Swiss Philanthropy Foundation is what Sabrina Grassi, its Director General, and Marc Salzmann, its Partnership Manager describe as an umbrella foundation, providing hosting facilities as an alternative for individual philanthropists to set up their own foundations – among other things. Here, they explain the rationale behind it and its operation to Alliance.

AM: What was the rationale for setting up the foundation?

Sabrina Grassi

SG: In Switzerland, historically, umbrella foundations are not that common because we benefit from a liberal framework where it’s very easy to set up a classic, independent foundation. We have 13,000 foundations in Switzerland which, per head of population, is one of the highest ratios in the world – it’s 15.8 foundations for every 10,000 people, while in the UK, it’s 1.8 and in the US, 3.7 per 10,000. So when Swiss Philanthropy Foundation was set up in 2006, the vision was that the complimentary vehicle was needed because sometimes people didn’t set up a foundation of their own because it has a cost not only financially but also in terms of time and knowledge needed. So the idea was, first, to provide an easier flexible economical access to philanthropy and, second, as an alternative for people who maybe don’t have time because they have a business to run, for example. And we worked hard as Swiss Philanthropy Foundation to make the vehicle known, which was not an easy task at first, but in the past years we have benefited more and more from higher recognition from the sector.

Of the many foundations in Switzerland, many are small and some are dormant, and the sector here is starting to realise that it might not always be very efficient to have all these small foundations which aren’t to concentrate many assets on a problem. Also, we’ve grown a lot and we’ve created over 80 funds and received over 350 million Swiss Francs over the past 18 years. So summing up, we bring flexibility, simplicity and more efficiency, and also administrative and governance expertise because often that’s what people lack at the start. Also the profile of the people coming to us is changing. The traditional view of a philanthropist is someone who has already retired and wants to do something good with their time, but we now have more entrepreneurs in their 50s who are still running the business, are still quite busy in their professional life, but since they have been successful, they want to contribute to society and the umbrella foundation is very convenient – they can rely on our expertise to manage the grants, do the due diligence and so on.

So the Swiss foundation scene is quite fragmented as you were saying. What sort of market are you aiming at – those who are substantial givers but haven’t got hundreds of thousands to give away or set up a foundation? 

SG: To start a fund with us, we ask for a commitment of 300,000 Swiss francs, which is more or less equivalent to Euro, over three years, so it’s a good amount to have a fund rather than set up a foundation. But there is no upper limit, so it’s not necessarily the case that with a big amount, you set up your own foundation, and with in-between amounts, you go to an umbrella foundation. We have funds with tens of millions, because it was more a question of the flexibility of the vehicle and of not having to administer it or renew the board periodically. We have a big issue with board renewals, because younger people don’t necessarily have the time to take on the responsibility. So the range is from 300k up to tens of millions.

The traditional view of a philanthropist is someone who has already retired and wants to do something good with their time, but we now have more entrepreneurs in their 50s who are still running the business, are still quite busy in their professional life, but since they have been successful, they want to contribute to society and the umbrella foundation is very convenient

You also host donor collaboratives. Was that part of the initial aim of the foundation or has demand arisen subsequently that you have responded to?

Marc Salzmann

MS: As Sabrina has explained, we really grew from helping private individuals to set up an alternative to the foundation through a donor advised fund. Then in about 2015, we had the opportunity to host Partners for a New Economy, which was our first collaborative fund that was set up not by private individuals but by foundations themselves. So yes, it grew out of a demand in the sector for foundations wanting to work together on a similar topic, but with an independent host like us. There’s also the opportunity for them to hire staff on our payroll directly for the initiatives. We see this need growing today because we work with more foundations as part of different collaborative funds. We are not thematic experts ourselves, so we don’t provide thematic input, but we provide the framework of good governance, so we will sit on the steering committees of these collaboratives, but only to validate decisions, to advise on good governance, and to ensure that things are done in the correct manner. We have been quite proactive as well in fostering the idea of donor collaboratives, so our work in that area has expanded.

SG: It’s not as common in Switzerland as it is in the US, for example, for foundations to collaborate, and we really wanted to be there to host these collaborations. We also saw the growing need for foundations to work together on systemic issues that are interconnected, so we seized this opportunity because it also allows us to diversify our activity, to learn from it and really to be a prominent actor in these collaborations to address global challenges. And, as Marc says, at the beginning we were mainly hosting, now we are also providing human resources. We are employing programme officers, programme directors for those donor collaboratives. So we really listened to the needs and have evolved our practice with them. Those donor collaborators are really a future asset for philanthropy and we want to be there to host them.

