Charities and foundations in Norway : a legal and financial framework with focus on the Olav Thon Foundationa

2017

This paper seeks to examine the history and usage of charities and foundations in

Norway. The number of large foundations has been on the rise, along with the interest in the

charitable sector. In its purity a philanthropic venture, the borderline philanthropic motivation

behind some charity has been questioned because of the tax savings connected to using the

organizational form foundation. Specifically, the case of the Olav Thon Foundation’s massive

tax savings compared to the taxation of Olav Thon as a private individual has been used as an

example. What is the impact of the increased use of charity through foundations on the

Norwegian society? This paper examines the existing legal regulation and tax legislation on

foundations and charity, to analyse how the Norwegian tax and legal system is equipped to

handle the increased use of charity through foundations. What are the shortcomings and what

are the potential sources of misuse? The examination has been done both by establishing a

historic and theoretical background and a legal and taxational framework, and through

analysing a relevant case in the transfer of the Olav Thon Group and much of Olav Thon’s

private fortune to the Olav Thon Foundation. The main findings in this paper are that the

existing framework moves funds away from the government, as the collected taxes decrease

when money is donated to a foundation, over to foundations with specific bylaws and rules

for distribution. This indicates a shift away from a classic social democratic model in Norway

There are also no rules governing how much a foundation is obliged to distribute in grants, in

contrast to a comparable country like Sweden. The paper also highlights a need for further

empirical research on the impact of charity through foundations, as well as potential additions

to the existing legal framework.