We, from the National Network for Children and the following partner organizations, sent our agreed position to all a number of ambassadors from the European Union on the draft law on amendments to the Law on Non-Profit Legal Entities, submitted by a group of members of the Bulgarian Parliament on July, 1st, 2020.
We turn to you in our capacity of representatives of some of the most respected non-governmental organizations in the country. We would like to express our deep concern about a draft bill for changes and amendments to the Non-profit Legal Entities Act, submitted by a group of members of the Bulgarian Parliament on July 1, 2020.
The suggested amendments foresee an obligation for the non-profit legal entities registered in public benefit (i.e. the non-governmental organizations – NGOs) to declare every income received from a company or a person located in a foreign country, which is over the amount of 1000 lv (around 500 euro). Along with this declaration the NGOs have to submit a proof for the source of the money as well as other documentation within a 7-days period. The declarations will be listed in a special Register of the foreign funded non-governmental organizations. Furthermore, the amendments introduce a possibility for full financial investigation of a foreign funded NGO and its declared incomes by the Public Financial Inspection Agency, which is responsible for the public budget and currently has the competences to investigate only public budget organizations, public entities or private entities with the participation of the municipality or the state, as well as beneficiaries of state aid. Therefore, the present competences of this agency are focused not on private incomes of private entities but are limited only to matters concerning the public financing.
The amendments further suggest severe consequences for the NGOs, which can range from temporary suspension of the “public benefit” status to termination of an NGO on the grounds of contradiction to the Constitution, the laws and the good morals.
Additionally, the bill suggests that the Management and the members of management bodies of foreign funded NGOs must be subject to the same responsibilities as the high-ranking state officials pursuant to the Act on counteracting corruption and on seizure of illegally acquired property. In other words the bill equals participation in the management of a foreign funded non-governmental organization to the highest administrative positions in the government of the country (such as the President and the Vice President, Members of the Parliament, the Prime Minister, Deputy Prime Ministers, Ministers, MEPs of the EU Parliament from the Republic of Bulgaria, etc.), thus establishing an extreme level of responsibility of private persons.
The bill also introduces limitation to the newly formed Civil Society Development Council, which was set up as a consultative body to the Council of Ministers with the main purpose to support the development and implementation of policies and activities aiming at strengthening the civil society in Bulgaria.
It should be pointed out that under the current legal framework NGOs already have broad obligations to declare their income and transactions before the tax authorities, National Statistical Institute and the Ministry of Justice’s Registry Agency, which guarantees the highest level of transparency of their operations. Additionally to these obligations some NGOs even now report the funds received from abroad on a quarterly basis to the Bulgarian National Bank upon request from the Bank. Therefore, the suggested changes and amendments are clearly discriminatory, disproportionate and unconstitutional. Moreover, our worries are related to the fact that the formulation of the limitations is so vague that it opens the door for a very broad interpretation of the wording “foreign country and foreign person”. It can, in fact, limit any foreign funding of NGOs in Bulgaria, jeopardizing the whole civil society sector.
The bill has disproportionality and discriminatory character towards both donors and recipients. NGOs funded by donor countries such as the EEA member states and/or by organisations and agencies in the other EU member states, Switzerland, the UK or the US will be put in a disadvantaged position compare to NGOs funded exclusively by Bulgarian sources or by the EU, as none of the above mentioned new reporting requirements will apply to NGOs exclusively funded by Bulgarian or EU funds. Last but not least, foreign funded NGOs will be put in a disadvantaged position compare to other types of organizations, such as religious denominations or commercial entities, as these other legal entities could continue to receive foreign funding without being subjected to the above mentioned new requirements for reporting of the terms and origin of the funding.
The right to associate is part of the fundamental rights of the Bulgarian citizens enshrined in the Bulgarian Constitution (art. 44). That right is also guaranteed by the European Charter on Human Rights (art. 11). The proposed restrictions in the bill are very similar to the restrictions imposed by Hungary on the financing of civil organizations by persons established outside the Member State, which the Court of Justice of the European Union in its Judgement in Case C-78/18 from June 18, 2020 declared as non-compliable with the EU law (art. 63 from the TFEU) and with the European Charter on Human Rights (art. 7, 8 and 12). Moreover, the Venice Commission in its Report on Funding of Associations CDL-AD(2019)002 explicitly states that obligations for increased reporting “…should be based on a prior risk assessment concerning the specific involvement of the NGO sector in the commission of crimes such as terrorism financing and money laundering”.
What is clear, however, is that these changes and amendments will definitely suppress the few strong and independent voices of civil society organizations and will isolate the Bulgarian civil sector from the international networks of their peers. The side effect of this will be a very shrinked space for activities of civil society actors and an even more hostile environment for operation.
For this reason, and in the context of the European and NATO solidarity and the shared common democratic values, we will appreciate any reaction on your side as representatives of the countries, which have some of the largest foreign assistance programmes and have supported Bulgaria all the way from the beginning of its democratic transition until now.
Bulgarian Donors’ Forum
BESCO – The Bulgarian Startup Association
Institute for Market Economy
Bulgarian Institute for Legal Initiatives
Bulgarian Center for-not-for Profit Law
Workshop for Civic Initiatives Foundation
Anti-Corruption Fund Foundation
National Network for Children
Programme and Analytical Centre for European Law foundation
Open Society Institute – Sofia
Bulgarian Environmental Partnership Foundation
Citizen Participation Forum
Access to Information Programme