Philanthropic Foundations And Social Welfare: A Comparative Study Of Germany, Sweden And The United Kingdom (England) 3658284986, 9783658284985, 9783658284992

Table of contents :
Acknowledgment......Page 5
Table of content......Page 6
List of tables......Page 10
Abbreviations......Page 14
1.1 Research problem and broader research context......Page 15
1.2.1 The concept of embeddedness......Page 21
1.2.3 Social welfare field......Page 22
1.3 Thesis outline......Page 23
2 Theoretical framework......Page 24
2.1 Welfare regimes and the underlying logic of country differences......Page 25
2.2.1 Short data overview – Government social welfare spending, NPO sector and foundations......Page 31
2.2.2 Varieties of Capitalism – Typology and propositions......Page 35
2.2.3 Three Worlds of Welfare Capitalism – Typology and propositions......Page 40
2.2.4 Social Origins – Typology and propositions......Page 49
2.3 Summary and implications......Page 55
2.3.1 Reflection on the heuristic procedure of the typology analysis......Page 56
2.3.2 Concluding remarks for the theoretical framework......Page 57
3.1 Plan of inquiry......Page 59
3.2.1 The Varieties of Capitalism propositions......Page 62
3.2.2 The Three Worlds of Welfare Capitalism propositions......Page 64
3.2.3 The Social Origins propositions......Page 66
3.3 Foundation sector data from a comparative perspective......Page 69
3.4.1 Germany......Page 70
3.4.3 England......Page 71
3.5 Analysis and Coding......Page 72
3.6 Conclusion......Page 74
4.1 Brief historical perspective on welfare state and nonprofit sector development in Germany......Page 75
4.1.1 The field and its structural principle......Page 81
4.2.1 Concise overview on the legal framework for foundations in Germany......Page 83
4.2.2 Empirical picture of foundations in Germany: Differentiation......Page 84
4.2.3 Social welfare foundations over time and specialties of the subsector......Page 88
4.2.4 Representative survey insights......Page 90
4.2.5 Grant-making foundations in the field......Page 92
4.2.6 Insights from large operating carrier foundations......Page 93
4.3 Conclusion......Page 99
4.3.1 Theoretical propositions......Page 100
5.1 Brief historical perspective on welfare state and nonprofit sector development in Sweden......Page 104
5.1.1 Religion and the nonprofit sector......Page 113
5.1.2 The field and its structural principle......Page 114
5.2.1 Concise overview on the legal framework for foundations in Sweden......Page 116
5.2.2 Empirical picture of foundations in Sweden: Differentiation......Page 118
5.2.3 Social welfare foundations over time and specialty of the subsector......Page 121
5.2.4 Operating foundations for children and young people......Page 126
5.2.5 Insights from grant-making foundations in the field......Page 128
5.3 Conclusion......Page 131
5.3.1 Theoretical propositions......Page 132
6 The UK (England)......Page 136
6.1 Brief historical perspective on welfare state and nonprofit sector development in the UK......Page 137
6.1.1 The field and its structural principle......Page 143
6.2 Philanthropic foundations and social welfare in the UK
– with emphasis on engagement for children and young people......Page 144
6.2.1 Concise overview on the legal framework for foundations in England and Wales......Page 145
6.2.2 Empirical picture of foundations in the UK: Differentiation......Page 146
6.2.3 Social welfare foundations peculiarities......Page 150
6.2.4 Operating foundations for children and young people......Page 152
6.2.5 Grant-making foundations and the state......Page 156
6.2.6 Insights on a general grant-making funder in social welfare......Page 159
6.3 Conclusion......Page 161
6.3.1 Theoretical propositions......Page 164
7.1 Foundations and social welfare from a comparative perspective
– regime influence, theoretical propositions......Page 168
7.1.1 Varieties of Capitalism......Page 170
7.1.2 Three Worlds of Welfare Capitalism......Page 177
7.1.3 Social Origins......Page 184
7.2 Concluding argument: The foundation continuum in social welfare......Page 187
8.1 Summary......Page 191
8.2.1 Contributions to the understanding of welfare regime theory......Page 192
8.2.2 Contributions to the understanding of nonprofit sector studies......Page 193
8.2.3 Contributions to the comparative understanding of foundations......Page 194
8.3 Policy implications......Page 196
8.4 Limitations and research desiderata......Page 199
8.4.1 Limitations......Page 200
8.4.2 Research desiderata......Page 201
Appendix A: European Foundation Sectors Overview......Page 203
Appendix B: Overview on dimensions of ITSSOIN - classification of nonprofit sectors......Page 206
Appendix C: Project Information– Roles and Positioning of German Foundations......Page 207
Appendix D: Interviews......Page 208
Appendix E: Interview Manuals......Page 210
Appendix F: Interview Analysis Coding......Page 224
Appendix G: German tax law – §52 Abgabenordnung......Page 229
Bibliography......Page 232

Citation preview

Sarah Förster

Philanthropic Foundations and Social Welfare A Comparative Study of Germany, Sweden and the United Kingdom (England)

Philanthropic Foundations and Social Welfare

Sarah Förster

Philanthropic Foundations and Social Welfare A Comparative Study of Germany, Sweden and the United Kingdom (England)

Sarah Förster TUM ForTe – Office for Research and Innovation Technical University Munich München, Germany Dissertation Hertie School of Governance, Berlin, 2018

ISBN 978-3-658-28498-5 ISBN 978-3-658-28499-2  (eBook) https://doi.org/10.1007/978-3-658-28499-2 Springer VS © Springer Fachmedien Wiesbaden GmbH, part of Springer Nature 2020 This work is subject to copyright. All rights are reserved by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, expressed or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations. This Springer VS imprint is published by the registered company Springer Fachmedien Wiesbaden GmbH part of Springer Nature. The registered company address is: Abraham-Lincoln-Str. 46, 65189 Wiesbaden, Germany

Acknowledgment This work was accepted by the Hertie School of Governance as an inaugural dissertation in 2018 and defended there on 9 th of October 2018. Professor Helmut K. Anheier suggested the project, supported it from the beginning, and gave me the chance to pursue it in close relation to the project “Roles and Positioning of German Foundations” in Berlin. For this, for critical advice and patient benevolence I thank him warmly. I also thank the second reviewers Professor Martin Knapp and Professor Philipp Wijkström for their commitment and valuable advice, from which I was happy to benefit. I would like to thank my friends and colleagues Janina Mangold, Clemens Striebing, Franziska Pfeifer, Philipp Redl, Anca Bukur, Mariella Falkenhain, Patrick Gilroy, Alexandra Ioan, Alexander Bushold, Ashley Metz, Susanne Lang, Jörn Basel, Charlotte Koyro, Zora Chan, Anita Tiefensee, Sandra Engelbrecht and the PhD cohort of 2013 very much for their support, many fruitful discussions and a pleasant working environment. I gratefully acknowledge the support of the Hertie School of Governance in providing me with a completion grant and research stay funding from the DAAD IPID4all program, and the support of the foundations consortium of our project on the German Foundation Sector namely Fritz Thyssen Stiftung, Gemeinnützige Hertie-Stiftung, Stiftung Mercator, Robert Bosch Stiftung, VolkswagenStiftung, as well as Stifterverband für die Deutsche Wissenschaft. I am very grateful to all my interview partners for sharing their insights and trusting me with their information and all helpful people I met during my interview phase in the various parts of Germany, London and Stockholm. I further would like to express my deepest gratitude to my closest friends and family for being there and supporting me throughout this whole journey. Ultimately, I would like to thank my parents with all my heart, without whom this work would not have been completed. Munich, Spring 2019

Table of content 1

Introduction ................................................................................................. 1 1.1 Research problem and broader research context....................................... 1 1.2Terminology ............................................................................................ 7 1.2.1 The concept of embeddedness ........................................................ 7 1.2.2 Carrier foundations as operating foundation type ........................... 8 1.2.3 Social welfare field ......................................................................... 8 1.3 Thesis outline ........................................................................................... 9

2

Theoretical framework ............................................................................. 11 2.1 Welfare regimes and the underlying logic of country differences ......... 12 2.2 Typology analysis and theoretical propositions .................................... 18 2.2.1 Short data overview – Government social welfare spending, NPO sector and foundations ................................................................... 18 2.2.2 Varieties of Capitalism – Typology and propositions ................... 22 2.2.3 Three Worlds of Welfare Capitalism – Typology and ..................... propositions ................................................................................... 27 2.2.4 Social Origins – Typology and propositions ................................. 36 2.3 Summary and implications ................................................................... 42 2.3.1 Reflection on the heuristic procedure of the typology analysis .....43 2.3.2 Concluding remarks for the theoretical framework ...................... 44

3

Methodology and data ............................................................................. 47 3.1 Plan of inquiry ...................................................................................... 47 3.2 Operationalization ................................................................................ 50 3.2.1 The Varieties of Capitalism propositions ...................................... 50 3.2.2 The Three Worlds of Welfare Capitalism propositions .................52 3.2.3 The Social Origins propositions .................................................... 54 3.3 Foundation sector data from a comparative perspective....................... 57 3.4 Interview data collection ...................................................................... 58

viii

Table of content 3.4.1 Germany........................................................................................ 58 3.4.2 Sweden .......................................................................................... 59 3.4.3 England ......................................................................................... 59 3.5 Analysis and Coding............................................................................. 60 3.6 Conclusion............................................................................................ 62

4

Germany ................................................................................................... 63 4.1 Brief historical perspective on welfare state and nonprofit sector ........ 63 4.1.1

The field and its structural principle ............................................. 69

4.2 Philanthropic foundations and social welfare in Germany .................... 71 4.2.1 Concise overview on the legal framework for foundations in Germany......................................................................................... 71 4.2.2 Empirical picture of foundations in Germany: Differentiation ..... 72 4.2.3 Social welfare foundations over time and specialties of the subsector ....................................................................................... 76 4.2.4 Representative survey insights ...................................................... 78 4.2.5 Grant-making foundations in the field .......................................... 80 4.2.6 Insights from large operating carrier foundations .......................... 81 4.3 Conclusion ............................................................................................ 87 4.3.1 Theoretical propositions................................................................ 88 5

Sweden ...................................................................................................... 93 5.1 Brief historical perspective on welfare state and nonprofit sector ........ 93 5.1.1 Religion and the nonprofit sector ................................................. 102 5.1.2 The field and its structural principle ............................................ 103 5.2 Philanthropic foundations and social welfare in Sweden .................... 105 5.2.1 Concise overview on the legal framework for foundations in Sweden ......................................................................................... 105 5.2.2 Empirical picture of foundations in Sweden: Differentiation ...... 107 5.2.3 Social welfare foundations over time and specialty of the ............... subsector ...................................................................................... 110 5.2.4 Operating foundations for children and young people ..................115 5.2.5 Insights from grant-making foundations in the field .................... 117

