Policy Paper: Agitating Against the State with Taxpayers’ Money?

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Observatorium 83 | June 2025 | by Rupert Graf Strachwitz

The Allegation
The allegation is as follows: Civil society organisations (CSOs)[1] are interfering too heavily in politics and, because they are predominantly recognised by the state as “tax-privileged”, are exceeding the boundaries of an alleged requirement for political neutrality. They are accused of violating the conditions set out in the German Fiscal Code (Abgabenordnung) for the granting of such “privileges”; indeed, they are said to use state-funded grants to organise protests against the very institutions that provide these funds. This accusation is primarily voiced from the right of the political spectrum. “All funding of non-governmental organisations (NGOs) by the Federal Government must be reviewed. No state financing of leftist front organisations,” reads a line from the CSU’s 2025 election manifesto.[2] A widely publicised parliamentary inquiry by the CDU/CSU parliamentary group to the (then incumbent) federal government dated 24 February 2025, stated: “In the view of the questioners, the protests against the CDU of Germany constitute deliberate party-political influence immediately prior to the upcoming federal election, which is no longer covered by charitable law.”[3] Björn Harms wrote: “In reality, what gathers under the cloak of the term [civil society] are primarily left-wing lobby groups, dependent directly on the state’s feeding troughs. […] Despite their technically private legal form, these associations and lobby groups are routinely deployed as instruments of state policy.”[4]

Even within conservative circles, the allegation of CSOs interfering too heavliy in politcs remains contentious. That it targets progressive politically active CSOs is hardly surprising – these actors often identify political developments earlier and therefore appear more progressive, which does not suit those who seek to conserve the status quo or restore what has been lost. However, the allegation strikes at the heart of civil society’s self-conception, which explicitly includes the active shaping of the commonwealth, a role protected by the catalogue of fundamental rights enshrined in the Constitution. The allegation extends even to religious communities and serves two purposes: first, it seeks to exclude all but political parties from participating in the political decision-making process. This is not confined to Germany. MEP Monika Hohlmeier, parliamentary secretary of the CDU/CSU group in the European Parliament, remarked: “Our laborious, long-standing work on the Budgetary Control Committee, investigating problematic EU Commission contracts with NGOs, is finally bearing fruit. […] The acronym NGO must not be a blank cheque for arbitrary and unregulated use of taxpayers’ money.”[5] This wording reveals the second aim: it is implied that those in power use public funding as a tool to preserve their power. This has always been, and still is, the case. But to derive from this a wholesale attack on civil society is unjust, shortsighted, and counterproductive in times of societal crisis.

Why Attack Civil Society?
There can be no doubt: civil society operates in the public sphere and holds a political mandate. The shaping and formation of political will is not the exclusive domain of political parties. The Constitution merely grants parties a participatory role in this process.[6] A long-overlooked or misunderstood indication of this may be found in tax law: “A corporation pursues charitable purposes if its activity is aimed at selflessly promoting the general public on […] moral grounds.”[7] Originally associated with personal morality, today we should speak of democratic morality – meaning that the guiding principles of our constitutional order must serve as the compass.[8]

Charitable status is therefore not primarily determined by the extent to which the state is “relieved” or “supplemented”, but by whether civic organisations form voluntary communities that stabilise society and ensure compliance with its principles – freely and independently.[9] The academic Colin Crouch, in 2011, assigned civil society the role of a watchdog, as checks and balances within state institutions were no longer functioning effectively.[10]

This watchdog role is contested by political parties. They do not want oversight – they want to be the overseers. But it is clear that political competition is being waged at the expense of a third party that has limited ability to defend itself. The funding policies at the heart of the accusations are crafted by political authorities and administrations – not by the CSOs themselves. Funding programmes, and particularly financial regulations (such as the Federal Budget Code – BHO), funding guidelines, and instructions for expenditure verification are all set solely by political and administrative bodies. CSOs that are even tangentially linked to public funding can attest to the strict, burdensome, and increasingly narrow regulatory framework they must navigate. If any party is to blame for misuse of funds for political purposes, it is not the CSOs, but the authorities coercing them into lobbying for pre-planned measures. Attacking those who are systemically precarious and forced to compromise in order to fulfil their mission, and portraying them as lawbreakers, is an abuse of power. For democratic parties to adopt such arguments is playing with fire. And the fact that political parties are adopting strategies laid out by someone like B. Harms who is linked to the far-right scene, is cause for deep concern.

