Percentage philanthropy in Ukraine - realities and prospects
In all civilized societies, care has always been taken for those in need of extra care and assistance. Usually the needs for the social sphere are covered by taxpayers’ deductions and the state itself decides how to distribute the funds received. And why not delegate some of the powers to the citizens themselves? Especially since this practice has been successfully implemented and operates in Eastern Europe. Oleksandr Maksymchuk, President of the Association of Philanthropists of Ukraine, kindly agreed to tell us in more detail what interest philanthropy is and whether it has prospects for development in Ukraine.
- Good afternoon, Mr. Alexander. Please tell us, what is interest philanthropy?
- Good day. Interest philanthropy is understood as a mechanism of financial support for non-profit organizations in Eastern Europe. It consists in the fact that the payer of personal income tax (PIT) has the right to redirect a certain, established by law, a percentage of his tax, which has already been paid to the relevant budget, for public needs. Some want to help the orphanage, some - institutions for the elderly, others - stray animals, etc.
Public needs and recipients of subsidies in each country are determined by law in accordance with existing priorities, expediency and the established system of socially useful institutions. Thus, citizens participate in the administration of part of their tax instead of government agencies, influencing decision-making in the state and government.
- Obviously, this greatly strengthens the sense of responsibility and involvement in the "big" case. And what other positive consequences of the introduction of interest-based philanthropy?
- It should be noted that interest-based philanthropy has not only the so-called monetary value, it also brings democratic principles to society and governance.
Among other positive consequences I would highlight the following: •
Improving tax discipline Increasing trust in government, ensuring public participation in public policy • Increasing the openness and responsibility of non-profit organizations • Decentralization of financial resources, targeted funding of community issues
• Growth of philanthropy in general
- You said that interest-based philanthropy is developed in Eastern Europe. Which ones?
- Percentage philanthropy was first introduced by Hungary in 1996. Then Slovakia, Poland, Lithuania and Romania joined the initiative (after studying its positive impact). At the end of last year, a corresponding law was passed in Molov. The norm is also on the way to legislative consolidation in the Czech Republic, Switzerland, Japan and is being considered in Macedonia.
- What about Ukraine?
- People have been talking about interest philanthropy in Ukraine since 2009. It was then in the framework of the Second Ecumenical SocialWeek (international forum, which seeks, including through the adoption of bills, improving the social welfare of the nation, promotes the involvement of civil society in a fair and solidary state policy and Ukraine’s integration into the international democratic, peaceful and ecumenical space - ed. )a bill on the introduction of interest-based philanthropy in Ukraine was prepared in Lviv. The author of the bill was an official of the Lviv City Council Alekseeva Natalia Igorivna. This bill was supported by MPs S. Kurpil, V. Stretovych and P. Pisarchuk, who were present at the event and registered the bill in the Verkhovna Rada of Ukraine under number 6055 dated February 10, 2010. However, in connection with the adoption of the Tax Code of Ukraine, this bill did not correspond to it.
- What was the future fate of this bill?
- In 2012, the Association of Philanthropists of Ukraine addressed the issue of introducing interest-based philanthropy. We looked at what is missing in the legislative field (then the Law on Charity was already adopted) and initiated the creation of a working group that developed a working version of the draft Law of Ukraine "On Amendments to the Tax Code of Ukraine to support non-profit organizations". philanthropy.
In early October 2014, the bill was presented at the Coordination Council established by the Minister of the Cabinet of Ministers of Ukraine. At that time, the idea of interest-based philanthropy was welcomed by Ukrainian parliamentarians. On February 12, 2015, a group of deputies submitted to the Verkhovna Rada a draft Law “On Amendments to the Tax Code of Ukraine №2122 (on Support of Non-Profit Organizations)”, which prescribes the mechanism of interest-based philanthropy.
It is not only about charitable organizations, but also about all non-profit (public, religious, etc.). This law is not unique, it largely repeats those already adopted in Europe, in some ways it is even similar to the law on church tax in Germany (a tax levied by some religious communities on their members and used byto finance community spending. In Germany, the church tax is levied at the same time as income tax. The amount of tax is about 2-3% of the taxable income of a citizen - ed. )
- What scheme of interest philanthropy do you propose?
- According to our proposals, they can use 2% of personal income taxes to support one or another non-profit organization.
The draft law somewhat complicates the moment of administration (it states that the tax, personally distributes funds at the request of the payer). We have developed additions that can be taken into account in the second reading. According to them, a person will be able to apply to the accounting department that wants to direct a certain percentage in favor of an organization. In this case, the administration will be simplified - the funds can be directed by the accounting department or the head at the request of the taxpayer.
- What are the real chances that the law will be adopted?
- We believe that the law, which has already been drafted, should be adopted in the first reading, and then, when there will be a second reading, make amendments, etc. We hope that at least by the end of the year it will be adopted. After all, three years have passed since its development. We now call on our friends, partners and MPs to raise this issue and make every effort to pass the law as soon as possible.
Given the Ukrainian realities, the state should react positively, because at present the level of public confidence in volunteers and philanthropists is quite high. In addition, it is necessary to realize that non-profit organizations do not "ask for a gift", but need financial support for status activities. The same philanthropists can significantly help the state in medical or social and other spheres. Therefore, the adoption of the law will have only advantages.