Table of content

ix

5.3 Conclusion ........................................................................................... 120 5.3.1 Theoretical propositions............................................................... 121 6

The UK (England) ................................................................................... 125 6.1 Brief historical perspective on welfare state and nonprofit sector ....... 126 6.1.1 The field and its structural principle ............................................ 132 6.2 Philanthropic foundations and social welfare in the UK ..................... 133 6.2.1 Concise overview on the legal framework for foundations in England and Wales ................................................................................. 134 6.2.2 Empirical picture of foundations in the UK: Differentiation ....... 135 6.2.3 Social welfare foundations peculiarities ...................................... 139 6.2.4 Operating foundations for children and young people ................. 141 6.2.5 Grant-making foundations and the state ...................................... 145 6.2.6 Insights on a general grant-making funder in social welfare ....... 148 6.3 Conclusion........................................................................................... 150 6.3.1 Theoretical propositions............................................................... 153

7

Comparative results ................................................................................ 157 7.1 Foundations and social welfare from a comparative perspective ........ 157 7.1.1 Varieties of Capitalism ................................................................ 159 7.1.2 Three Worlds of Welfare Capitalism ........................................... 166 7.1.3 Social Origins .............................................................................. 173 7.2 Concluding argument: The foundation continuum in social welfare .. 176

8

Conclusion ............................................................................................... 181 8.1 Summary.............................................................................................. 181 8.2 Contributions ....................................................................................... 182 8.2.1 Contributions to the understanding of welfare regime theory ...... 182 8.2.2 Contributions to the understanding of nonprofit sector studies.... 183 8.2.3 Contributions to the comparative understanding of foundations . 184 8.3 Policy implications .............................................................................. 186 8.4 Limitations and research desiderata .................................................... 189

x

Table of content 8.4.1 Limitations ................................................................................... 190 8.4.2 Research desiderata ...................................................................... 191

Appendix A: European Foundation Sectors Overview ..................................... 193 Appendix B: Overview on dimensions of ITSSOIN......................................... 196 Appendix C: Project Information...................................................................... 197 Appendix D: Interviews .................................................................................... 198 Appendix E: Interview Manuals ....................................................................... 200 Appendix F: Interview Analysis Coding .......................................................... 214 Appendix G: German tax law – §52 Abgabenordnung ..................................... 219 Bibliography ..................................................................................................... 223

List of figures Figure 4.1:

The most important source of the annual budget of social welfare foundations in Germany…………………………81

Figure 4.2:

Organigram of the child and youth help center construct, carrier foundation Stiftung Evangelisches Waisenhaus und Klauckehaus Augsburg (2012)………………..………….……..85

Figure 4.3:

Organigram of the child and youth help center construct ›Kinder- und Jugendhilfe Bezzelhaus e.V.‹ (2017)………..…....86

Figure 7.1:

The foundation continuum in the social welfare field…………..178

List of tables Table 2.1:

Three country overview on foundation sector – number of foundations, relative share of grant-making and operating foundations, total expenditure…………………………………...18

Table 2.2:

Three country overview on government social welfare spending as percentage of GDP, different years…………………20

Table 2.3:

Three country overview on third sector data of ITSSOIN project…………………………………………………………...20

Table 2.4:

Liberal and Coordinated market economies (only EU countries) based on original VoC table……………………………………..23

Table 2.5:

Theoretically expected and empirical welfare state size/scope of Liberal and Coordinated market economies (only EU countries)……………………………………………..24

Table 2.6:

Theoretically expected share of grant-making and operating foundations……………………………………………………...25

Table 2.7:

Empirical share of grant-making and operating foundations in the VoC countries………..…………………………………...26

xii

List of figures and tables

Table 2.8:

The Three Worlds of Welfare Capitalism: De-commodification and stratification………………………….28

Table 2.9:

The Three Worlds of Welfare Capitalism: De-commodification and stratification as indicators for the size of the welfare state……………………29

Table 2.10:

The Three Worlds of Welfare Capitalism: De-commodification and stratification as indicators for the size of the welfare state, empirical picture…30

Table 2.11:

The Three Worlds of Welfare Capitalism: Size of the welfare state and nonprofit sector size in relation…..32

Table 2.12:

The Three Worlds of Welfare Capitalism: Size of the welfare state and foundation sector size in relation…33

Table 2.13:

The Three Worlds of Welfare Capitalism: Size of the welfare state and foundations’ share in social services……..……..……..……..……..……..……..….34

Table 2.14:

The Three Worlds of Welfare Capitalism: Size of the welfare state and operating share of foundations in the field of social welfare…………………………………….35

Table 2.15:

Original Table from Salamon and Anheier (1998) Table VI. Test of Social Origins Model of Nonprofits Sector……………..37

Table 2.16:

Updated social origins classification, updated data from 2014 ITSSOIN project………………………………………………...38

Table 2.17:

Adaption of Social origins dimensions on the subsector of foundations as part of the nonprofit sector………………………40

Table 2.18:

Adaption of Social origins dimensions on the subsector of operating foundations in social welfare…………………………41

Table 2.19:

Adaption of Social origins dimensions on the subsector of foundations active in the field of social services………………..42

Table 3.1:

Operationalization of basic VoC proposition 1………………….51

List of figures and tables

xiii

Table 3.2:

Operationalization of specific regime VoC propositions………..51

Table 3.3:

Operationalization of basic Three Worlds of Welfare Capitalism proposition 2.……………………………………….52

Table 3.4:

Operationalization of Three Worlds of Welfare Capitalism specific regime propositions…...………………………………..53

Table 3.5:

Operationalization of basic Social Origins proposition 3……….55

Table 3.6:

Operationalization of Social Origins specific regime propositions……………………………………………..56

Table 4.1:

Overview foundation sector in Germany: Number, Assets, Expenditure……………………………………………………...73

Table 4.2:

Operating and grant-making foundations in Germany…………..73

Table 4.3:

German foundations presented per ICNPO field (2014)………...74

Table 4.4:

Foundations numbers in each funding period over time, multiple answers possible…………………………..…………...76

Table 4.5:

Operating and grant-making foundations in social welfare and their relation to other actors……………..…………………..79

Table 5.1:

Overview foundation sector in Sweden: Number, Assets, Expenditure…………………………………………………….107

Table 5.2:

Operating and grant-making foundations in Sweden…………..108

Table 5.3:

Swedish foundations presented per ICNPO field (2002)………109

Table 5.4:

Swedish operating foundations presented per ICNPO field (2002)………………………………………...110

Table 5.5:

Foundation Assets in Different Time Periods, based on table 3 from Wijkström and Einarsson 2004………….112

Table 6.1:

Overview foundation sector in the UK: Number, Assets, Expenditure…………………………………………………….136

xiv

List of figures and tables

Table 6.2:

Operating and grant-making foundations in the UK……………136

Table 6.3:

UK foundations presented per ICNPO field (2015)……………138

Table 6.4:

Foundation formation over time………………………………..146

Table 7.1:

Foundation sector differentiation comparative perspective……160

Table 7.2:

Size of the social welfare field and share of operating foundations…………………………………………. 161

Table 7.3:

Comparative overview on VoC propositions and findings…….163

Table 7.4:

Comparative overview on Three Worlds of Welfare Capitalism propositions and findings…………………………..170

Table 7.5:

Comparative overview on Social Origins propositions and findings…………………………………………………....174

Abbreviations ACF BGB CAF CME DSC EFC EUFORI ITSSOIN LME TWWC

Association of Charitable Foundations Bürgerliches Gesetzbuch (German Civil Code) Charities Aid Foundation Corporate Market Economies Directory of Social Change European Foundation Centre European Foundations for Research and Innovation Impact of the Third Sector as Social Innovation Liberal Market Economies Three Worlds of Welfare Capitalism

1 Introduction 1.1 Research problem and broader research context In many European countries, the field of social welfare is under immense pressure and governments are searching for more effective and efficient solutions to allocate provision under tight welfare budgets. These programs are required to solve social problems and in turn assure a prosperous and harmonious existence in an increasingly heterogeneous society. The provision of aid to the most vulnerable groups in society is at the core of the welfare state arrangements. We can examine the welfare state from different perspectives by alternately putting social rights, market solutions, or social transfers in focus. Family cohesion and care for the closest members continues to dissolve due to the increasing prevalence of long distance relationships and the expectation of a longer working life. Families are sometimes spread around the globe or across an entire country. There have always been children unable to live with their parents or relatives, or are orphanages who have none. These children are among the most vulnerable groups in society. Today, such children are under the special protection of the state in almost all European countries. However, before the provisions of the welfare state came into being, it was often left to private initiatives to take care of these children. The interplay of state, market, family and nonprofit welfare provision institutionally developed since the early Middle Ages or even further back in history (cf. Smith and Bormann 2007). Even there, a mix of all these spheres came together. However, with the birth of the welfare state the state took on responsibility for care and welfare of its citizens. These systems differ significantly influenced by the path-dependent development of the institutional configuration of social welfare field. Philanthropic foundations are a versatile organization (cf. Hammack and Anheier 2013). They have the potential to amplify the problem-solving capacity of society with the potential to act independent and provide seed and risk money for the development and execution of ideas that otherwise wouldn’t have a chance to be funded. There is however another part of the foundation sector especially prominent in the social welfare field, which isn’t discussed as much in foundation literature so far but represents a more European perspective on the foundation sector in social welfare. These are large carrier foundations that provide services and care in the field of social welfare. They work as operating foundations directly in the field. This forms a totally different type of foundation, where we don’t know much about. © Springer Fachmedien Wiesbaden GmbH, part of Springer Nature 2020 S. Förster, Philanthropic Foundations and Social Welfare, https://doi.org/10.1007/978-3-658-28499-2_1

