The special feature on the importance of data for the world’s philanthropic community in Alliance’s September 2012 issue comes none too soon. But, ironically enough, as Alliance readers were opening this special feature, Europe’s statistical agency, Eurostat, with the concurrence of the European Parliament, was closing the door, perhaps for another decade, on Europe’s best chance for securing better data on non-profit institutions (NPIs), including foundations.

But no one in the continent’s non-profit sector, nor in the research community working on the sector, apparently knew what was afoot or thought to object. Nor did the contributors to this special feature clue them in to what is undoubtedly the most promising potential source of solid data on NPIs available: their own statistical agencies.

So here’s the scoop: NPIs, including foundations, are economic units in the eyes of national statisticians, and philanthropy is a form of financial transfer. As such, both are covered by what is known as the System of National Accounts (SNA), the statistical system that countries use to compute their GDP and portray other features of their economies in a way that can be compared with other countries.

But there has long been a hitch: while non-profit institutions and charitable flows are covered by this data system, they are not visible in the data. In most countries NPIs are thrown in with for-profit corporations or government in the reported data, rendering them invisible.

In 2003, however, the UN accepted our proposal to fix this problem by releasing an official UN Handbook on Nonprofit Institutions in the System of National Accounts. This Handbook provides approved guidelines for the preparation by national statistical offices of special ‘satellite accounts’ detailing the size, composition, assets, revenues and transfers received by all  NPIs, including foundations – in short, much, though certainly not all, of the data that contributors to Alliance’s special feature were calling for.

Then, five years later, in 2008, the UN took advantage of a revision of the entire SNA system to strengthen the NPI provisions, highlighting the NPI ‘satellite account’ in a new chapter dedicated to NPIs, and requiring statistical offices to ‘subsector’ their sector accounts in order to make NPIs visible in the data, the first step towards producing NPI ‘satellite accounts’.

To date, 30 countries have committed themselves to prepare the satellite accounts called for in the UN handbook and 17 have done so. Unfortunately, except in a few countries where foundations actively promoted this handbook, Europe’s statistical agencies have lagged behind those in other developed regions in implementing it. A major reason for this is that European statistical agencies are kept on a short leash by Eurostat, and Eurostat has not encouraged adoption of the handbook.

The most recent evidence of this came with Eurostat’s preparation of the European counterpart to the 2008 revision of the System of National Accounts. The resulting European System of Accounts (ESA), which the European Parliament approved just as the September issue of Alliance was reaching readers, deleted all of the recommended improvements in the treatment of NPIs contained in the general 2008 SNA revision, dropping the special highlighting of the NPI ‘satellite account’ as well as the new ‘subsector’ rules designed to identify NPIs in the data.

Several contributors to the Alliance special feature on data point out that foundations and the non-profit sector generally will never be able to convince politicians of their importance, or even to know how they are progressing, without solid data. The UN handbook remains the best vehicle for generating these data on a sustained basis. But if European foundation and NGO leaders are serious about getting these data, they need to put pressure on Eurostat and on their national statistical authorities to adopt and implement this handbook. And so should such leaders in other regions. Here is the needed first step towards the new world of informed philanthropy that the authors of Alliance’s special feature were calling for.

Lester M Salamon
Director, Johns Hopkins Center for Civil Society Studies