European countries among highest scorers for philanthropic environment but hurdles remain

While the global philanthropic environment is becoming slightly more favourable on the whole and European nations are among the highest scorers, many countries are battling shrinking space for philanthropy due to their political environments and other factors, the 2022 Global Philanthropy Environment Index (GPEI) has found.

The Index, developed by researchers at The Indiana University Lilly Family School of Philanthropy at IUPUI, affirms that a consistent and enabling regulatory environment, state collaboration, and strong philanthropic traditions and societal values are essential to nurture philanthropy.

Of the 91 countries and economies covered by the survey, three-fifths report a favourable environment for philanthropy between 2018 and 2020 (scoring 3.50 or over), with philanthropic giving growing worldwide. However, two-fifths report a restrictive environment, with one-third citing restrictions for cross-border philanthropic flows specifically. Among the 79 nations studied in both 2018 and 2022, nearly 30 report a shrinking space for philanthropy as a result of their political environments, such as state harassment, negative campaigns, political instability and restrictions on foreign funding.

To measure philanthropy, the Index rates countries and economies on a scale of 1 (least favourable) to 5 (most favourable) across six factors: the ease of operating a philanthropic organisation, tax incentives on giving, cross-border philanthropic flows, political environment, economic environment, and sociocultural environment for philanthropy.

It found that the overall philanthropic environment was moderately supportive globally between 2018 and 2020, scoring 3.63. Of the six factors, ease of running a philanthropic organisation (3.97) scored the highest global average and economic environment (3.46) the lowest.

European countries among highest scorers

Many European nations were among the highest scores in the Index, with the Balkan region and Northern Europe seeing an overall improvement in their philanthropic environment and Western Europe remaining largely stable, while those in Southern Europe saw a slight decrease.

Globally, Liechtenstein scored the highest average score overall, at 4.91, followed by Norway (4.83), Switzerland (4.83), Germany (4.78), and the United States (4.76). Countries with scores between 4.5 and 5 were Belgium, Denmark, Finland, France, Netherlands, Sweden, and outside of Europe – Singapore. Austria, Ireland, Italy, Romania, and the UK also scored above 4. However, Albania and Hungary scored just 3.13 and 3.14 respectively.

Countries where the political environment for philanthropy has declined include Hungary – where attempts have been made to control the distribution of foreign funding, and where there is opposition to human rights and watchdog organisations. The latter opposition applies in Serbia too.

Barriers for philanthropy

The COVID-19 pandemic was listed as the main challenge for philanthropy in Southern Europe but was also seen as an opportunity to develop new ways of working. There was also concern that anti-money laundering and anti-terrorism legislation had introduced more reporting requirements on the Southern European philanthropy sector. Overall however, philanthropy seems to have a relatively stable legal environment here.

Few changes were reported from the nine Western European countries where the environment remained stable and favourable for philanthropy, and minor changes in tax law both for philanthropic organisations and donors even improved the situation.

Amir Pasic, Ph.D., the Eugene R. Tempel Dean of the Indiana University Lilly Family School of Philanthropy, said:

“The Global Philanthropy Environment Index and the Global Philanthropy Tracker provide the tools global leaders need to understand how and where the philanthropic environment is changing and evolving and – most importantly – to provide context as philanthropy works to solve pressing challenges. Whatever the challenge at hand, philanthropy operates in a context that we ignore at our peril.”