Foundations as an engine for change

Margarita Velásquez. General Director. IE Foundation

11 October 2013

Foundations account for 1% of Spain’s GDP, employ 200,000 workers, and benefit 23 million people. What’s more, they can also serve to fuel economic change.

For some years now we have been seeing a great many changes in European foundations, changes that had already been taking place at a steady rate, but which accelerated with the onset of the crisis. Organizations like the European Foundation Center, Asociación Española de Fundaciones, other European associations, and DAFNE (Association of Donor and Foundation Networks in Europe), have been working tirelessly with foundations to identify the challenges and changes required, but I believe that although we are getting closer to our goals, there is still room for improvement. 

Conclusions reached at the “Foundations as an Engine for Change” workshop held on October 1 at IE Business School” include that we are all aware that we need a European Statute of Foundations, a marked change in the legal framework, a reduction of barriers between countries in order to facilitate the work carried out by foundations in different geographic areas, greater transparency, and more professionalization among directors in the field. It also goes without saying that we need new strategies for fundraising and better communication.  In short, we need to strengthen the sector, which according the Spanish Association of Foundations provides employment for some 200,000 workers in Spain, and generates costs of some 8.5 billion euros. Moreover, the sector accounts for 1 % of Spanish GDP and benefits over 23 million people, being positioned as an independent and sustainable sector given that over 80% of its revenues are derived from private participation.  The sector plays a key role in Anglo Saxon countries, serving as an effective bridge between private and public functions, being accompanied by a “giving” culture which places a value on public services, which translates into a sense of responsibility and contributions from everyone (in addition to taxes).

But, how does this work when we thank about Foundations as an engine for change in Spain? Many foundations are facing mergers, changing income models, impact on their services, closures, etc. We are really looking forward to the new sponsorship law which has already improved figures in other European countries, like France, for example. Said law must be accompanied by cultural change. If not, it will not have the impact we are hoping for. We need a new sponsorship law that can help us to meet new challenges, to ensure that social function is not only left up to the state, and that individuals and companies make a greater contribution to rises in productivity, competitiveness, research and knowledge transfer. If this doesn’t happen, any improvement will be incidental. We need to foster cultural change in order to bring about economic change.

It is true that foundations are facing the same problems as business organizations, such as cost reductions, the search for efficiency, competitiveness and innovation, the need to launch new products and services…  The difference lies in the essence of what foundations are and their objectives, which is something we have to constantly remind foundation directors, patrons, sponsors, etc. A foundation’s objectives are set out in its statutes, and a not-for-profit company has a different economic model, a business model that governs the way revenues are generated and the way in which resources are managed to ensure social impact. Foundations are not for profit, but that does not mean that they are willing to assume losses.

Investment is something that should transcend the short term and which should be deferred in time, but the current situation means that companies and foundations have plenty of reasons to be focus on reducing costs.

Foundations can fuel the right kind of debate in fields related to R+D+I, debates which society has not paid enough attention to, to the extent that discourse between companies and other key players has often been been disrupted. Foundations are an excellent tool for ensuring that “more responsible” companies can manage social issues in a streamlined and effective manner. They provide a platform for R&D projects, in order to develop a new relational model.

Hence we are working on cultural change, the income model, recognition of donors, the incorporation of technology as a vehicle for transparency and efficiency. We are also working on the professionalization of foundations, and hope that the long-awaited sponsorship law will be applied in such a way that foundations really will serve as an engine for change in Spain.
Published on theVía@IEBusiness blog of ElPaí 


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