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Corporate Foundationsin Germany
Prof. Dr. Hans FleischCEOGerman Association of Foundations
14. June 2010
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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
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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)
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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
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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
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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
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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
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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)
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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
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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)
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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)
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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
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500.0
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1.0
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2.5
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über 500.0
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corporate other foundations
Assets of corporate* foundations are higher % small medium big
*Sparkassen-Stiftungen (saving banks foundations) not included
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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
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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
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50.0
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über
50.
000.
000€
corporate foundations othe foundations
*Sparkassen-Stiftungen (saving banks foundations) not included
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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
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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.
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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
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Corporate foundations in Germany
• New corporate foundations per year
• „Boom“ since 1980 as part of CSR-movement
0
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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
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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
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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
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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
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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