Legitimacy of Philanthropic Foundations: United States and European Perspectives

In Search of Legitimacy: Similarities and Differences Between the Continents

In Search of Legitimacy: Similarities and Differences Between the Continents Mattei Dogan Legitimacy is a belief, not a legal prescription that can be implemented by a ruler’s decree. Foundations flourish only in democratic regimes, where they are expressions of the civil society. The legitimacy of philanthropic foundations involves the belief that they are the most appropriate institutions to fill certain social functions in the sense that they are considered more efficient and more sensitive to the needs of the society than the state bureaucracy or the liberal market. Comparing the functions of foundations on both sides of the Atlantic is not an easy task. The difficulties come from the fact that we have on one side only one country under study, and on the other thirty extremely diverse countries differing in size, standard of living, historical heritages, and national legislations. We are facing, in fact, two kinds of comparisons: one, within Europe, the other across the Atlantic. It is possible, however, to underline significant analogies between the two continents. On both we notice a process of secularization over the last century. In the more distant past, most foundations were built on religious foundations because some believed that by stripping themselves of their wealth they would earn or deserve divine mercy and pardon. Such a philosophical conception had enormous beneficial consequences for the underprivileged because it alleviated their suffering . In Europe this religious motivation generated numerous institutions such as hospices, orphanages, and hospitals that received all kinds of people regardless of confessional affiliation, such as those forgotten by the state and the market. One example among many is that, of the twenty most important hospitals in Paris today, nineteen were created long ago as private religious foundations, some of them by wealthy and pious widows. Today all are financed by the government. A proof that contemporary pluralist democracies cannot function properly without multiple intermediary private organizations is the fact that in almost all European democracies the state directly subventions philanthropic associations, and even foundations. In France, for example, it was noticed on the occasion of the centenary anniversary of the 1901 law concerning the freedom of associations that the state had, in the previous year, furnished about 60 percent of the total budget of the 800,000 recognized associations—from taxpayer revenue. These associations ensure public service missions for the state and in place of the state. In this massive subvention is irrefutable proof that the state needs intermediate organizations, particularly the philanthropic sector. Certainly the state prefers to help associations rather than foundations, which have their own endowments and thus do not depend on the state. At the same time, the state helps both by allowing tax reductions. The number of foundations is an indispensable dimension in evaluating their role. It is not a complete one, however, even if the calculation is made by millions of inhabitants (ignoring the size of the countries). The number of foundations and their sizes and scopes vary enormously within Europe. To explain this a variety of factors must be taken into account, two of which being fiscal legislation and, particularly , the threshold for building a foundation. The minimal capital, to take one example, is much higher in France than in most other European countries and the United States. To take another, there is at least one fiscal foundation paradise. The smallest country in Europe, Liechtenstein has as many family foundations—30,000—as it does families. Helmut Anheier and Siobhan Daly have explored this statistical European universe and offer meaningful explanations (see chapter 8 in this volume). Why do foundations play a more important role in the United States than in Europe? The first explanation that comes to mind is the space that the state allots to the civil society, the place of the so-called welfare state. A basic difference between the United States and Europe is in the amount of the gross national product collected and redistributed by the state. Excluding the military budget, which, for geopolitical reasons , is devolved to the “inadvertent empire” the proportion of the GNP controlled by the state is, in Europe, twice as high as it is in the 274 The Legitimacy of Philanthropic Foundations United States. Within Europe it varies from more than half in the Scandinavian countries and France to about one-third in Ireland and Greece. The stronger role of the state in Europe can be...