Foreword

Philanthropy plays an important role in most countries, providing private support to a range of activities for the public good. This differentiates the sector from government initiatives (i.e., public action for the public good) and profit-based initiatives (i.e., private action for the private good). Almost all OECD countries provide some form of preferential tax treatment for philanthropy. Entities with a philanthropic status typically receive tax relief directly in relation to their activities, while both individual and corporate donors to these entities are often able to receive tax incentives that lower the cost of giving. This report represents one of the most comprehensive attempts to catalogue the tax treatment of philanthropic entities and philanthropic giving across 40 OECD member and participating countries.

In many countries these tax preferences have been in place, unaltered, for many years despite changing social conditions. For example, when income tax exemptions for philanthropic entities were introduced in many countries around the beginning of the 20th century, there were relatively few eligible entities and most of their income was in the form of donations. Over time, the philanthropic sector has grown and many philanthropic entities now rely significantly on self-generated income, including business and investment income. Large philanthropic foundations have also become more prevalent, placing greater focus on the degree of influence of large donors on the use of taxpayer funds. Meanwhile, the increasingly global nature of many policy challenges – such as environmental and public health concerns (including the COVID-19 pandemic) – raises questions regarding the appropriate tax treatment of cross-border giving. These developments suggest that a review of the tax rules in place in many countries may be warranted.

This report provides a detailed review of the tax treatment of philanthropic entities and philanthropic giving in 40 OECD member and participating countries. The report first examines the various arguments for and against the provision of preferential tax treatment for philanthropy. It then reviews the tax treatment of philanthropic entities and giving in the 40 participating countries, in both a domestic and cross-border context. Drawing on this analysis, the report then highlights a range of potential tax policy options for countries to consider.

The report, which has been carried out as part of a collaboration between the OECD and the Geneva Centre for Philanthropy, draws heavily on country responses to a questionnaire on Taxation and Philanthropy by country delegates to Working Party No. 2 on Tax Policy Analysis and Tax Statistics of the OECD’s Committee on Fiscal Affairs.