2

Introduction

»What little we know about relationships between foundations and governments in practice suggests that relationships vary between countries and over time (Anheier and Daly 2007; Schlüter et al. 2001, 268–81; Karl and Karl 1999).« (Leat 2012, 135). Gaining insight into this relationship is becoming more relevant for foundation research as a ›foundations boom‹ in Europe during much of the 20 th century took place and the context of the retreat of the state as a general phenomenon in most advanced market economies gives space and necessity for commitment (cf. Anheier and Leat 2013). This makes it even more interesting to assess the significance of the commitment of foundations in the production of welfare and for the future development of the relationship to the state. In recent decades, the number of foundations that are serving the public good rose within Europe. The majority of an estimated 141,000 public benefit foundations in Europe (McGill 2015—European Foundation sector 2015 report1) have been funded in the last two decades of the 20th century (cf. Hopt et al. 2008). However, not much is known about their commitment and function in their respective societies. We need more empirical insights to get closer to a realistic assessment of foundations engagement, role and function in society. This is an even more pressing topic as the public, at least in part through tax-exemptions, finances these organizations. Foundations in the social welfare field count among some of the oldest organizations with origins that sometimes date back to the sixteenth century or even further back. We do not know much about philanthropic foundations operating in the social welfare field in general and know even less so from a comparative view. The dissertation contributes to a broader perspective and in particular, provides insights into some of these still existing foundations. It emphasizes the heterogeneity of foundation types focusing on the mode of operation as a distinct characteristic. The main aim of this research is to learn more about foundations in the field of social welfare provision and the institutional embedding of foundations in different welfare regimes. Two strands of literature are in focus. On the one side the debate on philanthropic foundations in different European countries is in focus and on the other side the welfare regime literature which deals with the classification of well-developed market economies. Therefore, three typologies of political economy on different modern economic systems are analyzed for their potential to explain something about the embedding of foundations. Wolfgang Seibel described the idea of the investigation for the third sector: »So we have to assume the existing flexibility of institutional choice to be dependent on different patterns of third-sector embeddedness which can be revealed 1

One aspect which is especially pointed out by the report is that these numbers contain active and inactive foundations that may still be registered with the authorities (Mc Gill 2015, 1).

Research problem and broader research context

3

especially through cross-national comparative research.« (Seibel 1990, 57). This is correspondingly the guiding idea for the assessment of foundations’ embeddedness in social welfare in different welfare state systems. In governance research, there are three prominent typologies rooted in political economy. These hold exciting potential in explaining the embedding of different actors in well-developed market economies, the welfare states. They focus on different areas of societal spheres, the market, the state and the third sector. Political economy theory comprises the most prominent approaches for the typology of different welfare states. In this analysis, three theories will be leading. These are the Varieties of Capitalism based on Hall and Soskice (2001), the Three Worlds of Welfare Capitalism by Esping-Andersen (1990), as well as – especially with regard to the third sector – the Social Origins theory as originally described by Salamon and Anheier (1998). Institutionalism and path-dependent trajectories are implicitly considered an influence on the development of distinct institutional country settings. The three typologies provide varied perspectives and differ in their emphasis on aspects and drivers for country-specific institutional configurations. This gives a certain role to the actors that differ according to their regime type affiliation. The function the state or the market take on is explicitly thought of in the theories, but the perspective on some of the actors differs, meaning some actors are more in focus than others. These typologies were challenged over time, especially the Three Worlds of Welfare Capitalism, which was in focus when questions were raised on the role of Mediterranean welfare states or a missing gender dimension (cf. Arts and Gelissen 2002). The Varieties of Capitalism was challenged, also, by the finding of hybrid regimes (Schneider and Paunescu 2012). The Social Origins theory struggles with data availability for further theory testing (cf. Steinberg and Young 1998). All three theories were used to analyze the potential to assess hybrid organizations in different welfare systems (cf. Anheier and Krlev 2014), and in the large EU funded project ITSSOIN these theories build the framework for the assessment of the third sector as an impact on social innovation (Anheier et al. 2014). If the priority of research on social welfare and the third sector focuses »on the role of the third sector in a larger context, based on a theoretical understanding of historical development« (cf. Brandsen 2008, 113), then systemic perspective theories provide a fruitful approach (ibid.) as they are used here for the assessment of philanthropic foundations. The theoretical framework of this research project proposes to assess how foundations, as a special organizational form in social welfare, fit the regimes within which they exist. – Do these three theoretical approaches have some explanatory power for foundations in social welfare?

4 – –

Introduction

Do foundations fit these regime types? What can we learn about their embedding in different social welfare systems? The dissertation takes a comparative approach. The three countries investigated as welfare systems are Germany, as a conservative or corporatist welfare regime country, Sweden, as a social democratic regime, and the UK (England), as a liberal welfare regime. Welfare regime theory has the potential to be applied to investigate the embedding of organizations in the context of the respective regime system. For foundations especially the approaches proved to be a good heuristic to reveal that even though they are considered very independent organizations, they are bound by institutional embedding. As the chosen countries are all very distinct regimes according to regime theory, they offer the potential to show the differences and commonalities that comparative research may reveal. Foundations as an organizational form have not had that much attention when it comes to their embedding in different welfare state systems. Foundations are said to be one of the freest organizations of modern society (cf. Anheier and Leat 2006, Anheier 2014). The leading idea behind the research is that foundations in social welfare are influenced by the respective regime system within which they exist, even though they are said to be one of the most independent organizations, with their own assets and free of market or state constraints, set up for eternity. This independence means they do not have to follow the demands of the median voter to get reelected, nor do they have to comply with demands of customers to stay alive. This dual independence provides them with the power to follow their own strategies and not fulfill the demands of others-at least from an ›ideal type‹ perspective. They are in possession of a higher institutional elasticity than other third sector organizations. They have more space to act freely from institutional constraints. Foundations have more room and freedom to act, because of their unique structure in having their own assets and often times an independent governance structure. Those organizations hold a large potential for certain types of activities and of course, also have certain constraints. In many European countries, the term ›foundation‹ is not a legal term. Many different legal forms may count as a foundation and many name themselves as such. For instance, in Germany, some of the largest and best-known foundations are limited liability companies (GmbHs), like, for example, the ›Robert Bosch Stiftung‹. The structural operational definition of a foundation as originally developed by Salamon and Anheier (1997) for nonprofit organizations and further adapted for foundations (cf. Anheier 2001, Anheier 2014) is used by the UN Handbook on Non-profit Organizations (United Nations 2003) and further used in the Feasibility

Research problem and broader research context

5

Study on a European Foundation Statute (Hopt et al. 2008). This definition will be the point of reference for the investigation at hand. It is particularly applicable for comparing foundations in the different legal systems of European countries. It is comprehensive enough to cover a spectrum, while precise enough to point out the important organizational distinction of having assets and of having a decisionmaking process that is typically not based on the broad participation of members outside the board of trustees2 (cf. Anheier and Daly 2007, 4). According to this definition and considering a European comparative perspective, foundations are an asset based entity3, financial or otherwise, based on an original deed, with the following characteristics: 1. Private entity, 2. Self-governing entity, 3. Nonprofit-distributing, and 4. serving a public purpose4 (cf. Anheier 2014, 161). For the comparison of different European spheres, however, the country specific concepts and legal definitions of a ›foundation‹ shall be included, since the cultural and legal histories are also reflected in the conceptualizations of the respected legal concepts/definition5. The issue at hand: »While the growth in numbers has been widely noted, there has been less public and political discussion of what this trend means in terms of the roles, and more importantly, the rationales of private foundations, and the implications for their host societies.« (Anheier and Leat 2013, 2). Further, the embedding of foundations in their host societies is an important aspect for understanding this special organizational form. It is mainly discussed as being one type of organization, but there is a broader spectrum with different implications for the embedding within the welfare state, as the dissertation shows. There are theoretical implications to be taken into account in foundation research with regard to the mode of operation.

2

3

4

5

»Expressing primarily the will of the donor, the organizational structure of foundations does typically not allow for broad-based participation and decision making outside the limited circle of trustees.« (Anheier and Daly 2007, 4). As Smith and Borgmann (2007, 2) specify – »Whether the term is foundation, endowment, trust, fondacion, fundacao, fonds, Stiftung, stichting or saatio, words have been employed in every European language to describe private legal entities that possess income-generating assets and devote their resources to public purposes.« Alternative definition: A foundation has the following characteristics (Anheier 2001 in Anheier and Daly 2007): Foundations are asset-based financial or otherwise, based on an original deed. They are private entities, self-governing, nonprofit-distributing, serving a public purpose and having their own identity as being a ›foundation‹ (cf. Anheier and Daly 2007, 8f.). The definition chosen here shall provide the investigation with a benchmark against which the different foundation forms and country specifics can be assessed. This approach was also chosen by Anheier and Daly (2007, 10) in the investigation on the ›Politics of Foundations‹.

6

Introduction

Foundations work in different modalities, which accounts for different foundation types. Foundations can work as either grant-making or operating6. In some cases, they pursue their aims in a mixed mode, meaning in certain contexts they give grants and in others they work in the field operating projects, programs or other organizations themselves. Operating foundations work mainly through fully owned subsidiaries as carrier7 foundations, or in-house with their own projects. These different approaches were of importance with regard to the roles and positioning of social welfare foundations in Germany (cf. Förster 2017). The operating, and especially carrier, part of the foundation sector is critically important to understanding the foundation sector in the social welfare field. That is the main basis for the argument of the dissertation at hand. »Although operating foundations are historically the older form, the surge of grantmaking foundations in the twentieth century. […] seldom has an organizational form been more neglected than that of operating foundations, and recent research overlooks this type of foundation almost entirely.« (Toepler 1999, 164). This is true for the American foundation sector, as Toepler (1999) describes it 8, but even more so for the European one, where operating foundations have a long history. As such, the dissertation at hand aims to begin filling the gap of research on operating foundations – at least in the field of social welfare provision, where this foundation type can provide good examples for the influence of the welfare regime on the different foundation types, as will be shown in the argument to follow. 6

7

8

»The ways in which goals are pursued allow for a general distinction between operating and grant-making foundations, the former of which are more actively involved in carrying out the intended activities than the latter. Accordingly, foundations are either restricted to making grants to other agencies, or deliver services directly.« (Toepler 1999, 163). Carrier foundations are a special type of operating foundation. These foundations carry other organizations as legally responsible body, like, for instance, a research centre or social service provider. They operate other organizations or services in their field of engagement themselves. The concept of being a carrier is not limited to foundations, there are also carrier associations. Interestingly Toepler (1999), in the US context, has a different take on the operating and grantmaking distinction than the research at hand for the social welfare field postulates. »The key distinction to typical nonprofits relates to the financial independence from other stakeholders (e.g. funders). Operating foundations leave the donor a high degree of control (cf. Foote, 1985a, 14f.). Such control and participation is less likely in other nonprofit service providers, where funding restraints may also lead to compromises with regard to the services offered and shared control between different groups of demand-side stakeholders (Gronbjerg, 1993).« (Toepler 1999, 166). But in this dissertation the focus lies on the social welfare provision field and here, a rather limited donor control as service providers is in focus, the compliance with rules and regulations and the rather limited space to act independently. This leads towards the further distinction of the different foundation types in grant-making and two operating forms in operating grant-makers and operating carrier foundations. The definition above may aim at operating grant-making foundations, where the funder is in control of the projects she runs.

