The International Journal
of Not-for-Profit Law

Volume 3, Issue 1, September 2000

A publication of the International Center for Not-for-Profit Law

Tax Incentives For Nonprofit Institutions: Analysis of International Experience*  

By Ignacio Irarrázaval and Julio Guzmán

This article analyzes international experience on the question of tax incentives for donations to non-profit institutions, based on a conceptual model which argues that the level of donations depends on a series of economic, social, demographic and cultural variables, including tax incentives. The study considers the legal background of 16 Latin American countries and, in the case of Chile, figures and information on the laws dealing with tax incentives. It also makes a comparative analysis of the quantitative impact of these incentives in developed countries like Canada, United States and Great Britain. It concludes that there has been a significant increase in the use of tax incentives in Chile; however, these incentives are only used for very restricted purposes and are not generally applicable to individuals. Accordingly, the authors propose permitting individuals to use the tax allowances granted by law for making donations for educational purposes, and to widen the field of application to include philanthropic activities in the sectors of health, housing, old age and prevention of drug addiction. It also recommends a series of administrative amendments such as systemizing information on the resources mobilized, establishing intermediation mechanisms for administering donations, and developing the philanthropic institutional framework through systemization mechanisms and global supervision of the sector.

* This article was originally published in Estudios Publicos, 77 (Summer 2000)

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