Foreign-funding Restrictions

Seeking and acquiring financial resources, including foreign funding, is instrumental to the functioning of many non profit organisations (NPOs). Recent measures, ostensibly aimed at countering money laundering and the financing of terrorism, have also impeded efforts by NPOs to secure funding.

Research done by the International Center for Non-for-Profit-Law (ICNL) found that these impediments can take many forms, namely:

  • outright prohibitions (as in Eritrea, where the law restricts the UN and bilateral aid agencies from funding NGOs, or India, which under the Foreign Contributions [Regulation] Act specifies persons who are ineligible to receive foreign contribution);
  • the requirement of advance approval (as in Jordan, where foreign funding to associations is subject to the approval of the Council of Ministers, or Egypt where advance approval of the Minister of Social Solidarity and Justice is required);
  • burdensome procedural requirements (as in China, where non profits need to comply with complex rules for receiving and using foreign donations);
  • restricted purposes and activities (as in Indonesia, where a 2008 regulation prohibits foreign assistance causing ‘social anxiety and disorder of national and regional economy’); 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 by ICNL and the World Movement for Democracy, first in February 2008 and later updated in June 2012.

ICNL has also mapped the existing initiatives and strategies (local, regional and global) addressing the legal constraints on the foreign-funding of civil society.

See here for the UN Special Rapporteur’s factsheet on civil society’s ability to access resources, and another on protecting civil society space.