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The International Journal
of Not-for-Profit Law

Volume 3, Issue 1, September 2000

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

Table of Contents

Letter from the Editor

Articles

The Relationship Between the Governmental and Civil Sectors in Hungary
By István Csóka

Tax Incentives for Nonprofit Institutions: Analysis of International Experience
By Ignacio Irarrázaval and Julio Guzmán

The Definition of Religion in Charity Law in the Age of Fundamental Human Rights
By Kathryn Bromley

The Taxation of NPOs in South Africa
By Karen Nelson

The Aarhus Convention and its Practical Impact on NGOs Examples of CEE and NIS Countries
By Czelaw Walek

Negative Freedom of Association: Article 11 of the European Convention for the Protection of Human Rights and Fundamental Freedoms
By Wino Van Veen

Creation of a Special Legal Framework for NGOs [Spanish]
By Maria Beatriz Parodi Luna

Reviews

Charity Law
By Kerry O'Halloran
Reviewed by ICNL Staff

Cross-Border Philanthropy: An Exploratory Study of International Giving in the United Kingdom, United States, Germany and Japan
Edited by Helmut K. Anheier and Regina List
Reviewed by ICNL Staff

Case Notes

Central and Eastern Europe:
Serbia

Latin America and the Caribbean:
Venezuela

Middle East and North Africa:
Egypt

Western Europe:
Negative Freedom of Association: Article 11 of the European Convention for the Protection of Human Rights and Fundamental Freedoms

Country Reports

Asia Pacific:
Australia

Central and Eastern Europe:
Regional
| Bulgaria

Latin America and the Caribbean:
Venezuela

Middle East and North Africa:
Regional

Newly Independent States:
Moldova
| Ukraine

North America:
Canada
| Mexico | the United States

South Asia:
India | Pakistan

Sub-Saharan Africa:
Ethiopia
| South Africa

Western Europe:
Regional | Italy | Turkey

International

International Grantmaking

Program-Related Investments: Domestic and International
By David S. Chernoff

New International Grantmaking Website Unveiled
By Rob Buchanan

Review of a New International Grantmaking Website
By Peter deCourcy Hero

- - - - - - - - - -

Editorial Board

Country Reports: Western Europe

Regional

European Foundation Centre AGA and Conference 2000

By Richard Fries

Breaking with its 10 year tradition of meeting on the anniversary of the fall of the Berlin Wall, the Annual General Assembly of the European Foundation Centre and its associated conference took place this year from 20-22 September in Krakow. The warmth of the Polish reception (and the excellent preparation of the organising committee), combined with the autumnal beauty of the city, made this memorable gathering.

As always the range of conference, satellite and social events gave the 500 delegates, from all parts of Europe, from America, Africa, Asia, Australia and else where, much opportunity for profitable (and enjoyable!) networking, stimulated not only by the richness of the programmes but by the excellence of the reception given by the Mayor of Krakow and the evening on the historic Wawel. The assembly and conference was organised around the theme of “Foundations for Europe: Dialogue with Corporations and Public Authorities; New Techniques, New Philanthropists”. The working sessions seminars fell into four strands: organisational capacity building; thematic issues; regional – international; and current issues. Satellite events, including major announcements and launches, covered and even wider canvas.

Highlights of the AGA included:

The choice of Krakow as the location for the AGA was a boost to civil society debate and initiative in Poland itself. It aroused public and media interest, in particular in relation to the need to foster an enabling legal and fiscal environment for donors, with the associated issues concerning building endowments in the region. In particular a boost was given to Polish corporate citizenship initiatives.

The new Trust for Civil Society for Central and Eastern Europe was launched at the conference. This new organisation has been formed by a consortium of grant makers, including the Charles Stewart Mott Foundation, the Ford Foundation, the German Marshall Fund, the Open Society Institute and the Rockefeller Brothers Fund with an initial fund of $60.5 million to support the development and long term stabilisation of civil society and NGOs in Bulgaria, the Czech Republic, Hungary, Poland, Romania, Slovakia and Slovenia.

Also launched at the conference was a survey and guide to the nonprofit sector in the Balkans prepared for the Charities Aid Foundation by Jenny Hyatt (with substantial input form ICNL). Current events highlight the timelines of this initiative, not least the passing of the new NGO Law by the Bulgarian parliament the day before the launch – rarely can a publication have needed revision in so welcome a way so quickly!

