Philanthropy and its importance for Finance: an interview with Professor Francesco Schurr

Liechtenstein will host today the Finance Forum where one of the topics covered will be Philanthropy. The University of Liechtenstein will be part of the conference, as explained by professor Francesco Schurr, Chair of Company, Foundation and Trust Law. 

«Banks and finance institutes are facing far-reaching upheavals such as strict regulations or low interest rates etc. What conditions are needed for the financial centre of Liechtenstein to continue its excellent services? Who is going to be the future target group? The topics of this year’s event include a broad range and cover themes like the digitalization of the financial centre, philanthropy, investment decision, data security and data protection. Of central importance is the question, how to push the growth of the financial centre Liechtenstein. International experts will discuss those topics from different perspectives and will define common goals for national activities».

How important is philanthropy in the world of finance? Is there something that is not widely known about it and should it be more widespread?

Since 1926, the year of the introduction of the so-called Persons and Companies Act (Personen-und Gesellschaftsrecht: “PGR”), Liechtenstein is endeavored to offer international clients optimal conditions for structuring their private assets. In the field of international asset structuring the focus is not only on private benefit structures, but as well on philanthropic activities. In fact charitable foundations (gemeinnützige Stiftungen) as well as charitable trusts (gemeinnützige Treuhänderschaften) have had a long tradition in Liechtenstein. Anyway when we look at private wealth management in general and specifically at structures for philanthropy, we need to highlight, that there is a huge competition between jurisdictions. Liechtenstein is constantly reacting to the competition and the need to provide for the best solutions to structure private wealth in the field of philanthropy. Recently new statutory provisions entered into force allowing the establishment of Protected Cell Foundations. The new set of rules will allow the realization of many different charitable projects even if they are rather small in their dimension. The Protected Cell Foundation allows a splitting of liabilities, within the Foundation, and therefore enables an enormous competitive advantage comparing to other legal systems. The contribution of the University of Liechtenstein to the Finance Forum should help to enhance the awareness among the community of experts why people engage in philanthropy, how the money is invested and which options are offered by the Liechtenstein jurisdictions (as compared to similar jurisdictions) to realize the philanthropic goals.

Is philanthropy in Liechtenstein any different than what it is in other European countries?

Philanthropy has had a long tradition in Liechtenstein. There are many instruments available to guarantee a functioning organization of charitable foundations. It is for this reason that a charitable foundation must be registered. Foundations registered under Liechtenstein law are subject to supervision by the foundation supervisory authority. Transparency is therefore guaranteed by an external element of Foundation Governance. Attention must also be payed to the VLGS (Association of Liechtenstein Charitable Foundations e.V.). The VLGS unites the charitable grant-making foundations of Liechtenstein and safeguards the interests of the philanthropic sector. The purpose of the association is to promote and increase awareness of the foundation concept, in particular of the possibilities and benefits of non-profit foundations in Liechtenstein.

Do you know what the situation of philanthropy is in Switzerland?

Many experts in the world consider Switzerland as the paradise for modern philanthropy. In fact, Liechtenstein lawyers, bankers and tax experts have learned a lot from their Swiss colleagues in the field of modern philanthropy. Cases of foundation and charity mismanagement resulted in the establishment of the Swiss Foundation Code 2005. This Code is voluntary and gives guidelines on the matter according to the specific circumstances of a foundation. The three main principles within the Code are“Effective realization of the Foundation’s purpose”, “Checks and balances” and “Transparency”. Many charitable foundations have already taken the opportunity to implement the guidelines of the SFC and to brush up their administrative processes.

How important is it for an institute like yours to take part in these kind of events?

The academic staff, and especially the Professors of the Institute for Financial Services, are engaged in research and teaching in many issues that will be addressed at the Finance Forum. This event and similar events in many countries of Europe and the world therefore offer the opportunity to establish new ties between academia and practitioners. Furthermore academics need to discuss relevant topics of wealth management etc. with practitioners in order to get new ideas and to broaden the horizon. On the other hand it is part of the job of academics to share the results of their research not only in scientific conferences, but also in conferences that have a broader audience and therefore include delegates from banks, law firms as well as trust service providers.