NGO FUNDING BY THE EU

The EU’s expenditure on NGO’s is opaque and difficult to quantify. The information that is publicly available is inconsistently presented in a variety of different sources.

Which NGO’s qualify for funding?

According to the EU, NGO’s are defined as follows:

1. They have at least some formal or institutional existence;
2. They are non-profit distributing;
3. They are independent of government and other public authorities;
4. They are managed in a disinterested manner (their managers do not hope for personal gain), and
5. They  must be active in the public arena and their activity must be aimed, at least in part, to contribute to the public good.

 Ways of funding NGO’s

The Commission has two basic means of transferring funds to private bodies such as NGO’s.

Firstly, in order to carry out its operations the Commission uses public contracts to purchase goods and services it needs on the market as defined in the public procurement directive and the Financial Regulation (a framework document for principles and procedures of establishing and implementing the EU budget): studies, technical assistance and training, consultancy, conference and publicity services, books and ITC equipment, etc. The providers are selected via calls for tender that are issued by the relevant bodies of the EU.

Secondly, in order to promote or implement EU policy aims the European Commission provides direct financial contributions of a non-commercial nature in the form of grants to co-finance specific activities and projects. Interested parties can apply for the grants by responding to different calls for proposals. In order to be considered, the proposed activities and projects must relate to the corresponding EU policy aim. But the major part is neither managed nor paid directly by the European Commission, but through the national or regional authorities of the EU member states.

Grants available to NGO’s

The Commission's website on public contracts and funding lists many categories in which different organisations can receive funding directly from the Commission or its departments, the Directorates-General (DG’s). The following departments manage (or managed in recent years) calls for proposals open to "legal entities", established in the territory of the EU member states or specifically to non-profit or non-government organisations: Development & Cooperation – EuropeAid (DEVCO); Education and Culture (EAC); Employment, Social Affairs and Inclusion (EMPL); Energy (ENER); Enterprise and Industry (ENTR); Environment (ENV); Health and Consumers (SANCO); Humanitarian Aid (ECHO); Internal Market and Services (MARKT); Justice (JUST); Research and Innovation (RTD).

Apart from that, NGO’s can also access EU funding through programmes managed by national or regional authorities. While the Commission sets funding priorities, it is not directly involved in selecting those projects.

Conditions and accessibility of Grants

Grants, which are made available through a complex tendering process can only co-finance or subsidize actions, usually about 50-75% of the required funds. In other words they provide complementary financing while the proposing organisation needs to find the remaining funds somewhere else: from its own funds or third-party support.

Lobbying for Funding, not Funding for Lobbying

Public funding of NGO’s is used by NGO’s not only to provide services, but also to promote and legitimise themselves. One of the tasks ascribed for NGO’s in EU policy-making is involvement in decision-making. Hence, the EU intentionally supports NGO’s for the purposes of lobbying. Given this, NGO’s have a direct financial interest in the EU's budget decisions. It should come of no surprise, for example, that many organisations funded by the Commission lobby against austerity measures in public policy, because austerity implies the reduction of funding for all third parties, including themselves.

It is notable that environmental, human rights and animal rights organisations are the most influential lobby groups in EU policy-making. For example, Green 10’s access to decision-making goes "beyond the dreams of any commercial lobbyist, including regular meetings with the Council and the Commissioner for Environment, as well as monthly meetings at the Director’s level" not to mention the fact that politicians are typically more persuaded by arguments put forward by charities than by businesses.

NGO’s can use their power not only to guide the agenda but also to lobby for even greater funding for them. Many NGO organisations are insiders who know how to navigate the rules, regulations and red tape of the institutions.

Summary

• The European Commission funds NGOs with € 1.5 billion of direct grants per annum. Just 20% of total EU funding is spent by the Commission, and 80% is managed by national or regional authorities of EU Member States. Assuming a similar pattern of spending at the national level, total EU funding of NGOs is around € 7.5 billion per year.
• More indirect funding comes from contracts to supply the EU with goods and services.
• NGOs with mainly wealth-consuming missions (humanitarian, social, or environmental) benefit five times as much as NGOs with primarily wealth-creating aims (industry, civil society or research).
• EU funding policy aims make NGOs shift their emphasis from their original goals to the goals of the Commission.
• EU funding policy encourages NGOs to advertise and legitimise the Commission's activities as well as to promote and legitimise themselves.
• Lobbying for funding: 86% of EU grants go to NGOs with headquarters in Brussels, which on average receive grants that are twice as large of the total average.

   Measures to improve EU's spending policies on NGOs

• Spending should be in line with the preferences of EU citizens.
• Repeated application for grants should be made less attractive, namely by giving only half of the original grant to the second time applicants, a third to third time applicants, and a quarter to fourth time applicants.
• The EU co-financing rate should be reduced from 50-75% to 40% maximum. The majority of funding should come from private sources. This way the EU could save between 10 and 35% of the budget for direct funding of NGOs (€ 150 to 525 million)
• The process of commissioning work from NGOs should be brought into line with EU procurement policy, with profit-making organisations allowed to participate.
• Contracts should not be awareded to organisations with politicians or government officials in senior positions.
• Funds distributed via Member States should be reported in the same way as those distributed directly by the EU.
• The € 7.5 billion cost of EU funding of NGOs has an opportunity cost of up to 180,000 jobs.