How to Regulate APEs (Part 2)
Why APEs Have to be Made More Accountable than NGOs
German translation
In the first part of this conceptual analysis, it was argued that our definition of a Non-Governmental Organization needed to be separated into two categories: NGOs and a stakeholder group called Alternative Policy Enterprises (APEs). How are they different?
NGOs (Non-Governmental Organizations) are seen as organizations working in the field doing work that governments are unable or unwilling to do, like managing food banks, homeless shelters, crisis centers, medical relief, support for people with disabilities, conservation activities, community outreach, development aid…
APEs (Alternative Policy Enterprises) refer to non-profits who are politically motivated, working on policy issues, lobbying, influencing regulatory processes and driving for systemic change. APEs not only refer to activist organizations, but also foundations, UN agencies and other transnational bodies, the media, think tanks, researchers, trade associations and trade unions.
More attention and funding has been directed toward the politically connected APEs who are relentlessly lobbying governments, reducing the support for NGO groups and volunteers actually doing the work in the field.
Many might argue that this division of an important stakeholder category is unnecessary. Whether an individual is trying to support a victim or trying to stop millions of potential victims from the consequences of, say, climate change, both are parts of a wide group of non-profits trying to make the world a better place against external threats.
But all of us, even the writer of this article, want to make the world a better place in some way. The main difference is that APEs have a political agenda, often large budgets fed by foundations and a polarizing change ideology which they seek to impose on the world. Legitimate NGOs, on the other hand, are trying to solve more immediate problems with practical solutions for vulnerable populations. When a person is hungry, their politics or influence does not matter and winning a debate on an issue matters even less.
As the term “NGO” has been abused by opportunistic APEs, the policy influencers have benefited both socially and financially by draping themselves in the NGO cloak, while legitimate NGOs have struggled to get the needed support. APEs and NGOs are very different in their approach and need to be subject to different responsibilities and codes of conduct.
Why is this New Classification Important?
Many of the APEs, in positioning themselves as NGOs, have exploited loopholes to avoid being accountable and responsible. Many of them, while only communications offices, have budgets greater than mid-sized corporations, sell products and services, employ high-income lobbyists and lawyers and spread their operations across the globe with little or no regulatory scrutiny.
Because of the work volunteers are doing on the ground helping vulnerable communities, the term “NGO” carries a positive perception which the APEs take advantage of. These activists and their political tricks should not be considered in the same breath as the volunteers who work food banks or women’s shelters. APEs do not need government funding and, as profit centers, should pay taxes rather than serving as tax shelters.
APEs should be subject to the following obligations:
Transparency
APEs must be 100% transparent (in the same way corporations need to publish full details of their operations and activities). Foundations can no longer use dark, donor-advised funds, activist groups need to produce complete financial reports rather than opaque, one-page balance sheets and transnational organizations like the WHO agencies need to publish who is funding and pushing their programs and activities. The amounts of their funding need to be clearly acknowledged. Foundation-backed re-granters giving journalists $5000 to write a polarizing article pays their rent; giving them $50,000 buys their soul.
APEs also need to be transparent about their staff allocations. An organization like Corporate Europe Observatory, who preach transparency to others, employ thirteen staff at either 50% or 25% FTE, meaning they are also working for other APEs in the incestuous Mundo B building, often involved in the same campaigns but likely double-billing their funders. They demand transparency from industry but don’t need to be transparent themselves. Hypocrites.
Democratic Processes
There is a democracy deficiency in most activist, foundation and transnational activities. Whether it is Davos Man, an unaccountable IARC official, a billionaire philanthropist or an environmental campaigner, the voice of the few is emboldened to act and decide on behalf of the majority. Often interest groups from tort lawyers to organic food lobbyists to carbon disclosure economists pay off these APEs to increase their opportunities knowing they can use their influence to circumvent democratic regulatory processes. The uninhibited power of these non-profit groups (via their funding of the media, closed influence networks and abundant foundation
capital) needs to be contained so as to limit the obstruction of the democratic system.
Tax Conditions
When a non-profit is earning more from sales of goods and services than many mid-sized corporations, this income needs to be taxed. APEs, as high-income profit centers, should not enjoy tax-free and tax deductible status. Furthermore, foundations are often serving as tax shelters for illicit activities (like how tort law firms are using them to fund off-book, dark operations like the support of litigation-focused constructs like the Heartland Health Research Alliance via non-declared donor-advised funds).
