Finland plans tax relief for donations to welfare organisations

Finland’s government wants to expand tax relief for donations to organisations promoting wellbeing, but an economics professor says the change may benefit donors more than the organisations. Yle reported that the legislation could take effect at the start of 2027.

Under the proposal, donations to associations and foundations promoting physical activity, sport, the wellbeing of children and young people, social wellbeing and health would qualify. The change would apply to donations from both individuals and organisations.

Individuals would be eligible for a tax deduction if they donate more than 500 euros in a year to the same recipient. The deduction would be taken from tax owed, rather than from earned income as at present. Individuals can currently claim deductions only for donations to universities and other higher education institutions.

Economics professor Kaisa Kotakorpi said the reform could be costly and ineffective if it does not substantially increase donations. Some of the public support would go to people who would have donated anyway, she said. Kotakorpi also warned that the proposal would shift some influence over which organisations receive public support from political decision-makers to donors.

The new threshold could also concentrate donations. People who previously gave smaller amounts to several organisations might instead give the full sum to one recipient to qualify for the deduction.

The Association of Responsible Giving’s secretary general, Pia Tornikoski, said the reform was needed, although it would not make up for funding cuts. She said the 500-euro minimum was too high: the equivalent threshold in other Nordic countries is half that amount.

The government has approved cuts of 84 million euros to STEA grants for next year. The reform could also increase organisations’ administrative workload, as the Finnish Tax Administration would decide which organisations qualify and recipients would have to report donation information and collect more data on donors.

The bill is being considered by parliament, and experts consider its approval likely. If passed, it would enter into force at the beginning of 2027.