Developing the global_guide_to_what_counts_webpdf

Developing
The Global Guide
to What Counts

Expanding the Boundaries of Corporate Giving
Differing country standards create obstacles to consistent global
reporting. This report details the research results to create a
framework which overcomes those obstacles, empowering the business
community to capture and compare contributions.

CECP & Deloitte
To create a global measurement
framework, CECP leveraged ten years
of expertise with the Corporate Giving
Standard, but also required additional
proficiencies. Deloitte member firms’
invaluable experience in designing global
business impact standards, as well as the
Deloitte network’s extensive consulting,
audit, and tax knowledge, made it an ideal
consultant for researching and synthesizing
the applicable tax codes, regulations,
and reporting practices of firms around
the world. Deloitte member firms
were engaged by CECP for the Global
Corporate Giving Initiative on a pro bono
basis. Barry Salzberg, CEO of Deloitte
Touche Tohmatsu Limited, served as a
member of CECP’s board of directors
from 2009-2012.
This report is the companion piece
to The Global Guide to What Counts,
released in June 2012 and available at
CorporatePhilanthropy.org/Global.

© 2012 Committee Encouraging
Corporate Philanthropy.
Download additional copies of this report
at CorporatePhilanthropy.org/Global.

Preface

C
ommunities around the world This report establishes a valuation guide,
continue to face a grow- which will serve as an internationally
ing number of increasingly relevant measurement framework by
complex challenges on a daily which companies can track, report, and
basis. And while the business community benchmark their multinational cash and
is actively working to help address these non-cash giving. While the multiyear
challenges, we need a common language: project to establish the valuation guid-
a way to identify and clarify the cross- ance is coming to an end, it’s the starting
Barry Salzberg
industry, cross-border efforts currently point for a larger global measurement
Chief Executive Officer
under way to support communities. effort as the corporate community begins Deloitte Touche Tohmatsu Limited
To encourage the expansion of inter- implementing this guidance.
national business engaging with society, This work will influence important
the corporate giving field must unite to changes in the way the corporate social
develop and leverage better methods investment field currently measures the
to guide and measure social investment commitments of the largest companies
strategies. The questions remain: Can in the world. The other benefits expected
the business community speak as a from this project include increased
single voice about where the investment transparency, sharing of best practices,
is going, what programs and issues are and an aggregation of total giving across Doug Conant
being funded, and which programs are companies to better illuminate giving Chairman
most effective? trends of the business community. Committee Encouraging
Corporate Philanthropy
To answer these questions, we need a The results are yours. Throughout the
shared understanding of what consti- project, we listened to the needs of
tutes charitable giving and charitable corporations engaged in solving society’s
organizations. The mission of the most pressing issues. This report presents
project, and the subject of this report, our current thinking and progress to
is to provide more robust answers to date. The measurement tools produced
corporations’ important questions about by this initiative will be designed for prac-
measurement. tical use, and we continue to be open to
The Committee Encouraging your input and feedback on how to make
Corporate Philanthropy (CECP) in this inclusive effort representative of your
collaboration with Deloitte Touche company, your industry, and the field as
Tohmatsu Limited (DTTL) and the a whole. We thank you for your engage-
assistance of its member firms (Deloitte) ment and invite you to join us in the next
brings together the decade of measure- phases of work.
ment expertise of CECP, as one of the Sincerely,
strongest international forums of CEOs
with a sole focus on corporate social
engagement, along with the tax and
consulting knowledge and experience of Barry Salzberg
the Deloitte global network.

Doug Conant

Table of Contents

Report Overview . .................................................................................. 1
Project Motivation: Filling a Gap. .....................................................................2
.
Methodology........................................................................................................... 4
.

The Global Guide: Three Criteria..................................................7
.
Applying the Global Guide: Decision Tree................................................... 9

International Research Findings ...............................................11

I. Legal Structures................................................................................... 13
. “CECP’s global
II. Annual Reporting................................................................................. 16 efforts to advance
III. Government Registration.................................................................. 17
transparency
IV. Mission, Purpose, and Activities..................................................... 19
around reporting
V. Inurement................................................................................................ 21
and benchmarking
VI. Commercial Activities....................................................................... 22
.
VII. Private Schools.................................................................................... 24
.
of corporate social
VIII. Political Participation........................................................................ 25
.
investment are crucial
IX. Monetary Contributions................................................................... 26
. to mounting an
X. Property and Product Contributions........................................... 28 effective response to
XI. Service Contributions........................................................................ 29 the challenges facing
XII. Cross-Border Giving Agreements................................................30
. business and society.
The Global Compact
Spotlight on China............................................................................... 15
strongly supports
Spotlight on France........................................................................... 23
.
CECP’s work, which is
Spotlight on Russia............................................................................ 27
.
Spotlight on Brazil.............................................................................. 29
fully aligned with our
universal principles.”
Georg Kell
Executive Director
Next Steps: In Your Hands ............................................................... 31 UN Global Compact

Appendices
Acknowledgements ........................................................................................... 35
Regulatory Environment Survey (RES) Sample Questions................. 37

Report
overview
Given the absence of international standards for
defining and measuring charitable giving, CECP
and Deloitte set out to build the foundation
required to establish one with authority.
The results include three key criteria by
which global giving recipients are defined.
Designed for simple, practical application by all
internationally philanthropic companies, these
criteria should prove vital to improving and
harnessing your giving-measurement processes.
The Global Guide criteria were originally
presented to the CECP community in June
2012, in the companion piece to this report: The
Global Guide to What Counts (see page 7). For
Filantropia Corporatíva
readers who prefer to see the results without
the supporting research, the Global Guide is a Corporate Giving
succinct summary. For those interested in the
detailed international findings that determined Filantropia Aziendale
those criteria, the present report tells the full
story of how the criteria were established: the
research undertaken, the complexity traversed,
and the lessons learned.
Framed by sections that seek to describe the Mécénat d’Entreprise
“bigger picture,” this report’s findings detail
many of the exceptions and nuances that make
country regulations so difficult to standardize.
Introductory text highlights gaps in the Investimento Social Corporativo
current system and presents the research
methodology. Some findings informed the
criteria directly; others provided illuminating
context. At the beginning of each finding
that directly informed the establishment of
one or more criteria, the reader will see an
infographic.
In conclusion, the report predicts the benefits
of the Global Guide’s implementation, namely
allowing us to capture and compare—in a truly
meaningful way—the data on global giving.

Project Motivation:
Filling a Gap

C
orporate contributions to Figure 1: the Transformative Power of Measurement
social causes are growing all
the time. More than ever, Benchmarking and analysis Where
Improved
companies require a strategic does Solutions
your
measurement framework that will enable Data Collection Survey What’s company
for Global
Societal
your
them to report clearly on these contribu- company
fit? Issues

tions’ magnitude and significance. Global Guide What doing?
counts?

Global measurement has three com-
ponents: 1) consensus-driven valuation
guidance (What counts?), 2) global
corporate survey data collection (What’s Divergent Practices may allow a company to expand more
your company doing?), and 3) global Achieving a complete understanding of broadly, geographically speaking, but it
benchmarking and analysis (Where does all companies’ internal procedures for also requires a commitment to expend
your company fit?). tracking international giving is beyond internal knowledge and other resources
the scope of this project. However, on understanding a wide range of
Inherently, tax laws are developed domestic policies and ensuring that the
recent research has unearthed two gen-
domestically and reflect the local company’s own practices remain cur-
eral, divergent practices among compa-
conditions of civil society, or the “third rent and adaptable. As seen in Figure 2,
nies engaged in international giving.
sector.” This is a problem for multina- 32% of companies indicated followed
tional firms that endeavor to measure One is to use one country’s determina- the first practice, whereas 29% followed
and plan their global giving. The Global tion of a qualified recipient and to give the second. The poll also indicated
Guide serves as a basis for international only to that type of recipient, or per- that a significant number of companies
valuation guidance where the necessary haps also to its international equivalent. (20%) have not yet determined which of
standards for such measurement previ- The second is to seek to incorporate these practices they may apply.
ously did not exist. country-specific policies for every juris-
diction in which the company wishes to Problematic Benchmarking
be philanthropic. This second method Companies aspire to baseline their pro-
grams in order to measure and analyze
Figure 2: Corporate Methods for Tracking International Giving their performance based on comparison
data from peer firms. Benchmarking is
When you track global giving, how do you an important method, among others,
decide what to include and what to exclude? for determining success and opportuni-
ties for realignment. Without a common
32% baseline like the Global Guide, however,
29% truly comparable global giving data
cannot exist. Many companies choose
20% not to aggregate their global giving
19%
figures, or they are unsure of their
results. Tracking and reporting are done
in an uncoordinated manner, sometimes
resulting in incomplete data. In short,
We capture the We capture the We do not have Not applicable - we internally developed policies result in
amount deemed amount deemed a policy for do not participate numbers that to other companies are all
charitable under charitable under measuring this in global giving
the U.S. standards the local country amount
but unusable for benchmarking.
standards

Source: CECP Corporate Philanthropy Summit, Attendee Poll, June 2011, N=104

Committee Encouraging Corporate Philanthropy | developing the global guide to what counts | 2

P r o j ec t M o t i v a t i o n c o n t i n u e d

What the Global Guide What the Global Guide The Global Guide creates a measurement
Does NOT Do: DOES Do: standard based on three criteria inde-
While the Global Guide creates an inter- The Global Guide improves philanthropy pendent of any one country or region’s
national standard for specific purposes, measurement by proposing an interna- regulations. Currently, such a standard
the standard is not intended to have tional standard by which companies can does not exist. These criteria also make
policy implications or legal repercus- track and report their giving. Companies an affirmative and definitive (though
sions. It should also not be construed that uniformly report using the Global not exhaustive) statement on the current
as a standard that dictates internal Guide will produce truly comparable industry standard for what recipients
company policy or procedure, as the figures, thus moving toward transparency contribute to societal benefit.
focus is on agreement among companies for all consumers of this data. Increased
and not on redefining one company’s transparency responds directly to con-
specific, strategic priorities. sumer demands (see Figure 3). Data
Global
Collection
Guide
Survey
Nor does the Global Guide provide advice
on how to create or expand an inter-
national giving program, whether in a
particular jurisdiction or within a com-
pany’s own cultural environment. The The Global Guide focuses on being cur-
guide does not recommend recipients rent and relevant, so that the Global
or partners. However, there are many Guide criteria can be applied year-over-
excellent organizations equipped to help year to capturing global giving data
companies start or expand their inter- through a corporate survey.
national giving, and several of these are
Figure 3: CEO Perspective, The Importance of Transparency
listed in the guide’s acknowledgments.
Finally, how to measure giving’s impact Are consumers demanding greater transparency
is not an aspect of this project, either— regarding your company’s community-engagement
although impact measurement is a vigor- initiatives than they were five years ago?
ous and important ongoing conversation.
Please refer to CECP’s report Measuring 19% Significantly 40% Noticeably
the Value of Corporate Philanthropy1 for more greater demand greater demand
information on this topic.

