David Stanton (Cork East, Fine Gael)
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We will now discuss the provisional Council regulation on the statute for the European Foundation with representatives of Philanthropy Ireland. On behalf of the committee I would like to welcome: Mr. Ludwig Forrest, chairperson of the European Foundation Centre; Mr. Colin McCrea, a member of Philanthropy Ireland; and Ms Hanna Surmatz, legal counsel with the European Foundation Centre. I thank them for attending the committee today, as well as for the submissions they have supplied to the committee.

The format of today's meeting is that they will be asked to make some brief opening remarks which will be followed by a question and answer session. Before we begin, I wish to draw the witnesses' attention to the situation regarding privilege. Witnesses should note that they are protected by absolute privilege in respect of any evidence they are to give to the committee. However, if they are directed by the committee to cease giving evidence in relation to a particular matter and they continue to do so they are entitled thereafter only to a qualified privilege in respect of their evidence. They are directed that only evidence connected with the subject mater of these proceedings is to be given. They are asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against any person or entity by name in such a way as to make him, her or it identifiable.

Members should be aware that under the salient rulings of the Chair, members should not comment on, criticise or make charges against a person outside the House or an official by name in such a way as to make him or her identifiable.

I now invite Mr. Forrest to begin.

Mr. Ludwig Forrest:

I thank the Chairman and other members of the joint committee. It is a pleasure and an honour, but also a huge responsibility, for us to be here today. We would like to thank the committee for the precious time it is giving us for this presentation on the importance of the european foundation statute, EFS.

The European Foundation Centre, the foundation sector in general and several philanthropists hope that Ireland will, during its EU Presidency, support this legislative proposal and make real progress to secure its adoption. The Joint Committee could help in an effective way by bringing this issue to the attention of the relevant Ministers: the Minister for Justice and Equality, Deputy Alan Shatter; the Minister for the Environment, Community and Local Government, Deputy Phil Hogan; and the Minister of State, Deputy Lucinda Creighton.

It is our responsibility to convince the committee that this would be a good idea by demonstrating the status of the sector and why it is relevant and important. On 8 February 2012, the European Commission issued a legislative proposal for a european foundation statute. The proposal must now be endorsed by the co-legislators that is, the Council of Ministers and the European Parliament. Once adopted, this new European statute will not replace national laws but will act as an additional legal tool.

The statute is a legal instrument that will allow philanthropists, individuals, families, corporations and foundations to set up a European foundation. Once registered in a member state it will be recognised in all the other member states of the European Union and the European Economic Area.

What is the importance of the foundation sector in Europe? Approximately 110,000 foundations currently exist across Europe.

Those foundations cover all the domains of the general interest and they support tens of thousands of beneficiaries on several issues. The economic footprint of the foundations is significant because they redistribute their expenditure of €100 billion every year. Almost 1 million persons are employed in the sector, which does not include indirect employment, while between 1.5 million and 2 million volunteers help the work of the foundations. It is also a growing sector. For example, there is one new foundation every day in Spain while, last year, 800 new foundations were set up in Germany. People from other European countries want to support beneficiaries in Ireland or other countries and cross-border giving is also increasing by 20% every year.

Why is it needed? I work at the King Baudouin Foundation, which is one of the largest foundations in Belgium. When we face people who want to act in the general interest in more than one country, they are sometimes blocked by administrative burdens, long procedures, several costs and not knowing where to start. We live in times where we cannot afford that anymore. We should facilitate philanthropy. The more it is facilitated, the more engagement is facilitated and the more people are enabled to act in the general interest, which is much needed now. A feasibility study was conducted by the European Commission and it estimated the additional costs of the legislative burdens at €100 million, which is a significant amount. That money could be used for purposes other than administrative burdens.

Philanthropists and foundations that want to act in more than one country often need to create a new legal structure or personality in other countries. Members can imagine it is not easy for people to do that. We have several concrete examples in this regard and during the question and answer session, we can highlight them to how important they are.

This process is being backed. The foundation sector knows we are facing an important moment. The EFC and many foundations and philanthropists have worked for years to motivate member states to work on this issue. We know that we have never been so close to the EFC but we are still far away and we are quite realistic. The DAFNE, Donors and Foundations Networks in Europe, which represents 6, 000 foundations also supports this legal process. We have the pleasure of some backing from the European economic and social committee and the committee of the regions. The European Parliament endorsed us in 2011.

These are the key elements and I do not want to delay further because questions will be important. The European foundation statute is a simple tool to promote philanthropy for the general interest and we hope, therefore, that the joint committee will help us in this regard and bring the attention of the relevant Ministers to this issue during the Irish Presidency.

Marcella Corcoran Kennedy (Laois-Offaly, Fine Gael)
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I thank Mr. Forrest for his presentation. We are philanthropic people in Ireland in both the cultural and charitable spheres. We donate substantially per capita to various organisations. What would be the advantage to these organisation of engaging with this process? A philanthropy scheme has been introduced for the arts in this country. If somebody engaged with the scheme, how would the statute benefit them? How would it benefit a charitable organisation focused on social good in practical terms?

