Philanthropic Foundations in Higher Education: Comparative Perspectives from the United States and Germany [1st ed.] 978-3-658-27386-6;978-3-658-27387-3

Table of contents :
Front Matter ....Pages I-XVII
Introduction (Janina Mangold)....Pages 1-13
Theoretical Basis and Empirical Puzzle (Janina Mangold)....Pages 15-44
Methodology (Janina Mangold)....Pages 45-71
Germany (Janina Mangold)....Pages 73-107
United States of America (Janina Mangold)....Pages 109-149
Comparative Analysis (Janina Mangold)....Pages 151-189
Implications and Conclusions (Janina Mangold)....Pages 191-215
Back Matter ....Pages 217-258

Citation preview

Janina Mangold

Philanthropic Foundations in Higher Education Comparative Perspectives from the United States and Germany

Philanthropic Foundations in Higher Education

Janina Mangold

Philanthropic Foundations in Higher Education Comparative Perspectives from the United States and Germany

Janina Mangold München, Germany Dissertation submitted to the Hertie School of Governance, Berlin, in partial fulfillment of the requirements for the degree of Doctor rerum politicarum (Dr. rer. pol.) in the Doctoral Programme in Governance, 2018

ISBN 978-3-658-27386-6 ISBN 978-3-658-27387-3  (eBook) https://doi.org/10.1007/978-3-658-27387-3 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

Acknowledgements This dissertation was first submitted to and defended at the Hertie School of Governance, Berlin, in partial fulfillment of the requirements for the doctoral degree in Governance. My utmost gratitude goes first and foremost to my main dissertation advisor Helmut K. Anheier for his extensive feedback, continued support, and guidance throughout my dissertation. Of course, I also want to thank Steven Rathgeb Smith and Michael Hölscher for their indispensable advice and feedback on previous drafts of this dissertation. The research project “Role and Position of German Foundations” created an inspiring environment in which to write this dissertation. Not only do I cherish the numerous scholarly experiences, but also the exchange with my co-workers Sarah Förster and Clemens Striebing. I also thank Sasikumar Shanmuga Sundaram, Marie-Christin Höhne, Katharina Milz, and Mariella Falkenhain for providing careful feedback on parts of the dissertation. At the Hertie School of Governance, I have benefitted greatly from discussions with my fellow PhD students, in particular Anita Tiefensee, Patrick Gilroy, and Sandra Engelbrecht, as well as within our Nonprofit Organizations Study Group. The research funding organizations of our research project – the Fritz Thyssen Stiftung, Gemeinnützige Hertie-Stiftung, Robert Bosch Stiftung, Stiftung Mercator, VolkswagenStiftung as well as Stifterverband für die Deutsche Wissenschaft – deserve my gratitude for joining forces to make this research possible. Moreover, I would like to say thanks to the Hertie School and the German Academic Exchange Service for enabling me to conduct field research and expert interviews in the United States and participate at international conferences in Münster, Chicago, and Stockholm. I am grateful to all cooperation partners for their participation, especially the American Foundation Center by Candid and German Federal Statistical Office for providing access to data, but also to all focus group participants and interview partners in Germany and the United States for their time and willingness to share their insights. Finally, and most importantly, I wish to thank my family and Charlton Payne for their endless support.

Table of Contents 1

Introduction ................................................................................................ 1 1.1 Research Topic and Relevance............................................................ 2 1.2 Philanthropic Foundations ................................................................... 3 1.3 State of the Art and Gaps in the Literature .......................................... 4 1.4 Research Questions and Sub-Questions .............................................. 9 1.5 Research Objectives and Delimitations ............................................... 9 1.6 Structure of the Book ........................................................................ 11

2

Theoretical Basis and Empirical Puzzle ................................................. 15 2.1 Theoretical Insights of Regime and Foundation Models ................... 15 2.1.1

Varieties of Capitalism ......................................................... 15

2.1.2

The Three Worlds of Welfare Capitalism ............................ 21

2.1.3

Social Origins: Nonprofit Regime Types ............................. 26

2.1.4

Comparative Foundation Models ......................................... 30

2.1.5

Summary of Hypotheses ...................................................... 34

2.2 Laying out the Puzzle ........................................................................ 35 2.3 Summary and Pathway to Case Studies ............................................ 43 3

Methodology ............................................................................................. 45 3.1 Operationalization of Hypotheses ..................................................... 45 3.2 Case Selection ................................................................................... 53 3.2.1

Selection of Countries .......................................................... 53

3.2.2

Selection of Higher Education as Field of Activity .............. 54

3.2.3

Selection of Foundations ...................................................... 58

3.3 Data Sources and Analysis ................................................................ 63 3.3.1

Quantitative Data ................................................................. 63

3.3.2

Qualitative Data ................................................................... 66

3.4 Research Considerations ................................................................... 69

VIII 4

Table of Contents Germany ................................................................................................... 73 4.1 Philanthropic Foundations in Germany ............................................. 73 4.1.1

Definitions ............................................................................ 74

4.1.2

Types of Foundations, Mode of Operation........................... 75

4.2 The Activity Field of Higher Education ............................................ 77 4.2.1

Structural Principle, Actors and Governance ....................... 78

4.2.2

Central Challenges ............................................................... 81

4.3 German Higher Education Foundations ............................................ 82 4.3.1

Orientation Towards the State, Businesses, and HEI ........... 83

4.3.2

The Issues of Decommodification and Stratification ........... 94

4.3.3

The Nature of the Foundation Regime ................................. 97

4.3.4

Longstanding and Current Policy Issues ............................ 104

4.4 Preliminary Assessment .................................................................. 106 5

United States of America ....................................................................... 109 5.1 Philanthropic Foundations in the United States .............................. 109 5.1.1

Definitions .......................................................................... 109

5.1.2

Types of Foundations, Mode of Operation......................... 110

5.2 The Activity Field of Higher Education .......................................... 113 5.2.1

Structural Principle, Actors and Governance ..................... 114

5.2.2

Central Challenges ............................................................. 119

5.3 American Higher Education Foundations ....................................... 123 5.3.1

Orientation Towards the State, Businesses, and HEI ......... 123

5.3.2

The Issues of Decommodification and Stratification ......... 127

5.3.3

The Nature of the Foundation Regime ............................... 134

5.3.4

Longstanding and Current Policy Issues ............................ 141

5.4 Preliminary Assessment .................................................................. 147 6

Comparative Analysis ............................................................................ 151 6.1 Orientation Towards the State, Business, HEI, and Innovation ...... 152

Table of Contents

IX

6.2 Revisiting The Three Worlds of Welfare ........................................ 166 6.3 Revisiting Social Origins: Nonprofit Regime Types ....................... 181 6.4 Answering the Research Question .................................................. 187 7

Implications and Conclusions ............................................................... 191 7.1 Summary of Findings ...................................................................... 191 7.2 Implications for Comparative Foundation Literature ...................... 194 7.3 Implications for Foundations, Government Policy, and HEI .......... 199 7.4 Contributions and Directions for Future Research .......................... 211 7.5 Conclusions ..................................................................................... 214

Appendices ...................................................................................................... 217 Appendix A: Vignette ............................................................................... 217 Appendix B: Survey (Example) ................................................................ 218 Appendix C: Interviews ............................................................................ 220 List of German Foundations Interviewed (Alphabetical) ................ 220 List of American Foundations Interviewed (Alphabetical) .............. 220 List of American Organizations Interviewed (Alphabetical) ........... 221 Appendix D: Interview Questionnaire ...................................................... 222 Appendix E: Lists of 20 Relevant Foundations ........................................ 225 References........................................................................................................ 227

List of Abbreviations ACLS American Council of Learned Societies BGB German Civil Code BVDS Federal Association of German Foundations CME Coordinated market economies CNP Johns Hopkins Comparative Nonprofit Sector Project CRC Collaborative Research Center DFG German Research Foundation EU European Union FTE Full-time equivalent GDP Gross Domestic Product GER Germany GWK Joint Science Conference HEI Higher Education Institution ICNPO International Classification of Nonprofit Organizations IRS Internal Revenue Service K-12 Kindergarten through twelfth grade LME Liberal market economies NEA National Endowment for the Arts NEH National Endowment for the Humanities NGO Non-governmental organization NIH National Institutes of Health NPO Nonprofit organization NSF National Science Foundation NTEE National Taxonomy of Exempt Entities OECD Organisation for Economic Co-operation and Development STEM Science, Technology, Engineering, Mathematics UC University of California UK United Kingdom US(A) United States (of America) VoC Varieties of Capitalism ZiviZ Civil Society in Numbers

List of Figures Figure 2-1:  Figure 2-2:  Figure 2-3: Figure 2-4:  Figure 3-1:  Figure 3-2:  Figure 3-3:  Figure 4-1:  Figure 4-2:  Figure 4-3:  Figure 4-4:  Figure 4-5:  Figure 4-6:  Figure 4-7:  Figure 4-8:  Figure 4-9: Figure 5-1:  Figure 5-2:  Figure 5-3:  Figure 5-4:  Figure 6-1:  Figure 6-2:  Figure 6-3:  Figure 6-4:  Figure 6-5:  Figure 7-1: 

State versus market orientation................................................. 16 Foundation triangle ................................................................... 34 Expenditure on tertiary as percentage of GDP ......................... 41 Expenditure on tertiary as % of total government expenditure 42 Visualization of the term higher education in Germany ........... 56 Visualization of the term education in the USA ....................... 57 Visualization of the term higher education in the USA ............ 58 Types of German foundations sorted according to size ............ 76 Actors in German higher education .......................................... 79 Mode of operation of higher education foundations ................. 83 Relationship between foundations and public bodies ............... 86 Relationship between foundations and companies ................... 88 Relationship between foundations and research institutions .... 91 Institutional proximities of German foundations ...................... 93 Roles of German foundations in comparison ........................... 98 Foundation triangle for German foundations.......................... 107 Types of foundations .............................................................. 112 Actors in American higher education ..................................... 115 Institutional proximities of American foundations ................. 127 Foundation triangle for American foundations ....................... 148 German foundation support for HEI according to type .......... 173 American foundation support for HEI according to type ....... 174 Revenues of private nonprofit higher education institutions .. 183 Revenues of public higher education institutions ................... 184 Education vs. social spending in Germany and the US .......... 186 Typology of higher education foundations ............................. 196

List of Tables Table 2-1:  Decommodification and stratification in national contexts ........... 22 Table 2-2:  Government spending and nonprofit scale .................................... 27 Table 2-3:  Third sector regime types and foundation models ........................ 31 Table 2-4:  Roles of foundations ..................................................................... 32 Table 2-5:  Comparative foundation roles ....................................................... 32 Table 2-6:  Summary of hypotheses ................................................................ 34 Table 2-7:  Scale of nonprofit operations in the US and Germany.................. 36 Table 2-8:  Scale of foundation operations in the US and Germany ............... 38 Table 2-9:  Scale of higher education foundation operations .......................... 39 Table 3-1:  Operationalization of hypotheses .................................................. 46 Table 3-2:  Quantitative and qualitative data by country................................. 63 Table 3-3:  Comparison of quantitative data ................................................... 66 Table 4-1:  Number of volunteers according to mode of operation ................. 92 Table 4-2:  Capacity building among higher education foundations ............. 102 Table 5-1: Learned and strategic American foundations .............................. 142 Table 6-1: Top 20 German higher education institutions in 2010 ................ 157 Table 6-2:  Top 25 higher education institutions, 2000-2010 ........................ 159 Table 7-1:  Comparative foundation roles ..................................................... 194

Abstract To what extent do regime classifications help us understand higher education funding by foundations vis-à-vis the state? This book investigates the explanatory value of three prominent regime classifications – Varieties of Capitalism, Three Worlds of Welfare, and Social Origins theory – for understanding higher education foundations in two regime types: the liberal United States as well as corporatist Germany. The analysis shows that the classifications do indeed provide a good starting point since they enable us to draw conclusions about the country and activity field level. However, the analysis also shows that they meet their limits when philanthropic foundations are added to the picture since the classifications are not specific enough to correctly predict foundation behavior. The typology proposed in this study suggests that foundations can be placed on a continuum between funding through higher education to reach other aims and funding of higher education for its own sake. The place of foundations on the continuum is different in the sense that the rather market-oriented, liberal US foundations are more likely to support other aims through higher education, while the rather state-oriented, corporatist-conservative German foundations more often want to support higher education for its own sake. This study draws upon a range of both quantitative and qualitative data: German and American data sets including university funding statistics, 40 qualitative foundation vignettes, a representative survey of 1,004 German foundations, one focus group, and 49 semi-structured expert interviews conducted onsite. One of the study’s major contributions is that it refines the regime classifications by considering the understudied role of independent, philanthropic foundations supporting the advancement of higher education. Furthermore, it establishes the first link between regime types and higher education literature by way of philanthropic foundations. As there is growing discussion in Germany and the US about private engagement versus public funding in higher education, the results ultimately have contemporary relevance for understanding the topic in a comparative manner.

