29 February 2024

Proposed EU foreign funding directive places unfair burden on civil society

Philea joins other civil society organisations in expressing concerns about the planned directive establishing harmonised requirements on transparency of interest representation carried out on behalf of third countries (COM (2023) 639)) as part of the Defence of Democracy (DoD) Package. The proposal as it currently stands would negatively impact civic space, fundamental rights and EU law.

While we share the European Commission’s worry about attempts to undermine democracy across Europe and via foreign actors outside the EU, we doubt that the proposed directive is the right instrument to address this. There are serious concerns around the legality and proportionality of the proposal as well as the effectiveness of the proposed approach:

  • The proposal will place an additional reporting burden on already open, transparent civil society organisations, while failing to advance its primary aim to identify and address covert influence in policy making.  
  • The proposed directive appears to be in breach of the principle of necessity and proportionality, and some very broad definitions included therein could open the door to misinterpretation and misuse. It also instills an inherent suspicion of foreign funding – despite attempts to assure the use of neutral language. 

A deeper dive into some of the core issues includes: 

Definitions and scope: several of the key definitions and concepts are not clearly or are too loosely defined, which will lead to legal uncertainty and potential overregulation. For example, the definition of an ‘interest representation activity’ includes most activities that civil society organisations engage in as part of their regular advocacy work – including those activities welcomed by the EU in the accompanying Recommendation on promoting the engagement and effective participation of citizens in public policy-making processes. While the 2019 Venice Commission report requires a distinction between ‘lobbying as a professional remunerated activity’ and ‘ordinary advocacy activities of civil society organisations, which should be carried out unhindered,’ the Directive includes no such distinction.

Disproportionate administration: The proposed directive would entail significant administrative burdens, both for member states, the designated supervisory authorities, and for those organisations required to register. The existence of multiple national registers is likely to cause confusion and additional work, and the required level of due diligence, particularly for legal representatives and in relation to subcontractors, is extensive even for very limited sums of money. 

Fundamental rights and foreign funding restrictions: the Commission provides an analysis of the fundamental rights implications of the directive and concludes that it does not affect the essence of the freedom of association. We consider however that it does not  go deep enough into the recommendations of the Venice Commission on funding of associations or of the judgment of the Court of Justice of the European Union in the case of the Commission v. Hungary (C-78/18). In that judgment the court clearly articulated that transparency restrictions on foreign funding must not have a deterring effect on civil society and that foreign funding, be it public or private, should not be seen as intrinsically suspect. The objective of increasing the transparency of the financing of associations, while legitimate, was not considered sufficient to justify legislation applied indiscriminately to any funding from outside the EU. 

Foreign policy: the EU is one of the largest donors to rights and democracy groups around the world. It has spoken out against ‘transparency laws’ in other regions that are used as a disguised way to limit civic space and silence dissenting voices. Recent examples of this include responses to the Georgian Transparency Law and the foreign agent law in Kyrgyzstan. A law that appears to be an instrument to tackle unwanted foreign influence can do damage to the EU’s global role and reputation as a protector of human rights and democracy. Several countries have already referenced the proposed directive in their own communications. The EU risks losing credibility in future critiques of foreign funding laws and third countries will likely question the EU’s own funding when aimed at influencing policies.

Consideration of other measures: Both internal and external threats to democracy should be addressed, which includes ambitious long term measures tackling disinformation through the introduction of civic education within education curricula and further support to civil society organisations and independent media. The accompanying recommendation on fostering citizen participation in policy making is a great starting point and should be accompanied by further provisions at EU level to develop a framework on civil dialogue with civil society.

The Philea Legal Affairs Committee will submit a contribution to the ongoing consultation on the DOD in April.


Hanna Surmatz
Head of Policy