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Its a very useful tool, a very efficient 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 beneficiaries 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 expertiseto 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 financial resources together for

public benefit 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, financial 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 fields where they are present,

to reinforce the coherence of their policy and action.

Charhon notes the practical benefit provided by the Statuteof enabling a foundation to open an office 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 simplifies foundation operations and

makes them more efficient, he says. Indeed, why should

private donors be obliged to set up and register as many as

ten separate foundations to fulfil 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 it s 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.

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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 sectorto 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 field, insists Charhon. Were people

who are working on projects, addressing problems and

financing 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 Commissionto 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 thatis 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 benefit 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 flexible way in

response to changing realities.

The first 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

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 specific 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

Creating a tax-effective philanthropic market in the EUCross-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 benefit

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