Terminology

7

The empirical country case insights are based on interviews conducted with foundations representatives and experts in 2015. Additional secondary sources data from literature and desk research are used to strengthen the argument and provide context. Data from the Germany case include a representative survey and interview data. The collection of data was conducted as research associate in a threeyear project on the ›Roles and Positioning of German Foundations‹ (cf. Anheier et al. 2017; Förster 2017). 1.2 Terminology 1.2.1 The concept of embeddedness Embedding is a term that developed with different implications in economic sociology and that is used with different meanings. Some of the most important representatives of embedding as a concept are Polanyi (1957) and Granovetter (1985). With ›The Great Transformation‹, Polanyi described the embeddedness of markets in economic and non-economic institutions (cf. Polanyi 1971, in Swedberg 1987, 60). He based the institutional process on the three aspects of integration, reciprocity, and redistribution and exchange. Granovetter (1985) used the term in a different manner; he emphasized the network aspect of social relations in human action. »For Polanyi markets are not networks [as for Granovetter who changed the meaning of embeddedness] of structurally equivalent producers but rather fully social institutions, reflecting a complex alchemy of politics, culture and ideology« (Krippner 2001, 782). For an overview on the development and delimitation of the concept of embedding please note the discussion on embeddedness from a Polanyi symposium in Krippner et al. (2004). The way the concept of ›embeddedness‹ is used in this study is a more basic idea of being integrated and part of a system configuration, to be »firmly and deeply ingrained« (Oxford Dictionary Online, 4th October 2017). To be embedded can refer to different characteristics according to the three different theories under investigation. The different drivers for regime difference lead to several aspects that are important regarding the embedding of foundations. Being embedded according to the Varieties of Capitalism logic has different implications than being embedded according to a Three Worlds of Welfare Capitalism perspective or the Social Origins logic, which shall be operationalized in more detail with the development of propositions in the theoretical framework. Embedding characterizes the involvement and closeness of foundations to the policy field and the regime logic fit.

8

Introduction

1.2.2 Carrier foundations as operating foundation type Carrier foundations are a special type of operating foundation. These foundations ›carry‹ other organizations as the legally responsible body, like, for instance, a research centre or social service provider. They operate other organizations or services in their field of engagement. They often function more like a holding entity, in being the legal responsible body for mainly independent organizations under one roof. The concept of being a carrier in the social welfare field and in general is not limited to foundations. There are also carrier associations. Anheier and Seibel (2001, 15) describe such ›Trägergesellschaften‹ in general as »carrier association or legally responsible body«. Operating foundations work mainly through fully owned subsidiaries as carriers, or in-house with their own projects, which is the more common meaning of operating foundation. There are different foundation types with different modes of operation. The composition of the foundation sector with its different types of foundations is unique in every country, and the argument here is that this is because of different regime systems. There has always been a welfare mix, and the composition of actors in the provision of social welfare in each country developed uniquely on different pathdependent trajectories and was shaped by a unique development of institutional configuration. The argument here is that the foundations sector is also part of this unique development in each of the three country regimes in Germany, Sweden and the UK. 1.2.3 Social welfare field The field of social welfare is focused on the »services provided by the government or private organizations to help poor, ill, or old people« (Cambridge Dictionary Online 20.08.2017), as well as the most vulnerable people, like children or young people and people with disabilities. The welfare field in macro system analyses is often discussed with regard to social security, like pension systems, unemployment benefits, or health insurance – which all have influence on the way these services are provided. For this investigation, the social service aspect of social welfare shall be in focus, which is in relation and connection to these other aspects of social welfare, but is concentrating on the aspect of services for certain target groups like children and young people, elderly people and people with disabilities, refugees and the most deprived in society in need of help. The term is used interchangeably with the social service field, as it is defined in the ICNPO classification (cf. Salamon and Anheier 1996). This perspective gives the opportunity to assess the organizational landscape in relation to the welfare system configuration.

Thesis outline

9

1.3 Thesis outline The thesis is organized as follows. After Chapter 1, the introduction, in Chapter 2, the theoretical framework and the propositions for the investigation are developed and defined. They provide the main argument for regime differences impacting foundations from the perspective of the three theories in question. In Chapter 3, the plan of inquiry is laid out and the operationalization and investigation of the data is explained. The study puts new collected data and already existing data into a new perspective to assess the embedding of philanthropic foundations in social welfare on the background of regime theory. After developing the conceptual theoretical framework and presenting the methodology, the second part of the dissertation will provide empirical insights on foundations in social welfare and the welfare state in the three different countries of Germany, Sweden and the UK. The next three chapters present the country cases, with Chapter 4 on Germany, Chapter 5 on Sweden and Chapter 6 on the UK. In each of the country cases, an initial historical overview on the development of the welfare state and the nonprofit sector gives a basic introduction into the regime and development of the state and nonprofit sector, then a brief, basic overview on the legal framework of foundations and an empirical picture on the differentiation of the foundation sector in each country is given. The empirical findings for foundations in social welfare are presented before the final section discusses the theoretical propositions in relation to the findings. Chapter 7 brings all the findings together and adds a comparative perspective to develop the final argument on the embedding of foundations in social welfare based on the theoretical propositions. Lastly, Chapter 8, the conclusion provides an outlook on further areas for research and discusses both limitations and implications from the final argument

2 Theoretical framework There is important governance research in comparative political economy. Three prominent typologies influenced the field of welfare state classification considerably. They all deal with different regimes of well-developed economies. The theories propose certain drivers, which are the main influence of country differences according to each of the theories. The approaches deal with the question of whether and why there are different clusters of countries, how they came about and how these systems function. The chapter will lay the groundwork and theoretical framework for further analysis with regard to philanthropic foundations. The spheres of state, market and family serve different functions and have varied configurations of problem solving capacity in the different country systems. The field of civil society goes beyond the traditional family sphere, and the third sector is marked by the large variety of nonprofit organizations. This sector, which plays a considerable role in many fields, like, for instance, in social welfare, education or arts and culture in all European countries, has not been thought of explicitly as an actor or as its own sphere in two of the three macro system theories in focus, which are the Varieties of Capitalism (VoC) approach by Hall and Soskice (2001) and the Three Worlds of Welfare Capitalism theory by Esping-Andersen (1990). Salamon and Anheier (1998), however, sought to explicitly explain nonprofit sector differences in terms of size, composition and function in different welfare regime systems. The Social Origins theory is the third approach of interest for the assessment of foundations in social welfare. All three of these theories hold a special perspective on well-developed economic systems in Europe and beyond. They explain regime differences from unique points of view. They focus more on the market production system, social policy aspects or the third sector being the main area of interest. These three approaches hold a specific logic of development and function between the different spheres of state, market and family, or the third sector. One can identify different drivers for the development of the different state systems. This chapter provides a concise overview of the three regime theories and in a further step, discusses the theory with regard to social welfare foundations as special organizations in the welfare field. The typologies will be used to develop propositions for social welfare foundations in the respective regime countries from the different theoretical points of view.

© Springer Fachmedien Wiesbaden GmbH, part of Springer Nature 2020 S. Förster, Philanthropic Foundations and Social Welfare, https://doi.org/10.1007/978-3-658-28499-2_2

12

Theoretical framework

2.1 Welfare regimes and the underlying logic of country differences First, the Varieties of Capitalism (VOC) approach (Hall and Soskice 2001) offers a framework with a special focus on understanding variations across national market economy systems9. Each country has specific conditions regarding its institutional configurations. Depending on these specific conditions, countries, as well as companies, have sector-specific competitive advantages at their disposal. (cf. Porter 1990, Amable 2003, Lundvall 2007, Whitley 2007 in: Schneider and Paunescu 2012). Hall and Soskice (2001) postulate that two main types of capitalistic systems exist among wealthy nations. On the one hand, there are liberal market economies (LMEs) and on the other, coordinated market economies (CMEs). The former is prototypically represented by the system of the US and the UK for Europe and the latter by Germany. Each special setting is characterized by one type of capitalism and is responsible for certain industry-specific technological and comparative advantages. (cf. Schneider and Paunescu 2012, 732). These two types of ›regimes‹ build out different coordination patterns that foster institutional complementarities for the respective economy on the world market. The approach focuses on the firm as actor. All actors [firms] strive to advance their interests in strategic interactions with others (cf. Scharpf 1997a in: Hall and Soskice 2001, 6). LMEs and CMEs are ideal types. They are constructed as the poles of a spectrum (cf. Hall and Soskice 2001, 8) with being market centered on one end and being state centered on the other end. Each system builds out specific institutional environments. »In any national context, the firms will gravitate to the mode of coordination for which there is institutional support.« (Hall and Soskice 2011, 9). This would also be the case for other actors in the system. They would prefer or had to comply with the same mode of coordination, which is supported by the institutional configuration of the respective system. LMEs tend to base their coordination more on pure market mechanisms, whereas the preferred coordination mechanism of CMEs is more constrained by the state and based on networks of relationships. Complementarities10 have special relevance not only on the world market but also within the respective systems. »[…] Nations with a particular type of coordination in one sphere of the economy should tend to develop complementary practices in

9

10

In general it is about the exchange of products and goods on the world market. The different country specific systems of product and goods – the market production systems – build out complementarities on the world market. (cf. Hall and Soskice 2001). Two institutions can be said to be complementary, if the presence (or efficiency) of one increases the returns from (or efficiency of) the other (Hall and Soskice 2001, 17).

