The proposed European Foundation Statute would mean charities and foundations could be registered at an EU level, enabling easier cross-border fund-raising and spending.
Advocates believe debating the proposed regulation will also have the effect of increasing awareness of the support which foundations already give to research, encouraging member states to introduce national incentives to promote philanthropic giving.
“The gap between rich and poor is growing, people are having fewer children and some become rich quite fast, so there is potentially more interest in philanthropic giving,” says Isi Saragossi, Director of the European Research Area at the European Commission, adding, “Today, research is a small part of overall philanthropic activity and the level of funding varies a lot from one country to another, so there is the potential for growth,”
Time to increase philanthropy in science
Some foundations agree now is the time for a major increase in philanthropic support for scientific research. “In response to the financial crisis we have to mobilise more of the private wealth in Europe, which has accumulated over 60 years of peace,” says Wilhelm Krull, secretary general of the Volkswagen Foundation, which devotes all of its resources to research.
The number of foundations in Europe has been growing rapidly in the past 15 years, according to the European Foundation Centre (EFC). Between 2003 and 2008 alone, 18,000 new foundations were set up in the nine EU countries surveyed the EFC. This growth is being fuelled by a number of factors, including changing perceptions of the role of the state, a rapidly ageing population, greater awareness of citizenship in industrialised societies, the democratisation and economic development of Central and Eastern European countries and an anticipated inter-generational transfer of wealth as post war baby boomers reach retirement.
Currently, the largest foundations in Europe include the Wellcome Trust, with assets of €17.521 billion, Fondazione Cariplo with €6.479 billion, Compagnia di San Paolo, which has holdings worth €9.122 billion, Robert Bosch Foundation at €5.130 billion, Calouste Gulbenkian Foundation, €2.737 billion and the Volkswagen Foundation, €2.4 billion, according to the EFC.
In total, the EFC estimates that expenditure on research by the European foundation sector is approximately €4.2 billion a year - equivalent to 1.9 per cent of EU gross expenditure on R&D in 2008. In some cases, foundations have funded very substantial projects. The Central European University, for example, runs its core operations on the basis of income from a €420 million investment from the Soros Foundation, according to the EFC.
Foundations don’t pursue Grand Challenges
However, data from the Commission’s Eurostat service indicates that just six countries – Denmark, France, Germany, Italy, Sweden and UK – account for 88 per cent of total private, non-profit expenditure on R&D in the EU. In the majority of member states, such spending reaches just 0.5 per cent of the total R&D spending. Moreover, foundations tend not to pursue the so-called grand challenges or other strategic research objectives identified by the European Commission and other policy makers. “Foundations generally see themselves as having a niche role, looking to fund spearheading or path-breaking activities that complement mainstream research,” says Carl Dolan, research forum officer of the EFC.
One notable exception is the Wellcome Trust, which over the past 15 years has played an integral role in UK science policy and in funding strategic scientific infrastructure. It has made major contributions to projects of national – and international – significance, such as the Human Genome Project, the Diamond Synchrotron and the recently approved £500 million UK Centre for Medical Research and Innovation.
In its 2010-2020 strategic plan, the Wellcome Trust argues that issues such as climate change, hunger and rising obesity call for an urgent and coordinated response. “Their complexity and scale will demand new partnerships between governments, academia, industry and charities,” the Trust says.
Flexibility and autonomy
In the main however, Europe’s largest foundations regard themselves as facilitators, rather than engines of change. “I usually feel somewhat uneasy about claims by foundations that they can somehow change the world,” says Krull. “The advantages of a foundation are flexibility, autonomy and speed of response to immediate and urgent challenges.” A good example of this is the way in which foundations quickly stepped in to support researchers in Central and Eastern Europe after the Berlin Wall came down.
In support of this, the EFC contends that foundations tend to be much less bureaucratic than public sector bodies, and are more willing to take risks. “Some foundations have drastically reduced the administrative burden on their grantees, enabling [recipients] to concentrate on their scientific vision,” says Dolan.
About half of the Volkswagen Foundation’s current spending is devoted to what Krull describes as, “Opening up new opportunities for medium-to-long term, high-risk research by backing the most gifted, original and young minds.”
A further 35 per cent of expenditure is on cross-disciplinary research, while the remaining 15 per cent is spent on international research, primarily targeted at sub-Saharan Africa and the southern rim of the former Soviet Union. Current projects include documenting endangered languages and medical research in neglected tropical diseases. Krull stresses this breakdown changes over time and is driven by quality, rather than quotas.
Foundations can play a strategic role
Also emphasising quality over quantity, Ingrid Wuenning Tschol, chair of the EFC’s Research Forum and Head of Science and Research at the Robert Bosch Foundation, says foundations can play a strategic role, nudging the European research community in new directions. “Foundations can make a difference by taking risks and funding activities that aren’t supported by the public sector,” she says, pointing to the Robert Bosch Foundation’s support for research into geriatric medicine earlier this decade, and the recent creation of AcademiaNet, an Internet portal that profiles excellent female researchers, with the intention of bringing them to the attention of academic boards, conference planners and others requiring expert scientific opinion.
Foundations also become very actively engaged in specific research and development projects. For example, the d.o.b. Foundation of the Netherlands recently ran a competition for universities to develop a device that can be retrofitted, to reduce the pollution caused by the millions of tuk tuk taxis on the roads of Africa and Asia.
The d.o.b Foundation is one of the 128 members of the European Venture Philanthropy Association (EPVA), which was founded in 2004 to encourage this kind of active investment and engagement in social or philanthropic causes. Beate Truck, director of the EVPA, estimates that about 50 of its members are directly involved in venture philanthropy, each with a typical investment fund of between €10 million and €30 million.
Venture philanthropy constrained by government policy
Although interest in venture philanthropy is growing, the sector is being held back by government policies in parts of Europe, according to Truck. “Some of our members have complained about the negative tax impact of making social investments, using financial instruments other than grants,” she says. At the EVPA’s annual conference, Ronald Cohen, chairman of Bridges Ventures and the Portland Trust, called for an overhaul of philanthropic regulation, which he characterised as outdated and ambiguous in many countries.
Today, laws governing the formation of foundations and their tax treatment vary widely across Europe. Moreover, the EFC says there are significant barriers to cross-border activity, with tax exemptions often denied to foreign foundations established and based in other countries. “We get tax refunds from France and Finland, but not from Spain and the UK,” says Krull at the Volkswagen Foundation.
Although many large foundations, such as the US-based Gates Foundation and the Michael J Fox Foundation, routinely fund research in several different European countries, European Commission officials agree that an overhaul is needed.
Public authorities at national and EU level need to remove obstacles to the cross-border operation of foundations. At the same time there is a need to foster increased research funding by existing foundations and to encourage the creation of new foundations that back research, “Especially in areas linked to societal challenges,” according to a presentation by Saragossi at a workshop last October on, “The Role of Philanthropy in the European Research Area,” organised by the Belgian Presidency of the EU in collaboration with the King Baudouin Foundation and the EFC.
Saragossi also believes foundations need to better coordinate their research activities with those of the public sector, so that the two sources of funding are combined to maximum effect. “It is a question of better matching supply and demand. We need a culture of giving and asking, and professionalism on both sides,” he says.
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