The experience of one delegate, amid such a rich range of parallel events, is bound to be subjective; but in that spirit I would just refer to the research/analysis strands which was one theme running through the conference. Lester Salamon described the way in which the John Hopkins team plan to establish the Comparative Nonprofit Sector Project on a continuing basis through enlisting national statistical offices, hopefully under a UN umbrella. In parallel, as part of a report of the activities and aspirations of CIVICUS Europe given by Mall Hellam and Miklos Barabas, Helmut Anheier gave an exposition of the ‘Diamond’ project for assessing the state of civil society on the basis of four dimensions. There was also an animated discussion of the need for research in foundations in the course of which Francis Charhon announced the intention to convene a conference to form a network of researchers. Even more fundamental questions, about the historical, legal and practical basis of foundations were posed in a session by Blake Bromley from Canada, Elan Garouzil, of the Mott Foundation, standing in for Bill White, its President who was unfortunately unable to attend, and Rupert Strachwitz of the Maecenata Institute.

Italy

Incremental Changes of NPO Law: the Case of Italy

By Alceste Santuari

1. Introduction

Over the last decade, the Italian legal system has been enriched by a number of provisions concerning the non-profit universe. In 1991, the acts relating to voluntary organisations and social co-operatives were passed in August and November, respectively. In December 1996, the act on socially oriented non profit organisations (ONLUS) was passed, while the year 1998 witnessed the passing of several acts, namely, the act on national musical foundations, the act on consumers’ rights and the act relating to the transformation of some public bodies into private non profit entities. Later, in 1999, the act on banking foundations was passed and in October of the same year the Government passed a bill whereby the administrative and legal procedure to grant associations and foundations legal personality has been made easier and shorter.[1] Currently, the Parliament is discussing the draft bill concerning “social promotion associations”[2] and another bill reforming social care services, in which non profit organisations are to play a greater role.

To be sure, general reform of the Civil Code of 1942 (though overdue), in which the basic rules relating to associations and foundations are provided for, is not at issue. Although, over the last years, many government committees have been set up to study and bring about some proposals to amend the Civil Code, a bill concerning a broad review of NPO law is not to be scheduled for the near future.[3]

Rather, the action of the government and of Parliament has been defined by a series of enactments, which, though limited in scope, have resulted in bringing forward such amendments or innovations that do have an impact on the day-to-day management and organisation of Italian non-profit organisations. Accordingly, whereas it is commonly agreed that an overall reform of NPO law is much needed, non-profit organisations are already going through a growing phase of development.

2. The Latest Legal Intervention in the Non-Profit World

One such legal innovation has been introduced by the Act 22 June 2000, No. 192. This latest law enables and allows unincorporated associations to receive bequests and to purchase land and buildings without the relevant State authorisation. According to the Act 5 June 1850, No. 1057 bodies corporate, whether ecclesiastical or lay, could not own immovable real property without being specifically authorised to do so by the State. Inter vivos donations and bequests were not to be effective had charities not been authorised to accept them. Such a legal provision was to become Section 17 of the Civil Code of 1942. Regarding unregistered associations, the Code of 1942 provided that in order to receive bequests they had to apply for incorporation within a year after receiving notice of the potential donation (see Sections 600 and 786 of the Civil Code). The reason for this authorisation lay in the general order of the legal system, which provided that even incorporated bodies had to apply for a special authorisation to perform some activities (such as acceptance of donations and purchase of land). It followed that there could not be any legal and status difference between incorporated and unincorporated associations. Accordingly, unincorporated associations had to “become” like the former in order to be capable of entering specific contracts.[4]

A change in the system had been brought in already in 1997, when a special act of Parliament[5] repealed Section 17 of the Civil Code. This section provided – as stated above – that foundations and registered associations would need a State authorisation to receive bequests and to own real estate. By abolishing Section 17, the Italian Parliament actually brought down an ideological and legal wall that was erected in the mid-nineteenth century to contain the so-called peril of “manomorta” (i.e. the accumulation of wealth in the hands of charities, especially those linked to the Catholic Church).[6]

Notwithstanding the Act of 1997, many authors and some courts stressed the fact that Section 17 expressly referred to registered bodies. Accordingly, they regarded the repeal introduced in 1997 as not applicable to unregistered associations. These, therefore, were to be subject to the traditional State authorisation provided for by the law. Since court interpretations about what the exact scope of the repealing act were not clear, the legislature took upon itself the task of doing something. Hence, a two-section bill was brought forward in Parliament some months ago, which was passed on 22 June 2000 and entered into force on 13 July 2000.

Section 1 of Law No. 192 of 2000 redrafts section 13 of the Act of 1997 by stressing once again that Section 17 of the Civil Code of 1942 is abolished and also that all the relevant rules providing for authorisations on the part of both incorporated and unregistered associations are repealed too. This means that nowadays if a trade union, a political party or a voluntary organisation is offered a donation, it can accept it without any kind of authorisation. In order to protect the recipients of such donations, the law states that “foundations, incorporated and unregistered associations must accept inheritances with the benefit of inventory” (s. 1 (2)).