And do you notice the trend to work in collaboration in Switzerland growing?

MS: I think there is a growing trend for sure. We host one donor collaborative, the Safe and Sound City Programme, which is exclusively Swiss-based, made up of two Swiss-based foundations, Fondation Botnar et Global Infrastructure Basel. Another thing that is quite interesting is that we see that the majority of initiatives decide to stay being hosted, while for others, the collaborative initiative becomes the bridge to the creation of another vehicle. And so it’s really testing and incubating ideas together – if it works, then maybe we spin it off, or we stay. But yes, we see the demand growing across Europe and in Switzerland also.

Looking at your website, you’ve some quite big foundations involved in your collaboratives. You’ve got Ford, you’ve got Oak for instance, which are significant players. Presumably that means you’ve created some expertise in this area and people are happy to come to you?

MS: Partly, they come to us and, partly, we go to them. We’re quite proactive in fostering and facilitating collaborations and we have been lucky to have formed some long-term partnerships as well.

SG: I think there is a twofold advantage. First, they come to us because we have a good track record and we provide a high standard of governance and I think they noticed over time that governance was a key issue because if the collaboration is not organised well, it can go completely wrong. You need to have a system of governance where everyone sits as an equal at the table and the processes are known and decisions are made accordingly and grants are properly managed. We were the ones who drew attention to its importance because the foundations you mentioned, MAVA, Oak, they started with Partners for a New Economy and there were only four at the table and then the collaborative grew, Ford, Omidyar and Laudes Foundation and others joined, and it’s not the same to be seven or eight at the table rather than only four. How do you organise this influx of new members? Are there minimum thresholds that allow you to be part of the governance, of the decision-making? We kept that standard high, and they really appreciated that because it means they can focus on mission, strategy, objectives, impact, while we look after the rest. And the other thing is, having a fund hosted in Switzerland still provides advantages because we have a stable political, economic and regulatory environment. Also Switzerland is central in terms of time zones. These collaboratives sometimes have a foundation in Europe, one in the US, while their grantmaking might be in Asia, so it’s convenient to have a European time zone. It’s also about bringing people together around their thematic focus – environment, children’s rights or whatever – being able to do this has helped build our reputation and this is largely word-of-mouth. And as Marc said, our aim is also to try and promote collaboration in Switzerland where it is maybe not as established as it is in the US.

Individual funds, donor advised funds are obviously very popular in the US, but they’ve also attracted some criticism. Do the same criticisms apply in Switzerland, or is the regulatory system completely different?

SG: We don’t face that criticism. Foundations and DAFs do not have a fixed obligation to distribute money in Switzerland either but 70 per cent of the donations we have received at SPF have been distributed and our experience has been that people set up a fund really to do something in philanthropy, not to park money. More broadly in the philanthropic landscape of Switzerland, we have two different views of philanthropy which are a bit in tension. One is that a foundation needs to be forever, so there are foundations in Switzerland which can only distribute the earnings from the investment. That’s a traditional view that you want to be there as long as there are needs. But there’s also the opposite view that challenges are now, and it’s now that we need to distribute because in 100 years or even less, maybe it will be too late. So I would say the tension is not over DAFs, it’s more about the philanthropic sector in general.

Do you see holders of DAFs more as people who want to distribute money now or quickly rather than to hold onto it?

SG: We have higher rates of disbursements, yes. They want to be active now and contribute to society, not to wait and see in ten years’ time.

What kind of people are setting them up?

SG: We still have people maybe in their retirement phase, but these often set up legacy funds. That’s something we have been developing in the past three years and maybe also the pandemic made people reflect a bit more about that – what will I do with my money if I disappear tomorrow? Can I do something for society? And as I said earlier, more and more people between 45 and 60, still professionally active, and who have a very entrepreneurial mindset are setting up funds. They also want to be involved – they are very involved in the steering committee, in looking for the organisations to support. They are very hands-on. Also what we are starting to see is that couples who started DAFs are reaching the point where their children are young adults and the parents are beginning to involve them in the governance and sharing their philanthropic vision and it’s interesting to see how their children’s vision develops depending on their interests, their passions, etc. So DAFs can be medium-term vehicles for a specific project or they can become really the long-term family philanthropic vehicle. It really gathers the family around its values.

