When it comes to funding for NGOs, transparency is lacking in the EU

By MEP Auke Zijlstra

If it’s not about war, it’s usually about money these days. Last week, the European Court of Auditors published a damning report on the spending of EU Covid recovery funds. The €672.5 billion fund was intended to kick-start the economy after the downturn caused by the self-imposed Covid measures. The report finds that the RRF suffers from weaknesses in performance, accountability and transparency, with unclear results and a lack of cost transparency. It is only right that this made the headlines.

After all, one would expect the European Commission to handle this enormous amount of money with the utmost care. Especially since this fund (RRF) was the prelude to joint debt as the standard, the so-called Eurobonds, because the money was borrowed jointly. This is seen in Brussels as the next step in European integration.

Six months ago, the European Court of Auditors also published an extremely negative report on aid to Africa, entitled ‘The EU Trust Fund for Africa – Despite new approaches, support remains unfocused’. This report pointed to inadequate supervision and ineffective projects, exposing the waste of EU funds in development aid. The European Court of Auditors’ auditors were also unable to carry out physical checks everywhere: it was too dangerous.

But I would like to take a look at the unhealthy relationship between the European Commission and politically oriented NGOs. It has recently been reported that NGOs were willing to go the extra mile in supporting the European Commission’s policy objectives in exchange for money. This points to influence, including on the European Parliament, which is supposed to form an independent opinion as co-legislator. The problems are not limited to this entanglement. The financing itself is also not in order.

The EU does not even know some of its ‘own’ NGOs

The assessment of this funding has a long history. In 2018, the European Court of Auditors wrote ‘Special Report No 35/2018: Transparency of EU funds implemented by NGOs: more efforts needed’. NGOs are entitled to funding if they meet a few requirements: they must operate independently, serve social objectives, and neither the organisation nor its members may be profit-oriented. But what exactly does that mean? It would be useful if a uniform definition were used in Member States and by the European Commission. This turned out not to be the case. It would also be useful, even necessary, to give everyone who applies for funding the official NGO label after checking that they meet the requirements. This was not the case either.

Furthermore, it was unclear who received what and what was done with it. Without a central register, it proved difficult for the European Court of Auditors to trace subsidies.

Last month, the European Court of Auditors published a critical follow-up report entitled ‘Transparency of EU funding to NGOs – Despite progress, no reliable overview’ (Special Report 11/2025).And everything appears to be the same. The allocation of subsidies to NGOs is plagued by uncertainty and a lack of control, with risks of abuse, such as money laundering and terrorist financing. There is still no uniform definition of what an NGO actually is, no common registration system for subsidy applicants, and no accessible overview of subsidies awarded.

Only 10% of NGOs appeared to have been assessed by the European Commission at all.

What is considered an NGO varies from one EU country to another, and only five Member States have laid this down in law. It was not until 2024 that the EU defined an NGO as an organisation that is independent of government and not profit-oriented. This definition is far too vague to classify NGOs correctly in the EU’s financial transparency system. This is also because entities simply declare themselves as NGOs and the Commission does not check important aspects of their status.

Consider, for example, whether a government does not exert considerable influence over the NGO, or whether an NGO is indeed non-profit but pursues the commercial interests of its members.‘For example, a large research institute was categorised as an NGO, even though its governing body consisted exclusively of government representatives,’ the Court of Auditors said. But if NGOs are willing to promote the European Commission’s policy agenda in exchange for money, does that not automatically mean that the NGOs in question are not independent at all and should therefore not have received anything?

Hungary does monitor NGOs, something which annoys the EU

But nothing has changed for years. Why is that? An important point of reference is that in 2017, Hungary introduced a law requiring NGOs to register as ‘foreign-supported organisations’ if they received more than approximately 24,000 euros per year in foreign funding.This law also requires the disclosure of donors and amounts. The European Commission initiated legal proceedings. On 18 June 2020, the Court of Justice of the European Union ruled that Hungarian transparency requirements for NGOs were contrary to both Article 63 TFEU (free movement of capital) and provisions of the Charter of Fundamental Rights of the European Union.The Court ruled that, in this case, restrictions on capital movements, for example to combat money laundering, cannot be used to require transparency from NGOs.

This is at odds with warnings from the European Court of Auditors and reports from international organisations, which identify NGOs as vulnerable to abuse.For example, the G7’s Financial Action Task Force on Money Laundering (FATF) describes in its report “Risk of Terrorist Abuse in Non-Profit Organisations” (2014) how NGOs, such as certain Islamic charities, are being misused for terrorist financing by channelling funds to extremist groups.

Europol’s ‘EU Terrorism Situation and Trend Report’ (2020) and Eurojust’s ‘Report on Money Laundering’ (2019) point to similar risks, as does Moneyval’s ‘Typologies Report on Money Laundering through Non-Profit Organisations’ (2017).National authorities, such as the Dutch Financial Intelligence Unit (FIU) in its ‘Annual Review 2020’, report cases in which NGOs (such as mosque associations or non-profits behind Extinction Rebellion) are used as a front for suspicious financial flows. At the same time, the Commission assessed the risks of money laundering and terrorist financing in NGOs as ‘less significant’ in its Supranational Risk Assessments (SNRA) in 2017 and 2019. This therefore seems naive.

However, despite these reports, the European legislator (European Commission and European Parliament) remains reluctant to improve the transparency of NGO funding. In 2022, the Parliament did support a resolution calling for stricter transparency, but only for cross-border NGOs, which account for only 10% of NGOs active in Europe. The opinion of the European Parliament’s Committee on Civil Liberties, Justice and Home Affairs (LIBE), referring to the earlier ruling of the European Court of Justice, reiterated that transparency could hinder the activities of NGOs and deter donors. While citizens are increasingly restricted in their ability to pay cash and are required to account for their transactions, a different standard applies to NGOs.

But how much money are we actually talking about?

An impact study by the European Parliament’s Research Service, entitled ‘Impact Assessment on Funding of Litigation by NGOs’ (2021), even suggested, despite all the risk analyses, that all NGOs should be completely exempt from transparency requirements under all circumstances because there is insufficient data to demonstrate abuse. This creates a vicious circle: the European Court of Auditors is calling for legislation due to a lack of information, but the Parliament and the Commission argue that they cannot take action without sufficient data.

What now? To start with, the European Court of Auditors is demanding a workable definition of what an NGO actually is by 2026. But after seven years, it seems that, despite the risks, NGOs are simply seen by the executive as a convenient extension of its own power. It will then be a long time before anything changes here, and the European Court of Auditors can continue to call for action.

And if you are now thinking: is this really important? Between 2021 and 2023, NGOs received €7.4 billion for the EU’s most important internal policy areas, such as cohesion, research, migration and the environment. Of this, €4.8 billion was financed by the Commission and €2.6 billion by the Member States. A small group of 30 NGOs received more than 40% of these funds, mainly for the environment and climate. The total number of organisations funded was many times greater: between 2021 and 2023, more than 12,000 NGOs received EU subsidies.

But we do not know whether this was in accordance with the rules.

The structure of funded NGOs, with their own agendas, whether guided or not, undoubtedly influences our democratic decision-making. That alone seems to me to be sufficient reason for scrutiny and a critical eye. Because you don’t have that much influence. And wasn’t democracy supposed to give you influence?

Originally published in Dutch here.

Auke Zijlstra is a Dutch Member of European Parliament for the PVV. He can be found on X as @EconoomZijlstra. He often discusses EU affairs on this page.