Welfare regimes and the underlying logic of country differences

13

other spheres as well« (Hall and Soskice 2001, 18)11. Hence, the social service sector would develop complementary coordination with gravitation to the preferred mode of operation in the system. LMEs would be likely to have larger parts of social services based on market mechanisms, private funding and general skill profiles of employees in the social sector, whereas in CMEs, the state will coordinate more and has a stronger influence. Employees would have more specific training. Welfare state arrangements based on state incentives were more dominant than pure market coordination. The type of political economy relates to a corresponding type of welfare state (cf. Hall and Soskice 2001, 50f.). All LMEs are accompanied by a ›liberal‹ welfare state with emphasis on means testing and low levels of benefit, which reinforce the fluid labor markets. LMEs tend to encourage general, rather than specific, skills of workers and employees. Welfare state systems, which correspond with the CMEs, vary quite a bit more in their structure and build out. CMEs tend to prefer more specific skills in their workers and employees. In order for the employment market to provide these skills, the welfare state needs to build higher social protection schemes so that the employees invest in these specific skills and reduce the risk of unemployment and need. With higher protection schemes, the risk to need more time to find a new work place is compensated. This means that CMEs welfare schemes are more pronounced and the welfare state tends to have higher state expenditure than in the LME countries. The second theoretical approach is Esping-Andersen (1990) and his work ›Three Worlds of Welfare Capitalism‹. He distinguishes three types of welfare regimes. He examines different social policies. Nonetheless, the welfare state is more than the sum of discrete programs. Welfare state regimes consist of considerably more complex and interwoven legal and organizational features. (cf. Esping-Andersen 1990, 712 in: Arts and Gelissen 2002, 139). Path-dependency via trajectories of different historical forces formed distinct institutional constellations, which shaped and still shape the different welfare regimes. Esping-Andersen differentiates traditions of political mobilization and political philosophy, on the one side, and features of contemporary social policy configurations, on the other side (cf. Esping-Andersen 1990, Arts and Gelissen 2002). Social rights are the essence of social policy in this perspective. Esping-Andersen (1990) thereby draws on the findings of Polanyi (1944). Social rights influence 11

Footnote 18 from Hall and Soskice 2001, 18): »Of course, there are limits to the institutional isomorphism that can be expected across spheres of the economy. Although efficiency considerations may press in this direction, the presence of functional equivalents for particular arrangements will limit the institutional homology even across similar types of political economies, and the importance to institutional development of historical processes driven by considerations other than efficiency will limit the number of complementarities found in any economy.«

14

Theoretical framework

the degree to which a person can have a living independent of pure market forces (Esping-Andersen 1990, 3). Another central aspect of social policy is that it does not deal solely with equality. Rather, social policy also always promotes a certain system of stratification. The stratification structure mirrors a certain power structure of social classes. Here, representation of interests through class coalition in the political process shapes different stratification. Esping-Andersen (1990) embeds his explanation of regime differences in the political history of nations (Esping-Andersen 1990, 4). Social relations among different groups and actors are central. Esping-Andersen emphasized these aspects underneath the ›black-box‹ of social expenditures as the main indicator of welfare state differences (Esping-Andersen 1990, 20f.), based on the three elements of the nature of working class mobilization, class-political coalition structures and the historical legacy of regime institutionalization (Esping-Andersen 1990, 29). A key driver is the distribution of class power that finds its representation in social policy. He identified three ideal typical trajectories in the history of welfare states: liberal, conservative and social-democratic. He analyzed the different patterns according to his two fundamental dimensions of welfare statism in the following way: »1. [t]he degree of de-commodification, i.e. the degree to which a (social) service is rendered as a matter of right, and the degree to which a person can maintain a livelihood without reliance on the market. 2. The kind of social stratification and solidarities, i.e. which social stratification system is promoted by social policy and does the welfare state build narrow or broad solidarities?« (Arts and Gelissen 2002, 141). Going beyond these two dimensions he emphasized the importance of the interrelation between state, market and the family as main actors with certain roles in the provision of welfare (cf. Esping-Andersen 1990, 21). »As we survey international variations in social rights and welfare-state stratification, we will find qualitatively different arrangements between state, market and the family« (Esping-Andersen 1990, 26). There are also other influences besides the main driver of social class coalition power that congenially fostered the unique development of welfare provision and policy in the respective countries. One of the forces he mentions is the Catholic Church, which had a strong influence on the relationship between the state and the private sphere, like the family or market. Catholicism and absolutism have a positive influence on the build out of a corporate regime, like in Germany or France. In Germany, for instance, the subsidiarity principle developed through the influence of the church, which gives supremacy to the family over state interference. The principle was first formulated by Pope Pius XI in the social encyclical of ›Quadrogesimo Anno‹ in 1931 (cf. Sachße 1994). In the social democratic

Welfare regimes and the underlying logic of country differences

15

regimes, these two are in contra to the regime build out. The degree of socialism is influenced by the strength of left-party mobilization (cf. Esping-Andersen 1990, 136). For the liberal regimes, other factors are important. Here, for instance, the left power mobilization (WSC—Weighted Cabinet Shares) is a negative indicator and GDP per capita a positive indicator for liberal regime affiliation. In line with the idea of path-dependency and different trajectories that led to certain welfare regime developments one finds the third theory, the Social Origins approach as developed by Salamon and Anheier (1998). It is based on modifications to Esping-Andersen’s theory and incorporates the nonprofit sector and its formation in different countries. »Each of these [regime] types is characterized not only by distinct combinations of nonprofit sector characteristics and particular position of the third sector in society, but also by a particular state role and constellation of other institutions and social groupings.« (Anheier 2010, 1445). The other main influence is Barrington Moore Jr. (1966), with his three routes to a modern world: a democratic, a fascist, and a communist (cf. Salamon and Anheier 1998, 226). He attributes those ways to particular constellations of the relationship among the landed elites, rural peasantry, the urban middle-class and the state (ibid.). The main aim of the Social Origins theory is to explain the nonprofit sector cross nationally: How can variations in third sector size, composition and financing among different countries be explained? (cf. Salamon and Anheier 1998, 213). The unit of analysis is organizations that are private, nonprofit-distributing, selfgoverning and voluntary (definition according to Salamon and Anheier 1998, 215). Nonprofit organizations are an integral part of social and political coordination (cf. Seibel 1990 in Salamon and Anheier 1998, 227). The approach is focused on state-nonprofit relations12. Core dimensions of this notion are the size of the sector, the composition of the sector and the financing of the sector13. The third sector development is influenced and characterized by a »particular constellation of class relationships and pattern of state-society relations.« (Salamon and Anheier 1998, 213). Prior patterns of historical development have shaped the development and interplay of the different spheres in a society. The range of choice options at a time of development is constrained to varying degrees in different countries. This is the central base of the 12

13

Although they use Esping-Andersen’s terminology in parts, Salamon and Anheier stress that they do not focus on social welfare policy or pension policies, but on distinct types of state-nonprofit relationships (Salamon and Anheier 1998, Footnote 10, page 228). The key variables of the nonprofit sector for the investigation are the scale of nonprofit operations, measured by employment, volunteer time and operating expenditures. The source of the financial support of nonprofit organizations, distinguished in donations or contribution income, income from the public-sector support or revenue from the sale of services and products. (Salamon and Anheier 1998, 217).

16

Theoretical framework

argument of the Social Origins theory. It is developed in contradiction to the sole economic theories on the nonprofit sector and alternatively, on the dominantly state-centered welfare state literature. The social origins approach should be seen as a bridge between the »elegant simplicity of the economic models, […] and the dense detail of traditional historical accounts, which make it extremely difficult to generalize from place to place.« (Salamon and Anheier 1998, 246). Political class struggles and their influence on the state is a central feature of explanation. The power of the Church in a country is also a characteristic of the Social Origin order. The two central dimensions of the nonprofit regime typology within the Social Origins theory are social welfare spending and the scope of the nonprofit sector in each country. (cf. Salamon and Anheier 1998). Distinct types of state-nonprofit relationships are in focus (ibid.). It embeds the nonprofit sector in the logic of welfare regime types and further includes the explanatory role of government spending. This relates to ideas from certain economic theories, like, for instance, those of Weisbrod 1988. (cf. Anheier 2010). The three theories have been criticized in many ways. The next three paragraphs give a short overview of the main points of this criticism. These points of critique do not render the whole theory irrelevant, but provide insight on some of its potential weaknesses. The argument of the dissertation at hand is that these three theories provide a valuable base for the assessment of the embedding of different fields of engagement with the different drivers of regime difference. Many aspects of the VoC approach have been criticized. One of these criticisms is that VoC is too simplistic with its focus on the firm perspective influenced by the system (Allen, 2004). Bob Hancké (2009), in the introduction to the book ›Debating Varieties of Capitalism‹, gives a good overview of some of the main points of critique. Those critiques mainly doubt the idea of different capitalist variety in general, critically discussing the constituent elements of the theory and arguing for ›conceptually richer‹ notions of diversity among capitalistic systems14 (Hancké 2009, 5f.). The VoC theory is appropriate for the investigation at hand, because it provides the investigation with a market-centered perspective. The Three Worlds of Welfare Capitalism approach is one of the most influential theories in comparative system analyses and has been criticized from many angles. Grassman (2010, 28f.) give a good overview on the different critique aspects which include not being dynamic enough (Esping-Andersen 1996), omitting a 14

Schneider and Paunescu (2012) criticised the empirical validity of the approach as »still unclear«. Therefore, they tested the hypothesis stated by Hall and Soskice with longitudinal data from 26 OECD countries. »Comparative advantages develop as predicted in the VoC approach, but the types of capitalism are more varied and more dynamic than the VoC approach suggests.« (Schneider and Paunescu 2012, 731). Their findings expand the clustering to three more categories: Hybrid economies, LME-like economies and state-dominated economies (cf. Schneider and Paunescu 2012).

Welfare regimes and the underlying logic of country differences

17

fourth Mediterranean regime type (Ferrera 1996, Ferrera 1997, Leipfried 1992), neglecting gender issues (Lewis 1992, 1997), a lack of explaining differences of countries within the same regime type (van Keersbergen and Manow 2009), forgetting the voluntary sector (Kuhnle and Selle 1992), neglecting aspects of social care15 (Anttonen and Sipilä 1996) and for using the ›wrong‹ dimensions (Danforth 2014). Despite this manifold criticism, the theory is still especially appropriate for analyzing regime system differences (cf. Van Keersbergen and Vis 2015, Brandsen 2008). The critique is mainly based on the confusion between the typology aspect and the theory that lies behind the findings. To distinguish between the typology and ideal typical theoretical description of regime differences is important in order to avoid confusing one perspective with the other and having a good basis for investigation (cf. Van Keersbergen and Vis 2015). For the Social Origins theory, points of critique focus on a postulated lack of an evolutionary character and the time dimension of the nonprofit phenomenon (Wagner 2000, 543) or calling for a more multidimensional approach to take into account the great heterogeneity of the nonprofit sector (Ragin 1998, 261). In general, the lack of adequate comparable data on the nonprofit sector for more indepth analysis is a general problem for the Social Origins theory (Steinberg and Young 1998, Anheier 2010). Empirical testing of the theory is limited. However, besides all the critique, those theories are based on the three perspectives of the market, state and the third sector as main focal points of societal spheres. They help to discuss philanthropic foundations in social welfare from those three different perspectives and may help tell us something about the embedding of foundations in different welfare state systems. After this short conceptual overview of the theories used to assess social welfare foundations in different welfare systems, the next part of the framework will present theoretical propositions for social welfare foundations.