Mr. Colin McCrea:

I thank the Deputy. Members of the public in Ireland are generous in their giving and we all know that. There are 30 grant making foundations in the country. If we were to match the UK, we would increase that number to 500 and, therefore, we are way behind in the number of foundations we have. Mr. Forrest brought up the difficulties of operating across borders and setting up a foundation is difficult in itself. However, one of the problems we face is that small countries suffer disproportionately in terms of cross-border philanthropy. Few British foundations operate in the Republic of Ireland. The Joseph Rowntree Charitable Trust is a notable exception but a great number of them operate in Northern Ireland. They do not come south and one of the reasons is it is difficult to do so. One of the jobs I had until last month was with Atlantic Philanthropies. We set up different organisations in every country we operate in.

David Stanton (Cork East, Fine Gael)
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What does Mr. McCrea mean by that?

Mr. Colin McCrea:

A different legal structure in every country.

David Stanton (Cork East, Fine Gael)
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Is Mr. McCrea saying this proposal will mean one structure for all of Europe?

Mr. Colin McCrea:

Yes.

John Paul Phelan (Carlow-Kilkenny, Fine Gael)
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I thank Mr. Forrest for his presentation. While the Irish are not as familiar, as Mr. McCrea outlined, with the European notion of foundations and philanthropy, as Deputy Corcoran Kennedy stated, the Irish are well known for their generosity. How many people work in the sector in Ireland? If a standard set of legal principles were adopted across the EU, would that lead to foundations in other countries setting up operations in Ireland? Mr. McCrea mentioned one British foundation that is active here. What does he feel the nature of the legal framework should be? I presume it will not be prescriptive, given each member state has different regulations and rules regarding charitable status and so on. What practical measures would such a statute result in? What shape would it take?

Mr. Colin McCrea:

Perhaps Ms Surmatz, who is the EFC legal counsel, will take that.

Ms Hanna Surmatz:

It will not replace national foundation and charity laws because it will create a European legal instrument, which will be defined by European regulation.

It would be a supra-national legal tool to be used by those foundations which operate across borders as well as for funders with assets in different countries. It represents an answer to the reality that founders and donors have assets in different states and to the fact that there are an increasing number of Europe-wide issues which require bodies to join forces, which it is currently cumbersome to do. Cross-border research where the context involves a European agenda is sometimes difficulty for organisations to pursue. A regulation would provide an answer for essential trans-national initiatives and ease the entry of other foundations to Ireland, for example. It would allow organisations to operate across borders.

Mr. Ludwig Forrest:

I faced a very large company which was engaged in a great many philanthropic activities in the USA but which wanted to commence something in Europe. The company is also present in Ireland serving breakfast. The company asked me where it should start to create a European programme. Hopefully, in some months or years it will be possible to start with a European foundation. Currently, where a decision has been made to go to Europe, implementation involves dealing with 27 different legislative regimes. It is not easy to act. It is a question of allowing people to start quickly. I was contacted recently by the Irish in Europe Association, which is based in Brussels to promote Irish culture across Europe. It has activities, grants and donors across the EU. They asked me how they could commence a particular activity to which a European foundation statute would have been an answer. There are many organisations which promote research on migration and poverty on a European wide basis. They are the first clients to seek a European foundation statute.

John Paul Phelan (Carlow-Kilkenny, Fine Gael)
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I presume there are existing EU directives which touch on charitable organisations. Are there? I am not familiar with them, though I probably should be.

Ms Hanna Surmatz:

The development of a European foundation statute relates to the Single Market and EU company law. There is legislative provision to establish private European companies and we have a European co-operative statute but there is no scheme in place for public-benefit organisations.

John Paul Phelan (Carlow-Kilkenny, Fine Gael)
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Company law directives might have some general application.

Ms Hanna Surmatz:

This is a very specific document targeted at public-benefit foundations.

David Stanton (Cork East, Fine Gael)
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The figure of 110,000 foundations was mentioned. Is that a global statistic or is it confined to Europe?

Mr. Ludwig Forrest:

Europe.

David Stanton (Cork East, Fine Gael)
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There are 110,000 organisations in Europe giving away money for charitable and philanthropic reasons, of which there are 30 in Ireland.

Mr. Colin McCrea:

There are 30 in Ireland, of which two account for 85% of all spending. Those two foundations are to close within the next few years. To put on the green jersey for a moment, the proposed statute will assist smaller countries by facilitating the entry of foundations.

David Stanton (Cork East, Fine Gael)
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Global expenditure is in the region of €100 billion. What is the European expenditure?

Ms Hanna Surmatz:

That is the European figure.

David Stanton (Cork East, Fine Gael)
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Is there any reason the proposal should not be implemented? Is there anyone saying it is a bad thing? Is anyone jumping up and down and saying it should not happen?

Mr. Ludwig Forrest:

No.

David Stanton (Cork East, Fine Gael)
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I do not see why it should not happen either. It seems to be a positive idea.

I thank the witnesses for attending and for their interesting and valuable contributions to clarify the implications of the proposed regulation. We will give it serious consideration. I note to members that the adjourn date is currently provisional.