10 November 2021

Philanthropy on the central stage at EU Slovenian Presidency Social Economy Week

On October 13th Delphine Moralis spoke at the EU Social Economy week organised during the Slovenian Presidency. She outlines the diversity of the sector stating that philanthropy refers to foundations, family, corporate, community foundations and individual funders using their own financial and non-financial resources for the public good. Philanthropy supports programmes in areas from which we all benefit, such as education, health, science, environment, culture and international development. It works alongside other civil society organisations, complementing government and private sector initiatives. The distinctive value of philanthropy lies in its ability to respond in real time to the critical challenges facing our societies, while simultaneously taking a longer-term view as well as in its independence and freedom which can entail flexibility and systemic approaches to embrace the complexity of today’s challenges.

The economic contribution of philanthropy is significant. There are more than 147,000 philanthropic organisations in Europe with an accumulated expenditure of nearly €60 billion. The combined assets of European public-benefit foundations is over €511 billion.

Foundations come into the social economy sphere from two angles: as social economy actors in their own right and as funders and supporters and partners of other social economy actors.  Differently from the past when philanthropic organisations used to handle the grant giving and the investment of the endowment in a very separated way, foundations and philanthropic organisations are increasingly looking into how to align their asset and endowment investments with their public benefit missions.

In today’s context, impact investing is a concrete choice for a growing number of foundations both for the investment side and spending/grantmaking side, with a growing number of philanthropic organisations interested in using also their grantmaking (non-repayable donations) or operational programmes to support social business/green business by giving them financial support/grants/loans or by lending organisational support (e.g. developing skills or improving processes).

Foundations and philanthropic organisations can partner to co-grant and co-invest into EU policy areas. However, the EU could facilitate a more enabling environment for such action. Some national laws require preservation of the value of the endowment of a foundation – whereas mission-related investment or investment in social enterprises/small start-ups do not always generate the required returns (or are considered too risky as investments) – and some national laws do not permit the giving of loans by public-benefit organisations or any other programme activity that generates income on the programme side. EU and national measures to ease/stimulate more foundation engagement in impact investing into sustainable business and more mission-related investments could be considered.

Foundations could also provide different support methods. EU instruments could potentially offer a complementary mix between nonfinancial support, financial support via programme side or asset allocation/investment money.

The EU Social Economy Week also saw a visionary debate on cross-border philanthropy at which Georgia Efremova from the EC DG ECFIN, Gianluca Salvatori, Fondazione Donor Italia Onlus, Daniel Ferrel-Schweppenstedde, Charities Aid Foundation, Frédéric Theret, Fondation de France, and Hanna Surmatz, Co-lead of the Dafne and EFC Philanthropy Advocacy initiative discussed the approach to reinvent capitalism via new social business methods and new tools/approaches also for philanthropic actors including impact investing, mission related asset allocation and new co-investing and co-granting opportunities.  Speakers of the session, which was presented and moderated Primož Šproar, CEO, Fund 05 – Foundation for Social and Impact Investment, stressed that the philanthropic sector would benefit from better implementation of the non-discrimination principle, which does not yet fully apply to public-benefit organisations and their donors. It is important to ease tax effective cross-border donation from individual and corporate donors to social economy actors, as well as ease their tax-effective asset allocation/investment of the endowment into social economy actors.

In addition to the panel discussions and plenary sessions, the Gala of the European Social Economy Awards 2021 also took in the context of the Social Economy Week. The EU Social Economy Awards are an initiative of Social Economy Europe to boost the visibility of the social economy, its organisations and entrepreneurs and the collective solutions they propose to today’s most pressing societal, environmental, economic and technological challenges.