Austrian foundation sector: non-profits on the upswing

Austria’s swift reform of charitable law, which came into force in January 2024, has attracted attention across Europe. In particular, "the ten-year carryforward option for foundation grants and the conversion of the previously one-year extended donation deductibility into permanent law offer fertile ground for greater philanthropic engagement." This is how Katharina Turnauer, President of the Association for Charitable Foundations in Austria, described the reform when it was first introduced. Since then, the first effects have become visible. The new legal framework, especially for foundations, clearly offers incentives that did not exist before. Even in the early years after their creation, foundations can now use their capital—not only the income—to promote charitable purposes.

Alliance for non-profit status

Another milestone was the founding of the Alliance for Public Benefit in 2022, bringing together more than 3,000 organizations and 14 umbrella associations. Stefan Wallner, Managing Director of the Alliance, explains:

"For the first time, the new Alliance provides a joint representation of interests across all areas of the non-profit sector. The new aspect is that charitable foundations are now represented alongside the large umbrella organizations. The Fundraising Association Austria is also involved, with many members. This significantly strengthens the sector’s political voice."

The alliance has also made progress in extending and completing the deductibility of donations. In areas such as education, sport, culture, animal welfare and even some fields of human rights, several gaps have now been closed. Previously, private foundations faced disadvantages in this area. They now also benefit from easier donation deductibility. In fact, foundations themselves were a driving force behind the further development of donation deductibility, particularly in education, as Günther Lutschinger points out.

He is a board member of the Bündnis für Gemeinnützigkeit, served as Managing Director of the Fundraising Association Austria for more than 15 years, and has been Managing Director of the Association for Charitable Foundations in Austria since January 2024. He also served on the advisory committee that helped shape Austria’s reform of non-profit law.

He emphasizes the new flexibility donors now enjoy:

"Many donors do not yet know what they will want to support in five or ten years. Creating as much flexibility as possible was therefore a key motivation."

Verifiable growth

Against this backdrop, Lutschinger predicted a boom in new foundations in Austria in 2024. Has this materialized? The available figures suggest moderate growth, particularly among charitable foundations. While there were 760 in mid-2024, the number had already risen to 800 a year later. The Fundraising Association Austria’s 2025 donation report even estimates the number at 945.

Although charitable foundations have existed in Austria since the 19th century—the first being the Liechtenstein Foundation of the Austrian Savings Bank—development in this area remained stagnant for many years, largely due to an unattractive legal framework for foundations. As a result, by mid-2025 fewer than ten percent of Austrian foundations had charitable status. In Germany, by contrast, around 90 percent of foundations are charitable. In the meantime, however, charitable foundations in Austria already account for roughly one third of all foundations.

However, the current figures are not solely the result of new foundations being established. As in Germany—where the introduction of a central nationwide foundation register has been postponed until 2028—data collection in Austria has not always been consistent in the past. The question of what counts as a foundation, and what does not (for example endowment funds), remains part of ongoing discussions. Some of the increase therefore reflects more systematic data collection.

Lutschinger notes that a lower number of dissolutions is currently being offset by a steady flow of newly established foundations. For 2025, he estimates growth at around 2.5 percent, or at least 20 new foundations, with no foundation dissolutions recorded during the calendar year. At the same time, he points out that since 2012 more private, non-charitable foundations have been dissolved than newly established in Austria.

Insufficient commitment from the tax authorities

When it comes to the geographical distribution of charitable foundations, "you notice very strong regional clusters," explains Ruth Williams. She is Managing Director of the Fundraising Association Austria and previously served as Secretary General of the Association for Charitable Foundations for several years.

"By far the largest number of foundations are established in Vienna. In the federal states, their numbers decrease significantly, with Lower Austria and Salzburg ranking second and third."

Lutschinger also qualifies the frequently voiced view that establishing a charitable foundation in Austria is more difficult than setting up other types of foundations:

"The legal framework is clear. The real issue arises when the process is not completed by the authorities within the legally defined six weeks. The law itself could certainly be reviewed after ten years in light of experience, but the main challenge lies with the authorities."

Delays are sometimes accompanied by what Lutschinger describes as "subjective interpretations":

"Tax authorities are currently intervening in foundation law even though their role should be limited to tax assessments. This often depends on the individual official involved. We regularly file complaints against such decisions."

No increase in the volume of donations

The simplified deductibility of donations, although attractive, also presents a mixed picture for the non-profit sector as a whole. While it allows more organizations to invest in strategic fundraising, the overall donation pool is not growing. It remains unclear whether total donation volumes will increase in the coming years. At the same time, public funding in Austria is facing significant reductions.

Ruth Williams already observes shifts in the sector:

"When a new charitable foundation is established, it becomes highly relevant for fundraising organizations to ask themselves: How can we build relationships here? Where are the links to our own activities? And how could we cooperate with this funding foundation?"

The trend toward establishing new foundations is therefore also linked to hopes of creating new partnerships. Williams also sees stronger collaboration as essential, including internationally. For this reason she welcomes the open exchange with the Swiss association of foundations and cross-border initiatives such as the "Faktor D" network, which aims to strengthen democracy in German-speaking countries.

"Foundations are becoming more issue-focused, more international and more cooperation-oriented."

Four trends in the foundation sector

According to the Fundraising Association Austria, four major trends are currently shaping the country’s foundation sector.

One is a growing international orientation, visible for example in the activities of the Caritas Foundation Austria and the Jugend Eine Welt Foundation. Liechtenstein is often cited as a model in this respect.

The second trend is the increasing number of foundations dedicated to education and science, such as the MEGA Education Foundation. Ruth Williams notes that similar developments can be observed in Switzerland.

A third development is the rise of platform foundations. One example is the new ÖSTERREICH HILFT ÖSTERREICH foundation, established in 2025, which brings together major NGOs and the ORF. This model allows for stronger cooperation and greater collective impact, particularly in crisis situations.

The fourth trend is the growth of corporate foundations such as the ERSTE Foundation, which demonstrate how long-term corporate responsibility, cultural initiatives and social programs can be combined.

Looking at Switzerland, Lutschinger notes that Austria has developed several flexible models despite the relatively small size of its market.

"Legislators are often more liberal than the authorities responsible for implementing the law. Swiss authorities tend to be more creative in this respect."

At the same time, he is pleased that the will of the founder has been "massively strengthened" in Austria over the past year, as has "the flexibility of what founders can do within the framework of a foundation." This could provide interesting impulses for the Swiss market. So far, however, Austria has cooperated more closely with German and Liechtenstein foundations than with those in Switzerland.

Cross-border cooperation

At the most recent DACHLI meeting of the foundation associations in Vienna in January, opportunities for cooperation were again discussed extensively. Differences in sector structures across countries still make collaboration challenging. Nevertheless, discussions covered potential initiatives such as social bonds as instruments of social innovation.

"Perhaps the main difference between Austria and Switzerland is that we have a corporatist model in which the role of the state is always considered. The question is often whether the state might co-finance a project or eventually take it over completely. As far as I know, this is not the case in Switzerland. There, projects are financed by foundations, while the state operates separately," says Lutschinger.