France Générosité – a union representing 97 charitable organisations nationwide – reported a €200 million shortfall in the €2.9 billion collected on average each year.
“Charities are very worried about their capacity to maintain their programmes… Donations are crucial for NGOs,” Laurence Lepetit, chief executive of France Générosité, told FRANCE 24.
The union largely attributes the drop to recent changes in the country’s tax system, including the government’s decision in 2018 to replace a tax on wealth with a property tax. Under the previous rules, households with an income over €1.3 million could deduct 75 percent of charitable contributions (or up to €50,000) from their declarations. Although taxpayers can still write-off donations under the new property tax, it applies to only half as many people.
“For major donors, the transformation in our wealth tax is a big explanation,” Lepetit explained. “(Because) the change in the law divided contributors by two, charities received far less this year. We noticed a drop of 54 percent in donations, which is roughly €150 million.”
Small donors – in particular retirees – have also been hard hit by the new fiscal reforms, which has scrapped some taxes, but increased social charges.
“The overall feeling in France of having less buying power has contributed to a huge drop in small donations. Many NGOs have received letters from faithful donors saying that this year they don’t have the capacity to give,” Lepetit said.
Further slide in 2019
There are fears that private donations to charities may continue to slide in 2019, as the government is introducing a controversial, new system which automatically deducts income tax from workers’ paychecks.
“There are still many questions and a lot of anxiety among the population about this new tax system, and some donors have explained that they prefer to postpone donating this year in order to understand what their buying capacity will be in 2019,” Lepetit said.
Among the litany of organisations that have flagged a decline in donations in 2018 are some of France’s most iconic and popular group, including Doctors Without Borders (MSF) and Secours Catholique [Catholic Aid].
Not all NGOs, however, have been impacted in the same way. MSF reported an uptick in donations at the end of the year – a popular time for charitable giving – while the Secours Islamique [Muslim Aid] reportedly saw an increase in bequests in 2018.
“We also know that charities working towards animal welfare or the environment have better results than the others. But the overall big picture is a significant drop for most of them,” Lepetit said.