2020 Geneva International Conference “Taxation and Philanthropy”

The 2020 Geneva International Conference « Taxation and philanthropy » is an international academic event organized by the Geneva Centre for Philanthropy of the Université de Genève / University of Geneva (“GCP”), which took place on 25, 26 and 27 November 2020. The scientific conference was an online event. Recordings of all presentations will be available. The Conference provides a forum for experts (scholars, government representatives and other stakeholders in the field) from around the world to discuss and exchange knowledge and policy insights on the tax aspects of charitable giving. Recordings will be available.

This Conference is a part of a pioneer four-year project in Switzerland that seeks to study tax mechanisms related to philanthropy and has received funding from the Swiss National Science Foundation (SNSF). Following the Conference, the GCP will edit a peer-reviewed open-access publication « Routledge Handbook of Taxation and Philanthropy ». The handbook will contain several conference papers selected by the editors and will also include OECD’s report and policy brief “Taxation and Philanthropy in OECD and selected partner countries”.

In addition to the keynote speech, the scientific programme of the conference focusses on the four topics in the field of taxation and philanthropy: 

• #1 Are tax incentives for philanthropy justified?
• #2 Which types of tax incentives for philanthropic activities are conceivable and what is their respective efficiency? 
• #3 Cross-border philanthropy and tax barriers: should they be eliminated?
• #4 What is the role of tax incentives in corporate philanthropy and social entrepreneurship?

The Concept Paper of the Conference describes the principal research questions. 

A scientific workshop for junior scholars was also part of the conference.

This summary draws heavily on the presentations and reports provided. The brief extracts may not represent the complete and more complex ideas of the original authors. 

More details on the conference event, including videos of all sessions, could be seen at: https://www.unige.ch/conference-philanthropy-taxation/

KEYNOTE SPEECH

Designing tax incentives for the common good

by Mr. Pascal Saint-Amans

The focus on Philanthropy has substantially increased over the last decade, attracting growing attention from policy makers, the media, the academic community and the public at large. The Notre Dame catastrophe and the COVID-19 pandemic have significantly raised public awareness of the tax treatment to be applied to philanthropic initiatives. The relationship between taxation and philanthropic giving poses a number of fundamental questions. For instance, is it justified to offer tax deductions as a “reward” for donations? Are tax incentives for philanthropy a cost or a benefit to society? Are tax incentives designed in a fair and efficient manner? Can best practices be identified by comparing existing national schemes?

On 26 November 2020 (12h30-13h30 EST), Mr. Pascal Saint-Amans, the Director of the Centre for Tax Policy and Administration at the Organization for Economic Cooperation and Development (OECD), delivered a keynote speech, presenting the OECD’s policy Report on taxation and philanthropy resulting from the research project launched jointly by the OECD and the Geneva Centre for Philanthropy in September 2019. The project is the first large-scale international comparative study. 

OECD (2020). Taxation and Philanthropy, OECD Tax Policy Studies, No. 27, OECD Publishing, Paris, November, 141p. https://doi.org/10.1787/df434a77-en.

This report provides a detailed review of the tax treatment of philanthropic entities and philanthropic giving in 40 OECD member and participating countries. The report first examines the various arguments for and against the provision of preferential tax treatment for philanthropy. It then reviews the tax treatment of philanthropic entities and giving in the 40 participating countries, in both a domestic and cross-border context. Drawing on this analysis, the report then highlights a range of potential tax policy options for countries to consider.

Report (English) / Executive summary (English) / Policy Brief (English)

Résumé (français) /  Note de synthèse (français)

The report defines philanthropy and the philanthropic sector, and the very significant economic value of philanthropy. Most countries, including Canada, provide some form of preferential tax treatment for philanthropy. For Canada, the amont of giving is estimated in 2017 at 9.6 billion by individuals and 3.8 billion by corporations or 0.77 as a percentage of the Gross Domestic Product (GDP). The report first examines the various arguments for and against tax concessions, highlighting that there is no single generally accepted rationale for the preferential tax treatment of philanthropy. 

Most countries surveyed provide concessionary income tax treatment for approved philanthropic entities. The report identifies two approaches commonly taken: the first is to exempt all (or specific) income, and the second is to consider all forms of income taxable but to allow the entity to reduce its taxable income through current or future reinvestments towards the fulfilment of its worthy purpose. The report considers the tax treatment of philanthropic entities and of giving to philanthropic entities, before considering cross-border issues. 

All the countries surveyed also provide some form of tax incentive to encourage philanthropic giving to eligible entities, although the generosity and design of the incentives vary. In the large majority of countries surveyed, donations are deductible from taxable income (like Canada for corporations). Other countries offer tax credits instead (like Canada for individuals) and, in some cases, the donations of individuals are matched by government.

The report highlights a number of key issues that countries face in the design of their tax rules for philanthropy. First, the report highlights that countries need to ensure that the design of their tax incentives for philanthropic giving is consistent with their underlying policy goals. Second, countries should reassess the merits of providing tax exemptions for the commercial income of philanthropic entities, at least insofar as this income is unrelated to the entity’s worthy purpose. 