36% Demand
unchanged

5% Not sure
0% Noticeably less demand
0% Significantly less demand

Source: CECP Board of Boards CEO Conference, Attendee Poll, February 2012

1
http://www.corporatephilanthropy.org/
research/thought-leadership/research-reports/
measuring-the-value.html

3 | Committee Encouraging Corporate Philanthropy | developing the global guide to what counts

Methodology

Figure 4: Developing the global Guide: Milestones

Project Country Draft Advisory Proposal Public Working Global Research
Launch Research Guidance Comment Release Comment Group Guide Report

Feb. 2011 June 2011 Nov. 2011 Jan. 2012 Feb. 2012 April 2012 May 2012 June 2012 Aug. 2012

(Completion date is shown)

A
thorough review and analysis ent geographical regions. The countries
of the factors that would selected were Australia, Brazil, Canada,
likely influence global cor- China, France, Germany, India, Italy,
porate giving was a funda- Japan, Mexico, the Netherlands, South
mental step in addressing the unique Korea, Spain, Switzerland, Russia, the
challenges of developing a standard United Kingdom, and the United States.
measurement framework. The primary Countries that did not have at least two
goal was to analyze corporate giving Global Fortune 500 companies were
practices across multiple country jurisdic- automatically removed from consider-
tions, thus finding areas of synthesis ation. After selecting the jurisdictions to
and discrepancy that would inform the be sampled, Deloitte then assisted CECP
criteria established in the Global Guide. to develop and administer the Regulatory
Environment Survey (RES).
CECP worked with assistance from
Deloitte to develop and implement The survey was divided into three cat-
comprehensive survey research on the egories of questions designed to inform
current conditions affecting global the team on current conditions and chal-
corporate giving. Deloitte’s invalu- lenges existing in the field:
able experience in designing global
Comparing Jurisdictional
business impact standards such as the
Definitions of “Charitable”
Impact Reporting and Investment Standards
Giving. Because different jurisdictions
(IRIS) and the Global Impact Investing
have different definitions on what con-
Ratings System (GIIRS), together with
stitutes a “charitable” organization and
the company’s extensive consulting,
donation, it was necessary to reconcile
audit, and tax knowledge and experi-
the discrepancies that existed among the
ence, made Deloitte the ideal consultant
jurisdictions regarding how each defined
for this project.
a reportable donation. Several cat-
the Regulatory Environment egories were identified to obtain more
Survey (RES) detailed information from the foreign
jurisdictions, by determining the follow-
The seventeen countries with the
ing data points:
highest concentration of 2010 Fortune
Global 500 companies’ headquarters ■■ The types of organizations that qualify
were selected to be the focus of this as charitable within each country;
study, ensuring balance among differ-


m e t h o d o l o gy c o n t i n u e d

■■ The types of activities by those organi- ■■ Financial reporting valuation methods, Development of the
zations that qualify as charitable; and including how non-cash contribu- Valuation Guidance
■■ The types of activities that prevent tions are valued for financial reporting The responses collected from the RES
an organization from becoming a purposes. were analyzed and quantified for consis-
charitable organization or that result Examining Cross-Border Issues. tency to identify the level of consensus
in the disqualification of an otherwise Cross-border giving is giving made by and to reconcile discrepancies as to what
charitable organization (termed a a corporate headquarters in a jurisdic- constitutes a “charitable” organization
“disqualifying event”). tion foreign to its headquarters country. and donation—also as to how jurisdic-
After a first phase of country-by-country To understand the effects that national tions handle donor and cross-border
inquiry, Deloitte prepared a list of vari- variances would have on developing a issues. To ensure that sufficient and
ous activity types based on the National global measurement framework, the appropriate evidence was collected to
Taxonomy of Exempt Entities (NTEE), team sought first to gain an understand- provide a reasonable basis for the survey
published by the National Center for ing of how cross-border issues are typi- findings and conclusions, the team per-
Charitable Statistics (NCCS). Using the cally handled in each of the seventeen formed secondary research and follow-up
matrices completed in the first phase of jurisdictions. Deloitte member firms work as necessary to obtain the most
research, Deloitte sorted each country’s locally advised on certain cross-border complete and accurate assessment of the
responses against the list of activities and issues such as the permissibility of cross- current conditions present within each
then prepared and filled a second matrix border donations, the availability of tax jurisdiction.
outlining whether certain types of activi- benefits, and specific rules for cross-
Key findings from the RES are presented
ties should be considered as “charitable.” border donations.
in the International Research Findings
Identifying Legal Factors: To engage qualified and knowledgeable section of this report. These findings are
Tax Laws and Regulatory survey respondents, the Deloitte team organized by topical areas that the team
Environment. The team also col- leveraged their access to specialists with observed as having either a high degree
lected information on legal factors knowledge and experience of the tax of consensus or discrepancy among the
influencing corporate donors in the laws and regulatory environments of respondents. After the survey findings
seventeen selected jurisdictions. These each country surveyed. To complete the were applied to establishing the proposed
questions focused on determining how country surveys, Deloitte’s consultants global valuation guidance, a first draft of
the tax laws and regulatory environment reviewed the survey matrices, referred this proposal was shared with, and cri-
affected corporate donors’ decisions on to Deloitte professionals located in the tiqued by, hand-selected non-governmen-
giving. Deloitte sought to determine: jurisdictions studied, and assisted CECP tal organizations (NGOs) and companies
when necessary with follow-up questions. in the Advisory Group (see page 35).
■■ The types of tax benefits and incen-
tives available to corporations that Refining the Guidance:
donate to qualifying charitable organi- Online Public Comment
zations or activities; After this analysis, an exposure draft of
■■ Whether tax laws governing donations the proposed global valuation guidance
to charitable organizations fluctuated was published online from February 27
or were frequently changed; through April 9, 2012. As part of the
■■ Restrictions and caps on giving (relat- refinement process, industry leaders and
ing to tax benefits and other benefits professionals were invited to participate
that corporations might receive); in a public comment period and asked to
provide feedback to the proposed guid-
■■ Other fiscal, social, and political regula-
ance by responding to questions on an
tions that might influence donors; and
online feedback form.


m e t h o d o l o gy c o n t i n u e d

Respondents were asked a total of
Figure 5: engagement by region
eighteen questions about the content of
Breakdown of Practitioner Respondents the proposed global valuation guidance
and were requested to select from among
multiple-choice answers. Responses
16% Europe 49% United States
and Canada
to the feedback form were compiled,
analyzed, and quantified when possible;
four especially representative queries are
17% Asia
presented in the International Research
Findings section of this report. In gen-
eral, feedback from the public comment
period indicated strong support of the
three Global Guide criteria. Figures 5 and
18% Latin 6 provide detail on respondents.
America
Finalizing the Guidance:
Working Group
Source: Public Comment Period, Spring 2012, N=79
Finalizing the Global Guide required
a fresh collaborative effort, which we
Figure 6: engagement by sector
called the Working Group. The Working
Group’s goal was to consider all project
Breakdown of Practitioner Respondents
inputs and then determine the final text
of the guide.
20% Non-
Governmental
The Working Group was made up of
Organizations CECP staff, Deloitte International Tax
Services, Deloitte Sustainability, and the
Johns Hopkins Center for Civil Society
Studies. Over a series of meetings, the
Group agreed on various edits to the pro-
80%
Corporate
posed global valuation guidance—edits
designed to ensure that the resulting final
criteria best reflect the scope of work
achieved, as well as its intended purpose
and audience.


The 1 Must be formally organized

Global  The purpose of this criterion is to specifically
exclude individuals and ad hoc groups that

Guide lack structure or organizational identity.
 The primary method by which to satisfy this
Determining which criterion is through recognition as a legal
recipients to include entity by the standard of the country in
when reporting corporate which it is headquartered. The type of legal
entity is immaterial; it could be a corporation,
charitable giving.
association, or any other valid legal form.
 In many countries, recipients that are formally
organized nonetheless face significant
Three Criteria obstacles in establishing legal recognition. In
Eligible for Inclusion. A recipient the absence of legal recognition, a recipient
(institution, organization, or entity) must must produce evidence that it has liabilities that
meet all of the following criteria: are distinct from those of its members, such as
proof of formal leadership (e.g., the presence of

1
a governing board) as well as structured rules
of operation (e.g., a charter or bylaws).
The recipient
must be  Government or state-run recipients must be
formally excluded. See one exception in Criterion #2,
organized; “Education and Research.”

+ 3 Must never
distribute profits

2
The recipient
must exist for  The purpose of this criterion is to distinguish
a charitable commercial motives from non-commercial
purpose; and, motives as the purpose for which a recipient is
formally organized.

+
 To satisfy this criterion, a recipient’s finances
must be managed exclusively to produce a
charitable benefit:
- All sources of revenue must always

3
be reinvested in achievement of the
organization’s mission.
The recipient
- Surplus revenue must not be distributed to
must never
entities or individuals. An example of this
distribute
is when those with a financial share in the
profits.
organization, such as owners, members,
founders, investors, shareholders, or a
governing board receive dividends based
on the institution’s performance.
- Excessive salaries or perquisites are
grounds for excluding a recipient.


2 Must Exist for a Charitable Purpose

 The purpose of this criterion is to Included
distinguish charitable purposes from all Charitable Activity Categories
other purposes for which a recipient entity
Culture and Recreation: Culture and Arts; Sports; and Other Recreation
is formally organized. and Social Clubs.
 Include recipients whose institutional Examples: Visual and performing arts; architecture; historical societies;
purpose falls within one or more of the museums; publications and broadcast media; zoos and aquariums; social
major activity and purpose categories listed and service clubs; recreational facilities; and amateur sports clubs.
and described in the “Included Charitable Education and Research: Primary, Secondary, Higher, and Other
Activity Categories” section. Education; Research.
- The categorical system used here is drawn Examples: Elementary and primary education; higher learning; pre-schools;
from the International Classification of technical and vocational schools; and medical, scientific, and social science
Nonprofit Organizations (ICNPO). This is a research institutions. Government or state-run education institutions (in some
countries, these are called “public schools”) are included.
global standard endorsed and promoted
by the United Nations. The examples Health: Hospitals and Rehabilitation; Nursing Homes; Mental Health and
listed under each category are suggestive, Crisis Intervention; and Other Health Services.
not exhaustive. Examples: Institutions providing inpatient and outpatient care;
rehabilitation centers; public health and wellness education; and
- To be included, a recipient’s institutional emergency medicine.
purpose is evidenced by more than half
of its total expenditures being directed Social Services: Social Services; Emergency and Relief; and Income
toward an activity or activities. Support and Maintenance.
Examples: Child and youth welfare; daycare centers; services for families,
 Exclude recipients whose institutional the handicapped, or the elderly; domestic disaster prevention; temporary
purpose falls within one or more of shelters; domestic refugee assistance; organizations that provide direct
the categories listed in the “Excluded income support and material assistance; and self-help programs.
Charitable Activity Categories” section.
Environment: Environment and Animal Protection.
Examples: Pollution abatement; natural resource conservation;
environmental beautification; animal protection; and wildlife preservation.
Development and Housing: Economic, Social, and Community
Excluded Development; Housing; and Employment and Training.
Charitable Activity Categories Examples: Organizations working to improve quality of life or improve
economic infrastructure within communities; entrepreneurial programs; job
Political Parties and Organizations: Political Parties
training programs; vocational counseling and rehabilitation; and housing
and Political Organizations.
assistance.
Examples: Political parties; organizations to register
voters; and organizations that distribute political Law and Advocacy: Civic and Advocacy Organizations; Law and Legal
literature. Services.
Examples: Civil rights associations; organizations that advocate for the
Business and Professional Associations; Unions:
rights and protection of specific groups (such as women, the elderly, and
Business Associations; Professional Associations;
children); and organizations that rehabilitate offenders or provide victim
and Labor Unions.
support.
Examples: Professional associations (such as an
organization for lawyers) and business associations Philanthropic Intermediaries and Voluntarism Promotion: Grant Making
(such as a chamber of commerce). Foundations; Other Philanthropic Intermediaries; and Voluntarism
Promotion.
Religion: Religious Congregations and Associations.
Examples: Private foundations; organizations that recruit, train, and
Examples: Any institution promoting religious beliefs place volunteers and promote volunteering; and collective fund-raising
and administering religious services or rituals, organizations.
including churches, synagogues, temples, mosques,
shrines, and monasteries. • Exception: Grant Making institutions that direct more than half of their
funds toward one or more of the excluded activities and purposes
• Exception: Contributions coordinated or outlined in “Excluded Charitable Activity Categories” are excluded.
implemented by a religious institution but which
fund one or more included charitable activities or International: International Activities.
purposes are included. Examples: Exchange/cultural programs; international development assistance;
international disaster recovery and relief; and international human rights.
Not Elsewhere Classified.


Decision Tree

Applying C ri teri o n #1

The
Global Is the recipient formally organized as a
legal entity (type of entity is immaterial)?

Guide YES NO
Which of your grant
recipients would be
included? Is it government- or
state-run?

