Philanthropy: Opening Up to Charity

As government budgets shrink, European companies are starting to fill the void

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To celebrate the 100th anniversary of the Bavarian machinery company his grandfather set up in 1901, Richard Scheubeck and the firm's other family owners decided to create a charitable foundation. They put in $1.1 million, and Scheubeck encouraged the company's suppliers and business partners to make donations. With more than $1.4 million now in its coffers, the Scheubeck-Jansen Foundation has enough to fund its initial project: the first professorship in sensor technology at nearby Regensburg University of Applied Sciences. "We wanted to do something for the region, to set a cornerstone for a new industry cluster," says Scheubeck, 54, who chairs the foundation and serves as managing director of the family holding company.

Until recently, such generosity would have been unusual--unwanted even--in Germany. By tradition it was taxpayers, not foundations, who funded university chairs. But Germany is cutting back its spending on higher education, creating a need for charity. So far the technology position is the only privately funded professorship at the school. But at a rival university across town, charitable foundations are funding five professorships, and four more are on the way.

A new wave of business philanthropy is breaking across Europe. Corporate giving is commonplace in the U.S., where a century ago the Carnegie Corporation and the Rockefeller family pioneered a new type of corporate altruism. Their foundations remain models for companies and wealthy business people, including Microsoft's Bill Gates, whose family foundation is one of the world's biggest. In Europe, however, with the exception of Britain, corporate-giving traditions were wiped out by war, inflation and the growth of the welfare state, which left firms with little incentive to dole out funds. Fueled by high taxes, governments have carried the burden of social justice. If firms gave at all, they sponsored causes that might further their business or extend their marketing. That's changing, as governments squeeze their budgets and a new, less self-interested type of charity takes hold.

There has been a sharp rise in the number of not-for-profit foundations throughout Europe. And a network of foundations is beginning to lobby for pan-European legislation. According to the Brussels-based European Foundation Centre, about a quarter of the 61,000 foundations in the European Union were established in the past decade. In Belgium one-third of its 323 foundations were created after 1990. Growth is particularly strong in Germany, where more than 3,000 of the nation's 12,000 foundations have been created since 2000.

Rien van Gendt, executive director of the $1 billion Van Leer Group Foundation, is one of the leaders of the new breed of philanthropists in Europe. The foundation, which focuses on helping young children, has blazed a trail by spending 95% of its grant money outside its home country, the Netherlands. And unlike most European foundations, it has severed ties with its corporate founder, the Van Leer packaging company--a move that gave it independence and credibility. "I always advise firms to find their philanthropic interests far from their corporate goals," says Van Gendt, who is now spearheading an initiative to persuade European foundations to spend more money abroad. "That way it's not all perceived as an intelligent marketing effort."

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