Does philanthropy need marketing?

Over the last decades, academic, practitioner and policy interest in the philanthropic behaviours of individuals and households on the one hand, and on the activities of charities and other philanthropic organisations on the other, has grown exponentially. However, the advancement of multidisciplinary research on philanthropy has faced serious obstacles in Europe, and existing concepts and theories explaining it are still strongly US-based.

Public benefit purpose-foundations, being the typical philanthropic organisation in continental Europe, have been mainly studied from two different perspectives: as legal entities with a special fiscal regime and/or as institutions that perform certain functions for society. At the end of the day, the perceptions among researchers and practitioners resulting from both traditional approaches have turned out to be surprisingly similar. Foundations are perceived as independent economic capital agents, consisting of trusteeship of charitable gifts (the anglo-common-law tradition) or a set of assets with legal personality (the Ancient Rome-origin civil-law tradition), which complement or substitute welfare state arrangements, redistribute income, promote social change, preserve traditions or foster innovation; among other 'public good' functions.

This archipelago-like perception of the foundation sector has resulted in neglect of foundations as research-worthy social or economic agents. Foundations, under the archipelago approach, are a marginal legal form to institutionalise economic capital, i.e. capital that is immediately and directly convertible into money. Even the best-endowed foundations in the world may have limited budgets by comparison with a regional public administration, not to mention a state-wide one. There is an inherent difficulty in mapping the archipelago of foundations existing across continental Europe, given not only national differences in legal and fiscal frameworks, but also the fact that most EU member countries do not have a central foundation register.

This 'unmapped archipelago' situation has led to a certain extent to a standstill in foundation studies, with the exceptions of few countries such as Germany, Spain and France. The Bundesverband Deutscher Stiftungen, the Spanish Association of Foundations through the Institute for Strategic Analysis of Foundations (INAEF), and the Centre Français des Fondations are leading the preparation of systematic directories aimed towards segmented analysis for the sector. Apart from the satellite account initiative for the non-profit sector in general, some few courageous academics are surveying relatively small, non-random samples of foundations, generally selected among the largest in terms of endowment size, to estimate the economic dimensions for each country foundation sector. This means estimating the value to society of a wildly varied and rich forest – including not only trees, but also many bonsais – from the size and characteristics of the few sequoias existing. The picture arising from this exercise is not an accurate map and we still cannot answer the basic question of how many foundations exist in Europe and what do they do but, what is even more important over the medium term, we are completely missing the ecosystem where the trees are born, develop, and die.

My proposal to picture the whole foundation ecosystem would be to utilise two deeply rooted concepts in social science, i.e. social capital and relationship marketing in order to ultimately advance the discussion on why and how foundations are relevant for society. Foundations paradigm the importance of 'embeddedness', that is personal and corporate relations and networks of relations in generating trust and allowing the proliferation of obligations and expectations. This form of social capital is productive, making possible the achievement of certain ends that in its absence would not be possible. The core of relationship marketing is the maintenance of value-adding, mutually profitable, long-term relations between organisations and the actors in its micro-environment. The group or network within which there is extensive trustworthiness and extensive trust is able to accomplish much more than a comparable group without that trustworthiness and trust.

Let’s take a look at some examples: the Gulbenkian Foundation in Portugal, the more than 70 foundations created by Spanish universities, and the corporate foundations created all over the world. The Gulbenkian Foundation is one of the biggest endowed foundations in continental Europe. Its greater value to society, however, probably lies in how effectively it leverages its relationships with the outstanding set of several thousands of former grantees and Fellows who acquired new skills and capabilities with its support and cut across every intellectual elite in Portugal, including for example a former Prime Minister. Most of the more than 70 public and private universities existing in Spain have created foundations. The relationship between universities and university foundations enables employment programmes for graduates, R+D+i programme contracting with firms, volunteer programmes in less developed countries, networking with alumni... which would not be possible within the traditional university framework. And third, many firms have created foundations as a vehicle for implementing their corporate responsibility strategies. Foundations contribute to make these strategies credible. While they improve factor and demand conditions, the competitive context, or related and supporting industries for the firm they are connected to, they also create positive externalities benefiting other constituencies.

These and other examples that may come to mind prove that foundations can become effective generators of social capital if they successfully manage their relationships with relevant stakeholders so that long-term relationships based on trust are developed. I foster the idea that marketing should be used to its potential for managing successfully long-term relations between foundations and other organisations and also individuals.

A sound sense of marketing understood as client orientation helps foundations listen to stakeholders and understand their needs and expectations, and helps them also tailor programmes and projects which really can make an impact by helping fulfil those needs and expectations. A sound sense of marketing understood as value-mediated market orientation helps foundations build trust for partners and causes of their choice. A sound sense of marketing understood as the capacity to design win-win exchanges and collaborations helps foundations build long-term relationships with public and private agents who are key for social change and innovation. That is what relationship marketing is about. Marketing can help foundations complete a map for the archipelago and transform it into an understanding of the ecosystem they are part of. And last, but not least, marketing can help foundations in their fundraising... but this we knew already.

Dr Marta Rey's research interests focus on non-profit management and marketing, civil society, philanthropy and the foundation sector. Dr. Rey also sits on a number of boards of organisations involved in philanthropy and the non-profit sector across Europe and on several editorial boards. She is a Fellow of the Real Colegio Complutense at Harvard University and the Salzburg Seminar-Fulbright programme and is currently visiting fellow at The Hauser Center for Non-profit Organisations at Harvard University.

marta_rey-garcia@hks.harvard.edu
www.hks.harvard.edu/hauser/people/index.html