European philanthropy needs a solid defense. Here’s what that looks like.

 

Barry Hoolwerf

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On 25 September, Fratelli d’Italia won the Italian elections, which will take the third largest economy in Europe on a rocky path leading away from mainstream European politics. Europe again will have to navigate turbulent times. What implications could this have for philanthropy, now that philanthropy is increasingly associated with the same actors that are opposed by nationalist, ultra-conservative parties and economically anti-(neo)liberal movements? And what is needed to stand against possible uncomfortable measures against philanthropy?

In an excellent piece on the legitimacy of philanthropy that was presented at the International Conference on Philanthropy Research that took place in Turin on 23 September, Liz McKeon reminds us that philanthropic institutions are essentially public trusts, made possible by a decision of the state to exempt from taxation private wealth that has been either accumulated, generated or earned. The state agrees to forego the collection of tax and therefore the possibility for the public treasury to redistribute that tax revenue at its direction and with the presumed consent of citizens.

This is increasingly under question as institutional philanthropy is facing popular distrust – the election of Georgia Meloni and the Fratelli d’Italia can be seen as an example of this process. In fact, increasing distrust in existing institutions undermines the very essence of what philanthropy is: a public trust. We say one of the key characteristics of philanthropy is that it is not held accountable to the general public, but this is only true for the operating space it has been granted by the assumptions above and particular the consent above.

Philanthropy will – like it or not – have to show its added value compared to other societal actors to remain to be able to count on public consent.

Therefore, and we can like it or not, institutional philanthropy should work twice as hard to showcase its worth for society. It is like the medical doctor who smokes a pack a day or the vegetarian with a platinum frequent flyer card. Institutional philanthropy should live up to its expectations, as the sector also thinks it can do better as public policy. In essence, philanthropy will – like it or not – have to show its added value compared to other societal actors to remain to be able to count on public consent. Academically embedded research is an important source for the legitimacy of any professional sector and philanthropy is no exception. It can address one of the key arguments against philanthropy – that it is undemocratic.

However, many conversations about licence to operate are if fact conversations about the operating aspect. How can we improve philanthropy; how should it invest; formulate its strategy and assess its impact? But these conversations are already based on the assumption that philanthropy is in itself a sector that is different (and better) comparerd to other societal actors, both public as corporate in addressing societal problems. Are we able to answer this question? And if not, what would be needed to do so?

In many professions, a license to operate is derived from a formally described set of skills and knowledge that is deemed valuable and essential by a professional to work. Yet there are no universal (European) standards or criteria, let alone job requirements that include specific training or knowledge that is required to work in a sector that has been, and could be attributed with many pretentious characteristics. The medical profession sets up its registers and educational standards to prevent malefide ‘doctors’ to perform surgery or provide medical advice. This ‘closure of profession’ increases trust and has been copied by almost every professional sector, but philanthropy.

What’s more, institutionalised standards of profession through academic research and education on philanthropy may overcome three other aspects of philanthropy that are prone to critics. Ineffectiveness and amateurism by reinventing the wheel – seniors, ask yourself how many conversations did you have about the same topic that are now put on the agenda by another foundation? Particularism: studies that are merely more than internal policy evaluations or address subdomains of philanthropic action that are relevant to some, but particularly address questions that have to do with goals and aims and their related domains, but not address the general need for the rigorous study of philanthropy in itself, and to scrutinize its functioning,  overcoming the tragedy of the commons. Third, is a lack of capacity. From the corporate sector, we learn that growth comes from heavy investments in R&D. What may increase the size of philanthropy? Now philanthropy is marginal and signs are there that it becomes even more marginal in relative terms. Philanthropy should invest in growth, contributing to a culture of giving by finding effective ways to increase philanthropic behaviour now secularisation makes giving more and more something of a distant generation.

With overall decreasing trust in institutions and no institutionalized (read academic) lines of defence, it may come as no surprise that philanthropy is under constant public scrutiny and finds itself in defensive positions on a regular basis. However, its counterstrikes are fragmented and resemble a fire brigade. Currently, in the ongoing debate about social inequality and the distribution of wealth, the Netherlands governmental advisory named setting up a public benefit foundation as the first example of how to avoid taxation. The first! Not by transferring assets to fiscal paradises or by consulting well-paid fiscal advisory firms, but by setting up a public benefit foundation! It comes therefore as no surprise that the Dutch cabinet launched new taxation plans for 2023 that annual donations of over €250000 are no longer deductible. Given that the so-called (ultra) high net worth donate millions, this can have serious consequences for the influx of philanthropic capital. Now, without a solid defence line based on academically embedded views on philanthropy, this flank of philanthropy remains open to the guts of public policy officials. And yes, this is not only limited to the Netherlands, as also the recent transfer of Patagonia founder Yvon Chouinard was framed as ditching taxation.

What is needed? Several initiatives have been launched to address the shared need for knowledge. Notably, on a national level, the Swiss foundations set up a Center that has been guaranteed its academic independence but has been serving knowledge needs and has contributed to developing standardized guidelines on for example foundation governance. This example now serves as best practice and obtains its legitimacy from the institution that formed it. Long-term funding from a pool of foundations combined with academic independent can go together, as the agreement has been prolonged. In France, the chair on philanthropy has been developing the study of philanthropy with strong support from the foundation community. Publications on strategy were beneficial for the sector as a whole, while critical historic reflections make the validity of more protagonistic work stronger. In the Netherlands, a pool of foundations, combined with the association of charities, provides for half of the budget of the most comprehensive data collection on philanthropy in Europe. The publication that comes as a result has been instrumental for making arguments in favour of philanthropy, despite the recent developments. For sure it will assist the Dutch representatives of philanthropy to make the counterargument – based on science and not on guts.

Will it be enough? To date, I am afraid not. Although academic researchers on philanthropy collaborate within Europe, the three examples remain rare, and most academics that study philanthropy or would have an interest in developing the field remain scattered among different academic disciplines and research domains. With only limited possibilities to make a career in philanthropic studies and research centres struggling to gain and maintain ground within their universities, the share of academics that can provide more universal legitimacy remains too small to truly serve the philanthropy ecosystem. Besides, as long as there are no or very limited requirements to work in, with or for philanthropy, the development of an institutional and general layer of knowledge will remain stalled. On the positive side, we did not yet reach a tipping point.

Given the above, it is especially applaudable that on 22-23 September, the Fondazione Compagnia di San Paolo invited representatives academic community of philanthropy researchers and representatives of the foundation community to address the need for a shared research agenda. It is my hope that the outcomes will enlarge the possibilities for academics to study philanthropy with rigour and independence, and at the same time provide the philanthropy sector with valid and legitimate arguments in finding (re)consent of Europes citizens and policymakers to provide a supportive infrastructure for philanthropy.

Barry Hoolwerf is Executive Director of the European Research Network On Philanthropy.


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