Switzerland, an innovation hub for international philanthropy

“If you always do what you have always done, you will always get what you have always got” taught us Albert Einstein. This is true in our daily business lives and is equally true in philanthropy. Like in any other sector, philanthropy must adapt to a fast changing world and the old days where donors were asking themselves ”which organization to support and for how much” are largely gone.

Nowadays, philanthropists are looking to make an impact during their lifetime and are often involved in the projects they support. They go beyond the making of a gift by leveraging their skills and networks in order to support their philanthropy projects. In doing so, they surround themselves with professionals who can accompany them on their philanthropic journey, whether it is on the selection of projects, the structuring side (e.g. the creation of a family foundation or a personal fund within a hosting foundation) or the investment of the capital contributed (e.g. “Impact” or “Mission Related Investment”).

But to generate change, one needs innovation. This in turn requires the creation of a favourable ecosystem where people can connect, interact, debate and learn from each other. If, on top of that, the legal, tax, regulatory and supervisory frameworks surrounding these people are conducive to their intended activities, you have probably found an “innovation hub”. As far as international philanthropy is concerned, that hub has a name: Switzerland.

A city like Geneva, where Andre Dunant decided to create the Red Cross, illustrates perfectly the point. It is a rich city with numerous individual and corporate entrepreneurs and donors. Geneva provides useful links to experts from international organizations, NGOs and international conferences in areas such as human rights, environment, development, peace and refugees. These specialists might be available for exchanges and collaboration on philanthropy projects. It is also an international financial centre, where one can draw on the banking sector as well as asset management and structuring capabilities around the establishment of philanthropy foundations. The local authorities contribute to that dynamism by implementing initiatives aiming at simplifying or reducing the delay for processing a new foundation’s set up application. They collaborate closely with organisations like “SwissFoundations”, an independent body representing Swiss public foundations with a view to share knowledge and experiences through topical round tables. Together they work at building bridges between the philanthropic and the public sectors. This offer has been completed by the establishment in 2017 of the Geneva Centre for Philanthropy at the Geneva University, which aims at supporting the international development and promotion of Geneva as a platform for philanthropy.

Beyond Canton of Geneva, the Swiss philanthropy ecosystem is complemented by other academic initiatives like the creation by SwissFoundations in 2008 of the Centre for Philanthropy Studies (CEPS) at the Basel University. CEPS is the first interdisciplinary research and information centre for foundations and philanthropy in Switzerland. Last but not least, a new Chair on Family Philanthropy has been launched at IMD, the internationally based business school in Lausanne. Interestingly the Chair was created by a family business called Debipharm. The aim of the chair is to increase the social and financial impact of family philanthropy. It facilitates the creation of best practices and is the source of methodology to strengthen the analysis, decision-making processes, evaluation criteria, and governance in the area of family philanthropy. Another objective of the chair is to build upon and transmit common values to businesses and across family generations through philanthropy.

It is therefore no surprise that the sector of Swiss philanthropy foundations confirms its positive evolution observed over the last 5 years. With a total of 13.172 foundations and 349 new foundations established in 2016, Cantons of Zurich, Vaud, Bern and Geneva are the driving forces of such growth. To put these numbers into a European perspective, Switzerland shows a foundations’ density per 10,000 inhabitants of 16 against 2 for Germany and less than 2 for countries such as France, Spain and Italy.

It is also interesting to note the evolution of the philanthropic themes of Swiss foundations. Over the last 10 years, there has been a marked increase in the number of foundations active in the domains of research and education (+21%), environment (+50%) and international activities (+53%). The trend for newly created foundations is also to have broader goals, giving them more room to evolve over time.

Such a fertile territory makes Switzerland a trendsetter in international philanthropy with a couple of areas of particular expertise. One of them is the set up a personal philanthropic fund within a hosting foundation as an alternative to bespoke family philanthropy foundations. Whilst not a new concept as such, only a dozen of them have been established over the last 10 years, like the Swiss Philanthropy Foundation (SPF) in Geneva. With an initial starting capital or through an annual contribution, the fund’s assets are held in a segregated account, which is kept completely separate from the umbrella foundation’s other assets. Founders are not anymore the legal owners of the gifted assets but can suggest a preferred custodian bank and asset manager given the independence of the hosting foundation. The fund can be named according to the family’s wishes. The beauty of it is that you can focus the founder(s) efforts on achieving their philanthropy goals instead of being bogged down with the governance and administration burden of running a foundation. It is also cheaper to run. The funds are managed by a steering committee that includes the founder(s) or their representative and at least one member representing the hosting foundation. It can take as little as a few weeks to set it up.

Another area of excellence for Switzerland is sustainable finance. This refers to any form of financial service integrating environmental, social and governance (ESG) criteria into the business or investment decisions. Green bonds, impact investing, credits for sustainable projects, microfinance and active ownership, all fall under the heading of sustainable finance. Under the leadership of the Swiss Sustainable Finance (SSF), an association founded in 2014, more than 90 members from the financial services sector, universities, the public sector and investors are promoting sustainable finance by informing, educating and catalysing growth. I have witnessed as member of SPF Financial Commission that ESG compliant investment is becoming an increasingly important topic on the donors’ agenda. It requires the involvement of innovative service providers who can provide an initial sustainability assessment of the securities portfolio and assist to clarify milestones for an evolution towards a more effective ESG impact. It then goes on with the reconstruction of the portfolio with a view to maximize both performance and positive investment decisions in line with the principles of sustainable development.

A last area worth mentioning are the many examples of successful cooperation between Swiss based foundations to achieve better and quicker results.

If you were still looking for evidence of Switzerland as an international philanthropy hub, I would encourage you to have a look at the distinction “GREAT!” recently distributed to 10 philanthropic initiatives selected by Swiss Philanthropy Foundation Council to celebrate the 10 year anniversary of the foundation. It is a firework of dynamic, innovative and diversified initiatives promoting philanthropy. But at the end of the day, all this has only one purpose: to encourage those who wish to start a philanthropic journey to do so, and to offer them the broader toolbox to achieve it with passion and professionalism.

 

Published by eprivateclient, December 4, 2017

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