Hidden Force – Danish Foundations Putting Themselves under the Spotlight

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As it becomes more and more difficult for Danish civil society as well as for local authorities and the national government to fund new ideas for projects, philanthropic foundations have increased their grants substantially. This has given rise to a new public debate about the role of private foundations in Denmark – a debate to which foundations respond by putting themselves under the spotlight.

by Jacob Møller Overgaard, The Foundations Knowledge Centre

According to the latest available statistics from 2017, grants from private Danish philanthropic foundations and associations amounted to € 2.3 billion. This might not seem so impressive if you come from a much larger country such as Germany, the US, or the UK, but, given Denmark’s small size, this equals approx. 0.8 percent of the total GNP. And this number has gone up in recent years.

As a result, there is a growing public interest in learning more about the nature of foundations: in knowing where the money comes from and what it is used for and in having a thorough debate about where this development is leading us as society.

A vacuum of knowledge

Dane have fostered some of the world’s first industrial foundations. And for a country with a long – and proud – history of private philanthropy, you might think knowledge about foundations would be common – in the same way as Danish associations and the Danish cooperative movement are a part of the school curriculum.

However, the opposite is true. Generally speaking, there is little understanding about the work of foundations and their internal structures. This presents a challenge for foundations when they want to engage in emerging debates.

One simplified, yet illustrative, example may be drawn from a new survey, which reveals that as much as 43% of the Danish population cannot recall even one foundation by name.

Even though foundations provide substantial grants and, in the spirit of modern philanthropy, develop new strategies and take on brand new ways of working with philanthropy, a vacuum of knowledge does not come as a surprise.

A new role for foundations

The Danish public and private foundations are in the process of shaping the role of private philanthropy in the 21st century.

As private philanthropic funds and spending increase, public funds are decreasing in many areas – or, at least, they are prioritised in a way that forces both national and local governments as well as civic organisations to look to private foundations for funding.

This represents a significant shift in the dynamics between society and institutional philanthropy.

Since the development of the Danish welfare state, it has been a custom for national and local government to fund and provide basic services. However, the situation now seems to call for a new definition of what the basics are – and who should finance the rest?

It is only natural that the emergent influence of private philanthropy is met not only with applause but also grounds for questions and even some concern.

Following current debates in the Danish media, one can see that increasing grants to, e.g., public schools, culture and the natural sciences are greeted with both enthusiasm and concern from various stakeholders. What are the consequences of a more active private philanthropic sector? How does the way modern foundations work affect the organisations on the ground they support?

The importance of facts to facilitate such a public debate is evident. There are many questions to examine and to answer.

The Foundation Knowledge Centre

This need for fact-based knowledge is the one of the primary reasons a group of Danish philanthropic foundations and associations decided ago to establish The Foundation Knowledge Centre in December 2017.

Acknowledging that there is a need to support a public debate grounded on facts rather than assumptions or skewed prejudices, they established an association to collect analyse and communicate knowledge about how Danish foundations work and their contribution to society. In addition, the Knowledge Centre helps strengthen the dialogue among foundations themselves to benefit their philanthropic work and their organisations.

Fostering knowledge in general is a central part of philanthropic initiatives by Danish foundations. The latest grant statistics from Statistics Denmark show that, in 2017, no less than 53% of the donations by philanthropic foundations and associations went to scientific purposes. And this sharedoes not even include all knowledge-related grants, since one could further add grants provided for new insights and innovation.

The establishment of the Foundation Knowledge Centre acknowledges that the time has come to increase knowledge about the foundations themselves.

The icing on the cake

One of the core arguments of foundations is that their contributions must be seen as “the icing on the cake”. Hence, society’s fundamental services cannot depend on private philanthropic funds, they argue, because there is no guarantee that foundations are able to sustain the current level of grantmaking.

The most likely scenario is that, at some point, the level of grants will go down and not up. When this happens, it is important that relevant services of the welfare state are not affected.

To some extent, this argument is commonly accepted.

To quote the Danish politician Benny Engelbrecht from the Social Democratic Party, now a minister in the Danish government: “Foundation funding should not become a replacement for our tax-funded model of society, especially when it comes to welfare, where it is critical to maintain free and equal access to welfare services no matter where you live and no matter what specific projects the foundations choose to support.”

But even if this division of responsibility is not commonly disputed in theory, there is an ongoing need to clarify and explain the roles, tasks, possibilities and responsibilities of foundations.

The problem and power of diversity

Adding to the mix of challenges is the great diversity among foundations. Some donate billions, while others donate in the thousands. Some own and control large businesses, and some are strictly speaking not even philanthropic foundations but associations working as such.

While some rely on more traditional philanthropy and grant-giving, still others seek to become more strategic and catalytic, working on collective impact, etc. This diversity is surprising and confusing at the same time, even for someone like me, who works in the field every day.

On the one hand, the diversity among foundations is a part of the problem. It makes it much more difficult to explain what the sector is all about than if every foundation acted the same way. On the other hand, of course, the diversity is also one of the superpowers of foundations. Diversity is what ensures one of the most important features of the private philanthropic sector: that, all seen as a common sector, they can support almost any kind of idea one can think of – from the smallest community activity in the smallest football club in the smallest city to grand, wide-scale solutions to climate change or global poverty.

Embracing this diversity, therefore, is an important part of the task of shedding more light on the roles, approaches, possibilities and responsibilities of foundations. And in my experience, Danish foundations are well aware that they themselves must participate in creating this clarity just as they are aware that it is a never-ending task. As society changes and develops, so will the role of foundation and philanthropy too.

by Jacob Møller Overgaard, The Foundations Knowledge Centre

Jacob Møller Overgaard is Head of Communications in The Foundation Knowledge Centre, an association of Danish philanthropic foundations. Previously PR manager and editor at the philanthropic association Realdania and funder of the private publishing company Møller Publishing.