Who Is Affected?
Those making such arguments are engaging in a broadside assault[11] on the third arena of public life, alongside state and market – civil society. For 30 years, the term civil society has become globally accepted, though notably avoided by its critics. This attack aligns with other restrictions and accusations seen globally: in Hungary and Russia, “foreign agents” are accused of political interference; in the USA, ideological accusations such as “woke” or “DEI” are accompanied by sweeping funding cuts.

In Germany, civil society comprises around 700,000 collective actors. Most are largely unaffected – focused on services, mutual aid, or community-building. The majority fund their activities through membership fees, philanthropic donations, corporate sponsorship, or foundation endowments. Some, like sports clubs, receive public subsidies due to the broad societal consensus around their public benefit.

As long as federal, state, and municipal authorities, and the state social security system honour their contracts and compensate CSOs (such as welfare organisations or school operators) fairly, the major service-providing CSOs are not targeted. However, looming fiscal constraints may put these relationships to the test. Authorities have always shown preference for their own interests, to mean that non-state contractors habitually experience budget cuts first. Furthermore, the line between sovereign and contractual action is often blurred to the advantage of authorities. The same applies to CSOs that have become state partners through outsourcing – e.g. in development cooperation.

The current allegations largely affect a relatively small segment of CSOs – those that irritate political parties and the state. This may change if the federal government were to challenge the fundamental principle that non-profit bodies, which do not distribute profits and serve the common good, are treated differently from for-profit companies and individuals for tax purposes. Terms like “privilege” or “tax benefit”, relics from the nomenclature of pre-democratic authoritarianism, are misleading, as they imply a discretionary favour rather than legal differentiation based on the rule of law[12].

Nonetheless, all CSOs must engage with these allegations – because they could be affected next, or because some criticisms, even when targeting specific organisations, may ultimately refer to civil society as a whole. For instance, the afore mentioned Harms’ definition (“Despite their technically private legal form […] instruments of state policy”[13]) applies equally to the Goethe-Institute, formally a CSO that serves the German government’s international cultural and educational aims, and many other CSOs subsidised or compensated by tax money over decades, due to public interest and parliamentary decisions. The Foundation for the International Charlemagne Prize of Aachen, responsible for awarding the prize since 1950, is also a politically engaged CSO.

What Needs to Be Done?
Recent developments have triggered a notable surge in solidarity within civil society. Its self-understanding as a shared, independent, autonomous, and clearly defined arena vital to democratic resilience has grown stronger. Civil society must now decide how to defend itself against attacks and contribute constructively to solutions. It must move beyond mere complaint and develop a joint stance to assert its place in the public sphere – constructively and independently.

The state’s obligation to fund independent CSOs through statutory mechanisms is not in question. But some CSOs have become overly dependent on these mechanisms and vulnerable to coercion. They must re-evaluate their watchdog role and reduce their susceptibility to attack, ensuring they can act from a position of independence in defence of democratic morality. The much-derided German corporatism – close state-CSO entanglement – has reached its limits. Civil society must seek greater financial independence to escape the pressure of an overbearing state and party system. This is not a question of permission, but of will.

Specific Goals for Civil Society and the State may be phrased as follows:

1. CSOs should be committed to promoting the public good in the sense of democratic morality, and not pursue party-political objectives or call for support of specific parties.
2. CSOs should voluntarily refrain from using public funds – received through contracts or grant agreements – for public protests for or against state measures.
3. CSOs should not be bound by a vague requirement of “political neutrality”, but rather be empowered to contribute actively to democratic solidarity.
4. Donor associations, foundations, and individual donors should prioritise supporting CSOs over supporting public institutions or municipal projects, as CSOs often have a greater need.
5. CSOs must advocate for charity law to be updated to meet the needs of a 21st-century open society, ensuring the principle of the rule of law replaces the outdated notion of state “privilege”.
6. This reform must prioritise ethical commitment to a free society and the principles of human and civil rights, the rule of law, and democracy, over an expansive list of charitable purposes[14].
7. Civil society, with support from academia, advisory institutions, and non-state funders, must initiate a creative process to diversify and improve funding models – both through self-generated income and innovative fundraising. Independence through a mixed funding model should be the goal.
8. CSOs must learn to highlight the issues they address rather than their own needs and achievements in public communication.
9. Private funders must learn that supporting ongoing processes, including fundraising itself, is often more impactful than funding isolated projects.
10. All stakeholders must work to raise public awareness – through media and communication – about civil society’s vital role in the public sphere.

