Introduction

“Philanthropy in Europe is rooted in a rich past and is moving towards a promising future,” claimed Norine MacDonald and Luc Tayart de Borms[1], writing in 2008. Can the same claim be made today? A 2015 report from the Observatoire de la Fondation de France[2] notes, “everywhere in Europe, the foundation sector is flourishing,” while the almost universal presence of tax reliefs signals the fact that all European states now recognise the role of private philanthropy (Sweden was the last country to introduce such a mechanism in 2012).

Individual giving in all its forms is probably as old as human interaction, while the origins of foundations in many European countries are to be found in medieval times. At the same time, Europe is a diverse continent and giving is conditioned by differences in history and culture, economic and political conditions, and taxation rules.

MacDonald and Tayart note four different models within the continent’s span:

•   the Anglo-Saxon model, where civil society organisations (CSOs)[i] are seen as a counterweight to government
•   the Rhine model which, by contrast, involves a form of ‘social corporatism’, with CSOs often contracted to the state
•   the Latin/Mediterranean model, where the church is seen as responsible for charity and the state for service provision
•   the Scandinavian model based on a strong welfare state but with a strong tradition of volunteering.

Reliable data about giving in Europe is notoriously difficult to obtain. The different philanthropic traditions noted above mean that there is no single accepted definition of philanthropy, or legal or reporting structure, and in some cases figures represent the best available estimate. This caution should be borne in mind when interpreting any statistics about European philanthropy. Moreover, giving across Europe comes in many shapes and sizes from individual ‘household’ giving, the donations of wealthy individuals and families, institutional (and often long established) foundations and giving by companies.

In this brief overview, therefore we can’t hope to do justice to all the variants in philanthropy these differences give rise to. Instead, we will try to draw attention to some general patterns in giving, offer some insights into less researched countries in southern Europe, and highlight trends that are likely to shape the future of philanthropy in Europe.

[1] Norine MacDonald and Luc Tayart de Borms (eds) (2008) Philanthropy in Europe: A rich past, a promising future (Alliance Publishing Trust)

[2] Observatoire de la Fondation de France/CERPhi (2015) An Overview of Philanthropy in Europe, 2015.

[i] The London School of Economics offers the following definition of a CSO: ‘The term civil society organisation (CSO) is …inclusive of non-governmental organisations (NGOs), charities, trusts, foundations, advocacy groups, and national and international non-state associations.’

Charitable giving across Europe

Charitable giving across Europe

The focus on this report is on million-dollar donors, but it is useful to set their donations in the context of charitable giving at all levels.

For example, giving by individuals in 10 European countries studied by the Fondation de France[3] produced €24bn in 2014, nearly half of this (€11.5bn) coming from the United Kingdom[ii]. The next highest was Germany at just over €4bn. At the other end of the scale, Spain was among the lowest in terms of amounts, at €574m. The countries with the highest proportion of individual donors giving at all levels are the Netherlands (83%), Switzerland (70%) and Poland (70%). Generally, speaking, it is the countries of northern Europe where the highest proportions are to be found, those in the south the lowest. Only 30% of Italians, for example, were donors in 2014 and, in Spain, the figure was 19%.

In terms of trends, charitable giving on the part of the general public in Belgium, Germany and France is rising, while in Spain, the Netherlands and the UK it is declining.

The causes supported by the general public provide a useful snapshot of differences in attitude across the continent. For Germans, Belgians and Swiss, international and humanitarian aid is a priority, accounting respectively for 74%, 61% and 43% of donations. French and Spanish donors primarily give to “their most vulnerable fellow citizens”, as the Fondation de France report puts it. In France, 37% of donations go to social welfare initiatives, while combating poverty and programmes supporting children are the main concerns of Spanish donors.

[3]   Ibid. All the statistics given in the following two paragraphs are taken from this source.

[ii]    Unless otherwise stated, all statistics include the United Kingdom

 

Major philanthropy

Major philanthropy

Major philanthropy is split across Individual donors, Foundations and Corporate giving.

Individual donors

When it comes to high-net-worth donors, Europe is the region where most progress has been made in terms of the commitment of individual philanthropists, according to a 2015 survey[4].

The greatest challenge faced by major European philanthropists, according to this survey of some 400 individuals, was choosing both the cause and the right organisation to fund. The top two causes among respondents were health (59%) and the environment (57%).

Foundations

According to Donors and Foundations Networks in Europe (DAFNE)[5], there are some 148,000 European foundations, with combined assets in the region of €433bn and expenditure in 2015 of nearly €60bn. Germany has the largest foundation sector, both in terms of numbers (over 20,000) and expenditure (€17bn in 2012). Six other European countries have at least 10,000 registered public benefit foundations with the second and third largest sectors, in terms of numbers, to be found in Poland and Hungary. These figures are best treated as indicators only, as they refer to what are termed ‘public benefit foundations’. While the term may be self-explanatory, its interpretation in different jurisdictions is not, and the definition of ‘public benefit’ status varies from country to country.

