www.Stiftungen.org

Corporate Foundationsin Germany

Prof. Dr. Hans FleischCEOGerman Association of Foundations

14. June 2010

2

www.Stiftungen.org

Foundations in Germany

State/ governmental

sector(1. Sector)

Corporate Sector(2. Sector)

Civil Society(3. Sector)

500.000 associations17.000 foundations

4. Sector?Hybrid

organisations

Constant growth of Cicil Society

3

www.Stiftungen.org

Foundations in Germany

• Long history

• Middle age:• Church foundations

• Civic urban foundations in free towns (Hanse-towns etc.)

• 19.th century: „Boom“ of civic foundations• Law reform (civil code BGB): foundations as independent legal

bodies

• 1900: 100.000 existing foundations

• First half of 20th century: destruction of majority of foundations (2 world wars, Nazi, inflation)

4

www.Stiftungen.org

Foundations in Germany

Second half of 20th century:

• East Germany: Destruction of most remaining foundations (socialistic dictatorship G“D“R)

• West Germany BRD: Slow but growing recovery of foundation sector;

primarily private persons as founders;

„foundation boom“ since 1990

5

www.Stiftungen.org

181 201

290325 323

385411

466505

564

681

829774 784

852880 899

1134

0

100

200

300

400

500

600

700

800

900

1000

1100

1990 1992 1994 1996 1998 2000 2002 2004 2006

Rechtsfähige Stiftungen des bürgerlichen Rechts

Foundations in Germany

11% 44% 12% -1% 19% 7% 13% 8% 12% 21% 22% -7% 1% 9% 3% 2% 26% Grwoth rate per year

Foundation law & tax reforms 2000/2002

Foundations tax Reform 2007Number of new foundations in each year since 1990

6

www.Stiftungen.org

Corporate Foundations in Germany

• Assets of 17.000 German Foundations:

ca. 100 Mrd*. € +X

• Assets of 20 biggest:

ca. 30 Mrd. € ?

• Expenditures of foundations per year:

ca. 15 Mrd. €

Of this: 5 Mrd interest

2 Mrd donations

*Mrd = US-billions

7

www.Stiftungen.org

Purposes of foundations in Germany

Social32,7%

Science13,3%

education14,9%

art & culture14,4%

environment3,3%

other purposes15,7%

private non charitable

5,6%

(7.815 Stif tungen entsprechen 100%)

Rechtsfähige Stiftungen des bürgerlichen Rechts

8

www.Stiftungen.org

Foundations in Germany

• Various legal forms of foundations

• 90 % of founders: private individuals• of this: 44 % private entrepreneurs

• 10 % of founders: legal institutions (incl. governement, associations & corporate firms)

9

www.Stiftungen.org

Foundations in Germany

Various tax benefits for charitable foundations

• Donations deductible from income/corporation tax:• 20 % of yearly income (private/corporate; if more

donated: deduct transferable to next tax years)

• or 4 %o of yearly turnover (corporate firms; if more donated: deduct transferable to next tax years)

• Plus: 1 Mio € donations to the endowment (one time every 10 years)

• Plus: No inheritance tax for assets donated by last will

• Existing charitable foundation: no income/corporation tax, no turnover tax; serveral other tax benefits

10

www.Stiftungen.org

Foundations in Germany

• Corporate-related foundations: founded by an entrepreneur; the corporation is the donated endowed asset (e.g. Bosch-Foundation, Bertelsmann, Krupp, …)

• Corporate foundations: the corporation is the founder, donates the asset (in the framework of the „normal“ foundation law)

11

www.Stiftungen.org

Corporate foundations in Germany

• approx. 450 (?) corporate foundations

• plus 670 (corporate) foundations of the saving banks (Sparkassen-Stiftungen)

• plus serveral hundred foundation-like mechanisms

• Nearly all major stock corporations (AGs) have at least one own corporate foundation

(e.g. Allianz: 3 foundations in Germany, other in other countries)

12

www.Stiftungen.org

Corporate foundations in Germany

0

2

4

6

8

10

12

14

16

18

bis

50.0

00€

bis

100.0

00€

bis

250.0

00€

bis

500.0

00€

bis

1.0

00.0

00€

bis

2.5

00.0

00€

bis

5.0

00.0

00€

bis

10.0

00.0

00€

bis

25.0

00.0

00€

bis

50.0

00.0

00€

bis

100.0

00.0

00€

bis

500.0

00.0

00€

über 500.0

00.0

00€

corporate other foundations

Assets of corporate* foundations are higher % small medium big

*Sparkassen-Stiftungen (saving banks foundations) not included

13

www.Stiftungen.org

Corporate foundations in Germany

• 53 % of German corporate foundations* have assets between 1 Mio € & 50 Mio €

(Other Foundations: 40 %)

