The Roles and Contributions of

Foundations:

Comparative US-European PerspectivesComparative US-European Perspectives

A presentation by

Helmut K Anheier and David Hammack

October 2010

Foundation Renaissance

There is renewed interest in foundations in countries as

different as the United States, the UK, Australia, Japan,

Italy, Germany, Sweden and Turkey or Brazil.

Yet there is some untested assumption of institutional Yet there is some untested assumption of institutional

similarity across these settings – how can we assume

that foundations are alike and mean the same even if

historical context and roles suggest differences?

U.S. vs. European Foundations

The US endowed grant-making foundation, quite strictly

regulated to prevent material benefits to donors and

staffs, eschew electioneering, and observe transparency,

differs from European norms.

From 1890, US state and federal laws increasingly

differentiated the US general-purpose grant-making

foundation from retirement funds and from corporate,

community, and other forms of foundations, and also

from endowed charities such as universities, research

institutes, and museums.

European Foundations

that would not be foundations in the US

• Political Foundations

• Bertelsmann Foundation

• Wallenberg Foundation

• Bosch Foundation• Bosch Foundation

• Italian Banking foundations

• Political foundations in Germany

• Fondation de France

• Church foundations

U.S. Institutions

that could be foundations in Europe

• Harvard (2008: $35b) and Yale (2008: $23b): endowments

larger than the Ford F’s (2008: $11b) generate income

covers nearly half their expenses. Also possess extensive

buildings, labs, grounds, book and art collections, etc.

• The Cleveland Museum of Art (endowment nearly $1b),

substantial buildings and grounds, world-class collections.

No admission fee, no direct government support. A

“nonprofit organization.”

• 700 community foundations: assets up to $2 billion.

“Public charities.”

The Project

Contributions of American

Foundation

Hypotheses: Important Foundation Roles

Charity (“Immediate Relief”)

Complement GovernmentSubstitute for Government

Philanthropy

InnovationInnovationSocial and Policy Change

Control, Redistribution

Asset ProtectionRedistribution

Hypotheses: Comparative Foundation Advantage

Social Entrepreneur

Respond, InitiateConvene, Catalyze

Institution Builder

Lead CollaborationsLead CollaborationsEstablish Self-Sustaining Institutions

Risk Absorber

Accept Programmatic, Social, Political RiskPreserve Assets Dedicated to Valued Goals

Hypotheses: Comparative Foundation Disdvantages

Insufficiency

Resources inadequate to ambitions

Particularism

Focus on some groups, ignore others

PaternalismPaternalism

Disregard views of others

Amateurism

Rely on “informed dilettantes”

Impact

Definition

“the sustained difference an activity made in producing a intended change” or “the cause-effect relationship between resources and activities on the one hand and some observable and sustained change in relation to stated goals on the other”on the other”

Context

measurement of the impact of resources and activities must be evaluated within a sophisticated understanding of the relevant – and constantly changing – institutional, legal, political, economic, and social context.

Evidence

Context

Extensive secondary literatures on fields, institutions, activities

Current government and other data on relevant topics

Current Foundation Work

Foundation Center database of foundation grants for 2001

Special studies by contributors: on schools in Arizona, on R.W. Johnson Foundation initiatives, on foundation responses to “welfare reform” in the 1990s, on foundation initiatives in the former Soviet Union and Eastern Europe, etc.

The selected fields

Research Universities

Health Care

K-12 Education

Social WelfareSocial Welfare

Arts and Culture

International

Religion

Social Movements

The Argument: Context Counts

Four Distinct Periods

the particular-purpose, sectarian era of the

nineteenth century,

the classic institution-building era of the first half of

the twentieth century,

a postwar effort to redefine and expand foundation

relevance that lasted into the 1990s,

the current effort to reposition foundations and

focus on achievable results.

19th C Protestant Particularity

• (Northern) Baptist Education Society (1791)

• American Bible Society (1816)

• Education Board of the Presbyterian Church (1820s)

• American Education Society (1825) • American Education Society (1825)

• Society for the Promotion of Collegiate and Theological

Education at the West (1843)

• The American Missionary Association (1846)

• The Board of Education of the Methodist Church Student

Loan Fund (1872)

19th C Nonsectarian Foundations

• Franklin Trusts of Philadelphia, Boston (1791)

• The City Funds of Philadelphia (1831ff)

• Lowell Institute (1836)

• Peabody Education Fund (1867), southern education

• John F. Slater Fund (1882), southern education

• Bernice Bishop Estate (1884) Hawai’ian School

• Baron de Hirsch Fund (1891), resettlement of Eastern

European Jewish refugees

• Andrew Carnegie’s Public Library Campaign (1890s)

