Mr. Frank Flannery:

There was an old and very powerful tradition of philanthropy in the eighteenth and nineteenth centuries. However, that was a different Ireland and society. Most of what was done in Ireland, in great public buildings, services, hospitals, etc., was done through philanthropy. Those were different times, but philanthropy was very strong. In a way, that same culture is still very strong in Britain.

What happened in Ireland was that this economic model was destroyed through the land Acts at the end of the nineteenth and beginning of the twentieth century, when there was a huge transfer of wealth, followed by an economic war and a period of extreme protectionism. This was followed by the free trade Act in the 1960s and then the European Economic Community in the 1970s, which blew away what remained of that old wealth, industry and thinking to a large extent. Some of the trusts still in existence here are old endowments from 100 or 200 years ago and they now only provide a small amount of money.

The wealth we have now in Ireland is a creation of the Ireland of the late 1950s, 1960s and since. This was driven by the State incentivising behaviour it wanted to encourage. It started off by making profit on exports tax free, back in the late 1950s. The first programme of economic expansion was built on such ideas. Then we incentivised inward investment through setting up a low corporate tax rate. We developed outfits like the IDA, Enterprise Ireland, Córas Tráchtála and so on, giving grants and assistance of all kinds to help people. More recently, when we did not have enough hotels, we created schemes for their development, until we had too many. We also created incentives for house building. Every activity in the economy we wanted to push, we incentivised it in a similar way. This is how we developed our economy.

The wealth we have now is relatively new wealth that came through in the 1960s, 1970s, 1980s and 1990s. Basically, the whole thinking in the past 50 or 60 years in Ireland has been to do with making money, but there is no generational feeling with regard to what to do with it. There certainly was no such feeling during the Celtic tiger era, when there was a mad dash to create more money. Anyone would say that what went on in the development explosion was that all of the profits from the previous deal were pumped into the next deal. It was a kind of frenetic process.

Ireland is now going through a reflective period.

We are coming out of a national tragedy in which everybody has suffered and there is a moment to reflect that when we do rebuild our economy we want to build it on sounder values so that we will not repeat the mistakes of the past. Nonetheless, we are dealing with human nature and the concept of incentive is useful. We are not proposing any fiscal or tax incentives but we are proposing some kind of incentivisation to get people to do it.

One of the problems with philanthropy in Ireland is that it has never in our lifetime been incentivised. If a company in Ireland spends money on research and development it is allowed a double tax relief on that expenditure, in addition to the normal 12.5% that it pays. It gets a break of 37.5% because research and development is seen as an activity to encourage and that is what the State does now. It does not encourage a company to give money to a good cause or to invest in a charity or social economy. The last budget decoupled this kind of giving from other tax-efficient activity. For a while it was nearly impossible for a company to give. Far from incentivising, we have been virtually penalising it. It has never been assisted here. There has never been a reason given to people to put their money in to philanthropy or good causes or into trusts or foundations. If we had the same number of foundations per head of population as the UK has we would have 500 or 600 but realistically speaking we have only approximately 20 and Atlantic Philanthropies has 85% of the total. We are in a very poor and weak state.

The Chairman asked the fundamental question and the answer is that we do not have philanthropy in Ireland because the State has never recognised it. The State does not encourage it. It has never incentivised it. We are beginning a debate here and we will continue to ask why not incentivise investment in the social economy and such projects, in the same way as we do research and development. The payback is much faster because these events happen quickly and one gets a 12-month payback and a substantial hit in two years, whereas in research and development it could be 10 or 15 years before the payback yet a corporation is incentivised to do research and development and not to do what we propose. We are putting out a challenge to corporate Ireland to give at least 1%, as is done in the UK.