Hera has a problem. The American aid organization addresses the effects of extreme heat on women in the global south. She has convinced enough sponsors of her work. But their money has to cross the border into the USA. Donors from Europe cannot do anything with the donation receipt there. And they are deterred by threats from the Trump administration to freeze donations to organizations it deems “woke.” That's why the organization founded a branch in the Netherlands. An inefficient dual structure for accepting money.
Almost every major nonprofit organization does this. Anywhere they want to accept donations. Already for decades. It is difficult to estimate how many such duplicates there are. The American subsidiary of the Belgian King Baudouin Foundation alone manages more than 500 circles of friends of European organizations so that not everyone has to set up their own. If you want to save yourself the trouble of setting up a business, you can take the detour via intermediary foundations, which acknowledge the donation domestically and then pass it on to a partner in the target country. Networks of this type retain around five percent.
The common misconception is that nonprofit organizations are inefficient. The truth is: it is the way the money gets to them. An industry that moves its money like this doesn't need enemies. She delivers the material to her critics free of charge: expensive, slow, opaque.
Above all, however, the small-state nature of giving is a massive restriction on the free movement of capital. In 2025, the largest intermediary network for donations processed exactly 12,749 of them. This does not reflect the demand of a continent with 450 million inhabitants. The former program director of the Ikea Foundation, Liz McKeon, came up with a striking comparison with me in the podcast “The New Giving”: If a money changer charged five percent, no one would queue at his counter.
Firstly, the lack of competition: the sector has long been characterized by large foundations and development agencies that bring money across borders with their own staff and little cost pressure, and by large aid organizations that have their own donation branch in every rich country and have no interest in making access easier for smaller competitors.
Secondly, the lack of transparency: Unlike in the financial sector, no one has to disclose their money flows, and so each case remains an individual case that lawyers and tax advisors examine and settle individually, preferably with a new case as a result.
Thirdly, and this is new, politics: not only the second Trump administration, but also Russia, India and, until recently, Hungary are restricting money from abroad because it could finance a critical civil society. The justification is always protection against external influence.
With the dismantling of USAID, the world's largest development agency, official development aid from industrialized countries fell by 23 percent last year, the deepest cut since statistics began. Private money could step in. There are enough of them, and the interest in giving has never been greater.
What is missing is the path. Some wealthy people fear that their commitment will be interpreted politically. Others don't know how much of their money will arrive. Very few people want to set up an organization for this purpose. At 100 euros that doesn't matter. But no one gives 100,000 euros or a million if there is a few thousand euros of advice beforehand and then a fee of several percent. It is an invisible market failure, and its consequences are borne by those who work against poverty, disease and heat.
There is reason for hope. The next generation of asset owners is thinking in terms of problems, not countries, and Europe could be the start. A European internal market for philanthropy could be regulated in one sentence with mutual recognition of non-profit status. As chairman of the European umbrella organization for foundations, I first called for it nine years ago. It took eight years until the Commission withdrew the proposed law last year.
What philanthropy needs most urgently is political acceptance as an independent force. Ahead of the US congressional elections on November 3rd, the headlines are different. Elon Musk, who put the wrecking ball on global development finance with his DOGE agency, is the largest donor of this election campaign with $366 million and wants to ensure that Donald Trump's Republicans keep the Senate. It would be a tragicomic punchline if he, of all people, used a donation to discredit giving as a legitimate force, at a time when it is needed more urgently than ever before as a force independent of governments.
Global giving is at a fork. It is fighting to regain its legal freedom and is overcoming national borders by investing in modern infrastructure. Or it stays trapped in them.
