The size of philanthropy and social investment in Turkey are growing. Although philanthropy in Turkey is on the increase, the institutional form of giving is still low, reflecting a gap in knowledge about how to give effectively and a consequent lack of sophistication in mechanisms for giving.
Individual giving is deeply rooted in the cultural and religious fabric of Turkey, yet it is these traditions that make Turkish people more likely to give directly to family and neighbors than through more organized efforts to civil society organizations (CSOs). In fact, 80% of individuals report giving financial donations, but 87% prefer direct giving as the most effective form of philanthropy as opposed to giving to CSOs. (1)
Institutional vs. direct diving (%)
Individuals report the main reasons for this preference is that because their donations are generally small (53%) and unplanned (21%). Only 12% indicate a lack of trust and 9% indicate a lack of information as reasons for direct giving (2)
Reasons for not using institutional intermediary (%)
In 2004, the equivalent of more than 2 billion USD in individual giving was reported in Turkey. Thirty-seven percent (37%) was given to CSOs and 35% was given via direct giving to individuals. This confirms the notion that when donations are made to organizations they tend to be in larger amounts (3)
Snapshot Findings: Individual Giving in Turkey
According to data gathered by the Philanthropy in Turkey: Citizens, Foundations and the Pursuit of Social Justice study, Turkish people appear motivated mainly by religious obligations (32%) and traditions and customs (26%). Fewer people are motivated by a sense of obligation to serve society (12%) or an expectation from society to give (9%) (04)
Motivations for giving (%)
When making donations to organizations, individuals on the whole select causes such as poverty, education and health rather than human rights and social/economic development (05).
If you were to make a donation to a foundation, for what purpose would that primarily be? (%)
According to a 2006 report by the Charities Aid Foundation, individual giving accounts for 0.23% of Turkey’s Gross Domestic Product (GDP). Turkey ranks 10th out of the 12 countries compared in this study (06).
National giving levels shown as a % of GDP
Turkey’s ranking of 136th in the 2011 edition of the CAF’s ‘World Giving Index’, makes it one of the lowest ranked countries in Central and Eastern Europe. According to the Index, 14% of population give money to charity, 7% volunteer time and 40% help a stranger (07)
Regional View – World Giving Index 2011
Legal and fiscal frameworks in Turkey do not distinguish between family and company-sponsored foundations. Many foundations are affiliated with “large cap” companies and family holdings and do not raise funds from any outside sources. All income for these foundations comes from their endowments and holding company revenues.
Most companies do not have a defined policy or practice in making grants to CSOs. Decisions are often made by companies’ Board Members and/or marketing and public relations departments. Rather than form foundations, companies are more likely to provide in-kind support of services, technical support or goods, or sponsor a specific program or activity on a long-term basis. The presence of employee giving and cause-related marketing strategies is emerging.
Grantmaking by Foundations
Foundations and associations are the two main legal forms of non-profit, non-state voluntary entities that comprise the non-profit sector in Turkey. Both operate their own programs and receive funding support from their members (if an association), from their endowment investments (if a foundation), and/or from external donor organizations (08) .Foundations are not grant making foundations. The idea of a fundraising and grantmaking foundation remains underdeveloped. Although there is no recognized category of grantmaking foundations, the new Law on Foundations of 2008 made it possible for foundations to make grants (09).
The first community foundation, which was established after the new law took effect, was the Bolu Community Foundation. It can be made a model example for the expansion of community foundations to other cities throughout the country (10)
According to the public opinion research on “Youth, Volunteering and Social Capital” conducted by Educational Volunteers Foundation of Turkey (TEGV), only 4.8% of 18-35 year olds in Turkey volunteered in the previous year, while men, and individuals from higher education and income groups are more likely to volunteer. Lack of spare time (70 %) and lack of financial resources (67 %) are cited as the main reasons for not volunteering (11)
Associations which attract the most members include political parties, chambers, and sports clubs, as opposed to township associations, human rights associations, and environmental associations.
Funding Sources for CSOs
According to the CSI Report for Turkey, funding patterns differ slightly between associations and foundations. Associations are heavily reliant on membership fees (70%) and individual donations (44%). Foundations rely on donations (57%) and interest earnings on liquid assets and rental income. Donations to foundations are comprised of individual (75%) and corporate (17%) giving (12).
Restricted and underdeveloped infrastructure of philanthropy in terms of the legal and fiscal legislations, small number of CSOs benefitting from the international and private sector funds, limited amount of public funds available for the CSOs and the lack of transparency in funding processes are some of the major constraints CSOs face in respect to financial sustainability.
Legal and Fiscal Terms for Charitable Giving
Tax legislation creates significant limitations on benefits for both foundations and associations and their donors. Associations and foundations are exempt from corporate and income tax, but are subject to all other taxes including Value Added Tax (VAT). They are permitted to establish profit-making entities, but this income is subject to corporate and income tax.
Tax exemption status (known as public benefit status) is available upon application to regulatory officials and subsequent approval of the Council of Ministers. Due to the rigor of this application and approval process, as of 2011, only 243 foundations and 410 associations held tax benefit status (13). Donations made to associations and foundations with this status are allowed a tax deduction (up to 5% of total turnover in a calendar year, 10% if the organization is in a developing region of the country). However, donations made directly to most government agencies are allowed a 100% deduction. This highlights a significant bias in raising funds for public rather than private foundations.
Sevda Kilicalp works as Philanthropy Specialist at Third Sector Foundation of Turkey (TUSEV). Through its Social Investment Program, TUSEV seeks to increase the effectiveness and flow of resources to the third sector by developing mechanisms and the necessary infrastructure for philanthropy. For more information please visit TUSEV web page at www.tusev.org.tr