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Might and Right: The Shape of Philanthropy to Come

March 02, 2009

(Bradford Smith is president of the Foundation Center. In his last post, he wrote about the nonprofit equivalent of "too big to fail.")

An interesting fact leapt out at me from a 224-page document I downloaded today: when taking into account the twenty-seven EU member states, European philanthropy is mightier than American philanthropy by a considerable margin. According to the Feasibility Study on a European Foundation Statute:

Allowing for all data uncertainty and validity problems, we estimate that the European foundation sector has assets of between EUR 350 billion and EUR 1.0 trillion (!) and annual expenditures of between EUR 83 billion and EUR 150 billion. By contrast, US foundations have assets of approx. EUR 300 billion and expenditures of EUR 29 billion.

The study arose out of efforts by the European Commission, the European Foundation Centre, and others to cut through the maze of foundation tax laws that impede foundations in Europe from engaging in cross-border activities. These barriers exact a cost of somewhere in the neighborhood of EUR 100 million per year that could be avoided by allowing foundations to constitute themselves as European foundations as opposed to being registered in a single country.

Many will find the report to be a tough slog, but having lived and worked in Europe for the past three years I found it fascinating. I will admit to being a big fan of the European Union -- a remarkable achievement after centuries of conflict, ethnic cleansing, and two horrific world wars in the 20th century. Philanthropy in Europe is quite different than in the United States; it favors operating programs over grants, engages directly with governments and the EU while relying less on advocacy, and, as the report tells us, is simply bigger.

At the other end of spectrum lies the Dalit Foundation in India. During fiscal year 2007-08, the foundation's grants and fellowship budget totaled only $340,000 and the average grant size was $5,300. But what the Dalit Foundation lacks in resources, it more than makes up for in courage and ambition.

Dalits, sometimes called "untouchables," fall beneath the communities that are included in India's four main caste groups. They comprise a population of 160 million and, despite caste bias having been outlawed in l950, suffer daily discrimination and are relegated to degrading occupations such as "manual scavenging" —- being lowered into latrines to clean them out by hand.

The Dalit Foundation grew out of the National Campaign on Dalit Human Rights and represents the philanthropic arm of a social movement. Having made significant gains on the political front, the movement recognized the need to invest resources in proving that Dalits are no different than any other Indian, when given a chance. Their small projects are emblematic of the larger struggle: arming men who say "no" to manual scavenging with new job skills, a theatre group that helps Dalits out of alcohol and drug dependency, a leadership program that equips youth with "education about perspectives that are relevant to Dalit liberation, research and intensive participation in grassroots-level activities."

American philanthropy has provided critical support to the European Foundation Centre over the years as well as a number of European foundations, particularly in EU accession countries. But now that European philanthropy is more than its equal, how will U.S. philanthropy react? The Dalit Foundation received critical endowment support from the Ford Foundation. Yet many American foundations tend to see such efforts as "intermediaries" that add an extra layer of administrative cost in delivering grants to the poor, rather than an exercise in contributing to social justice by building viable indigenous philanthropies.

The might of the European foundations and the right of the Dalit Foundation show us the shape of philanthropy to come.

-- Bradford Smith

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Posted by Bela  |   March 03, 2009 at 10:41 AM

This is very interesting and your last comment speaks to a larger issue in American philantropy: "many American foundations tend to see such efforts as "intermediaries" that add an extra layer of administrative cost in delivering grants to the poor." I attended a meeting recently about social enterprise efforts aimed at earned income specifically. One attendee spoke up during Q&A with a comment something like this: "I hope you're not suggesting that social enterprise replace the way we've always supported nonprofits. I like the way we've always done it." To my way of thinking, this mindset contributes to the overall question about the relevancy of US foundation philanthropy in the 21st century. The way we've always done it may need to shift, since the next generation's view of how to help the poor and fix societal ills is evolving away from "how we've always done it." Maybe "competition" from EU philantropy will spur US philantropy to get moving in new and exciting directions.

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