Though the concept of the foundation has a long history in many European countries, modern European foundations are primarily characterised by their youth, with foundation numbers increasing rapidly over the last two to three decades. Half of Swiss foundations, for example, are less than 20 years old. Between 2001 and 2014, the number of French foundations more than doubled. In Germany, which has the largest number of foundations in Europe, more than 70% of them were founded after reunification, and the sector continues to grow. In Belgium, more than half the foundations in existence in 2012 were founded after 1995, and the sector has expanded rapidly in the last decade.

European philanthropic capital is extremely concentrated, mainly as a result of some very large foundations: in Germany, for example, The Robert Bosch Foundation holds assets worth €5bn. German foundations account for one third of total foundation spending in Europe. In Italy, savings bank foundations, created in the 1990s, hold half of all Italian philanthropic assets, or 21% of the European total. At the other end of the spectrum, however, numerous foundations with very limited assets are also emerging.

Corporate giving

There is an increasing expectation that companies should play a part in the solution of social problems, a view that is enshrined in the UN’s recently launched Sustainable Development Goals (SDGs) . In line with this, the number of corporate foundations and the amount of their giving seem to be increasing across the continent. Composite figures for corporate giving across Europe are not available but some examples can serve as a rough index. In 2012, German corporate foundations had higher payout rates than other foundations in the country – 43% of corporate foundations spent more than €100,000, while the figure for other types was 37%. (In the UK, according to the Association of Charitable Foundations, the top 50 corporate foundations gave grants worth £232.3m).[6]

While corporate foundations can make grants in any geographic or thematic area, in practice their giving is often closely linked to a company’s area of work. There are some good practical reasons for this, since similar interests mean that a foundation can draw on the expertise and the relationships of the company. Such support can also mean that the amount of grant funding understates the value companies provide to their foundations.

Moreover, with the evolution of corporate social responsibility (CSR) practices, it’s likely that the majority of corporate giving is no longer just in the form of grants, but also in the provision of services, expertise or administrative support, a trend which seems likely to increase.

[4]    BNP Paribas (2015) Individual Philanthropy Index, 2015.

[5]    Donors and Foundations Network Europe, European Foundation Sector Report 2016 (DAFNE), http://dafne-online.eu/wp-content/uploads/2016/10/PBF-Report-2016-9-30-16.pdf.

[6]    Association of Charitable Foundation, Giving Trends 2015 (ACF).

 

Spotlight on Southern Europe

Spotlight on Southern Europe

Southern Europe has borne the brunt of the recession and, in some cases, the migrant crisis, too, and this has shaped the recent character of its philanthropy.

Spain

As noted above, individual household charitable giving by Spaniards is among the lowest in Europe and is trending downwards, having dropped 47% in eight years. The most likely cause is the recession, though mistrust of charitable organisations may play a part. Only 33% of Spaniards express trust in the third sector, whose development in the country has been relatively slow. Generosity and solidarity are traditionally expressed more within family networks.

By contrast, however, the foundation sector in Spain seems to be relatively thriving. DAFNE's enquiry found 8,866 active foundations which had spent €8.07bn in 2014, the third highest foundation expenditure rate in Europe.

In keeping with the general European trend, most Spanish foundations are young.[7] They are also mostly small (just under half had assets of €150,000 in 2009), and operate their own programmes, rather than making grants (74.6% devoted their resources to operating their own programmes, against 31.9% who have grant-making as their main activity). Their biggest areas of interest were culture and recreation (46.5%) and education and research (52%).

Italy

Though only a small percentage of Italians give to charity, they give relatively healthy amounts - €2.6bn out of the €24bn total calculated by the Observatoire de la Fondation de France study for individual giving in European countries. Italian foundations, too, rank among the highest in terms of amounts given. Though their numbers are relatively modest at 6,220, they gave €9.95bn in 2011, the second largest amount among European foundation sectors. (For a comparison, according to the same set of statistics, the UK’s 12,400 foundations gave €4.4bn).

Carola Carazzone of ASSIFERO, the umbrella body for Italian foundations, points to important distinctions from the general European picture, in particular between the 88 banking origin foundations and 104 private family, corporate and community foundations. The number of banking foundations is fixed by law, so it’s the non-banking segment that is growing. Banking foundations also dominate the sector having, on the whole, “big endowments…while the private family, corporate and community foundations have small endowments compared to the big European ones.” Another distinguishing feature is that over half of the non-banking foundations don’t have professional staff.

Carazzone notes that, “funders are becoming more aware of their innovative role in taking risks, experimenting, supporting innovation, moving from just donating to investing in social change, especially on the following issues: ageing, housing, refugees.” But she adds a caution: “For the Italian funders today the threat is pandering to the growing requests for filling the gaps left by the retreat of government and public expenditure.”

An emerging form of philanthropy in Italy is the community foundation, a form pioneered in the US which aims to raise funds from local communities and spend them to meet local needs. Virtually unknown there before the turn of the millennium, there are now 27, many of them supported or founded by the local authority or a larger foundation (15 were established by Fondazione Cariplo, for example, in the early years of the century). New forms of community philanthropy are also emerging. While their emphasis remains on local assets, they are making creative use of those assets, rather than focusing on building endowments and giving grants, For example, the Foundazione di Comunità di San Gennaro, established in 2016, is using the artistic heritage of the San Gennaro Catacombs and street art as a means to transform society.