YES NO

Is it an Can it produce
educational evidence that it has
institution liabilities distinct
(school)? from its members,
such as proof of
YES NO formal leadership as
well as structured
rules of operation?
Exclude
YES NO

Exclude

Proceed to Criterion #2


Decision Tree continued

C ri t eri o n # 2 Criterio n #3

Does its institutional purpose fall within Does it ever
one or more of these included categories? distribute profit?
• Culture and Recreation
• Education and Research
• Health YES NO
• Social Services
• Environment
• Development and Housing Exclude
• Law and Advocacy
• Philanthropic Intermediary
and Voluntarism Promotion
• International

YES NO

Is it a philanthropic Is it a religious
intermediary? institution?

YES NO YES NO

Exclude

Does it direct more than Is the contribution
half its funds toward: designated to fund
one or more included
• Political Parties
charitable activities
and Organizations
or purposes?
• Business and
Professional YES NO
Associations; Unions
• Religion
Exclude
YES NO

Exclude

Proceed to Criterion #3 Include


International
Research
Findings

I. Legal Structures...........................................................13
II. Annual Reporting........................................................16
III. Government Registration......................................... 17
IV. Mission, Purpose, and Activities............................19
V. Inurement.......................................................................21
VI. Commercial Activities. ............................................. 22
.
VII. Private Schools............................................................24
VIII. Political Participation................................................25
IX. Monetary Contributions...........................................26
X. Property and Product Contributions..................28 Filantropia Corporatíva
XI. Service Contributions...............................................29 Corporate Giving
XII. Cross-Border Giving Agreements....................... 30
Filantropia Aziendale
Spotlight on China......................................................15
Spotlight on France...................................................23
Spotlight on Russia.................................................... 27
Spotlight on Brazil.....................................................29
.

Findings

T
he first step toward develop- in seventeen countries with the highest This visual mark displays the connec-
ing internationally relevant concentrations of Fortune Global 500 tion between findings and criteria. The
and inclusive Global Guide companies as shown in Figure 7. remaining seven findings served as
criteria was rigorous research. invaluable context to determining the
To engage qualified and knowledge-
The objective of this research was to criteria, although they did not inform the
able survey respondents, the Deloitte
uncover descriptive factors for corporate criteria directly.
team leveraged their access to specialists
giving recipients that had the highest
with knowledge and experience of the All findings were not covered in the
level of agreement among the surveyed
tax laws and regulatory environments public comment questionnaire because
countries. The research process was
of each country surveyed. CECP then it was built to assess support for the
developed with awareness that tax law,
published the proposed global valuation proposed global valuation guidance.
regulatory environments, and cross-bor-
guidance online and hosted a public Therefore, a sampling of four public
der regulations vary across international
comment period. The “Methodology” comment results that do connect to
jurisdictions and that this variability
section of this report describes this pro- a particular finding have also been
presents major challenges for measuring
cess in more detail. included (Findings I, III, IV X).
,
corporate giving in a global context.
Although tax incentives and legal clas- In order to understand how countries
CECP with the assistance of Deloitte
sifications are subject to change, most define or classify recipients (institutions,
created and distributed a ninety-question
countries demonstrate stable regulatory organizations, or entities) that they con-
Regulatory Environment Survey (RES)
environments in which the tax laws sider “charitable,” the RES began with a
to gather data on the current conditions
governing donations and the tax status series of questions related to the activities,
of charitable organizations have not organizational structure, and regulatory
Figure 7: 2010 Fortune changed significantly in the last ten years. mechanisms that governments use to
global 500 Concentration Approximately 88% of the surveyed define and classify entities that they con-
jurisdictions reported that there had been sider of societal benefit. The survey then
Number of Companies per Country
no significant legislative changes that shifted its focus to contribution types.
Brazil 7 have considerably affected qualification
criteria for charitable status. Some juris-
Canada 11 “Even within our
dictions did note less significant changes,
China 46 such as alterations to annual reporting company there often
requirements, but these changes did little
France 39
to affect the general stability.
times may not be full
Germany 37 consensus on how to
This section presents the results of the
India 8
RES survey. The survey generated twelve measure certain types of
Italy 11 key findings with respect to the tax laws, giving when reporting.
Japan 71 regulatory environments, conditions,
and challenges present in the surveyed With each foundation
Mexico 2 jurisdictions. These results are the source operating independently,
Netherlands 13 data used to standardize a definition for
what constitutes a “charitable organiza- there is a particular
Russia 6
tion,” otherwise commonly recognized as challenge in gathering
South Korea 10 a recipient of corporate giving. relevant information to
Spain 10 Five of the twelve findings had a direct share as we seek
Switzerland 15 and fundamental influence
United Kingdom 29
Influenced
on the development of the Global 1 collaborative partners in
Global Guide criteria—as Guide
Criterion #1
our efforts.”
United States 139 indicated by the presence Orange Foundation (France)
Source: www.forbes.com of an infographic (right).


F i n d i n g I . Leg a l S t r u c t u re s

Charitable organizations must have approved
legal structures in some jurisdictions, but
requirements vary across jurisdictions.

Influenced
Global
1 “Legal structure”
refers to an entity
structure may best accommodate and
describe its purpose. However, this does
Guide type, separate not mean that all associations are chari-
Criterion #1 from an individual table organizations or vice-versa.
person, recognized
by the government. Requirements vary for
charitable entities to
A majority of the countries surveyed
organize as government-
recognize and approve specific types of approved legal structures.
legal structures, such as associations or
foundations. Some jurisdictions require Survey responses revealed that while a
all charitable entities to organize into majority of jurisdictions require entities
specific legal structures, generally as a to organize as a specific type of legal
means of classifying them for regulatory structure, others are more flexible or
and tax purposes. do not have any specific requirements.
Country responses were broken down
Figure 8: practitioner response, Legal structures into three categories according to their
requirements:
There are two key requirements: 1) That the recipient is Category 1
government-registered, and 2) that it does not distribute
Specific Legal Structures
profits. How do these requirements compare to your
company’s current policies and practices?
Required. A majority (65%) of the
surveyed jurisdictions require enti-
ties to be organized into a recognized,
75% These requirements
match our policies approved legal structure based on
its mission, purpose, or the types of
11% These requirements do activities in which it intends to engage.
not match our policies, but In those jurisdictions, the type of legal
they are not in conflict
structure is generally dependent upon
the nature of the organization’s activi-
8% These requirements ties. For example:
conflict with our policies
■■ The United Kingdom has four
6% Partial agreement primary forms of not-for-profit, non-
governmental organizations (NGOs):
Source: Public Comment Period, Spring 2012, N=73 companies limited by guarantee,
unincorporated associations, trusts,
Certain common legal structures are not and industrial and provident societies.
exclusive to charitable organizations. In An NGO in any of those categories
these cases, filing for charitable status can qualify as a “charity.” A charity
can be done separately from establish- is eligible for significant tax benefits
ment as a legally recognized entity. and is also subject to a series of
A commonly known entity of regulations relevant to an equivalency
this description is a corporation. determination.
Corporations can be charitable or non- ■■ In France, the government recognizes
charitable in Australia, India, South two primary forms of NGOs—asso-
Korea, and the United States. Likewise, ciations and foundations—and further
if an organization has a membership breaks down the classifications into
focus, it may be required to organize sub-classifications that correspond with
itself as an association, since that legal different categories of activities.


F i n d i n g I . Leg a l S t r u c t u re s c o n t i n u e d

Category 2 stated in its statutes using capital allo- A few jurisdictions have unique types of
Flexible Legal Structures. Twenty- cated to such purpose.” Dutch founda- legal structures available for some types
nine percent of the surveyed jurisdictions tions may be used for different purposes. of charitable functions not commonly
recognize certain types of legal organiza- seen elsewhere. China has one form of
There are no universal characteris-
tions as common classifications for enti- legal structure called a “Government-
tics for defining and classifying even
ties that perform charitable activities, but organized NGO,” which is a quasi-gov-
common legal structures.
do not restrict entities to those categories ernment agency that is generally formed
as a prerequisite for obtaining charitable The most common types of legal by the government and staffed with gov-
status or tax benefits. structures found in the surveyed jurisdic- ernment employees. Public institutions
tions are associations and foundations. may receive grants from foreign donors
■■ In Italy, charitable organizations
About 80% of the countries list them and are subject to some of the same
are not required to have a specific
among their classifications for charitable tax rules as nonprofit organizations.
legal status or type of organization
organizations; they also generally define Japan currently has a transitional type
(they can be associations, founda-
them in similar ways. of entity called a Public Interest Legal
tions, committees, cooperatives, etc.)
Person (PILP), generally comprised of
However, the activity performed For example, associations are generally
only one or a few individuals. This is a
must be in strict compliance with defined and understood to be mem-
transitional organizational form that is
legal requirements in order to obtain bership-based organizations open to
being phased out due to laws established
beneficial tax treatment. members of the public with a common
in December 2008.
■■ In Mexico, there is no federal law interest and organized by a written
establishing a definition for the types agreement to achieve a non-economic
of legal institution that qualify as purpose. A foundation is commonly “With a new standard,
“charitable organization,” but some understood to be an organization or
states within Mexico have established a institution that engages in charitable we would have the
definition for local purposes. activities or finances other organizations ability to quickly
for that purpose. assess philanthropic
■■ Similarly, in Canada, membership
corporations, trusts, and unincorpo- Despite commonly used terms for some value regardless of the
rated organizations and associations legal structures, classifications and
form the most common types of char- terminologies for legal structures are
country.
itable organizations; however, Canada not always interpreted in the same way
has no statutory requirements (under across all jurisdictions. For example,
Often times the
either federal or provincial laws) that Spain uses the term “foundation” inter- legal definition of
specifically govern the legal form changeably with its general definition for what constitutes
under which a not-for-profit entity “charitable organization” and applies a
must be organized. broader meaning to the term “founda-
public and charitable
Category 3 tion” than is used or interpreted in the institutions is difficult
No Legal Requirements. The United States. In the United States, to understand, even for
a foundation is defined as a formal
Netherlands (which represents 6% of
structure consisting of a corporate body
those working on the
survey responses) is the only jurisdiction
that has no specific legal requirements created by a dedication of assets for a inside.”
or defined categories for recognizing specific charitable purpose. In Japan, Dynamo/KME (Italy)
charitable organizations. In the Dutch foundations aren’t necessarily legal enti-
Civil Code, a foundation (stichting) is ties that have a societal benefit. There is
defined as “a legal person created by a separate designation used to denote a
a legal act which has no members and “foundation of public interest.”
whose purpose is to realize an objective


Spotlight on China

Unique Institutions in the Civil Sector

Contributor: China also has some country-specific
nuances related to nonprofit registration.
Historically, grassroots nonprofits had
to identify a government department
Business for Social Responsibility (BSR)’s or institution that would be responsible
CiYuan initiative builds innovative cross- for their sponsorship and supervision.
sector partnerships to enhance the value While recent regulation gives nonprof-
of social investment in China. Through its in selected cities or provinces that
this initiative, BSR has deepened its work across specific issue areas the
professional knowledge about the current ability to register directly via local civil
nonprofit sector environment in China, affairs bureaus, there are still challenges
including understanding the nuances of associated with the implementation of
institutional structures there. this regulation and related issues such as
whether NGOs can publicly fundraise and Understanding the full landscape, including
One specific example is government-orga-
enjoy the same tax benefits as GONGOs. different types of NGOs, has been instru-
nized NGOs (GONGOs),a type of non-
profit unique to China. While not officially Given the challenges nonprofits experience mental to CiYuan in its work in China to
considered to be a government authority, in both registration and public fundraising, help business integrate philanthropy with
GONGOs are usually set up by a specific it can be difficult for these organizations core business strategy, foster collaboration,
government department and adopt similar to hire staff, accept funding from founda- and inspire innovation.
tions or companies, or tender for proposals
or contracts. However, such barriers have GONGOs typically
also inspired these organizations to seek
more entrepreneurial approaches in their focus on issues
operations and in revenue generation. In traditional to the
addition, some GONGOs are helping grass-
roots nonprofits overcome some of these
charitable sector, such
financial hurdles by allowing the nonprofits as poverty alleviation,
to register a fund beneath them.
education, and
women and children’s
systems of operation. GONGOs typically
focus on issues traditional to the charitable
CiYuan Manager Brooke Avory speaks development.
with a participant.
sector, such as poverty alleviation, educa-
tion, and women and children’s develop-
ment. GONGOs usually have between 30
and 100 employees but are able to use
government agencies and networks to
implement programs nationwide. Aside
from their close ties to the government,
GONGOs have the legal ability to solicit
funds from the public (which other non-
profits are not permitted to do), a status
that has also given rise to the name “public
foundations.” They are also able to provide
a receipt allowing donors to claim a tax
deduction from their contribution. This
provides them with a financial advantage
over other types of nonprofit organizations
such as “private foundations,” associations,
and other types of grassroots NGOs.


