Philanthropication thru Privatization
A crucial barrier to the development of community foundations and other community-based philanthropic institutions in less-developed regions of the world has been the general lack of capital to underwrite their operations. One promising route to solving this dilemma may be to channel into charitable endowments all or a portion of the proceeds of a wide array of "privatization transactions" in which public assets are transferred into private hands.
This process was identified by Dr. Lester M. Salamon of the Johns Hopkins Center for Civil Society Studies and coined as “Philanthropication thru Privatization” or “PtP.” PtP be defined as a transaction in which all or a portion of the proceeds resulting from the sale or other transfer of public or quasi-public assets are dedicated to the creation or expansion of charitable endowments under the control of meaningfully autonomous private charitable institutions.
PtP is not just an abstract idea, moreover. Indeed, some of the largest and most reputable foundations in the world, such as Germany's Volkswagen Foundation, Italy's foundations of banking origin, New Zealand's network of "community trusts," Belgium's King Baudouin Foundation, Spain's massive "la Caixa" Banking Foundation, and over 200 health conversion foundations in the U.S. have all resulted from, or been enlarged through, a PtP process.
To date, nine identifiable asset classes have been involved in such transactions, including: 1) state-owned enterprises; 2) other state-owned property; 3) debt swaps; 4) royalties from state-regulated businesses; 5) transformations of nonprofits or mutuals; 6) stolen assets; 7) stranded assets; 8) penalties arising from corporate misdeeds; and 9) broadcast spectrum auctions.
The PtP Initiative
With a grant from the Charles Stewart Mott Foundation, EWMI launched a “Philanthropication thru Privatization” (PtP) project in 2008 to explore and promote the PtP option. The PtP Initiative is the first concerted effort to pursue this option for creating indigenous charitable endowments out of the proceeds of privatization transactions and has received support from the Charles Stewart Mott, Volkswagen, King Baudouin, la Caixa, and Ford foundations, as well as from a coalition of eight Italian foundations of banking origin. The project was founded by Dr. Lester M. Salamon, of the Johns Hopkins Center for Civil Society Studies, and directed by him until his passing in August 2021. Dr. Salamon was assisted by a robust international team of Project Associates; an Advisory Committee chaired by Dr. Wilhelm Krull, General Secretary of the Volkswagen Foundation; and a network of PtP Exploratory Committees operating in different regions of the world, many of whom remain involved in the project following Dr. Salamon's passing.
To date, the Initiative has:
- Identified 643 PtP foundations with over US$201 billion in assets
- Conducted detailed case studies of 22 of these foundations;
- Produced a major report, Philanthropication thru Privatization: Building Permanent Endowments for the Common Good, analyzing how these foundations came about and how they have performed;
- Organized a blue-ribbon Advisory Committee;
- Undertaken a variety of dissemination events, including a two major PtP international conferences;
- Launched a series of "How-to" Booklets designed to acquaint citizens with how to apply the PtP approach to the various asset classes in which it has surfaced; and
- Launched a series of detailed case studies of existing PtP foundations.
Next steps include:
- Continued dissemination of the PtP idea through presentations and meetings with key stakeholders;
- Continued assembly of examples of PtP foundations;
- Publication of additional How-to booklets and case studies;
- Organization of additional PtP Exploratory Committees; and
- Technical support of pilot implementation projects.
- Towards a Digital Equity Foundation: Best Practices for Governance, Accountability, & Transparency for Foundations Established with Public Assets by Charles Bell
- America's Health Conversion Foundations: A PtP Success Story by Charles Bell
- To close digital equity gaps, US should endow a private Digital Futures Foundation by Lester M. Salamon and Michael Calabrese (Boston Globe)
- How to Close America's Digital Equity Gaps: Toward a Digital Futures Foundation by Lester M. Salamon and Michael Calabrese
- Viewpoint: A Vast New Source for Social Purpose Finance by Lester M. Salamon (Stanford Social Innovation Review)
- Spain's "la Caixa" Banking Foundation: A Global PtP Model by Lester M. Salamon and Juan-Cruz Alli Turrias
- Where Should All the Stolen Money Go? by Lester M. Salamon (World Financial Review)