The Importance of a Donations Law that Promotes Environmental Philanthropy

Faced with the current socio-environmental crisis, it is urgent to make legislative changes with tax incentives that allow public-private collaborations that promote concrete actions from all sectors of society to protect nature.

The Environmental Philanthropy Network­–of which Fundación Mar Adentro is a part of–was created in 2018 due to various civil society organizations’ interest in joining forces to collaborate in strengthening public policies that encourage philanthropic actions in environmental matters, in addition to expressing solidarity amongst each other to strengthen their capacities. The Network is currently composed of 50 organizations dedicated to protecting the environment.

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© Felipe Guarda

Environmental philanthropy refers to the actions and selfless contribution of private individuals, whether as individuals or by means of an institution, in service of the environment and the restoration of marine and terrestrial ecosystems. In this way, the objective of the network’s members is the protection, conservation and restoration of nature.

According to the Environmental Philanthropy Network, there are urgent tax aspects to consider in order to create a law that encourages environmental philanthropy and that allows for the participation of civil society as relevant collaborators of the State. Faced with the current socio-environmental crisis, it is essential to encourage the collaboration of all sectors of society, not only to facilitate various sources of financing, but also to advance towards a common understanding of the role of environmental philanthropy and the necessary regulation it implies; whether in fiscal terms, lobbying and impact measurement, among others.

The various organizations in the Environmental Philanthropy Network have jointly developed some principles that specify how a single donation law could contribute to encouraging philanthropy through a clear regulatory framework. This framework would establish the importance of initiatives that are framed within this area and that respects its diversity: some are more focused on effective conservation (scientific development, environmental education, community work), and others are focused on the improvement of public policies and activism, but always within the framework of the objectives of protection and restoration of the environment. Likewise, it is essential to create mechanisms to encourage donations to philanthropic institutions, in addition to accountability and transparency systems.

Chile currently faces issues with donations, as there are many laws distributed throughout various institutions, depending on the type of donation and objectives they have. This makes it very complex and difficult to make donations and is one of the main points that the Ministry of Finance wants to address in its new law.

The Environmental Philanthropy Network highlights that in Chile, since 2011, there is a law that regulates associations and citizen participation in public management. Law #20,000 recognizes the duty of the State to promote and support initiatives associated with civil society. Although this law facilitated the constitution of foundations, corporations and associations, it did not address the essential issue of financing. At present, creating a foundation or association is fairly simple and has a reasonable cost; however, financing its maintenance and operations is difficult when there are no funds available to ensure the fulfillment of their objectives from the beginning.

Current legislation leads Civil Society Organizations (CSOs) to pay taxes on all of their activities, regardless of whether they have a social role, are of public interest or are not for profit. There are currently few topics that fall within the legal category to receive donations, and an important point that is highlighted is the need to increase the number of topics that are eligible for donation. For example, environmental, health and human rights CSOs cannot currently receive donations.

In addition, the environmental sector has been historically devoid of access to philanthropic financing, despite the fact that Law #20,500 recognizes the protection of the environment as a matter of public interest. Although it is legally feasible to receive contributions from people and businesses, there are significant limits in practice due to the absence of tax incentives for environmental philanthropy.

According to this network, there are many CSOs in Chile that have developed their activities thanks to financing from business donations, in contrast with other countries, where civil society finances their activities. This happens because in some countries donations come largely from philanthropy, thus, contributions from people are larger than those from companies.

In this way, the Environmental Philanthropy Network maintains that Chile should follow this path, through the promotion of a public policy that encourages philanthropy and contributions from individuals, without prejudice to incentives of Corporate Social Responsibility initiatives. Thus, a public policy for financing CSOs with tax incentives for individuals could be seen as a complement to Law #20,500, strengthening civil society itself as a participant in the purposes of the law, through the  financing of their organizations.

Additionally, this group stresses that a donation law for CSOs should allow for donations in money and goods, at the donor’s choice. This is especially relevant in the environmental field, where there are opportunities to donate real estate. Likewise, a donation law that encourages philanthropy should provide for people to donate their time and knowledge or skills, and include tax exemptions for donations from abroad.