appendix.tex (8733B)
1 \section{Further information on donations} 2 \label{app-back} 3 4 \subsection{General background information} 5 6 This section contains general background information pertaining donations. 7 8 % FIXME: make this less EU-specific for USENIX??? 9 10 \subsubsection{General Regulatory Framework} 11 12 European Union (EU) member states regulate donations through a blend 13 of EU-wide directives and country-specific laws. While there is no 14 uniform regulation that applies to all donations in Europe, certain EU 15 directives and principles affect donation practices, particularly 16 those related to transparency, anti-money laundering (AML), tax 17 compliance, and donor data protection. 18 19 \subsubsection{Transparency and Accountability} 20 21 Transparency in charitable donations is crucial to maintain public 22 trust and deter financial misuse. European countries typically require 23 organizations that receive donations to adhere to transparency 24 measures, including: 25 26 \begin{itemize} 27 \item {\bf Public Financial Reporting:} Most European countries 28 mandate that charities, nonprofits, and similar organizations 29 publish annual financial reports. These reports generally include 30 detailed breakdowns of income sources, donation amounts, and 31 expenditures. 32 \item {\bf Disclosures for Large Donations:} In some countries, large 33 donations must be reported to regulatory authorities. This threshold 34 and the specific requirements vary by country. For example, Germany 35 requires registration for organizations receiving public donations, 36 while the UK mandates certain reporting for donations above a 37 particular threshold. 38 \item {\bf Third-Party Audit Requirements:} To verify the financial 39 integrity of charitable organizations, many countries mandate 40 independent audits for organizations surpassing specific revenue 41 thresholds. 42 \end{itemize} 43 44 \subsubsection{Anti-Money Laundering (AML) and Counter-Terrorism Financing (CTF)} 45 46 Given the potential for abuse of charitable donations for money 47 laundering and financing illegal activities, EU-wide Anti-Money 48 Laundering Directives (such as the AMLD5) require organizations to 49 implement stringent controls. 50 51 \begin{itemize} 52 \item {\bf Know Your Donor (KYD):} Similar to the Know Your Customer 53 (KYC) practices in the financial sector, some countries require 54 organizations to verify the identity of donors making significant 55 contributions. This requirement is typically tied to AML laws. 56 \item {\bf Transaction Monitoring and Reporting:} Charitable 57 organizations must monitor donation transactions and report any 58 suspicious activities to relevant national authorities. 59 \item {\bf Registration with Financial Intelligence Units (FIUs):} 60 Nonprofits are encouraged, and sometimes required, to register with 61 FIUs in certain EU countries to facilitate AML compliance. 62 \end{itemize} 63 64 \subsubsection{Taxation and Deductibility} 65 66 The tax treatment of donations varies across Europe, but many 67 countries provide tax incentives to encourage charitable 68 giving. Donations to qualifying nonprofit organizations are often 69 tax-deductible, either partially or fully, depending on local laws. 70 71 \begin{itemize} 72 \item {\bf Eligibility of Donors and Organizations:} Both the donor 73 and the recipient organization usually need to meet specific 74 criteria. For instance, only donations to accredited charities 75 registered with national authorities are often eligible for tax 76 relief. 77 \item {\bf Limits on Deductions:} Most countries place caps on 78 deductible donations, typically as a percentage of the donor’s 79 income. For example, France allows deductions up to 20\% of taxable 80 income, whereas Germany permits deductions up to 20\% of annual 81 income or corporate profits. 82 \item {\bf Cross-Border Donations and Tax Relief:} The EU's ``Stauffer 83 doctrine'' principle requires member states to treat cross-border 84 donations similarly to domestic donations if the recipient 85 organization meets equivalent standards, which facilitates 86 cross-border charitable giving across the EU. 87 \end{itemize} 88 89 \subsubsection{Data Protection and Privacy (GDPR)} 90 91 The General Data Protection Regulation (GDPR) is a significant EU law 92 that affects how personal data is collected, stored, and managed, 93 including for donations. 94 95 \begin{itemize} 96 \item {\bf Consent for Data Collection:} Donors must be informed of 97 how their personal data will be used, and organizations must obtain 98 explicit consent if data will be used for purposes beyond the 99 donation transaction itself, such as marketing. 