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GROWING THE NON-PROFIT SECTOR IN EUROPE BY EUR 4BN: CAPGEMINI INVENT SUPPORTS THE EU IMPACT ASSESSMENT ON CROSS-BORDER ACTIVITIES OF ASSOCIATIONS

Soohyun Lee
Dec 7, 2023

We’re getting closer to eliminating barriers in the single market for non-profit organizations 

Moving towards an economy for people

On September 5, 2023, the European Commission adopted a proposal to facilitate cross-border activities of non-profit associations (NPAs) in the EU by reducing the regulatory formalities and legal barriers they face, thereby enabling them to fully benefit from the single market. By promoting the role NPAs play in generating economic and societal value in the EU, the proposal embraces the idea of an economy that works for people as envisaged in the European Green Deal and the Digital Decade 2030. Capgemini Invent, together with Ecorys, professors Antonio Fici (University of Rome Tor Vergata) and Wino van Veen (VU University Amsterdam), and Bram Van Baelen (KU Leuven), supported the Commission with an impact assessment study for this proposal.

Unlocking the socio-economic potential of the non-profit sector in Europe 

The estimated 3.87 million non-profit associations active in the EU contribute 2.9% (EUR 420 billion) of the EU’s gross domestic product (GDP), creating value in sectors such as health, social services, humanitarian aid, social inclusion, R&D, culture, education, and sports. When they operate in another member state, these associations often face additional costs and administrative burdens due to an absence or lack of synchronization in national cross-border legislation. Approximately 8% (310,000) of NPAs active in the EU are currently affected by such obstacles.  

The Study supporting an impact assessment on cross-border activities of associations outlines policy options and assesses their impact and capacity to solve identified problems. It is based on literature review/desk research of 66 documents; the collection of detailed information on laws and regulation of associations in each Member State; 64 interviews with associations, umbrella organizations, national authorities, and others; and a survey targeting 2,491 stakeholders with 140 responses.  

The study finds that eliminating barriers in the single market can cut these costs by up to EUR 770 million annually, saving up to EUR 8.5 billion within 15 years and encouraging a further 185,000 associations to engage in cross-border activities, potentially economizing an additional EUR 4.2 billion. In other words, removing barriers would not only increase GDP and create up to 75,000 new jobs, but it would also unlock the socio-economic potential of the non-profit sector in Europe wherein NPAs account for approximately 87% of legal entities.

Breaking down the barriers to the single market  

The study identifies four barriers in the single market: cross-border activities of associations in relation to their right to establishment and provision of goods and services, the movement of capital, cross-border membership and participation in governance bodies, and cross-border mobility. It also outlines various policy options to counteract them. These differ mainly in how they comply with proportionality and subsidiarity principles.  

The preferred policy option involves the creation of an additional legal form of European cross-border association (ECBA) in Member States’ national legal systems that, once registered in one Member State, would be automatically recognized throughout the EU through an “ECBA certificate.” Additionally, it provides for harmonized rules on transfer of registered office, allowing NPAs to benefit from freedom of establishment and freedom to provide goods, services, and capital in the EU. It also ensures the ECBA free and non-discriminatory access to public funding in each Member State in which it operates. 

For matters outside the scope of the current proposal, such as taxation treatment, ECBAs would be treated like national non-profit associations, thereby respecting Member States’ traditions, and not affecting existing associations. Moreover, this option is targeted and complies best with the proportionality and subsidiarity principles while being the most balanced in terms of cost and benefit. 

The need for harmonization and coordination

When it comes to cross-border activities, Member States currently follow their own disparate national rules, resulting in fragmented requirements and limitations and creating unequal conditions for the numerous NPAs that want to operate in the single market. The impact assessment study shows that the cross-border activity of NPAs has yet to reach its full potential in the European Union due to these existing barriers.  According to Niels van der Linden, Client Lead for the European Union Institutions at Capgemini Invent, it further reveals that action at EU level is needed to enable harmonized or coordinated rules. In addition to bringing demonstrated economic benefits, this will also strengthen the non-profit sector and civil society at large. 

The proposal will be presented to the European Parliament and the Council for approval. Once adopted, Member States will have two years to transpose the Directive into national law. 

Find out more 

Read the full study supporting the impact assessment on cross-border activities of associations. 

Capgemini partners with public sector organizations globally to design, test, iterate, and run digital services that put citizens at the center. To learn more about making eGovernment services accessible to cross-border users in Europe, read the eGovernment Benchmark 2023, It provides a full analysis of Europe’s progress towards connected digital governments that put users – citizens, businesses, cross-border organizations – at their heart. 

Author

Soohyun Lee

Senior Manager for European Institutions
“The data economy presents a transformative opportunity, especially in sectors like sustainability, energy, and social welfare. By harnessing the power of data management and sharing, we can revolutionise how resources are allocated. At the heart of this evolution is technology which acts as a catalyst for empowering individuals through knowledge. This not only fosters innovation but also ensures equitable access to the benefits of technological advancements, playing a critical role in elevating communities and enriching the quality of life across the board.”

Patrick de Bas

Senior Managing Consultant | Capgemini Invent
“The data economy will allow us to address the current and future societal challenges. Especially at the local and regional level, data is an essential resource to allow cities and communities to become truly smart and develop a better understanding of the impact of their decisions. With a solid data economy and matching digital data infrastructure, smart city are destined to unleash tremendous societal value.”