Governments should continue providing support to the philanthropic sector while taking steps to safeguard tax systems and ensure that the activities of philanthropic organisations continue to align with the public interest, said the Organization for Economic Cooperation and Development (OECD).

In a new report titled, "Taxation and Philanthropy , "the international organisation reviews the tax treatment of philanthropic entities and charitable donations in 40 countries worldwide. It was produced in conjunction with the Geneva Centre for Philanthropy.

The report points out the significant impact of philanthropy – the non-profit sector represents as much as 5% of GDP in many countries and many nations provide tax breaks to encourage philanthropy. It suggests:

"Governments should continue providing tax support to the philanthropic sector while at the same time improving the design to maximise effectiveness."

The report also draws attention to emerging concerns in some countries that current practices could give a small number of wealthy donors disproportionate influence over how public resources are allocated. This concern is highlighted by the rise in the number of very large private philanthropic foundations established by ultra-high-net-worth individuals, who are able to channel substantial resources into the priorities of their choice, while significantly minimising their tax liabilities.

While risks of abuse should be addressed, this concern should not overshadow the overwhelmingly positive spillovers of philanthropy in general, according to the report.

"Philanthropy plays an important role in most countries, providing private support to a range of activities for the public good, and this is especially evident in the current context of the COVID-19 crisis," said Pascal Saint-Amans, Director of the OECD Centre for Tax Policy and Administration.

"Looking ahead, governments need to strike the right balance between safeguarding tax systems while continuing to provide support to the sector."