The Legal Status of Non-Governmental Organisations and Their Role in a Pluralistic Democracy: Guidelines to promote the development and strengthening of NGOs in Europe (1998) (excerpt)


Guidelines to promote the development and strengthening of NGOs in Europe

Multilateral meeting organised by the Council of Europe in cooperation with the Japan Foundation

Strasbourg, 23 - 25 March 1998


10. When an NGO is established it normally becomes a separate legal person. That generally means that the NGO and not its members, is liable for its debts, contracts, and obligations. Only an established NGO may be eligible for government grants or tax breaks.


12. The principal documents that should be required to be filed in establishing an NGO are the governing documents of the organization, which should adequately state the nature and purpose of the organization, provide for an adequate governance structure, state the powers and limitations of the organization, identify the founders, directors, and officers, state the location of the principal headquarters, and identify a legal representative.

13. The administrative process for the registration of NGOs should be applied with a minimum margin of discretion provided. The government ministry or agency responsible for the registration of NGOs should publish rules and regulations applicable, and forms that explain the process. It should provide assistance to NGOs that are seeking formal legal status, and it should be required to provide a written statement of reasons for any refusal to register an NGO.

Decisions not to register an NGO or to terminate one should be appealable, both administratively and to an independent court.

In some countries it may be found appropriate that it be the courts that function as the registering body.


16. NGOs that seek grants, contracts, tax preferences, or other concessions, should be required to register so that agencies of the government can determine what NGOs have been established and what their purposes, powers, and limitations are. In addition any individual or legal person doing business with an NGO (e.g. leasing it space, selling goods, recruiting staff) should be able to determine whether it has been established as a recognized legal person. It is also important that the public have access to this information. For their own protection, citizens need to be able to check whether a purported NGO that seeks their support is really established or not.

17. Laws governing NGOs should provide that no net earnings or profits of an NGO may be distributed as such to any person.

NGOs should be allowed to engage in economic activities so long as the principal purpose of the NGO is to pursue a public purpose or the mutual benefit of its members. If an NGO does derive net profits from an economic activity, they must be used for the public or mutual benefit purposes for which it was formed, and they must not be distributed to any person. This principle of non-distribution is the most important feature distinguishing NGOs from for-profit entities.

18. The law should permit an NGO, in its governing documents or by resolution, to designate another similar NGO to which any assets remaining after the payment of all debts and obligations should go. In some situations, large donors may have imposed a contractual obligation that funds received from it be returned in the event of termination. A good practice is for an NGO to select another NGO engaged in the same or a very similar kind of activity to receive its assets upon termination.


20. An NGO that is properly established in one country should generally be allowed to solicit and receive cash or in-kind donations or transfers from another country, a multilateral agency, or an institutional or individual donor in another country, so long as all generally applicable foreign exchange and customs laws are satisfied.

Generally speaking, the rules should be the same for foreign and domestic funding. If domestic funders must be disclosed in annual reports, the same rules should apply to foreign funders. If domestic funders are entitled to support any legal activity that is permissible for domestic NGOs to engage in, foreign funders should be entitled to the same privileges.

21. NGOs and governments should in each appropriate sector establish mechanisms for dialogue, consultation and exchange in a spirit of openness and with the overriding objective of searching for optimum solutions to society's needs and problems.

Such consultative mechanisms are neither a competition with nor a replacement for the roles played by political parties, trade unions, employers' associations or commercial lobbies.

22. The existence of and participation in government-NGO consultative mechanisms neither guarantees nor precludes government subsidies, contracts or donations to individual NGOs or groups of NGOs. No consultation should be viewed by government as a vehicle to coopt NGOs to government priorities, nor by NGOs as an inducement to abandon their goals and principles.

23. It goes without saying that such government-NGO consultations should take place at all stages of the drafting of legislation and administrative decrees that affect and frame NGO status, financing or spheres of influence. NGOs should acquire the expertise to make competent input to all aspects of such discussions, whether political or technical. Appropriate training in relevant fields including managerial skills should be encouraged.

24. Government-NGO trust and partnership take time to establish and develop. In some countries it may be found useful for the government to designate an office or a person as the focal point for channeling NGO contacts.


32. The NGO sector must be concerned to demonstrate its commitment to effectiveness, accountability, high standards, participatory processes, good governance, voluntary ethics, equal opportunities, and probity of staff at all levels.

33. Self-regulation is most prevalent and successful in countries where the legal system for NGOs is most highly developed. This suggests that both the laws governing NGOs and the sector's own awareness of the need for ever higher standards go hand in hand. Responsible NGOs are increasingly aware that the success of their sector depends to a large extent on whether the public regards it as efficient, effective, and ethical. Further, self-regulatory codes are often developed to enable groups of NGOs working in a specific sector to deal with the particular needs and challenges of that sector.

34. The adoption and internal enforcement of a clear, strong code of conduct is a powerful statement to donors, beneficiaries, and other interested parties that the NGO has standards and takes meaningful steps to enforce them. Replicated by numerous NGOs in any society, the process of adopting and enforcing codes of conduct can measurably raise the actual and perceived status and integrity of the sector.