A new study by Nexus, McDermot Will & Emery LLP, and Charities Aid Foundation (CAF), Rules to Give By: A Global Philanthropy Legal Environment Index, investigates how 177 governments support philanthropic giving in a comparable and standardized way. The purpose of the report is “to summarize the relevant tax laws that affect non-profit organizations, corporate and individual donors, and estates, and to score countries on these regulations.” Those scores, on a scale of one to eleven, provide a standard baseline for comparisons between countries.
The key findings of the study indicate several global similarities:
* 77% of countries offer incentives to corporations
* 66% offer incentives to individuals for donating to NPOs
* 95% of countries provide tax exemptions to NPOs
* 80% of nations have reporting requirements for NPOs (but only 18% consider the size of the NPO in establishing those requirements)
* Over half of all countries surveyed scored a 9 or higher Rules to Give By Index (RGBI)
How do Asian countries compare to the global numbers?
Only 11 countries scored the highest possible score of 11 and the only Asian country to make that list is Singapore. This is not surprising given Singapore’s favorable legal and tax environment for giving.
* 83% of Asian nations offer incentives to corporations but 68% offer incentives to individuals for donating to NPOs – slightly higher than the global average
* 95% of Asian countries provide tax exemptions to NPOs – on par with the global average
* 88% of Asian nations have reporting requirements for NPOs, but only 12% consider the size of the NPO in establishing those requirements – representing a higher than average requirement, with fewer nations accounting for NPO size
Tax incentives for individuals appear effective in creating a culture of giving.
Study authors also conclude that their findings “clearly demonstrate a global consensus that charitable activity is beneficial to society” based on the consistent levels of government support for NPOs either through tax exemptions or donation incentives.
Rules to Give By provides an important first step in creating systems that offer comparable data across regions and by countries. The Executive Summary of the report is a good place to start. However, it is important to also look at the Nexus website and review the details when trying to understand a particular country. Even then, the data is too generalized and it does not provide a true understanding of the philanthropic legal environment of working in a particular country or region. Corporations and foundations may use it to provide general comparisons and set executive expectations on how challenging (or not) it is to manage their giving in particular countries. Yet, China received a score of 10 (out of 11). This fact may not be helpful when trying to explain to an executive why more time and effort is needed to work in China. As we all know, the overall philanthropic enabling environment in China is difficult.
Unfortunately, reports like this are referenced by too many decision-makers without knowing the practical realities of giving in a particular region or country. Therefore, it is important to remind decision-makers that the legal environment is only one piece of the pie when it comes to the philanthropy ecosystem of a country.
About the Author
Dien S. Yuen is Founder and Managing Director of Kordant Philanthropy Advisors, a social venture firm dedicated to more effective, impactful and joyful philanthropy. As an advocate of donor education and the strengthening of the philanthropic sector in the U.S. and Asia, she speaks at many events and her insights are often quoted in leading publications, including Forbes Asia, New York Times, Family Office Review, San Francisco Business Times and Economist Intelligence Unit reports.