Third, the report identifies a number of ways countries can look to both reduce the complexity and improve the oversight of the concessionary tax regimes for philanthropy. These include: applying the same eligibility tests for both philanthropic entities and philanthropic giving; imposing a minimum value threshold for a non-monetary donation to receive a tax incentive; establishing a publicly available register of approved philanthropic entities; introducing an annual reporting requirement; implementing a combined oversight approach (e.g. tax administration and independent commission); clearly differentiating between corporate donations and sponsorship; improving data collection and tax expenditure reports; implementing limits to fundraising expenditures; implementing rules that limit certain types of operating expenses of philanthropic entities; and limiting the remuneration of staff, managers, and board members of philanthropic entities. 

Finally, the increasingly global nature of many policy challenges – such as environmental and public health concerns (including the COVID-19 pandemic) – may require countries and institutions to cooperate across borders. In this context, there is merit in countries reassessing whether there may be some instances where equivalent tax treatment should be provided to domestic and cross-border philanthropy. 

Mr. Saint-Amans focused on the policy options in the report in his talk. 

• Ensuring the design of tax incentives for philanthropic giving meets
• Preferential tax treatment of philanthropic entities
• Reduce complexity
• Improve oversight
• Reassess the current restrictions for international giving

WORKSHOP #1 – Are tax incentives for philanthropy justified?

25 November 2020 7h00-9h30 EST

Moderators: Henry PETER and Giedre LIDEIKYTE HUBER

1. Emanuela CEVA (Université de Genève) “Institutional Short-Circuits: When Should Philanthropy be Incentivised?”  

Adopting a political perspective, institutional failures are named, as a reason to provide incentives. Office accountability is cited with internal resource action and external remedial action. Philanthropy enhances office accountability. Individual and corporate initiatives sustain public institutions and act as a prop for public institutional action.

2. Nicolas DUVOUX (Université Paris 8) “Philanthropy, Class and Tax in France”  

Drawing from a sociology perspective, the qualitative ethnographic study examines family foundations in France. Among the results, wealth tax is considered illegitimate and tax deductions are a way to avoid it; philanthropists are better than the state for allocating money, and there is an attachment to pluralism.

Comments by Pamala WIEPKING (Vrije Universiteit Amsterdam) and discussion 

3. Brigitte ALEPIN (Université du Québec en Outaouais) “The tax regime for private charitable foundations in North America – A threat to democracy and an infringement on government finances” 

Examination of private foundations in Canada and the US. Description of the relationship between donors, donation, foundation and distribution in the philanthropy process in a Canadian context. With calculations over a 25 year period, a donation of 100M$ cost 53M$ to society compare to a current value of 13M$ received; and is considered a bad tax deal. To avoid a balance, the disbursement quota should be 7.5% instead of 3.5% in Canada, which may have an effect on perpetuity. 

4. Christoph DEGEN/ Francois GEINOZ (ProFonds) “Importance of and Requirements for Tax Exemption for Non-Profit Organisations and Deductibility of Donations in Switzerland” 

Focus on detailed rules in Switzerland.

5. Calum M. CARMICHAEL (Carleton University) “Charitable ends by political means? A comparative study of how this is or is not permitted” 

Comparison of 16 countries regarding political activities (electioneering, advocacy, lobbying) by using guiding political philosophy (egalitarian vs libertarian) and guiding democratic mode (deliberate vs pluralist). There is no consistency between a lot of countries. Canada is consistent and leans on the more restrictive side.

Comments by Robert E. ATKINSON (Florida State University) and discussion 

6. Ann O’CONNELL (University of Melbourne) “Is it really a Charity? Membership-based entities as charities” 

From a legal perspective, some entities should receive tax reliefs because they are: not for profit, no distribution of funds, ‘worthy’ purpose, and public benefit. However, questioning about some membership-based entities (agricultural, business and professional association), who may have a private benefit and not a public benefit.

7. Ian MURRAY (The University of Western Australia) “The Donor Control/ Public Benefit Balance Underlying Philanthropic Tax Concessions” 

Questioning about the donor control vs public benefit. It may be out of balance: anti-democratic under the control of elite donors, who control the charity; philanthropic paternalism; size and class that benefit from donation concessions. A clear distinction between public and private charity.

Comments by Alastair THOMAS (OECD) and discussion 

WORKSHOP #2 – Which types of tax incentives for philanthropic activities are conceivable and what is their respective efficiency?

27 November 2020

Moderators: Henry PETER Giedre LIDEIKYTE HUBER

1. Richard STEINBERG (Lilly Family School of Philanthropy/ IUPUI) “The Design of Tax Incentives for Giving” 
2. Nicolas J. DUQUETTE/ Jennifer MAYO (Sol Price School of Public Policy/ University of Michigan) “Changes in the distribution of US charitable giving and philanthropy by type of organization over a long period of time” 
3. Malini CHAKRAVARTY/ Priyadarshini SINGH (Centre for Budget and Governance Accountability (CBGA), New Delhi/ Centre for Social Impact and Philanthropy (CSIP)) “Tax Incentives for Giving to NPOs: Does India need them at all ?”  

