INCREASING THE FLOW OF CAPITAL FOR GOOD - INVESTING AND GIVING
1. According to the John Hopkins Center for Civil Society Studies, the Netherlands is considered to have the world’s largest non-profit sector in terms of percentage of the economically active (paid and unpaid) population. Annual giving to philanthropic causes amounts to 0.7% of Dutch GDP.
2. Dutch government and legislation does not have a coherent or systematic policy towards non-profit organizations per se. There is no overarching administrative oversight over charitable foundations and associations. Historically, philanthropic organizations are known as private organizations; even where State funding has been very important. The notion of a ‘philanthropic’ organization is only relevant for tax laws under what is known as ANBI status.
3. For non-Dutch residents, the use of a Private Foundation in the Netherlands offers excellent opportunities to combine philanthropy and private (trust) purposes, since a Private Foundation does not have to comply with ANBI requirements.
4. Approximately 1 out of 4 foundations in the Netherlands is a charitable foundation qualifying as an ANBI for tax purposes (about 50,000). Foundations are also used for social purposes, voting trust purposes, and private purposes.
5. A foundation or association that lacks the status of an ANBI does not pay income tax on investment income, gifts or bequests.
6. Many international NGOs, particularly those with complex governance structures, have their ‘supranational’ body governed by Dutch law due to its flexible legal framework.
7. In 2008 the Netherlands became the first country in the world to open up its borders to fully deductible cross border gifts to foreign organizations.
8. The growth in charitable giving has slowed during the last five years. This reflects declining donor trust in fundraising charities a trend among philanthropists to redirect their giving to social enterprises that have an increased focus on impact measurement.
9. There are no specific legal vehicles identified for social enterprises or impact investments. The tendency is that the existing charitable foundation framework is expanded to accommodate ‘commercial’ activities as well. Tax exemption can only be obtained through a substantive use of volunteers.
10. The market for Major Donors is relatively under-developed in the Netherlands, although tax incentives such as ‘living legacies’, where a major donor maintains income from his gifted assets, already exist.
1. Lester M. Salamon, S. Wojciech Sokolowkski and Regina List, Global Civil Society: An Overview, 2003)