Switzerland is known for its watches, chocolate, cheese, but also for its wealth. Many nonprofits worldwide are thus interested in Switzerland as a fundraising market. But just as raising funds in any other country, it requires a good understanding of the trends, differences and nuances. With this article, I open a secret door to some key elements anyone should have in mind before entering the Swiss market.
1- Giving trends in Switzerland
According to ERNOP, the total giving amount for all sources of philanthropy in Switzerland represents more than 4 billion euros. Usually, foundations contribute more than half of the total amount given in Switzerland (Giving in Europe study from ERNOP), but lately, individual giving has increased, due to the various crises.
If we zoom in, total donations made by individuals in Switzerland reached CHF 2.5 billion in 2022 (latest Donations Report published by Swissfundraising and Zewo). The record figure was partly driven by the CHF 418 million donated to Ukraine. This was 22% higher than the total in 2021 and 38% than the total in 2018.
8 out of 10 households donate, with the average annual amount given per household rising to CHF 400. 89% of people aged 55 – 99 years old give, 82% of people aged 35 – 54 years old and 78% of people aged 15 – 34 years old.
Bequests also represent an important part of donations. As an example, in 2007, the Swiss donated EUR 660 million through bequests, a considerable amount (ERNOP).
Though Swiss citizens remain quite traditional in their giving ways – direct postal or bank transfers remain the most popular way to donate and donations made this way are on average larger -, the trends now show increasingly digital donations. Over the past four years the amount donated online has increased five-fold to CHF 117 million. Twint, a Swiss payment app, dominates 80% of direct digital channels.
According to ERNOP, Swiss households mainly gives to:
- public and / or social benefit (35%)
- religion (21%)
- health (11%)
- and international aid (10%), though this percentage can evolve depending on the context.
2- What about Swiss foundations ?
Here are some figures from the 2023 edition of the Report on foundations in Switzerland published by Swissfoundations, CEPS and the Zürich University:
On regional distribution:
- 13,365 foundations in Switzerland are distributed disparately across the cantons.
- The highest concentration of foundations is in the canton of Zurich (2,225), followed by Berne (1,409) and Vaud (1,374).
- Geneva, with its high number of new foundations, will soon join the top three cantons where foundations are concentrated, recording strong positive growth (3.2%).
On the field of action:
- 56% of Swiss foundations have a purpose linked to a place, a municipality or a canton.
- 25% of foundations are active at the national level.
- 23% of foundations work internationally, mostly in education and research, social work and development cooperation. Environmental protection has seen strong growth over the past ten years.
3- Tax deduction
In Comparative Highlights of Foundation Laws by Philea, Switzerland uses a tax deduction, meaning a reduction in the growth amount on which tax is calculated.
For corporations, at the federal level, charitable contributions of up to 20% of the net profit (after tax) of a company are tax deductible, provided certain criteria are met. In particular, the charitable contribution must be remitted to Swiss legal entities that are exempt from taxation based on their public welfare or exclusively charitable objective.
For individuals, a deduction (actual) for donations made to a qualifying Swiss based charity organization can be claimed on the tax return. On the federal level, and in many cantons, the deduction is capped with a certain ratio of the taxable income. The yearly minimum and the amount deductible can vary from canton to canton. For example, in the Canton of Geneva, an individual must donate a minimum of 100 CHF for the donation to be eligible for tax deduction.
4- Practical tips to know
Apart from trends, data and giving behavior, it is important to understand that Switzerland is quite a difficult market to enter. Indeed, the high number of international nonprofits opening an office in Switzerland has led to more and more protection of the market. If there is one thing you need to remember is that Swiss nationals hate organizations settling in their country only for fundraising purposes. A foreign organization will have to show that it is involved in Switzerland, through activities for instance, and that it brings an added value.
Based on practical experience in accompanying foreign organizations newly established in Switzerland, below are some elements to carefully consider:
- Create an official structure in Switzerland, but think carefully in which canton you wish to do so;
- Hire Swiss citizens as part of the Board. The governance of your nonprofits will be closely monitored;
- Rent a real office, instead of just an address, and show that you employ local people;
- Show that your projects are designed by your team in Switzerland;
- If you have entities in different countries, have a clear portfolio of projects in each of these countries;
- Take time to learn about the ecosystem and to know the different networks that might be of great help to give you more tips and advice;
- If you are an NGO, consider applying to the ECOSOC status, this might also help entering the UN ecosystem;
- Be humble and have a growth mindset, understand that Switzerland does not work the same way neighboring countries do.
Last but not least, remember that Switzerland is a federal country, divided into cantons and that it is made up of four linguistic regions: German-speaking Switzerland, French-speaking Switzerland, Italian-speaking Switzerland and Romansh-speaking Switzerland. Beyond the national specificity, you will have to gain a better understanding of the Canton you wish to settle in and communicate in the local language.
Conclusion
Like any other country, a good understanding of the Swiss market combined with professional support from people with expertise and knowledge is essential to ensure that you are not wasting your time, money and energy in creating a new entity, which could end up closing down very quickly.
Do you need expertise and support for your organization? Let’s talk about it!
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