The International Journal of Not-for-Profit
Law - Volume 2, Issue 1
A quarterly publication from The
International Center for Not-for-Profit Law
|
|
|
Working Group No.2 - Decision-makers and the Registration of Public Benefit Organizations (PBOs) Group facilitator:
Radost Toftisova Issues for Discussion: 1.
Which is the appropriate authority
to decide on granting public benefit status? §
Which bodies should decide? §
What are the advantages and disadvantages of each model? §
Under what circumstances would the different models be
appropriate? 2.
How should the decision whether to
grant public benefit status be made? §
Should there be a separate procedure for public benefit
status, or should it be granted during the regular registration procedure? 3.
Which criteria should the
decision-making authority consider in granting public benefit status? §
Should there be discretionary power to decide? §
What documentation should be required? §
Is it appropriate to require a qualification period before
granting public benefit status?
Discussions,
Conclusions and Recommendations The working group followed
the suggested topics for discussion and we touched several other relevant issues
as well. 1.
Who decides?
The discussion began with an examination of the existing solutions in the
countries represented in the group. In the Netherlands, Romania, Poland, Hungary
and Bulgaria, for example, it is the court that decides on the registration of
NGOs. However, public benefit status is still an unknown concept under the
current Polish and Bulgarian legislation. In Romania, de lege ferenda
public benefit status will be granted by the government. Concerns were expressed
about the executive branch having the decision-making authority (in Slovakia
this is the Ministry of Interior). The British example of a special decision-making body - the Charity Commission- was pointed out as a good solution, because it avoids the danger of strong governmental control and provides for a faster public benefit status-granting procedure.
The group discussed the several aspects of “public benefit” as a
special status for which only some NGOs may be eligible, and the relation of
those aspects to the choice of decision-making authority (e.g.,
since PBOs enjoy tax benefits, tax authorities should have a input in the
decision to grant PBO status).
We summarized the main advantages of the “court-decides” solution as:
independence from political interference, easier appealability of the decision,
good tradition in some countries, and a public registry that is available and
easily accessible. The disadvantages include: slow procedure, danger of a
“case by case” decision-making process, concerns about judicial
interpretation of the law instead of merely applying it, and a lack of expertise
by the judges in NGO issues.
The arguments made in favor of a separate decision-making institution
include: low costs, centralized process, the possible participation of NGO
representatives, faster procedure, the possibility to use an already existing
body for new functions. The arguments against such an institution include:
possible corruption, centralization of the process (in its negative aspect), and
the lack of administrative competence in the NGO representatives.
Choosing a Ministry as a decision-making authority, offers the advantage of
wide expertise, low costs and good coordination among ministries, and has as a
major drawback the open door for political influence on the status-granting
process.
In general, group discussions led to the conclusion that there
is a wide variety of solutions to the problem of who should have decision-making
authority for the granting of public benefit status. The appropriateness of any
given solution depends on the civil, legal and political traditions in each
country, on the established relationship between government and the NGO
community and on the degree of maturity of the NGO sector itself. Major factors to be taken into consideration
are the independence of the
decision-making process, the avoidance of political influence and strong state
control on it, and the keeping of a public registry of PBOs. In a number of
countries the issue has no practical relevance yet because the concept of public
benefit NGO has not been introduced. Similar considerations arise when a given
type of NGO may only be created as a PBO, e.g. foundations in France. 2.
Status-granting procedure
The importance of a fast, simple, transparent and easily accessible
procedure, with a possibility for appeal, was emphasized. The group discussed
the draft Romanian law under which a 3-years’ qualification period is required
before an NGO is granted public benefit status and during which it has to meet
certain criteria. We concluded that the disadvantages of such a solution
probably outweigh the advantages, because it places a great burden on NGO
candidates for public benefit status - they must meet the requirements imposed
on PBOs without enjoying the accompanying benefits.
Some of the participants suggested that the procedure should be different
depending on the type of NGO. Another opinion identified the need for a
connection between the decision-making and the controlling body. However, those
two bodies should not necessarily coincide. While, for example, it would be appropriate
for the court to grant public benefit status, it would also be acceptable if the
state exercises some control in exchange for the benefits it gives to PBO, and
the tax authorities in particular would normally control the tax benefits PBOs
enjoy.
We did not reach a definite conclusion as to whether a single or a
two-step procedure for granting PB status should be recommended. The most
appropriate solution would depend on the situation in the relevant country and
its traditions with respect to NGO and PBO concepts. 3.
Criteria to be considered
The working group finally discussed what criteria should be taken into
consideration by the decision-making authority in the process of granting or
denying public benefit status. The group reached the conclusion that such
criteria should include: the purpose of the NGO, the non-distribution of
profits, and the degree to which the activities of the organization are in the public
interest.
The group discussed the concerns that arise in connection with the
possibility of NGOs performing economic activities, and the claims by business
entities of unfair competition by NGOs. Private Benefit Organizations
performing economic activities may need to register in the registry for business
entities as well, depending on the established system in the different
countries.
The working group also concluded that granting public benefit status is
not an irreversible process, and that such status may be withdrawn when the NGO
ceases to meet the qualification criteria. In certain cases even a retroactive
effect of the withdrawal may be justified. In addition, sanctions may be
imposed on an NGO that has abused its public benefit status. This
would encourage PBOs to keep in strict and constant compliance with the
requirements inherent to their status.
The working group briefly discussed the discretion that should be
provided to the decision-making body. Arguments supporting both wide and narrow discretion were presented. The prevailing opinion suggested that the
authority should be given wide discretion to grant public benefit status and
narrow discretion to deny it. Such a solution would enable more types of NGOs
to qualify for public benefit status, even if the legislation in force is
outdated and does not include them among the potentially eligible groups.
Of
course, possible abuse and
corruption come up as concerns here.
|
Send mail to datiken@icnl.org with
questions or comments about this web site.
|
