The organisations launched a set of recommendations to boost impact investing in the European Parliament this week, calling for closer collaboration between public, private and philanthropic actors to maximise impact.
Impact Europe and Philea – the Philanthropy Europe Association – have urged European and national policymakers to intensify efforts to enable more impact investing and collaboration opportunities between public, private and philanthropic actors to efficiently address complex societal challenges.
This week, the two organisations presented a set of four recommendations in the European Parliament, highlighting the importance of co-investing and blended finance approaches to achieve long-lasting social and environmental impact.
With more than 186,000 philanthropy organisations in Europe handing out a combined €54.5bn to various causes each year, foundations and other philanthropic organisations carry significant economic clout. The combined assets of public-benefit foundations alone is worth over €647bn.
Although European philanthropic organisations are increasingly involved in impact investing, they are often held back by restrictive laws, Philea said, citing its own legal analysis.
“There is huge untapped potential”, said Roberta Bosurgi, CEO of Impact Europe, referring to one of their previous reports containing examples of foundations using loans and equity to fund social enterprises. “Philanthropic organisations are crucial to leverage the full spectrum of capital to achieve social change”.
Recommendations
The four recommendations urge policymakers to take action by enabling impact investing at the programme level, creating a co-investment facility under the InvestEU financial programme, encouraging impact investing and mission-related investments at the endowment level, and incorporating philanthropy from the outset in the next Multi-Annual Financial Framework.
Regarding the first recommendation of enabling impact investing at the programme level, the ‘Unlock philanthropy: policies to enable more impact investments’ paper presented this week, cites a number of countries that have started enabling impact investing for philanthropic organisations.
These include the Netherlands, where the tax authorities recently said philanthropic organisations can support social economy organisations and generate profits, as long as those profits are spent on the purpose of the organisation.
In Spain, the government moved €400m from its National Recovery and Resilience Plan into a social impact fund aimed at providing financial support to purpose-driven companies, projects and funds. Philanthropic organisations are allowed the participate in the fund, either as as beneficiaries and also as co-investors.
Switzerland has also made inroads – the Cantonal Tax Office of Zurich extended the tax-exempt, non-profit status to additional impact investing.
“Philanthropic organisations could do more if enabling frameworks and innovative tools were available as outlined in the Social Economy Action Plan,” said Delphine Moralis, CEO of Philea, referring to the European Commission’s 2021 action plan for the social economy.
