Compliance in the third sector: transparency in NGOs and foundations
The third sector, comprising NGOs, foundations and non-profit associations, handles millions of euros in public subsidies and private donations every year. By 2025, the need to implement compliance and internal control programmes in these entities has become a priority in order to prevent risks of corruption, money laundering and embezzlement.
Main challenges
- Lack of financial resources to implement compliance systems.
- Poor culture of transparency in small and local organisations.
- Risk of misappropriation of funds or mismanagement of grants.
- Need for accountability to donors, administrations and European bodies.
Recommended measures
- Implementation of clear codes of ethics and internal policies, aligned with European standards of good governance.
- Regular internal and external audits, as an increasingly common requirement in EU-funded projects.
- Accessible and secure whistleblowing channels for employees and volunteers, in line with Directive (EU) 2019/1937 on the protection of whistleblowers.
- Training in transparency and good governance, aimed at both management and operational staff.
- Adaptation of ISO 37301 (compliance management systems) and ISO 37001 (anti-corruption) to the non-profit sector.
- Anti-money laundering policies, especially in NGOs operating with international funds, in accordance with Directive (EU) 2015/849 (AMLD IV) and successive reforms.
Applicable legislation
Spain:
- Law 50/2002, on Foundations.
- Law 45/2015, on Volunteering.
- Law 38/2003, General Subsidies Law.
- Spanish Criminal Code: Article 31 bis on the criminal liability of legal persons (also applicable to foundations).
European Union:
- Directive (EU) 2019/1937 on the protection of whistleblowers.
- Regulation (EU) 2021/241, which links access to European funds to criteria of transparency and control.
- AMLD (Anti-Money Laundering) Directives for the prevention of money laundering and terrorist financing. The 6th AMLD (AMLD6), in force since December 2020, expands the list of money laundering-related offences to include cybercrime and environmental crime. It establishes criminal liability for legal persons and toughens penalties (at least four years' imprisonment in serious cases). The new AML package creates the European Anti-Money Laundering Authority (AMLA) based in Frankfurt, strengthens the traceability of transfers (EU Regulation 2023/1113 on transfers of funds and crypto-assets), and improves authorities' access to financial information. The new AML package also creates the European Anti-Money Laundering Authority (AMLA) based in Frankfurt, strengthens the traceability of transfers (EU Regulation 2023/1113 on transfers of funds and crypto-assets), and improves authorities' access to financial information.
Outlook
Compliance requirements in the third sector will grow rapidly in the coming years, driven both by public administrations and by the European Union itself, which already links access to EU funds to the existence of internal controls and integrity policies.
NGOs and foundations that anticipate this by implementing robust compliance systems will have a clear competitive advantage in terms of credibility, access to grants and long-term sustainability.
In summary:
- Transparency is no longer optional, it is a European requirement.
- Compliance is the passport to ensuring the trust of donors, institutions and civil society.
| Sexta Directiva UE AMLD 31 mayo 2024 | 2172 KB |