Comments by Sarah SMITH (University of Bristol) and Daniel FICHMANN (OECD) and discussion 

4. Kimberley SCHARF (University of Birmingham) “More giving or more givers? The effects of tax incentives on charitable donations in the UK” 
5. Camille LANDAIS/ Gabrielle FACK (London School of Economics (LES)/ Paris Dauphine-PSL) “?”
6. Giedre LIDEIKYTE HUBER/ Marta PITTAVINO/ Henry PETER (Université de Genève) “Efficiency of tax incentives for charitable giving : evidence from Switzerland” 
7. Giuseppe UGAZIO/ Ursa BERNARDIC/ Mael LEBRETON/ Giedre LIDEIKYTE HUBER/ Henry PETER (Université de Genève) “When and how do tax incentives promote Prosocial Behavior and Charitable Giving?” 
8. Maja ADENA (WZB Berlin Social Science Center Economics) “Tax-price Elasticity of Charitable Donations: Germany” 

Comments by Sarah SMITH (University of Bristol) and Daniel FICHMANN (OECD) and discussion 

WORKSHOP #3 – Cross-border philanthropy and tax barriers:

should they be eliminated?

26 November 2020 8h00-9h30 EST

Moderators: Henry PETER Giedre LIDEIKYTE HUBER

1. Hanna SURMATZ/ Max VON ABENDROTH/ Ludwig FORREST (European Foundation Centre AISBL (EFC)/ Donors and Foundations Networks in Europe DAFNE/ King Baudouin Foundation (TGE)) “How to ease tax effective cross-border philanthropy within the European Union and beyond?” 

Examination of cross-border philanthropy in European Union. Improvements since 2015, but conflicts still exist with infringement procedures and court cases. Mention of 3 court cases: Stauffer, Persche and Missionwerk. Offer possible ways to ease processes.

2. Natalie SILVER (University of Sydney) “Removing Tax Barriers to Cross-border Philanthropy: Lessons from Australia” 

Examination of cross-border philanthropy in Australia. Tensions between government interests (protects / oversight) vs donor / charity interests (contribute). Discussion of policy shift in interpreting ‘in Australia’ concept from a long standing restrictive approach (established, controlled, maintained and operated with purposes and beneficiairies in Australia) to a new more permissible approach (established, makes operational and strategic decision mainly in Australia). 

Comments by Alastair THOMAS (OECD) 

3. Eric M. ZOLT (University of California, Los Angeles) “Cross-Border Philanthropy: A U.S. Perspective” 

Examination of cross-border philanthropy in United States. 

4. Xavier OBERSON UNIGE “Taxation of cross-border philanthropy – the potential of international tax law standards and double taxation treaties” 

Examination of cross-border philanthropy from an international tax law perspective. Discussion of domestic / territorial tax rules, including mention of 3 EU court cases: Stauffer, Persche and Missionwerk. Possible ways to solve obstacles with double taxation conventions, such as residence of charitable entity, exemption, deductions of cross-border gifts, exemptions gift & inheritance tax treaties, and non-discrimation provisions. 

Comments by Anne O’CONNELL (University of Melbourne) and discussion with Sabrina GRASSI 

WORKSHOP #4 – What is the role of tax incentives in corporate philanthropy and social entrepreneurship?

27 November 2020

Moderators: Henry PETER Giedre LIDEIKYTE HUBER

1. Sigrid HEMELS (Erasmus University Rotterdam) “Tax reactions on entrepreneurial philanthropy: the case of the Netherlands” 
2. Rene BEKKERS/ Stephanie MAAS (Vrije Universiteit Amsterdam) “Culture Change is Hard: Evidence from A Tax Reform in the Netherlands” 
3. Fiona MARTIN (UNSW Sydney) “The growing concept of social enterprise in Australia: Can a social enterprise take advantage of tax concessions by operating through a charity?” 
4. Steven DEAN/ Dana BRAKMAN REISER (NYU School of Law/ Brooklyn Law School) « For-Profit Philanthropy: Networks, Hybrids and Taxation » 

Comments by David BRADBURY (OECD) and discussion 

5. Laurence de NERVAUX/ Philippe DURAND/ Dominique LEMAISTRE (Fondation de France/ PWC) “The impact of the overlap of public and private initiatives on the philanthropy tax regime: the French case” 
6. Raphaël GANI (Swiss Federal Administrative Court) “Social entrepreneurship: is it social or entrepreneurship? Tax treatment of social entrepreneurship in Switzerland” 
7. Peter HONGLER/ Florian REGLI (University of St. Gallen) “Corporate Social Responsibility and the Taxation of Corporations – Time to Rethink?” 

Comments by Ian MURRAY (The University of Western Australia) and discussion

François Brouard, DBA, FCPA, FCA est professeur titulaire, comptabilité et fiscalité, Sprott School of Business, Carleton University / Université Carleton, et directeur-fondateur du Sprott Centre for Social Enterprises / Centre Sprott pour les entreprises sociales (SCSE/CSES), membre du Philab, Réseau canadien de recherche partenariale sur la philanthropie, et co-directeur du Philab Ontario.