Philanthropic Environment Restrictive in Many Countries, Study Finds

Philanthropic Environment Restrictive in Many Countries, Study Finds

While regulatory conditions for philanthropy showed improvement in six of eleven regions globally, the overall philanthropic environment in about 40 percent of the countries and economies evaluated remains restrictive, a study from the Indiana University Lilly Family School of Philanthropy at IUPUI finds.

Updated for the first time since 2015, the 2018 Global Philanthropy Environment Index ranks seventy-nine economies on a five-point scale across five factors designed to gauge the ease with which philanthropic organizations operate, both within countries and across borders. The five factors are regulations with respect to the formation and operation of philanthropic organizations; laws governing the giving and receiving of donations domestically; laws governing donations made across borders; the political and governance environment; and — for the first time — the socio-cultural environment.

Designed to facilitate cross-sectoral collaborations and inform decisions with respect to strengthening the environment for philanthropy, the report found that the global average GPEI score was 3.64 (on a scale of 1.0 to 5.0). The analysis also found that the political environment is a critical challenge facing the philanthropic sector, and that while 60 percent of the economies studied have a generally favorable philanthropic environment, two out of five have a generally restrictive environment. Indeed, the political environment in a country — even more than the regulatory environment — can greatly undermine the work of philanthropic organizations.

The study also found that regions with favorable environments for philanthropy tend to be linked to higher per capita gross domestic product (GDP), with the United States and Canada (GPEI score of 4.58), Northern and Western Europe (4.53), and Oceania (4.25) — all with high levels of per capita GDP — leading the way.

At the same time, the effects of regulatory changes have been mixed. A comparison of fifty-seven economies included in both the 2015 and 2018 analyses based on the three regulatory environment measures show improvement in six of the eleven regions, with a modest increase of 1.7 percent on the global average score. But nearly a quarter of the seventy-nine economies included in the 2018 report introduced restrictive regulatory changes after January 2014, leading to a more restrictive environment for cross-border donation flows. And since 2010, several countries have increased their scrutiny of organizations that accept charitable contributions from foreign sources, while in the last three years China, Egypt, Hungary, India, and Israel all have created new laws or amended existing laws to regulate the inflow of foreign funds received by philanthropic organizations.

"We know that the public and private sectors need the help of philanthropy to solve the world's problems," said Amir Pasic, the Eugene R. Tempel Dean of the IU Lilly Family School of Philanthropy. "But our ability to maximize the impact of philanthropy in response to immediate crises and long-term challenges requires that we understand how laws, policies, and cultural attitudes shape success or failure. With famine and refugees in need of immediate relief, and grave risks to peace and sustainability looming on the horizon, the stakes could not be higher."

"Global Philanthropy Environment Index Shows Political Uncertainty as Greatest Challenge to Global Philanthropy." Indiana University Lilly Family School of Philanthropy Press Release 04/30/2018.