F i n d i n g II . A n n u a l R ep o r t i n g

Annual reports (usually financial) are required
in a majority of jurisdictions, but filing
requirements and processes vary.

Influenced
Global
1 To ensure that
charitable organiza-
Journal Officiel 2. Spain requires external
audits for larger organizations that meet
“Zurich operates on
Guide tions comply with certain asset and employee thresholds. a truly global basis,
Criterion #1 laws and regulations serving customers
governing their In lieu of annual filing
requirements, audits or in more than 170
operations, 82% of
the surveyed jurisdictions require them
other reporting obligations countries. And about
are used to ensure
to provide annual financial reports by compliance. as many disparate
filing documentation with the appropri- definitions seem
ate regulatory authority. Twenty-four percent of jurisdictions
have no annual filing requirements, but to exist as to what
Filing requirements generally include still hold organizations accountable for
some type of annual financial state-
constitutes a charitable
conforming to laws and regulations. For
ment that provides an accounting of the example, while Switzerland does not organization; some,
organization’s finances, usually for an require charitable organizations to file for example, impose
annual period. Annual reports may also annual documentation, they are subject
include supplementary information such
income thresholds.
to a yearly audit at the discretion of the
as descriptions of the organization’s regulatory authority responsible for their
activities and accomplishments, direc-
As we continuously
oversight. In India, once an institution is
tors’ reports, audit reports, performance registered, it continues to operate for as endeavor to better
reports, and fundraising receipts. long as it continues to fulfill the condi- track and measure
tions of its registration—or it disbands, our global community
Some jurisdictions have
owing to the completion of its objective.
more stringent annual investments, utilizing
reporting requirements for A few jurisdictions have unique require-
different sizes or types of ments for ensuring compliance with
a single measurement
charitable organizations.
regulatory requirements. Germany is across our group could
In 18% of jurisdictions, the reporting one example. It has a unique require- significantly reduce
requirements depend on the size of the ment for organizations to file financial
entity’s annual revenues or the scope of reports every three years instead of
the time invested into
its operations. Australia classifies eligible annually. German organizations must consolidating this data
organizations into three tiers based apply to local tax offices that issue an for our reporting.”
upon annual revenues and tax deduct- exemption certificate upon application,
Zurich Financial Services
ibility status; each tier has different filing stating that the applicant qualifies as
(Switzerland)
requirements. In the Netherlands, some a nonprofit organization (NPO) and is
organizations can be exempted from the thus tax-exempt. The certificate is valid
filing process based on the size or level for three years.
of their operations.
Mexico provides another unique
Filing requirements in some jurisdic- example. In lieu of financial statements,
tions, such as France and Spain, depend Mexico only requires organizations to
on the legal structure or size of the submit financial reports at the point
organization, with some types of entities of registration. For subsequent years,
subject to a more formal or comprehen- only an “annual notice” is required that
sive filing process and others permitted asserts, under oath, that the organiza-
to follow a more streamlined process. In tion continues to comply with all appli-
France, all foundations are required to cable requirements.
file and publish an annual report and
budget, and associations with budgets of
more than 150,000 Euros must publish
their accounts on the public website
2
http://www.journal-officiel.gouv.fr/


F i n d i n g III . G o v er n m e n t R eg i s t r a t i o n

Registration and oversight of charitable organizations
is conducted by at least one government agency or
department in all jurisdictions.

R
egistration is the process by Figure 9: practitioner response, government registration
which governments recog-
nize, approve, and certify Must a recipient organization be registered as
charitable organizations a charitable organization with the government
within their jurisdictions and allow them in which it is headquartered in order to receive
to engage in activities that support their contributions from your company?
mission, such as education or health care.
Registration sometimes occurs at the
75% Yes
same time that an entity is formalizing
as a legal structure; other times these are
accomplished separately. Agencies that
register charitable organizations have the 25% No
function of ensuring that any entity that
applies for designation as a charitable
organization meets the domestic jurisdic-
tion’s legal criteria governing the require-
ments for charitable organizations.
In all of the surveyed jurisdictions, there
is at least one designated government
department, agency, or office respon- that they receive is usually applied to (CIO). In addition to meeting criteria
sible for the registration and oversight income taxes, but some jurisdictions also for registering as a charity, CIOs must
of charitable organizations. An entity provide charitable organizations relief meet a separate, additional set of criteria
that seeks charitable status is required to from other types of taxes, such as value- to obtain tax-exempt status, such as
register and obtain certification that gives added-tax (VAT). submitting an annual return and addi-
it the right to operate within a defined tional financial reports regardless of the
scope and raise funds for its charitable In 71% of jurisdictions, the same author-
amount of its annual revenues.
mission. Across jurisdictions, the registra- ity that regulates charitable status also
tion process for charitable organiza- regulates an organization’s tax-exempt While some countries
tions accomplishes different things, and status (or its qualification for favorable regulate solely nationally,
is applied and understood differently, tax treatment) and thus registration and others have more than
tax-exemption are part of the same one level of regulatory
particularly when it comes to tax benefits
process. As a result of its registered chari- authority.
and/or how charitable organizations will
be regulated. table status, the organization is automati- National Approaches
cally exempted from income taxes on all Sixty-five percent of the surveyed juris-
Registration almost always expenditures that support its mission. dictions register and regulate charitable
leads to tax benefits, organizations at the national level. In
although some jurisdictions There are a few jurisdictions that have
a separate process for charitable status most cases, they are required to regis-
have a separate process
and tax exemption. In France, registra- ter through a national level authority
for registration and tax-
exemption. tion is a necessary legal prerequisite for such as a Tax Office, Internal Revenue
obtaining tax benefits, but an additional Agency, or the Ministry of Finance of
Across all jurisdictions in the study, each country.
questionnaire must be completed with
national governments provide some
tax authorities to determine if the orga- For example, Canada, Australia and
form of tax benefit or tax relief to
nization can qualify for tax benefits. The the United States require all charitable
registered charitable organizations. For
United Kingdom, which makes a legal organizations to register through federal
charitable organizations to enjoy special
distinction between a “charity” and a revenue authorities; the oversight of
tax benefits, all jurisdictions require
“charitable organization,” has a special registered organizations’ activities
entities to register with the proper
type of incorporated charity called a is also managed at that level. India
regulatory authority. The tax benefit
“Charitable Incorporated Organisation”


F i n d i n g III . G o v er n m e n t R eg i s t r a t i o n c o n t i n u e d

employs a unique national approach cantonal (regional) level, each canton issued by the Tax Administration Service
in that the legal organization of the has established a local supervisory which publishes information online
entity determines where it is required authority that handles the oversight about qualifying organizations, including
to register. Furthermore, in India three of charitable organizations within its the registered organization’s legal name,
different national agencies handle jurisdiction and reports all relevant registry number, location, and a descrip-
registration and oversight of the three information at the national level. tion of its mission and purpose.
different classifications of charitable
Regional or Local Approaches Some countries maintain lists for only
organizations: “Trusts” must register
The remaining thirty-five percent of some organizations, depending on their
through the Charity Commission,
jurisdictions have no registration authority location, size, income thresholds, or
“Section 25” companies must register
or process at the national level. Entities other criteria. For example, in Spain,
with the Ministry of Corporate Affairs,
seeking charitable status are instead there is a list for charitable organizations
and “Societies” must register with the
required to file locally with authorities in that exceed 2.4 million Euros in annual
Registrar of Societies.
the regional or local area in which they revenues. In Russia, some lists are pub-
■■ Multiple Level Approaches are organized and/or operating. lished locally, but there are no national
Among the 65% of jurisdictions that lists. Brazil publishes public lists only for
In South Korea, charitable organiza-
require national registration, there are a particular category of organizations
tions are defined and codified through
three—Italy, Spain, and Switzerland— called Society Organizations for the
the civil code and there is no single
that also handle registration and Public Interest (OSCIPS), although these
agency within the country that regulates
oversight of charitable organizations organizations represent only one of five
them. In Germany, charitable organi-
at the regional or local level. The level designations of nonprofit organizations
zations must register and be regulated
of government that handles it depends that operate in Brazil.
by the foundation supervisory office of
on either the size (based on annual rev-
the Bundesland (province) in which the A few countries use other methods to
enues) of the organization, the type of
entity seeks to be headquartered. The inform corporate donors that an entity is
entity, or the regional location where
Netherlands registers all entities through a qualified recipient and that a donation
the entity is headquartered. Each
local Registers of Commerce and the to the organization is tax-deductible. In
jurisdiction relies on both national and
Chamber of Commerce and Industry addition to publishing a list of regis-
regional/local authorities to register
in the entity’s local area maintains a tered and approved organizations on a
and/or regulate the status and activi-
register of all approved and currently national website, French nonprofits also
ties of charitable organizations.
operating organizations. issue official donation receipts to their
For example, Italy requires some donors. In Germany, there is no pub-
entities to register and be regulated A majority of jurisdictions lished national list because charitable
by the Prefettura, which is a local office maintain comprehensive
organizations are registered on a regional
that represents national authority for public information lists of
all registered charitable
level and donation receipts are the only
foundations with a nationwide scope, process in place. Only qualified German
organizations.
while organizations with a more organizations can issue such receipts.
localized scope are solely regulated by Seventy-one percent of the surveyed This process assures the donor that his or
regional authorities. In Spain, there jurisdictions publish a comprehen- her donation is tax-deductible.
are both national and regional registra- sive list of all qualified organizations
tion authorities for each autonomous through the department that registers
region. Foundations must register in them, or employ public information
the autonomous region where their tactics to communicate registered,
main activity is pursued, but if it is government-approved organizations to
pursued in more than one region, they potential donors.
are required to register at the national
They are either published on a website or
level. Switzerland regulates chari-
can be requested from the tax agencies or
table organizations both nationally
the regulatory authorities that maintain
and locally. On the national level, the
them. In Mexico, for example, charitable
Federal Supervision Authority admin-
organizations must get an authorization
isters the registration process. At the


F i n d i n g IV. MISSION , P U R P OS E , AN D A C TIVITI E S

To determine an entity’s eligibility for charitable status,
all surveyed jurisdictions place a primary focus on its
mission, purpose, and activities.

