Today, the Philanthropy Advocacy initiative – led by Dafne and EFC –launched the most comprehensive overview to date of the legal and fiscal regulation of foundations and philanthropy in Europe. The 2021 “Comparative Highlights of Foundation Laws” provides a broad, comparative overview of the diverse legal and fiscal environments of foundations – across 40 countries – as well as identifies relevant trends and developments. 

The report looks into how philanthropy in Europe is regulated from a comparative perspective, what legal requirements exist to establish a foundation, whether foundations  can pursue only public-benefit or also private purposes, what governance requirements are set out, what forms of tax incentives exist to encourage philanthropic organisations and giving and how this differs across the continent or what impact anti-money laundering and anti-terrorism legislation has on the European philanthropy sector.

“While many governments have introduced tax incentives to stimulate philanthropic activity, an enabling environment  goes beyond tax incentives and includes the freedom to set up a public-benefit organisation, as well as the freedom of foundations and donors to operate without undue restrictions, either domestically or across borders,” says Hanna Surmatz, legal expert and co-lead of the Philanthropy Advocacy initiative.

The key findings include:

• Laws are failing to keep up with the constant evolution of philanthropy’s toolbox of actions. For instance, foundations are wanting to do impact investing, offering not only grants but also loans to social businesses, and they want to do more mission-related investments. The legal frameworks, however, are not keeping pace.
• Some countries have become more flexible when it comes to requirements for foundations’ capital. Ensuring that organisations have a reliable source of income to pursue a public-benefit purpose seems to have become more important than a fixed amount of starting capital.
• Self-regulation, codes of conduct and quality labels are being discussed as effective approaches towards internal and external governance alongside state supervision. In general, authorities have no discretion in the setting up process of foundations, but discretion may exist in the interpretation of certain legal terms.
• Overregulation seems to be an issue as public-benefit foundations are being lumped together with other entities in intensifying international EU and national regulation efforts such as policies developed to fight money laundering and terrorism financing, as well as tax evasion. This has led to foundations being subject to increased reporting and due diligence requirements.
• Barriers remain for cross-border philanthropy. While it is easy for goods and services to move freely across Europe, it remains a challenge for philanthropic organisations to move their seat and for individual and corporate donors to give across borders.

The Swiss country profile was written by SwissFoundations (Julia Jakob) in collaboration with Center for Foundation Law, University of Zurich (Prof. Dr. Dominique Jakob and Renata Trajkova).

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