3. Broad-Based Reform- What Would it Look Like?

After the complete and definitive repealing of Section 17 of the Civil Code an overall reforming process of the general law regarding NPOs would be even more advisable. The incredible growth of the so-called Third Sector has taken place within a legal framework that has not been non-profit friendly, so to say. Nevertheless, over time the sector of non-profit organisations has increased both in size and the scope of activities it carries out. This demonstrates that non-profit organisations have developed in spite of the legislation. It could also be surmised that all in all the poorly designed provisions of the Civil Code have somehow favoured the growth of non-profit entities.

Obviously, just because there has been some positive developments in the non-profit sector does not mean that it is better to leave things as they are presently. Conversely, it has been underlined that a favourable legislative pattern may greatly contribute to the evolution of non-profit organisations.[7] However, the legislature has to be aware that the non-profit world is different to the one which many reform proposals referred to in the past. At present, non-profit organisations do possess of large wealth; they often carry on business as a means to accomplish their institutional goals; they enter contracts with public authorities; NPOs also provide services to the community against the payment of a price, as in the case of for-profit companies.

In this context, what are the possible legal solutions to reform NPO law in Italy? Over the last years, there have been three main proposals, which may be summed up as follows:

  1. a special statute on social enterprises

This proposal intends to draft a specific act relating to social enterprises, thus regarding these enterprises as a new business form, which, though producing services for the market, pursues a goal other than profit. It follows that social enterprises would be placed as a sort of “third party” between associations/foundations, on the one hand, and companies, on the other. Indeed, social enterprises would be defined as comprising simultaneously entrepreneurial factors and charitable motivations within the same organisation.[8]

  1. review of the First Book of the Civil Code

This proposal aims at recognising in the Civil Code– courts decisions have long accepted this reality - the possibility that associations and foundations might carry on economic activities alongside their “ideal” purposes. Therefore, associations and foundations, both traditional expressions of civil society, would be permitted to extend their activities to the production and exchange of goods and services on the market.[9] This would imply that business-like non-profit organisations would be subject to the very rules provided for companies (i.e. bankruptcy).

In this respect, it has been stressed that the non-distribution constraint, which has been progressively acknowledged in Italian special legislation as one of, if not the most important element of NPOs, should be strongly enforced.

  1. review of the Fifth Book of the Civil Code

Here, the intention is to amend the legal provisions relating to companies (which are included in the Fifth Book of the Civil Code) so as to enable them to achieve non-profit goals. The proposal under consideration obviously would turn the current legal system up side down, since the natural order which distinguishes NPOs, on the one hand, and companies on the other, would come to an end. In fact, a new organisational form would be devised in which all the characteristic elements of companies would be integrated with the exigency of pursuing social aims. The peculiar aspect of such a socially oriented company consists of replacing personal interest (profit) with the accomplishment of a social goal. This would imply that the system would give full recognition to a corporate form that is established to fulfil a purpose different from distributing profits among the company’s shareholders.

Whatever the legislative solution, it is important to move from the assumption that NPOs at large need a renewed legal environment where they can further developed and prosper. In particular, they are search for legislative solutions that may better ensure third parties entering contracts with them and make their management more stable and certain.

While waiting to act via a well elaborated act, Italian Parliament is paying attention to the non profit phenomenon by passing specific provisions, as the one we referred to above. Such a manner of proceeding is ultimately no less significant to the non-profit universe than a general reform.

References

BRUSCUGLIA L. – ROSSI E. (eds.), Terzo Settore e nuove categorie giuridiche: le organizzazioni non lucrative di utilità sociale, Milan, 2000

DE CARLI P. Le problematiche dello scopo negli enti “non profit tra pubblico e privato, in Comitato Regionale Notarile Lombardo, Gli enti “non profit”. Nuove figure e nuove problematiche, Milan, 1993.

DE GIORGI M.V., L’autorizzazione agli acquisti delle persone giuridiche: ingloriosa fine di un istituto secolare, in Studium Iuris, No. 10/1997, 1010-1017.

GRUPPO STUDIO SOCIETA' E ISTITUZIONI (a cura di), Fondazioni e Associazioni. Proposte per una riforma del primo libro del Codice Civile, Rimini, 1995.

MARASA’ G., La disciplina degli enti “non profit”, Turin, 1998.

PONZANELLI G., Abrogazione dell’art. 17 C.C.: verso una riforma degli enti non profit?, in Corriere Giuridico, n. 7/1997, 841-843.

SALAMON L.M. – TOEPLER S., The Influence of the Legal Environment on the Development of the Nonprofit Sector, Center for Civil Society Studies, Working Paper Series, No. 17, July 2000 (manuscript).

SANTUARI A., L’impresa sociale. Un concetto giuridico? Contributo, anche in chiave comparata, al dibattito sulla riforma del libro primo del codice civile in materia di enti non profit, rivista “Il Diritto di famiglia e delle persone”, issue n. 2/2000.