Billionaires are able to move funds from one operation to another to minimize tax obligations and income accumulation (the prevalence of offshore family office operations often include in-house philanthropic operations). This was clearly not what governments had intended when they gave beneficial tax status to non-profits. APEs, as enterprises raising large amounts of capital, need to pay their fair share for the benefit of all society.
Government Support
A recent Firebreak article highlighted the problem when governments like Germany’s Socialist-Green coalition funded militant activist groups to support their policies and attack the opposition during the recent election campaign. The parliamentary inquiry has likened these government-funded activists, media and research groups as part of a coordinated “deep state”.
In separating APEs from NGOs, this challenge can be easily addressed. Governments should fund NGOs like food banks, homeless shelters, crisis support organizations... They should never fund APEs (not only because of their clear political agenda, but because they are already drowning in foundation funding).
Financial Accountability
Non-profits not only don’t need to provide detailed financial reports (a one-page annual balance sheet is often all that is required), they are not subject to the same accountability / liability obligations even if their activities, investments and operations exceed that of most mid-sized corporations.
APEs need to be equally accountable for the consequences of their actions and campaigns. Often the NGO halo provides such groups with a “virtue cover” that allows them to break the law, spread lies and not be held to the same level of accountability. But if an activist group or foundation spreads false information or damages business interests, they must be able to provide the means to cover their liability. They cannot be allowed to move around tens of millions of dollars to run hostile campaigns, and if ever held to account, be able to simply reconstitute themselves as another NGO.
Illustration: The European Climate Foundation
The best example of an APE that has abused its status as an NGO or non-profit is the European Climate Foundation (ECF). See the Firebreak translation of a French investigation on the ECF. This re-granting fiscal sponsor, that claims to be a foundation hiding behind the cloak of NGO reporting requirements, has benefitted massively from non-profit loopholes. As an activist entity, the ECF does not reveal who it funds from its annual budget (€275 million in 2023). This money is coming from a collection of large, mostly American, foundations. It seems they fund almost every climate-oriented NGO and media group in an effort to control the public narrative on climate change. They enjoy tax-free status and their donors enjoy fiscal advantages (while remaining anonymous).
On what planet would anyone seriously consider an organization with an annual free cash flow of €275 million, highly-paid executives and an advisory board of former prime ministers and public figures, as a non-profit or an NGO? They have no obligations or expenses, no heavy investments and no public scrutiny. Its budget is 100% campaign cash but this raises no issues with the media or the public as they claim, as an NGO, that they are doing the virtuous work of trying to save the planet. In reality, the ECF’s relentless pressure on policymakers to rapidly accept their Net-Zero climate campaign targets, skilfully executed, have hurt humanity in their rushed transition while enriching a lot of opportunists in the financial community (as well as every NGO that accepted their pay-offs).
The ECF controls an flotilla of NGOs they direct onto their policy platforms, media groups that are obliged to report on their strategies as news and networks of international organizations and world leaders beholden to them. As an NGO, they are not obliged to disclose anything (and they don’t). Larger than most corporations, the European Climate Foundation is more than an APE, it is an unregulated gorilla, operating from the shadows.
Let’s be Fair and Reasonable
By recategorizing a large number of activist campaign groups not as NGOs but as APEs, a proper, fair scrutiny of their activities can be introduced, public confusion with legitimate NGOs will be eliminated and their campaigns, influence and operations will be made to be transparent and accountable. This is badly needed to ensure policy debates and regulatory decisions are fair, open and representative of all societal actors.
The APEs will no doubt object and invest heavily in keeping their privileged NGO status. But we can no longer consider most of these politically-driven organizations in the same breath as people supporting the homeless, providing medical care to the vulnerable or helping restore dignity to victims of poverty. If the high-priced activists, lobbyists and campaigners continue to try to portray themselves as budding Mother Theresas deserving of special conditions, then it is doubly urgent to enforce this decoupling of status, if anything, to protect the integrity of those actually in service to humanity.
In order to preserve the strong reputation of NGOs and in order to better support the good work they have been doing, we need to contain the zealots and the activists. Redefining them as APEs is a good start.