1

Introduction

Comparative research on philanthropic foundations is scarce despite the fact that it would allow us to identify longstanding developments in the distribution of responsibilities for the public and private.1 The political space for foundations varies greatly by country and time. By studying foundations, therefore, we can draw general conclusions about changing conceptions of the state and governmental responsibilities vis-à-vis philanthropic commitment in different national contexts. As time goes by, relationships between foundations and the state might change. Such changes depend on the conception of statehood more generally: whether and to what extent a specific purpose is considered a public as opposed to a private responsibility. Moreover, even if a purpose is deemed a public purpose, it might still be supported by private funds. The relationship between public and private responsibilities depends not only on time but also place. What is considered a public responsibility in one country might not be understood as a public responsibility in another. Understanding this complexly changing interplay of public and private responsibilities is the core interest of the following monograph. In short, this study investigates American and German foundations, the two largest foundation sectors, in order to explore how the institutional ties of the supposedly same institution can vary vis-à-vis the state in different national contexts when it comes to supporting the purpose of higher education.2 By undertaking an in-depth comparative analysis of the higher education foundation sectors in those two countries, I want to shed light on public and private engagement for higher education. The aim of this book is to improve our understanding of modern societies by investigating current state-foundation-relationships in Germany and the United States. First, we need to define philanthropic foundations, their mode of operation, and the specific characteristics which make them particularly worthy of study. A brief survey of the existent research reveals a lacuna at the intersection of foun1

2

“Foundations indicate, perhaps more than any other type of nonprofit organizations, long-term directions and shifts in the relationships between public and private responsibilities; and between private wealth and the public good” (Anheier, Daly 2007b, p. 4). Chapter 3 includes the detailed operationalization of the term higher education. In brief, I define the activity field of higher education in Germany in accordance with the regulation of taxation which lists the foundation purpose “Wissenschaft und Forschung.” In the US, I refer to the National Taxonomy of Exempt Entities to operationalize higher education.

© Springer Fachmedien Wiesbaden GmbH, part of Springer Nature 2020 J. Mangold, Philanthropic Foundations in Higher Education, https://doi.org/10.1007/978-3-658-27387-3_1

2

1 Introduction

dation, higher education, and regime literature. As a result of this gap in existing research, in what follows I seek answers to the question: To what extent do regime classifications help us understand higher education funding by foundationsvis-à-vis the state in Germany and the United States? The overall aim is to explore the usability of regime theories and ultimately advance our understanding of philanthropic foundations in a comparative perspective. 1.1 Research Topic and Relevance In this study, I focus on the purpose of higher education. Not much research has been undertaken in comparative welfare state research with regard to education in general, and higher education in particular (see Busemeyer, Trampusch 2011, Busemeyer et al. 2013, p. 212). While primary and secondary education are often considered a basic right in most countries, this is less clear in the case of higher education (Willems, Beer 2012, p. 106). The reason for this is that higher education is seen as having value not only for society at large, but also for the individual attending higher education due to the resultant higher personal earnings.3 In both Germany and the United States, higher education is at a crossroads: On the one hand, higher education institutions are considered vital to a flourishing, vibrant economy. On the other hand, colleges and universities face several challenges: they are confronted with severe financial constraints due to a disinvestment of public funds while student numbers are on the rise. In order to fill the budget deficit, universities are building and professionalizing their development offices to acquire more external funds. In the course of this, higher education institutions have responded by trying to diversify and intensify their funding base: third-party funders, such as industry, government-funded agencies, international organizations, alumni, and philanthropic foundations, receive more and more attention from educational institutions. They all hold the potential to bring much needed revenue to universities in times of government cutbacks. However, they also bring a greater reliance of higher education institutions on external funding sources. This book focuses on a rarely discussed, but intriguing actor in the field of higher education funding: philanthropic foundations. As a “rare species” and the “most infrequent organizational form” (Anheier, Romo 1999, p. 79), foundations are financially smaller organizations, which experts describe as having a disproportionate importance as a result of the prevailing budget shortfalls. A Stanford professor argues: “And so they [higher education institutions] turn to other sources, a small percentage of which is foundation money. And even though that 3

See also Busemeyer et al. on Wilensky (1975) who argues that “education is special” in general. Wilensky sees education, especially at the higher levels, as contributing to equality of opportunity and not necessarily absolute equality (Busemeyer et al. 2013, p. 215).

1.2 Philanthropic Foundations

3

foundation money is small, it can be influential.” But before this monograph examines foundations in more detail, the next section provides a first glimpse of foundations as we know them from the literature. 1.2 Philanthropic Foundations This part is intentionally kept short to not anticipate too much of the more detailed discussion in the analyses chapters. However, before being able to fully understand the usability of the regime classifications for foundations as a special type of nonprofit organization,4 it is important to generally identify what a foundation is. Definition At the moment, a structural-operational definition of foundations shall suffice. Commonly, five major criteria have to be fulfilled to be classified as a foundation in the literature: A foundation is an asset-based, private, self-governing, nonprofit distributing entity that serves a public purpose (Anheier 2003, p. 51 and Anheier 2014, p. 161). In other definitions also a sixth criterion is added, namely that a foundation also identifies itself as a foundation (Anheier, Daly 2007b, pp. 8–9 and Anheier et al. 2017a, p. 11). The definition of foundations is not legally protected and varies from country to country (Anheier, Daly 2007b). There is no single legal definition of what a foundation is – and what it is not. Therefore, I will consider the individual legal background and definitions of foundations in Germany and the United States in Chapters 4 and 5. Uniqueness of Foundations Foundations are among the freest institutions in modern society (Anheier, Leat 2006): they have a triple independence from market forces, ballot box, and outside stakeholders (Anheier, Daly 2007b, p. 4; Anheier, Leat 2011, p. 107); this means that, because they have their own assets, they are not bound to, for example, customer choices or voter preferences. Therefore, theoretical approaches with market logics at the core might struggle to integrate foundations as a special organizational form in their approach. While firms are thought to function in a certain way to solve coordination issues, foundations are less predictable due to their triple independence. This independence puts them in a position unlike any other organizational form. Hence: “Without such constraints, foundations pos-

4

Unlike nonprofit organizations (NPOs) and non-governmental organizations (NGOs), foundations are based on an asset base and original deed (Anheier, Daly 2007b, p. 10).

4

1 Introduction

sess degrees of freedom that possibly no other institution has. This is their great potential” (Anheier, Leat 2011, p. 112).5 Moreover, as Prewitt highlights, foundations are particularly interesting research objects since they share attributes with both the public and private sector: Like the market, foundations are private and “outside the state,” but, like the state, they are also nonprofit and “outside of the market” (Prewitt 1999, p. 18). Mode of Operation In order to delineate the state-foundation relationship, we also need to look at the different forms foundations can take in a welfare state. Underlying the term foundation, which includes a large variety of forms, are five basic types: grantmaking, operating, mixed, community foundation, and government-sponsored/ government-created foundations (Anheier 2014, pp. 161–162). For this purpose, I pay special attention to three of those types, namely grant-making, operating, and mixed.6 This is due to the fact that, according to the literature, the majority of US foundations are grant-making, while foundations in Europe mostly operate their own programs or do both in a mixed approach (Anheier 2014, p. 161). The literature sees operating foundations as closer to the welfare system, often including close state links (Anheier, Daly 2007b, p. 17). To test the assumptions for the field of higher education, we need to take an empirical look at the variety of foundation forms in the US and Germany in this particular field. So far, the literature has not done this. 1.3 State of the Art and Gaps in the Literature Missing in the literature is, as mentioned, an account of the connection between foundations, higher education, and regime research. For this reason, I consider and investigate all three strands of literature in this book. Chapter 2, titled “Theoretical Basis and Empirical Puzzle,” includes a full literature review on regime classifications and their connection to nonprofit organizations and the activity field of higher education. The country chapters refer to the existing foundation literature in Germany (Chapter 4) and the US (Chapter 5). As a result, this part of the chapter is kept short here.

5

6

Translated parts of original: „Ohne solche Zwänge verfügen Stiftungen über ‚Freiheitsgrade‘, die vielleicht keine andere Institution hat. Hierin liegt ihr großes Potential“ (Anheier, Leat 2011, p. 112). However, this independence comes not only with comparative advantages and strengths, but also disadvantages or weaknesses, such as insufficiency, particularism, amateurism and paternalism (Anheier and Leat, 2006; Hammack and Anheier, 2013). Mixed foundations both operate their own programs and make grants to third parties.

1.3 State of the Art and Gaps in the Literature

5

Higher Education Foundation Literature Scholarly research on philanthropic foundations is generally limited. As Anheier, one of the leading figures in the field, puts it: “[…] few organizations have received less attention by researchers and policy analysts than foundations. While cross-national studies of business firms, government agencies and service providing nonprofit organizations are increasingly becoming available, little is known in a systematic way about the current and future role and policy environments of foundations” (Anheier, Daly 2007b, p. 7). Even a decade later, the same author writes that “it would be wrong to conclude that a significant momentum has been achieved” since comparative studies on foundations are “still in their infancy” (Anheier 2018). He argues that this is due to the poor data coverage which impedes the path to progress. Existing research and data coverage is even scarcer when we narrow it down to one particular field in which foundations operate: higher education. "Considering that independent foundations have been providing support for public education since early in the 20th century, it is surprising how little their contributions have been studied by researchers (Hansen 2008, p. 320).” Rathgeb Smith also argues that more research on the field-level would be warranted: “We need much more in-depth assessments of how particular forms of nonprofit-government relationships have emerged across fields of activities and across nation-states” (Smith, Grønbjerg 2006, p. 237). To provide such an assessment, by investigating foundation activity in the particular field of higher education across Germany and the United States, is the aim of this study. The American foundation landscape is the largest worldwide. Compared to Germany, there is more existing research and available data on it. In order to make use of and build upon the research which has been undertaken within the “American Foundations” research project by Anheier/ Hammack (2010), I use two chapters of the book as a basis for conceptualizing my own monograph (Frumkin, Kaplan 2010, Wheatley 2010). Especially Frumkin’s and Kaplan’s article about the engagement of American foundations in higher education serves as an anchor for my project. 7 Yet, since the data for their analysis is from 2001, their material has to be enriched with newer data. The German foundation landscape is the second largest worldwide, in terms of numbers and capital, after the United States of America. However, much less research has been undertaken about German foundations than about 7

They investigate the activity of American foundations along five dimensions: type of recipient organization, largest givers and largest recipients, type of grant support, beneficiary population, and grant purpose or field of activity.

6

1 Introduction

their American counterpart (Anheier, Daly 2007c). Even though the German foundation landscape has seen strong growth within the past years, not much scientific attention has been paid to it. Especially the existing literature on higher education foundations is relatively scant. Data about German foundations is poorly developed and patchy. What is more: the limited amount of actually available data is hardly accessible. Some organizations are hiding their “data treasure” from the interested public. Until recently, it was not possible to draw representative conclusions about German foundations working in the activity field of higher education, especially not about their size and mode of operation, nor their self-perceived roles and positions relative to other actors. However, due to the research project “Roles and Positions of German Foundations” this is now possible. Thanks to this research project, I had the opportunity to gather different quantitative and qualitative data on German higher education foundations within its framework. I partially base Chapter 4 on this data in agreement with the head of the research project and main advisor of this dissertation. Regime Model Literature The relationships between state and nonprofit sectors are of a complex and disentangled nature. Since the nonprofit sector is embedded in and inseparable from the political economy, we first have to understand the nature of the economy as well as the nature of the political structure to be able to finally understand the nonprofit sector itself (Smith, Grønbjerg 2006, pp. 221–223). It is with the help of theoretical regime models that I want to undertake this task and apprehend German and American state-foundation relationships. The three “most prominent welfare system classifications” are of relevance for the book at hand and build the theoretical basis (Anheier, Krlev 2014, p. 1396). To this basis belong the literatures on Varieties of Capitalism (VoC), Worlds of Welfare as well as the social origins theory. In Chapter 2, I present those three main welfare system classifications, as will other authors who further developed their initial ideas. The present study seeks to contribute to comparative regime research by embedding higher education foundations within its conceptual framework. I will evaluate how much explanatory power the classifications hold and present the puzzle that follows from embedding foundations in the welfare system classifications. The three classifications at the heart of this study all follow a relatively similar logic of institutionalism and path-dependency that is supposed to determine distinct country configurations. Out of those, only the last-mentioned classification from Salamon/Anheier also directly integrates nonprofit organizations and develops a third-sector regime typology.