Notes

[1] Currently, when an association or a foundation, intending to operate at national level, seeks for the granting of legal personality it is to apply to the central Government for the relevant authorisation. The act approved by the Italian Government on 22 October 1999 provides for the transfer of functions from central to county authorities. In addition, whereas in compliance with old rules, after being granted legal personality, non profit organisations were required to be enrolled with a specific court’s registrar, this requirement is to be passed onto prefects’ responsibility.

[2] Section 2 of the aforementioned bill, as approved during the parliamentary proceedings of 19 July 2000 in the Chamber of Representatives, reads as follows: “Social promotion associations consist of both incorporated and unregistered associations, movements, groups and their co-ordination and federative levels which are formed to carry out socially oriented activities for the benefit of their members or of third parties, with no profitable aim and by fully respecting members’ freedom and dignity. For the purposes of the present act, political parties, trade unions, employers’ associations, professional bodies and all those organisations aimed at exclusively promoting their members’ economic interests do not fall within the definition of “social promotion association”. Furthermore, private clubs or any association whose by-laws provide for some kind of limitation as to members’ economic conditions or discrimination of any sort for their being members of the organisation or provide for the transfer right of the members’ parts or link the associations’ membership to the holding of shares cannot be defined as social promotion associations.”

[3] This is probably due to the numerous legal and tax provisions already into force, which make it difficult to design a comprehensive draft bill.

[4] Registered and unregistered associations have progressively come to be very similar over the last years. In this respect, for instance, despite their being not legally incorporated, thus lacking the full capacity of own property, Law No. 82 of 1985 made it possible for unregistered associations to acquire buildings in their own corporate capacity. In fact, prior to 1985, had an unregistered association intended to attain a building, this would have had to be vested with and bought by a member of the association (usually the President) on behalf of the latter. It followed that, had the President decided to leave the association, the property would have gone away with him, bringing with it clear negative consequences for the association as such.

[5] It is a delegated law (i.e. an act of Government passed after the latter being entrusted with to do so by Parliament) by which the Government has begun to introduce such terms and concepts as “devolution”, “federalism”, “deregulation”. It is within this particular legal framework that many obsolete and anachronistic rules and provisions were repealed.

[6] As a matter of fact, a partial exclusion of Section 17 of the Civil Code had been already implicitly stressed in the Act 29 June 1996, No. 367 concerning the transformation of State music institutions into private non profit foundations. Indeed, the act under consideration provided that foundations engaged in the music field would not need any State authorisation in order to accept donations or bequests. See PONZANELLI G., Abrogazione dell’art. 17 C.C.: verso una riforma degli enti non profit?, in Corriere Giuridico, n. 7/1997, 842.

[7] Although the legal framework is not in itself the sole element influencing the development of non profit organisations in one country, since other non-legal institutional arrangements do interfere with their growth, the set of legal provisions does represent a key factor. See SALAMON L.M. – TOEPLER S., The Influence of the Legal Environment on the Development of the Nonprofit Sector, Center for Civil Society Studies, Working Paper Series, No. 17, July 2000 (manuscript).

[8] Actually, a similar organisational model has been accomplished through the legal form of social co-operatives, as provided for by Law No. 381 of 1991. This act, indeed, clearly states that social co-operatives must perform their activities for the benefit of the community at large by either managing social and care services or integrating disadvantaged people into the labour market (s. 1).

[9] This is the case of the Act of 1999 on banking foundations. After the passing of this act, banking foundations have transformed: from public bodies they changed their legal status, thus adopting that of non profit organisations. As such, they are permitted to set up subsidiary companies in order to better fulfil their institutional and statutory goals.

Turkey

The Peace Summit

By Maria Stajic 

The Peace Summit, International Symposium on Conflict Resolution, was held between August 16th and 27th, 2000 at the Fantasia hotel in Kusadasi, Izmir, Turkey. This event was successfully organized by AEGEE Ankara and AEGEE Athina and sponsored by European Commission, European Youth Foundation, European Cultural Foundation, Council of Europe and other organizations. The Peace Summit gathered 112 participants from 22 countries. The Academic program of the Peace Summit consisted of discussions of the basic concepts of international politics and conflict management, the root causes of conflict, tools and techniques of conflict resolution, case studies and simulations. Participants were broken into subgroups in order to analyze several cases in the Mediterranean and the Balkans. All groups were led by members of the Peace Summit academic team. The lecturers included professors, assistant professors, lawyers, journalists, experts in the fields of politics, international relations, mediation, and NGOs. The lecturers were from many countries including Turkey, USA, Canada, Spain, Cypress, Germany, Bosnia.

 

 

Copyright © 2012 The International Center for Not-for-Profit Law (ICNL)
ISSN: 1556-5157