Influenced
Global
2 The mission, purpose,
and activities of an
Figure 10: practitioner response, government-run schools

Guide organization serve as Irrespective of the current policies and practices at
Criterion #2 strong indicators for your company, would your company support including
determining whether contributions to all public education institutions?
or not an entity serves
or contributes to societal benefit. At a 58% Yes, and this is
national level, this is evidenced by the consistent with our policies
specifications of activities and purposes
11% Yes, but this is
within the regulations of all surveyed inconsistent with our
jurisdictions. At a recipient (institutional) policies
level, during the registration and annual
13% No, all government
reporting processes, registering organiza- recipients should be
tions generally define their purposes and excluded
activities in their chartering paperwork,
which may include articles of incorpora-
tion, strategic planning documents, and 18% Other
other documents that list the mission,
goals, and objectives of the organization.
Some jurisdictions may create addi- System3 were assessed for eligibility. The Categories of Majority Consensus
tional requirements for recognizing system includes a total of 25 main In each of the categories below, at least
entities as eligible organizations, such categories, each with a varying number 70% of the surveyed jurisdictions reported
as requiring them to organize in a of subcategories that specifically describe that the category met their criteria or
commonly recognized legal structure; what is included in the corresponding is included within their domestic legal
however, mission, purpose, and activities main category. Countries in this study definition of eligible activities or purposes.
were the foundational characteristics were presented with the classification A 70% threshold was applied in determin-
that determined eligibility. system for vetting and each selected ing which categories of activities met with
There is significant
the categories that met their domestic majority consensus among the jurisdictions.
consensus concerning what criteria for activities or purposes that they
considered as providing a public benefit.
■■ Arts, Culture, and Humanities
activity categories qualify
as “charitable”; however, The terminology used below comes from ■■ Community Improvement and
there are important these main categories. Capacity Building
discrepancies. Diseases, Disorders, and Medical
Categories of Unanimity
■■

Laws in each country generally indicate Disciplines
All surveyed jurisdictions reported
which activities the jurisdiction considers that the categories below meet or are
■■ Environment
to be “charitable” or having an inherent included within their domestic legal def- ■■ Food, Agriculture, and Nutrition
public benefit, but do not always specify inition of eligible activities or purposes
which activities are prohibited. (However,
■■ Housing and Shelter
(those providing a societal benefit).
prohibition is not necessarily implied by ■■ Medical Research
lack of inclusion in a country’s list.) ■■ Education ■■ Mental Health and Crisis Intervention
In order to determine the level of con-
■■ Health Care ■■ Philanthropy, Voluntarism, and Grant
sensus among jurisdictions for various ■■ Human Services (such as Children/ Making Foundations
possible categories of eligible activi- Youth Services, Residential Care, and ■■ Public Safety, Disaster Preparedness,
ties, main categories from the National Adult Day Programs) and Relief
Taxonomy of Exempt Entities Classification ■■ Science and Technology
■■ Social Science
3
http://nccsdataweb.urban.org/kbfiles/324/
NTEE_Two_Page_2005.pdf ■■ Youth Development


F i n d i n g IV. MISSION , P U R P OS E , AN D A C TIVITI E S c o n t i n u e d

Categories of Discrepancy Global Guide Criterion

2
Four categories fell into questionable
status. The main category had less than Must Exist for a Charitable Purpose
60% support, but 70% of the jurisdic-
tions qualified one subcategory under The categorical system used is drawn from the International
that main category as an activity or Classification of Nonprofit Organizations (ICNPO).
purpose that provides a societal ben-
efit. Five categories in the classification Included Charitable Excluded Charitable
system were eliminated because fewer Activity Categories Activity Categories
than 60% of the surveyed jurisdictions n Culture and Recreation n Political Parties and Organizations
included them in their legal definition n Education and Research n Business and Professional
for activities or purposes that constitute n Health Associations; Unions
a societal benefit. n Social Services
n Religion

n Not Elsewhere Classified
n Environment
Categories with less than 60% of the juris-
dictions’ support but containing at least one n Development and Housing

subcategory with more than 70%: n Law and Advocacy

n Philanthropic Intermediaries and
■■Animal-Related Purposes, with the
exception of the subcategory “Wildlife Voluntarism Promotion
n International
Preservation and Protection.”
■■Crime and Legal-Related Purposes,
with the exception of the subcategory ■■ Public (or government-managed) Government institutions that provide
“Protection Against Abuse.” schools meet eligibility require- education (often referred to as “public
■■International, Foreign Affairs, and ments for charitable status in schools”) qualify as charitable organi-
National Security, with the exception almost all jurisdictions. All sur- zations in all jurisdictions except for
of the subcategory “International veyed jurisdictions indicated that a) the Russia. Russia excludes public schools as
Development.” advancement of education provides an charitable organizations because most
important public benefit, and b) institu- public schools are government-run enti-
■■Civil Rights, Social Action, and
tions that provide public education ties that are prohibited from obtaining
Advocacy, with the exception of the
include primary and secondary schools, charitable designation. In the United
subcategory “Intergroup and Race
high schools and gymnasiums, colleges Kingdom, “public schools” are usu-
Relations.”
and universities, adult and vocational ally privately funded corporations that
Categories with less than 60%: education services, as well as other receive tax benefits because they provide
■■Employment educational institution types deemed to a societal benefit.
■■Mutual Membership contribute to raising the overall educa-
tional level of the population.
■■Public Societies
■■Religion or Religious Purposes
More on Government Institutions
■■Recreation and Sports
In addition to the types of activities There are some recipient categories deemed to lie outside the Global Guide’s scope
and purposes that jurisdictions included of research and which are thus excluded from total giving calculations. However, a
few such categories garnered so many mentions during the public comment period
and excluded in their legal definitions
that they warrant further exploration and discussion, e.g.:
for what constitutes a public benefit,
the research also revealed some unique ■■ Government institutions (but not schools). Public comments queried whether to
insights across jurisdictions related to include giving to government recipients. Most examples of giving to government
certain purposes and activities: recipients were in China, South Korea, and elsewhere in the Asian region. Non-
geographically focused examples included giving to disaster relief, health sector
institutions, and local (municipal) level institutions.


F i n d i n g V. I n u re m e n t

Inurement disqualifies an organization’s
eligibility for charitable status and tax
exemption in almost all jurisdictions.

“Macquarie Group Influenced
Global
3 Private inurement
occurs when an
In most types of charitable organizations,
the founders, managers, officers, and
Foundation has Guide individual with a other insiders are prohibited from using
representatives Criterion #3 financial share in the assets for their personal interests; doing
located in several organization, such so can result in the loss of the organiza-
as owners, mem- tion’s charitable designation, tax-exempt
cities around the world, bers, founders, investors, shareholders, status, or both. Eighty-eight percent of
with its headquarters or a governing board, enters into an the surveyed jurisdictions indicated that
based in Australia. arrangement with the organization an organization could lose its charitable
and receives a profit or benefit greater and/or tax-exempt status if the organi-
With a multinational than the service or benefit based on zation’s assets or revenues inured to the
reach in our giving, the institution’s performance. Because benefit of private individuals.
we are always keen registered organizations are able to
A few jurisdictions allow this practice
solicit donations and obtain favorable
to track and fully tax benefits not available to for-profit
under certain conditions, but have
established conditions and regulations
understand the value entities, the practice of inurement may
for how insiders may derive financial
of our contributions jeopardize their charitable designation
benefit. One type of Japanese organiza-
or tax-exempt status. Organizations that
worldwide. are not-for-profit are usually required
tion, “Special Nonprofit Corporations”
(SNCs), receive more tax benefits as
to use surplus revenues to achieve their
This is an excellent charitable goals.
compared to other types of not-for-
profit organizations and therefore must
initiative which assists adhere to more stringent rules, includ-
us in reaching a firmer ing rules prohibiting inurement.
understanding of how
we compare to our
peers across the field.”
Macquarie Group Foundation
(Australia)

More on For-Profit Institutions
There are some recipient categories deemed to lie outside the Global Guide’s scope
of research and which are thus excluded from total giving calculations. However, a
few such categories garnered so many mentions during the public comment period
that they warrant further exploration and discussion, e.g.:
■■ “For-profit” social institutions and/or social entrepreneurs. Many comments
queried whether to include giving to recipients that blur the lines of institution
types, including profit-oriented businesses that function primarily for a social
purpose, or socially driven nonprofits that increasingly operate with business-
oriented commercial activities.


F i n d i n g VI . C o m m erc i a l Ac t i v i t i e s

Commercial activities usually do not disqualify
charitable organizations, but most jurisdictions require
separate financial reporting and tax obligations.

Influenced
Global
3Although there is no
universal definition
Jurisdictions employ
various strategies to
Separate tax obligations and
financial reporting must be
Guide for what consti- regulate participation in applied to commercial and
Criterion #3 tutes “commercial commercial activities. nonprofit activities. In jurisdictions
activities,” most Jurisdictions use different methods to that allow charitable organizations to
jurisdictions gener- regulate and restrict nonprofit organi- undertake commercial activities, such
ally interpret them as income-seeking zations in the commercial economic activities are generally not exempted
business activities that produce revenue. realm. The levels of tolerance and from taxation. Tax authorities require
With the sole exception of China, which restriction vary. In general, registered separate books of account for “not-for-
does not permit charities to engage in organizations are permitted to engage profit” and “for-profit” activities.
any form of commercial activities, all in commercial activities as long as the ■■ In the Netherlands, Italy, and Canada,
surveyed jurisdictions reported that activities fall within the jurisdiction’s profits earned by charitable organiza-
commercial activities do not auto- approved guidelines for the conduct tions are subject to taxation if the
matically threaten the organization’s and financial management of not- organization’s commercial activity
charitable status or tax benefits. By for-profit organizations. The survey comes into competition with com-
leveraging market forces, some organi- results revealed some common rules mercial enterprises or falls outsides
zations are able to boost their fundrais- that jurisdictions use to limit or regulate the scope of the organization’s stated
ing efforts and significantly enhance charitable organizations’ involvement in purpose, mission, or objectives.
their revenues. Examples of a charitable commercial activities:
organization engaging in commercial ■■ Not-for-profit organizations in South
activities include: An organization’s activities and Korea must file corporate income tax
financial expenditures must be returns for profits they generate. In
■■ A museum that charges an admission primarily focused on not-for- Switzerland, income from “non-char-
price for an event or activity. profit activities. Some jurisdictions, itable” commercial activities could be
■■ An established and experienced non- such as France, Germany, and Australia, taxable at a “reduced mixed-company
profit organization that offers consult- allow for-profit activity as long as the rate” and Dutch tax authorities specifi-
ing services to start-up nonprofits for predominant activities and expendi- cally require that commercial activities
a fee. tures of the organization are focused must be “clearly distinguished from
■■ An environmental organization that on public benefit and do not relate to charitable activities to avoid losing
sells repurposed or recycled goods. profit-making or excessively come into exempt status.”
competition with private enterprises. Brazil specifies that organizations “…
An economic development organiza-
■■
■■

tion that sells artisanal crafts made by Some jurisdictions impose may not have any for-profit activities
an indigenous population. thresholds for commercial activi- combined with nonprofit activities.”
ties. To discourage excessive engage- This means that organizations do
■■ A community-based organization that
ment in commercial activities, some not necessarily lose their tax-exempt
offers free professional services (e.g.,
jurisdictions impose thresholds that limit status for engaging in for-profit activi-
tax or legal) to low-income families,
the amount of income that an organi- ties, but are required to track and
but provides the same services to small
zation can generate by competing in report those activities separately from
businesses for a fee.
commercial markets. For example, in not-for-profit activities.
Because most registered organizations Italy, revenue gained from commercial
are able to solicit donations and enjoy tax activities must not exceed 66% of a
benefits that are not available to for-profit charitable organization’s total budget.
entities, they must abide by strict rules Mexican law limits commercial income
to obtain and maintain their tax-exempt to 10% of an organization’s total
status. As a result, not all of their activi- income in a given fiscal year.
ties (such as some commercial activities)
may be exempted from taxation.


Spotlight on france

A Unique Way to "Charter" a New Course

Contributor: For compa-
nies in France,
charitable giv-
ing is framed
by law and
based on very advantageous tax incen-
tives. France is one of the rare European
countries allowing the deduction of
corporate donations from the actual tax
due (l’impôt sur les sociétés), rather than
from the income on which tax is calcu-
lated. Foundations and associations, the
two major categories of beneficiaries in
France, are both required by law to oper-
ate for “nonprofit” oriented purposes.
Clearly stated in the regulations are
prohibitions against any organizational
stakeholders or trustees receiving finan- Admical team joined by the Minister of Education on the inaugural day of
signatures on the Charter, February 2012.
cial benefits of any kind. Furthermore,
any unrelated economic activities are 180 members with a network, discus- and the grantee in order to emphasize
taxed at the normal corporate income sion forum, and research laboratory, the importance of balance between the
tax rate. These requirements are seen in in addition to its 33 years of expertise. two. Admical promotes a new calling in
the traditional structure of most NGOs Recently, Admical sought to document corporate giving, highlighting the added
in France. However, these requirements a rethinking—outside the constrictions value of partnerships between corpora-
leave aside the growing reality of organi- of tax law—of the relationship between tions and beneficiaries motivated by
zations mixing commercial activities with corporations and beneficiaries. shared ethics and values.
a general-interest or social goal, such as
in the sector of Entrepreneurs Sociaux. The resulting Charter (La Charte) now
has over 70 corporate signatories and a
Admical, an official French Association,
has been actively promoting corporate
total of 170 signatories from all sec- France is one of
tors. The Charter bestows advantages
philanthropy since 1979. It provides its and obligations on both the beneficiary the rare European
countries allowing the
deduction of corporate
donations from the
actual tax due (l’impôt
sur les sociétés),
rather than from the
income on which tax is
calculated.

