Gift of giving at Xmas? Not unless EU tweaks rules

Wealth gaps are widening in this interconnected world, making it even more vital that we open new routes for global philanthropy. Yet even within Europe, EU legislation to bring down barriers to transnational giving has yet to materialise.

The EU Commission's Social Economy Action Plan, published on 9 December, offers a promising start.

Vice president Margaritis Schinas acknowledged that "philanthropic organisations still face financial, legal and tax constraints in taking full advantage of the single market".

The EU executive now plans guidance to clarify existing rules on the taxation of cross-border donations in Europe and on member states' obligation not to discriminate against EU citizens and legal entities.

Recognition of the role philanthropy plays is welcome. More must now be done to dismantle national obstructions to the free flow of gifts to good causes.

Economic crisis, a surge in irregular migration, climate change and now the pandemic, have all put uneven strains on communities - and borne witness to the willingness of people across our continent to reach out and help those most affected, however far away.

Here in Brussels, we at Belgium's King Baudouin Foundation aim to play our part in enabling cross-border gifting – through Transnational Giving Europe, a network of European philanthropic institutions, and globally in a new partnership called Myriad.

But governments could do much more to ease international donations, which can offer speed, innovation and diversity that complement state-funded aid efforts.

The situation is anomalous.

In the two decades before the pandemic, international tourist trips and expat populations had almost doubled, global trade has trebled, and global daily foreign exchange trading has quadrupled. As with people and goods, money has been racing round the world as never before.

Thickets of national regulations

Yet little has been done to cut back the thickets of national regulations governing philanthropy. Indeed, new obstacles have been thrown up.

This is about ordinary citizens. The very wealthy have the legal and accounting help to deal with the hurdles.

Millions of more typical donors face huge frustrations – well-intended but complex national legislation covering notably taxes, terrorism, and money laundering - not to mention governments in some places making it harder for their citizens to accept donations from abroad, citing fears of unfriendly "foreign agents".

We in philanthropy institutions can help. Inspired by TGE in Europe, KBF launched a global partnership in September called Myriad.

It lets individuals and organisations in Europe, North America, Asia, and Australia, donate in nearly 100 countries, simply, efficiently and with full legal and fiscal clarity. The intention is to forge lasting global support communities.

It may seem surprising, however, that the Myriad model, born in Europe, should still be needed here in the "borderless" EU. Charitable donations are a notable absentee from the single market in goods, services, labour, and capital. If you want to give your money away in Europe, you had better think twice before letting it cross a Schengen frontier.

TGE helps to make it as easy and economical for someone in Brussels or Brescia to donate to an association close to their heart in, say, Greece, Ireland, or Estonia, as to support a charity nearer home.

Put simply, if someone donates euros to a local charity, they will generally be able to deduct at least some of this donation from their taxes thanks to national fiscal incentives.

By using TGE, they can obtain similar benefits while supporting a charity in another country covered by the network. EU-level regulation would make that process much simpler and, surely, contribute to even greater continental solidarity.

Recent years have made us all too aware that few of modern society's problems sit neatly inside national frontiers.

It is heartening to hear the Commission speak of lowering barriers to those who want to reach across borders to help solve those problems. At this time of year when we celebrate giving and resolve to make the new year better than last, it is time for all of Europe's leaders to accelerate efforts to make good on that promise.