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EFFECT | spring 2007

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European Foundation Centre | www.efc.be
Its a very useful tool, a very efcient tool, and it has to be
recognised as that, says Francis Charhon, President of the
Fondation de France and Chair of the European Foundation
Centres (EFC) EU Committee. The ultimate beneciaries are
citizens.
The results of the Commissions 2006 consultation on whether
to go forward with the feasibility study showed the strong
support for such a study from foundations of all sizes and
types from a variety of European countries. Almost a third of
all respondents were foundations, who unanimously urged
the Commission to carry out the feasibility study on the
Statute.
Charhon spent more than six years leading the effort of
EFC members to develop a European Foundation Statute.
According to Charhon, the Statute is a collective product of
members who believe there is a need for such an instrument.
The members include a wide range of foundations from
countries across the EU. But Charhon believes the Statute not
only addresses a foundation need; it ultimately addresses
a citizens need it provides an effective way for citizens to
contribute to the European public good.
EU citizens can travel, study and work in other EU countries,
and set up transnational European companies. But without
this Statute, they cannot dedicate their wealth and expertise
to contribute to the European public good. At a time when
Europe is struggling to overcome citizens disaffection
with the European project, the EU needs to offer its citizens
the means to pool their nancial resources together for
public benet purposes. Indeed, the EFC has been looking
forward to the adoption of a European Foundation Statute
and was somewhat taken aback in November 2006 when
Commissioner McCreevy called into question the need for
it, a statement which stood in contrast to the more positive
attitude expressed by EU President Barrosos Cabinet.
A European Foundation Statute could offer foundations an
appropriate legal tool to carry out activities across Europe
without undue administrative, nancial and legal burdens.
Existing foundations for which operating across various
countries in the enlarged EU is an integral part of their mission
would have direct use of such a statute. A European statute
could also help foundations advance their cross-border
activity and cooperation in the elds where they are present,
to reinforce the coherence of their policy and action.
Charhon notes the practical benet provided by the Statute
of enabling a foundation to open an ofce in any EU country
without going through a complicated administrative process
in each country. The Statute would also make it easier to work
in another EU country without having to set up a separate
foundation in that country. The Statute is simple, functional
and operational. It simplies foundation operations and
makes them more efcient, he says. Indeed, why should
private donors be obliged to set up and register as many as
ten separate foundations to full a public purpose objective
across the Union?
The Statute aims to enable foundations to work in several
EU countries when there is an added value in doing so,
corresponding to the aims of the organisations, for example
cooperation and investment in research; education and
training; management of natural resources; cultural
cooperation; and regional cooperation for socio-economic
development, particularly in border areas.
Why has it been such a long process to get the European
Commission to move forward with the European Foundation
Statute? I think its probably because the Commission doesnt
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Foundations get a yes to feasibility study on a
European Foundation Statute
In January 2007, European Commissioner Charlie McCreevy announced that the Commission would launch a
feasibility study on a European Foundation Statute some time this year. Although still not the Statute itself,
the feasibility study is a welcome development as foundations have clearly expressed a need for such a
statute, which would be an optional tool, complementing but not replacing existing legislation.
EFFECT | spring 2007
LOREM IPSUM 12
exactly understand the need, and so we will have to make a
greater effort to not only explain the need, but also the will of
foundations to have such a tool for their work in Europe, says
Charhon. Its a misunderstanding of the capacity of the sector
to address the needs of citizens. We have to work on that to
explain and explain and explain.
Foundations are perceived as being intermediary bodies that
are not in touch with whats needed on the ground. But the
Commission has to understand that foundations are very
close to the needs of the eld, insists Charhon. Were people
who are working on projects, addressing problems and
nancing solutions.
This year Charhon would like to see more efforts made
at national level to convince key people in governments
of the value of a European Foundation Statute. He hopes
national governments would then press the Commission
to go forward with the Statute. So this would be a parallel
approach alongside ongoing efforts of the foundation sector,
particularly through the EFC, to convince the Commission.
The sector is growing at an exponential rate in all EU
countries. Figures suggest a high growth rate in the sector in
various EU states, with 28% up to 40% of the national-level
sectors having been set up in the last decade in countries such
as Belgium, Finland, France, Italy and Germany. Foundations
are increasingly active beyond their own borders, a trend that
is expected to continue. The EFCs estimate, extrapolating
from databases of known foundations, is that 25,000 of these
foundations have combined assets of 174 billion euros at their
disposal.
New wealth has been created in a variety of new sectors of
the economy, and within the next 20 years Europe will witness
the most important intergenerational transfer of wealth ever.
The EFC believes that part of this private wealth should be
directed towards the European public good. A European
Foundation Statute would provide foundations with the
necessary vehicle to channel these resources for the benet of
the European project and the EUs citizens.
Nyegosh Dube, EFC
More information on the Statute:
www.efc.be/european_statute
Such steps complement efforts, led by the European
Foundation Centre, to bring about the adoption of a European
Foundation Statute as a powerful new tool for cross-border
foundation activity in Europe. Enactment of a European legal
form for foundations and changes in national tax laws can
together contribute to creating a Europe-wide market for
philanthropy.
In fact, market is not an inappropriate term, since provisions
of the European Community Treaty geared primarily towards
business activities are now also being applied to philanthropic
activities. These are provisions on freedom of establishment
and free movement of capital, as well as free movement of
labour and people. Given the tremendous increase in the role
of philanthropy since the original Treaty was signed 50 years
ago, Treaty provisions are being applied in a exible way in
response to changing realities.
The rst major step in this direction came in 2002 when the
European Commission formally requested Belgium to change
its legislation on gift and inheritance tax, as it restricted
preferential rates on philanthropic donations and legacies
to entities established in Belgium. Actually, the request
concerned legislation in the countrys three regions. While
Flanders and Brussels amended their laws to satisfy EU
requirements, Wallonia did not go far enough. So in 2005 the
Commission referred the Walloon case to the European Court
of Justice (ECJ).
In 2006, the Commission decided to cast its net wider. It sent
formalrequeststothegovernmentsoftheUK,|relandand
Poland to end discrimination against foreign PBOs in their
income tax legislation. According to the Commission, these
Member States allow tax relief for gifts to charities, but
only if they are established in their own territory. Charities
in other Member States are excluded from the relief... The
Commission, moreover, threatened to refer specic national
cases to the ECJ if the governments in question did not
respond satisfactorily within two months. In December
2006, the Commission turned its attention again to Belgium,
sending it a similar request and warning.
The rules of the Internal Market forbid discrimination against
charities in other Member States, said EU Taxation and
CustomsCommissionerLaszloKovacsina1uly2006Luropean
Creating a tax-effective philanthropic market in the EU
Cross-border philanthropy in Europe may be getting easier. European institutions have taken steps to bring
national tax legislation into line with key provisions of EU law to end discrimination against public benet
organisations (PBOs) based in other EU states and against those who give to such organisations.
THE LEGAL AND FISCAL SCENE
European Foundation Centre | www.efc.be