The 2011 Admical laureates of their “Oscar
du mécénat” including Fondation Culture et
Diversité, Fondation Accenture, Fondation
Schneider Electric, Enea Consulting, and
Fondation Vinci.


F i n d i n g VII . P r i v a t e Sc h o o l s

Tax benefits are commonly provided to
private schools and jurisdictions regulate
their commercial activity in various ways.

P
rivate or commercially oriented Most jurisdictions regulate “We pride ourselves
schools pose a unique set of private schools through
regulatory issues because they income thresholds, in managing locally,
are entities that engage in special tax rules, or other allowing different
profit-seeking behaviors (charging tuition) restrictions.
regions to directly
in order to provide a service (education) ■■ Income Thresholds. Japan includes
that also creates a universally agreed- Private School Corporations among respond to their
upon public benefit. Thus, jurisdictions its qualifying organization types, but specific needs, but as
apply different types of regulations to restricts for-profit activities to less than a company we need a
private schools. These regulations tend to 50% of total costs, a rule that is also
be similar and linked to the jurisdiction’s applied to private schools. (The costs standard that allows
general rules on engaging in commer- related to public interest activities must us to easily show what
cial activities. Nevertheless, 82% of the account for 50% or more.) Under we as a company
surveyed jurisdictions provide some type Japanese tax law, revenues from for-
of tax benefit to private schools. Within profit activities are subject to corporate have done for societal
that percentage, there exists considerable tax, even if the activities are deemed to causes.
variance in how “charitable status” and be in the public interest.
tax benefits are regulated. ■■ Special Tax Rules. Some jurisdic- For this, we need
While some jurisdictions tions apply separate tax rules for a a standard that
automatically disqualify private school’s “for-profit” and “not- allows us to capture
private schools, others for-profit” activities. In such cases,
impose little or no organizations are required to keep everything that we
restriction on their separate books of account and apply do, from employee
commercial activities. a separate set of tax rules for each. volunteering to our
A few of the surveyed jurisdictions For example, France and Italy do not
exclude private schools as qualifying largest corporate
automatically exclude private schools
from charitable designation and/or tax institutions, but do require them to pay commitments.”
benefits based on their engagement corporate income tax on any profits.
Radobank International
in commercial activities. For example, ■■ Other Restrictions or (the Netherlands)
Germany automatically excludes private Requirements. Mexico allows
schools, colleges, and universities that private schools to qualify as charitable
engage in profit-seeking activities from organizations, but stipulates that they
qualifying as “charitable organizations.” must meet the terms of the General
Education Act, have teaching as their
By comparison, a few jurisdictions did
main purpose, and receive a substan-
not impose any special regulations or
tial portion of revenue from funds
tax rules on private schools engaged in
furnished by the federal government,
commercial activities. For example, the
states or municipalities, donations, or
Netherlands and Russia do not place
the attainment of corporate purposes.
any such restrictions, nor do they tax
Brazil does not automatically exclude
them differently than other charitable
private schools from obtaining chari-
organizations. China includes private
table status, but it does expressly forbid
schools as qualifying organizations,
for-profit activities to be mixed with
exempting them from their rule against
not-for-profit activities. Therefore, a
inurement, since “…the founders of a
private school may charge tuitions to
private school are permitted to receive a
the extent that all profits are rein-
‘reasonable return’ on their investment.”
vested in the school’s objective and
the requirements are set forth in its
chartering documents.


F i n d i n g VIII . P o l i t i c a l P a r t i c i p a t i o n

Political participation does not automatically disqualify
charitable status, but some jurisdictions restrict
partisan endorsements and campaign financing.

I
n the majority of surveyed jurisdic- More than half of ■■In India, all not-for-profit entities are
tions, organizations do not risk jurisdictions permit forbidden from engaging in politi-
losing their charitable designation endorsement of political cal activity surrounding an election,
or tax-exempt status if they spon- parties, movements, or including financial support to political
sor or engage in activities that support election campaigns. parties or election campaigns.
the general political process of their Fifty-nine percent of the surveyed Forty-seven percent of jurisdictions
respective governments, including partic- jurisdictions permit charitable orga- permit charitable organizations to
ipation in advocacy activities. However, nizations to endorse political parties, provide financial contributions to politi-
some jurisdictions place restrictions on election campaigns, and candidates for cal parties or candidates. South Korea,
certain types of partisan-based political office; doing so does not jeopardize their Switzerland, Australia, China4, France,
activities, such as endorsing candidates or charitable or tax-exempt status. In Italy, and the Netherlands all permit contri-
political parties or using organizational endorsement activities do not impact butions to political parties or election
funds to make financial contributions to charitable qualifications unless the campaigns without disqualifying them.
campaigns. Violations of the laws and organization is “…a mere instrument
regulations controlling political activi- of the political party” or organized for Some jurisdictions have
ties can result in the loss of tax benefits, specifically political purposes. little or no limitations
charitable status, or both. on the types of political
The remaining 41% of jurisdictions activities in which charitable
Some jurisdictions reported that the prohibit endorsement activities. Mexico organizations may engage.
types of political activities in which an prohibits any activities related to politi- Though the minority, some jurisdictions
organization engages must be directly cal campaigns or to the development do not place any restrictions on the types
related to its stated mission or purpose. and distribution of propaganda, as well of political activities in which charitable
In Brazil, for example, it is not a disquali- as activities specifically aimed at influ- organizations may engage. Some juris-
fying event if a public benefit organiza- encing legislation. dictions, such as Australia, France, and
tion supports the democratic process or
More than half of the Netherlands, even include political
provides general political education, with
jurisdictions prohibit activities among those that qualify orga-
the caveat that “…the practice should
financial support to nizations as “charitable.”
observe the limitations inherent to the
political parties or
destination of resources.” ■■ In Australia, there are no expressed
election campaigns.
limitations on the engagement in
In Germany, a charitable organization is Fifty-three percent of the surveyed political activities by qualifying orga-
allowed to comment on politics related jurisdictions prohibit charitable organizations (including endorsements and
to its public benefit purpose and is also nizations from financially supporting financial support to political move-
able to communicate with legislators political parties or election campaigns ments), but such organizations must
about proposed legislation without with organizational assets. Doing so will provide additional disclosure to the tax
losing tax-exempt status. Canada’s result in the loss of charitable status. authorities, including full disclosure of
Income Tax Act seeks to limit nonprofit
In Russia, charities are expressly any political activities or expenditures
political activity to “… activities (that) ■■

prohibited from using their assets to as well as gifts received that enabled
are ‘ancillary and incidental’ to the
support political parties, movements, political expenditures.
organization’s primary activities,” and
“do not include the direct or indirect and campaigns. Although Russia ■■ France allows some political parties to
support of, or opposition to, any politi- allows charitable organizations to qualify as non-governmental organiza-
cal party or candidate for public office.” endorse political parties and/or elec- tions (NGOs). In addition, public util-
tion campaigns, Russian law does not ity associations and foundations may
permit these organizations to provide engage primarily in political activities.
financial support to either. ■■ The Netherlands places no restric-
4
China allows for direct financial support of ■■ Canadian law does not allow direct tions on the political activities of
specific groups, including trade unions and or indirect financial support of parti- charitable organizations.
certain affiliated organizations of the Chinese san activities and prohibits financial
Communist Party. contributions to political parties or
election campaigns.


F i n d i n g IX . M o n e t a ry C o n t r i b u t i o n s

Monetary contributions are the most commonly
claimed form of charitable donations and almost
always result in a tax deduction.

A
cross the surveyed jurisdic- Figure 11: Donation Type tax deduction by country
tions, the most widely used
and accepted donation Country Cash Property Service
method is a monetary (or
cash) donation. With the sole exception Australia X X
of Russia, each country’s cash dona- Brazil X X
tions result in a tax deduction for the Canada X
corporate donor. Country-by-country
China X X
information on tax deduction availabil-
ity is found in Figure 11. France X X X
Germany X X X
Tax deduction limits for
cash donations vary India X
significantly across X X X
Italy
jurisdictions.
Japan X X X
A complete list of maximum deductions
for the seventeen countries analyzed is Mexico X X
listed below. The results demonstrate Netherlands X X X
that tax deduction thresholds vary Russia
significantly across jurisdictions, ranging
from allowing no deduction (Russia) to South Korea X X
having no limitations on the amount Spain X X
of donations that can be claimed for a Switzerland X X X
tax deduction (Australia and the United
Kingdom). The deduction limits shown United Kingdom X X
below represent all contribution types, United States X X
of which monetary contributions are
Source: Regulatory Environment Survey
the most common.
■■ Russia (No benefit)
Most jurisdictions require cash must be used to further the goals,
■■ France (0.5% of taxes owed) proper documentation and interests, and objectives of the recipient
■■ Italy (2% of taxable income) reporting to substantiate organization in order for the donor to
■■ Brazil (4% of taxable income) monetary donations. receive a tax benefit.
■■ Mexico (7% of taxable income) About 82% of the jurisdictions require Some jurisdictions require monetary
some sort of proof of donation in order donations to be reported on separate tax
■■ India, the Netherlands, South Korea,
for the corporate entity to receive a tax forms. For example, Mexican tax author-
Spain, and the United States (10% of
benefit. In Japan, corporate donations ities require the use of a special form
taxable income)
are substantiated with receipts list- called a “Multiple Informative Return,”
■■ China (12% of taxable income) ing reference numbers and providing which details information about donors,
■■ Germany and Switzerland (20% of evidence that the contribution rendered donations, and their corresponding
taxable income) was relevant to the activity of the recipient organizations. Spain uses a dif-
■■ Japan (40% of taxable income) organization. To receive a tax benefit in ferent procedure than other jurisdictions.
South Korea, the donor must request Instead of requiring corporate donors to
■■ Canada (75% of taxable income)
a donation receipt as evidence of the report donations, Spain requires recipi-
■■ Australia and the United Kingdom donation; the issuance of the receipt ent organizations to file special paper-
(No limit) assures the donor that the donation is work with tax authorities.
tax-deductible. Additionally, donated


Spotlight on russia

Unique Regulation: The Effects of No Tax Deduction

Contributor: At Russia’s There is little public appreciation of cor-
Donors porate philanthropy in Russia. This lack
Forum, we of recognition is compounded by a gen-
have been eral national mistrust toward businesses.
studying Still, corporations are working harder
and helping and harder to develop philanthropy in
companies to improve their philanthropy the country, owing to the Soviet tradi-
programs for over ten years. Our mission tion of supporting social infrastructure
is to enhance the effectiveness of orga- in communities where businesses are
nized grantmaking that aims to support active and to a pragmatic understand-
the development of a democratic society ing of the necessity to build a stable life
in Russia. Each year, we coordinate the for employees. Other incentives include
“Top Corporate Philanthropist Award.” wanting to meet the requests of foreign
investors and a general willingness to
One phenomenon of modern Russian
contribute to the country’s future.
philanthropy is the proportion of cor-
porate contributions; corporate giving
is more than four times the level of
individual giving. Our data shows that
philanthropic giving in Russia is 80%
from the corporate sector and 20% from
individual donors. These figures contra-
dict traditional western patterns—all the
more so because there are no tax deduc-
tions for corporate giving in Russia.
A corporate deduction did exist from 1996
until 2002, but the government elimi-
nated it, owing to alleged violations and
misuse. The debate on whether to bring
back such tax breaks has been a lively one
ever since. Most experts see it as an incen-
tive, especially for small and medium-
sized companies, to be more involved in
philanthropy. But some companies do not
agree: they say the breaks, in reality, will
come with the burden of being required
to report more rigorously on their opera- Winners of the Top Corporate Philanthropist Award gather at the Donors Forum
annual ceremony, November 2011.
tions. Government officials oppose the
idea of introducing any tax incentives for
philanthropic giving—especially by the Philanthropic giving in
business sector—due to a general suspi-
cion that corporate taxpayers will violate Russia is 80% from the
the intentions of such incentives, thus corporate sector and
decreasing government income.
20% from individual
donors. These figures
contradict traditional
western patterns.


