First, we have a government that is more inclined to take a back seat; it makes cuts in the hope that foundations will step in and make up the shortfall. This is a complex problem. Take Fonds 1818. The foundation obviously wants to uphold good relations with its municipality during the regular discussions it holds with the official and political authorities in The Hague, including with the Mayor. I have to admire Boudewijn de Blij (Executive Director of Fonds 1818) for his stance during these discussions: ‘If the municipality cuts its funding to an organisation because it assumes that Fonds 1818 will step in, we pull the plug on the partnership.’ Strong words, and with good reason: we are not here simply to subsidise local government budget cuts. But how does this work in practice? The municipality of The Hague decided to close a number of libraries; we had to decide whether to step in. Our initial reaction was: ‘no way’. But then we realised that it was not only libraries that would be closing, but also the youth clubs and community centres in the city. The municipality was actually closing meeting places at a time when we were trying to promote integration and mutual understanding. As it happens, this latter aspect is an important part of the mission of Fonds 1818. In this particular case, should we have stayed with our original position: we will not step in and make-up the shortfall left by government? Would it be true to say that we never fund anything that used to be funded by government? No, it wouldn’t. This shows the complexity of this matter and how easy it is to cling to the principle of ‘not filling the gaps left by the government’. Sometimes, we have to learn to step beyond our own ego. This is exactly what Boudewijn and the staff at Fonds 1818 (authorised by us, the Board) did. We took over the funding of the public library function, but we didn’t continue the traditional format. Instead, we did it on our terms. We deployed IT, not necessarily using qualified staff and not necessarily in the existing library buildings.
The increasing importance of private funding for public objectives, i.e. the importance of foundations, is also evident in the fact that foundations are growing both in number and size. New types of foundations are joining the familiar family foundations and private foundations, among them corporate foundations and community foundations. All in all, foundations are becoming more visible. There is also heightened public, media and political interest in philanthropy. The growth and increased visibility of foundations is not only due to the more prominent role they have taken on, but also because they are contributing to a role that has itself become more significant. It’s a chicken and egg argument, but growth in the sector and the importance of the sector are certainly reinforcing each other.
The importance of foundations in the context of social development is also growing, due to the shift from donation to investment. These days, foundations are more willing to think not only in terms of donations, but also in terms of promoting development through loans, financial participation in social capital and guarantees, and being a partner in social investments. This gives the significance of foundations in society an extra dimension. The mission related investments of Fonds 1818 have undoubtedly contributed to boosting the role that this particular foundation plays within its own geographical area. In short, various factors are raising the profile of the foundations’ role in society. Society expects more of foundations, and foundations are keen to comply.
Before going into a number of factors that will always limit the role and significance of foundations (known as counterforces), I’d like to comment on the fact that regardless of whether the part played by funds is growing or shrinking, the nature of philanthropy has changed. The Bernard van Leer Foundation was founded by will after the death of Bernard van Leer. These days, most foundations are established during their founder’s lifetime. In fact as a result of this development, approximately half of the current endowed foundations in the Netherlands (in the region of 2,500) were established while the founder was still alive. The founders are therefore very much involved. They want to do more than provide funds; they also want to offer their expertise, their networks, and they want to be actively engaged. They’ve even come up with a term for it: ‘venture philanthropy’. It sometimes reminds me of The Emperor’s New Clothes, because I come across so many so-called traditional foundations, which are highly innovative without any sign of a living charismatic founder (example: Fonds 1818, Bernard van Leer Foundation). At the same time, I also see ‘venture philanthropy’ foundations that are run by founders who are still very much alive but keen to practise risk-avoidance. But I digress…
Let me return to my argument about the majority of foundations being established during the founder’s lifetime. Although I may be a slightly critical about making a distinction between traditional foundations and ‘venture philanthropy’, the fact that wealthy private individuals/entrepreneurs set up foundations has certainly contributed to the dynamics of the sector and its professional development.
Are there any disadvantages to this development? Yes. Let me mention two of them very briefly. The mentality of some entrepreneurs when it comes to solving social problems is: ‘we’ll fix it’. They have earned their wealth dynamically and now, in this new world of philanthropy, they are thinking in terms of exits, with all the dangers this entails. I’m told that venture capitalists always enter a room walking backwards so that they can see the exit before they go in. It doesn’t work like that in the world of philanthropy. Realising social change is a matter of organic development rather than ‘we’ll fix it’. A second point that warrants special attention is that of the new, up-and-coming foundations that operate on the international stage with absolutely no idea or experience of contextual differences. They do not seem to realise that you can’t simply transpose a solution or strategy from one country onto another; they have no concept of cultural sensitivity. Let me illustrate this point with an anecdote based on reality. There are huge differences between the Netherlands and Belgium in terms of cultural and national characteristics.
If you are not aware of these differences, you can go horribly wrong. The difference in management style between a Dutch and a Belgian foundation is a prime example. In the Netherlands, it is common for the director of a foundation to plan extra time into a decision-making process to consult staff before changing a strategy or making far-reaching organisational changes. The atmosphere is usually informal. This participational approach with the aim of reaching consensus about vital decisions is held in high esteem by staff working in Dutch organisations. In fact, some would say that the Dutch value consensus in the same way that people in other countries value sex. But a colleague working for a Belgian foundation once told me that asking staff to participate in making a vital decision simply does not work in Belgium. If a director in Belgium asks the staff for their opinion on a weighty problem, the reaction is usually: ‘Oh help, the boss is confused, he’s out of his depth, he doesn’t know which way to steer the organisation’. In fact Belgian staff might even say: ‘the future of the organisation is obviously at stake; we’d better start looking for another job’. That’s how important culture is.