The Roles and Contributions of Foundations:

Comparative 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 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

• 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

PhilanthropyInnovationSocial and Policy Change

Control, RedistributionAsset ProtectionRedistribution

Hypotheses: Comparative Foundation Advantage

Social EntrepreneurRespond, InitiateConvene,  Catalyze

Institution BuilderLead CollaborationsEstablish Self‐Sustaining Institutions

Risk AbsorberAccept Programmatic, Social, Political RiskPreserve Assets Dedicated to Valued Goals

Hypotheses: Comparative Foundation Disdvantages

InsufficiencyResources inadequate to ambitions

ParticularismFocus on some groups, ignore others

PaternalismDisregard views of others

AmateurismRely 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”

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 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) 

• 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

• 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, 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, RockefellerWorld Peace Foundation, &c.

Relative Decline of Foundations

Calculated by David C. Hammack from Historical Statistics of the U.S., Millennial Edition, and federal data.

Federal Funding in Key Foundation Fields, as GDP Share, 1965‐2010

Calculated by David C. Hammack from data in Historical Statistics of the United States, millennial edition.

0.00%

4.00%

8.00%

12.00%

16.00%

20.00%

1965 1970 1980 1990 2000 2010 estimate

Medicare, Medicaid

Social Security

Soc Svc, Com Dev

DisabilityHousing & Food

Income Support

K-12

Hi EdResearchInternat’lMilitary Research

Relative Decline of Foundations

Source: U.S. Department of Commerce – Bureau of Economic Analysis, Bureau of the Census.

Relative Decline of Foundations

Data from Colin B. Burke, (2001). “Nonprofit History’s New Numbers (and the Need for More),” Nonprofit and Voluntary Sector Quarterly30 (2), pp. 174-203; this data was subsequently published in Historical Statistics of the United States: Millennial Edition.

Foundation Grants at 7% of Assets, as GDP Share, 1944‐2008

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

1944 1954 1965 1975 1985 1995 2008Calculated by David C. Hammack from Foundation Center data.

Growth of Nonprofit Organizations

Estimates developed by David C. Hammack from data in Historical Statistics of the U.S. and the National Center for Charitable Statistics.

Relative Decline of Foundations

Relative Decline of Giving

Estimates developed by David C. Hammack from various archival, State of Ohio, and U.S. Department of Commerce Sources.

Great Variation in Local Taxation

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

Actual state and local tax revenues per capita

State total taxable resources per capita

U.S. = 7.8%

Boston

Atlanta

Miami

Houston

DallasLos Angeles

Seattle

ChicagoDetroit

Pittsburgh

MinneapolisSt. Paul

New York

Philadelphia

Washington, D.C.

San Francisco

Foundation Giving: Flows of $5 million Within Network of 15 Metro Areas, 2003

Net Donor

Net Receiver

Analysis of Foundation Center data by Helmut Anheier and associates, UCLA Center for Civil Society.

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. 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%

Calculated by David C. Hammack and associates from Foundation Center data, Case Western Reserve University.

Results: Current Foundation Contributions

Charity (“Immediate Relief”)Complement Government: Inadequate Resources  Substitute for Government: Inadequate Resources 

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

Regional Build‐Out  Newly Identified Role

Control, RedistributionAsset Protection Notable; Implies ControlRedistribution Inadequate Resources 

Results: Current Foundation Contributions

Social EntrepreneurIdentify,  Initiate Uncommon, ChallengingRespond,  Convene,  Catalyze Often Practiced

Institution BuilderLead Collaborations Some AttemptsSelf‐Sustaining Institutions Many Local Gap FillersReinforce Established Patterns Common

Risk AbsorberAction, Social, Political Risk Some EffortsPreserve Assets Common

Current Foundation Contributions

Insufficiency: Universal, even Gates

Particularism: Common ‐ Local, Religious, Cultural

Paternalism: Infrequently cited

Amateurism Celebrated quality of US funds

Europe

• Multitude of foundation forms

• Multitude of models that go beyond charity/philanthropy/strategic philanthropy distinction

• 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 BehaviorOrphan Drugs

Social and Policy Change ?Kids CountKaiser Family Foundation – Health

Regional Build‐Out  ?Texas Medical CenterLA 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 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

http://anniekatec.blogspot.com/2008_02_01_archive.html