1. Foundations in Contemporary Europe Warsaw, 12th September, 2008 ______________________________ The Foundation Sector in Germany Rupert Graf Strachwitz AN DER HUMBOLDT-UNIVERSITÄT ZU BERLIN MAECENATA INSTITUT FÜR PHILANTHROPIE UND ZIVILGESELLSCHAFT

2. www.maecenata.eu MAECENATA INSTITUT 2 12. Oktober 2015 7 Questions 1.Legal definition ? 2.Types of Foundations ? 3.Other legal forms of CSO ? 4.The role of foundations ? 5.The rationale behind recent legal changes ? 6.Advantages and shortcomings of legal frameworks ? 7.Current challenges and trends ?

3. www.maecenata.eu MAECENATA INSTITUT Issues  General picture  Socio-political context  Areas of intervention  Role in society / Role the state sees for them  Place of foundations among other CSOs  Place and role of foundations in the ‚whole state system‘ 3 12. Oktober 2015

4. www.maecenata.eu MAECENATA INSTITUT Rupert Graf Strachwitz  30 years experience in and with foundations as: –grant seeker, –foundation executive –board member –consultant –academic researcher –academic teacher –author –independent policy advisor  not a foundation lobbyist 4 12. Oktober 2015

5. www.maecenata.eu MAECENATA INSTITUT 5 12. Oktober 2015 1. Legal definition Universitas bonorum: Assets locked into a legal entity in perpetuity destined to serve a purpose specified by the founder at the time of institution –Legal definition narrower than general/historical definition –Assets not necessarily liquid assets –Legal entity not necessarily legal personality –In perpetuity means lifetime of the foundation –Founder may specify scope of changes to the purpose within fiscal limits –Purpose does not have to be public benefit.

6. www.maecenata.eu MAECENATA INSTITUT 2. Types of Foundations  A: Legal –Autonomous (Legal personality under civil law) –Non autonomous (Trust – no legal personality) –Incorporated (Limited company – GmbH/AG) –  Association styled foundation  –Foundation in public law –Foundation in Church law 6 12. Oktober 2015

7. www.maecenata.eu MAECENATA INSTITUT 2. Types of Foundations  B: Functional –Ownership ( e.g. buildings / works of art ) –Operating ( institutions / projects ) –Grant making ( statutory beneficiary or by selection ) –Benevolent ( direct help to persons in need )  C: Fiscal –Public benefit ( tax exempt ) –Private purpose  e.g. family  ( not tax exempt ) 7 12. Oktober 2015

8. www.maecenata.eu MAECENATA INSTITUT 2. Types of Foundations  D Financial –classic (private founder / few purposes) –corporate (corporate founder / few purposes) –government (government funding / few purposes) –community (public funding / gradual build-up / multi- purpose) –Communal (public funding / gradual build-up / one purpose) 8 12. Oktober 2015

9. www.maecenata.eu MAECENATA INSTITUT 3. Other legal forms of CSO CS activity does not require a legal form. CSO forms: –Registered association –Non-registered association –Public benefit limited company (GmbH / AG)  Associations:approx. 1 Million  Foundations:approx. 20,000 (+ approx. 100,000 church foundations) 9 12. Oktober 2015

10. www.maecenata.eu MAECENATA INSTITUT 4. The role of foundations  To make assets available for a specific purpose in a sustainable way ( 98%: public benefit purpose )  To serve as a capital market to civil society  To complement communal action by individual action  To support minority causes  To channel private funds towards public purposes  To provide a legal framework for specific long term public benefit investments 10 12. Oktober 2015

11. www.maecenata.eu MAECENATA INSTITUT 4. The role of foundations Assessment  C. S. does not primarily rely on foundations for its development  Foundations are the structurally conservative end of C.S.  Government overrates the funding capacity of foundations.  Foundations are fashionable, given the disadvantages of associations  Foundations introduce a notion of sustainability in a very fast changing environment. 11 12. Oktober 2015

12. www.maecenata.eu MAECENATA INSTITUT 5. The rationale behind recent legal changes  To open the door for fundamental changes in state – civil society relations by working on the subsector most popular with the state  To react to public pressure to facilitate civic engagement  To attract private funds for government projects 12 12. Oktober 2015

13. www.maecenata.eu MAECENATA INSTITUT 5. The rationale behind recent legal changes Assessment  No fundamental agreement on policy – legal measures are driven by short-term political considerations  Policy split between politics and administration  Massive opposition from umbrella organisations against formalized public accountability  No inclination to ease government supervision.  Attempts to channel civic engagement towards government friendly attitudes/programmes/etc. 13 12. Oktober 2015

14. www.maecenata.eu MAECENATA INSTITUT 6. Advantages and shortcomings  Legal and fiscal environment not unfavourable  Foundations do have a scope to shape their own theory, policy, governance etc.  Foundations are not restricted in the choice of their assets.  Foundations lack public accountability. 14 12. Oktober 2015

15. www.maecenata.eu MAECENATA INSTITUT 7. Current challenges and trends Challenges  Enormous increase in number of foundations  Most foundations comparatively small / underfunded  Administrative burden difficult to be borne by volunteers  Lack of independent academic accompaniment  Lack of training of officers 15 12. Oktober 2015

16. www.maecenata.eu MAECENATA INSTITUT 7. Current challenges and trends Trends  Gradual increase in CS cohesion at top level.  Cooperation with other foundations, not with other CSOs  No level playing field within CS – outside world consists of grant seekers, regulators, and others  More activity (operating / pro active grant making)  Big foundations enter into public policy business 16 12. Oktober 2015

17. www.maecenata.eu MAECENATA INSTITUT Issues  Foundations have a very old history and an extraordinary continuity.  Grave lack of research on foundations  Plethora of diverse traditions, activities, visions, no clear cut role model  Foundations find it difficult to see themselves as CSO  Recent changes have probably had an effect on the number of new creations, but not yet on outlook. 17 12. Oktober 2015