1.3 State of the Art and Gaps in the Literature

7

Before going into detail in Chapter 2, I will sketch a brief overview of each of the classifications. I will begin with the more general one and advance to the more specific one. All three classify Germany and the United States into more or less similar types of regimes. Since Germany and the US are the two countries studied in this book, I pay special attention to the regimes into which they fall and present them in detail. I provide detailed information regarding the case selection in the methodology chapter. I consider the theories individually, instead of integrating them, since they speak to different aspects: The first theory, VoC, describes countries’ economic systems; the second theory, Worlds of Welfare Capitalism, describes countries’ welfare regimes, and the third, social origins theory, describes nonprofit regimes. The first classification introduced focuses on the nature of the economy and is the VoC literature. The key aspects are the types of capitalist economies, namely liberal market economies (LME) and coordinated market economies (CME), which are centered on firms as key agents. The VoC approach will be only briefly presented to then focus on the research that has been undertaken by other scholars to relate it to higher education. So far, however, the topics of VoC and higher education have not been linked to foundations at all. This is exactly where the monograph at hand would like to come in and assess to what extent the underlying VoC logic also applies to foundations supporting higher education. In sum, the VoC approach provides insights into the sub-sector of higher education. The theory would suggest that foundations in the German CME have closer institutional ties with the state compared with foundations in the American LME. The second welfare regime8 classification used focuses on the nature of the political structure. It is the seminal contribution by Esping-Andersen (1990) called “Worlds of Welfare Capitalism.” Key aspects in his approach are stratification and decommodification. While Hall/Soskice specifically study firms, Esping-Andersen looks at the state, market, and family relationships.9 His issues can be applied to the sub-sector of higher education. Foundations as an organizational form are not present in his theory. However, theoretically German foundations would be part of the conservative welfare regime and American foundations would belong to the liberal welfare regime. The third and last regime classification elaborated in this book is social origins theory. It focuses on the nature of the nonprofit sector. Salamon/Anheier 8

9

Esping-Andersen defines “regime” as “a set of norms, rules, procedures and institutions that constrains the behavior of [its] members” (Esping-Andersen 1990, p. 2). Anderson (2015) describes the relationship between state, market, and family with “the extent of state-produced and financed welfare as opposed to family or market-produced welfare” (2015, p. 17).

8

1 Introduction

(1998) apply Esping-Andersen’s analysis “to the question of the appearance and the growth of the nonprofit sector” (Salamon, Anheier 1998, pp. 227). They find that the nonprofit sector is deeply embedded in social, political, and economic relationships (Seibel, 1990; Salamon, Anheier 1998, p. 215). The authors argue that the size and structure of the nonprofit sector are a reflection of its embeddedness in a complex set of relationships, classes, and regime types. Thus, key elements of their comparative-historical approach are path dependency, social forces, matters of power, and the resulting state-society relations. Social origins theory has a different purpose in my analysis than the two previous theories do, since it actually covers nonprofit organizations rather than more generally the economic system or welfare system in which foundations are embedded. While it is crucial to first consider the economic and welfare system for our understanding of nonprofit organizations, foundations are at the center of attention in this book. At the core of the social origins approach is the nonprofit sector and its cross-national development. Therefore, it should have some explanatory power regarding one specific type of nonprofit organizations: foundations. Social origins theory might suggest that German foundations belong to the corporatist regime, and American foundations to the liberal regime. But, as Adloff points out, what is typically valid for the nonprofit sector in certain regimes, is not necessarily valid in the case of foundations (2004, p. 275). It is unclear how foundations are embedded vis-à-vis state and society and what functions they fulfill in certain regimes (ibid.). Moreover, the remaining question is to what extent the classification also holds true for the foundation sub-sector level of higher education as one of foundations’ principal activities (Salamon, Anheier 1998, p. 217). Building up on the empirical puzzle presented at the end of Chapter 2, I want to explore why the actual support of higher education is not as the theory would lead us to expect. It is for this reason that I want to investigate what is special about the sub-sector of higher education. To come straight to the point: The analysis of the theoretical bases demonstrates that the theories provide limited explanatory power for making sense of the puzzle at hand. The VoC and Worlds of Welfare strands of literature help partly to capture the field level, while the social origins theory helps us to integrate foundations as an organizational form. Nevertheless, it does not accurately predict foundation behavior in the specific sub-sector of higher education. Therefore, we have to revisit the three theories and test the operationalized hypotheses step by step - and not only social origins theory, which seemed to be the most fitting at first sight. Understanding the roles of German and American founda-

1.4 Research Questions and Sub-Questions

9

tions in the sub-sector of higher education from a comparative welfare state10 perspective is thus the key objective of this monograph. 1.4 Research Questions and Sub-Questions Against the backdrop of the state of the art as well as the literature and data shortages, the main research question of this study is: To what extent do regime classifications help us understand higher education funding by foundations vis-à-vis the state in Germany and the United States? With this main research question, I want to explore to what extent the existing theories capture the phenomenon of higher education funding of foundations visà-vis the state. I want to assess to what extent the differences in higher education funding by foundations are dependent upon the regime types. Moreover, I also investigate the following sub-questions: • Economic regime: What are the institutional ties between higher education foundations, state and public institutions, business actors, and higher education institutions? • Welfare regime: How do stratification and decommodification, the two primary dimensions used to describe welfare regimes, compare in Germany and in the US? • Nonprofit regime: How does the nature of the nonprofit regime and foundation model differ in the liberal US and corporatist Germany? 1.5 Research Objectives and Delimitations In answering the questions I raised above about the economic, welfare, and nonprofit regimes, this book has three main objectives. The objectives pertain to foundation research, higher education in combination with comparative regime research, and the data situation. The first and primary objective of this monograph is to advance our understanding of philanthropic foundations and their engagement on the sub-sector level of higher education. Since especially German higher education foundations remain remarkably understudied, my study therefore aims at providing a better understanding of what German and American foundations do in higher education

10

As Esping-Andersen put it: “…only comparative research will adequately disclose the fundamental properties that unite or divide modern welfare states” (Esping-Andersen 1990, p. 3).

10

1 Introduction

vis-à-vis the state, business actors, civil society,11 and higher education institutions. The second objective is to advance comparative regime research by testing the explanatory power of existing typologies for philanthropic higher education foundations. Thus, the purpose of this study is to conduct a comparative study across two distinct regime types and their foundation sectors, the liberal United States as well as the corporatist Germany, to assess to what extent the regime models provide explanations for foundation behavior. The third objective is to analyze existing data and generate my own data to redress the data shortage and opacity of higher education foundation data. For this reason, I consult existing federal databases with a view to foundation funding. Additionally, as a further contribution to the state of the art, I present a representative survey on German foundations that I developed with my research project team members and expert interviews that I conducted myself. The methodology Chapter 3 introduces all respective data sources. There are several temporal, spatial, and research delimitations: First, this study does not attempt to cover the historical evolution of state-foundationrelationships up to today, but concentrates instead on recent developments. This means that I am primarily interested in the contemporary roles played by American and German foundations. Where possible, I use data covering the years of 2000 through 2010. The self-generated interview data is of a more recent nature since I conducted the qualitative expert interviews in spring and summer of 2015. All data sources thus are supposed to convey recent impressions. Secondly, there is a geographical confine: As stated, the book studies two countries in-depth: Germany and the US. I provide theoretical justification for the selection of those two countries in the methodology Chapter 3. Furthermore, besides the country focus, I also narrow it down to one particular activity field in which I investigate the engagement of foundations: higher education. Foundations pursue several other main purposes that have societal relevance (Anheier et al. 2017a, p. 17). Recent studies shed light on other activity fields which are relevant for German foundations, such as social matters (Förster 2017), arts and culture (Anheier, Striebing 2017), as well as primary and secondary education (Striebing 2017). Lastly, there are limitations regarding data and research matters. I present data and research limitations in detail in the methodology Chapter 3. However, it is important to mention here at the outset that the data situation is different for each country. For Germany, I can make use of representative survey data due to 11

A definition of civil society is: “the sphere of institutions, organizations and individuals located between the family, the state and the market in which people associate voluntarily to advance common interests” (Anheier 2004, p. 22; Anheier, List 2005, p. xvi).

1.6 Structure of the Book

11

the research project on “Roles and Positions of German Foundations.” This is not the case for the US. For this reason, the German representative findings serve as a starting point to contrast with the American findings. 1.6 Structure of the Book The main body of this study consists of six chapters. For the sake of readability, I moved detailed lists and tables, especially from the methodology Chapter 3, to the appendix at the end of this study. This appendix includes a vignette, survey, lists of interviewed foundations, the interview questionnaire, and lists of relevant foundations. What I have included in the main body of the text are the foundation portraits. All the qualitative research, starting with the vignettes and leading up to the expert interviews, feeds into them. They introduce the foundations being studied here in a concise manner. The information stems from a variety of sources, such as foundation homepages, annual reports, newspaper articles, and my interviews with foundation representatives. All foundation portraits include the following information (wherever available): name, type of foundation, establishing year, founder, location, assets, annual budget, number of staff members, and purpose. Chapter 2 sets the theoretical stage. I introduce the three most prominent regime classifications: VoC, The Three Worlds of Welfare Capitalism, and social origins. For each theory, I discuss their main components, limitations, and connection to higher education and nonprofit organizations. I develop hypotheses in terms of empirical expectations. I enrich this theoretical base with the existing comparative foundation literature. According to these theories, Germany belongs to the group of CMEs with a conservative welfare state and a corporatist nonprofit sector. In turn, the US is theoretically part of the LMEs with a liberal welfare state and a liberal nonprofit sector. In light of the theories, I raise the question of whether and to what extent foundations as an organizational form do in fact fit into these regime classifications. The purpose of the methodology Chapter 3 is to turn the theoretical propositions of Chapter 2 into methodological considerations. I present in detail the summary of hypotheses and their operationalization, the selection of countries, the operationalization of the key term “higher education,” the selection of foundations as well as the data sources used in this book for each country. The chapter maps out the methods I used when researching the topic at hand and includes a thorough description of how I went about it. The problem that I address with this mixed methodology is the shortage of existing data and literature on the applicability of foundations and regime theories to the sub-sector level of higher education.

12

1 Introduction

The main argument of Chapter 4 is that the role of German higher education foundations is revealed when one considers the activity field, the actor constellation with its high degree of integration, as well as the inherent tensions. This chapter, and Chapter 5, has a threefold approach: It first introduces the German foundation landscape, including legal aspects, definitions, and the literature on them. The second part illustrates the highly complex and under-funded field of higher education. Its structural principle refers to the sovereignty of federal states, their responsibility for higher education institutions, the selfadministration of universities as well as the autonomy of professors. There are three central tensions: the imbalance of basic funds vs. third-party funds, research vs. teaching, and the federal government vs. states. It is important to look at the actors and governance to discern what implications there are for foundations. The third part connects the first two and embeds higher education foundations in the activity field. It is guided by the three hypotheses and thus looks at the economic regime, welfare regime, and nonprofit regime. Foundation Portraits and quotations of German higher education foundations serve as illustration of their institutional ties. I contrast their views with quotations from other experts in the field whom I questioned during a focus group. Chapter 5 follows the same structure as Chapter 4. After introducing the context of American foundations as the largest foundation sector worldwide, I examine the activity field of higher education. The US higher education system can be characterized as being highly decentralized, competitive, marketcoordinated, and less standardized with a great institutional heterogeneity of the organizational landscape. The central tensions of US higher education involve the financial state of affairs, access to higher education institutions, affordability of higher education, completion of degrees, as well as the prioritization of STEM (Science, Technology, Engineering, Mathematics) vs. humanities. The chapter includes portraits and pertinent quotations by American foundations supporting higher education as well as by other actors interviewed in the field, such as professors of philanthropy, development officers at universities, and representatives of government-funded agencies. The penultimate Chapter 6 performs the comparative analysis. This chapter takes up the theoretical considerations of the second chapter. I review each theoretically derived hypothesis of the regime classifications and test them for both the German and American higher education foundation sector – as much as the data allows. Finally, I answer the research question to what extent the regime classifications help us understand foundation activity in higher education. My results show that the regime classifications can only help us to account for foundation engagement in the field of higher education to a certain extent. If we zoom into the field more closely, we find that these accounts reach their limits.

