Members of the European Parliament have agreed to consider simplifying the way the European Commission funds charities and allowing them to count gifts in kind and volunteering towards match-funding targets.
Filippo Addarii, executive director of the Euclid network - a European network of third sector leaders - said the commission would publish new financial regulations at the end of 2010.
Addarii said he hoped the new regulations would include reforms to charity funding, including permission to measure the value of gifts in kind and volunteering, and to use it, rather than cash donations, to meet the commission's requirement that the value of its funding is matched by donations from elsewhere.
He said the reforms could also include increasing from 7 per cent to 20 per cent the proportion of grants from the commission that can be spent on indirect costs such as overheads, and scrapping the rule that charities cannot make a surplus from running services using European funding.
Addarii said the German MEP responsible for writing the regulations, Ingeborg Grassle, had asked Euclid to produce a briefing about the proposed reforms, which would be discussed at a cross-party round table in September.
"The European Union is one of the largest donors for civil society in the world," said Addarii. "But the funding rules that regulate its grants are some of the most complicated in the funding arena.
"I can see a consensus emerging in the commission about the need for these reforms, so I'm confident we will make a breakthrough."