Large Non-Sectarian Foundations, 1900-1925

1902 Carnegie Institution of Washington Washington, D.C.

1902 General Education Board New York

1905 Milbank Memorial Fund New York

1906 Carnegie Foundation for the Adv of Teaching New York

1907 Russell Sage Foundation New York

1909 The Rockefeller Foundation New York

1910 Carnegie Endowment for International Peace Washington, D.C.

1911 Carnegie Corporation of New York New York

1914 Engineering Foundation New York

1917 The Rosenwald Fund Illinois

1918 The Commonwealth Fund New York

1918 Laura Spelman Rockefeller Memorial New York

1918 The Chemical Foundation New York

1919 Twentieth Century Fund New York

1919 Mayo Properties Assn. Minnesota

1924 Daniel and Florence Guggenheim Foundation New York

1925 The John Simon Guggenheim Mem. Fndn New York

1925 Wisconsin Alumni Research Foundation Wisconsin

Classic Era: Self-Sustaining Institutions

• Public Libraries

• Separating U.S. Universities and Liberal Arts Colleges from

Denominational Control

• Medical Research, Education, Professionalism

• Public Health Initiatives• Public Health Initiatives

• Scientific Research as University Priority

• High School Curriculum & College Admissions

• National Standards for Charity Organization & Industrial

Regulation

• Empirical Approaches to Social Research

• Transnational circulation of elites

• Framing Research on International Affairs

Notable Classic-Era Setbacks

“ hierarchical regionalism” in med services Milbank, Commonwealth, Rosenwald

School curriculum for non-college-bound Carnegie F. for the Advance of Teaching

Equal education for African-Americans S’n Ed Bd, Carnegie C, Rosenwald, etc.

Regional Planning Russell Sage Foundation

Na’l system of vol., professional soc service Russell Sage Foundation

Public vocational ed, juv. courts, sex ed Carnegie, Rock, Commonwealth, PaynePublic vocational ed, juv. courts, sex ed Carnegie, Rock, Commonwealth, Payne

Protestant Christianity on campus Danforth, many southern funds

Curb business cycle, prevent Depression. Rockefeller, Sloan, Rosenwald, RSF, etc.

Christianity in Asia Rockefeller, China Medical Board, Luce

Labor rel, sober behavior, eugenics Rockefeller Foundation, several others

International peace, prevention of WW II Carnegie Endowment for Int. Peace,

Rockefeller, World Peace Foundation, &c.

Relative Decline of Foundations

Federal Spending on Health, Education, Welfare, etc.

as Gross Domestic Product Share, 1902-1990

16.0%

0.0%

4.0%

8.0%

12.0%

16.0%

19021913

19221932

19401950

19601970

19801990

Federal Funding in Key Foundation Fields,

as GDP Share, 1965-2010

12.00%

16.00%

20.00%

DisabilityHousing & Food

Income Support

Calculated from data in Historical Statistics of the United States, millennial edition.

0.00%

4.00%

8.00%

12.00%

1965 1970 1980 1990 2000 2010 estimate

Medicare, Medicaid

Social Security

Soc Svc, Com Dev

Support

K-12

Hi EdResearchInternat’lMilitary Research

Relative Decline of Foundations

U.S. Personal Consumption Expenditures,Per Capita , 1959-2007

25,000

30,000

0

5,000

10,000

15,000

20,000

25,000

1959

.19

62.

1965

.19

68.

1971

.19

74.

1977

.19

80.

1983

.19

86.

1989

.19

92.

1995

.19

98.

2001

.20

04.

2007

.