1.6 Structure of the Book

13

The reason for this is that our results are strongly dependent upon the peculiarities of the activity field of higher education and country context. Most importantly, our results are dependent upon foundations as a special organizational form which has an unpredictable, individualistic nature. The concluding Chapter 7 summarizes the key findings of the book and offers a typology of higher education foundations. Based on these findings, I derive recommendations for foundations, government policy, and higher education institutions. It highlights the implications for comparative foundation literature, higher education literature, and regime type literature. I conclude by identifying limitations of current research and points of departure for future research.

2

Theoretical Basis and Empirical Puzzle

After the introductory chapter, the aim of this chapter is to present the main theoretical strands of literature informing this book. In what follows, I assess regime literature and foundation literature to identify their limitations and gaps for understanding state-foundation relationships and the role of foundations in supporting higher education. Following from the identified gaps, the chapter will argue for why it is necessary to study foundations supporting higher education from a comparative regime perspective. While the field of higher education constantly supplies the background of this monograph, it has to be emphasized that my main focus is on philanthropic higher education foundations. The chapter will begin by specifying the main assumptions of the theoretical approaches. The aim is not to fully engage with all arguments that are made in the strands of literature, but to pinpoint the main components of the argument that relate to this research topic. After outlining the key strengths of the classifications, I show their limitations and shortcomings with regard to foundations and higher education. Starting from the regime classifications, I develop hypotheses. The ultimate goal in this study is to test the applicability of the classifications in the case of foundations supporting higher education to determine how much explanatory power, if at all, they provide. 2.1 Theoretical Insights of Regime and Foundation Models 2.1.1 Varieties of Capitalism The most prominent representative of the comparative capitalisms literature is Hall/Soskice and their work “Varieties of Capitalism” (2001). The different representatives of the comparative capitalisms literature vary in terms of the number of types of market economies as well as the number of relevant areas they identify.1 Hall/Soskice distinguish the large OECD nations between two ideal types of political economies with different institutional configurations: socalled CMEs and LMEs. Germany is characterized as an example of the CME2

1

2

Schneider and Paunescu (2012) refine Hall and Soskice’s two main types of capitalism and add three more categories: entirely state-dominated economies, intermediate hybrid economies as well as LME-like economies (see Figure 2-1) (Schneider, p. 740). This is due to the fact that they find with the help of longitudinal analysis the types of capitalism to be “more varied and more dynamic” than Hall and Soskice describe it (Schneider, p. 731). To the group of CMEs belong ten countries: Germany, Japan, Switzerland, Netherlands, Belgium, Sweden, Norway, Denmark, Finland, and Austria (Hall and Soskice, 2001: 19).

© Springer Fachmedien Wiesbaden GmbH, part of Springer Nature 2020 J. Mangold, Philanthropic Foundations in Higher Education, https://doi.org/10.1007/978-3-658-27387-3_2

16

2 Theoretical Basis and Empirical Puzzle

and the United States as an example for the LME.3 The “private sector’s ability to act (in)dependently of government influence” functions as the main defining variable (Anheier, Krlev 2014, p. 1401) (Figure 2-1). State Orientation

Statedominated economies

CMEs Germany

Market Orientation

Intermediate economies

LME-like economies

LMEs United States

Figure 2-1:

State versus market orientation

Source:

Based on Anheier (2018, p. 8); Anheier and Krlev (2014, p. 1401); Hall and Soskice (2001); Schneider and Paunescu (2012, p. 740)

Hall and Soskice introduce a firm-centered concept with firms as key agents at the heart of their argument (Hall, Soskice 2001, p. 6). While in LMEs processes are coordinated in a hierarchical, competitive manner and firms rely very heavily upon free markets and prices, firms in CMEs believe in non-market relationships4 when collaborating with other actors (Hall, Soskice 2001, p. 8). Depending upon the type of coordination, market economies develop their own “institutional comparative advantages” (Hall, Soskice 2001, p. 36) which distinguishes them from other market economies.5 Following their logic, each market economy focuses on the fields in which they perform best. The literature holds the view that there is no superior model of a market economy; different arrangements of a market economy have an equal right to exist (Hall, Soskice 2001, p. 21). Due to institutional complementarities,6 the authors expect countries with particular institutions to develop complementary institutions in other areas as well (Hall, Soskice 2001, p. 18). 3

4

5

6

From their point of view, six countries represent the LMEs: the USA, Britain, Australia, Canada, New Zealand, and Ireland. Collaboration and credible commitments characterize non-market relationships (Hancké et al. 2007, p. 5). The authors define institutions as ”a set of rules, formal or informal, that actors generally follow, whether for normative, cognitive, or material reasons, and organizations as durable entities with formally recognized members, whose rules also contribute to the institutions of the political economy” (2001a: 9). As Amable points out, institutional complementarity means that there is a “joint influence of institutions” on the whole economy in a non-isolated way. He argues: “Institutional complementarity is present when the existence or the particular form taken by an institution in one area reinforces the presence, functioning, or efficiency of another institution in another area” (Amable 2003, pp. 59–60).

2.1 Theoretical Insights of Regime and Foundation Models

17

The authors compare the way LMEs and CMEs solve coordination problems which arise as soon as firms enter relational contact internally or externally.7 They identify five spheres as the most important institutional structures in which firms can cooperate and develop relationships with others. Those five distinguishing features which shape firm behavior are: 1. Industrial relations system; 2. Vocational training and education; 3. Corporate governance/corporate finance system; 4. Relations among firms; 5. Relations between firms and employees (Hall, Soskice 2001, p. 6).8 The second type of sphere about education and vocational training is of special importance for the study at hand. In Hall/Soskice’s theory, we learn the following about this sphere of education and vocational training: The distinct ideal types have a different take when it comes to skill specificity of employees (Hall, Soskice 2001, p. 17). This means that in LMEs the general skills would be more important due to short job tenures and fluid labor markets (p. 30). Tertiary education programs would emphasize “certification” in general skills rather than supporting more specialized competencies (ibid.). In contrast, in CMEs company-specific or industry-specific skills (p. 30) cultivated by vocational training schemes are important for the education systems (p. 25). Hall and Soskice also devote attention to the issue of innovation since “a firm’s capacity to innovate is crucial to its long-run success” (Hall, Soskice 2001, p. 38). They distinguish between radical and incremental innovations. The institutional framework of LMEs makes them better for radical innovation while CMEs rather have the capacity for incremental innovation. Radical innovations “entail substantial shifts in product lines, the development of entirely new goods, or major changes to the production process” (ibid.) characterized by a capacity to take risks (p.39).9 On the contrary, incremental innovations are “marked by continuous but small-scale improvements to existing product lines and production processes” and typical for CMEs (Hall, Soskice 2001, p. 39).10 Hall/Soksice argue that “each economy displays specific capacities for coordination that will condition what its firms and government do” (p. 35). But where do organizations that are neither entirely part of the state nor the market come 7

8

9

10

Examples for this are suppliers, clients, collaborators, stakeholders, trade unions, business associations, and governments (Hall, Soskice 2001, p. 6). Jackson und Deeg (2006) build further up on it and suggest the following spheres: financial systems, corporate governance, inter-firm relations, industrial relations, skill creation, work organization, welfare state and innovation (Jackson, Deeg 2006, p. 13). Given examples for sectors in which radical innovation is pivotal are biotechnology, fastmoving technology sectors, software development, telecommunication, and corporate finance. Incremental innovation is, according to them, important for the production of capital goods, machine tools, factory equipment, consumer durables, engines, and specialized transport equipment (p. 39).

18

2 Theoretical Basis and Empirical Puzzle

into the picture? As mentioned above, foundations are not necessarily marketbased since they are independent of customers and voters. There is no clear remark made by Hall and Soskice on the role of nonprofit organizations. Thus far, the contribution of higher education foundations with regards to funding higher education institutions has not been explored and not related to the VoC approach. But following this theory, I would expect to find closer institutional ties between foundations and the state in Germany than would be the case with American foundations. Hall and Soskice’s approach is clear and straightforward. Nevertheless, this simplification stays on a relatively abstract level and therefore leaves room for development and interpretation. A detailed review of the criticism of the approach has been collected elsewhere.11 Important for this purpose here is to notice the neglected role of the state in VoC (Hancké et al. 2007, pp. 14–16) and the absent consideration of nonprofit organizations. As pointed out, VoC in its original form does not get us very far in understanding this special issue of higher education and foundations. Even though they refer to education and vocational training, they do not reflect specifically upon higher education. For a literature concerned with capitalism and entrepreneurship this seems to be a strange lacuna, as higher education and research are at the core of economic progress. Overall, their approach has limited, direct explanatory value for state-foundation relationships. As shown in the next part, there are to date relatively few authors who seek to fill this higher education gap in the theory. We need to look more closely at VoC and the limited scholarly work that is available on its connection to education and particularly higher education. Varieties of Capitalism and Higher Education Hall and Soskice identify “vocational training and education” as one of five main spheres in their research. Only scant research, however, is currently available on the connection between VoC and education, especially higher education. The available works will be briefly summarized and followed by an explanation for why the study at hand is consequently necessary and what gaps it fills in the comparative capitalisms literature. A first approach to connect VoC and education was undertaken by Bruno Amable (2003). He criticizes the actual low variety of types of capitalism introduced by Hall and Soskice and expands their dichotomous approach by introduc-

11

See Hancké et al. (2007) who provide a good overview of the many points of criticism (Hancké et al. 2007, pp. 7–8).

2.1 Theoretical Insights of Regime and Foundation Models

19

ing five12 models of capitalism (Amable 2003, pp. 79–80). Due to the countries investigated in this monograph, only the market-based (US) and continental European economies (Germany) are of interest. He pays special attention to five key institutional areas.13 With regard to the institutional area of education, he expects market-based economies to belong to a private university system and to have “low public expenditures, highly competitive higher-education system, non-homogenized secondary education, weak vocational training, emphasis on general skills, lifelong learning” (Amable 2003, p. 106). On the contrary, Amable calls the continental European capitalism model a public tertiary-education system (p. 164) that includes from his point of view “high level of public expenditure, high enrolment rates in secondary education, emphasis on secondary-education homogeneity, developed vocational training, emphasis on specific skills” (Amable 2003, p. 106). When now zooming in and looking at the interface of VoC and higher education, I find that there are only a few contributions to the research, and they are at the same time of relatively recent nature. I mention the exceptions only shortly here since Hölscher (2016, p. 89) gives an accurate overview of those works. Graf (2013) explores institutional division between vocational training and higher education in Austria, Germany, and Switzerland (Graf 2013). Wentzel (2011), Leuze (2010), and Graf (2009) study the German and English education systems. Wentzel (2011) is interested in skill formation in school education, vocational education, and higher education in England and Germany (Wentzel 2011). Leuze particularly looks at the transition of college graduates into the labor market in Germany and England (Leuze 2007; Leuze 2010). Last but not least, Graf inspects the institutions of higher educations, namely German and British universities and their internationalization strategies (Graf 2009). Van Santen (2014) is the only one who does not compare German and British higher education, but actually contrasts German and American undergraduate degrees from a VoC perspective to find out whether an “Americanization” of German higher education takes place. However, she finds confirmation for the usability of the VoC framework. Schulze-Cleven (2015) contrasts German and American higher education, but looks into liberalization processes. He submits that German and US higher education are contrasting ideal types. According to him, the pluralist US consists 12

13

The five models are called: market-based liberal economies, social-democratic economies, Asian capitalism, continental European capitalism as well as Mediterranean/ South European capitalism (Amable 2003, p. 103). The institutional areas he identifies are product-market competition, the wage-labour nexus and labour-market institutions, the financial-intermediation sector, social protection and the education sector (Amable 2003, p. 93).

