Philanthropy FAQ

Institutional philanthropy refers to foundations, corporate funders and other players that:

1. Have their own financial resources which they deploy strategically
2. Are independently governed
3. Use private resources for public good.

These organisations, which are in myriad forms, are purposefully structured and organised over the long term and bound by structures of accountability, public benefit and public reporting and legal requirements.

There is no legal definition in Europe of “foundation”, which can mean something very different from one country to another. This is due to the many languages and cultures as well as the different legal and fiscal environments that exist across Europe. Nevertheless, whether they are called a “Trust” or “Fondazione”, foundations working for the public good tend to share a common set of characteristics, and a generally accepted definition is as follows:

“Public-benefit foundations are asset-based and purpose-driven. They have no members or shareholders and are separately constituted non-profit bodies. Foundations focus on areas ranging from the environment, social services, health and education, to science, research, arts and culture. They each have an established and reliable income source, which allows them to plan and carry out work over a longer term than many other institutions such as governments and companies.”

This definition is based on the articles of Philea’s draft “Model Law for Public Benefit Foundations in Europe”, which were identified and agreed upon by experts and actors in the field among the Philea membership.

Due to the many different contexts across the European Union, especially regarding fiscal, legal, and social frameworks, it is very difficult to have accurate statistical estimates on public-benefit foundations across Europe. Knowledge on the foundation sector is thus more concentrated at national level by national associations of donors.

For a comparative overview of the different legal and fiscal operating environments across the EU and wider Europe, see the Philea publication, Comparative Highlights of Foundation Laws.

Philea has produced provides a comparative overview of the diverse legal and fiscal environments of foundations in 40 countries across wider Europe: the 28 EU Member States, plus Albania, Bosnia and Herzegovina, Kosovo, Liechtenstein, Macedonia, Montenegro, Norway, Russia, Serbia, Switzerland, Turkey, and Ukraine.

The process to establish a foundation differs greatly from country to country. Philea has published a comparative overview of the diverse legal and fiscal environments of foundations in 40 countries across wider Europe: the 28 EU Member States, plus Albania, Bosnia and Herzegovina, Kosovo, Liechtenstein, Macedonia, Montenegro, Norway, Russia, Serbia, Switzerland, Turkey, and Ukraine. The publication details the purposes that foundations are allowed to pursue, the requirements for setting them up, governance and transparency requirements. The tax treatment of foundations is also discussed, with details on the income tax treatment of the foundation, including income from economic activities and asset management. There is also information on tax incentives for individual and corporate donors, including the issue of cross-border donations.