“Shrinking spaces” in Germany: Why the current non-profit law endangers our vibrant democracy

What does “non-profit status” mean for an association?

For many associations and organizations, it is vital to be recognized as a “non-profit” by the relevant tax office. This status brings with it numerous tax benefits, including exemption from corporation tax and the ability to issue donation receipts. In addition, often only non-profit organizations have access to funding. And those who are proven to be “non-profit” are trusted by donors and enjoy a higher public reputation. For many clubs and associations, the loss of non-profit status therefore threatens their existence.

Why are so many organizations currently losing their non-profit status?

In addition to nationally known organizations such as Attac and Campact, local tax offices have now also withdrawn the non-profit status of smaller, regionally active associations such as the Demokratische Zentrum Ludwigsburg. The background to this is the Attac ruling by the Federal Fiscal Court (BFH) in January 2019, which ruled that the globalization-critical network Attac is not a non-profit organization under tax law as it attempts to influence political opinion with its campaigns. Until a temporary decree by the Federal Ministry of Finance in March 2020, numerous tax offices relied on this decision when reviewing associations and organizations.

The Attac ruling: a two-tier society for associations

The basis for the BFH ruling is the catalog of charitable purposes in the tax code. With the Attac ruling, the BFH has created a kind of two-tier society: Associations that work to promote sport, art or culture are allowed to become politically active to promote their purposes, e.g. publicly campaigning for more cultural funding. However, associations that are committed to “promoting the democratic state” and “political education” may not act with the intention of “influencing political decision-making and public opinion”. This requirement leads to great legal uncertainty in politically active civil society. For many organizations, it is almost impossible to predict whether their work will still be classified as charitable in the future.

“Shrinking spaces” in Germany

When the scope for action for critical civil society dwindles in countries such as Turkey, Hungary or Russia, there is international talk of “shrinking spaces”. In Germany, the Attac ruling now restricts the ability of associations to participate in the formation of political opinion. It is a serious blow to democracy if organizations are stripped of their non-profit status due to their political stance or if they no longer express themselves politically because they fear this consequence.

The Basic Law allows associations to participate in the formation of political opinion

According to Article 21 of the Basic Law, civil society organizations have a right to participate in the formation of political opinion alongside political parties. For a vibrant democracy, it is essential that a wide range of actors take a critical look at existing conditions and take a stand. We are therefore convinced that the current non-profit law urgently needs to be reformed in order to give politically active organizations legal certainty. Democracy needs a strong civil society.

Alliance “Legal certainty for political decision-making” and institutional support

Further information on the Attac ruling and our demands to the legislator can be found on the website of the “Legal certainty for political decision-making” alliance (in German), of which the GFF is a member.

Our work in this area is supported by the Open Society Foundations.