20

2 Theoretical Basis and Empirical Puzzle

of liberal higher education institutions led by market-governance, while corporatist Germany is characterized by non-market coordination by universities and professors at higher education institutions (Schulze-Cleven 2015, p. 1). He finds that American public higher education is pushed by investors and managers towards corporatization and thus to “behaving like large for-profit companies” (2015, p. 2). In turn, in Germany there is an increasing stratification of institutions taking place, which means that they no longer have an equal status since some “excellent” universities have crystallized. However, he emphasizes that professors and students in Germany helped in moderating the process (SchulzeCleven 2015). One of the newest additions at the interface of the VoC and higher education literature is by Michael Hölscher (2016). He tests the usability of the VoC approach for higher education, particularly teaching at higher education institutions,14 and investigates how it is administered in LMEs as compared to in CMEs.15 Hölscher covers several more specialized topics regarding VoC and higher education, such as access to higher education institutions, distribution according to fields of studies, teaching methods and practical applicability, competences of alumni, access to the job market as well as privatization of higher education institutions. His main hypothesis is that teaching in higher education systems can be differentiated along with the VoC approach. Accordingly, he expects differences in the higher education systems in developed countries to be systematically related with the VoC (Hölscher 2016, p. 353). In sum, he concedes that, after his empirical analysis, his hypotheses can be confirmed with a few limitations and discrepancies regarding some aspects or countries. While Hölscher focused on higher education teaching, the book at hand examines higher education funding, particularly funding for research. Assuming that the market economy systems (including corresponding capitalisms) show complementarities with the higher education system, how and to what extent is it possible to situate foundations within its framework? If the assumptions of the VoC approach also apply to foundations: how does their role vary in different national contexts in the field of higher education? In line with the previous research on VoC and higher education, the main hypothesis integrating foundations could be: If the VoC logic can be applied to foundations, differences in support for higher education by foundations can be differentiated in accordance with the VoC approach. In the field of higher education, German foundations are in clos14

15

He focuses particularly on teaching as compared to research and administration at higher education institutions (Hölscher 2016, p. 7). Hölscher pays particular attention to Great Britain and Germany, but up to 24 countries are considered depending on the availability of data (p. 10).

2.1 Theoretical Insights of Regime and Foundation Models

21

er institutional proximity to the state and CMEs have a greater presence of governance institutions than LMEs. American foundations follow radical innovation processes, while German foundations follow incremental innovation processes. This means that if VoC also holds true for foundations, I would need to see German foundations cooperating more closely with the state as well as them complementing each other’s work, while this would be less often the case for the relationship between the state and American foundations. Additionally, I would also need to see foundations in LMEs to be more likely to support private higher education institutions to a larger degree. In contrast, foundations in CMEs would be expected to be more likely to support public higher education institutions to a larger degree. I would also expect to see a difference in foundation funding behaviour when it comes to the issue of innovation. The theory would let us assume that in a LME, foundations support radically innovative projects at higher education institutions. On the other hand, in a CME, foundations would be more likely to support incrementally innovative research. 2.1.2 The Three Worlds of Welfare Capitalism As Hall and Soskice argue, the types of political economies and types of welfare states should correspond (Hall, Soskice 2001, p. 50). This means that they expect the LMEs to be accompanied by liberal welfare states that are characterized by low levels of benefits which help reinforce fluid labor conditions. Here, they point to Esping-Andersen whose seminal work The Three Worlds of Welfare Capitalism I present now in its essence. His approach clusters the advanced capitalist democracies in three ideal types with more or less distinct underlying welfare state logics16: the social democratic regime, the liberal regime, and the corporatist or conservative regime. All regimes follow “qualitatively different arrangements between state, market, and the family” as Esping-Andersen puts it (1990, p. 26). Esping-Andersen examines two parameters to identify the nature of the modern welfare state: Decommodification and stratification. First, in capitalist systems, labor power is commodified and competes with each other (see also Polanyi 1944). The concept of decommodification “refers to the degree to which individuals, or families, can uphold a socially acceptable standard of living independently of market participation” (Esping-Andersen 1990, p. 37). Thus, decommodification relates to the concept of making citizens and their labor power less a “commodity” and thus less dependent on market forces (Esping-Andersen 16

Esping-Andersen defines the term regime as follows: “To talk of ‘a regime’ is to denote the fact that in the relation between state and economy a complex of legal and organizational features are systematically interwoven” (Esping-Andersen 1990, p. 2).

22

2 Theoretical Basis and Empirical Puzzle

1990, p. 3). Decommodification is operationalized in terms of access to benefits, income replacement as well as range of entitlement provided (Esping-Andersen 1990, p. 47). Indices for decommodification of labor are, for example in the cases of sickness and unemployment, number of waiting days to receive benefits and number of weeks of benefits duration (Esping-Andersen 1990, p. 50). Second, Esping-Andersen describes the welfare state as a system of social stratification. He points to the welfare state’s redistributive capacity and its ability to have “an active force in the ordering of social relations” (Esping-Andersen 1990, p. 23). Features of welfare state stratification that are salient from his point of view include not only income distribution, but also class and status as such. He thinks that it is not sufficient to solely regard the income distribution of a country, but also the “level of living” referring to the structure of opportunities and inequality regarding health, housing, and working life (Esping-Andersen 1990, p. 58). The degree of each of the two salient characteristics, decommodification and stratification, determines the respective regime type. Liberal welfare regimes, such as the United States,17 consist of low decommodification and high stratification while corporatist welfare states are characterized by low decommodification and low stratification (see Table 2-1). Accordingly, Germany would be among the examples for a conservative/corporatist welfare state (see also Kohl 1990 on ideal types).18 Table 2-1:

Decommodification and stratification in national contexts

Low

Decommodification19 Low High Conservative: Germany Social democratic: Sweden

High

Liberal: United States

Stratification

Source:

17

18 19

(Post-socialist): Czech Republic

Anheier 2018, p. 9

Other examples for liberal regimes mentioned by Esping-Andersen are Canada and Australia (Esping-Andersen 1990, p. 27). Austria, France, and Italy are further examples (Esping-Andersen 1990, p. 27). “Commodification is supposedly low only where structures are formal and strong and less so where these are weak (as is more likely the case for Eastern European or for developing countries like Peru” (Anheier, Krlev 2014, p. 1401).

2.1 Theoretical Insights of Regime and Foundation Models

23

He postulates that in a liberal welfare regime, the state would encourage market activity, “either passively – by guaranteeing only a minimum – or actively – by subsidizing private welfare scheme.” Moreover, this regime is marked with lowlevel decommodification effects and an established order of stratification (Esping-Andersen 1990, p. 27). Benefits and services from the welfare system depend on the individual’s position in the market and have to be acquired fully or in a subsidized form (Smith, Grønbjerg 2006, p. 233). The fact that universal entitlements are not present in such commodified regimes and that there is opposition to a strong state leads to service systems that leave a window of opportunity for nonprofits and for-profit providers (ibid., p. 234). Unlike in liberal regimes, market efficiency and commodification are not pronounced in the corporatist/conservative regimes. In contrast, there exists a distinct state ‘edifice’, the principle of subsidiarity that gives priority to the family’s capacity, and the Church with traditional views on family life (EspingAndersen 1990, p. 27). Therefore, the state has a strong role in the corporatist/conservative regime, but it is “subsidiary to these other institutions” (Smith, Grønbjerg 2006, p. 233). The Three Worlds of Welfare and Higher Education As mentioned above, the literature predicts different outcomes for the conservative Germany and the liberal United States when it comes to stratification, while both would be considered low in their degree of decommodification. However, it is not sufficient to consider only the country context and educational policy, since research shows different outcomes in the activity fields, e.g. for primary and secondary education as well as higher education (see Allmendinger, 1989). Thus, we now want to turn to the interface of welfare regime literature and education, particularly higher education literature: Hega/Hokenmaier (2002) identify that the three types of welfare states proposed by Esping-Andersen go hand-in-hand with specific profiles for educational policy. His model has “built-in assumptions about the objectives, preferences, and tendencies of each welfare regime type for its social programs” (p. 7). However, his model does not refer to education.20 Hega/Hokenmaier argue that it should have, because education can “like other social programs, reduce an individual’s dependence on the vagaries of labor markets, or at least improve his or her position” (Hega, Hokenmaier 2002, p. 7). Others have even described education as “the best anti-poverty program” (Schulze-Cleven 2015, p. 3). 20

Anderson (2015) collects further criticism of Esping-Anderson’s approach, such as the question of where the Mediterranean countries and newer member states of the EU belong (2015, pp. 18–19). Additional noteworthy criticism is also the argument of van Kersbergen and Vis that recent studies of the three worlds’ literature exhibit signs of normal science (2015).

24

2 Theoretical Basis and Empirical Puzzle

The authors emphasize that education has to be seen as part of the welfare state when they state that “while education is not always recognized as part of the welfare state’s policy package, it is, no less than other public programs, recognized as a core entitlement in most Western societies” (Hega, Hokenmaier 2002, p. 2; see also Mosher 2015, p. 242). The difference between education and social policy is from their point of view that education provides equality of opportunity instead of the equality of condition prevalent in other welfare arenas (Castles 1989, 431 in: Hega, Hokenmaier 2002, p. 4). The implication is that the US would prefer to invest in education compared to building a welfare state. The authors hypothesize that given welfare regime types affect a country’s tendency in educational policy. In liberal welfare states, they expect to see a high percentage of public sector dollars allocated to education due to the belief in educational opportunities, while the conservative welfare state would spend less than the liberal one due to its preference for socioeconomic order over social mobility (Hega, Hokenmaier 2002, p. 9). However, it has to be highlighted that the authors focus on education in general and not on higher education in particular. Moreover, they only consider public funding, and not private funding for education. Nevertheless, they expect that when private funding forms a significant part of funding, government expenditures are reduced to place a greater responsibility on the individual (Hega, Hokenmaier 2002, p. 14). Hega/Hokenmaier find proof for assigning the welfare regime types to the educational policy profiles of countries. Germany is described as lagging in education spending but as ranking high in terms of a greater emphasis on social insurance expenditures over education. In turn, the liberal welfare states can be categorized by high educational spending and low social insurance spending (Hega, Hokenmaier 2002, p. 18). An instructive typology of educational systems by Allmendinger (1989) distinguishes between the dimension “standardization” and “stratification.” Standardization refers to “the provision of equal educational standards nationwide whereas stratification refers to “the selection procedures within the systems (Allmendinger 1989, p. 231). She examines the standardization and stratification of higher education, amongst others, in West Germany and the United States. Allmendinger identifies a stratified, unstandardized American system of higher education that is highly selective during the admissions process. She argues: “American colleges and universities are substantially stratified in terms of the status and prestige they confer on students” (Allmendinger 1989). At the same time, she characterizes West German higher education as unstratified with relatively the same standards at mostly state institutions (see Table 2-2). More recent research supports this classification in general (e.g. Bastedo 2003; Jacob, Weiss 2010; Slaughter, Taylor 2016).

2.1 Theoretical Insights of Regime and Foundation Models

25

Willems and de Beer find in their more recent research a less clear-cut categorization of the welfare regime types in higher education than proposed by Esping-Andersen. They identify three clusters which more or less correspond with Esping-Andersen’s ideal types, but the liberal and conservative welfare regimes in particular exhibit only some of the prototypical characteristics (Willems, Beer 2012, p. 105). They use five indicators for measuring decommodification: 1) public spending on higher education as a percentage of Gross Domestic Product (GDP), 2) the share of public spending in total expenditure. These first two indicators shall provide a ratio between public and private responsibility21 for higher education (Willems, Beer 2012, p. 108). The additional three indicators they use align with what Esping-Andersen calls eligibility, income replacement, and range of entitlements. Willems and de Beer translate eligibility as access in the case of higher education. 3) The third indicator is the percentage of the relevant population enrolled in a higher education program. 4) The fourth indicator refers to tuition fees as a potential restriction to access. 5) The fifth indicator shows to what extent there is a level of income replacement, i.e. level of student loans or grants issued by the government in order to allow students to acquire a higher education without being dependent on a market income. The second dimension of stratification22 contains three further indicators according to Willems/de Beer. 1) Differentiation in terms of number of tracks in higher education institutions (ibid.); 2) Vocational specificity defined as the degree to which a system focuses on general or specific knowledge and skill attainment to prepare for a particular vocation; and 3) Standardization23 regarding budgets, curricula, examination standards, and the degree to which they meet nationwide standards. In stratified educational systems the authors would expect to find a low variation in the quality of schools. Low standardization would mean that institutions enjoy a high autonomy when deciding on budgets, examinations, and curricula. If in turn the regional governmental level is responsible for setting those issues, an intermediate level is achieved. A high level of standardization is fulfilled if national governments have the competences to decide (Willems, Beer 2012, p. 108). For each of the prototypical welfare regimes, Willems and de Beer derive certain hypotheses. In liberal regimes, there is overall a low expenditure on high21

22

23

As Busemeyer puts it: “High levels of private financing can turn into an effective access barrier to higher education for students with a low-income background” (Busemeyer 2017, p. 426). The authors define stratification as the “hierarchy of the different pathways in the education systems” (Willems, Beer 2012, p. 109). They use the following definition of standardization: “variation in the quality of schools and universities” (Willems, Beer 2012, p. 109).

