Many donations are destroyed although they could still have been used for charitable organizations and needy customers.
(Photo: IMAGO/Westend61)
The Federal Government is working on a “National Strategy for Social Enterprises” with the goal set out in the coalition agreement of comprehensively supporting companies that are geared towards the common good.
Sven Giegold (Die Grünen), the responsible state secretary in the Federal Ministry of Economics, has been campaigning for years for better framework conditions for social enterprises and sees them “as an important driver for the transformation of Germany”.
Since, in addition to improving the framework conditions, the main concern is easier access to public funding, the goal formulated in this way could give rise to the suspicion that another state-funded sector is to be created, which pursues politically opportune projects under the guise of entrepreneurship.
That would be very unfortunate, given that the social enterprises that are already active make a significant positive contribution to society. The spectrum ranges from educational programs and help for refugees to initiatives for sustainable agriculture.
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Such activities, which are based on the UN Sustainable Development Goals, can make a more efficient and effective contribution to achieving the strategy than cumbersome authorities and state actors, precisely because of their entrepreneurial orientation.
State should only help at the beginning
That is why it is also important, however, that these public-interest-oriented companies have to prove themselves on the market just like “normal” companies. This means that the social enterprises have to generate most of the funds they need themselves, through proceeds or donations. They must not be permanently dependent on government funds. The state can and should help in the beginning, but then withdraw.
Daniel Stelter is the founder of the discussion forum beyond the obvious, which specializes in strategy and macroeconomics, as well as a management consultant and author. Every Sunday his podcast goes online at www.think-bto.com.
(Photo: Robert Recker/ Berlin)
It will therefore be important for the federal government to find a way for financial support to be free of political influence and with clear limits. A neutral body, which also includes representatives from business, would create trust in this respect and improve the quality of decisions.
Juliane Kronen, the founder and managing director of innatura, also emphasizes how important it is to prove itself on the market. Founded in 2013, innatura arranges donations in kind from companies to social institutions, thus reducing the estimated annual volume of goods that are destroyed at over two billion euros, although they could still have been used by charitable organizations and needy customers. However, she also points to the urgently needed improvement of the framework conditions.
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Companies that make a donation in kind have to pay sales tax on the value of the goods. As a result, it is often cheaper to destroy the goods – for example because of damage to the packaging – than to pass them on as a donation.
Why isn’t the coalition acting?
It would be easy to end this tax nonsense, as Dr. Wolfram Birkenfeld, former judge at the Federal Fiscal Court, states in an expert opinion. A simple administrative regulation in which the basis of assessment for all unsaleable goods is set at zero euros would suffice. EU law no longer stands in the way of this.
This leads to the question of why the coalition is not acting here, contrary to what was announced in the coalition agreement. “We will remove existing tax law hurdles for donations in kind to non-profit organizations through a legally secure, low-bureaucracy and simple regulation in order to prevent the destruction of these goods,” reads there.
Chancellor Olaf Scholz, as Minister of Finance, did not bother about it. Christian Lindner does the same. The effortlessness of the significant increase in inheritance tax in the annual tax law proves how easy it can be if you really want to.
But there are still a few days to pass an administrative regulation that will allow donations to be made to others unhindered in the new year. Merry Christmas.
Daniel Stelter is the founder of the discussion forum beyond the obvious, which specializes in strategy and macroeconomics, as well as a management consultant and author. Every Sunday his podcast goes online at www.think-bto.com.
More: Social enterprises are playing an increasingly important role in Germany