Historically, foundations are among the oldest existing social institutions. Their origins are visible in antiquity, with roots in Plato's Academy in Greece and the Library of Alexandria in Egypt. Throughout the Middle Ages, foundations were largely synonymous with religious institutions operating in the fields of health and education, and as orphanages, hospitals, schools and colleges. Being an integral part of the feudal social structure, the governance and operations of foundation boards frequently combined both aristocracy and clergy. However, from about the high Middle Ages the emerging strength of the urban middle classes and the role of trades or crafts guilds meant that the bourgeoisie gradually began to replace the gentry and clergy as the dominant founder--a trend amplified during the industrialisation process in the nineteenth century.
Nevertheless, not all countries saw growth in the number and influence of foundations during the early industrialisation phase. Being identified with the ancien regime, foundations and associations remained banned in France after the Revolution of 1789, and faced a highly restrictive legal environment until the twentieth century. Indeed, the state kept a watchful, frequently distrustful eye, on foundations in many countries. For example, in Austria, the state attempted to appropriate foundation assets to fill budget gaps at various times from the seventeenth to the nineteenth century, and transformed university foundations into governmental institutions during the eighteenth and nineteenth centuries. In addition, for the first four decades of this century, the European foundations world suffered greatly from the political and economic upheavals of that era. The American experience however, has been very different. While Europe's foundations faced great uncertainty and frequent decline, US foundations moved to the forefront of organised philanthropy, with the emergence of large-scale philanthropic foundations. These new foundations did not adopt the more traditional charity approach of directly addressing social and other public problems, but aimed at exploring the causes of such problems systematically in view of generating long-term solutions. Given the significance of this new orientation of foundation work and the large amount of resources that went into it, the modern foundation is often perceived as a genuinely American phenomenon.
What is a foundation?
The language and terminology of foundations is varied, highly complex and sometimes confusing. At one level, foundation, fondation, fundacion, fundacao, fundazzione, Stiftung, stichting, stiftelse, idqmla, or wakf, share a common image: a separate, identifiable asset (the root meaning of fund, fonds) donated (the root of stift) to a particular purpose, usually public in nature (implying the root of philanthropy). Even though most legal systems incorporate the ancient Roman legal differentiation between foundations based on some core asset (universitas rerum) and associations (universitas personarum), prevailing reality seems less clear-cut. The various legal traditions and systems define and treat foundations rather differently and registration, legal practices and oversight regimes vary accordingly, sometimes even within the same country, so there exist the possibility for a many types of foundation.
A profile of foundations
At the most fundamental level, an accurate assessment of the size of foundations is hampered by a lack of basic statistics. With the exception of the United States and its more than 40,000 foundations as of 1995, most countries can at best offer rough estimates of the number of foundations. The British Directory of Grant-Making Trusts lists about 2,500 foundations; in Canada, we find about 850; the Portuguese foundation directory lists about 250, and the Australian Directory of Philanthropy includes about 400 trusts and foundations. Moreover, there are about 7,000 foundations in Spain, yet less than 500 autonomous foundations in France and around 600 foundations in Austria.
At least three countries show relatively high number of foundations. In Sweden, estimates reach as high as 50,000, although probably only around 8,000 are of any significant size; in the Netherlands, some 100,000 entities are registered as foundations, and for Switzerland, Wagner reports 21,500 foundations as of 1996. In each of these cases, foundations are typically not grant-making institutions. In Sweden, foundations, particularly in the past, were a means of preserving family wealth, i.e., served a dynastic as well as a familial welfare function; in the Netherlands, foundations serve as the legal form for many social service providers and educational institutions as well as church-related trusts. In Switzerland, nearly two-thirds of its foundations are social insurance and pension funds set up for employees.
Foundations appear to exist in most parts of the world, either as genuine institutional forms such as the wakf system in the Islamic world or as a result of the implementation of the civil or common law systems by the colonial powers in much of the developing world. If the estimates of about 1,700 foundations in Argentina and 4,000 foundations in Korea or the fact that about 3,600 new foundations were established in Turkey over the last 30 years is any indication, however, it becomes clear that the foundations are not a Western phenomenon.
The reach of foundations
In Europe, two fields clearly dominate the profile of foundation activity: education and research, with an average of 30 percent, and social service (25 percent). Together, both fields account for over half of foundation activities so measured. In fact, education and research, and social services are the main categories in 8 of the 15 countries reporting. Adding health care, with an average of 17 percent of foundation activity, pushes the total share up to 71 percent. Art and culture accounts for the third largest share of foundation activities in Europe. Some countries show clear concentration in one field particularly: this is the case for health care foundations in France, housing foundations in Ireland, international activities in the Netherlands, and cultural foundations in Spain. Such concentrations are the result of specific historical developments, such as urgent demand for affordable housing in early twentieth century Ireland, or institutional effect, such as the prominence of large health care research foundation in France.
The growth and function of foundations
More foundations were created in the last two decades than in the three decades before, and more foundations were established after 1950 than prior to that date. In other words, foundations in Europe and the US are essentially products of the postwar period and of the last three decades in particular. Two out of three European foundations were established after 1970. However, for Europe, three growth patterns seem to emerge.
According to Prewitt, foundations can fulfil four basic functions, yet the extent to which foundations fulfil a special role or function remains a matter of some controversy. Prewitt suggests that only the pluralism argument could withstand closer empirical scrutiny for serving as the 'legitimating theory' of foundations. Whereas foundations may create and preserve pluralism, and thereby increase the problem-solving capacity of societies, they may not, and if so only to some limited degree, be redistributive, efficient and change-oriented.
Politics, prosperity and foundations
It is because of a degree of political stability and economic prosperity that foundations in Europe appear to be experiencing some kind of a renaissance. This foundation boom follows, with a hiatus of nearly 100 years, the previous foundation boom during the industrialisation period of the late nineteenth century. As in previous eras, persistent policy options and dilemmas have come back on the political agenda. And it is in the context of these policy options and dilemmas that our knowledge about foundations matters. Among these are:
Who can decide on the use of wealth? From the eighteenth century experience, which saw foundation assets that could otherwise have been used productively withdrawn from the economy, to concerns about taxation and equity today, foundations figure prominently in public life. Should the fate of fortunes, large and small, be left primarily to individuals, or does government, as the representative of society, have some moral or political priority over the use of wealth?
Who is responsible for delivering public and quasi-public good? If governments do no longer see themselves as the party solely, let alone primarily, responsible for social security, welfare, education, culture or many other fields, who, and under what conditions, has legitimacy to act in the public interest? Surely defining the role of foundations is crucial in this respect.
To what extent can governments allow private interests to influence the political agenda? All governments, be they autocratic or democratic, face the same dilemma: independent actors like foundations can create alternative power centres. In autocratic regimes, this fear is obvious, but it is subtler in democracies. Ultimately, foundations, unlike democratic governments, are not answerable to the electorate, which creates profound accountability problems. And unlike interest and lobby groups, foundations are typically not answerable to specific members and stakeholders who might control or own them.
It is in this wider political context that the future of foundations in Europe, the US and other parts of the world will be decided, and which will lead to a continued repositioning and redefinition of their role in the twenty-first century.
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