15

Buhr and Stoy (2015) argue that the Three Worlds of Welfare Capitalism (TWWC) theory aims at and captures a holistic regimes typology. The VoC theory was developed as a certain perspective and that it hasn’t made the effort to try and incorporate the economy as a dimension of the TWWC theory and instead developed a distinct approach. In their paper, they focused on the critique of the TWWC being solely a focus on transfers. They wanted to assess the social service dimension in correspondence with the TWWC transfer approach. Different scholars analysed the social service sector in its different dimensions of health, care and others as critique on the TWWC. Buhr and Stoy (2015, Figure 2 page 274) analysed these studies with a network analysis and came to the conclusion that the countries in these different analyses cluster the same as in Esping-Andersen’s original welfare regimes typology. This supports the claim of holistic regimes. »The typology by Esping-Andersen was confirmed not only to apply to the worlds of transfers but to the worlds of services as well. […] This suggests that the role of the welfare state is a good starting point for a holistic framework of welfare regimes combining the transfer and the services component.« (Stoy 2014, 357).

18

Theoretical framework

2.2 Typology analysis and theoretical propositions The following paragraphs analyse and discuss the typologies and theoretical propositions deriving from the three regime theories of political economy with regard to foundations as an organizational form. Propositions drawn from the theories are presented and the macro data tables of each of the typologies will be a device to assess the foundation sectors regarding their regime affiliation. In combination with the propositions from theory, the typology tables highlight differences concerning foundations in the respective regimes under investigation. The procedure is a heuristic device to identify macro relevant characteristics of foundation sectors. It uses the theory and the corresponding typologies to generate propositions. Further, it will help to form propositions about aspects of the embedding of the social welfare foundation population in the three different welfare systems of Germany, Sweden and the UK, which will be examined in the second part of the dissertation. 2.2.1 Short data overview – Government social welfare spending, NPO sector and foundations The following tables (2.1–2.3) will give an overview on basic data of the nonprofit sector and foundation sector data used in the typology analysis in this chapter. Table 2.1 provides an overview showing the basic data on the foundation sector for the three countries. Table 2.1: Three country overview on foundation sector – number of foundations, relative share of grant-making and operating foundations, total expenditure

Data on foundations

Germany

Year

Sweden

Year

UK

Year

Number of foundations

18,820

201416

13,700

201217

12,400

201318

52%

201419

86%

200220

92%

201521

Relative share of grantmaking foundations

16 17 18 19 20 21

Basisdatensatz 2014, Anheier et al. 2017 Einarsson and Wijkström 2016 EFC 2016c, ACF Representative survey, Anheier et al. 2017 Wijkström and Einarsson 2004 Pharoah and Zimmeck 2015, EFC 2016c Country Profile of the UK, Traynor and Walker 2015

Typology analysis and theoretical propositions Relative share of operating foundations Total expenditure of foundations Share of foundations active in social services Share of operating foundations active in social services Sources:

19

48% (24% of those are mixed) €13.1 billion

201422

14%

200223

8%

201524

201425

€0.6 billion

201326

€4.4 billion

201527

55%

201428

30%

200229

39%

201530

43% (21% of those are mixed)

201431

8%

200232

unknown

Various sources, please note the footnotes 16–32.

In table 2.2 it is displayed that the order of the three countries regarding government social welfare spending as percentage of GDP has been stable since the 1990s. Sweden has the highest share in government social welfare spending, followed by Germany and the UK33. 22

23

24 25

27

28 29 30 31 32 33

Representative survey, Anheier et al. 2017; here operating and mixed foundations are combined in one category. Wijkström and Einarsson 2004 – Foundations in Sweden. Their Scope Roles and Visions, page 44f., table 4 and table 6. Pharoah and Zimmeck 2015, EFC 2016c Country Profile of the UK, Traynor and Walker 2015 Anheier et al. (2017a, 13 and footnote 31) 26 EFC 2014a, Stiftelser i Samverkan (The Association of Swedish Foundations) EFC 2016c—based on 300 largest foundations—Giving Trends Top 300 Foundation Grantmakers 2015 Report (ACF) Representative survey, Anheier et al. 2017 Wijkström and Einarsson 2004 Traynor and Walker 2015 Representative survey, Anheier et al. 2017 Wijkström and Einarsson (2004,46). However, the UK had the largest growth in share and comes closer to the rest of the welfare states, at least in 2013. More recent developments with huge welfare cuts seem to put the country closer

20

Theoretical framework

Table 2.2: Three country overview on government social welfare spending as percentage of GDP, different years

Year

Germany

Sweden

UK

1990

21.4

28.5

16.3

2000

26.2

28.2

18.4

2013

25.6

28.2

22.5

2014

25.8

28.1

21.5

Source: OECD data retrieved 17.10.2016. Table 2.3: Three country overview on third sector data of ITSSOIN project

Data on the third sector from ITSSOIN34 Share of third sector involved in welfare state core activities35

Germany

Year

Sweden

Year

UK

Year

72%36

2007

28%

2002

61%

2012

Third sector share of paid workforce37 Third sector share of GDP

9.2

2007

2.7

2002

2.7

2012

4.1

2007

5.3

2002

2.4

2012

Source: Anheier, Krlev, Preuss et al. 2014, ITSSOIN Deliverable 2.1 Theory and empirical capturing of the third sector 201438

34

35

36

37

38

to its path-dependent trajectory again. Social welfare expenditure declined 1% from 2013 to 2014 (cf. OECD data on government social welfare spending retrieved 17.10.2016.). Anheier, Krlev, Preuss et al. 2014—ITSSOIN Deliverable 2.1 Theory and empirical capturing of the third sector 2014. Welfare state core activities expenditures – share of third sector in % (Anheier, Krlev, Preuss et al. 2014). For Germany, third sector share in total national gross value added in these fields is used (Anheier, Krlev, Preuss et al. 2014). Third sector share of paid workforce (% of total national workforce) (Anheier, Krlev, Preuss et al. 2014). ITSSOIN limitations of approach: »Since the history and functions of the third sector vary between different countries, it must be highlighted that it is extremely difficult to make a relevant synthesis. One of the most serious problems is that we have data from different years. In the extreme cases there are 20 years between the newest and the oldest data sets. Nonetheless, these are, to the best of our knowledge, the latest and most fitting data available. To some extent newer data exist (for example from the ZIVIZ survey in Germany), but if they do not appear in the analysis, it is because they did not match the particular dimensions explored below [for instance third sector funding or share of third sector involved in welfare state core activities]. This is why in some cases older but

Typology analysis and theoretical propositions

21

Table 2.3 shows the newest data from the ITSSOIN project (Impact of the Third Sector as SOcial Innovation) on the third sector of the different parameters of involvement in welfare core activities, the share of paid workforce and the share of GDP. For the foundation sector, there exists no data on the share of paid workforce or share of GDP. For Germany, we know the share of foundations working with full time employees or volunteers, and we know the annual budget and the revenue structure along general lines (cf. Anheier et al. 2017b, chapter 2). However, for the other two countries, there are no representative surveys and these numbers are not available. Asset numbers for German foundations are not available according to ICNPO fields because no reliable numbers have been published, apart from the ones generated by the German foundations project (Anheier et al. 2017). Likewise, there was no information in assets for the different fields of activity for the UK. The composition of the foundation sectors in the three countries under investigation is very distinct, as the overview in table 2.1 shows. In Germany, the share of operating and mixed foundations is uniquely high compared to Sweden, with a moderate share of operating foundations and the UK with almost no known operating foundations. However, the grant-making form is the dominant foundation type in each of the three countries. The social services field is notably pronounced in Germany, Sweden and the UK, with a high share of foundations’ engagement in the field. The highest share is known in Germany, with more than half of the foundations active in the field (55%), followed by the UK with 39%, and Sweden with 30% share active in social services. The share of operating foundations in the social services field in Sweden is, with only 8%, very low, considering that 30% are operating in total. In Germany, the share of operating foundations in the social service field is almost as high as the share for the whole foundations sector, with 21% operating and 22% mixed. For the UK, there is no estimation apart from the insight that the numbers are supposedly remarkably low, with almost none identified. After this short general overview on the data and differentiation of the foundation sectors and country social expenditures, the next section discusses the theoretical considerations and typologies. Theoretical propositions are presented as guidelines for further analysis.

more fitting data were used. Although this means that the following analysis has to be read with caution, we are confident that given the variety of indicators included and the complementary perspectives provided in the next chapters, we can provide a meaningful indication of national variations affecting social innovation.« (Anheier, Krlev, Preuss et al. 2014, 14).

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Theoretical framework

2.2.2 Varieties of Capitalism – Typology and propositions The core idea of the Varieties of Capitalism (VoC) approach by Hall and Soskice (2001) is that country specific settings produce distinct comparative advantages in different capitalistic systems. Firms and other actors in the system find different solutions to deal with coordination problems. With regard to social policy and the welfare state, emphasis is on the firm perspective. Nevertheless, the authors suggest a corresponding logic of regime type differences as well for social policy. There are two central influences in the distinct regime countries, the state and the market. These two poles are understood as lying at both ends of a continuum (cf. Hall and Soskice 2001, 8), where the countries can be aligned according to their dominant pattern. Some economies are more market and others more state-centered. The core argument and perspective is based on the firm as central actor. What effect do different welfare schemes have on the firm and the respective system? Hence, the coordination problems of the firm are solved differently according to the system within which they operate. The question here, then, is what does the VoC logic of different coordination systems and different market systems mean for the embedding of foundations in welfare states? The welfare state is only implicitly thought of in the VoC approach. Social policy and coordination of welfare aspects correspond with the respective capitalistic system (cf. Hall and Soskice 2001, 50f.). In the VoC logic this would most likely be the case also for the social services area as part of the welfare system. LMEs tend to have a liberal welfare state with basic provision for all and fostering private market solutions, and CMEs would prefer a welfare state with higher state involvement. As such, they have a stronger state influence on coordination. However, with CMEs the welfare state system configuration is not as clearly predicted as it is for LMEs (cf. Hall and Soskice 2001, 51). The driver for country differences in VoC is the degree of market influence as a coordination mechanism. The system logic should be active not only for the firm, but also for other actors and as such, foundations as well. When taking this into consideration and bringing foundations in, a central prediction emerges. Propositions regarding foundations would be that if they fit the logic of VoC, then foundations also have to take part in and be influenced by the market system as a coordination mechanism in the LMEs, and they would be under greater state influence in the CMEs. Proposition 1: If the VoC logic holds true for the foundation sector, then foundations re more likely to take part in and be influenced by the market forces of the respective country configurations (CME or LME).

