Nine global lessons

As charities the world over face similar challenges, what can the UK learn from abroad? David Ainsworth looks at bright ideas on subjects such as legacies, public service delivery and VAT

Map with flags
Map with flags

The Netherlands: Cross-border giving

The European Court of Justice recently ruled that donations by EU citizens to charities in other EU countries should get the same tax relief as domestic donations.

The UK has so far failed to respond to the ruling, but the Netherlands has already introduced legislation allowing cross-border giving. The country is also open to the idea of cross-border giving with US charities, says Simon Weil, chair of the European Association for Philanthropy and Giving.

Weil says the Dutch have also succeeded in attracting interest from charitable foundations in other countries by making it easier for them to operate in the Netherlands. "They've said that EU and US foundations can carry out their activities in the Netherlands under a very liberal registration regime, and with a low level of regulation, so long as they are properly regulated in their own countries," he says.

Argentina: Volunteering

What began 12 years ago as a way to help schoolchildren and students understand the practical value of their education has become a volunteering juggernaut.

In the past three years, more than 1.5 million students and 40,000 teachers have volunteered through the country's Service Learning programme.

"We wanted to link volunteering to better academic achievement," says Maria Nieves Tapia, director of the Latin American Centre for Service-Learning. "We didn't just want middle-class children going out and doing a bit of work for the poor. We wanted everyone, no matter how poor or how young, to understand the difference their skills could make in their communities."

She says the programme has reduced drop-out rates among youngsters at Argentine schools. "Children who use their skills in their neighbourhoods value their education," she says.

USA: Legacies

The lifetime legacy concept, used widely in the US since the 1960s, allows people to give their property to a charity, but retain the use of it during their lifetime.

The approach involves people donating their assets to charity by irrevocably placing them in trust. The introduction of the scheme in the UK has been consistently promoted by the Charities Aid Foundation, which believes lifetime legacies offer several tax advantages for the donor, give charities a much clearer view of their future situation and attract donations that would otherwise not find their way to charity.

CAF says lifetime legacies stand a significant chance of being introduced in the UK, and recent policy papers put forward by both Labour and the Conservatives offered support for the idea.

USA: Credit unions

The Community Reinvestment Act, introduced in 1977, forces US banks to put a certain amount of their money into deprived communities and has led to a supply of cheaper credit to people who might otherwise have been financially excluded.

The idea caught the attention of former communities secretary Hazel Blears at the end of April, just before her exit from government. She said the act would serve as "an interesting starting point" for drawing up legislation for the UK.

The hope is that similar laws here would provide support to credit unions and community development finance institutions, many of which are struggling to increase and maintain their activities at the moment. A plan for implementation was expected by the summer, but Blears's departure may well result in this being delayed.

Australia: Public sector contracts

Job Futures is a national network of more than 160 not-for-profit organisations that work to win government employment services contracts.

These can then be delivered at local level by charities with local expertise. The network, now 10 years old, consists of charities that work with disadvantaged groups such as indigenous Australians, the disabled, ex-offenders and refugees.

Under the Job Futures model, a central bidder with the expertise and scale to win major contracts negotiates with central or local government for the contract, absorbing much of the risk that prevents smaller organisations from putting in applications for the work.

The network has already inspired the development of the Futurebuilders Consortium here in the UK, a coalition of charities seeking government contracts.

Bangladesh: Microfinance

The Grameen Bank has revolutionised the process of financial support in poor communities in Bangladesh.

It started making small loans to very poor communities at affordable rates to help them develop businesses, and achieved an extremely high repayment rate. By proving that it was possible to make a profit lending very small amounts of money to the very poor, it spawned a host of imitators around the world.

There are questions, however, about whether the model can work in areas of market failure and financial inclusion in the western world. Certainly the bank's founder, Nobel Prize winner Muhammad Yunus, believes so, and has recently set up a microfinance provider in New York.

One of the bank's former employees, Faisal Rahman, has also launched a microfinance provider, Fair Finance, in the UK. It has been set up to challenge the hegemony of doorstep lenders and payday lenders.

Denmark: VAT

The battle to win relief from irrecoverable VAT for UK charities has been going on for 30 years. But thanks to an important victory in Denmark, which has resulted in the Danish government offering substantial VAT rebates to fundraising charities, there is now hope that change could happen in the UK too.

The Danish decision has demolished one of the UK Government's main arguments against granting VAT relief - that the EU wouldn't allow it. The change in Denmark rested on a statement by Laszlo Kovacs, the EU commissioner for taxation and customs union, which made it clear that so long as governments collect VAT, they are free to return it to charities at a later date.

Peter Jenkins, a former VAT specialist at professional services firm Ernst & Young and a long-time campaigner against VAT on charities, says the Conservatives have made preliminary suggestions they will revisit the issue of VAT relief if they win the next election.

Germany: Social banking

The Gemeinschaftsbank fur Leihen und Schenken, or GLS, is a social bank that offers current accounts to German citizens, but with the catch that no interest is paid on their money.

Instead, the interest is used to offer loans to socially responsible businesses at better rates than they could get from mainstream banks. The rest of the banking sector has taken a big hit in the credit crunch, but GLS enjoyed double-digit rises in its net profits in 2008.

Malcolm Hayday, head of UK social lender Charity Bank, says GLS is typical of Europe's superior social banking sector. "There are much larger institutions in Europe than in the UK," he says. "In the UK, we've spent a lot of time looking at American models, and sometimes haven't been so good at seeing what's on our doorstep in Europe."

Italy: Cooperatives

In many parts of southern Europe, the cooperative sector is much larger and more effective than in the UK.

Italy's Consorzio Gino Mattarelli is a consortium of 1,100 cooperatives that employ 35,000 people and have a combined annual turnover of more than EUR1.2bn (£1.03bn).

"It works at a local level all the way up to national level," says Dorotea Daniele, director of European social enterprise support agency Diesis and a former CGM employee. "It represents about 10 to 20 per cent of all the cooperatives in Italy, depending on where you are in the country, so it's a very powerful player."

Cooperatives, says Daniele, receive significant benefits thanks to the Italian constitution, including support for taking on some unemployed people such as ex-offenders or disabled people and the right to bid for small contracts without having to go to competitive tender.

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