Do you have a sense of how much DAFs are growing in terms of numbers over the past say five years or so?

MS: We definitely see a rise in demand, though it’s difficult to say across the whole Swiss sector. But to give you an idea, there are over 13,000 foundations in Switzerland, and only about 15 to 20 of them are umbrella foundations hosting DAFs. So it’s still a growing area, but we’ve been adding about eight to ten additional funds a year over the past few years. And it’s important to reiterate what Sabrina was saying about the growth of legacy funds, because it’s often people who are without heirs or who want to allocate part of their capital to charity. So in that respect, we are here to help people give their capital a sense of purpose beyond their own lifetimes. So yes, we see a rise in demand, but it’s difficult to give an overall picture.

SG: It takes time. There is growing interest, but it’s also because we’ve worked hard, because if you don’t make the vehicle known, people won’t come to you. So it’s also about being in the right networks, for example, of legal advisors, financial advisors to philanthropists, because they will often be the key element in making the philanthropist aware that such a solution exists. When I joined the foundation, we were creating maybe five DAFs per year, today it’s more like eight to ten.

MS: And some donors approach us directly because they’ve done their own research or they tried to set up a foundation and it became too burdensome, so they looked for an alternative.

You talked about sort of the younger generation becoming involved in some of the funds and you yourselves set up a NewGen council. Was that in response to trends you were seeing in the funds?

SG: The NewGen Council was a project a few years back and we did it in collaboration with our strategic partner, WISE Philanthropy Advisors because of the generation shift and wealth transfer. We got a group of young people together with their parents to see how they were challenging their vision of philanthropy, so it was a very interesting project and we see it playing out in the DAFs themselves where, as I said, young people are getting involved. It’s too early to say if their philanthropy is developing differently. The differences are more visible in the DAFs we set up with people in their 40s. For example, we see a lot about sustainability, systemic change, climate. while the generation of parents is more about social challenges like poverty and education. The most recent example we can give is that last year, we set up a collaborative fund for young people, run by young people. It’s ten people between 18 and 30 years old, and they are the ones organising themselves as they want in the steering committee and deciding on the beneficiary organisation, the size of grants, etc. We are one of three foundations supporting this fund, but we only validate that the grants are of public interest, according to the law. It’s very interesting to see how they are organising themselves. Are they making many grants but small amounts? Are they making big ones but fewer? What kind of goals are they choosing? There is a keen interest in the young generation helping the young generation because they are the future, and it’s all about professional insertion, environment, sustainability. So it’s a good observatory. We’ve run several projects to see how young people are conducting philanthropy, and the NewGen council was just one of these. Overall, it’s a bit early to draw conclusions.

But do you see younger people playing an increasing part in Swiss philanthropy?

SG: They are starting to, but I don’t think philanthropy is made by young people yet. The average age of our donors I would say is 45 to 60. It’s not 20 to 40. Generally, the money is in the hands of the parents’ generation.

MS: When given the chance, young people, do sign up for the challenge. When we opened the call for applications for the group of 10 young people last year, we had many, many people signing up. There’s also a training called the Foundation Board Academy, organised by our partners, WISE Philanthropy Advisors, that recruits young people to train them, and to be part of foundation boards. So there is a growing opportunity for young people.

What does the partnership with WISE Philanthropy Advisors entail?

SG: WISE is a strategic partner because there is a historic link – both of us were set up by the same founders but we have evolved independently, being connected when it’s to our mutual strategic advantage to be connected. So, for example, as Marc already said we made a conscious and strategic choice years ago not to internalise project expertise, so for the thematic funds, we have a partnership with WISE who can bring in sector expertise. With the DAFs, some might need thematic expertise, but most of our donors want to choose their philanthropy themselves, but they can also recommend other experts or we can involve WISE when needed. We are completely open to contracting other experts on behalf of the hosted initiatives, depending on the topic or the needs and often do so.

MS: Thematic funds are typically something that’s very pertinent for donors who have a lot of money to give to charity and say they want to support health, or education and employment, but they don’t know which organisations to support. They also want to understand their impact and might want to do a field visit, so that’s where we open up the opportunity for them to fund the projects that are part of our thematic funds.

