A new article by Center Director Lester Salamon published on the WINGS Philanthropy in Focus blog introduces a promising new route to creating endowed charitable foundations through the process we have termed “Philanthropication thru Privatization,” or PtP for short. This process involves capturing for charitable endowments the proceeds of a host of non-traditional transactions under way around the world. These transactions involve assets that are “invisible in plain sight:” they are in the ground in the form of mineral deposits, in the air in the form of broadband spectrum auctions, in foreign banks in the form of stolen assets, and in legal cases imposing penalties for corporate misdeeds. The PtP Project has already identified well over 600 foundations around the world that have gained endowments from such transactions. This brief piece provides a concise overview of the PtP initiative, introduces the asset classes to which this concept has already been applied, and provides examples of the resulting foundations.
The PtP Project is actively involved in promoting the implementation of this concept in locales across the world and would be eager to learn of possibilities in other areas. Please contact us.
Please feel free to share this article with those in your networks. You can read the full article from WINGS Philanthropy in Focus or download the article as a PDF. Below is a brief excerpt from the article.
PtP: A Promising New Route to Creating Endowed Charitable Foundations
By Lester M. Salamon, Johns Hopkins University
Energetic efforts are being made at the present time to promote the development of community foundations or other community-based philanthropic institutions in less-developed and transition regions around the world. A crucial barrier to the success of these initiatives, however, is the general lack of capital to underwrite and sustain their operations. As a consequence, such efforts too often lead to burn-out and frustration among those leading these efforts.
Meanwhile, in many of the same regions where these foundation-building efforts are going starved for funds, enormous transactions are going forward that are transferring huge stores of government-owned, regulated, or subsidized assets into private hands. Unfortunately, these resources are largely hiding in plain sight to advocates of charitable foundations. They are in the ground in the form of royalties from mining and drilling operations; in the air in the form of auctions of broadband spectrum frequencies for cell phone usage; in settlements of court cases involving corporate misdeeds; in sales or leases of state-owned enterprises; in debt swaps; and in transformations of nonprofit or cooperative organizations into for-profit businesses.
If steps could be taken to channel even a small portion of the proceeds of such transactions into community-focused philanthropic endowments, an enormous break-through could be achieved in building a permanent charitable support base for civil society, social enterprise, and poverty alleviation objectives in less-developed regions of the world. For example, if only 5% of the US$700 million in proceeds of the recent sale of the Kenya telephone network to Vodaphone had been dedicated to the creation of a community-focused charitable foundation, the result would have been a $35 million philanthropic institution—many times larger than the existing Kenya Development Foundation and most other foundations elsewhere in Africa.
Fortunately, something quite like this has occurred in a number of places around the world. This includes the creation of enormous private foundations such as the California Endowment out of the conversions of nonprofit hospitals and health insurance plans in the United States; the huge Italian foundations of banking origin out of the privatization of Italy’s previous quasi-public co-op savings banks; the Volkswagen Foundation out of the sale of the state-owned Volkswagen Company in 1960; the Renova Foundation out of a penalty imposed on the Vale and BHP mining companies following the disastrous Marianna dam collapse in Brazil; and a substantial endowment for the Mozambique Community Foundation out of the proceeds of a debt swap. …