of existing legislations
•
No legally recognised official definition of an NGO
•
In general terms, NGOs share the following characteristics:
 Are not created to generate personal profits
 Are voluntary – i.e. have no compulsory participation
 Are independent from Governments; national, regional or local authorities; political
parties or commercial organisations
 Are not self serving in aims and related values
 Are providing specific specialist knowledge, expertise and skills supplementing:
o Actions of the private sector (in particular due to market failures and externalities)
o Work of public bodies (in particular by fostering the development of civil dialogue and giving
further voice to (groups of) citizens)
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I. What is an NGO (2)?
•
EU has one of the most open and participatory decision making
processes in the world
•
Rules governing the finances of the EU
Financial Regulation (FR) and its Rules of Application (RAP)
 Include no definition of an NGO
 Have no specific mention of NGOs
•
Art. 121 FR: Grants can be given by way of financial contribution or
donation to finance:
 An action helping to achieve a Union policy objective ("action grants")
 The functioning of a body which pursues an aim of general Union interest or has an
objective forming part of, and supporting, a Union policy ("operating grants")
•
Recipients are, in general, Not-For-Profit-Organisations (NFPOs)
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I. What is an NGO (3)?
•
Classification as NFPO is derived from Art. 125 FR which defines general
principles applicable to grants:
 Shall not have, in general, the purpose or effect of producing a profit ("no-profit principle")
 Shall not be retrospective (except in specific cases, e.g. crises and humanitarian aid)
 Shall involve co-financing (unless stated otherwise)
•
NFPOs exclude:
 Commercial firms and trading organisations that distribute profits to owners/shareholders
 State actors, such as national, regional and local authorities (because, by definition, they
are classified as a separate category)
•
NFPOs include Non-State Actors (NSAs) or the Civil Society:
 Associations, charities, academic and/or research institutes, grassroots organisations
 "Traditional NGOs"
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II. How much of the EU budget is paid to NGOs (1)?
•
In its recording system, Commission classifies legal commitments by type of
organisation/recipient ("Legal Entity Files" – LEFs)
 NFPOs
o Highest level of obligatory classification
o Total number in 2013: 8 275
 NGOs
o Sub-category of NFPOs
o Classification by individual Commission departments/Executive agencies
o Total number in 2013:
2 005
o Distribution in 2013:
• EuropeAid:
1 153 (57%)
• EACEA:
259 (13%)
• ECHO:
152
• ENV:
227 (11%)
• Other:
214 (11%)
(8%)
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II. How much of the EU budget is paid to NGOs (2)?
NGOs benefiting from EU grants
(in billion €)
1.92
2.20
2.51
2.51
2.78
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4
3
2
1
•
Average amount per year: 3.08 billion €
•
Increasing trend
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3.17
3.51
3.75
3.96
4.49
II. How much of the EU budget is paid to NGOs (3)?
Policy area / Department
EuropeAid - External cooperation
RTD - Research & Innovation
ECHO - Humanitarian Aid
ENV - Environment (Includes ENV NGOs and NGOs
implementing LIFE Programme)
Others
Total:
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Billion €
1.52
0.58
0.96
0.24
% of total
33.8%
12.9%
21.3%
5.3%
1.19
26.6%
4.49
100.0%
II. How much of the EU budget is paid to NGOs (4)?
•
Characteristics of typical NGOs receiving grants:
 EuropeAid: NGOs implementing development projects or fostering policy initiatives in areas
such as democracy and human rights
 Humanitarian aid: NGOs implementing humanitarian projects governed by Framework
Partnership agreements
 Environment: Mostly NGOs receiving "action grants", some NGOs receiving "operating
grants", relating primarily to nature protection
•
Examples of NGOs receiving "operating grants"
 EuropeAid: Platform NGO – CONCORD - is composed of around 40 Network and Associate
Network Members which represent national, regional and thematic NGOs
 Humanitarian aid: Platform NGO – VOICE – represents around 80 Humanitarian NGOs
based in EU and EEA countries
 Environment: Platform NGO – European Environment Bureau (EEB) – represents around
140 environmental NGOs
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III. Transparency/simplification/accountability - NGOs (1)?
•
European Parliament as main driver (in particular through changes to
Commission's proposals for the current FR)
 Reduction of burdens placed on NGOs (e.g. grant applications, expected reporting, audits)
 Flexible and pragmatic position towards co-financing (e.g. NGO's own resources, in-kind
contributions from third parties)
 Granting of degressive levels of co-financing to NGOs (which was designed to reduce
dependency on Commission grants) was withdrawn
•
Transparency
 Commission made a great effort to ensure that all sectors of EU economy are given an
equal chance and treatment in participating in policy formulation and implementation
 Policy formulation: Surveys, formal and informal dialogues, conferences, work groups,
public consultations
 Policy implementation: Calls for proposals for grants
o Results are communicated to the participants
o Results are published in the Financial Transparency System (FTS) which is accessible to public
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III. Transparency/simplification/accountability - NGOs (2)?
•
Simplification
 Commission regularly reviews its rules, guidelines and procedures
 Emphasis on more proportionate requirements and easier access to funds
 Shift from input-based to result-oriented grants
 Measures to assist smaller NGOs
o Increased threshold for low value grants from €25 000 to €60 000 enabling a larger number of
applicants
•
No requirement of financial guarantees
•
No requirement of proof of the legal status
•
No requirement of proof of the financial and operational capacity
o No re-submission of evidence of non-exclusion if it has recently been provided in other award
procedure
o Greater use of lump-sums
o Payment to be made within 20 days
 Greater use of Framework Partnership Agreements in some areas (e.g. Humanitarian aid)
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III. Transparency/simplification/accountability - NGOs (3)?
•
Accountability
 Commission's Delegated Authorising Officers have an obligation to implement internal
controls that are proportionate
o Ex-ante information on actions planned
o Sound procedures to process grant applications
o Adequate audits/controls on reports concerning results achieved and expenditure declared
 Annual Activity Reports
 Commission's "Synthesis Report" and "Article 318 Report"
 Internal Audit Service
 European Court of Auditors
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IV. Conclusions
•
European Parliament as active promoter of NGOs in the development
and implementation of EU policies
•
NGOs are increasingly important and influential partners at EU level
•
Commission responded in particular by simplifying procedures so that
the greatest number of NGOs (national, regional, local and thematic)
may have access to EU funds
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Thank you for your attention!
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