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Open letter to Presidents Von der Leyen, Michel and Sassoli on the implications of MFF 2021-27 and Next Generation EU for the philanthropy sector

08 October 2020

Today, Max von Abendroth, Executive Director of DAFNE, and Delphine Moralis, CEO of the European Foundation Centre, have written to Ms. Ursula von der Leyen, President of the European Commission, Mr. Charles Michel, President of the European Council, and Mr. David Sassoli, President of the European Parliament, on behalf of more than 10,000 donors and foundations across Europe. The letter addresses the implications of the new Mulitannual Financial Framework (2021-2027) and Next Generation EU on the European philanthropy and civil society sectors.

You can read the text of the letter in full below:

EU’s next MFF and the Recovery Plan putting the third sector at risk - potential implications for philanthropic and other public benefit organizations

DAFNE and the EFC jointly represent more than 10,000 donors and foundations across Europe. This philanthropy sector is a vital part of Europe’s civil society, providing 60 billion euros of private resources annually to the public good.

In the view of the European foundation sector the agreement reached at the Council in July 2020 on a common position of Member States does not respond to the concerns of philanthropy and other public benefit organisations. Therefore with this letter we would like to draw your attention to the potential impact of the next Multiannual Financial Framework for 2021-2027 and the Next Generation EU on philanthropic and other public benefit foundations.

Following our recent outreach to you as part of a wider civil society alliance we herewith would like to present to you the specific recommendations of our members:

ON THE NATIONAL RECOVERY PLANS:

• We welcome that the EC guidance for the national implementation plans includes a specific recommendation to Member States to involve civil society organisations into the drafting of the national implementation plans for the recovery fund. It is vital that Member States engage with philanthropic organisations and wider civil society around the national recovery plans according to the national circumstances;

• We also believe that philanthropic organisations and wider civil society organisations should be involved in the governance of the Recovery and Resilience Facility of the Recovery Plan, and be able to evaluate the national implementation plans and provide direct input to the Commission, as well as monitor their implementation;

• We believe that some philanthropic organisations can play a crucial role in partnering with public actors around the national recovery actions and can also act as implementing partners for some of the action.

ON THE MFF:

• There is a need to increase funding for Europe's flagship programmes, which support key EU priorities such as protection of the environment, social inclusion, democracy and fundamental rights, equality between women and men, culture, education, health, and in particular: Erasmus+, Creative Europe, the Justice, Rights and Values Programmes, Life, EU4Health Programme. The amounts proposed in the European Council agreement do not respond to current needs;

• The funding for the Rights and Values programme should be increased, in order to enable civil society to promote and protect the rights and values enshrined in the EU Treaty;

• We see the need for a strong rule of law conditionality regulation which is a factor that will make or break the EU’s credibility and accountability; this conditionality must ensure that in case of significant rule of law and fundamental rights breaches, those who need funding are not penalised, and that it is made available to beneficiaries through direct management by the European Commission;

• The EU institutions must reach an ambitious agreement on the extension of EU own resources to be able to meet EU needs on a long term basis; we consider this as very important, as the third sector (philanthropy/civil society) will likely need to step in to address inequalities which will arise if the costs of this crisis are carried by citizens;

• We would welcome a strong Invest EU programme providing guarantee instruments and financial instruments to encourage more entry points for philanthropic organisations as grant-makers and co-investors and potentially the design of financial products that could stimulate also more mission related investments of philanthropic endowments.

• Some philanthropic organisations/foundations also manage and implement EU operational programmes (such as ESF) for decades. For them changing co-financing rates for example in the ESF+ could potentially make it difficult to continue such actions. It could hence be considered to allow Member States to introduce higher co-financing rates for Programs related to social inclusion. This would allow for the participation of organisations which, unlike regional authorities, are unable to commit to high co-financing rates to complement the funding coming from the MFF.

The philanthropy sector has been responding to the Covid-19 crises and has already started to help contribute to the emergency and recovery phase by committing more than €1.1 billion (according to a recent McKinsey report) geared towards emergency relief to the healthcare crisis as well as general support for struggling non-profit partners. Philanthropic organisations have ensured that initiatives are taking on both the immediate/direct and longer term/indirect consequences of this pandemic. While this figure is certainly a good start, we are, as a sector, fully aware that its contribution is only complementary to public action and that there are challenges related to our operating environment which hinder us to unleash the full potential.

The philanthropy sector is very diverse since it is composed of small/local initiatives as well as larger grantmakers. Many smaller philanthropic organisations are also in need of recovery measures to be able to continue their work. Larger philanthropic actors are also impacted by the crisis and are in view of challenging financial markets considering more creative ways of investing the endowment via mission related investments. Measures to facilitate mission related asset allocation in line with EU policies and as suggested by the Invest-EU Programme are very welcome and we would like to explore this further.

We would welcome an opportunity to discuss these matters with you at any moment. We strongly believe that while facing the COVID-19 crisis, the EU must keep its foundational values up while exploring new ways to engage and encourage more private resources for the public good.

Yours sincerely,

Delphine Moralis
EFC Chief Executive Officer

Max von Abendroth
DAFNE Executive Director

Open Letter to EU Presidents on MFF and Next Generation EU