You recently published a comparative analysis of the Legal Framework for Donation and compared Chile with other countries in Latin America and several OECD countries. To get us started into the topic, which are the pillars that compose a general legal framework?
A legal framework for donations that is inclusive must follow two principles: a broad legal definition of public benefit that underpins eligibility to receive donations with tax incentives and low barriers for different types of donors and civil society organizations to participate in the system. Thus, following this principle in the CEFIS study we identify 5 pillars that compose a general legal framework: i) a simple and general legal framework that regulates donations and charities, ii) an inclusive list of causes eligible to donate, iii) a one-step system that allows civil society organization to receive incentivized gifts; iv) a rational tax incentives framework that balance broad participation of different types of taxpayers and at the same time watch out the fiscal costs, and v) transparency and accountability to safeguard trust in the system.
So, in those terms, what would you say are the most meaningful differences between the countries that have a strong philanthropic infrastructure and those that still have emerging ecosystems?
The role of philanthropic infrastructure is key in two aspects. First, to make the case for philanthropy. Philanthropic support organizations, academic centers, association of foundations or civil society organizations are the entities whose call is to make the case for philanthropy. They can provide data, examples and arguments to policymakers to show the value of philanthropic practice and the role of civil society for the public good. Second, philanthropic infrastructure organizations are called to propose and raise awareness on legal changes that need to be made in their countries to develop a legal framework that facilitates the development of philanthropy. Countries that show high development of giving practice, have favorable legal frameworks and a strong philanthropic infrastructure. These three components build a virtuous circle that provides a favorable ecosystem for philanthropic practice and for civil society to flourish. In countries with weak infrastructure, public policy towards philanthropic practice depends on policy maker’s views and tends to change over time.
What would you say are the most restricted areas of work according to the legal frameworks?
There are three types of restrictions for philanthropic practices. The first is related to causes. While health, poverty alleviation, education, and culture are the causes regularly included in most legal frameworks, other causes like human rights or environmental conservation are only included in countries with high development of philanthropic practice and more inclusive legal frameworks.
The second type of restrictions are the ones related to procedures that civil society organizations have to accomplish to be able to participate as charities that can receive tax incentive donations. The burden of bureaucracy can be a strong barrier, especially for little or new organizations, to access private giving.
There is a third group of restrictions related to separate donations devoted to civil society from partisan politics. When the legal framework includes safeguards to separate partisan politics interests channel through charities, the norm acts as safeguards for the independence of civil society. But, when it includes restrictions for public policy advocacy role they constrain the role of civil society.
In recent times where the global emergency has seen such levels of solidarity, have you seen some flexibility in restrictive regulations? Can we expect legal updates in countries with weaker frameworks?
Different countries have adopted regulations that facilitate donations during the Covid-19 emergency, increasing the ceiling for the total amount of giving with tax incentives, facilitating the procedures for donations, establishing matching funds, and also public funds for helping civil society organizations survive the crisis.
Chile has a special law for giving during a catastrophe that has facilitated big amounts of giving for first needs such as health assistance, food provision for families, or research for health treatment. But we know the impact of this crisis is multidimensional and will last longer than the health emergency. We also know that the public sector is not able to work alone and that we will need to strengthen public-private cooperation. Civil society organizations have a key role in the recovery and can provide spaces for collaboration. This is a powerful argument to present to policymakers to move forward in advancing a new legal framework or legal changes that can really help to develop philanthropic practice.
What can PSOs do to promote legal reforms in places in which the legal frameworks are obstacles to the development of philanthropy ecosystems?
Neither donors nor civil society organizations can act alone when they face legal constraints and see the need to advocate for legal changes. PSOs have a fundamental role in providing data, arguments, and awareness before policymakers. Collaboration between PSO and academic centers can be a fundamental key to provide international compared analysis and evidence-based proposals for good public policy for the sector.
Finally, to finish on a reflective note, what’s your take on this: Do legal frameworks mold philanthropic cultures, or do philanthropic cultures mold legal frameworks?
Based on what you can see in every society, the concern for the wellbeing of your community can be found in every place. Is part of the human spirit and key to building up social cohesion. Legal framework can facilitate or hinder philanthropic practice, but the passion and interest that move donors to give to public good are more profound than the legal constraints or incentives.
This article is part of the #LiftUpPhilanthropy Series, bringing together reflections and thought leadership from leaders across the philanthropy sector on how the sector can build itself for the future.
Magdalena Aninat, Founding Director, Center for Philanthropy and Social Investments (CEFIS) at Adolfo Ibáñez University’s School of Government.