Giving in Europe Current Trends René Bekkers VU University Amsterdam The Netherlands May 23, 2013 Cross-Border Giving: Changes and Trends in the 21st Century Center for the Study of Philanthropy in Israel

Boy, we are in big trouble. 2

To mention just a few things... The housing bubble burst. Unemployment is high, especially among young people. Public debts have increased. Pension payments are reduced. Consumer spending and confidence are down. The banking crisis is not over yet. 3

It’s not just the money, stupid! The economic crisis not only reduces people’s resources to do good, it also makes them uncertain. People are uncertain about their jobs, their savings, their pensions. Uncertainty lowers giving and volunteering. 4

Social psychological effects More insecurity. More anxiety, more stress. Lower subjective well-being. Lower trust in fellow citizens and institutions. Polarization along political and ethnic cleavages. More demand for religion. 5

Some sociological trends Families become smaller. Increasing inequality. Ongoing secularization. Educational expansion: diploma inflation. Immigration continues. Ethnic heterogeneity increases. 6

The need for philanthropy Poverty increases. Social and emotional needs increase. Cohesion and tolerance are under threat. And governments do less. 7

The Waterbed Effect Government grants Private donations Friedman (1962) called this the crowding-out effect. 8

Bron: CBF

‘A severe cut in government funding to nonprofit organisations is not likely, on average, to be made up by donations from private donors.’ Abigail Payne (1998) 10 This statement applies to the US. In the UK and the Netherlands the evidence supports the conclusion that government cuts reduce giving.

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The ‘Big Society’ UK prime minister David Cameron called for increased civic responsibility, before the Big Cuts. Evidence from the Third Sector Research Center in the UK shows that the capacity to compensate cuts is lowest in areas where the needs are at a maximum. 12

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A ‘Big Society’ in the Netherlands? A similar call was made by the previous conservative/Christian coalition when budget cuts were announced for Arts & Culture (€200 mln). Recently the conservative/labor coalition announced a cut of €1 bln in international assistance, calling for more corporate activity. More cuts will follow – bracing for impact. 14

We’ve been there before. This is not the first time in history that we go through an economic and social crisis. We’ve been through worse periods in history. Periods in which philanthropy was a much more important force in society. 15

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“Stuyvesant called upon the 43 richest residents of New Amsterdam to provide funding to fix up the ailing Fort Amsterdam and to construct a stockade across the island to prevent attacks from the north, while it took New Amsterdam's most oppressed inhabitants -- slave labor from the Dutch West India Company -- to actually build the wall.” Russell Shorto – The Island at the Center of the World 17

18 This is the ‘Giving house’ in the city of ‘s-Hertogenbosch. In the middle ages, the poor in the city received food and clothing at this house. Funds for the service were obtained through bequests, legacies and other donations from citizens, but also from the city council. Today, the building serves as the city’s library and an arts center.

19 The ‘Sweet Mary’ Fraternity was founded in Its first members were clergy. The fraternity engaged in charity and cultural activities. Ghisbertus van der Poorten donated his house in The acceptance of Protestants, including members of the Royal House of Orange, helped resolve religious conflicts that had dominated the city since the spanish occupation in the 17th century. The current building in neogothic style dates back to 1846.

20 The ‘Sweet Mary’ Fraternity was founded in Its first members were clergy. The fraternity engaged in charity and cultural activities. Ghisbertus van der Poorten donated his house in The acceptance of Protestants, including members of the Royal House of Orange, helped resolve religious conflicts that had dominated the city since the spanish occupation in the 17th century. The current building in neogothic style dates back to 1846.

The Rijksmuseum (1885) 21

The Concert Hall (1886) 22

What do I mean by ‘philanthropy’? The transfer of resources from an individual to a collective, without direct compensation at the market price. This definition avoids the problems associated with terms ‘voluntary’ and ‘public good’. It includes much more than the donation of money. 23

Some examples Charitable giving to nonprofits helping people in need. Venture philanthropy. Social entrepreneurship. Employee volunteering. Corporate sponsorships. In-kind donations. 24

Some NOT examples Charity: Almsgiving. Helping a friend. Informal care of family members. Involuntary: Mandatory service learning. 25

Questions we would like to answer 1.How large are differences in philanthropy (incidence, amounts, allocation over causes) between nations in Europe? 2.How can these differences be explained? 3.How has philanthropy changed as a result of the economic downturn, government cuts, and legal changes? 26

What we have… Lots of data on volunteering, but much less on charitable giving Several datasets on giving using – Different definitions of philanthropy – Different questionnaire modules to measure philanthropy – Different survey methods 27

We’re in big research trouble. How many people report donations to various causes varies from one dataset to another. Even differences in giving within the same country vary from one dataset to another. Finally, differences between countries are explained by different variables in the two datasets. 28

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What now? Let’s start all over again. And do it better. 30

31 Prospects for Data Access Tax data: legal definitions, thresholds, privacy issues Survey data on corporate philanthropy difficult to gather Foundations even more difficult to get access to Getting survey data on households least problematic  let’s do this!

32 What we need… New data on giving, using: – A clear definition of philanthropy. – A validated, cross-nationally adequate instrument to measure philanthropy. – One single method of data collection; online is the only feasible option.

