The Global Philanthropy Environment Index “Southern Europe” region includes Greece, Italy, Portugal, and Spain.
The COVID-19 pandemic crisis since 2020 was listed as the main challenge for philanthropy in the region but also as an opportunity in terms of the need to respond to this crisis and to develop new ways of working, being more flexible, and collaborating with government and other actors to create synergies. New informal philanthropic initiatives are becoming more prominent in the region, and established actors need to assess how they collaborate with those informal groups.
Laws are not always keeping up with the constant evolution of philanthropy’s toolbox of actions, and it is not yet clear how much of the pandemic-related new ways of working will be there for the longer term. For instance, with regard to impact investing and new tools of operations, the legal frameworks in the concerned countries appear to be slow to respond.
Philanthropy seems to have a relatively stable legal environment in Southern Europe compared to other parts of the world. Clear legal requirements exist to establish philanthropic organizations (POs), though requirements may differ for the legal type of the organization whether association, foundation, or other. Under the Italian Third Sector Code, any entity (other than companies) set up for the pursuance of a public benefit activity can register with the Single National Register of the Third Sector (“RUNTS”).
Tax incentives exist for POs themselves and to encourage giving by individual and corporate donors, though they differ in scope. It appears that governments generally want to encourage philanthropy. They grant tax concessions for POs and provide tax incentives for individual and corporate donors. Greece saw an increase of tax incentives for donors in 2019.
There is, however, concern that anti-money laundering and anti-terrorism legislation has introduced more reporting requirements on the Southern European philanthropic sector and that there are cases of overly rigid implementation of the European Union (EU) Money Laundering Directive at Member State level (foundations are treated as obliged entities in the Spanish context).
Old and new barriers exist to cross-border philanthropic and foundation action. While governments have introduced tax incentives to stimulate philanthropic activity, this is still not always the case in cross-border contexts. Tax-effective cross-border philanthropy does not yet work. Despite groundbreaking decisions of the European Court of Justice, which have introduced the non-discrimination principle, laws remain complex, and, in some cases, even discriminatory (Spain is just now amending its tax laws in this regard). Barriers also remain for cross-border action of POs. While it is easy for goods and services to move freely across Europe, it remains a challenge for POs also in Southern Europe to move their headquarters and for individual and corporate donors to give across borders.
Self-regulation, codes of conduct, and quality labels are being discussed as effective approaches towards internal and external governance alongside state supervision. In general, authorities have no discretion in the setting up process of legal entities, but discretion may exist in the interpretation of certain legal terms.