Clarity needed for charity’s sake

Lucerne's culture and congress centre was helped by handouts from charities Keystone

Charitable trusts in Switzerland have assets in excess of SFr30 billion ($23.7 billion), but no one really knows where the money goes.

Critics have also long called for tax laws to be changed to encourage people to donate more money to charities.

The Swiss government is also looking at ways to bring more transparency to the workings of these organisations.

Not much is known about this branch of the economy – what is known is that these charities distribute a lot of money, that this purpose allows them to save on taxes and that, in contrast to the United States, information about them in Switzerland is hard to come by.

“Statistics on charitable trusts are very rare,” Christoph Degen of proFonds, an umbrella organisation representing non-profit trusts in Switzerland, told swissinfo.

Many trusts provide money to fund educational and cultural activities, offering an important back-up to the public authorities, which often do not have the resources to build a new theatre, for example.

Tax free

Under current law, up to ten per cent of charitable donors’ taxable income can be exempted from federal taxes.

A parliamentary commission looking at revising the law has suggested that the threshold be increased to 40 per cent to encourage more donations. But the government says this is too much, and has recommended 20 per cent instead.

But federal taxes make up only a small proportion of the average Swiss’s tax bill. The lion’s share is accounted for by community and cantonal taxes, and some cantons have strict ceilings on how much can be given to charities without being taxed.

Companies can also make tax-free donations, provided there is no advertising involved. Returns that are not financial in nature might still be taxable when the law is revised.

“If a name is mentioned only once, without being accompanied by posters, adverts and images transfers, then this is classified as charitable donation,” explains Degen.

“The best example is the list of donors in the monkey house in the Basel Zoo.”

Pole position

The assets of charitable trusts across Switzerland work out at about SFr1,500 per head, which means that the nation is in the top position in Europe when it comes to the net worth of charities. In Britain, this falls to SFr800 per capita and just SFr530 in Germany.

Liechtenstein is an exception – the figure there is close to SFr18,000 per head. The laws there are open to abuse because whoever sets up a trust can dissolve it and take the money for himself.

But the days of this idyll are likely to be numbered. The European Union and the Organization for Security and Co-operation in Europe are demanding that the duchy revise its liberal policies.

swissinfo

Key facts

There are 10,000 charitable trusts in Switzerland.
Their assets total about SFr30 billion.
Efforts have been underway for 14 years to revise the law regulating trusts.
The next session will be on December 18.