Government Policy and the Nonprofit Sector: Switzerland - VMI

Nollert and Budowski Government Policy and the Nonprofit Sector: Switzerland
1. Shifts in Philosophy
As stated in the introduction, liberal attitudes are at the core of the Swiss constitution, and therefore the Swiss
government attributes a major role to NPOs in terms of policy formulation and implementation, as well as in
regulating economic processes and tackling social problems. Since the late 1990s, however, the partnership
between the state and NPOs has been challenged by the economic climate. One challenge comes from the
neoliberal economists, who argue that extensive market regulation in combination with raised levels of
participation options for associations have resulted in “distribution coalitions” that were responsible for the lack
of innovation in the post‐war period (Borner, Brunetti and Straubhaar 1990).
Another challenge has come from the philosophy of New Public Management, which calls for a more efficient
public‐private partnership. At the same time the partnership is challenged by questions as to whether subsidies
for NPOs in the social sector and sector of development cooperation are necessary. Although radical
suggestions, such as abolishing plebiscitary devices (initiatives or referendums, the Federation Complaint Right),
or canceling subsidies for well‐known welfare and relief organizations are not acceptable to the majority, they
point to an increasingly skeptical judgment promoted primarily by the Swiss People’s Party of the social and
economic functionality of associations and environmental organizations.
2. Changes in Level and Type of Support
Over the past few years, the government’s position has changed in two respects: (i) state institutions are acting
with increased caution when meting out financial support; (ii) NPOs are receiving greater regulatory support.
Since Switzerland is federally organized it is important to stress that taxation in particular, can vary widely at the
federal, cantonal, and municipal levels. The impact of this is that the Federal government, the cantons, and
municipalities raise taxes in independent ways and thereby all have a certain amount of control over specific
devices acknowledging or supporting the work of NPOs by means of tax deductions or acknowledgement of
their contributions to society.
In 2006 the Foundation and Fiscal Law for Nonprofit Organizations 28 in the Civil Code was revised and ensured
that differences between cantons and municipalities were minimized in the medium‐term, and allowable
deductions for donations from direct Federal taxes was increased from 10 percent to 20 percent as of January
2006. The point of departure for this revision dates back to a parliamentary initiative. It assumed that revising
the Foundations legislation would increase the propensity to provide nonprofit foundations with greater
financial means.
At the cantonal level the deductions have been continually revised, which increased and harmonized the overall
level of tax deduction for natural persons. As of January 1, 2006 and January 1, 2007 respectively, twelve
cantons increased their tax deductions in respect to donations to welfare and relief organizations to 20 percent
(Solothurn, Obwalden, Appenzell Innerrhoden, Glarus, Nidwalden, St. Gallen, Schwyz, Uri, Vaud, Zug, and
Luzern). Tax deductions of this sort have already been at this level for many years in three additional cantons
(Aargau, Schaffhausen, and Zurich). The front‐runner is Basel‐Land with a 100 percent tax deduction in respect
28 Stiftungs‐ und steuerliches Gemeinnützigkeitsrecht
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