Doug Rutzen of ICNL has published an interesting article entitled Aid Barriers and the Rise of Philanthropic Protectionism. The article is an updated version of an earlier article entitled "Regulation or Repression: Government Policing of Cross Border Charity,”
Rutzen notes various types of restrictions imposed by many countries on their own non-profits that impede them receiving international philanthropy including:
(1) requiring prior government approval to receive international funding;
(2) enacting “foreign agents” legislation to stigmatize foreign funded CSOs;
(3) capping the amount of international funding that a CSO is allowed to receive;
(4) requiring that international funding be routed through government-controlled entities;
(5) restricting activities that can be undertaken with international funding;
(6) prohibiting CSOs from receiving international funding from specific donors;
(7) constraining international funding through the overly broad application of counterterrorism and anti-money laundering measures;
(8) taxing the receipt of international funding, including cross-border philanthropy;
(9) imposing onerous reporting requirements on the receipt of international funding; and
(10) using defamation laws, treason laws, and other laws to bring criminal charges against recipients of international funding.
Canadian charities should be aware that foreign countries have laws, sometimes unexpectedly, that can impact on their funding of charitable projects. Rutzen also raises a good point that if you are trying to prevent a problem, such as terrorism or money laundering, to pass laws or regulations that only apply to non-profits is not likely to be that effective, Rutzen also discusses government justifications and international law requirements.
Rutzen in his conclusion notes:
As of January 2015, fifteen laws are pending that would restrict access to international funding, including cross-border philanthropy. These restrictions are justified with reference to concerns about political interference in domestic political affairs, CSO accountability and transparency, and aid effectiveness, as well as terrorism and national security.
International law provides a useful analytic lens to examine these restrictions. Under international law, restrictions are permissible only if they are:
(1) prescribed by law;
(2) in pursuance of one or more legitimate aims, specifically:
- national security or public safety;
- public order;
- the protection of public health or morals; or
- the protection of the rights and freedoms of others; and
(3) “necessary in a democratic society to achieve those aims.”
In some cases, restrictions will fail the “prescribed by law” standard because they are not contained in a law enacted by the legislative branch of government. In other cases, restrictions fail to meet the “foreseeability” requirement of the prescribed by law standard because they are insufficiently precise. Restrictions will also fail if they are based on grounds other than those listed in Article 22(2) of the ICCPR. If these hurdles are overcome, it is then necessary to engage in a detailed analysis of the constraint and the country context. The key questions are whether the restriction is necessary or proportionate to the legitimate interest articulated by the government, and whether the justification is a pretext to constrain dissent or independent civil society. Applying this analysis, the UNSR has found that many constraints are presumptively problematic:
Under international law, problematic constraints include, inter alia, outright prohibitions to access funding; requiring CSOs to obtain Government approval before receiving funding; requiring the transfer of funds to a centralized Government fund; banning or restricting foreign-funded CSOs from engaging in human rights or advocacy activities; stigmatizing or delegitimizing the work of foreign-funded CSOs by requiring them to be labeled as “foreign agents” or other pejorative terms; initiating audit or inspection campaigns to harass CSOs; and imposing criminal penalties on CSOs for failure to comply with the foregoing constraints on funding.
You can read the full report at Aid Barriers and the Rise of Philanthropic Protectionism
Do you require legal advice with respect to Canadian or Ontario non-profits or charities?
Mark Blumberg is a partner at the law firm of Blumberg Segal LLP in Toronto and works almost exclusively in the areas of non-profit and charity law.