Conclusion
In times like these, the soft power[15] of civil society plays a crucial role in maintaining democracy’s resilience as a political and social model. Referring to the political scientist cum politician Ralf Dahrendorf, the academic Helmut Anheier asserted: “Organised civil society will have to moderate the transnational conflicts of the early 21st century to counteract the overload of state and market in a globalised world.”[16] For this, it needs support – not obstruction.

Dr Rupert Graf Strachwitz is the founder and Senior Strategic Advisor of the Maecenata Foundation.

This text is the product of a collaborative process including: Ansgar Gessner / Dr Sascha Nicke (Maecenata Foundation), Dr Marita Haibach, Dr Philipp Hoelscher, Philipp Hof (Haus des Stiftens), Susanna Krüger (Social Entrepreneurship Netzwerk Deutschland), Larissa Probst (German Fundraising Association), Michael Seberich (Wider Sense).

The funding of this publication project by the Kurt and Maria Dohle Foundation is gratefully acknowledged.

This is a translation of a paper originally published in German as  ‘Mit Steuermitteln gegen den Staat agitieren?‘ (Observatorium no. 82)

[1] In the relevant documents and publications, these organisations are usually referred to as NGOs (non-governmental organisations). This term is misleading. Originally coined in 1948 in the context of accrediting organisations to the United Nations Economic and Social Council (ECOSOC), it is now deliberately used in a disparaging sense (“non-governmental organisation = not a proper dialogue partner”).
[2] CSU: Deutschland wieder in Ordnung bringen – Unsere Bayernagenda zur Bundestagswahl 2025. Munich 2025, p. 21.
[3] Deutscher Bundestag, 20. Wahlperiode, Kleine Anfrage der Fraktion der CDU/CSU: Politische Neutralität staatlich geförderter Organisationen“. BT-Drucksache 20/15035  24 February 2025, p. 1.
[4] Björn Harms: Der NGO-Komplex – Wie die Politik unser Steuergeld verpraßt. Munich: LMV 2025, p. 27. According to the dust jacket, Harms completed a traineeship with the conservative weekly Junge Freiheit and now works for the online medium NIUS, which is categorised as right-wing populist and right-wing conservative.
[5] Herbst/Hohlmeier: Aufdeckung problematischer Verträge mit NGOs zeigt Resultate. CDU/CSU-Gruppe in der EVP-Fraktion im Europäischen Parlament. 8 April 2025: https://www.cducsu.eu/artikel/herbsthohlmeier-aufdeckung-problematischer-vertraege-mit-ngos-zeigt-resultate (accessed 16 May 2025).
[6] Article 21(1) of the Constitution (Grundgesetz).
[7] Section 52(1) sentence 1 of the German Fiscal Code (Abgabenordnung – AO).
[8] See applicable German constitutional and international law, for example:

• Universal Declaration of Human Rights, adopted by the United Nations General Assembly on 10 December 1948,
• Basic Law for the Federal Republic of Germany, in force since 23 May 1949,
• European Convention on Human Rights, international treaty of the Council of Europe member states, concluded on 4 November 1950 (Germany has been a party since 5 December 1952),
• Charter of Fundamental Rights of the European Union, anchored in Article 2 of the Treaty on European Union of 1 December 2009.

[9] See: Rupert Graf Strachwitz: Die neue Sittlichkeit.In: DIE STIFTUNG, no. 1/2023, p. 7.
[10] Colin Crouch: Das befremdliche Überleben des Neoliberalismus. Berlin: Suhrkamp 2011, pp. 222, 232.
[11] See in detail: Rupert Graf Strachwitz: Generalangriff auf die Zivilgesellschaft – Überlegungen für die Entwicklung der Demokratie. Berlin: Maecenata (Opusculum No. 199) 2025.
[12] Recently, Donald Trump has spoken of a form of privilege which he himself can grant or revoke when taking action against universities or organisations.
[13] See footnote no. 4.
[14] Swiss charity law completely forgoes specifying individual charitable purposes and ties tax assessment solely to the constitutional goals of the Swiss Confederation and to formal criteria, such as the non-distribution constraint.
[15] The term soft power was coined by American political scientist Joseph Nye (1937–2025).
[16] Helmut Anheier: Zivilgesellschaft und Krisen – Dahrendorfsche Reflexionen. In: Leviathan, Vol. 40, No. 3/2012, pp. 421f.

• civil society
• democracy
• funding