26

2 Theoretical Basis and Empirical Puzzle

er education with a high share of private expenditure. The authors expect government in liberal regimes to guarantee a basic level of educational provision and leave additional provisions to the market. In turn, corporatist welfare regimes have, in their view, relatively high government spending, low tuition fees, moderate student loans and grants, high vocational specificity, standardization, and strong hierarchy (Willems, Beer 2012, p. 110). Following this theoretical base, I want to investigate what this background implies for foundations in the countries studied. I derive the following hypothesis for this theory: For the Three Worlds of Welfare theory to account for foundations, it would have to allow us to identify differences in support for higher education by foundations in accordance with the theory. Given that philanthropic foundations aim to contribute to the public good, we would expect American foundations to be more supportive of diminishing the issue of stratification and increasing decommodification in higher education than German foundations. This means that I would expect American foundations, among other private actors, to provide a relatively high share of funding to a market-led higher education system which is characterized by relatively high tuition fees, student loans, and heterogeneity among institutions. In turn, I would expend to locate German foundations in a relatively well-resourced government funded higher education system with low tuition fees. 2.1.3 Social Origins: Nonprofit Regime Types Based on Esping-Andersen’s presented analysis of the welfare state (1990), Lester Salamon and Helmut K. Anheier (1998) develop a theoretical approach for comparative third-sector research.24 The authors submit that the nonprofit sector is not “floating freely in social space”, but is embedded in an overall social system. The origins can be traced back to different historical and social forces (Salamon, Anheier 1998, p. 245). Their theoretical approach aims to explain patterns of nonprofit organizations according to their development, size, composition, and revenue base. The authors argue that complex social phenomena, such as the emergence of the welfare state, depend not on one factor alone, but on “complex interrelationships among social classes and social institutions” (Salamon, Anheier 1998, p. 226). This means that the welfare state is considered a phenomenon which emerges as a “balance of power among social classes, between state and society, and even among nations” (Salamon et al. 2000, p. 15). 24

The Johns Hopkins Comparative Nonprofit Sector Project (CNP) assembled the data to test five theories. The CNP began its work in 1991 and collected data on nonprofit sectors in 45 countries all over the world (Comparative Nonprofit Sector Project 2016).

2.1 Theoretical Insights of Regime and Foundation Models

27

Their major hypothesis is that the type of welfare regime depends on two key dimensions. They use those two dimensions to distinguish among four welfare regime types. The first dimension refers to the extent of government social welfare spending25 while the second dimension refers to the scale26 and revenues27 of the nonprofit sector (Salamon, Anheier 1998, p. 23). Both dimensions can be either “high” or “low.”28 They identify four more or less distinct nonprofit regime types that describe the state-nonprofit relationships as liberal, social democratic, corporatist, and statist (see Table 2-2).29 Each nonprofit model evolves with a certain state role and position for the third sector (Salamon, Anheier 1998, p. 228; Anheier 2014, p. 218). Table 2-2:

Government spending and nonprofit scale

Government social welfare spending Low

High Source:

Nonprofit scale/sector size Low Statist Japan

High Liberal US

Social democratic Sweden

Corporatist Germany

Based on Anheier/Krlev (2014), Anheier (2010); Salamon and Anheier (1998)

The two country cases I inspect in this book are classified by Salamon/Anheier as liberal in the case of the United States and as corporatist in the case of Germany. The liberal regime is characterized by relatively low government social welfare spending and a relatively large nonprofit sector. Here, foundations would be expected to be less close to government policy. While the theoretical approach thinks of the scale of the nonprofit sector as decreasing in liberal regimes, when government social welfare spending increases, this would not be the case for corporatist regimes. Here, an increase in government social welfare spending 25 26

27

28 29

The authors do not, however, provide an operationalization of the term. The scale of the nonprofit sector is measured by “full-time equivalent” (FTE) paid employment, number of volunteers as well as operating expenditures (Comparative Nonprofit Sector Project, p. 6). The variable “sources of nonprofit financial support” distinguishes between fees and charges, public sector payments as well as philanthropy/private giving (Comparative Nonprofit Sector Project, pp. 6–7). However, the authors do not clarify what counts as low or high in terms of a cut-off. Due to the country selection and a lack of space, I only briefly summarize the liberal and corporatist regime types. I will not further introduce the social democratic and statist regimes.

28

2 Theoretical Basis and Empirical Puzzle

should be associated with an increase in the nonprofit scale as well (Salamon, Anheier 1998, pp. 228–229). The authors explain this by stating that, in the liberal welfare model, government and third sector are seen as alternatives, while they are partners in the corporatist model (Salamon, Anheier 1998, p. 230). Thus, in the corporatist regime, foundations would be expected to be closely associated with and cooperating with public agencies. The theory posits that education is one of the fields30 most affected by it. Therefore, it is important to further test the applicability of the theory’s claims (Salamon, Anheier 1998, pp. 23). In the framework of the CNP, an International Classification of Nonprofit Organizations (ICNPO) was developed consisting of twelve main groups and 27 subgroups. “Education and research” is the second group of this classification scheme. It is broken down into four subgroups.31 The social origins theory mainly refers to “education and research” as a whole and does not investigate the subgroups fully.32 Thus, it is important to break down “education and research” and to look at higher education33 specifically to test the sub-sector level of nonprofit activity. A general hypothesis enables me to test the applicability of the social origins theory for higher education: If the social origins theory holds true for higher education foundations, the relationship between the level of government spending for higher education and scale of foundation sector depends on the type of nonprofit regimes. In corporatist Germany, we would expect public funding of the nonprofit higher education sector to be higher than in liberal regimes. Philanthropic Research Funding Typology The philanthropic research funding typology is based upon the social origins theory. Breeze et al. (2011) connect philanthropic fundraising by higher educaϯϰ tion institutions in most of the European Union’s (EU) member states with the

30

31

32

33

34

Other fields most affected are listed as social services as well as culture and recreation (Salamon, Anheier 1998, p. 23). The four subgroups of ‘GROUP 2: Education and research’ are called ‘2100 Primary and secondary education’, ‘2200 higher education’, ‘2300 other education’ referring to vocational/technical schools as well as ‘2400 research.’ A further development of the theory includes a combined version of education, health, and social services, but not just as (higher) education, when identifying the revenue structure of the nonprofit sector (Anheier 2014, p. 222). The subgroup 2200 higher education is listed as “Higher education. Higher learning, providing academic degrees; includes universities, business management, schools, law schools, medical schools” (Comparative Nonprofit Sector Project, p. 18). Higher education institutions in twenty-four out of back then twenty-seven member states of the EU participated in a survey conducted by Breeze et al. (2011) about the importance of

2.1 Theoretical Insights of Regime and Foundation Models

29

different welfare regimes. The authors develop a philanthropic35 research funding typology consisting of six regime types.36 Henceforth, only the liberal and corporatist regimes will be studied here due to the country selection. The authors see a market-orientation in higher education institutions in liberal regimes. Moreover, in liberal regimes, they expect philanthropy to fund professorships, chairs, research, buildings, and events (Breeze et al. 2011, p. 1184). In turn, in the case of the corporatist regime, they expect “networks of support groups” to be funding primarily research (ibid.). Breeze et al. implement the six regime types to their survey among 164 higher education institutions in the EU. They assume that if a university is based in a liberal market system, philanthropy is more likely to be a considerable source of income as opposed to in other regime types. According to their model, the role of government determines if philanthropic income is more or less pronounced. If government plays a dominant role, philanthropic income is supposed to be modest (Breeze et al. 2011, p. 1184). There are several shortcomings in the philanthropic research funding typology: First of all, the findings relate only to European higher education institutions. No data has been collected about American higher education institutions for the sake of comparison. A transatlantic perspective on the likely two largest foundation sectors worldwide will enrich the comparison. Second, while Anheier/Daly introduce two types of corporatist regimes, namely a state-centered corporatist regime37 and a civil-society-centered corporatist regime,38 Breeze et al. integrate those two types into one general corporatist regime type (Anheier, Daly 2007b, p. 18).39 It might be important to look closely at the specific features of the corporatist regime. Third, Breeze et al. examine the overall philanthropic research funding. While it is useful to compare the different sources of philan-

35

36

37 38

39

philanthropic research funding for their higher education institution. The countries which did not submit completed surveys were Hungary, Luxembourg, and Malta. They define ‘philanthropic funding’ as “funds, capital assets and gifts in kind received from philanthropic individuals and organizations (excluding governments). This includes gifts and awards from these services but not payments for services. Contract research, therefore, does not qualify as philanthropic funding. Competitive research funding from philanthropic sources such as foundations and trusts, however, does count as philanthropic funding” (Breeze et al. 2011, p. 1185). They distinguish between social democratic, liberal, Mediterranean corporatist, post socialist statist, corporatist as well as statist (peripheral) regimes and their respective type of philanthropic research funding. Examples for state-centered corporatist regimes are France, Belgium, and Luxembourg. Countries that represent a civil-society-centered corporatist regime are, according to the authors, Germany, Austria, Netherlands, Switzerland, and Liechtenstein. I will introduce Anheier/Daly’s foundation models in the part “Comparative foundation models.”

30

2 Theoretical Basis and Empirical Puzzle

thropic research funding, it will be instructive to closely look at one specific actor: foundations. In order to specify the general hypothesis for this theoretical approach, we can thus state that we would expect philanthropic foundation funding in the liberal US at higher education institutions to be a stronger source of income than in corporatist Germany where it would presumably provide a more modest funding source. Furthermore, in the liberal US, foundations fund professorships/chairs, research, buildings, and events, whereas foundations in corporatist Germany are likely to fund research. This part of the theoretical basis introduced three major regime classifications and the further literature that builds on them. I found that the first two classifications help us to better understand the nature of the economy and political structure, types of regimes and sub-sector of higher education in which foundations are active in Germany and the United States. In addition, the third classification, including the philanthropic research funding typology, is beneficial to derive hypotheses about how foundations work as one specific type of nonprofit actor. However, in order to be able to better locate foundations in the presented regime literature, we first have to familiarize ourselves with foundations themselves. This is the aim of the next part of this chapter. 2.1.4 Comparative Foundation Models Anheier/Daly refine the social origins theory and derive from the four nonprofit regime types (Salamon/Anheier 1998) seven foundation models (see Table 23).40 Depending on the third sector regime type, the foundation model and the roles of foundations unfold in different ways. They put forward the view that the “nonprofit regimes as well as the policies and the policy-making style associated with them, help account for cross-national differences in the nonprofit sector scale and structure but are also useful for casting the roles and visions of foundations” (Anheier, Daly 2007b, pp. 14–15). Their classification seeks to capture “the dynamics of relations between foundations and key actors – notably the state, the corporate sector and nonprofit organizations – as well as between foundations themselves” (Anheier, Daly 2007b, p. 17). As mentioned above, the liberal (i.e. USA) and corporatist (i.e. Germany) models are the focus of this book.

40

In total, there are seven foundation models since two regime types are based upon more than one foundation model. The corporatist regime consists of three subcategories (1) statecentered corporate model, (2) civil society-centered corporate model and (3) Mediterranean corporate model, while the statist regime type is twofold (1) peripheral statist model and 2) post-socialist model (Anheier, Daly 2007b, pp. 18–19).