F i n d i n g X . P r o per t y a n d pr o d u c t c o n t r i b u t i o n s

Property and product contributions
are common and usually result in a tax
benefit for corporate donors.

I
n 82% of the surveyed jurisdictions, Figure 12: practitioner response, product valuation
property and product (or in-kind)
contributions are a common form Does your company track both the book and market value
of donation and can be claimed as a of property and/or product donations?
tax deduction. Only three jurisdictions—
Canada, Russia, and India—do not offer
tax deductions to corporate donors for 4% No, only 55% Yes, both
market value is are tracked
property and product contributions. Many tracked
jurisdictions do not require the donation
to be reported or disclosed separately from
20% No, only book
the financial statement, and how property value is tracked
and product contributions are claimed is
often discretionary to the corporate donor,
though most donors tend to report them
as a cost or business expense. 21% No, neither is
tracked
Across jurisdictions, there
are three common methods
of valuing property and Source: Public Comment Period, Spring 2012, N=51
product donations: market
value, cost, and book value.
ing books. Book value is the initial Most jurisdictions that use market value
■■ Market value (also called “fair
cost of the asset, less its depreciation do not require independent appraisals
market value”) is the most common
over time. Additionally, book value is of property and product contributions.
method of valuation across the sur-
not affected by economic or industry An appraisal is usually a document cre-
veyed jurisdictions. Market value is
conditions, since depreciation is formu- ated, signed, and dated by a qualified
defined as the price that a particular
laically calculated. appraiser in accordance with generally
item of property or product would sell
accepted appraisal standards within the
for in the open market. It is the price A majority of jurisdictions
use market value for domestic jurisdiction; it also includes
that would be agreed on between a
valuing property or information required by tax authorities
buyer and a seller with neither being
product donations, and for determining the value of the property
required to act and both having
most do not require or product donated.
reasonable knowledge of the relevant
independent appraisals.
facts about the item for sale.5 Because Only three jurisdictions—Australia,
there is no single formula that always Fifty-nine percent of the surveyed jurisdic- China, and the United Kingdom—spe-
applies when determining the market tions use market value for valuing property cifically require corporate donors to
value of a property or product, market and product donations, while 41% use have property and product contributions
value is generally difficult to measure other valuation methods. Germany uses independently appraised by a third party;
and sometimes requires a qualified, book value and Italy requires the donor to however, some of those who don’t require
independent, third-party appraisal. value the product or property at either cost independent appraisals recommend them
or market value, whichever is lower. Brazil for the purpose of substantiating the tax
■■ Cost valuation is defined as the
and the Netherlands leave valuation to deduction, or in cases where the corporate
price that a company paid for an item,
the discretion of the corporate donor, but donor manufactures the donated property.
what it was worth when the company
acknowledge that market value is the most In Japan, there is no specific requirement
acquired it, or what it cost the com-
common type of calculation used. In some for the valuation of property donations.
pany to manufacture it. Cost valuation
cases, valuation depends on whether the
stays constant over time; it does not
company is donating its own manufactured
fluctuate, like market value.
products or whether the donation consists
■■ Book value (also called “carrying of property or products purchased by the
value”) refers to the value of an asset company.
5
Determining the Value of Donated Property:
as it appears on an entity’s account- http://www.irs.gov/pub/irs-pdf/p561.pdf


F i n d i n g XI . s er v i ce c o n t r i b u t i o n s

Service (pro bono) contributions
are the least common type of tax
exemptions offered or claimed.

S
ervice contributions (also called ■■ A supply chain manager from a Many jurisdictions do not have clearly
pro-bono services) are the dona- manufacturing firm who redesigns defined laws addressing the valuation and
tion of professional services to the supply chain management of a tax deductibility of service donations. Of
charitable organizations. Pro- nonprofit hospital seeking to improve the jurisdictions that do offer a tax benefit,
bono services require a formal commit- the efficiency of its medical equip- most value the donations at the market
ment between the donating company ment delivery. rate for comparable services, i.e., the aver-
and recipient and the services must Across jurisdictions, service donations age cost that a third party would charge to
be professional service for which the are the least common type of donations provide the same service. Other jurisdic-
recipient would otherwise have to pay. claimed for tax benefits. Only 35% tions allow different valuation methods.
Examples of service donations include: of the surveyed jurisdictions consider For example, France and the United
service or pro-bono donations as eligible Kingdom permit companies to prorate an
■■ An attorney who provides free legal
for a tax deduction. Notably, in most employee’s salary to the time spent serv-
counseling to underprivileged com-
jurisdictions staff salaries are a deduct- ing a qualifying organization in order to
munities.
ible business expense, significantly determine the deductible donation.
■■ A commercial web developer who
complicating the question of service
designs a website for a nonprofit
donations’ deductibility.
organization.

Spotlight on brazil

A Unique Contribution Type: Mandatory Giving

Contributor: Comunitas ment actions focused on mitigating the with 12%. The remaining 30% went to
was founded environmental and social impacts of its other causes. Most of these companies’
by Dr. Ruth activities, including donating funds. actions are directed to the same commu-
Cardoso in nities served by their voluntary projects.
To study this, an important new fea-
2000. The
ture was introduced to the BISC survey Each year, Brazilian companies demon-
organization’s
in 2010. A complementary analysis of strate a greater commitment to social
objective is to
previously unpublished data on social causes, evident in the increase of both
bring together different sectors of soci-
investments made as a result of Brazilian their voluntary and mandatory invest-
ety to promote the social development
legislation was added to the current pro- ments. The findings and recommenda-
of Brazil. Each year, Comunitas under-
file of voluntary social investments. tions presented in the 2011 BISC Report
takes a study of corporate social invest-
may contribute to even more participation
ment called Benchmarking in Corporate The majority of companies that pro-
by the private sector in the social field.
Social Investment (BISC). vided their information for 2010 perform
mandatory investments in the commu- Audience members listen as the results of
A distinctive feature of corporate
nities. Moreover, the amount of funds Comunitas’s latest BISC report are presented
philanthropy in Brazil is the influence of
invested on a mandatory basis is greater in December 2011.
government requirements to give. There
than their voluntary invest-
is not one major federal requirement
ments (51% mandatory, 49%
for companies to make contributions.
voluntary). The focus area
Instead, different compulsory require-
of these investments shows
ments apply from the federal, state,
a strong majority in one
and municipal level depending on the
category: 58% of mandatory
activities, contracts, and licenses of
investments were distributed
the company. In some cases, the term
within the environment field.
“environmental compensation” is used
The second-highest category
to describe these contributions. The leg-
is community development,
islation requires corporations to imple-


F i n d i n g XII . C r o s s - B o rder g i v i n g a gree m e n t s

Bilateral and multilateral agreements
are used by some countries to facilitate
cross-border giving.

C
ross-border giving is giving In the absence of tax A majority (65%) of the surveyed
made by a corporate head- treaties, some jurisdictions jurisdictions allow tax deductions for
quarters in a jurisdiction allow resident foreign corporations that make cross-border
foreign to its headquarters corporations to establish donations, but apply different regulations
country. Fifty-three percent of the foundations. for accessing tax deductions. Of those,
surveyed jurisdictions have at least one Some jurisdictions do not have bilateral about half (Canada, France, Germany,
tax treaty or other mechanism in place or multilateral agreements in place, Mexico, the United Kingdom, and the
that allow corporate donors to receive nor do they value any contributions United States) stipulate that contributions
tax deductions for contributions to to foreign-based organizations as a can be made only within jurisdictions
specified organizations outside their tax-deductible expense. As a result, where a bilateral or multilateral treaty is
national borders. multinational corporations that conduct in place. Those jurisdictions that allow
operations in more than one country cross-border donations in the absence of
Some jurisdictions have bilateral agree-
typically organize corporate foundations a treaty apply strict regulations to cross-
ments—agreements with a foreign
in order to facilitate giving in foreign border contributions:
country, facilitating cross-border giving
jurisdictions where they have established
between the two—and have established ■■ Australia requires foreign incorpo-
a corporate office.
exclusive laws and regulations for these rated companies to register with the
transactions. For example, Australia, This enables the corporations to give Australian Securities and Investment
Canada, and Mexico have reciproc- locally from each country office in order Commission by completing a form,
ity agreements with the United States to take advantage of more favorable paying a fee, and filing a constitution
through individual tax treaties. local regulations and tax benefits associ- and foreign incorporation papers. In
ated with donations. The corporate addition, foreign entities that earn
Some European Union (EU) countries
foundation is usually a trust or limited income in Australia may be required
have established multilateral reciproc-
liability corporation with the objective to register under Australian taxation
ity agreements with other EU countries
of furthering charitable purposes for regulations.
as well as member countries of the
the public benefit; the foundation also In the Netherlands, domestic corpo-
European Economic Area (EEA) Treaty, ■■

aims to facilitate donations to qualifying rate donors can receive a tax benefit
which includes Iceland, Liechtenstein,
organizations in a corporation’s country when donating to foreign foundations
and Norway. However, not all EU
of operation while affording the corpo- as long as the Ministry of Finance con-
countries have taken steps to adopt
rate donor a favorable tax status. siders the beneficiaries to be qualified
such agreements because, this process
requires changes to domestic laws and recipient organizations.
Jurisdictions differ
regulations that affect tax rules regard- in how they regulate ■■ South Korea’s Ministry of Finance
ing charitable giving. For example, the and tax cross-border can designate certain offshore organi-
Netherlands acknowledges general tax contributions. zations as being in the public interest,
treaties and the EU Treaty; however, Most jurisdictions have specific report- supportive of non-resident Koreans,
Dutch tax authorities have not yet ing rules for the three different contri- and helpful to South Korea’s inter-
adopted legislation that provides for bution categories that are generally the national public relations. In addition,
cross-border giving. same for both domestic and cross- South Korea’s tax law states that
border contributions. For the most part, donations to foreign organizations for
cross-border monetary and property natural disaster relief can be deducted
donations are usually valued and at a 50% limitation.
reported as expenses, but vary on which
financial form they use to report them.
Since service donations are generally
uncommon, even for domestic contribu-
tions, many countries do not have spe-
cific guidelines for how to report them
when they are provided across borders.


Next steps:
In your hands

The Transformative Power
of Measurement

The Global Guide is the foundation
for something much greater. By
creating a shared language for
measuring and reporting global
philanthropy, the first step toward
Mécénat d’Entreprise
data collection that will enable true
comparison and analysis is complete.
Answering key questions—“What
counts?,” “What’s your company Investimento Social Corporativo
doing?,” and “Where does your
company fit?”—requires a group
effort. With each answer based
in standards established by the
Global Guide, companies improve
their policies for addressing global
societal issues.