• 10 % have assets of more than 50 Mio €

*Sparkassen-Stiftungen (saving banks foundations) not included

14

www.Stiftungen.org

Corporate foundations in Germany

• Corporate foundations* have higher expenditures than other foundations

• (43 % of corporate/37 % of other spend more than 100.000€ per year) %

0

10

20

30

40

50

60

bis

50.0

00€

bis

100.

000€

bis

1.00

0.00

0€

bis

2.50

0.00

0€

bis

5.00

0.00

0€

bis

10.0

00.0

00€

bis

25.0

00.0

00€

bis

50.0

00.0

00€

über

50.

000.

000€

corporate foundations othe foundations

*Sparkassen-Stiftungen (saving banks foundations) not included

15

www.Stiftungen.org

Corporate foundations in Germany

• Major income usually from interest etc (endowment)

• Often: additional yearly donations from the corporation

Example Telekom-Foundation:

100 Mio € endowment fund

5 Mio € yeary income from interest/dividends etc

5 Mio € donation from Telekom

16

www.Stiftungen.org

Corporate foundations in Germany

A corporate founation is usually one of three pillars:

- Corporate giving

- Corporate foundation (and its expenditure)

- Social Sponsoring

These three pillars are major parts of the overall CSR-activities, which include other elements as well (such as corporate volunteering programs).

CSR is part of the CR of the corporation.

17

www.Stiftungen.org

Corporate foundations in Germany

Corporate foundations

Other foundations

Education 39% 17%

science 33% 13%

Art & culture

27% 15%

Purposes of corporate foundations*:

*Sparkassen-Stiftungen (saving banks foundations) not included

18

www.Stiftungen.org

Corporate foundations in Germany

• New corporate foundations per year

• „Boom“ since 1980 as part of CSR-movement

0

2

4

6

8

10

12

14

16

18

1953

1956

1959

1961

1965

1968

1970

1972

1974

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

19

www.Stiftungen.org

Corporate foundations in Germany

• Corporate foudnations‘s name: name of the corporation usually included, often in combination(Telekom-Foundation; BMW-Kuenheim-Foundation; Allianz environment foundation)

• Corporate identiy of the foundation: 50 % related but partially different logo (compared to the corporation); 50 % same CI as the corporation; usually own but coordinated PR

• Usually fully transparent (finances, activities), own annual report plus inclusion in the CSR-report

20

www.Stiftungen.org

Corporate foundations in Germany

• Highly professional management

• Higher renumeration of staff than at other charitable foundations

• Director: usually a foundation professionel (but sometimes in combination with responsibility for the whole CSR-program)

• Corp. foundation staff usually employed by the foundation (sometimes a mixture)

• Often administrative support from the corporation, financed by the corporation

• Separate form corporate volunteering program

21

www.Stiftungen.org

Corporate foundations in Germany

Activities

• Grant giving and / or own projects (often both); strategic & focused approach beyond traditional corporate philantrophy

• Often partnership with other foundations

• Growing: Partnership with other governemental/public institutions and/or NGOs

• NGOs and public institutions are more prepared to cooperate with the corporate foundation than with the corporation

22

www.Stiftungen.org

Corporate foundations in Germany

• Corporate Foundations: traditional foundations have a slightly different image

• Corporate foundations are the becoming more and more an accepted and appreciated „normality“

• Corporate foundations do not fundraise (no competition to the NGOs)

• Corporate are a player in the foundation field, which is different from the other NGO-world

23

www.Stiftungen.org

Corporate foundations in Germany

• Corporate Foundation: a player in the 3rd sector (foundation part), not just a bridge into it.

• The more a corporate foundation plays its role as a player in the 3rd sector with (limited) independence, the higher is its credibility and therefore higher is the image transfer effect for the corporation

• Corporate foundations bring • professionalism into the 3rd sector / foundation sector and

• stability and sustainability (and thus credibility) into the CSR-activities of the corporation

• transfer know how and networks to the corporation