Philea and Transnational Giving Europe have recently published a collection of case studies about the 6 major obstacles to cross-border philanthropy. “Removing Obstacles to Cross-Border Philanthropy; The Time Is Now” urges the EU to take further steps to facilitate cross-border donations.
The 6 barriers to Philanthropy:
The European philanthropy sector counts 186,000 organisations with an annual expenditure of over 54.5 billion and a million of donors. Despite this and the contribution of $16 billion in cross-border philanthropic outflows, the sector remains challenged by administrative, legal and fiscal barriers.
- Discriminatory tax treatments and complex procedures. European tax-systems pose a real challenge to donors and organisations when it comes to donations and allocating assets abroad tax-effectively.
- Difficulties in accessing banking services. Organisations have seen their attempt to open a bank account in a foreign country being met by closed doors and reticence. They have also reported bank’s transfer delays of charitable donations to foreign organisations.
- Lack of legal recognition of foreign organisations. Foreign organisations are required to open a branch in the respective country before being able to enter into contracts. Complying with different legal requirements regarding fundraising has also lead organisations to end projects in some countries.
- Impossibility of cross-border merger of foundations. The EU and most European states lack of a regulation on cross-border merger forcing philanthropic organisations to looking for other ways to finalise the process.
- Burdensome process to transfer seat or perform conversion cross-border. Philanthropic organisations cannot shift headquarters across borders due to a lack of regulations both at EU and at state level.
- Restriction on foreign fundings. The foreign funding agent restriction is a legal requirement to register as foreign-funded organisations leading to a stigmatisation of their fundings and activities.
The way forward
Despite the considerable barriers, the latest policy developments give some hope. The European Commission has adopted in June 2023, a previous proposal for a Council recommendation on developing social economy framework conditions. European states taxation framework, non-discriminatory taxation of charitable organisations and donors are also discussed in two annexed documents.
Download the report here: Removing Obstacles to Cross-Border Philanthropy; The Time Is Now