The Regulation of Foreign Funding of Nonprofits in a Democracy
PUBLISHED: MARCH 2024
Governments around the world have increasingly regulated nonprofits access to foreign funding. These regulations, which often take the form of registration requirements, are justified as needed to protect a country’s politics from undue foreign influence. Yet, they have also placed new burdens on nonprofits and been used by governments to discredit critics, creating significant new constraints on activism on issues from fighting climate change to protecting human rights. While authoritarian governments have been the most aggressive proponents of these restrictions, many democracies have also embraced variants of them, creating new uncertainty about how foreign funding of nonprofits should be regulated.
In this moment of global regulatory flux, this article argues for what it calls a democracy centered approach. It begins by surveying the quite different regulatory approaches to cross-border funding of nonprofits in the world’s three largest democracies or democratic blocs: the United States, India, and the European Union. It labels their current respective approaches: “ambiguous regulatory heavy-handedness”, “government controlled nonprofit nationalism”, and “rights-based regulatory liberalism.”
Drawing on these examples, the article examines justifications for restricting cross-border funding to nonprofits as well as justifications for more open regulation. Significantly, it finds that perhaps the strongest argument both for and against limitations on foreign funding is protecting a country’s democratic self-governance. It argues that this apparent contradiction is the result not only of competing considerations about what improves self-governance, but also competing understandings of the proper relationship between government and civil society in a democracy.
It then develops a novel framework for how democracies should approach the regulation of cross-border funding of nonprofits that rests on five key principles that should shape and limit any such regulation. The potential benefits of this approach have implications not just for the regulation of the cross-border funding of nonprofits, but also the broader regulation of foreign influence in civil society.
Published in the Virginia Journal of International Law.
