11 April 2019

Philanthropy Manifesto: a milestone on the road towards a Single Market for Philanthropy

Guest post  on Alliance Magazine by Massimo Lapucci, Secretary General of Fondazione CRT and Chair of the EFC

On 20 March, in the presence of over 60 representatives from the EU institutions, the European Commission’s Kerstin Jorna (Deputy Director General of DG ECFIN) and Michael O’Flaherty (Director of EU Fundamental Rights Agency (FRA)) provided clear support to the new Philanthropy Manifesto.

As part of the EFC’s joint work with DAFNE on the Philanthropy Advocacy Initiative, last year we commissioned an academic study, ‘Enlarging the space for European Philanthropy’ which we used to develop this Philanthropy Manifesto ahead of the European elections in May 2019. It includes four clear recommendations to policymakers:

  • Recognise philanthropy
  • Reduce barriers to cross-border philanthropy
  • Enable and protect philanthropy
  • Co-grant and co-invest for public good

The launch of the Philanthropy Manifesto is a real milestone for our sector and the key recommendations pave the way for the future. At the launch Kerstin Jorna took us on a journey from Barnier to Juncker and into the future of EU policy, concluding that the European Commission sees great opportunities for new ways of cooperating with institutional philanthropy including using the new financial instruments within Invest EU. Michael O’Flaherty stressed that philanthropy, as a crucial part of civil society, is nonetheless struggling with challenges around its operating space, for example because of foreign funding restrictions.

Philanthropy already does a great deal, and it could do a great deal more were it able to enjoy a better operating environment, especially across borders. Institutional philanthropy already supports and invests in a diverse range of areas which benefit people and communities in Europe and around the world. Philanthropy has a clear complementary role vis à vis the public actors and partners with them in areas of common concern. Philanthropy’s expertise and role as catalyst are key ingredients in this recipe.

Institutional philanthropy comes in all shapes and sizes and one of the most common misunderstandings is that philanthropy means just giving money, because philanthropy has much more to offer than its financial resources. Policymakers could and should take our sector into account when they are looking for partners and advisers as well as co-funders and investors. Wealth can also be accumulated in the valuable currencies of knowledge and experience.

Philanthropy, like other sectors, is becoming more international both in its outlook and activities. Philanthropic organisations are more and more seeing the advantages of working together with others – within their own countries as well as across borders (over 60 per cent of EFC members are active outside their countries of origin). There is also a growing appetite and appreciation for pulling together on European issues (the future of Europe; sustainable agriculture; Roma, to name just a few) or global issues such as climate change.

Philanthropy understands that issues seldom recognise borders. But therein lies the challenge: the diversity of the regulatory situation across the EU and barriers for cross-border work. There are complex laws and barriers both old and new. We have seen some tightening of rules for philanthropy and wider civil society, even in the EU. Foreign funding restrictions are being introduced under our noses – in the middle of the EU – in Hungary. There are also attempts to introduce overly tight public reporting measures such as a recent transparency act proposal in the Netherlands. It’s essential that national and European policymakers stick to European values, rights and freedoms. We, as philanthropy, do not (yet) have a level playing field compared to companies and business and thus we cannot move and operate as freely across borders.

Latest estimates suggest that there are some 147,000 foundations in Europe; giving €60 billion per year; and managing €511 billion in assets and endowments. This is small compared to, say, state resources, but philanthropy is not and never will be a replacement for government or state spending (or other responsibilities). Institutional philanthropy is a diverse tool set for addressing specific areas of interest or concern. We have a long philanthropic tradition in Europe and yet a young and thriving foundation sector, with the majority of foundations established from the late 90s onwards. Half of the EFC’s members were set up after 1990.

But as we scrutinise the effects that others have on our sector, so too must we look to ourselves and what we can do to increase our impact and expand our ‘philanthropic toolbox’. In the pursuit of its social aims, far from being something that replaces existing approaches and traditional instruments (like grantmaking), the so-called social economy, including social finance and namely, social impact investing, can offer more tools to philanthropy’s skillset.

Institutional philanthropy strives to achieve impact and greater social investment. All we ask is that policymakers recognise our potential and help us find solutions to allow philanthropy to bloom.