The European Foundation Centre (EFC) has written an open letter to the Italian EU presidency and EU governments urging the presidency to achieve results towards the enactment of a European Foundation Statute (EFS), which the EFC has advocated for several years.

The letter, also signed by the Donors and Foundations Network in Europe (DAFNE), says: “We are likely at a turning point in the negotiations on the EFS, given the progress made on this file over the past six months during the Greek EU presidency.

“To achieve decisive progress, however, five key questions will now need clear answers.”

The EFS proposal, currently going through the EU legislative process, establishes a constitution for a pan-European foundation (FE) operating across borders, removing the requirement for foundations operating in different jurisdictions to set up separate legal entities in each country.

It is supported by the industry because it would provide a single set of rules for European foundations, helping to reduce the costs and uncertainty involved in cross-border activities.

It could also stimulate cross-border donations, and provide a level of transparency and accountability to individual foundations set up under its framework. 

It would not, however, replace existing national laws, but would be optional and complementary.

The European foundation sector disburses €100bn annually and employs 1m people, with more than double that number working as volunteers.

The final step in the process to create a regulation will be a vote by all 28 EU member states, which must be unanimously in favour for the proposal to become law.

The EFS proposal has gone through a long process of refinement to maximise the chances of success at the final hurdle.

The current text is the seventh version since the European Commission unveiled the original proposal in February 2012.

In particular, the proposal’s tax provisions were removed after proving a major obstacle to progress.

Emmanuelle Faure, European affairs senior officer at the EFC, said: “We take stock of developments and progress at the beginning of each EU presidency, as they lead the negotiations on the file.

“There’s been a lot of work and engagement from the Greek EU presidency in the first half of 2014. Building on the good dynamic and concrete outcome of negotiations, the Italian EU presidency can now lead the discussion to a fruitful conclusion.”

The questions the letter says must be answered include the issue of whether the EU should still require a unanimous vote of member states to pass the EFS, and whether the perceived slow uptake of previous EU company laws precludes adopting a European statute for foundations pursuing general interest purposes.

A further question is whether austerity measures at the national level are a major stumbling block to a new law seen more as an administrative cost than a return on investment to society.

The letter says: “This would be all the more astonishing in particular in those countries that have a highly developed charity sector, and where large sections of community services are co-run by foundations.”

A question as to whether it matters that a European foundation has a starting capital of €25,000 or €50,000, when its aim is to benefit the public at large, refers to the minimum level of assets an FE must have and maintain throughout its life-span, which has become a critical issue.

The final question challenges the situation that, while there is unanimous agreement within the EU for more transparency via compulsory information storage for all types of entity, registration for future European foundations is still an issue in some countries.

The letter ends: “Both the EFC and DAFNE are urging member states to adopt the proposal in due course.

“A solution is every bit as possible as it is necessary. It takes the shape of a simple tool that is not only about better regulation but first and foremost about being responsive to citizens and society’s needs.”