The Eurozone has so far borne the brunt of the financial markets’ scepticism about the sustainability of public expenditure in the developed world, forcing countries like Greece, Spain, Italy and Ireland to introduce tough austerity measures. Can philanthrocapitalism help the big-government-loving Europeans to steer their way through the crisis?
Hopefully that question will be on the table at the Foundation Week conference that is being held in Brussels at the moment, under the auspices of the European Foundation Centre (EFC). (Alliance Magazine has a series of blogs from Foundation week here.)
On the face it, a European philanthropic flowering looks pretty unlikely. True, there are a few new donors, working through groups like the EFC and the European Venture Philanthropy Association, but European philanthrocapitalism has still not reached critical mass, as it is starting to do in the UK and in some emerging markets in Asia and Latin America. Giving levels in Europe, among rich and poor alike, are still low and, well, philanthropy is often seen as a strange Anglo-American habit.
That is a mistake. Europe has a rich philanthropic tradition starting with the first microcredit institutions, the Monti di Pieta of Renaissance Italy, through to enlightened industrialists like Ernest Abbe of the Zeiss corporation in Germany in the 19th century. Europe’s foundations are also, not to put a finer point on it, stinking rich – according to one study back in 2007 (sadly not available on the web), the top 50 European foundations had total assets worth 10% more than their U.S. counterparts.
Admittedly this valuation is disputed as these assets are especially hard to measure. Many European foundations hold the bulk of their assets in shares donated by their philanthropic founder, and value them in terms of the price of the shares when they were put into the foundation rather than their current market price.
As we report in the book, the largest foundation in the world may not be the Bill and Melinda Gates Foundation but, according to the Economist, the Stichting Ingka, the Dutch-registered foundation that owns the flatpack furniture giant IKEA. Never heard of it? No surprise really, because it does not give much money away and its target beneficiary is… promoting better design.
Stichting Ingka may be a bit of an outlier but, on the whole, Europe’s big foundations do seem to be performing far below their potential. Italy, for example, is home to several mutli-billion dollar foundations created by bank privatisations in the 1990s (some of which were the descendents of the pioneering Monti di Pieta) that seem overly concerned with grant-making to art and heritage rather than driving deeper social transformation. Much philanthropy in France is still channelled through the Fondation de France, which is a government-sponsored national community foundation that seems designed to keep giving firmly within limits.
So maybe, just maybe, the fiscal crisis is a chance for the countries of Europe to look again at the sleeping giants of the foundation world and think about how these under-used assets could be harnessed to tackle social problems at home or fill the funding gaps likely to result from cuts in government aid to the developing world. A good place to start, this Foundation Week, would be for Europe’s foundations to provide (or governments to require it if they don’t) some genuine transparency about what European foundations are worth and what they are doing.
An even bolder move would be for Europe’s governments to follow what America did four decades ago, and require that foundations give away each year a minimum percentage of their assets (5% in America) in return for their considerable tax advantages. There’s a big idea to champion this Foundation Week!