Releasing philanthropic potential Constraints and opportunities in the operating environment

Hanna Surmatz and James Magowan EFC / DAFNE STUDY Hanna Surmatz and James Magowan Member concerns over closing space Scoping Study Academic research Practical applications / advocacy agenda DAFNE member evidence EFC knowledge / expertise Evidence based policy making

Releasing philanthropic potential Constraints and opportunities in the operating environment Dr. oonagh B. breen, sutherland School of law, UCD.

How big is the space for philanthropy in Europe? How is it changing? ? . . . And what can we do to enlarge it?

1. Differences between civic and philanthropic space 2. Mapping the Existing Legal Infrastructure for Philanthropy 3. Categorising the Tools – regulatory, fiscal and soft law options 4. Unpacking International and National Regulatory Efforts: From FATF to SNRA 5. Talking Tax 6. Soft Law Options Scoping Study January – June 2017

1. Differences between Civic and Philanthropic Space “The enabling environment for donors who wish to use private wealth for the public benefit free from undue political interference or legal/administrative obstruction” The focus is on institutional philanthropy “Independent, separately constituted bodies with their own established and reliable source of income, usually but not exclusively from an endowment, and their own governing board. Set up to distribute financial resources for public benefit purposes either by supporting charities, associations, individuals or by operating their own programmes.” (EFC, 2001)

2. Legal Infrastructural Challenges of Regulating for European Philanthropy Lack of Treaty Basis Without firm legal foundations, any legal structure you build will fall through the cracks . . . Problems getting EU Council Unanimity Multiple Failures to pass enabling EU legislation

2. Legal Infrastructural Challenges of Regulating for European Philanthropy Problems in Europe . . . but responses directed at external relations Stauffer, Hein Persche, Missionwerk Free Movement of Capital Non-Discrimination Principle

Possibilities under consideration . . . Alternative legal bases to Article 352 for promulgating EU legislation Commission Framework to strengthen the Rule of Law Council Rule of Law Dialogue The political influence of the Venice Commission Council of Europe Expert Council on NGO Law

Making Sense of the Enabling Space for Philanthropy in Europe 1. Regulations 2. Fiscal Measures 3. Soft Law & Administrative Guidance

1a. Regulatory Efforts – FATF & EU SNRA FATF Recommendation 8 implementation EU Supra national risk assessment Required under 4 AMLD “assessment of risks of ML and TF affecting internal market and cross border activities” Commission Report due in June 2017 with recommendations to Member States Risk based approach – 2016 Action Plan. 2017 Road map for SNRA implementation Commission consultations with Civil society in Feb and Nov 2016 and March 2017 Revised Typologies Report (2014) , BPP (2015) and significant revision of R8 (2016); Involvement of Nonprofit Platform in FATF Consultation processes; Work of Nonprofit Platform in preparing nonprofit sectors to participate in Country Mutual Evaluations (in 2016 regionally and in Denmark, Sweden, and Ireland).

Free Movement of Capital?? Post EFS – Remaining Barriers 1b. Regulatory Efforts - National Case Studies Free Movement of Capital?? Post EFS – Remaining Barriers Cross Border Transfer of Foundation’s registered seat Cross Border Merger Issues New Challenges: Hungarian Restrictions on Foreign Funding: Draft Law on Transparency of Organisations Receiving Support from Abroad

FATF SNRA 1c. Regulatory Implications for Philanthropy? Risk ID “Effectiveness” Private Sector Consultative Forum SNRA Risk ID Risk Mitigation

2. Fiscal Measures 2014 2017 Next Steps?

Others? Tax Solutions under consideration . . . Better training for MS tax staff? Luxembourg Model – simple certification? Dutch Model – ABNI registration with Tax Authority? MS take a common principled approach rather than rule based comparability approach? Provide greater public information on equal tax principle and its application to cross border philanthropy? Others?

Is Soft Law strong enough to enhance philanthropic space in Europe? 2011 EU Commission Use of Soft Law re philanthropic institutions? Comm Discussion Paper on NP Guidelines 2010 Nonprofit Code of Conduct Framework 2005 SNRA Report 2017?

Foreign Funding Restrictions The role & potential of Self Regulation Counter Terrorism & Anti-Money Laundering The role & potential of Self Regulation Effective Tax Philanthropy Business Models & Venture Philanthropy – a new way forward?

Over to you . . . Current State of Play in the operating environment: Challenges? Opportunities? What is/could be done to improve the philanthropic environment: Nationally? At EU level? What is the priority action that needs to be taken: by the philanthropic sector? by policymakers?