Author Ulyana Lisak
Read also: Direct speech: Do you compile a world rating of charity, what questions would you ask?
- Good afternoon, Mr. Alexander. Please tell us, what is interest philanthropy?
- Good day. Interest philanthropy is understood as a mechanism of financial support for non-profit organizations in Eastern Europe. It consists in the fact that the payer of personal income tax (PIT) has the right to redirect a certain, established by law, a percentage of his tax, which has already been paid to the relevant budget, for public needs. Some want to help the orphanage, some - institutions for the elderly, others - stray animals, etc.
Public needs and recipients of subsidies in each country are determined by law in accordance with existing priorities, expediency and the established system of socially useful institutions. Thus, citizens participate in the administration of part of their tax instead of government agencies, influencing decision-making in the state and government.
- Obviously, this greatly strengthens the sense of responsibility and involvement in the "big" case. And what other positive consequences of the introduction of interest-based philanthropy?
- It should be noted that interest-based philanthropy has not only the so-called monetary value, it also brings democratic principles to society and governance.
Among other positive consequences I would highlight the following: •
Improving tax discipline Increasing trust in government, ensuring public participation in public policy • Increasing the openness and responsibility of non-profit organizations • Decentralization of financial resources, targeted funding of community issues
• Growth of philanthropy in general
- You said that interest-based philanthropy is developed in Eastern Europe. Which ones?
- Percentage philanthropy was first introduced by Hungary in 1996. Then Slovakia, Poland, Lithuania and Romania joined the initiative (after studying its positive impact). At the end of last year, a corresponding law was passed in Molov. The norm is also on the way to legislative consolidation in the Czech Republic, Switzerland, Japan and is being considered in Macedonia.
- What about Ukraine?
- People have been talking about interest philanthropy in Ukraine since 2009. It was then in the framework of the Second Ecumenical SocialWeek (international forum, which seeks, including through the adoption of bills, improving the social welfare of the nation, promotes the involvement of civil society in a fair and solidary state policy and Ukraine’s integration into the international democratic, peaceful and ecumenical space - ed. )a bill on the introduction of interest-based philanthropy in Ukraine was prepared in Lviv. The author of the bill was an official of the Lviv City Council Alekseeva Natalia Igorivna. This bill was supported by MPs S. Kurpil, V. Stretovych and P. Pisarchuk, who were present at the event and registered the bill in the Verkhovna Rada of Ukraine under number 6055 dated February 10, 2010. However, in connection with the adoption of the Tax Code of Ukraine, this bill did not correspond to it.
- What was the future fate of this bill?
- In 2012, the Association of Philanthropists of Ukraine addressed the issue of introducing interest-based philanthropy. We looked at what is missing in the legislative field (then the Law on Charity was already adopted) and initiated the creation of a working group that developed a working version of the draft Law of Ukraine "On Amendments to the Tax Code of Ukraine to support non-profit organizations". philanthropy.
In early October 2014, the bill was presented at the Coordination Council established by the Minister of the Cabinet of Ministers of Ukraine. At that time, the idea of interest-based philanthropy was welcomed by Ukrainian parliamentarians. On February 12, 2015, a group of deputies submitted to the Verkhovna Rada a draft Law “On Amendments to the Tax Code of Ukraine №2122 (on Support of Non-Profit Organizations)”, which prescribes the mechanism of interest-based philanthropy.
It is not only about charitable organizations, but also about all non-profit (public, religious, etc.). This law is not unique, it largely repeats those already adopted in Europe, in some ways it is even similar to the law on church tax in Germany (a tax levied by some religious communities on their members and used byto finance community spending. In Germany, the church tax is levied at the same time as income tax. The amount of tax is about 2-3% of the taxable income of a citizen - ed. )
- What scheme of interest philanthropy do you propose?
- According to our proposals, they can use 2% of personal income taxes to support one or another non-profit organization.
The draft law somewhat complicates the moment of administration (it states that the tax, personally distributes funds at the request of the payer). We have developed additions that can be taken into account in the second reading. According to them, a person will be able to apply to the accounting department that wants to direct a certain percentage in favor of an organization. In this case, the administration will be simplified - the funds can be directed by the accounting department or the head at the request of the taxpayer.
- What are the real chances that the law will be adopted?
- We believe that the law, which has already been drafted, should be adopted in the first reading, and then, when there will be a second reading, make amendments, etc. We hope that at least by the end of the year it will be adopted. After all, three years have passed since its development. We now call on our friends, partners and MPs to raise this issue and make every effort to pass the law as soon as possible.
Given the Ukrainian realities, the state should react positively, because at present the level of public confidence in volunteers and philanthropists is quite high. In addition, it is necessary to realize that non-profit organizations do not "ask for a gift", but need financial support for status activities. The same philanthropists can significantly help the state in medical or social and other spheres. Therefore, the adoption of the law will have only advantages.
Author Ulyana Lisak
Read also: Direct speech: Do you compile a world rating of charity, what questions would you ask?