Typology analysis and theoretical propositions

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Table 2.4: Liberal and Coordinated market economies (only EU countries) based on original VoC table

LMEs Ireland United Kingdom

CMEs Belgium, Denmark, Finland, Germany, Iceland, Netherlands, Norway, Sweden, Switzerland

Source: Based on Hall and Soskice 2001, page 20, table 1.1.: The economic performance of liberal and coordinated market economies. Here only the European countries are displayed.

In more market dominated countries, foundations would have to be prone to a higher market affiliation to find solutions and be more market oriented. In LMEs, the welfare state would be more liberal and market oriented. There, the government social welfare spending would be rather low compared to CME countries. Foundations would perform a different function in LMEs than in the CMEs. Stock market capitalization was higher, and the preference to use it would be higher. Reliance on market solutions would also be higher. In CMEs, the state would have more influence and regulate more. Higher government social welfare spending and a larger welfare state are expected. The coordination mechanism on the social service market would be more constrained by the state than in the LME countries. There would be lesser pure market influence. Social networks would be more important. In table 2.5, the theorized size of the welfare state is operationalized as government social welfare spending as a percentage of GDP. In the upper part of the table the theoretically expected distribution is displayed. Below, the empirical picture of the size of the welfare state is shown, and the affiliation of the three countries under investigation is consistent with theory. The theorized size of the welfare state can be supported empirically for the UK and Ireland as LME countries. Here, government social welfare spending is rather low compared to the other European countries named by Hall and Soskice in their original work (Hall and Soskice 2001). Germany, Sweden, Belgium, Denmark and Finland as CME countries have higher government social welfare spending. The prediction for LMEs is plausible. For CMEs, the prediction is not as precise and a bit broader, but that was something Hall and Soskice had anticipated, in the sense that for CMEs it is not unambiguously clear how they are composed and how they function with respect to coordination mechanisms other than the market (cf. Hall and Soskice, 51). Some of the CME countries may rely more on the state and some more on personal networks or other relations to coordinate their concerns in the CME system.

24

Theoretical framework

Table 2.5: Theoretically expected and empirical welfare state size/scope of Liberal and Coordinated market economies (only EU countries)

Hall and Soskice 2001, CME and LME countries

LME:

CME:

Ireland United Kingdom

Belgium, Denmark, Finland, Germany, Netherlands, Norway, Sweden, Switzerland

Expected welfare state configuration/size

Small welfare state – low government social welfare spending as percentage of GDP

Large welfare state – high government social welfare spending as percentage of GDP

OECD data – social expenditure in percentage of GDP 2000 (median, relative*) OECD data – social expenditure in percentage of GDP 2013 (median, relative)

Ireland, Netherlands, Switzerland, United Kingdom

Belgium, Denmark, Finland, Germany, Norway, Sweden

Ireland, Norway, Switzerland United Kingdom

Belgium, Denmark, Finland, Germany, Netherlands, Sweden

Source: OECD data on social expenditure as percentage of GDP, different years, retrieved in March 2016, the author’s own calculation of relative median. Country selection from Hall and Soskice 2001, page, 20, table 1.1. *It has to be kept in mind that the median thresholds are calculated in relative terms. If the country composition is altered, another picture may show. However, these are the countries originally taken into consideration by Hall and Soskice 2001. For a similar procedure on relative thresholds, please see Anheier, Krlev, Preuss et al. 2014 and the ITSSOIN project.

There is no prediction on the overall nonprofit sector or foundation sector size that can be drawn from VoC theory. But it can be theorized what mode of operation would be preferred if the logic of the respective system holds true. Where market mechanisms are pronounced, the grant-making aspect would be more likely to be pronounced, as there, the capital market is much more involved, which was one of the empirical dimensions of the classification. In the CMEs, on the other end of the spectrum, the state has more influence and a larger welfare state is likely to be

Typology analysis and theoretical propositions

25

active. The foundation sector can be more independent or more interconnected. Here, the proposition is that the operating share of the foundations sector would be higher with a larger financial mix and more personnel working in the foundations. They are likely to be less dependent on stock market investment (theoretical considerations displayed in table 2.6). Table 2.6: Theoretically expected share of grant-making and operating foundations

Hall and Soskice 2001 – LME and CME countries

Ireland United Kingdom

Belgium, Denmark, Finland, Germany, Netherlands, Norway, Sweden, Switzerland

Empirical dimensions tested in the VoC original text by Hall and Soskice (2001) Expected share of grantmaking and operating foundations expected by theory

High stock market capitalization Employment protection low

Lower stock market capitalization Employment protection high

Full-time equivalent employment high GINI rather high

Full-time equivalent employment rather low GINI rather low

Grant-making more pronounced (high stock market capitalization)

Operating foundations more pronounced (lower stock market capitalization and more financial mix)

Source: The author’s considerations based on Hall and Soskice 2001.

In LME countries, the market mechanism is pronounced. The liberal welfare state prefers basic provision, grant-making foundations are mainly financed through investments of their own assets on the stock market, and as such, grant-making foundations are more likely to be the preferred form of foundations in social welfare in LMEs. Proposition 1A: Grant-making foundations in social welfare are more likely to be the dominant foundation form in LMEs, where stock market capitalization is high and the market mechanism is pronounced.

26

Theoretical framework

Proposition 1B: The share of operating foundations in social welfare is more likely to be higher in CME countries with a more constrained market and a higher preference for network coordination and state-centered coordination. The predictions and insights for foundations in the social welfare field are rather limited to very general tendencies based on the VOC theory. To go a bit further, if the foundation sector was integrated into the respective capitalistic system, the preference for highly skilled staff would be higher in CME countries than in LME countries. As there is no detailed data available for these further propositions, the general assumptions of proposition 1A and 1B shall be the guideline for the investigation. Table 2.7: Empirical share of grant-making and operating foundations in the VoC countries

Hall and Soskice 2001 – LME and CME countries

Operating foundations share

Grant-making foundations share

Ireland United Kingdom

Belgium, Denmark, Finland, Germany, Netherlands, Norway, Sweden, Switzerland

LMEs - market dominated - preference for market coordination Lower share

CMEs - state dominated - preference for network/other coordination Higher share

United Kingdom (8%*) Sweden (14%) Higher share

Germany (44%)

United Kingdom (92%) Sweden (86%)

Germany (56%)

Lower share

Source: OECD data on government social welfare spending as percentage of GDP, own adaption, based on Esping-Andersen 1990; Arts and Gelissen 2002 – Focus is on European countries. Foundation sector data, from Pharoah and Zimmeck 2015, Wijkström and Einarsson 2004, Anheier et al. 2017. * 8% of charitable expenditure, not share of foundations

Table 2.7 shows that the theorized grant-making and operating share of foundations can be supported by the empirical findings for the two countries of Germany and the UK. Sweden falls in the opposite category, as we would have expected for a CME country. Here, the share of grant-making foundations is much higher, and

Typology analysis and theoretical propositions

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the share of operating foundations is lower. Sweden seems to deviate from the predicted ideal type configuration of CME. However, when we take the further analysis on VoC of Schneider and Paunescu (2012) into account, the picture changes. In their revision with newer data they could show that Sweden changed affiliation from CME in 1995 to LME-like since 1999 (Schneider and Paunescu 2012, page 10, table 1). The relevant aspect for the change was the characteristic that the stock market capitalization is now higher. The first impression of the data tables combined with the theoretical propositions provides insight on a broad tendency, which suggests a relation of the foundation sectors’ operating mode distribution in relation to the capitalistic system they exist in. Propositions 1, 1A, 1B are leading for further investigation. 2.2.3 Three Worlds of Welfare Capitalism – Typology and propositions The Three Worlds of Welfare regime approach developed by Esping-Andersen (1990) is based on the idea of class conflicts leading to different class coalitions in the political process that again shape social policy. Varied underlying power distribution leads to different representation of interests in policy and is considered as the main driver of welfare state differences39. Other institutions shape the welfare state development further in an interwoven institutional arrangement. As Van Kersbergen and Manow (2009) add to the discussion, the importance of religious streams for the formation of class coalition was not explained and explicitly discussed by Esping-Andersen (1990). It is, however, an especially important aspect with regard to welfare regimes connected to the class power thesis. The proposition regarding foundations would be that if they fit the logic of the typology, they must be influenced by class policy represented in the different social policy schemes as the main driver of welfare regime differences. Proposition 2: If the Three Worlds of Welfare Capitalism regime logic holds true for the foundation sector, then foundations are more likely to be influenced by social policy arrangements that are shaped by different class power coalitions as the main driver of welfare regime differences.

39

The presence and absence of the Catholic Church is one of these additional factors that influenced the institutional arrangement of the welfare state remarkably. For instance, through translation into Catholic related party power (cf. Esping-Andersen 1990, 137).

28

Theoretical framework

Table 2.8: The Three Worlds of Welfare Capitalism: De-commodification and stratification

Welfare typology

regime

De-commodification Low

De-commodification High

Stratification Low

Conservative: Italy, France, Germany

Social-democratic: Netherlands, Denmark, Sweden

Stratification High

Liberal: Switzerland, Ireland, United Kingdom

—

Source: Based on Esping-Andersen 1990; Arts and Gelissen 2002 – focus is on European countries.

In the typology the dimension of de-commodification is centrally constructed as being a driver for the welfare state size. Commodified individuals rely heavily on the market to provide a living for themselves. Higher de-commodification implies greater state involvement in the independence of the citizen from the market, meaning a larger scale and scope of welfare schemes, along with higher social expenditures. Both dimensions of the ›Three Worlds of Welfare Capitalism‹ original typology have an influence not only on the composition, but also on the size, of the welfare state. Higher de-commodification means a larger welfare state, and low stratification can mean a larger welfare state as well. However, it seems the more explicit driver for the size of the welfare state is de-commodification – which leads to more influence of the state and to larger welfare state expenditure. Low stratification means that larger solidarities among classes can be built and that lower class interests may get representation, leading to a larger welfare state because of larger protection schemes. As such, stratification can also have an influence on the welfare state. The main aspect, here, is the maintenance of income. The class power influence is the relational aspect of the typology. The lower the stratification, the higher your chance of maintaining your income. It is not entirely clear if low stratification as characteristic out-rules low de-commodification. However, it can be assumed that a welfare state with low stratification is not small, somewhat state controlled redistribution or protective mechanism is likely to be active.