2.1 Theoretical Insights of Regime and Foundation Models Table 2-3:

Third sector regime types and foundation models

Public sector social welfare spending Low

High

Source:

31

Third sector size (economic)

Small Statist regime type Foundation models: 1) Peripheral statist 2) Post-socialist statist Social democratic regime type Foundation models: 3) Social democratic

Large Liberal regime type Foundation models: 4) Liberal (e.g. USA) Corporatist regime type Foundation models: 5) Civil society-centered corporate (e.g. Germany) 6) State-centered corporate 7) Mediterranean

Based on Anheier and Daly (2007)

In the liberal foundation model foundations build, according to Anheier/Daly, a largely parallel system next to government and have thus overall high importance (Anheier, Daly 2007b, pp. 18–19; Toepler 2007, p. 334). They are “frequently seeing themselves as alternatives to the mainstream and as safeguards of non-majoritarian preferences” (Anheier, Daly 2007b, p. 17). The landscape can be characterized as having fewer operating foundations, a long history of grantmaking foundations as well as relatively clear boundaries between the sectors. State involvement is only indirect (Anheier, Daly 2007b, pp. 18–19). Within the corporatist regime type, Anheier/Daly describe the German foundation model as a civil society-centered corporate model. They highlight that the overall importance of foundations in the country is medium. They argue that foundations are for the most part in a “subsidiarity relation” with the state. They describe the operating foundations as being part of the welfare system with close state links. Here, the authors even make a reference to education and assume that operating as well as mixed foundations belong to the educational system (Anheier, Daly 2007b, p. 17). The grant-making foundations are “somewhat less prominent” from their point of view. They highlight that complex borderlines exist between state and foundations as well as between foundations and business (Anheier, Daly 2007b, pp. 18–19). Adloff et al. come, in the case of Germany, to the conclusion that there are two foundation sub-sectors: the corporatist one and the liberal one (Adloff 2007). While they find mostly complementary roles for foundations in the corporatist

32

2 Theoretical Basis and Empirical Puzzle

sub-sector, they identify varying roles for foundations in the liberal sub-sector, such as the promotion of innovation, pluralism, and change. The authors treat the majority of German foundations as part of the corporatist sub-sector, since they are embedded in the system of corporatism (Adloff 2007, p. 178). This is supposed to be true especially for foundations supporting social matters, since they are regarded as fulfilling mainly complementary functions (ibid.). Anheier/Daly (2007) developed a pattern to locate the roles of foundations in more than twenty countries, among others the United States and Germany. Table 2-4 summarizes an overview of the roles and their definitions, updated with the newest research by Anheier et al. (2017). Table 2-4:

Roles of foundations

Role Social and policy change Protection of tradition and cultures Relief Complementarity Substitution Build-out Innovation

Source:

The purpose, functions served Promote structural change and reforms Preserve status-quo, shield traditions Alleviate suffering and meeting needs Complementing the state; serving otherwise undersupplied groups and their needs Taking on financial functions otherwise or previously supplied by state Capacity building and institution building Uncertainty, knowledge-intensive, controversial, reach across boundaries in organizations, fields, sectors (pp. 38)

Based on Anheier 2007, pp. 13-14; Anheier et al. 2017

For selected purposes and roles, the authors assessed how distinctive they are in three different categories41 (Anheier, Daly 2007c, pp. 28–43). Broken down to the United States and Germany, the role pattern as presented in Table 2-5 emerges. Table 2-5:

Comparative foundation roles

Role Social and policy change 41

Germany Somewhat

United States Pronounced/ applies

The three categories are pronounced/applies, somewhat, less so/not at all.

2.1 Theoretical Insights of Regime and Foundation Models Complementarity Substitution Preservation of traditions and cultures Innovation Source:

Pronounced/ applies Less so, not at all Somewhat

Less so, not at all Less so, not at all Less so, not at all

Pronounced/ applies

Pronounced/ applies

33

Based on Anheier, Daly 2007a, pp. 27–38

The analysis of German foundations remains at a rather generalizing level and only limited insights42 are gained into the field of higher education due to the small number of foundations interviewed which work in the field of higher education. Out of 24 interviewed foundations, only two promote science as the authors decided to translate the German purpose “Wissenschaft und Forschung” (higher education) (Adloff 2007, p. 180). But since foundations are usually closely intertwined with the field in which they work, they cannot “be divorced from the policy environment in which they function" (Anheier, Daly 2007c, p. 43).” Some tremendous improvement of the work is warranted if we need to grasp a better understanding of the role of higher education foundations. It therefore remains to be examined carefully how the state-foundation relationship and roles differ for the higher education field. Thus, it is necessary to zoom into the field and to gather information about field specific foundations. The underlying question to be tackled is whether state-foundation relationships in Germany and the US, as forecasted by Anheier/Daly, also apply to the specific sub-sector of higher education. Are, for example, most German foundations still embedded in a mostly corporatist vision? Is the complementarity role largely absent in the US (Toepler 2007, p. 332)? Is it still common for both foundation sectors to reject substitution? I want to investigate those questions with the help of the foundation triangle displayed below in Figure 2-2. This triangle helps to visualize the aims and roles of philanthropic foundations, but also integrates their mode of operation. The mode of operation can be either grant-making, operating, or a mixed approach of both. The three guiding aims of foundations are called social and policy change, protection of tradition and cultures, and relief. The main activities of foundations are build-out, complementarity, substitution or innovation. The country Chapters 4 and 5 present the different modes of operation, aims, and activities in detail and discuss to what extent they apply for the foundations in each country. The sum of the roles leads us to the position of foundations relative to other actors – 42

They argue, for example, that supporting higher education cannot per se be considered innovative. The authors describe the funding of research as probably a “complementary role or – with an individualistic funding policy – as support of pluralism” (Adloff 2007, p. 180).

34

2 Theoretical Basis and Empirical Puzzle

such as state, market, civil society – and with regard to this specific activity field, to the positions of foundations relative to higher education institutions.

Figure 2-2:

Foundation triangle

Source:

Anheier et al. 2017a

2.1.5 Summary of Hypotheses Table 2-6 lists the theoretically derived hypotheses on VoC, The Three Worlds of Welfare Capitalism as well as social origins. Chapter 3 contains the precise operationalization of the hypotheses and empirical expectations. The indicators for each hypothesis will tell me if I am right or wrong. Table 2-6:

Summary of hypotheses

Hypothesis 1: Varieties of Capitalism (VoC)

Hypothesis 2: The Three Worlds of

Hypotheses If the VoC logic can be applied to foundations, differences in support for higher education by foundations can be differentiated in accordance with the VoC approach. In the field of higher education, German foundations are in closer institutional proximity to the state and CMEs have a greater presence of governance institutions than LMEs. American foundations follow radical innovation processes, while German foundations follow incremental innovation processes. For the Three Worlds of Welfare theory to account for foundations, it would have to allow us to identify differences in support for higher education by foundations

2.2 Laying out the Puzzle Welfare Capitalism

Hypothesis 3: Social origins

Source:

35

in accordance with the theory. Given that philanthropic foundations aim to contribute to the public good, we would expect American foundations to be more supportive of diminishing the issue of stratification and increasing decommodification in higher education than German foundations. If the social origins theory holds true for higher education foundations, the relationship between the level of government spending for higher education and scale of foundation sector depends on the type of nonprofit regimes. In corporatist Germany, we would expect public funding of the nonprofit higher education sector to be higher than in liberal regimes.

Author’s illustration

2.2 Laying out the Puzzle Previously in this chapter, I reviewed the three major regime classifications and foundation literature. It turned out that the regime classifications do not cover nonprofit organizations in their original form; only Salamon/Anheier integrate them. However, especially at the sub-sector level of higher education, not much research has been undertaken. This monograph provides a remedy for this theory and data gap. I derived hypotheses for each classification in order to assume what would happen if they also hold true for foundations in higher education. Now, rigorous testing with data is required to clarify the state-foundation relationship in higher education. I first want to turn to the only regime classification that offers insights into nonprofit behavior: the social origins theory. On three levels, I want to contrast the data of the American and German nonprofit sectors: • Scale of nonprofit operations • Scale of foundation operations • Scale of higher education foundation operations The first aim is to compare the sectors to find out whether the social origins theory forecasts correctly that both countries have a large nonprofit sector, a large foundation sector, and in particular a large higher education foundation sector. Later on, the second aim is to see whether the US falls into the category of low government spending while Germany belongs to the category of higher government spending.

36

2 Theoretical Basis and Empirical Puzzle

Scale of Nonprofit Operations Table 2-7 summarizes the scale of nonprofit operations in the US and Germany. About 1.41 million nonprofit organizations exist in the US and more than 600,000 in Germany. The expenditures of US nonprofits amount to 905.9 billion dollars in 2013, while it was 89 billion Euros in the case of German nonprofits. The American nonprofits employ 10.7 million people, with 15 percent of all nonprofit employment in educational services43 (Johns Hopkins Center for Civil Society Studies 2012, p. 3). In Germany, there are 2.3 million insurable employments as well as 300,000 minimal employments in the nonprofit sector. Regarding the number of volunteers and their volunteer time, approximately 62.6 million American adults volunteered at least once (Urban Institute 2015, p. 11). The data of Germany shows about 400,000 full-time equivalents volunteering (Zimmer, Priller 2007, p. 60). All in all, the nonprofit sectors weigh strongly in both countries. Table 2-7:

Scale of nonprofit operations in the US and Germany

Scale of nonprofit operations Number of nonprofits

1.41 million (Urban Institute 2015, p. 1)

Expenditures

$905.9 billion (2013) (Urban Institute 2015, p. 1)

Employment

10.7 million (2010) (Johns Hopkins Center for Civil Society Studies 2012, p. 2)

Volunteers

62.6 million adults, 24.9 percent of the US population volunteered at least once (Bureau of Labor Statistics 2016); 8.7 billion hours in 2014, equivalent to 5.1 million FTE (Urban Institute 2015, p. 11)

Source: 43

USA

Germany 616,154 (2012) (Zivilgesellschaft in Zahlen 2013, p. 80) 89 billion Euros (gross value) (2007) (Statistisches Bundesamt 2012, p. 217) 2.3 million insurable employment; 300,000 minimal employment (Statistisches Bundesamt 2012, p. 214)

400,000 FTE (late 1990s) (Zimmer, Priller 2007, p. 60)

Different data sources (see references in the continuous text)

Educational services include private elementary and secondary schools, colleges, universities, and other educational facilities (Johns Hopkins Center for Civil Society Studies 2012, p. 3).

2.2 Laying out the Puzzle

37

Scale of Foundation Operations In a second step, I want to identify the strength of the foundation sectors irrespective of their exact purpose structures. A strong foundation sector exists in both countries (see Table 2-8). In the US, the number of foundations reaches 86,726 in 2014 (Foundation Center by Candid 2014a).44 Germany exhibits at the same time 18,820 foundations (Anheier et al., 2017). American foundations have 865 billion dollars in assets and 60 billion dollars in expenditures (Foundation Center by Candid 2016a). On the contrary, the assets of German foundations are approximately at 100 billion Euros (Bundesverband Deutscher Stiftungen 2014, p. 32)45 and approximately 13.1 billion Euros46 yearly expenditures (Anheier et al., 2017).47 The estimated number of employees in grant-making foundation amounts to approximately 58,000 employees (McKeever 2016). For the total number of foundations, this estimation seems to be quite conservative. Regarding volunteers, we can state that grant-making foundations do not typically have volunteers. Anheier et al. (2017) and their representative survey find 260,000 employees in German foundations. According to the Federal Association of German Foundations (BVDS), there is no reliable data on the number of employees in German foundations. Their rough estimations show a number of 55,00048 full-time and part-time employees, including volunteers, working in 3,507 foundations (Bundesverband Deutscher Stiftungen 2014, p. 38). If we experiment with the numbers, around about 300,000 people, including volunteers, would support 20,000 foundations.49 The number without volunteers amounts to 210,000. The survey of the foundation research project (Anheier et al. 2017) finds 380,000 volunteers in German foundations. According to the BVDS, 30% of the 300,000 people are volunteers. This means that there are approximately 90,000 volunteers.50 44