Your website talks about fiscal sponsorship. Can you just explain what that actually consists of?

MS: We actually learned the terminology fiscal sponsoring, fiscal sponsorship, quite recently. From my understanding, it’s more used in the Anglo-Saxon world, especially in the US but less so in Switzerland. For us, it’s philanthropic initiatives, hosted as part of an umbrella organisation like ours. To put it simply, if a DAF is the alternative to a private foundation, the fiscal sponsoring project is the alternative to creating an NGO, an independent NGO. That’s where we see foundations coming together, devising an idea jointly, developing a single strategy. Sometimes, the project might stay under the umbrella of the fiscal sponsor, like us, or they might then spin off into an independent organisation. What we saw in a recent visit to the US is that the leaders in fiscal sponsoring are not necessarily the leaders in DAFs. So it’s like two different sectors. In Europe, we are seeing much more of a hybrid model and that’s where we see ourselves in the sense that we’ve evolved from doing private DAFs to doing increasingly fiscal sponsoring projects, and so donor collaboratives etc. Today, it’s about 50/50 I would say. We see a growing number of fiscal sponsoring providers across Europe in countries like France, Belgium and the UK, a bit less so in Switzerland.

So fiscal sponsorship and DAFs are two different things basically?

SG: Essentially, yes. As Marc was saying, in the US, it seems you are an umbrella either for one or the other, and it’s rare that you do both. Whereas in Switzerland, we don’t have this distinction and we host both.

Your role is solely to be a platform. You don’t undertake initiatives yourselves, presumably?

SG: Sometimes. For example, we are one of the co-funders for this fund for young people by young people. We have also supported initiatives that Marc leads about promoting philanthropy, our Master Class in philanthropy. We also had a presence at the Verbier Festival for Classical Music for its 30^th anniversary because it’s the right place to speak about philanthropy. So sometimes we are the engine of promoting initiatives on topic that are the current challenges of philanthropy.

MS: Very much so. For example, the Master Class in philanthropy is an annual course that takes place every year at the end of the summer, in partnership with the Centre for Philanthropy Studies at the University of Basel, and the Centre for Philanthropy at the University of Geneva and ourselves. It brings together about 25 participants, and it’s a little bit of a 360 exploration of philanthropy in Switzerland, but not limited to Switzerland. We talk about things like good governance, choosing the right vehicle, fiscal matters, regulatory issues, selecting a cause, starting to see things strategically, about impact and collaboration in philanthropy, so over three days, we really cover a broad range of topics that are important to think about in philanthropy. Of the 25 participants, there’s normally about ten that come from the legal and financial sectors who come to get training in order to be able to orient their clients when they are asked questions. Then we have about ten people that come from the foundation sector, mostly people sitting as part of foundation boards because the content is very strategically-oriented, and then we’ll always have a handful of people who sign up individually because they are thinking of setting up a family foundation, for example and they need to get the tools to start to think like that.

SG: And also to answer the growing need for professionalising philanthropy, both for foundations and for advisers.

MS: And the Verbier Festival as Sabrina said, is a well-known classical music festival, in the two final weeks of July each year. The philanthropy forum has been taking place in the past years normally over 24 hours and we hosted a public conference, met high net-worth individuals, talked about philanthropy and about concrete solutions.

What do you see as the main trends in Swiss philanthropy?

SG: I sit on the board of the Swiss Foundations Association and I’m taking the presidency this year, so it’s a good observatory to see the trends. Overall, many foundations wish to connect, exchange ideas and benefit from peer-learning. I see big foundations wanting to have more impact and being more adventurous in the things they support. Also, there is a growing trend of trust-based philanthropy, as elsewhere. Support for systemic issues is also growing. What we notice in the statistics is that for the foundations set up recently, the environment and sustainability are taking a larger proportion of giving. It’s still often not the main purpose which is still culture, society and education, but environmental sustainability is now in about fifth place in terms of giving, but is growing. In terms of regulations, social entrepreneurship is not yet considered in Switzerland as being charitable, so there’s also a reflection and a wish to evolve in that respect. Some foundations want to be more pioneering and to really address challenges in a more impactful way, though by no means all are following that path.

MS: And maybe another thing to add is diversity, equity and inclusion. Those discussions that we see taking place in other countries like the UK and the US, are happening here as well.