Typology analysis and theoretical propositions

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Table 2.9: The Three Worlds of Welfare Capitalism: De-commodification and stratification as indicators for the size of the welfare state

Three Worlds typology Stratification41 Low

Stratification High

De-commodification40 Low Conservative: Italy, France, Germany Size of welfare state not unambiguously clear, however, it seems plausible that these welfare states are not necessarily small ones Liberal: Switzerland, Ireland, United Kingdom

De-commodification High Social-democratic: Netherlands, Denmark, Sweden Large welfare state – High government social welfare spending – more state influence —

Small welfare state – Low government social welfare spending – more market influence Source: Own adaption, based on Esping-Andersen 1990; Arts and Gelissen 2002 – focus is on European countries.

The size of the welfare state is operationalized as government social welfare spending as a percentage of GDP. For comparative reasons with the other two regime theories, the size of the welfare state as a percentage of GDP is constructed as the one dimension that is held constant in the typology tables. The focus of Esping-Andersen (1990) goes beyond economic aspects with a critique on the more economic dominated perspectives of regime differences and to go beyond the sole economic indicator of social welfare expenditure (cf. Esping-Andersen 1990, 2). The simplification of the tables to match the comparison is not meant to suggest disregard for the underlying theory logic and complexity. 40

41

De-commodification is the first dimension of the typology. It consists of three indexes for the central social policy areas like pensions, sickness, and unemployment cash benefits (EspingAndersen 1990, 49). Stratification is the second central dimension. The emphasis is on income maintenance, and not pure income distribution (Esping-Andersen 1990, 69). The central indexes for stratification are: the degree of corporatism, etatism, and means-testing, market influence, universalism, and benefit equality (Esping, Andersen 1990, page 70, table 3.1).

30

Theoretical framework

Table 2.10 shows that the liberal and social-democratic welfare states comply well with the predicted operationalization of high de-commodification on the size of the welfare state. Low de-commodification does not automatically mean a small welfare state if stratification is low as well. The low stratification seems to be the counterpoint in this case, as the data on the three countries of Germany, France and Italy show. However, when low de-commodification goes together with high stratification, the data suggests the welfare state size is small. Table 2.10: The Three Worlds of Welfare Capitalism: De-commodification and stratification as indicators for the size of the welfare state, empirical picture

Three Worlds typology

Small welfare state – Low government social welfare spending as percentage of GDP – Low Liberal: Switzerland, Ireland, United Kingdom

Large welfare state – High government social welfare spending as percentage of GDP – High Social-democratic: Netherlands, Denmark, Sweden

Empirically – government social welfare spending as percentage of GDP

Low

Conservative: Italy, France, Germany High

1985/1990

Switzerland, Ireland, United Kingdom, Italy

2000

Netherlands, Switzerland, Ireland, United Kingdom

2013

Netherlands, Switzerland, Ireland, United Kingdom

Theoretically expected

Germany (Median), Denmark, Netherlands, Sweden, France Germany, Denmark, Sweden, France, Italy (Median) Germany (Median), Denmark, Sweden, France, Italy

Source: OECD data on social expenditure as percentage of GDP, different years, retrieved in March 2016, own adaption, based on Esping-Andersen 1990; Arts and Gelissen 2002 – Focus is on European countries.

Typology analysis and theoretical propositions

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Esping-Andersen (1990, 26) sets into correspondence the spheres of state, market and the family. Hereby one can criticize that he omits the nonprofit sector sphere (cf. Kuhnle and Selle 1992). This sphere, I argue, can be equally thought of as the family sphere. It is the sphere that, apart from the state, acts as a safety net when the family is not capable of providing the necessary care and protection for their members in need. Esping-Andersen does not mention the nonprofit sphere in his original text explicitly, but it can be included in the same way he treats the family sphere. In the social democratic regime, the state is the central power in the field of welfare provision. The ideal space for private engagement in social welfare is, typically speaking, not large. »This model crowds out the market …« (Esping-Andersen 1990, 28). So the nonprofit sector is expected to be not that large, at least the formal one. We know that volunteering, for instance, is strikingly high in Sweden (cf. Study on Volunteering in the European Union 2010, 65). The private sphere is rather restricted by the state. In Esping-Andersen’s words (1990, 28): »The ideal is not to maximize dependence on the family, but capacities for individual independence«. In the liberal welfare state, market solutions are pronounced. »[…] The state encourages the market […]« (Esping-Andersen 1990, 26). The private sphere, also with regard to nonprofit engagement, is likewise given a greater space to act formally within the welfare field. Welfare provision is equally distributed but kept to a minimum for everyone. Here, the nonprofit sector is likely to supplement state provision as private initiatives, and the space for further demand in social welfare is rather large. In the conservative regime, another configuration is present. Here, the family is of crucial importance, and the Church has strong influence. Esping-Andersen does not spell out that this private sphere is centrally shaped by the nonprofit actors in welfare provision. He does not factor in the nonprofit sector. »[…] the principle of ›subsidiarity‹ serves to emphasize that the state will only interfere when the family’s capacity to service its members is exhausted.« (Esping-Andersen 1990, 27). The nonprofit sector is expected to be large.

32

Theoretical framework

Table 2.11 shows the nonprofit sector in correspondence with the theorized size of the welfare regimes. Factoring in the nonprofit sector, each of the three regime type countries of Germany, Sweden and the UK are affiliated to a different cluster. Table 2.11: The Three Worlds of Welfare Capitalism: Size of the welfare state and nonprofit sector size in relation

Welfare regime typology

Theoretically expected

Small welfare state – Low government social welfare spending as percentage of GDP – Low Liberal: Switzerland, Ireland, United Kingdom

1985/1990 government social welfare spending

Switzerland, Ireland, United Kingdom, Italy

NPO sector size – small

Government social welfare spending as percentage of GDP – low Italy

NPO sector size – large

United Kingdom

Large welfare state – High government social welfare spending as percentage of GDP – High Social-democratic: Netherlands, Denmark, Sweden Conservative: Italy, France, Germany Germany (Median), Denmark, Netherlands, Sweden, France Government social welfare spending as percentage of GDP – high Sweden, Denmark Germany, France, Netherlands

Source: OECD data on social expenditure as percentage of GDP, retrieved in March 2016, own adaption, based on Esping-Andersen 1990; Arts and Gelissen 2002 – Focus is on European countries. ITSSOIN data on the nonprofit sector size (for more detailed explanation see the part on the social origins theory in this chapter).

Typology analysis and theoretical propositions

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In table 2.12, data for the nonprofit sector is exchanged for the foundation sector to see if the sector size corresponds with the nonprofit sector size. All three countries have a comparatively large foundation sector. Table 2.12: The Three Worlds of Welfare Capitalism: Size of the welfare state and foundation sector size in relation

Welfare regime typology

Theoretically expected

1985/1990 government social welfare spending

Foundation sector size – small (Median, relative*) Foundation sector size – large (Median, relative)

Small welfare state – Low government social welfare spending as percentage of GDP – Low Liberal: Switzerland, Ireland, United Kingdom Switzerland, Ireland, United Kingdom, Italy

Large welfare state – High government social welfare spending as percentage of GDP – High Social-democratic:Netherlands, Denmark, Sweden Conservative: Italy, France, Germany Germany (Median), Denmark, Netherlands, Sweden, France

Government social welfare spending as percentage of GDP – low Ireland, Italy, Denmark (Median)

Government social welfare spending as percentage of GDP – high France, Netherlands

United Kingdom

Germany, Sweden

Source: OECD data on social expenditure as percentage of GDP, retrieved in March 2016, own adaption, based on Esping-Andersen 1990; Arts and Gelissen 2002 – Focus is on European countries. Foundation sector data derived from: European Foundation Centre (EFC) foundation numbers in the different EU countries from the online resource centre, 26th of September 2014 (overview on foundation sector data for Europe, please note the Appendix), Wijkström and Einarsson 2004, Anheier et al. 2017. * It should be kept in mind that the median thresholds are calculated in relative terms. If the country composition is altered another picture may show. However, these are the countries originally taken into consideration by Esping-Andersen (1990). For a similar procedure on relative thresholds please see Anheier, Krlev, Preuss et al. 2014 and the ITSSOIN project.

34

Theoretical framework

If foundations fit the logic of their respective system – if they are influenced by social policy systems as proposed in proposition 2, the following would show: Foundations as part of the nonprofit sector would be more restricted by the state in Sweden and have a more constrained space within which to act in social welfare, in the UK they would work besides the state with limited interference in a larger space given to them by the system in the field of social welfare and the financing would be privately dominated, and in German social welfare provision, they would be incorporated according to the subsidiarity principle. Proposition 2A: If foundations in social welfare are integrated into the regime logic of the social democratic regime, then foundations in social welfare are more likely to have a smaller space to act, are restricted by the state and the number in social welfare is expected to be low. Propositions 2B: If foundations in social welfare are integrated into the regime logic of the liberal regime, then foundations in social welfare are more likely to have a larger space to act, complement state activity, are financed privately, state influence is rather low and the number in social welfare is expected to be high. Proposition 2C: If foundations in social welfare are integrated into the regime logic of the conservative regime, then foundations in social welfare are more likely to be subsidiary actors with a larger space to act and the number in social welfare is expected to be high. Table 2.13: The Three Worlds of Welfare Capitalism: Size of the welfare state and foundations’ share in social services

Foundations in social services Foundations in social services proportion LOW Foundations in social services proportion HIGH

Government social welfare spending Low

Government social welfare spending High

The UK (39%)

Sweden (30%)

Germany (55%)

Source: Traynor and Walker 2015 for the UK; Wijkström and Einarsson 2004 for Sweden; Anheier et al. 2017 for Germany.

Typology analysis and theoretical propositions

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Table 2.14: The Three Worlds of Welfare Capitalism: Size of the welfare state and operating share of foundations in the field of social welfare

Welfare regime typology

Theoretically expected

Small welfare state – Low government social welfare spending as percentage of GDP – Low Liberal: Switzerland, Ireland, United Kingdom

Large welfare state – High government social welfare spending as percentage of GDP – High Social-democratic: Netherlands, Denmark, Sweden Conservative: Italy, France, Germany

1985/1990

Operating foundations Low share Operating foundations High share

Switzerland, Ireland, United Kingdom, Italy Government social welfare spending as percentage of GDP – low United Kingdom (