Debate: Heavy taxation of foundations hurts patients
Government plans to partially or completely abolishes tax relief for grants from foundations, something that Danish health research depends on, may have serious consequences – not only for the universities and researchers, but also for the health of Denmark’s citizens.
By Allan Flyvbjerg, Dean of the Faculty of Health (AU), Ulla Wewer, Dean of Health and Medical Sciences (KU), Ole Skøtt, Dean of the Faculty of Health Sciences (SDU), and Lars Hvilsted Rasmussen, Dean of the Faculty of Medicine (AAU).
Danish health research is dependent on funding from both public and private sources.
The largest ever national research project within psychiatry, Integrated Psychiatric Research (iPSYCH), which aims to find the causes of the most serious psychiatric disorders, is being realised with DKK 241 million in funding from the Lundbeck Foundation.
The opening of the National Centre for Particle Radiotherapy in 2018 is, among other things, only possible because of a donation of DKK 250 million from the Moller Foundation. The Centre will carry out research and offer kinder radiation therapy for cancer patients, in particular children and young people, The Novo Nordisk Foundation’s large donations to improved diabetes research and treatment through the Danish Diabetes Academy, the Center for Basic Metabolic Research and the Steno Diabetes Center Copenhagen, are just the latest examples of the importance of the major private foundations for Danish society in the field of health alone.
All of the above examples are huge projects that will create knowledge, education and quality of care at the highest level through research. They would not be realised without support from private foundations. The world of academia and research is generally dependent on receiving larger and smaller contributions from foundations that make socially valuable research and education possible in the Danish research environments.
A socially beneficial partnership
The universities and the private foundations form an ideal socially beneficial symbiosis. The foundations donate money and the universities pay it back with new knowledge for the benefit of society. The fact that the research carried out at the universities is also of great importance to the success and growth of Danish companies – as was recently described by Executive Vice President and Chief Science Officer Mads Krogsgaard Thomsen from Novo Nordisk – is an added bonus.
The unique collaboration between the universities and the private foundations must not be undermined. But we are worried that this could unfortunately soon happen.
In the autumn of 2015, the Danish government presented a number of proposals to abolish the special tax relief provisions that are applicable to non-profit foundations. This meant that the foundations would have to reduce their grants by an estimated one billion Danish kroner (DKK). A quick little technical tax change, which resulted in an immediate outcry from both foundations and grant recipients. One of the proposals – known as the transfer regulation – was already withdrawn in November 2015. Now we await the government's next proposal regarding the foundations’ consolidation relief. Not without some trepidation.
The government has not shelved its plans for limiting the option for non-profit foundations to make grants for charitable purposes through the abolition or reduction of the consolidation relief, which gives the foundations the opportunity of deducting an extra 25 per cent when making grants for socially beneficial purposes, including health research.
Discontinuing tax relief can be expensive
In Denmark we boast of world-class research, even though the competition with the universities in the international elite is fierce. Working in Denmark’s favour to give it a position of strength are well-educated researchers, unique research registers and a good legal foundation for research. We depend on being able to create research environments in which the universities with their researchers and lecturers can create value for society together with the grant makers. Which more tangibly means that the foundations make the grants that the researchers then convert into results and knowledge.
The division of labour between researchers and foundations is even more important because the government supported funding of research has been dramatically reduced, while the international competition for EU funds has intensified further in recent years, not least in the healthcare sector.
This division of labour can be jeopardised by the government’s meddling with the basis that the foundations themselves have for making grants. Which is what will happen if the consolidation relief is abolished or reduced. It will be devastating for the Danish research environments and will ultimately be expensive in regard to both the health of the country’s citizens and the nation’s competitiveness.