100 \item {\bf Data Minimization and Retention:} Organizations are 101 expected to collect only the data necessary for processing the 102 donation, retain it only as long as necessary, and ensure proper 103 data deletion practices. 104 \item {\bf Right to Access and Erasure:} Donors have the right to 105 request access to their personal data held by an organization and 106 can request deletion or correction of their data under specific 107 circumstances. 108 \end{itemize} 109 110 \subsubsection{Corporate Donations and Sponsorships} 111 112 Corporate donations are also regulated, particularly when related to 113 tax deductibility, disclosures, and compliance requirements. 114 115 \begin{itemize} 116 \item {\bf Transparency in Corporate Sponsorships:} European countries 117 may require public disclosure of corporate donations or sponsorship 118 arrangements, especially when public funds are involved. Many 119 countries also enforce rules against donations that may appear to be 120 intended for influencing legislation or government actions. 121 \item {\bf Limits on Corporate Donations:} Some countries impose caps 122 on corporate donations eligible for tax relief to prevent excessive 123 deductions and potential misuse. 124 \end{itemize} 125 126 \subsubsection{Cross-Border Giving and EU Philanthropy Initiatives} 127 128 The European Union encourages philanthropy across borders within 129 Europe, but the process is still complex due to varying national tax 130 and legal frameworks. 131 132 \begin{itemize} 133 \item {\bf European Foundation Statute and the European Philanthropy 134 Manifesto:} These initiatives aim to harmonize cross-border 135 philanthropy regulations. The proposed European Foundation Statute, 136 for instance, would create a legal form of a foundation operating 137 across the EU. 138 \item {\bf Transnational Requirements for Nonprofits:} Nonprofits must 139 navigate both the tax and regulatory requirements of each country in 140 which they operate or fundraise, including any special 141 registrations, tax filings, or documentation for cross-border 142 transactions. 143 \end{itemize} 144 145 \subsubsection{Ethical Standards and Codes of Conduct} 146 147 Some countries have established or encouraged adoption of ethical 148 standards or codes of conduct for fundraising activities. Examples 149 include: 150 151 \begin{itemize} 152 \item {\bf Code of Conduct for Fundraising:} Many countries have 153 adopted codes of conduct, which may govern methods for soliciting 154 donations, advertising practices, and donor interaction 155 protocols. There are also private initiatives such as the Donor 156 Pledge from the Dutch foundation Donateursbelangen (``Donor Interest 157 Foundation''). 158 \item {\bf Charity Commissions and Regulatory Bodies:} Several 159 European countries have independent regulatory bodies that oversee 160 charitable organizations, such as the Charity Commission in the UK, 161 to ensure compliance and ethical conduct in donations. 162 \end{itemize} 163 164 \subsection{Country-Specific Considerations} 165 166 While EU-wide directives provide a framework, each country has unique 167 laws. Here are a few examples: 168 169 \begin{itemize} 170 \item {\bf Germany:} Nonprofit organizations must register with local 171 authorities to receive tax exemptions, and donations exceeding 172 10\,000 EUR must be reported. 173 \item {\bf France:} Nonprofits must adhere to the ``Loi de 1901'' and 174 comply with annual reporting requirements to remain eligible for 175 public donations. 176 \item {\bf Italy:} Nonprofits are eligible for tax incentives if they 177 register as ONLUS (Organizzazione Non Lucrativa di Utilità Sociale) 178 or a similar designation under Italian law. 179 \end{itemize} 180 181 182 \ifodd0 183 Some bits of thoughts 184 185 Article 56 TFEU guarantees free movement of services throughout the 186 EU. In particular, this obliges each EU country to recognize the 187 charitable organizations that are registered in other countries, as 188 confirmed by the following decision of the Court of Justice of the 189 European Union: 190 191 \url{https://op.europa.eu/en/publication-detail/-/publication/d3892f27-39b1-4a26-98b3-451a7ffb101d/language-en} 192 193 194 195 \subsection{Yearly Donation Limit} 196 197 In some tax jurisdictions, the tax authority may set a limit on the 198 total amount of donations that a charity may receive in a given tax 199 year. 200 %XXX ~\cite{?} A Donation Authority must enable tracking and enforcement of such a limit. 201 202 \fi