Introduction to philanthropy and non-profit organisations in Spain
The philanthropic sector in Spain, also widely known as the third sector, plays a substantial role in addressing the social needs of vulnerable population groups. Close to 30,000 organisations represent the sector, a majority of which are centred around combating poverty and social exclusion as well as ensuring the effective exercise of social rights. Over 3% of all workers in the country are part of philanthropic organisations, 80% of whom are female. Women also constitute 60% of NGOs’ governing bodies compared to half of this amount in female executives in the private sector.
Non-profit or voluntary entities are financially supported mainly by the government through tax money, whereas a smaller amount of donations comes from private donors. However, public funding has decreased significantly over the last ten years, with 60% of the third sector’s total income in 2010 to 47% in 2021. Contrarily, private revenue increased from 18% to 22% for the same period.
According to a report by the Spanish Fundraising Association, the number of individual Spanish benefactors grew by one million in 2022. As a result, the number of Spaniards who made a donation was 15.9 million. Face-to-face remains the most successful fundraising approach in Spain, followed by online donations and fundraising events.
Despite the positive trends in private donations, the Spanish philanthropic sector needs more resources to meet demand. Especially during crises, such as the European financial crisis and the COVID-19 pandemic, the third sector becomes highly important for cushioning the implications on the population. For instance, between 2020 and 2022, giving campaigns and platforms thrived, with 13% (1/3 of all benefactors) of the population donating to Covid-related campaigns.
Causes important for the Spanish people
Although a vast amount of public funding in the sector traditionally goes to religious institutions, over recent years, individuals have chosen to give to food banks, research and education, stray animals, cultural and art projects and health treatments. In 2018, donations focused on children (56%), the elderly (48%) and patients (46%) in need.
With regard to education, the funding aims to improve teaching and training for people of all ages, including adolescents with high-risk behaviours and children with special needs. Besides health campaigns, other causes prominent in the past two years include environmental protection, technological developments, the war against Ukraine and the Canary Islands volcanic eruption.
As per OECD, Spanish benefactors account for the second largest contributions to development projects in Latin America, supporting 2.8 million low-income individuals. In terms of foreign donations to Spanish NPOs, the main Transnational Giving Europe Spanish beneficiaries’ missions also revolve around the environment, education, health, culture and social matters domains.
Even though new types of charities are gaining popularity, several issues prevent Spaniards from donating. To mention a few, reduced public funding, staff reduction, lack of transparency and ambiguities for international beneficiaries based in Spain negatively impact NGOs’ capacities and reputation. Reportedly, the number of NPOs with more than 50 workers diminished from 23% in 2010 to 12% in 2022. Overall, the third sector currently employs approximately 530,000 people, as opposed to nearly 645,000 in 2013.
Funding and staff concerns prevent non-profit organisations from investing in building a more positive and trustworthy image. Consequently, in response to a recently conducted survey, 36% of the people who have chosen not to donate shared that they do not trust non-profit organisations. National laws on foreign charitable foundations operating in Spain further hinder the sector’s development.
In 2014, the European Commission launched an infringement procedure against Spanish tax legislation on such organisations. The action aimed to review whether the country violates non-discrimination and free movement of capital principles. As a result, amendments were made to Spain’s tax legislation for NPOs. Prior to the legal action conclusion, only a branch or subsidiary of a foreign foundation registered with the Spanish Foundation Registry enjoyed full tax exemption.
Additionally, Spanish law did not explicitly recognise the deductibility of donations to foreign NPOs or provide equal tax treatment for non-resident NPOs with income generated in Spain. Moreover, foreign NGOs in Spain were required to register with the Spanish Foundation Registry, and their permanent activity could not primarily involve fundraising.
The adopted amendments entitle entities with a permanent establishment in Spain comparable to Spanish foundations and organisations established in the EU or EEA with tax information exchange agreements to tax exemption. However, the ambiguity of what ‘comparable’ means might continue to create impediments. As a response, recommendations to implement the non-discrimination principle discussed by Philea and the European Commission could address comparability issues and enhance the common space for philanthropy across Europe.
Sector development opportunities
There are a number of solutions that would help the Spanish third sector to showcase its importance and expand philanthropic activities. To begin with, building partnerships with other NPOs and the private sector opens a window of opportunity to reach out to more diverse donors, adapt to new technologies and learn from corporate governance principles. The latter could address transparency and reputation concerns by drafting elaborate impact assessments and providing information about activities to stakeholders.
Working towards a digital transformation, attracting and training new talent as well as educating the public about the sector’s value can serve as the basis of private-no-profit cooperation. For instance, venture philanthropy, using venture capital investment to financially support initiatives linked to results, is a way of ensuring initial capital for new non-profit organisations.
Besides funding, businesses can provide legal services as well as access to networks, human resources, marketing and communication strategies. Venture philanthropy also entails long-term investment, allowing NPOs to operate flexibly and learn from project administration practices. Furthermore, such collaboration enables private actors to understand the social mission of foundations.
The 20th Spanish Fundraising Congress, focused on the 2030 Agenda for Sustainable Development, is a concrete example of an initiative that presented opportunities for collaboration between NPOs and businesses towards achieving the SDGs. Specifically, the forum gave stakeholders the platform to brainstorm on new fundraising models, digitalisation, and global philanthropy trends and innovations.
Working towards sustainable development and environmental philanthropy objectives would make the Spanish philanthropic sector more relevant to younger generations. The 2024 UN Ocean Decade Conference, hosted by Spain, ought to reinforce the state’s ‘commitment to the blue economy and sustainable development of the ocean.’ Since the event will take place in Barcelona, NGOs, officials, businesses and universities from around the country can contribute to solutions addressing climate change, food security, biodiversity conservation, sustainable ocean economy, pollution and natural hazards.
Finally, new partnerships and initiatives create an impetus for Spain’s non-profit sector to expand by adopting novel digital fundraising solutions and operational technologies, sustainable practices, transparency models and result measurement approaches.