ERNOP

Big state, big giving – the unusual case of philanthropy in Sweden.

Sweden - Johan Vamstad (Ersta Sköndal University College)

 

 

Sweden represents a distinct model for charitable giving in an international comparison. Sweden is what Esping-Andersen called a social democratic welfare state. A social democratic welfare state maintains a vast system of public welfare services that are available to all citizens as an entitlement and that are funded by taxes (Esping-Andersen, 1990). The Swedish, or Scandinavian, welfare regime was to a large extent designed to pre-empt the need for charities since these were considered to create social stigmatisation and  to perpetuate social inequalities. The Swedish welfare state has succeed in removing the need  for charity based social services but it does not seem to have an adverse effect on giving in general among the Swedish population.

 

The charitable giving performed by Swedish citizens is quite considerable but it is primarily directed to organisations working with international aid and in some cases medical research being performed in Sweden. Only a minor part of donated funds are given to organisations working primarily with domestic social issues, such as homelessness and child abuse. Swedes donated 5,2 billion SEK (510 million Euro) to charitable causes in 2009, which is a high figure in an international comparison considering that Sweden only has a population of 9,3 million people. The Swedish Cancer Foundation, UNICEF Sweden and Save the Children were the top three receivers. The Swedish Fundraising Council reports that charitable giving among Swedes is growing in spite of the economic crisis (FRII website 2010-01-22). As many as 60% of all Swedes stated that they had been giving to a charitable organisation in the last six months when surveyed by the same council. Swedes today generally look favourable at charitable organisations, 78% are “positive” or  “very positive” towards them (FRII, 2009).

 

 

The Civil Society

The Swedish civil society is based on mass membership in organisations based on a high degree of unpaid, voluntary work by non-professionals. Just as the Swedish giving is influenced by the universal welfare state, the shape of the civil society is also directly caused by the social democratic welfare regime. The organised civil society in general is very large in Sweden but areas like social services, welfare and healthcare are exceptions. These areas are dominated by the public sector, while the civil society is dominating in separate and/or complementing areas such as labour market, sports, culture, organised interests et cetera.

 

As many as 86% of the adult population are members of at least one organisation and 48% of the population are active members in at least one organisation (Svedberg et al, 2010). The number of Swedes that are volunteering is stable but a very recent, a nationwide survey shows that the amount of work they doing is growing. The average work effort is four hours a week, which amounts to 400.000 full time work years (Svedberg et al, 2010). Unpaid volunteer work is the most common and important contribution to the Swedish civil society, while strictly monetary donations is less characteristic for the Swedish model. Still, private donations to civil society organisations are not insignificant in Sweden. 12% of the total funding of the Swedish civil society comes from private donations, which might not seem like a lot if one does not know that the EU average is 7% (Trägårdh and Vamstad 2009, p.183). The explanation for this is that civil society organisations in other parts of the EU perform often costly welfare services for which they are paid by the state, while the Swedish civil society organisations perform activities that are to a large extent paid for by membership fees and voluntary work. The EU average for private donations is, in other words, dwarfed by the extensive public funding of private non-profit welfare services in both corporatist countries like Germany as well as liberal ones like the United Kingdom. The proportion of the funding of the civil society that is provided by the state is therefore, perhaps ironically, also a lot lower in Sweden than in most of the rest of the EU.

 

Could trust explain the Swedish case?

It seems as if the Swedish type of welfare state does not restrict giving, neither directly through a large public sector and high taxes, nor indirectly through influence on and framing of the civil society. The universal availability of public social services and the high taxes that pay for them does not reduce Swedes to passive citizens lacking both means and incentives to donate money. If anything, Swedes give more and volunteer considerably more than the population in a typical developed country. What could possibly explain this? Part of the explanation can perhaps be provided by research studying the link between stable institutions and generalised trust, such as Rothstein (2003). Sweden is a high trust society, the generalised trust is among the highest in the world, which is by many explained by the stable and transparent public institutions in Sweden. Low levels of corruption and a high level of predictability among public institutions makes people trust them and, more importantly, trust each other. The exact causal link between generalised trust and giving is not entirely clear but it seems evident that high trust at least to some extent favours charitable giving. Research shows that a potential giver is more likely to give if he/she believes, or trusts, other people to do the same. The same logic goes for volunteering for unpaid work in a civil society organisation and both these behaviours are common in the Swedish high trust society.

  

Recent public policies in the area of philanthropic giving

The by far most significant policy development in this area in Sweden in recent years is the initiative to introduce tax deductions for donations to charitable causes. Sweden is today together with Slovakia the only country in the union that does not allow these tax deductions. Slovakia used to have these deductions and still use other kinds of tax incentives for giving, which Sweden does not. Tax deductions has been discussed regularly since the 1950's but each time question has neared a political decision the same basic arguments against it has occurred. The basic principle of the Swedish tax system, which is extensive, is to collect as much taxes as possible and the distribute these according to political decisions. To allow tax deductions is therefore not only to lose money for the state, it is also to lose democratic control over which causes that gains financial support. A commonly heard argument against tax deductions in Sweden is that it would benefit mainstream causes that already has great resources (for marketing et cetera) while marginal or weak groups would suffer from the limitation of the redistribution of wealth from taxes.

 

The first serious attempt to introduce tax deductions for gifts to philanthropic causes was made in 1979 and the second in 1991. Both these reforms failed and never passed the parliament, for various reasons. On the 11^th of November 2008 the Swedish four party coalition government decided to appoint a group of civil servants to formulate proposal for a system of tax deductions suited to the Swedish tax system that the parliament could debate and decide on. The proposal was finished by June 2009 but the actual proposal was over shadowed by the fact that the group also advised against tax deductions in their writing. Their reasons for this was that it would compromise the Swedish tax system. The proposal underwent a process where different authorities, organisations and other actors commented on it during the autumn of 2009, which is according to the Swedish policy process (a bit similar to the EU green/whitebook routine). The fate of the proposal is right now very uncertain. It is certainly possible that this will become the third failed attempt to introduce tax deductions for charitable giving in Sweden, especially since the only political party that are actively  working to realise it is the very small Christian Democratic Party. Sweden might thereby remain an exception when it comes to tax incentives for giving to philanthropic causes.

 

 

Bibliography

Esping-Andersen, Gösta 1990. Three worlds of welfare capitalism. Princeton: Princeton University Press

 

FRII website 2010-01-22 http://www.frii.se/1_faktastatistik.shtml

FRII 2009. Gallupundersökning om det svenska folkets syn på och givande till ideella hjälporganisationer. Stockholm: FRII

 

Rothstein, Bo 2003. Sociala fällor och tillitens problem. Stockholm: SNS förlag

 

Svedberg, Lars, Magnus Jegermalm och Johan von Essen 2010. Svenskarnas engagemang större än någonsin. Stockholm: Ersta Sköndal Högskola

 

Trägårdh, Lars and Vamstad, Johan 2009. Att ge eller att beskattas – avdragsrätt för gåvor till ideell verksamhet I Sverige och andra länder. Stockholm: Sektor 3