18 November 2021

Debate: “A Single market for Philanthropy” to unlock the potential of philanthropy ‒ private resources for public good ‒ across the EU

“Philanthropy can help us catalyse a more holistic response to the vast challenges that lie ahead, from climate change to vaccination and social innovation.” Those were the words of Mairead McGuinness, the European Commissioner for Financial Stability, Financial Services and the Capital Markets Union, at the European Parliament plenary session of 21 October 2021. The plenary welcomed Commissioner McGuinness on behalf of Commissioner for Innovation, Research, Culture, Education and Youth, Mariya Gabriel to start a debate on the proposal to build a “single market for philanthropy”.

The Commissioner elaborated on the effects of natural disasters and Covid-19 on the arts and culture sector, which constitutes one of the key areas of operations for philanthropy. She noted that foundations are part of the treaty as is their pursuance of public interest. Therefore, any restrictions of the philanthropic sector should be risk- and evidence-based and proportionate. She concluded by referring to two upcoming studies looking into the barriers for cross-border social economy actors, including philanthropy, in the context of the Social Economy Action Plan, which is set to be released on 8 December 2021.

The political group representatives welcomed the Commissioner and her intervention. MEPs representing the major political groups, PPE, S&D, Renew and the Greens/ALE, highlighted the added value philanthropy brings to our societies.

PPE representative MEP Seán Kelly reiterated the support philanthropy brings to the core values of the EU institutions, including upholding cohesion. As rapporteur for the InvestEU Fund, he referred to the potential to build on InvestEU to support the single market for philanthropy. MEP Milan Brglez on behalf of S&D highlighted the local embeddedness, agility and solidarity at the heart of philanthropy. He noted the complementarity of the philanthropic sector to the state. Furthermore, he stressed the diversity of non-profit organisations, which despite their varied nature, often have common objectives. There remains, however, fragmentation in terms of legal requirements and tax rules. He finished his intervention by highlighting the need to be in constant dialogue with the sector if the EU institutions are to regulate it.

S&D was followed by Renew representative MEP Ilhan Kyuchyuk, who intervened on behalf of Vice-President Nicola Beer. The Renew group highlighted the diverse contributions of philanthropy, which beyond donations also include time resources, expertise and networks. MEP Kyuchyuk stated that philanthropic organisations act in the space where neither government nor the commercial sector act, experimenting with innovative solutions. He invited the plenary to imagine the huge potential of philanthropic organisations if legal, administrative and fiscal barriers were to be removed – a potential in terms of investing their assets across borders, making loans to social enterprises, and giving across borders.

MEP Sergey Lagodinsky, on behalf of the Greens/ALE further highlighted the importance and diversity of the philanthropic sector. He referred to the many small and large foundations dedicating their work to combating hate, fighting climate change and supporting people in need. However, he noted that the non-discrimination principle strengthened and proposed by the European Court of Justice does not yet work in practice, and he called on the mitigation of financial burdens for cross-border finances. Referring to the ongoing JURI initiative for a supranational legal form for European Associations, he ended his intervention with a call for the creation of supranational legal forms and regulatory regimes.

Finally, political groups ID, ECR and The Left took the floor, providing a narrower view on philanthropy. These groups were concerned about new regulations hampering giving, hence ignoring the existing duties of EU Member States to implement former EU Court of Justice decisions setting out the non-discrimination principle for charitable organisations as opposed to commercial entities, which already operate freely in the EU single market. The left side was more outspoken about the most visible players in philanthropy, in particular big philanthropy and donors, therefore not considering the complementarity of public-benefit organisations to state interventions in Europe and the diversity of the philanthropic sector which also includes thousands of community foundations.

Commissioner Mairead McGuinness closed the session by responding to some of the concerns raised. She reiterated the willingness of the European Parliament to support philanthropy, and not to introduce red tape. She finished the debate by noting that public-benefit foundations are considering new ways of funding their work, and there is a need, therefore, to investigate financial tools which can make them thrive in the long-term.

Philanthropy Advocacy welcomes the debate on the single market for philanthropy in the European Parliament and remains available for further conversations on how to transform this into policy. The philanthropic sector should have its rightful place in the EU single market. The single market for philanthropy should be implemented with the necessary dialogue with the sector, as pointed out by several speakers at the European Parliament plenary debate on the matter. We are looking forward to continuing the dialogue with EU policymakers on how to untap the full potential of philanthropy by removing legal, administrative and fiscal barriers that create a burdensome operating environment.

Resources:

Please find more information on the single market for philanthropy that is strongly supported by the sector in this European Philanthropy Manifesto as well as the legal analysis across 40 countries in Europe in this recent “Comparative Highlights of Foundation Laws”, published on 1 October 2021.

By Hanna Hanses, Philanthropy Advocacy

Hanna Hanses is Junior Manager at Dafne (Donors and Foundations Networks in Europe) in Brussels. Since joining Dafne in 2019, she has been part of the Legal Team of Philanthropy Advocacy, a joint initiative of Dafne and the EFC (European Foundation Centre). She holds an LLM International Human Rights Law from the University of Essex, UK, focusing her thesis on climate-induced displacement. She received her LLB Bachelor in Law from Ghent University, Belgium. Hanna brings with her a multi-cultural experience, having lived in inter alia the Democratic Republic of Congo, Switzerland and Belgium.