“If the 20th century in France was the century of associations, the 21st will be the century of foundations”.
The Fondation de France’s recent study  is a masterly illustration of this prophecy.
The results of this study speak for themselves, but let’s take a look back at the origins of this momentum. “This century was three years old…” as Victor Hugo might have written, when the so-called Aillagon law of August 2003 was enacted, giving new impetus to the associative sector that appeals to the public’s generosity. This law was a welcome addition to the law on foundations of July 1990.
I won’t go back over the improvements to the various tax measures it introduced to encourage donations and bequests to public-interest organizations, and refer you to the text of the law..
As far as foundations are concerned, the law facilitates the creation of RUP (Reconnue d’Utilité Publique) foundations, and opens up the possibility of transforming them into sheltering foundations. The text also makes corporate foundations more agile, notably by facilitating access to manual donations for their stakeholders.
The acceleration of the legislative pace will complete the legal framework, making it one of the most advanced in the Western world.
Here are just a few of the milestones marking the beginning of this century:
- 2006: creation of the Fondation de Coopération Scientifique (with an expendable endowment)
- 2007, creation of partnership foundations and unincorporated university foundations.
- 2008: law on endowment funds, enabling the creation of quasi-foundations.
- Finally, on July 21, 2009, the law on hospital reform and patients, health and territories introduced the creation of hospital foundations.
France, which had no law on foundations until 1990, is catching up with its northern neighbors with impressive momentum!
Leaving aside the plethora of static, not to say dormant, endowment funds, the Fondation de France counts almost 5400 endowment funds and foundations, including the 1742 sheltered foundations.
What does this picture tell us?
Recent legislation has led to the emergence of new vehicles favoured by philanthropists and patrons. i.e. philanthropists = individuals and patrons = companies.
Endowment Funds and Sheltered Foundations have been widely preferred to RUP Foundations and Corporate Foundations.
A wide variety of founders – individuals, companies, associations, hospitals, universities, local authorities, etc. – have opted for more flexible and less demanding endowment frameworks.
These entities represent a growing economic weight in the third sector
The €14 billion in expenditure should be seen in the context of the €60 billion weight of the sector. In other words, 0.5% of the number of non-profit organizations now account for almost 25% of total expenditure.
It is, however, regrettable that this excellent study does not specify which expenses, mainly for operating foundations, come from the generosity of the public and companies, and which from day fees, agreements, subsidies or services.
This distinction would have made it possible to determine the proportion of funds raised by operating foundations and by redistributors.
To better understand the dynamics of the data presented in this report, let’s specify which type of structure we’re dealing with.
Operating and distributing foundations are two major types of foundation in the philanthropic landscape. These foundations have different characteristics in terms of structure, operation and mission.
An operational foundation, also known as a “full-service foundation”, carries out activities directly in pursuit of its corporate purpose. It develops its own programs and projects, and in the case of the most powerful, manages its own establishments.
Distributing foundations do not themselves carry out operational activities, but make grants to other organizations working in their field of interest. They are the fastest-growing group in terms of the number of foundations created.
It is important to note that some foundations may have a hybrid nature, i.e. they may both carry out their own actions and support other organizations. Such foundations are often referred to as “mixed foundations”.
It should also be noted that both types of foundation may be financed by an endowment or successive endowments from their founders. In this case, they do not require external support.
Outlook for these two types of foundation
- Endowment funds and foundations
Endowment foundations, whether operational or distributing, clearly have considerable potential, given the increasing socialization of assets and fortunes, whether intergenerational or entrepreneurial. As indicated in the study, more than two-thirds of these are created by individuals and companies who will obviously not be appealing to public generosity.
If we had to name just a few, among the most powerful are the Pierre Fabre Shareholder Foundation, the Daniel and Nina Carasso Sheltered Foundation and the Anyama Endowment Fund.
- Funds and collecting foundations, whether operational or distributing
The development of collecting foundations, whether operational or distributing, is less obvious. It is clear that the creation of this type of vehicle will be less dynamic, or even stagnant, given the strong competition for philanthropic euros.
For redistributing foundations, the path is virtually blocked, unless they are born of a novel fund-raising initiative, e.g. Ze Event., solidarity lotteries, such as Novamedia in the Netherlands, a cause championed by a star: cf. RED and Bono, or by a generous crowd mobilizing millions of donors, like Time for the Planet even though it’s not a foundation.
For operational foundations, if they have not been involved in fund-raising for several years, the barrier to entry becomes prohibitive, as it requires an investment that ensures a distant return on investment.
So, what does this study tell us?
As already mentioned, the rise of foundations marks a real turning point.
It illustrates the concentration of resources in the hands of a few thousand wealthy individuals and powerful corporations.
This paradigm shift continues to raise questions about the democratic representativeness of these organizations and their ability to dictate choices on matters of general interest.
But just as the American philanthropist competes with the State and its satellites, so the philanthropist and patron of the arts in continental Europe complements the action of the welfare state.
In France, the generosity of individual and corporate donors, who have endowed their foundations, goes mainly to social causes and medical research, which gives us hope that the enlightened philanthropic despots will have less control over the general interest.
Holder of a doctorate in organizational science, he has worked for a number of major non-governmental organizations and communications groups, including Fondation de France, Médecins du Monde and TBWA, and is Chairman of CerPhi and Force for Good. Co-founder of several professional bodies: Association Française des Fundraisers, Comité de la Charte de déontologie des organismes faisant appel à la générosité publique, Euconsult, La chaire de Philanthropie de l’Essec. Investor with Heoh, Qu’est ce qui tourne? My Quick Win. He has published several books and articles on philanthropy and fund-raising.
 Francis Charhon