Guest Blog: International Giving – Part 2

Germany and Transnational Giving Europe

In 1999, four large European foundations, the Fondation de France, the Charities Aid Foundation in the UK, the Fondation Roi Baudouin in Belgium, and the Oranje Fonds in the Netherlands got together and formed a network to help overcome these difficulties. This was the beginning of Transnational Giving Europe (TGE)[1].

Today TGE has 19 members, and several more are being cleared for admittance, one per country. As two of the partners have US subsidiaries, registered as tax-exempt 501 (c) (3) organisations, the network’s services to donors extend to the US as well, while beneficiaries may be based anywhere in the world. In order to join TGE, members, nearly all of them foundations, must not only be charities in good standing, but must technically be able to accept donations in a wide range of charitable fields.

In Germany, no organisation existed that could meet this condition, so Maecenata, an originally Munich-based research, policy, consulting, and service organisation founded in 1989, created a special new entity which joined the network in 2000. In 2010, this programme became part of the charitable Maecenata Foundation and is now the German TGE partner[2]. The Maecenata Foundation retains its legal seat in Munich, but operates from offices in Berlin. The Brussels based King Baudouin Foundation continues to act as the network’s permanent coordinator.

The network’s prime aim is to service philanthropists and beneficiaries. Donors may make an ear-marked donation to the TGE partner at home who will issue a tax-deductible receipt. Before this can happen, however, the ultimate beneficiary needs to undergo a due diligence process testing for compliance to international standards of a charity. These will include a formal deed or statute, non-distribution requirements, a track record of compliance, transparency in regard to major stakeholders and a finality clause. Following the transmission of the donation, the beneficiary will need to provide adequate reporting. A process made easier thanks to the facilitation of the local TGE partner. As established and trustworthy foundations, Maecenata and its TGE partners receive a donation from a local beneficiary, and then support a charity abroad by way of a grant. Transnational grants are regarded with less suspicion than transnational philanthropic gifts.

13547089_mWhile at the beginning, many donors, corporate donors in particular, remained sceptical as to the legality of this mechanism, a sharp rise in total transactions in recent years clearly shows that confidence has grown. Large corporate and private donors naturally put the whole system through a thorough scrutiny by their own legal and fiscal advisors, obviously with positive results, as the network now counts a whole range of large corporations and some generous individuals among their donors.

In addition to wealthy individuals, major corporate donors use the network for their international giving programmes. Maecenata often ranks first among the partners in sending philanthropic gifts to beneficiaries abroad reflecting the fact that Germans have proven to be particularly internationally minded by giving generously to charities all over the world. The largest-ever single donation, amounting to 8.4 million Euro, was awarded to a faith-based charity in the US by a German donor.

Within the TGE network, the United Kingdom is particularly strong in receiving philanthropic gifts from abroad. The reason for this is the large number of foreigners attending UK schools and universities and the very advanced methods of fundraising used once they have become alumni. Additionally, many US universities have registered subsidiaries in the UK through which they channel all of their donations from Europe. Important beneficiaries include various UN organisations, notably the World Food Programme, to which even quite small donations may be chanelled through TGE. Surprisingly, governments are taking an interest in the network as potential beneficiaries too, and recently, even foundations not affected by tax issues have sought assistance from TGE partners to help them with their international grants.

Icon 11All TGE partners are regularly scrutinized by their respective tax authorities and given the green light to carry on. Maecenata has undergone this check four times since the year 2000. German tax-paying donors and legitimate charities should be be reassured by hearing that German authorities are extremely meticulous in checking on the ultimate use of funds rendered tax-deductIble through the mechanisms of TGE.

While TGE was originally set up within the European Union, it now also has members in other countries, notably Switzerland. Furthermore, donations to beneficiaries in countries with no TGE partner are becoming increasingly important.   To obtain adequate reporting that will satisfy the local tax official in a language he or she can understand can be quite a task without the help of a partner on the spot. But with very few exceptions, this has never deterred either the donors or the intermediaries from doing what they feel is their contribution towards changing society.

The network’s aims however go beyond service provision as befits a civil society operation. 28 comprehensive country profiles available for free download and commisioned by TGE[3] give a vivid impression of the differences between individual national regulations. They provide an update on the legal and fiscal developments and deal with the legal and fiscal aspects involved in each transaction (gift or inheritance taxes to be paid, possible relief or exemptions, bilateral tax treaties, alternative solutions, etc.). Realized in partnership with the European Foundation Centre, the profiles provide input to advocacy initiatives supporting a more favourable international philanthropic environment. The German profile was assembled by Maecenata in cooperation with the Bucerius Law School in Hamburg.

Icon 12Since the 28 profiles and an overview of transnational giving in Europe were published in 2014[4], the network partners are increasingly in demand for sharing their know-how. Together with others, the foundations involved in TGE have also been actively advocating improvements at an international level for many years. They provide more than a tailor-made service for philanthropists to overcome the many restrictions and doubts associated with global philanthropy, in much the same way as they are accustomed to do in their private and business lives.

Maecenata and its TGE partners will continue to argue that philanthropy is a major asset for development, social change, improving people’s lives, and good governance, and not a liability to be fought under pretences of money-laundering or suspected terrorism. In the meantime, donors should make use of all legal ways to extend their philanthropy to causes outside of their immediate neighbourhoods. To this end, the know-how and experience accumulated in the TGE network over 15 years serves a world-wide community of philanthropists and beneficiaries as well as consultants, agencies, and legal and fiscal advisors.

[1] http://www.transnationalgiving.eu 
[2] http://www.maecenata.eu/actuelles-international
[3]http://www.transnationalgiving.eu/tge/details.aspx?id=219942&LangType=1033
[4] For the profiles: see above; for the overview (published in print and electronically), see: http://efc.issuelab.org/resource/taxation_of_cross_border_philanthropy
Dr. Rupert Graf Strachwitz, a political scientist and historian by training, with ample personal experience in the governance of not-for-profit organisations in Germany and abroad, was the founder of Maecenata Management, of which he was the managing director until 2011. Today, he is a free-lance philanthropy consultant as well as being the director of the Maecenata Institute for Philanthropy and Civil Society, an academic think tank. In his professional career and through his many volunteer activities, he has committed himself to the concept of a strong civil society as a third arena of societal activity beside the market and the state. This concept was totally new in the German environment of political theory and practice in the 1990s and is even now only gradually being seen as a serious conceptual alternative to the theory of a strong and overruling state.