The Donors and Foundations Networks in Europe (DAFNE) and the European Foundation Centre (EFC) have recently published the study Enlarging the Space for European Philanthropy, that undertakes a scanning of the horizon of philanthropy’s operating space. Percorsi di secondo welfare has interviewed the author, Oonagh B. Breen, Professor of Law at UCD Sutherland School of Law, about European philanthropy, the emerging trends and the potential impact on social innovation. Here you can find the Italian version of the interview.
Focusing on social innovation, several researchers agree that the legal and fiscal framework of a country can limit or boost the development of socially innovative practices. Which factors, in your opinion, can boost the action of philanthropy as a social innovation enabler?
Social innovation often starts small with the potential to grow over time. The route to that growth can take several different paths – including, among others, building a delivery network (via collaborations, franchises, licences); growing the organisation to deliver; and entering into strategic partnerships. When it comes to the action of philanthropy as a social innovation enabler, one of the best ways for philanthropy to support social innovation is through strategic partnerships whether this be through direct or indirect support. My Report for EFC and DAFNE (Enlarging the Space for European Philanthropy (Brussels: EFC and DAFNE,16 January 2018) discusses the importance of the emergence of social investment and venture philanthropy as direct means to facilitate philanthropic growth in the social innovation space. It highlights the new moves at European level to support social entrepreneurship while also reporting on the national barriers that exist in some countries to philanthropic organisations to engage fully in the support of social innovation programmes. An interesting example of the latter perspective on encouraging indirect support of social innovation can be found in Ireland where the Government created the Social Innovation Fund Ireland (SIFI) in 2013. The SIFI is the venture capital fund of the social innovation sector, the purpose of which to find and back innovative solutions that address critical social issues in Ireland. Every Euro that is donated in private philanthropy is matched by a Euro from the Department of Rural Affairs and Community Development from the Dormant Accounts Funds. In this way we have both the state and the non-profit sector working together to create an enabling environment for social innovation.
Emerging philanthropy trends requires civil society to be even more skilled to be effective. But in a more competitive system, the smaller and less developed organisations can get left behind. A problem that could be worsened by a broader cross-nation philanthropy, since organisations will have to compete with organisations from countries where philanthropy is better developed. Do you agree? Which interventions could prevent from such a risk?
Philanthropic practice is constantly evolving, and this is a good thing! The importance of being a part of a European network, understanding how the law changes and what best practices are is particularly important for philanthropic organisations no matter what size they are or in what jurisdiction they are based. To this end, representative bodies like the European Foundation Centre and DAFNE (the Donors and Foundations Network in Europe) provide excellent opportunities to members to keep abreast of changing legal and fiscal frameworks and new trends in philanthropic giving. Thus, in Italy, Associazione di Fondazioni e di Casse di Risparmio (ACRI) and Assifero (Associazione Italiana delle Fondazioni ed Enti della Filantropia Istituzionale) are both members of DAFNE and are plugged into this important network of donors, spanning 26 countries.
Cross-border philanthropy and free movement of philanthropy is something to be encouraged, not feared. My Report for EFC and DAFNE (Enlarging the Space for European Philanthropy (Brussels: EFC and DAFNE,16 January 2018) found that legal and fiscal obstacles were more of a threat to philanthropic giving: “These obstacles take many forms, ranging from restrictive foreign funding legislation, changes in tax laws, additional administrative burdens (substantially increasing the cost of making a grant and the time required to process it) as well as difficulties in cross-border financial flows, caused by ongoing incidences of bank de-risking, even within the EU. The practical effects of these obstacles are that smaller grants become so cost prohibitive that that they will no longer be made, edging out smaller foundations from international grant-making. Even for those larger foundations that can comply, philanthropic momentum can be lost.” (at 20)
Which are in your opinion the peculiarities of European philanthropy?
European philanthropy has a long pedigree and a rich history. Given the different cultural practices, legal systems, economic and political conditions, not to mention, tax rules, the approach to philanthropy is not necessarily a harmonised one, nor should it necessarily be so! There is no one-size-fits-all portrait of the European philanthropist or donor, nor are there dominant models. Writing in 2008, Norine MacDonald and Luc Tayart de Borms (eds) Philanthropy in Europe: A rich past, a promising future (2008, Alliance Publishing Trust) identified four different models of European philanthropy:
1. the Anglo-Saxon model, where civil society organisations (CSOs) are seen as a counterweight to government;
2. the Rhine model which, by contrast, involves a form of ‘social corporatism’, with CSOs often contracted to the state;
3. the Latin/Mediterranean model, where the church is seen as responsible for charity and the state for service provision;
4. the Scandinavian model based on a strong welfare state but with a strong tradition of volunteering.
Another feature of European philanthropy is the concentrated nature of its capital, mainly as a result of very large corporate foundations: German foundations account for one third of total foundation spending in Europe (the Bosch Foundation alone holds assets worth €5 billion). In Italy, savings bank foundations, created in the 1990s, hold half of all Italian philanthropic assets, or 21% of the European total.
Can you tell us something about Italian recent changes in philanthropy?
Italy is an interesting country when it comes to philanthropy for many reasons. There are important distinctions between Italy and other European countries not least because of the existence of the 88 banking origin foundations (a number fixed by law). The introduction of the community foundation to Italy since the 2000s has provided a new philanthropic mechanism with now over 27 community foundations in existence, many of them founded or supported by a local authority or larger foundation. New forms of community philanthropy are also emerging. Focusing on local assets, these endeavours are making creative use of those assets instead of the perhaps more traditional route of focusing on building endowments and giving grants, For example, the Fondazione 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 (see Andrew Milner, The State of European Philanthropy, Alliance Magazine, January 2017).
On the legal front, Italy has been reforming its third sector laws in recent years, most notably with the introduction of Law No. 106 of 6 June 2016 (Third Sector Reform Law) and Legislative Decree No. 117 of 3 July 2017 (Code of the Third sector). Legislative Decree 117 introduces a comprehensive reform of the legal and tax regime applicable to entities operating in the third sector (to be known as ‘third sector entities’). However, the entry in force of the main innovations provided for by this reform (for example, the new optional tax regime or repeal of the ONLUS Decree) is subject to the European Commission’s authorisation, which has not yet been received. With the 2018 Edelman Trust Barometer indicating a further decline in trust levels for Italian NGOs (down 13% to 46% in 2018), the need for a robust legal framework that provides donors with confidence is to be welcomed.