What is the most effective way for foundations to work within a strong welfare state? Could they do more good by managing their assets more strategically?
These were among the questions addressed by Nordic Foundations Network Meeting in Stockholm on 24 – 25 October, which drew together some 90 participants from more than 50 foundations in Denmark, Finland, Norway, and Sweden. The meeting was the best-attended of its kind so far and was also the first one in which Danish foundations had taken part.
‘Networking in combination with systematic and goal-oriented peer learning and practice-oriented workshops suit us well in the Nordic countries. Probably, this practice-oriented approach is one important explanation for the growing participation in the meetings,’ said Chief Executive Göran Blomqvist from The Swedish Foundation for Humanities and Social Sciences, who hosted the meeting along with Bikuben Foundation (Denmark), Gjensidige Foundation (Norway), and Kone Foundation (Finland).
Susanne Dahl, Head Adviser from Bikuben Foundation also remarked on both the rising participation rate and the Danish presence and suggested they indicated ‘a growing mutual interest among Nordic foundations and a wish for collaboration and sharing of knowledge. Nordic foundations have a strong welfare state as a common denominator. This sets us apart from other European countries and complicates the way we draw inspiration from international foundations.’
However, as Stefan Einarsson, Research Fellow at Stockholm School of Economics, noted, the findings of his research show that Swedish foundations have increased their grants in areas traditionally considered part of the welfare state – by 75 per cent in the case of social welfare and by 80 per cent in healthcare between 2002 and 2012.
Strength in diversity
Göran Blomqvist pointed out that one of the key challenges shared by Nordic foundations is the growing demand for initiatives from the philanthropic sector. That, in turn, he noted, demands increased knowledge sharing.
‘We are experiencing rapid changes in the context in which foundations and other philanthropic organizations operate. The speed is increasing; new topics are coming on the agenda… We meet challenges within art and culture, disaster relief, migration and social inclusion, gender, human rights, research, and innovation,’ said Blomqvist, and suggested that the diversity of Nordic foundations should be used as a source of inspiration.
He noted the need ‘to improve the analysis and our forecasting capabilities,’ adding: ‘In a complex situation like this, the diversity of the Nordic foundation sector is an important asset. It gives us inspiration for new ways of thinking, acting and a willingness to test different models.’
In the workshop on catalytic philanthropy, Hanne Jervild of the Health Foundation in Denmark shared the Foundation’s experience of using collective impact as a work method in a collaborative project with Helsingør Municipality. The project aims to break the poverty cycle and improve the well-being of overweight children.
‘We have been working on translating the collective impact method – with its English/American origin – to make a better fit with the Danish welfare model. At the Health Foundation we are not that many employees. Thus, I believe it could be interesting for others to get insights in to how it’s in fact possible to get great results from projects based on long-term partnerships – without it costing the foundation a fortune,’ said Jervild.
Sustainable investments don’t mean a trade-off
There was inspiration to be drawn from outside of the foundation sector as well. Reynir Indahl, who specializes in responsible and sustainable investment at Summa Equity gave a thought provoking talk about the options available for foundations’ asset management.
He noted the ‘fantastic’ work foundations have been doing: ‘You are really working to make Scandinavia and the world better.’ But, he added, ‘it is a drop in the ocean of what you could be doing.’ Not only that, foundations needed to be careful they weren’t doing harm: ‘You probably have a trillion kroner (134 billion Euro) on your balance sheets. Are they invested to make the world a better place or are you actually harming the world? Are you creating a more unsustainable world with the asset allocation on your balance sheets?’ he wondered.
He argued that foundations should take a greater interest in creating great results by investing their assets in innovative companies focused on creating products that help solve social and environmental challenges globally. It is also a good business, explained Indahl:
‘You might have heard that if you want to do investments that have anything to do with impact or sustainability or are responsible investments, there is a trade-off. You have to take lower returns. There have been several large studies showing that impact investments or sustainable investments yield exactly the same in the same asset classes as others. The notion that there is a trade-off is false,’ he said.
According to Åke Iverfeldt, Executive Director of the Swedish Foundation for Strategic Environmental Research (Mistra), there are no good reasons for public benefit foundations to ignore the opportunities in sustainable investments. On the contrary, Mistra’s experience since the turn of the millennium shows that sustainable investments offer both lower risk and better long-term returns than traditional asset types.
‘The biggest obstacle for foundations is conservatism: “Sustainability is fine but it is on someone else’s desk – I deal with the core business according to the bylaws”. That is ‘wrong and it is especially wrong for foundations that normally have a long-term perspective. If you have a long-term perspective, sustainability is right in the middle of your core business,’ said Iverfeldt.
‘The market for sustainable investment in equity is there and it is large enough. And there are a lot of opportunities in other asset classes, too. However, you have to evaluate what is sustainable or not. Carbon footprinting and ESG rating are tools that you can use for the positive selection. Negative screening is nowadays more a hygienic factor,’ concluded Iverfeldt.
‘The network meetings help bridge the gap and shorten the distance between Nordic foundations in their daily work,’ said Susanne Dahl from The Bikuben Foundation, summing up the two-day gathering. ‘We find that the meeting has helped create new contacts and opened up the possibility of collaborative work. The meetings are of great value to us – they provide inspiration and enhance the dialogue.’
Jakob Thomsen is the managing editor of Danmarks Fonde.