The continued rise of foundations in the philanthropic sector

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The dynamism of the philanthropy sector is not weakened. Increasing number of structures, increasing economic weight: after two years of health crisis, the will to act in the general interest has never been so strong for two decades.

On April 7, the Fondation de France presented its new annual philanthropy barometer, produced by the Philanthropy Observatory. Present in all territories, the Fondation de France is the leading philanthropic network in France. Its barometer highlights the strong growth in the number of foundations in two decades. Since 2001, the number of foundations has multiplied by 2.5 to close to 2,800 active structures in 2021. This increase is basically linked to company foundations, which are six times more numerous, and to the protected foundations, whose number has tripled. If we include endowment funds in all foundations, their number reaches close to 5,000 structures, which collectively committed 11.9 billion euros of expenditure for the general interest in 2020.

The weight of the foundations

Overall, there is very strong global growth in the sector. Currently, sheltered foundations and endowment funds, which were created in 2008, account for three-quarters of philanthropic structures in France. Another indicator of the rise of the philanthropic sector: the increase in the economic weight of foundations. In almost 20 years, the assets of the foundations, such as their expenses, have quadrupled, reaching 32 billion euros in assets and 11.9 billion euros in expenses in 2020 (compared to 8 billion euros). euros of assets and 3.1 billion euros of expenditure in 2001). While this vitality of the sector is encouraging, the Fondation de France teams point out, it should be noted, however, that certain foundations have suffered, due to the health crisis, a drop in their resources, in particular the structures of operators or structures. of modest quality. size. For the Fondation de France, this trend testifies to the strength of private commitment, both from individuals and companies, to the general interest after this unprecedented period of crisis. “The dynamism of the philanthropy sector has not weakened during the health crisis, on the contrary! “Demonstrates the confidence of private actors in the ability of philanthropy to meet the current challenges of our society, to have an impact on the world around them,” said Axelle Davezac, Director General of the Fondation de France. “This desire to get involved is as strong for individuals as it is for companies, and for the latter, the crisis has even acted as an accelerator,” he concludes.

A favorable tax context: the law Aillagon

How to explain this dynamism? Undoubtedly, several factors are involved. The first of these is undoubtedly the evolution of the fiscal and legal framework. The legislature has on several occasions facilitated the commitment of individuals or companies. The provisions resulting from the law of 1er August 2003 on patronage, associations and foundations, known as law Aillagon, which bears the name of the Minister of Culture and Communication who initiated the text, have allowed the corporate sponsorship to take off thanks to a particularly attractive tax regime. In its 2011 report on tax gaps, the General Treasury Inspectorate also considered the reduction in corporation tax on donations to works or public interest entities to be “relatively efficient” (Report from the Commission of Valuation of tax expenditures and social niches, June 2011). ). The common law regime established in 2003 to promote corporate sponsorship is accompanied by specific mechanisms dedicated to the action of companies in the field of art and culture. It allows companies to benefit from a reduction or IR of corporation tax (IS) equal to 60% of the amounts granted (CGI, art. 238 bis). However, this reduction is limited since the expenses withheld may not exceed 20,000 euros or 5 ‰ of the total turnover without taxes of the promoter company, when the latter amount is higher, in case of exceeding this limit may be extended. the excess of tax cuts over the next five years. Donations made by companies must be sent to an organization of general interest such as a foundation or association, an educational establishment, a public or local body, etc. Specific regimes have been established for the acquisition of three types of cultural assets: national treasures, original works by living artists, and musical instruments. Within the common law system itself, the texts distinguish between associations called “Amendment”. Colouche which have benefited from more favorable provisions since the passage of the Finance Act of 1989 and other associations of general interest. The scope of the associations Colouche it has gradually expanded to include increasingly varied associations.

Legislative developments

The latest finance law for 2020, however, marked the first drop in the sponsorship incentive mechanism, reducing the corporate tax cut from 60% to 40% for some of the expenses of larger companies. . This text also limited the appeal of skills sponsorship. However, with the implementation of a ceiling of 10,000 euros in 2019 and 20,000 euros in 2020, the legislator has favored the philanthropic action of the VPEs that have so far been limited by the historic ceiling of 0.5% of sales. Another decisive element, the law TEPA of 21 August 2007 for the economic recovery, which introduced the reduction of the solidarity tax on wealth (ISF) which, from 2009, allowed to mobilize more than 50 million euros in donations for the benefit of research establishments or higher or artistic education, foundations recognized as being of public utility, integration societies and companies of temporary insertion works, workshops and integration projects, etc. paid by 19,000 taxpayers, which meant a € 38 million tax reduction (ISF – Donation scheme codified in Article 885-0-V bis). of the CGI). This incentive plan has been extended in the form of an IFI-Don scheme. Another important text, the Law on Social and Solidarity Economy of 31 July 2014, which defined the field of social and solidarity economy (ESS), a form of entrepreneurship and economic development, adapted to all areas of human activity, recognizing the foundation as one of the four major statutory families of the ESS, recognition of the contribution of the sector to the service of missions of general interest in France.

The rise of CSR policies

Another significant causal factor is the development of corporate social responsibility (CSR) policies, which translate the concept of sustainable development through three pillars: social, environmental and economic, which has played a driving role in the growth of corporate foundations. . The complementarity of CSR approaches and philanthropy allows companies to make a global and consistent commitment to the general interest. Since 2001, companies, whose securities are listed on a regulated market, have been obliged to report on how the company takes into account the social and environmental consequences of its activity. These obligations are being gradually extended to all companies. Non-listed companies whose total balance sheet or net turnover exceeds 100 million euros and have more than 500 employees must comply with it for the years beginning on or after 31 December 2013. SMEs VSE , although they are not currently subject to these reporting obligations, but more and more of them are voluntarily committing to a CSR approach. For these companies, their CSR commitment is an opportunity for action and development, a vector of meaning and mobilization for teams, and a lever for performance. In this context, sponsorship has its place to meet the ambitions of these companies.

Growing favor of protected foundations

In 1990, the legislature limited the designation to three forms of organization: the foundation recognized as being of public utility, the corporate foundation, and the foundation hosted by an authorized body. The endowment fund, which is not called a foundation, was added to this set of general measures in 2008. Between 2006 and 2009, the legislature, to encourage the development of foundations in the service of research and teaching superior, has created four specialized systems. , directly inspired by pre-existing statutes: the scientific cooperation foundation, the university foundation, the collaboration foundation and the hospital foundation. There is a growing interest in protected foundations, which allow patrons to give their name to a fund or a cause, without having to raise an endowment but leaving the possibility in the medium term to give birth to a FRUP. It is an attractive model for families and businesses, especially because this special status allows them to benefit from both legal and methodological support and therefore share knowledge and costs. It also offers founders the opportunity to join a network, to open up to exchanges and collaborations around common causes. More and more families are creating protected foundations, the Fondation de France teams point out. Today it is common to see how up to three generations mobilize around a philanthropic project, designed and built as a family. Another strong trend is the creation of foundations hosted by companies, which account for, for example, almost half of the new foundations hosted by the Fondation de France in 2021. These are mainly SMEs that mobilized in 2020 to respond to the urgency of the health crisis. , and now they want to perpetuate that commitment. These new foundations want to give concrete and effective answers to the great current challenges of our society. The desire to support the ecological transition and protect biodiversity is at the heart of the commitment of about 30% of the new foundations hosted by the Fondation de France. Other causes related to vulnerabilities are also very present in the missions of the foundations. Specifically, the fight against inequality and violence against women, the precariousness or mental health of young people, but also education and culture, which have been particularly affected over the last two years.

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