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The International Journal
of Not-for-Profit Law

Volume 12, Issue 3, May 2010

A publication of the International Center for Not-for-Profit Law

Table of Contents

Letter from the Editor

Restrictions on Foreign Funding of Civil Society

Special Section

Introductory Overview
International Center for Not-for-Profit Law

Mohamed ElAgati

Debebe Hailegebriel

Aleksej Bogoroditskii

Sri Lanka
Rohan Edrisinha

Marcos Carrillo


Maintaining Control: Recent Developments in Nonprofit Law and Regulation in Vietnam
Mark Sidel

The NGO Law: Azerbaijan Loses Another Case in the European Court
Mahammad Guluzade and Natalia Bourjaily

The Origin of the Species: Why Charity Regulations in Canada and England Continue to Reflect Their Origins
Peter Elson

Legal Forms of Civil Society Organizations as a Governance Problem: The Case of Switzerland
Georg von Schnurbein and Daniela Schonenberg

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Editorial Board


International Center for Not-for-Profit Law1

The ability to seek and secure financial resources is fundamental to many, if not most, not-for-profit, non-governmental organizations (NGOs). The legal and regulatory framework may facilitate or impede efforts to secure resources. Indeed, the law may place NGOs in a precarious position by imposing barriers to specific resource categories – such as funding from foreign sources. The issue has immediate relevance in many countries. In the past six months alone:

This new wave of restrictions – including laws either enacted or proposed – adds further momentum to a regulatory backlash against civil society that has been frequently noted by the International Center for Not-for-Profit Law (ICNL), commentators, academics, and practitioners. Countries rely on a panoply of legal tools to prohibit or limit access to certain resources. Examples include restrictions on the ability to engage in economic activities; limits on the opportunity to compete for government grants or contracts; burdensome tax obligations; and restrictions on investment alternatives. But perhaps the most common – and arguably, the most controversial – of resource barriers are restrictions on funding from foreign sources, including foreign governments, multilateral institutions, private foundations, and individuals.

The barriers to foreign funding assume many forms: outright prohibitions (as in Eritrea, where the law restricts the UN and bilateral aid agencies from funding NGOs); the requirement of advance approval (as in Jordan, where foreign funding to associations is subject to the approval of the Council of Ministers); and the mandatory routing of government funding through government banks (as in Uzbekistan, where foreign funding for NGOs must be channeled through government banks, which has reportedly led to the obstruction of at least 80 percent of foreign grants to NGOs). These regulatory approaches are outlined in the Defending Civil Society report, published in February 2008.2

In the two years since publication of Defending Civil Society, we have witnessed ongoing efforts – and sometimes innovative approaches – to constrict access to funding resources, and foreign funding in particular. In Egypt, as stated above, a new draft Law would replace the existing Law on Associations and Foundations (Law 84 of 2002), require organizations to obtain permission from the Ministry of Social Solidarity prior to receiving foreign funds or affiliating or partnering with foreign organizations, and give the Ministry apparently unlimited discretion to approve or deny such requests. In Venezuela, the draft Law on International Cooperation, which remains pending, would create an international cooperation fund and require compliance with government priorities. In Sri Lanka, a draft Bill on NGOs has been prepared, but not released to the public; it may be reasonable to presume, however, that the Bill is likely to empower the state to investigate the financial management and accountability of NGOs that receive foreign funding, as this has been the practice of the Select Committee of Parliament, active since 2006.

In Russia, a government list of foreign donors has been substantially reduced, thereby limiting the number of organizations legally able to provide tax-exempt grants to Russian recipients. Perhaps most notorious of all recent regulatory acts is the Proclamation to Provide for the Registration and Regulation of Charities and Societies (CSP), enacted in Ethiopia in February 2009. The law is one of the most controversial NGO laws in Africa, and indeed in the world. The Proclamation, among other things, restricts NGOs that receive more than 10 percent of their financing from foreign sources from working on the advancement of human rights, promoting the rights of children and the disabled, equality of gender, nations and nationalities, promoting good governance and conflict resolution as well as the efficiency of the justice system.

These five countries – Egypt, Ethiopia, Russia, Sri Lanka, and Venezuela – are in the spotlight of this issue of the International Journal for Not-for-Profit Law. In countries like Egypt and Ethiopia, organizations which are dependent on foreign funds – especially human rights and opposition groups – may find themselves starved of funds and effectively unable to continue operations. In Sri Lanka and Venezuela, where draft laws currently threaten the sector, concern runs high over the content of the draft law (Sri Lanka) and over whether the law will actually be enacted (Venezuela). In Russia, more encouragingly, there have been recent improvements to the regulatory environment for civil society, but these improvements have not necessarily touched upon foreign funding restrictions.

While each country report describes the legal constraints at issue, the focus of the reports is more squarely on the political context within which the legal constraints have arisen. Prior to the drafting and enactment of laws or regulations imposing such barriers, there are often warning signs, in the form of ominous statements by government officials or politicians or the enactment of restrictive law in other areas, such as the media. The proffered government justifications for the barriers are as diverse as the constraints themselves and can include calls for increased accountability and transparency of CSOs; preventing foreign interference with domestic political processes; protecting national security; combating terrorism and extremism; and the coordination and harmonization of foreign aid and CSOs implementing foreign aid programs. And the civil society responses, unsurprisingly, vary with each country context. These are the questions that this issue of the International Journal for Not-for-Profit Law explores.

ICNL is grateful for the ongoing support of USAID and Pact, who made these reports possible under the auspices of the NGO Legal Enabling Environment Program (LEEP). ICNL also expresses its appreciation to the local partners in each country and is pleased to present the results of their efforts. We hope that the country reports will raise awareness and provoke consideration of what has become an ongoing threat to civil society in many countries.


1 This paper is made possible with the generous support of the American people through the United States Agency for International Development (USAID). The contents are the responsibility of the authors and do not necessarily reflect the views of USAID or the United States Government.  

2 See ICNL and the World Movement for Democracy Secretariat at the National Endowment for Democracy, Defending Civil Society, February 2008.


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