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34 Definitions Should be operationalized. Definitions should identify a clearly delimited set of phenomena Easy way out: – Exclude memberships and fees. – Exclude informal giving. – Avoid the word ‘voluntary’.

35 Conceptual model SourceChannelDestination DonorOrganizationCause MoneyServices Households, individuals, corporations Churches, charities, foundations Groups, Ideals

36 The questionnaire should identify Units of analysis: individuals, AND/OR households, OR foundations, OR corporations Channels: churches, charities, foundations, other nonprofit organizations Destinations: causes and services Resources: money, goods, labor

The fragmented pieces of evidence We know next to nothing on the sensitivity of volunteering to recessions. Until 2008, philanthropy used to be fairly ‘recession proof’. Giving by households is less sensitive to economic trends than corporate and foundation giving. Religious giving is less sensitive to economic trends than other types of giving. 37

In the UK, giving by households declined by 10% in 2008/09 – it is slowly recovering. In the Netherlands, giving by households remained steady in 2009 but has declined by almost 5% in Corporate giving is much more sensitive to the economy, it declined by 19% 38

Some positive new trends Crowdfunding and crowdsourcing. Micro-lending. Remittances. Friends’ societies. Heart beating organ donations. Social entrepreneurship. 39

And some more Giving platforms for special events fundraising, like giving.uk. Participatory philanthropy: sports events. Corporate social responsibility. Employee volunteering programs. High Net Worth Philanthropy. 40

The “Golden Age” of Philantropy € millions Extrapolation based on data from Statistics Netherlands (CBS) By 2059 €86 billion will be transferred to charitable causes through bequests 41

The Giving Pledge 42

Modern philantropists in the Netherlands 43 Pieter Geelen created the Turing Foundation after he sold his company The royal family and Johan Cruijff support youth and cohesion The Van den Ende foundation supports arts and culture

HNW 2013 Survey 13% response rate from millionaires Average giving: €5,200 = 1.9% of income Heavily skewed: 80/20 rule Highest amounts donated by young self- employed entrepreneurs Increase from €2,300 in

“If the government cuts, I will give more” 45

Total giving per year by willingness to compensate government cuts “If the government cuts, I will give more” 46

Creating a ‘Giving Culture’ Modesty: “Do not let your left hand know what your right hand is doing” (Matthew 6:3; Maimonides second degree) Philanthropy should not be a dirty word. Social entrepreneurship could be the first degree (help a person help himself). Education could play a role in creating a giving culture, e.g. through service learning. 47

Local cross-sector collaborations Private foundations in the Netherlands with a local focus receive more funding requests from nonprofits. Interest increases in what works in cross- sector collaborations, also from the government. Community foundations are now being established. 48

Four models Initiating: start a program, and export it into government policy. Complementary: work towards similar goals and strengthen each other as partners Adversarial / competitive: try to do better than government or make government do better Substitutive: take over government tasks 49

Concerns Production of some public goods but not others. Cancer but not mental illness research centers. ‘Too much’ influence on public policy for philanthropists leading to arbitrariness, nepotism and inequality. 50

What we need is… A serious political discussion about the role of philanthropy in public policy. Decent research informing policy decisions. Thorough evaluation of the results of any changes that will be implemented. 51

Ingredients People are longing for a more ‘caring society’ and are prepared to contribute. People enjoy giving and volunteering more than paying taxes. They dislike organizational inefficiency. People respond to tax incentives and changes in government subsidies, but not that much. 52

Conditions for cooperation Meeting – Knowing – Strengthening each other; mutual trust. Accountability and (some) regulation. Public confidence and transparancy. Self-organization of the sector; speaking with one voice. 53

Alternative visions Aiming for a substitution effect, the resulting crowd out will be far from perfect. If nonprofit organizations are viewed as partners in public policy, this would help. Think from a ‘crowding in’ hypothesis, even if subsidies are not changing. Present subsidies as matching grants. 54

This… 55

Rather than this. 56

Tools for governance 1.Measure impact and effectiveness. Thank you, ECSP (Rotterdam). 2.Impose financial reporting requirements. 3.Establish nonprofit management education programs. 4.Amplify the signal that accreditation gives to donors. 57

Tasks for the sector Nonprofit organizations will need to report and improve their reporting standards. Raise standards by education in nonprofit management. Adopt more stringent codes of conduct. Evaluate programs and show impact. Advertise tax incentives and engage donors more in programs. 58

Tasks for the government Get educated in nonprofit management. Measure and evaluate impact and effectiveness of reforms. Check charity registrations. Give public access to the charity register, in a user-friendly manner. 59

Legal changes A European Foundation Statute should allow cross-border philanthropy in Europe. Favorable tax treatment is important but often ‘treasury inefficient’. Laws alone do not change behavior; people have to know about them and see their advantages. Framing is important. 60

A price is not a price Proportion of the reward for participation in GINPS04 donated by participants +46% +90% Bestemming - Herkomst - Effecten Sociale invloed 61

Thanks, says René Bekkers Professor & Head of Research Center for Philanthropic Studies VU University Amsterdam 62