Relative Decline of Foundations

Giving as Share of Personal Income in the United St ates,1929-1994

4.0%

4.5%

5.0%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

1929 1934 1939 1944 1949 1954 1959 1964 1969 1974 1979 1984 1918 1994

Foundation Grants at 7% of Assets,

as GDP Share, 1944-2008

4.00%

5.00%

0.00%

1.00%

2.00%

3.00%

1944 1954 1965 1975 1985 1995 2008

Growth of Nonprofit Organizations

Nonprofit Share of US Employment, 1800-2000

10%

0%

2%

4%

6%

8%

1800 1850 1900 1950 2000

Relative Decline of Foundations

Giving as % of Personal Income, Nonprofit Employment as % of Labor Force,

Estimates, United States, 1800-2000Nonprofit

Employment10%

Total Giving

0%

2%

4%

6%

8%

1800 1850 1900 1950 2000

Relative Decline of Giving

Gifts & Endowment Contributions To Income in Three Large Nonprofit Fields,

Cuyahoga County, Ohio, 1930-1990

80%

0%

20%

40%

60%

1930 1960 1990

Hospitals Social Services Colleges, Universities

Great Variation in Local TaxationActual state and local tax revenues per capita

State total taxable resources per capita

4.8-7.3%

7.4-7.8%

7.9-8.2%

8.3-10.3%

http://images.google.com/imgres?imgurl=http://www.higheredinfo.org/mapgen/state.php%3Fdatacol%3D6939&imgrefurl=http://www.higheredinfo.org/dbrowser/index.php%3Fmeasure%3D35&usg=__SNadCTq2Ej5Y8-pS-EO8XwqCPEM=&h=400&w=631&sz=94&hl=en&start=1&tbnid=j8LIP9BfWnTM1M:&tbnh= 87&tbnw=137&prev=/images%3Fq%3Dtax%2Beffort%2Bhigher%2Beducation%26gbv%3D2%26hl%3Den%26client%3Dfirefox-a%26rls%3Dorg.mozilla:en-US:official

U.S. = 7.8%

Boston

Seattle

Chicago

Detroit

Pittsburgh

MinneapolisSt. Paul

New York

PhiladelphiaSan Francisco

Foundation Giving: Flows of $5 million

Within Network of 15 Metro Areas, 2003

Atlanta

Miami

Houston

DallasLos Angeles

Philadelphia

Washington, D.C.

Net Donor

Net Receiver

80 Northeast Ohio Recipients of $1 Million or More in Total Foundation Grants,

1999-2003, By Major Institutional Category

University Circle & Allied Organizations $173.6 M 39%

Other Cuyahoga Cty Ed and Cultural Orgns 55.0 M 11%

Cuy. Cty Social Service Organizations 47.5 M 11%

Cuy. Cty Educational Initiatives 29.8 M 7%Cuy. Cty Educational Initiatives 29.8 M 7%

Cuy. Cty. Housing & Economic Development 29.0 M 6%

Cuy. Cty. Catholic and Jewish Charity Feds 14.0 M 3%

Cuyahoga County commissioners, court 9.3 M 2%

Colleges and Universities Outside Cuy. Cty. 41.6 M 9%

Akron, Canton Soc Service, Education 30.8 M 7%

Other Fund Raising and Distributing Entities 21.9 M 5%

Results: Current Foundation Contributions

Charity (“Immediate Relief”)

Complement Government: Inadequate Resources Substitute for Government: Inadequate Resources

Philanthropy

Innovation: New Institutions Fields mostly too bigInnovation: New Programs Fields crowdedInnovation: New Programs Fields crowdedSocial and Policy Change Must consider legitimacy

Regional Build-Out Newly Identified Role

Control, Redistribution

Asset Protection Notable; Implies ControlRedistribution Inadequate Resources

Results: Current Foundation Contributions

Social Entrepreneur

Identify, Initiate Uncommon, ChallengingRespond, Convene, Catalyze Often Practiced

Institution Builder

Lead Collaborations Some AttemptsLead Collaborations Some AttemptsSelf-Sustaining Institutions Many Local Gap FillersReinforce Established Patterns Common

Risk Absorber

Action, Social, Political Risk Some EffortsPreserve Assets Common

Current Foundation Contributions

Insufficiency: Universal, even Gates

Particularism: Common - Local, Religious, Cultural

Paternalism: Infrequently citedPaternalism: Infrequently cited

Amateurism Celebrated quality of US funds

Europe

• Multitude of foundation forms

• Multitude of models that go beyond

charity/philanthropy/strategic philanthropy

distinctiondistinction

• Need to “brand” foundations as European

institutions, not in reference to US “gold standard”

• Context specific developments (welfare states,

nonprofit regimes, varieties of capitalism)

• Test US results against European experience

U.S. – Europe – Examples

U.S. Europe

Innovation: New Programs ?R.W. Johnson Healthy Behavior

Orphan Drugs

Social and Policy Change ?Kids Count

Kaiser Family Foundation – HealthKaiser Family Foundation – Health

Regional Build-Out ?Texas Medical Center

LA MuseumsSouthern Educational FoundationEastern, Center Europe

Asset Protection ?Religious

Arts

Civil Liberties

Comparative Summary, Europe

Context Roles of

Foundations

Importance

Social democratic Smaller limited

State controlled Smaller limited

Corporatist Larger Significant

Liberal Larger Significant

Mediterranian Medium Less significant

Post socialist Smaller Potentially significant

New Policy Developments

• At policy level: Encouragement in many European

countries to foster foundations often with the U.S. as

model (e.g., UK, Germany, France)

• European dimensions: some evidence of greater • European dimensions: some evidence of greater

cross-border awareness, interest and activities on

behalf of EU foundations

• European Foundation Statute (established broader

foundation concept) – need to substantiate what

roles and contributions to expect

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