By Switzerland offers a favourable policy and legal environment for philanthropy. However, some issues could be improved, particularly in the field of tax law (Lideikyte Huber/Peter, 2021). First, there’s no clear policy message about the goal of tax incentives for charitable giving. In practice, it appears that those incentives are structured to maximize total giving, potentially undermining distributional (equality) concerns. However, the legislator never specified such a goal.
Secondly, Switzerland should reassess the current restrictions on its tax support for cross-border philanthropy. Considering our global challenges, such as the pandemic or climate change, an insular perspective on philanthropic action and its benefits seems outdated.
Finally, Switzerland lags behind in data collection and reporting on tax incentives for charitable giving. Improving this would enhance transparency and allow all stakeholders to better understand the relationship between philanthropy and taxes. This could also enhance the general trust in philanthropic initiatives, which is often lacking because of opacities in the philanthropic sector.
To address these shortcomings, the Swiss legislator should provide a clear message defining the goal of tax incentives for philanthropic giving, as well as reassess the rationale for restricting the tax support for cross-border giving. Both the legislator and the government should seek to collect and report better data on tax incentives for charitable giving and their efficiency. In addition, researchers outside the area of law could clarify a number of current knowledge gaps concerning the response of taxpayers to incentives for giving
Transparency and public trust
Beyond the tax framework, the Swiss philanthropic sector is seen as relatively non-transparent. In addition, studies based on the canton of Geneva indicate that people holding leadership positions in foundations are, as a whole, neither diverse nor equipped with the right skills. Those studies have also observed the need to publicize and align the work of regulatory authorities.
Foundations need to become more transparent and accessible in order to maintain public trust, as well as to introduce measures to increase the diversity of board members and to develop the skills of their personnel.
Giedre Lideikyte-Huber is a Senior Lecturer at the Faculty of Law, University of Geneva. Lideikyte-Huber is on Twitter and LinkedIn. Photo of Geneva, Switzerland, courtesy of Jack Ward and Unsplash.
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