Greece

Writing in Alliance magazine last year, Sotiris Laganopoulo, Secretary of the Bodossaki Foundation, noted that until 2009, “Greek philanthropic foundations’ priorities were mainly education, culture, people with special needs, the protection of the environment and the improvement of medical treatment – medical equipment for hospitals, renovation of hospitals.”[8]

The refugee and migration crisis has put an unprecedented strain on the country’s welfare services at the same time as the government’s capacity to meet these needs was greatly reduced. Greece has struggled to manage the arrival of immigrants and refugees, for whom Greece has been the main entry point. Aid requests to non-governmental organisations (NGOs) have significantly increased during a time when available state resources have diminished. NGOs had traditionally received most of their funding from the state as well, so a heavy burden has now been placed on private funders.

Under these circumstances, some have channelled the majority of their funds towards welfare provision and social inclusion – such as the 'Food from the Heart' programme launched by the Stelios Philanthropic Foundation  – while others looked abroad, attracting funds from foreign donors and acting as funding intermediaries. The Bodossaki Foundation, for instance, was appointed as the fund operator for the EEA Grants NGO Programme for Greece, ‘We are all Citizens’.

[7]    Sanzo-Perez, Rey-García, Álvarez-González (2016) ‘Professionalization and partnerships with businesses as drivers of foundation performance’, Working Paper #17, Universitta Catolica del Sacro Cuore, CRC, Milano, Italy. http://centridiricerca.unicatt.it/crc-Perez-Garcia-Gonzalez_n17_def.PDF 

[8]    Sotiris Laganopoulos, ‘Crisis in Greece leads to new paradigm in philanthropy’, Alliance, 3 August 2015.

Trends

Trends

There a number of key trends which are becoming apparent across Europe.

Venture Philanthropy

The growth of the European Venture Philanthropy Association (EVPA), the umbrella body of European venture philanthropy funds, attests to the increasing interest in venture philanthropy (VP). Established in 2004, as a ‘kitchen table’ group comprised of the five founders without staff, members or premises, the EVPA now has over 210 members from 29 countries. Roughly speaking, VP adapts the techniques of the private equity and venture capital worlds to the social sector. Its distinguishing methods are tailored financing, organisational support and impact measurement and management.

While initially VP’s identity rested on differentiating itself from ‘traditional’ grant-making philanthropy, EVPA members now include a number of well-established foundations such as the King Baudouin Foundation, the Adessium Foundation and Bertelsmann Stiftung.

Impact Investing

Social enterprise, social investing, socially responsible investing – these terms, seldom clearly differentiated – are part of the same general trend as VP, which emphasises investment, rather than donation. The expectation is of social returns and/or environmental returns, as well as a financial return. The trend is most highly developed in the UK, where the social investment market is worth an estimated £202m[9] and where the government-backed Big Society Capital has been launched to stimulate the market. Elsewhere, the market is smaller, though increasing. In Germany, the state development bank, KfW, launched what it called a “new instrument for financing the growth of social enterprises” in 2011.[10]

Cross-border giving

The existence of organisations and networks like the European Foundation Centre (EFC), Network of European Foundations (NEF) and DAFNE (see above) shows the pan-European perspective of many foundations. In addition, initiatives such as Transnational Giving Europe, a partnership between major foundations throughout Europe, have made it possible for individual and corporate donors from 17 European countries to benefit from the tax reliefs in their own country when supporting a public benefit organisation in one of the other 16 countries. The European Court of Justice has developed a general non-discrimination principle, according to which an EU-based foreign public benefit organisation (PBO) is entitled to hold the same tax-privileged status as a national PBO, provided that it can be shown to be comparable.[11]

However, cross-border giving suffered a serious reverse in 2014 when the EU scrapped a proposed European Foundation Statute following a failure among member states to reach a consensus on it. The proposed Statute would have made it easier for European foundations to operate across borders. What the effect of the UK’s referendum vote to leave the EU will be on this question is uncertain. According to the ACF[12], funders’ attention in the UK is principally focussed on what the referendum revealed about the UK, such as addressing the divisions it highlighted. There is no suggestion that funders with the pan-European commitments or interests will falter in those interests, though it is impossible to say what the regulatory picture will look like once the break with the EU is finalised.  

Overall, the landscape of European philanthropy is dynamic. In addition to the major trends noted in this report, and as the Observatoire de la Fondation de France notes, “new ways of giving... are changing the philanthropic landscape.” They are likely to be an important area for the future.

[9]     ‘The rise of European Social Investment,’ the Guardian, 25 October 2013.

[10]    www.kfw.de/KfW-Group/Newsroom/Aktuelles/Pressemitteilungen/Pressemitteilungen-Details_9718.html.

[11]    Transnational Giving Europe/EFC (2014) Taxation of Cross-border Philanthropy in Europe after Persche and Stauffer: From landlock to free movement? (TGE/EFC).

[12]    Association of Charitable Foundations, EU Referendum: What next for charitable foundations? 20 September 2016, www.acf.org.uk/news/eu-referendum-what-next-for-foundations