Next Steps

Advantages of an the Transformative Power of Measurement
International Standard
The potential advantages of the Global Benchmarking and analysis Where
Improved
does
Guide are manifold. Most directly, the your
Solutions
for Global
Data Collection Survey What’s
guide will benefit corporate giving pro- your
company
fit?
Societal
Issues
fessionals who use its new framework to Global Guide What
company
doing?
collect and report on their own compa- counts?
nies’ global contributions. The Global
Guide will also equip such professionals
with new methodologies in support of
resource allocation and strategy discus- The Individual Corporate
Practitioner Will Be Able To:
“While the scope of
sions. Practitioners weighed in on these
benefits as shown in Figures 13 and 14.
our giving is large, it
■■ Contextualize company changes
within broader global trends. becomes difficult to
Corporate philanthropy stakehold-
ers, too, stand to benefit from the ■■ Ensure alignment of activities and track the monetary
Global Guide, particularly the increased priorities. value of certain types
transparency it encourages by making ■■ Apply a common, efficient, and of donations as
trend analyses more publicly available. meaningful language to discussions of
There is also significant potential for the company-wide initiatives addressing
aggressively as we’d
guide to enhance coordination among global issues. like to.
grantmakers with overlapping funding ■■ Identify other companies working on
priorities. The industry can track and similar issue areas or within the same Having a way to align
talk about collective impact on shared region, thereby encouraging collabo- our giving efforts
international causes. In short, rallying ration.
around a single standard will result in a regardless of where
meaningful representation of how cor-
■■ Promote improved tracking and they are allocated
porations are improving the world. metrics by dispersing the Global Guide
and requiring that data and reports will do more toward
be based in its new international achieving a larger,
standard. common goal.”
■■ Cite global data in presentations to
Infosys Limited (India)
senior leadership and the board of
directors, in order to make the case for
increased funding, new or improved
programming, and advocating more
efficient grant management.
■■ Present a more transparent under-
standing of reported figures to all
stakeholders.


n e x t s t ep s : i n y o u r h a n d s c o n t i n u e d

The Corporate Figure 13: benefits of benchmarking
Contributions Field Will
Benefit From:
What is the number one
■■ The participation of more multina- benefit of global contributions
41%
tional companies in an internationally benchmarking for your company?
founded benchmarking process.
■■ A larger data repository for compara-
tive analysis across countries. 21%
■■ More accurate giving reports, with 19%
richer context. 14%

■■ Greater momentum driving the
5%
establishment of additional consen-
sus-driven, international measure- Opportunities Provide global Provide global Use global data Not applicable—
to collaborate context when context as an for strategic do not give
ment tools. with companies presenting additional tool decisions globally
active in the programs for internal
A Worthwhile Investment same country or for external communications
in Measurement region audiences

Instating a new global standard in any Source: CECP Corporate Philanthropy Summit, Attendee Poll, June 2012, N=102
field requires the investment of key
resources and a commitment to effect-
Figure 14: the most effective benchmarking
ing a major transition in mindset and
operations.
What factor would make
In the public comment period part of global benchmarking and 51%
the study, companies were asked to analysis most effective for
identify barriers to compiling a total your company?
global giving number. This question
was also asked on the annual Corporate
Giving Standard (CGS) survey; approxi-
mately 130 companies responded.
Interestingly, 11% of such companies 15%
12% 12%
reported that they currently experi-
10%
ence “No Barriers” in reporting a total
global giving figure. This, of course,
The The Global data More data on Not
is the goal: breaking down all barriers participation participation that can be other global applicable—
to a confident and efficient reporting of the largest of the largest analyzed contribution do not give
number of number of multiple ways programs such globally
process. As for the companies who did highly ranked international depending on as matching
report challenges: the most commonly international firms in my my need: by gifts or
firms (Forbes company’s focus area, volunteering
cited barrier was “Lack of Technology,” Global 500) industry by region, by
with 20% of companies reporting that industry



n e x t s t ep s : i n y o u r h a n d s c o n t i n u e d

Figure 15: company readiness “Our company has
operations in more
How ready is your company to
undertake global measurement? 46% than 50 countries and
more than half of our
employees work outside
30%

24%
of the U.S. Given this, it
is very helpful to have a
consistent way to view
benchmarking data on
giving trends by other
Unsure Still a few years Completely
out ready—it’s long companies around the
overdue
globe.
We believe this adds
to our effectiveness

as a corporate citizen
“there are multiple software systems Onward
to track this data that are not con- everywhere that we
The Global Guide criteria represent cor-
nected.” “Lack of Consensus” received porate philanthropy’s first step toward have facilities.”
the second-highest response rate, with unlocking a shared language for global General Electric (USA)
14% of companies reporting that “there giving benchmarking and analysis.
is no internal consensus as to what to Achieving this objective will enable
include/exclude from that number.” companies and other philanthropic
Naturally, each company’s internal agents to develop more effective collabo-
processes will be unique. One of the rations and maximize philanthropy’s
next steps for users of the Global Guide impact. It is now up to the global cor-
is to compile and share strategies for porate giving community to harness this
these processes—beginning with the resource by participating in forthcoming
best practices of that 11%. Companies global data collection. So many compa-
are urged to join this conversation by nies are ready. CECP looks forward to
contacting CECP staff directly. making the journey with you.


a ppe n d i x A

Acknowledgements

This report, Developing the Global Guide to Advisory Group Contributors
What Counts and its companion piece, Special thanks to the following firms We extend much gratitude to those who
The Global Guide to What Counts, are and institutions whose representatives took the time to review the proposed
the products of many hard-working reviewed our findings in December global valuation guidance and weigh in
companies, organizations, and individu- 2011 and provided feedback prior to the on the content during our public com-
als. CECP is proud to have received the public comment period: ment period. Eighty comments were
assistance of Deloitte in the undertaking submitted, with approximately 80%
of this project. Admical (France)
coming from companies and 20%
AXA Financial (France)
Deloitte, Consultant from non-governmental organizations.
BBVA (Spain)
Contributors represented North America,
The cross-functional Deloitte team CAF-Russia
South America, Asia, and Europe,
contributing to this project demon- Centro Mexicano Para la Filantropía
and included but were not limited to:
strated excellence, aptitude, and dedi- Comunitas (Brazil)
Admical, Agilent Technologies, Alcoa
cation throughout. Deep appreciation Fosun International (China)
Inc., APCO Worldwide, Business for
is extended to all who contributed. GE (United States)
Social Responsibility, CAF-Russia, Centro
Specifically, from the Deloitte member Hitachi (Japan)
Mexicano Para la Filantropía, Colgate-
firm in the United States, Malva Pfizer (United States)
Palmolive Company, Comunitas, Corning
Rabinowitz (Deloitte Consulting LLP) Royal Bank of Canada (Canada)
Incorporated, Dell, The Dow Chemical
and Erin Scanlon (Deloitte LLP) served Social Venture Group (China)
Company, Dynamic Logistics, Dynamo/
as leaders for Deloitte on the project, Woolworths (Australia)
KME, Fondazione San Patrignano
joined by Mitch Weiss (Deloitte Tax LLP) ONLUS, General Electric, General Mills,
and Chase Smerdzinski (Deloitte Tax Give2Asia, Hitachi, Honeywell, Infosys
LLP) from International Tax Services. Limited, Japan Center for International
CECP Exchange (JCIE/USA), Kimberly-Clark
Corporation, KPMG, Macquarie Group
This project would not exist without Foundation, Merck, Natixis Global
the vision and leadership of Executive Asset Management, Newman’s Own
Director Charles Moore. Margaret Foundation, Orange Foundation, Pfizer,
Coady, Director, provided instrumental Pro Bono Lab, Radobank International,
expertise, direction, and guidance for Renova Group, Russian Donors Forum,
the project and the production of both Samsung Electronics America, Siemens,
the Global Guide and this report. Carmen Taproot Foundation, United Technologies
Perez, Senior Research Analyst of Corporation, Wal-Mart Stores, Inc., and
Global Valuation, also serves as Project Zurich Financial Services.
Manager for the Global Corporate
Giving Initiative.


a ppe n d i x A c o n t i n u e d

Global Guide Working Group Complementary Corporate
Global Giving Organizations
“The key criteria
Special thanks to Megan Haddock, in CECP’s Global
Center for Civil Society Studies at The following organizations do
Johns Hopkins University, and Eric extremely important work to make Giving Initiative are
Hespenheide, Audit & Enterprise Risk significant contributions to the field highly aligned to
Services Partner, Deloitte & Touche, of global corporate giving. Each is a our internal policies,
for their invaluable expertise provided superb resource for companies wishing to
to the Global Guide Working Group—in become even more active internationally: allowing us to better
addition to CECP and Deloitte staff ■■ United Nations Global Compact
benchmark where we
who participated in the Group as well. stand as compared
■■ Worldwide Initiatives for Grantmaker
Supports (WINGS) to other companies
■■ TechSoup Global headquartered around
■■ Taproot Foundation the world.”
■■ Sampradaan Indian Center for Renova Group (Russia)
Philanthropy
■■ The Philanthropic Initiative
■■ King Baudouin Foundation
■■ The International Centre for
Nonprofit Law
■■ Global Philanthropy Forum
■■ Give2Asia
■■ European Foundation Centre, AISBL
■■ Donors Forum
■■ The Council on Foundations:
Global Grantmaking Institute
■■ The Council on Foundations:
United States International
Grantmaking (USIG)
■■ The Conference Board Research
Working Group: Corporate
Philanthropy With a Global Footprint
■■ Charities Aid Foundation
■■ Admical


a ppe n d i x b

Regulatory Environment Survey (RES)
Sample Questions

The Regulatory Environment Financial Reporting and
Survey (RES) included approxi- Administration
mately ninety questions. Below is Please describe where cash and cash-
a sampling, organized by section equivalent donations to Charitable
titles. Organizations are reported on a
Defining Charitable Corporate Donor’s financial statements.
Organizations
Financial and Regulatory
What types of not-for-profit, non-govern- Reporting Considerations
mental organizations exist in the country? Please describe how non-cash contribu-
Is there an agency within your country tions are valued for financial reporting
that defines Charitable Organizations? purposes.
If so, please reference the agency. (Is
Financial Reporting
this determination solely or partially Valuation
based on laws and regulations enacted
at the national or subnational (i.e., local) Is a Corporate Donor required to
level of the country?) obtain an independent appraisal of
such property for financial reporting
To be considered a Charitable purposes?
Organization, must the nonprofit orga-
nization have been organized or operate Tax Benefits and Incentives
exclusively for one or more specified May a Corporate Donor obtain any
purposes? Please describe such purposes. tax benefits for donating cash or cash
What types of activities prevent equivalents to a Qualifying Charitable
an organization from becoming a Organization? If so, please advise regard-
Charitable Organization or result ing the type of benefit conferred (i.e., a
in the disqualification of an oth- deduction, credit, or other tax benefit).
erwise Charitable Organization (a
Cross-Border Issues:
“Disqualifying Event”)? Financial Reporting and
Has a Disqualifying Event occurred Administration
if: Any portion of the Charitable Please describe how property donations,
Organization earnings inures to the including donating the temporary use
benefit of any private shareholder, of such property, to organizations that
individual, or company? If not, to are not organized in, or residents of, the
what extent may the earnings of the Corporate Donor’s country of incor-
Charitable Organization inure to the poration are reported on a Corporate
benefit of any private shareholder, indi- Donor’s financial statements.
vidual, or company?
May a Corporate Donor rely on a treaty
If the Charitable Organization may or reciprocity agreement with another
engage in profit-seeking activities, are country as the basis for claiming some or
such profits subject to taxation and/or all of the above-mentioned tax benefits?
do they affect the Corporate Donor’s
tax benefit?
Has a Disqualifying Event occurred if
an otherwise Charitable Organization
does not operate exclusively for the
public benefit?


About CECP
The Committee Encouraging Corporate
Philanthropy (CECP) is the only inter-
national forum of business CEOs and
chairpersons focused on raising the level
and quality of corporate philanthropy.
Membership includes more than 180
CEOs and chairpersons representing
companies that account for more than 40
percent of reported corporate giving in
the United States. For more information
visit CorporatePhilanthropy.org.

About Deloitte
Deloitte refers to one or more of Deloitte
Touche Tohmatsu Limited, a UK private
company limited by guarantee, and its
network of member firms, each of which
is a legally separate and independent
entity. Please see www.deloitte.com/about
for a detailed description of the legal
structure of Deloitte Touche Tohmatsu
Limited and its member firms. Please see
www.deloitte.com/us/about for a
detailed description of the legal struc-
ture of Deloitte LLP and its subsidiaries.
Certain services may not be available to
attest clients under the rules and regula-
tions of public accounting.

Graphic design by Tom Dolle Design
www.dolledesign.com

Committee Encouraging Corporate Philanthropy
110 Wall Street, Suite 2-1
New York, NY 10005
P 212.825.1000
F 212.825.1251
CorporatePhilanthropy.org
info@corporatephilanthropy.org
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