Diana Leat

From Charity to Change, Brussels to Beijing

This chapter illustrates the scale of foundations, their variety, and their geographical spread. A survey of philanthropic foundations throughout the world would be another book, and one that would be severely hampered by lack of reliable data. Relatively few countries produce systematic data on foundations, and foundations themselves are sometimes happy, for good and not so good reasons, to remain invisible.

Dark Corridors or Glass Pockets

The accountability—or lack of it—of foundations is a theme that underlies many of the issues discussed in previous chapters. If foundations were better regulated and more accountable then the ‘playthings of the rich’ charge would have less relevance. If foundations were better regulated and more accountable their effects on democratic process would be more apparent— and so on.

Public Benefit or Playthings of the Rich

Philanthropy—whether large or small, individual, or institutionalised in a foundation—is private giving for public good. Unlike taxes, philanthropic gifts are not required, they are choices and the giver could have chosen other ways to spend his or her money. As Jersey-based Australian philanthropist Graham Tuckwell remarked when giving AU

Cash Machines or More

50 million ‘I could have bought a yacht … but then how could I sit in church’ (Quoted in Canberratimes.com.au Feb 5 2013).

The Future Is Monstrous

One of the charges charities fear most is being seen to spend too much on ‘overheads’. In a charity’s publicity and fundraising materials, there are often prominent claims that ‘every penny/cent’ goes to help those in need, implying that the charity spends nothing on offices, utilities, staff, and so on. Endowed foundations do not need to make such claims for fundraising purposes, but trustees may nevertheless keep a tight rein on any spending that is not directly related to the foundation’s mission. Organisations that work to support and advise foundations are frequently asked what percentage of a foundation’s income it is reasonable to spend on overhead, and whether there are any benchmarks.

Missing Measurement, Misunderstanding Measurement?

Jacques Derrida (1995) argues that a future that is not monstrous would not be a future but a predictable tomorrow; all real innovations have something scary or ‘monstrous’ about them. Futurology is a dangerous business for various reasons. This final chapter claims to do no more than highlight some issues foundations may face in the coming decades.

How Foundations Work: An Overview

From the 1990s on there has been increasing pressure on foundations to measure their impact—or, perhaps more accurately, the impact of their grantees. Articles by Porter and Kramer (1999), and Letts, Ryan, and Grossman (1997), for example, put the impact of foundations under the spotlight.

Sources of Wealth and Income

Foundations generally, although not always, start with a donor (donor motivations are discussed in a later chapter). The donor may be alive or dead (i.e., the foundation is created as part of her/his legacy) and may be an individual, a couple, a family, brothers and sisters, or a company. In the case of community foundations, the foundation is created in order to attract donors. Sometimes, the foundation is created in order to find a politically or socially acceptable home for contested or ‘ownerless’ assets. For example, as noted above, in Germany the Volkswagen Foundation was created to ‘solve’ the problem of competing claims to ownership of the car company at the end of the Second World War (see also the case of New Zealand community banks in McKinlay 1999). Similarly, in the UK the Diana, Princess of Wales Memorial Fund was created in order to make use of spontaneous, unsolicited donations from the general public left at the gates of Kensington Palace in the days after the death of the Princess.

Definitions and Distinctions

Foundations face a cluster of charges to do with their wealth and income. One charge concerns the source of the wealth with which the foundation was initially created—how the money was made and what harm, if any, was done in the process? A related but different charge concerns the effects of foundation formation on the tax base; do foundations erode the tax base in such a way as to neutralise any good they may do? Yet another charge is that the bulk of foundation money is not applied to public benefit and, worse, actually contributes to the problems foundations claim to want to solve.

Warehouses of Wealth: Payout and Perpetuity

At root, the term ‘philanthropy’ refers to love and caring for fellow human beings. In modern usage the term has rather narrower connotations. People who give time voluntarily in the service of others are caring, but they are rarely referred to as ‘philanthropists’. Today philanthropy is generally seen to involve giving money, and the label ‘philanthropist’ usually reserved for those at the higher end of giving. If I referred to myself as a philanthropist on the basis of my £10 gift to the local hospice it would sound pretentious.