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
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