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Miriam Levy Turner's recent article looks at Philanthropic Foundations

18 December 2018

Miriam Levy Turner's recent article looks at Philanthropic Foundations

There is a growing need for professionalism among council members of charitable foundations; in this article Miriam discusses why:

By Miriam Levy Turner; Managing Director - Whitmill Trust (Suisse) SA 

(This article first appeared in E-Private Client's Switzerland 2018 newsletter)

Since the start of the millennium, Switzerland’s number of “public service and tax-exempted” charitable foundations has increased from around 8,000 to over 13,000, according to a report prepared by CEPS, SwissFoundation and the Centre for Foundation Law at the University of Zurich. Furthermore, the value of the time volunteered by individuals in Switzerland to acting as Council members has been estimated at around 27 billion Swiss francs (this includes association, and both formal and informal foundations).

The growing number of foundations, increased networking and exchange of shared experience, together with a range of diverse initiatives, desire to innovate and develop best practice by those professionals at the heart of the industry have been the catalysts for increased professionalism within this sector and a drive for greater transparency.

 

The 2018 SwissFoundation report, also noted that as well as a move towards a more professional approach there is also an increased focus on one improved governance, compliance with regulations and international directives. According to the CEPTS survey in 2012, philanthropic foundations in Switzerland have amassed over 100 billion Swiss Francs of assets under management however the distribution is not evenly spread, with the majority of these monies being held by a very small number of very significant structures. The study reveals that over 85 percent of the philanthropic foundations have less than 5 million Swiss francs in assets and over 80 percent of those do not support or maintain any permanent personnel or infrastructure.

Before joining a foundation Council for the first time, there is often uncertainty among individuals regarding the finer details involved in the role of a Council member. For the uninitiated and where members are passionate about the cause being promoted, they can easily end up giving their time up very generously. Not all of that work will however necessarily qualify as governance, and can lead to the lines between governance and nongovernance related functions blurring. This can be problematic especially if the main role of the Council and its members is to provide sound governance and conduct impact assessments of how funding is benefiting underlying projects and activities.

Certainly for some of the less well funded foundations the lack of available resources, combined with the continuous quest to raise funding in support the organisation’s activity can cause stresses which are particularly associated with the voluntary side of the Council member’s role, versus the role of paid professional who service the larger philanthropic enterprises. These stretched circumstances and lack of resources can lead to Councils often comprising of uninformed and potentially unprofessional members, who will potentially be ignorant or unfamiliar with recent change in regulations, risk management techniques and lack general knowledge and experience of the sector itself, which is often made up for with unbridled enthusiasm.

When asked how they reached the role of Board Chair a 2016 survey surprisingly informs us that circa 10 percent of Council members step-up as a last resort and that less than four percent are properly groomed for the position.

So how does this divide get bridged? How does this sector improve the professionalism and knowledge base of the individuals involved?

Is the answer increased regulation? Is it about better training for volunteers and professionals alike, is it a mixture of the two?

The management of a company whose prowess is reflected by its commercial success or failure, contrasts sharply with management of the charitable sector where success or failure is less easily measurable. Unlike in a Company a charitable foundation often lacks the right structure and tools to detect problems in an organisation or for that matter apply quick and efficient changes to the governance and management control once problems are identified. Experienced Council members forming part of the board, well-structured governance and policies and procedures can be key to delivering results.

 

 

In spite of each Council member often being a specialist, who is a highly regarded professional in their own particular field, it is not unusual for there to be a lack of understanding regarding the management and operation of the foundation. It would be interesting to see how a Council adjusts to problematic circumstances and how quickly they can, depending on their composition and structure; (i.e. experienced professionals vs enthusiastic volunteers or a combination of the two); apply effective change to improve governance and performance.

There are a few organisations who provide training and courses for those working in foundations, and for those seating on foundation councils. In the Lemanic area, the SwissFoundations in Geneva and the Center for Philanthropy Studies (CEPS) established by the Association of Swiss Grantmaking foundations in Basel in 2008.

Their aim is to improve both the understanding of foundations and increase knowledge around strategic philanthropy as opposed to non-strategic charitable giving.

Furthermore, the CEPS provides a direct benefit for foundations and other non-profit organizations through executive education and coaching, other available seminars are given by Swiss Philanthropy Foundation a Geneva based non-profit hosting foundation established in 2006, as well as “Giving Women” with a view of building a community of informed female philanthropists. It also aims to provide support through the shared capabilities of each of its members along with seminars and courses.

Another such public establishment is the International Geneva Welcome Centre (CAGI) founded in 1996 by the Swiss Confederation and the Canton of Geneva. The CAGI mission is to facilitate the installation and integration in the Geneva and Lemanic region of international civil servants, members of permanent missions, consulates, NGOs, Multinational Corporations, their families as well as smaller membership associations. 

Sharing good practices, through articles, seminars, conferences and specialist training programs are key drivers in improving knowledge and professionalism among volunteers and professionals alike leading to better governance and monitoring of how resources are deployed, which in turn will result in better impact investing. Not only is this necessary to the development of Council members, but it is also in the interests of the donors themselves and will in the long term increase confidence in the status of philanthropic foundations and their administration in Switzerland.

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