An empirical study of the economic costs and benefits of charitable grant-making foundations in Switzerland has been published.
With over 13’000 charitable foundations and total assets of almost 100 billion CHF, Switzerland is one of the world’s most important centres for philanthropy. The country has six times more foundations per capita than the United States of America or Germany.
Charitable foundations generate considerable value for society. They promote topics which governments have not (yet) been able to address or has only considered in a limited capacity. They can tolerate higher levels of risk and foster new ideas that help shape our future. Foundations are also an expression of citizens’ voluntary commitment to the common good. They are a pluralistic element in a society where individuals actively take responsibility, rather than waiting for governments to intervene in pending matters.
In return, the state grants foundations and their donors certain tax privileges. These apply when a charitable foundation is established and while it is operating. Until now, no one has considered whether this arrangement pays off at a fiscal policy level.
This is where the study “Foundations – A good deal for society” comes in. Two model cases of setting up a foundation with alternative investment options were used to calculate the amount of tax revenue forgone by society. This loss is then measured against the gain reaped by society in the form of donations from charitable grant-making foundations. The two model cases show that these foundations disburse significantly more funds than the government would be able to collect by taxing the assets.
–> The foundation model reaches its break-even within one month and at the latest, after up to 18 months. From this point onward, the foundation is nothing but a good deal for society.
The study was compiled by SwissFoundations, the association of charitable grant-making foundations in collaboration with PwC Switzerland, a leading audit and advisory company.
A flyer summarizing the results in available for download in English. The full study (including four model cases) is available for free download in German and French.
