Montenegro Pledges EUR 440 Million to Social Sector and Promises Permanent Finance Law for Charities and Care Homes

Prime Minister Luís Montenegro announced on Monday that the government has channelled more than EUR 440 million into Portugal's social and solidarity sector over the past two years, and pledged to create a dedicated finance law that would give charities, care homes, and social institutions a permanent and predictable funding framework for the first time.

What the Package Includes

Speaking at his official residence in Lisbon on 14 April, Montenegro said the 2026 state budget alone added EUR 218 million in new funding for the social sector — the institutions that run day-care centres, elderly homes, disability services, and food banks across the country. Combined with the previous year's allocation, total additional investment since his government took office now exceeds EUR 440 million.

The Prime Minister described the social institutions — known in Portugal as Instituições Particulares de Solidariedade Social, or IPSS — as "privileged partners" in the delivery of public services, rather than mere grant recipients. The language signals a shift in how the government frames its relationship with the sector, treating it as part of the public service infrastructure rather than a charitable afterthought.

Background: CCP’s incoming presidency shifted to Gustavo Paulo Duarte at its fiftieth-anniversary General Assembly on 29 April.

A New Finance Law for the Social Economy

The most significant announcement was not the money itself but the promise of structural reform. Montenegro said his government wants to legislate a "lei de finanças da economia social" — a finance law specifically for the social economy — that would establish how the state funds the sector on a permanent basis, similar to how the local government finance law governs transfers to municipalities.

If enacted, such a law would mean that social institutions no longer have to renegotiate their cooperation agreements with the government on an annual or ad hoc basis. Instead, they would operate under a transparent, legally guaranteed funding formula that provides what Montenegro called "predictability" and "stability."

This would represent a meaningful shift for the thousands of IPSS that collectively employ tens of thousands of workers and provide frontline social services in every municipality in Portugal.

Doubled Tax Allocation

Alongside the spending commitment, the government doubled the share of personal income tax (IRS) that taxpayers can direct to social and charitable organisations. The allocation rises from 0.5 per cent to one per cent, and the Prime Minister appealed directly to citizens to use this mechanism when filing their annual returns.

The measure is designed to diversify funding sources for social institutions so that they are not entirely dependent on state transfers — though in practice, the IRS consignação remains a modest revenue stream for most organisations.

What This Means for Expats

For foreign residents, the social sector is often invisible until they need it. IPSS institutions run many of the crèches and pre-schools that expat families rely on, particularly outside Lisbon and Porto where private options are scarce. They also operate elderly care homes that some long-term residents may eventually need for ageing parents who have joined them in Portugal.

The promise of a permanent finance law could improve the quality and availability of these services over time, particularly in smaller cities and rural areas where social institutions are the only provider. More immediately, the doubled IRS allocation means that residents filing Portuguese taxes can now direct a slightly larger share of their tax bill to a charity or social institution of their choice — a detail worth noting when completing the annual IRS return.

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