Harnessing the Power of Philanthropy

On 1 October, in recognition of the European Day of Donors and Foundations, Philea and Impact Europe convened EU policymakers and philanthropic leaders at the European Parliament to advocate for policies that support philanthropic impact investing. The event opened with a welcome note from MEP Katrin Langensiepen of the Group of the Greens, Philipp Schulmeister, Director for Campaigns at DG COMM in the European Parliament, and the CEOs of Philea and Impact Europe, Delphine Moralis and Roberta Bosurgi. The welcome note highlighted the urgent challenges of climate change, social inequality, and democratic erosion, emphasizing the need for cross-sector collaboration to address these issues effectively.

The event highlighted the release of a joint position paper by Philea and Impact Europe, which offers recommendations for the next European Parliament and Commission. The recommendations draw on the joint calls from the Impact Manifesto and European Philanthropy Manifesto, framed within the context of the European Parliament elections earlier this year. During the event, Roberta Bosurgi, CEO of Impact Europe, introduced the paper, which aims to strengthen philanthropic impact investing in the coming years. Following this, Delphine Moralis, CEO of Philea, led an engaging discussion with philanthropic leaders in impact investing and representatives from the European Commission (EC), the European Investment Bank (EIB), and the European Investment Fund (EIF).

The position paper proposed several key initiatives:

1. Enabling Impact Investing at the Programme Level
2. Developing a Co-Investment Facility under InvestEU 
3. Facilitating Impact and Mission-Related Investments at the Endowment Level
4. Integrating Philanthropy Early in the Next Multiannual Financial Framework (MFF)

The event highlighted the growing interest of foundations in deploying capital for impact investing through diverse forms of repayable financial instruments, such as loans and equity, rather than traditional grants. Sybren Devoghel from the King Baudouin Foundation discussed the foundation's shift towards impact investing, driven by a new generation of philanthropists seeking sustainable funding solutions for social enterprises. Impact investing allows the foundation to diversify its approach and form partnerships with private-sector entities while reinvesting returns to maximise impact. Traditionally, foundations have provided grants and made ESG-focus investments; however, these investments often lack direct social or environmental impact. The COVID-19 pandemic underscored the urgency of adopting impact investing to address pressing global challenges.

Despite the potential, philanthropic impact investing is often hindered by restrictive national regulations. At the event, Siep Wijsenbeek from the Dutch National Association (FIN) illustrated this issue, highlighting the new momentum in the Netherlands. FIN successfully advocated for a standardised tax ruling that allows all foundations to engage in impact investing, which replaced the cumbersome process of obtaining individual rulings for each foundation. This model could serve as a blueprint for an EU-wide standard to overcome legal barriers and foster a cohesive and scalable philanthropic impact investing landscape.

Policymakers and foundations share a common commitment to finding sustainable solutions to social and environmental challenges, yet neither can achieve these goals alone. Wijsenbeek underscored that collaboration between philanthropic organisations and policymakers can lead to credible, scalable solutions for urgent issues like climate change and social inclusion.

Building on this, François Dauriat from the European Commission’s DG EMPL highlighted the Commission’s existing support for philanthropic impact investing through initiatives like the Social Economy Action Plan (SEAP) and InvestEU. SEAP aims to address barriers to cross-border donations, facilitate tax solutions, foster co-investment facilities, and improve access to funding to grow the impact investing and social economy ecosystems – from grants to repayable finance. 

Further supporting this agenda, Karel Vanderpoorten from DG GROW underscored the role of the Transition Pathways initiative, which identifies the social economy as a key industrial ecosystem and supports actors in building capacity, forming networks, and developing sectoral policies. In a major networking effort, the EC is soon launching a collaborative platform that will connect social economy actors, private investors, and other industries interested in impact-driven activities, thereby helping to attract capital and expand partnerships across the sector.

EU financial instruments under InvestEU are also accessible to impact investors, including foundations. The European Investment Bank and the European Investment Fund (EIF) actively engage with philanthropic organisations in impact investing. Through co-investments and de-risking instruments, the EIF helps catalyse private investments in social enterprises and initiatives. Additionally, the EIB offers capacity-building support through the InvestEU Advisory Hub.

Silvia Manca from the European Investment Fund shared success stories from these collaborations, such as foundations launching impact investing funds in the equity space as well as deploying loans. A notable example is Portugal’s Fundação José Neves, which supports student financing. Through a previous funding programme, the EIF provided a guarantee product to the foundation, empowering it to offer income-sharing agreements (ISAs) to students. These agreements allowed students to defer payment of their tuition fees, with repayment contingent upon securing employment. Today, this initiative could be supported under the InvestEU Microfinance, Social and Skills Guarantee Product.

Going forward, Gunter Fischer from the European Investment Bank and Silvia Manca from the EIF discussed plans to mobilise foundation endowments and programmatic investments proactively. They are working with Philea, Impact Europe, and foundations to co-create a tailored co-investment facility and solutions that allow foundations to invest in line with their missions. Sybren Devoghel welcomes the co-investment facility, recognising its potential to provide risk-sharing, expertise-sharing, and diversification opportunities. However, he cautions that the facility's effectiveness could be compromised by "mission drift" if it becomes too broadly or narrowly focused. To address this, he suggests developing tailored "sleeves" within the co-investment structure, allowing it to support the diverse priorities of foundations based on specific national or thematic goals.

Looking ahead, the representative from DG GROW expressed optimism about expanding opportunities for philanthropic impact investing under the new European Commission’s political agenda. Key priority areas likely to emerge include social housing, social infrastructure, and energy—sectors where there is both a high investment need and potential for philanthropy to drive impact alongside public and private partners.