The real value of philanthropy

The recent reform of the Voluntary Sector gives order to a system worth over 64 billion Euro in Italy, of which 9 are made up exclusively of charitable donations. More facilities are provided for donors and an increased regulation is provided for not-for-profit entities.

Philanthropy is becoming an alternative instrument for the allocation of human resources having specific skills and action strategies capable of producing a measurable social impact and of starting partnerships with the corporate and finance sector. In Italy, philanthropy, meant as the support to socially useful activities through the donation of financial resources, moves total 9.1 billion Euros, so that Italy ranks third in Europe, after the United Kingdom and Germany.

Philanthropy is an increasingly discussed theme, also because, last July and August, the government issued legislative decrees implementing the so-called reform of the Voluntary Sector, bringing into effect law no. 106 dated 6 June 2016.

The Voluntary Sector entities created by the reform include the new type of philanthropic entities, i.e. those entities that are mainly founded as associations, philanthropic foundations or communities, which seek resources to be committed to third parties for the pursue of specific projects. This is a new strategic philanthropy model which requires all not-for-profit entities to consider their social impact and prepare their sustainability report. The reform has introduced some updates also concerning the tax treatment of donations to Voluntary Sector entities.

According to Paolo Besio, Partner at Bernoni Grant Thornton: “the legislator is trying to reorganize this aspect by increasing concessions granted. Besides, some tax rules are still subject to the approval by the European Commission. I believe this is the right way, even though a clearer definition of the benefits for philanthropists would have been advisable. However, philanthropic choices are not influenced by tax concessions”.