[Exclusive] Government Pushes to Allow Corporate Donations in Hometown Love Donation Program

Doubts Over Effectiveness of Individual Donations in Strengthening Local Finances

Ministry of the Interior and Safety Begins Full-Scale Design of Incentive Systems

President Lee’s Policy Initiative Faces Divisions Over Quasi-Tax Concerns and

The government is pushing forward with a plan to expand the eligible donors for the Hometown Love Donation Program from individuals to corporations. This move stems from the assessment that relying solely on individual donations makes it difficult to achieve the program's goals of strengthening local government finances and revitalizing regional economies. However, the legislative process is expected to face significant challenges due to concerns over increased quasi-tax burdens on businesses, potential collusion between local governments and corporations, and the possibility of reduced national tax revenues.

President Lee Jae-myung is speaking at the Cabinet Meeting and Emergency Economic Inspection Meeting held at the Blue House on the 26th. Photo by Yonhap News Agency

According to relevant ministries on June 1, the government is reviewing a plan to allow corporate participation in donations as a way to invigorate the Hometown Love Donation Program, which is now in its fourth year of implementation. Launched in January 2023, the program currently allows individuals to donate to local governments in exchange for tax deductions and regional specialty gifts. Despite a rapid increase in total donations since the program began, the impact on strengthening local finances has been limited. Last year, the total amount raised grew to 151.5 billion won, but when averaged across 243 local governments nationwide, this amounts to only about 600 million won per municipality. Moreover, in the first quarter of this year, the total amount raised declined year-on-year, marking the first negative growth since the program’s inception.

In response, the government has begun full-scale policy design to fulfill President Lee Jaemyung’s campaign pledge and national agenda of introducing corporate donations to the Hometown Love Donation Program. The Ministry of the Interior and Safety recently commissioned a research project titled "Study on the Introduction of Corporate Donations to the Hometown Love Donation Program." The study aims to assess the feasibility of corporate donations and prepare a framework for incentives such as tax deductions, as well as directions for amending related laws. In the National Assembly, lawmakers from both ruling and opposition parties have submitted a series of bold amendments that include allowing corporate donations, abolishing donation limits, and linking the program to private platforms for further deregulation.

However, discussions on corporate donations have been put on hold due to concerns over unclear standards for corporate eligibility, worries that corporate giving could reduce donations to social welfare organizations, opposition from the Ministry of Justice and fiscal authorities, and debates about quasi-taxation. When the system was first introduced in 2021, such concerns led to restricting eligible donors to individuals. A government official stated, "There is consensus among politicians, the government, and local authorities that the Hometown Love Donation Program needs to be expanded in some form," adding, "We plan to continue discussions with relevant ministries based on the research findings."

This content was produced with the assistance of AI translation services.