45

46 47

48

49

50

This number was taken form the Foundation Center homepage. The most recent number that was also published in an official report is 86,192. Of those, 91 percent are independent grantmaking foundations (78,582), 5 percent operating foundations (4,218), 3 percent corporate foundations (2629) and 1 percent community foundations (763) (Foundation Center 2015). The BVDS emphasizes that the assets of all German foundations can only be estimated since no accurate figures exist. They assume that it is “well beyond” 100 billion Euros (Bundesverband Deutscher Stiftungen 2014, p. 32). More information on the basis of calculation can be found in Anheier et al. (2017), Chapter 2. The BVDS estimates the expenditures at roughly 17 billion Euros (Bundesverband Deutscher Stiftungen 2014, p. 34). 30% of those 55,000 are considered full-time employees, 27% part-time, 4% in marginal employment and 30% volunteers (Bundesverband Deutscher Stiftungen 2014, p. 38). The thought experiment is based on the assumption that 55,000 people support 3,507 foundations and then calculated with the rule of three. This number of BVDS is much lower than what we find in the representative survey of Anheier et al. (2017). One of the reasons could be that the BVDS data relies on data from 2005 onwards. They do not specify the exact year. Additionally, they admit that there were many

38

2 Theoretical Basis and Empirical Puzzle

Considering the presented numbers, I can confirm that both the United States and Germany have developed foundation sectors with a substantial asset base, yearly expenditures as well as employees and volunteers (in Germany). Table 2-8:

Scale of foundation operations in the US and Germany

Scale of foundation operations Number of foundations Assets

$60 billion (2014) (Foundation Center by Candid 2016a)

Employment

58,418 (2013) (McKeever 2016, table 2-17)51

Source:

52

53

54

86,726 (2014) (Foundation Center by Candid 2016a) $865 billion (2014) (Foundation Center by Candid 2016a)

Expenditures

Volunteers

51

USA

Grant-making foundations do not typically have volunteers.53

Germany 18,820 (Anheier et al. 2017) ~100 billion Euros (BVDS 2014) ~13.1 billion Euros (Anheier et al. 2017) ~17 billion Euros (BVDS) ~ 260,000 employees52 (Anheier et al. 2017) 210,000 employees (BVDS ) ~380,000 volunteers (Anheier et al. 2017)54 ~90,000 volunteers (BVDS )

Different data sources (see references in the continuous text)

institutional support foundations (Anstaltsträgerstiftungen) in the sample with a strong employee base (Bundesverband Deutscher Stiftungen 2014, p. 38). The Bureau of Labor Statistics estimated 58,418 employees for grantmaking foundations (North American Industry Classification System NAICS 813211) in 2013, per The Nonprofit Almanac 2016 from the Urban Institute. This calculation is based on N=983 foundations that employ 13,517 people according to the representative survey. On average, a foundation employs 13.75 people. Projecting this number at 18,820 foundations, we find a total number of app. 260,000 employees (Anheier et al. 2017). As for example the Bill & Melinda Gates Foundation puts it: “However, the foundation is a funding organization and we believe it is the organizations to which we give grants (and many others like them) that have the greatest need for volunteers” (Bill & Melinda Gates Foundation 2016). This calculation is based on N=969 foundations with a total of 19,669 volunteers. On average, every foundation has 20 volunteers at their disposal. In turn, this would be a total of 380,000 volunteers in 18,820 German foundations (Anheier et al., 2017).

2.2 Laying out the Puzzle

39

Scale of Higher Education Foundation Operations After presenting the recent figures of German and American foundations, I now want to narrow my results down in a third and last step. The following Table 2-9 summarizes data about higher education foundations. In the case of the United States, there are 21,694 foundations that support higher education, according to the Foundation Directory Online. Thus, every fourth foundation (25%) of the total number of foundations supports higher education, amongst other purposes. Generally, the expenditures of American foundations supporting institutions of higher education were on average 3.8 billion dollars per year between 2000 and 2010 (Foundation Center by Candid database). There is no information available regarding employees in American higher education foundations. As quoted before, there are typically no volunteers supporting grant-making foundations. In Germany, 5,362 foundations (28%) out of 18,820 foundations support higher education according to the Basis Database 2014.55 In the representative survey, 19 percent of the foundations say that higher education is their main purpose.56 Additionally, the relative number of foundations supporting higher education in Germany decreases compared with other purposes (see Anheier et al. 2017, Chapter 2). 37% of German higher education foundations have paid employees. The majority of higher education foundations have volunteers (84%). In sum, I can be certain that both the United States and Germany possess considerable nonprofit and foundation sectors. When zooming-in on the data for higher education foundations, I find relatively strong figures as well. Compared with the overall foundation numbers, however higher education finds lower support rates among the major purposes.

Table 2-9:

Scale of higher education foundation operations

Scale of higher education foundation operations Number of higher education foundations

55 56

USA

Germany

21,694 (Foundation Center by Candid, 2016, Foundation Directory Online)

5,362 (several purposes); 3,576 (higher education as main purpose) (Anheier et al. 2017)

However, the purpose of 1,050 foundations is not available in this database. NHigher Education= 195 of N=1,004.

40

2 Theoretical Basis and Empirical Puzzle

Expenditures57

For institutions of higher education: On average $3.8 billion per year (between 20002010) (2013) (Foundation Center database58)

Employment

Not available

Volunteers

Typically no volunteers

Source:

~ 2.5 billion (3,576 foundations x 700,000€) (Anheier et al. 2017)59 ~2.86 billion Euros (3,576 foundations x 800,000€60) (Bundesverband Deutscher Stiftungen 2014, p. 34) Employees in 37% of foundations (Representative survey, Anheier et al. 2017) Volunteers in 84% percent of foundations (Representative survey, Anheier et al. 2017)

Different data sources (see references in the continuous text)

My overall aim in this part of the chapter is to inspect whether the social origins theory predicts correctly the two dimensions in the case of German and US higher education. When looking into the first dimension, the scale of nonprofit and foundation operations, I have found evidence with our empirical material for the assumption that both studied countries show a high scale of nonprofit and foundation operations and a relatively high scale of higher education foundation operations. The second dimension on which the welfare regime depends is government spending. The following two graphs depict government spending for higher education between 2000 and 2012. Figure 2-3 shows a relatively constant picture over time when we look at the expenditure on tertiary educational institutions as 57

58

59

60

Since the category “assets” on the national level in Table 2-8 was based on assumptions in the first place already, I omitted the category in this Table 2-9. I individually requested this database from the Foundation Center. The methodology chapter provides more information about it. Anheier et al. (2017) estimate the expenditures to be 13.1 billion Euros. For the sake of simplicity, the giving per foundation in higher education was considered to be equal with the giving of other foundations (13.1 billion/18,820 foundations). Every foundation gives on average app. 700,000 Euros. The BVDS estimates the average giving per foundation to be 800,000 Euros annually (Bundesverband Deutscher Stiftungen 2014, p. 34).

2.2 Laying out the Puzzle

41

percentage of GDP by source of funding: public61 and private62 sources. As expected, the level of private funding on tertiary educational institutions as percentage of GDP is much higher in the US than in Germany. The question arises, though, why the level of private spending is at a considerably higher level in the US than in Germany. Moreover, the data is also surprising: the level of public funding is about equal in Germany and the US (see Figure 2-3).

as percentage of GDP

2.5 2 1.5

US private US public

1

GER public GER private

0.5

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

0

Figure 2-3:

Expenditure on tertiary as percentage of GDP

Source:

OECD 2003-2016

61

62

The term public spending refers to “expenditure on educational institutions as well as educational-related public subsidies given to households and administered by educational institutions. […] This indicator shows the priority given by governments to education relative to other areas of investment, such as health care, social security, defence and security” (OECD 2016b). The term private sources refers to households and other private entities and their direct expenditure on educational institutions, net of public subsidies, and does not include expenditure outside educational institutions e.g. textbooks, private tutoring and student living costs (OECD 2016a).

42

2 Theoretical Basis and Empirical Puzzle

To find further proof for this assumption that the level of public funding is not lower in the US than in Germany, I want to consult another data source (UNESCO Institute for Statistics 2016). It shall be scrutinized how the expenditure on tertiary education as percentage of total government outlays (not GDP this time) relates in the case of the two countries. Figure 2-4 illustrates that also with this data basis the result is similar: the public expenditure on tertiary education as percentage of total government expenditure is steadily decreasing, but overall still higher in the US while it is on a lower level slowly increasing in Germany.

as percentage of total government expenditure (%) (all sectors)

4.5 4 3.5 3 2.5 2 2002

2004

2006

2008

GER

2010

2012

2014

USA

Figure 2-4:

Expenditure on tertiary as % of total government expenditure

Source:

UNESCO Institute for Statistics 2018

My empirical analysis of the two dimensions proposed by the social origins theory yields a puzzling finding. On the one hand, while it is the case that the dimension “scale of the nonprofit/foundation sector” is relatively pronounced in Germany and the US, the purpose higher education receives lower support rates among the major purposes. This finding raises the question of why higher education is pursued less often than other major purposes. On the other hand, I cannot confirm that the second dimension “level of government spending” is higher in Germany than in the US when we select the

2.3 Summary and Pathway to Case Studies

43

field of higher education. But, given that social origins theory claims to pertain to the nonprofit component of the field, what are the implications for nonprofit higher education? To be precise, I investigate whether public funding as a share of total revenue of nonprofit higher education is higher in corporatist than in liberal regimes. My analysis opens up new questions that will be posed at the end of this chapter. 2.3 Summary and Pathway to Case Studies The purpose of this chapter was to discern whether and to what extent the three main regime classifications help us in predicting the higher education foundation scale vis-à-vis state in the United States and Germany. I synthesized the current state of the art regarding the regime classifications and its usability for research on foundations with a particular main focus on higher education. To summarize the key points: It turned out that The Three Worlds of Welfare and the VoC literature are partly helpful to sharpen our understanding for the activity field of higher education. In turn, the third classification, the social origins theory, provides us with a better understanding of nonprofit activities vis-àvis the state. In light of the respective data, I find that both countries have a similarly high share of public money flowing into higher education. Since one would assume that corporatist Germany invests more money for higher education than the liberal US, this finding was surprising. Moreover, the private domain, which also includes foundations, plays a particularly important role in the US (see also Busemeyer 2006, p. 217-218). But what exactly is the role of foundations? This finding raises a number of questions to be tackled in the chapters to come, in order to better understand the commitment of higher education foundations vis-à-vis the public: • Economic regime: What are the institutional ties between higher education foundations and state and public institutions, but also with business actors, and higher education institutions? To what extent do German foundations show a closer institutional proximity to the state than do American foundations? Is it possible to distinguish between an incremental innovation approach in the case of German foundations and radical innovation in the case of American foundations? • Welfare regime: How do stratification and decommodification, the two primary dimensions used to describe welfare regimes, compare in the case of German and American foundations? • Nonprofit regime: To what degree is public funding a greater revenue source for nonprofit higher education in Germany than in the US? To what extent do American foundations perceive themselves as a stronger

44

2 Theoretical Basis and Empirical Puzzle source and German foundations as a more modest source of funding for higher education compared with public funding? How does the nature of the foundation model differ in liberal USA and corporatist Germany?

3

Methodology

The previous chapter introduced the theoretical basis of the book at hand. The research problem which I seek to address is whether and to what extent regime classifications are suitable to predict and to differentiate foundation activities in higher education in Germany and the US. My central research question is: “To what extent do regime classifications help us understand higher education funding by foundations vis-à-vis the state in Germany and the United States?” The theoretical propositions of Chapter 2 inform the methodological considerations that I will elaborate in this chapter. The chapter begins by operationalizing the hypotheses derived from the theoretical framework. It justifies the focus on Germany and the US as well as the selection of the respective foundations in each country. Moreover, it operationalizes and delimits the key term “higher education.” In a next step, I present the different data sources and explain my mixed-method treatment of them. The quantitative approach uses several data sources, such as funding statistics by the Federal Statistical Office, an individually requested dataset from the Foundation Center by Candid1 as well as a database and representative survey for German foundations. The qualitative approach consists likewise of several data sources, such as vignettes2/case studies, expert interviews and one focus group. The chapter concludes by elaborating on considerations of data availability, sample specifics, data quality, as well as generalizability. 3.1 Operationalization of Hypotheses Table 3-1 lists the operationalization of the hypotheses derived from the theoretical framework provided by VoC, The Three Worlds of Welfare Capitalism as well as social origins. The aim was to convert the hypotheses into empirically testable research entities. This requires operational terms that specify what data constitutes the different concepts of a hypothesis (Bryman 2016, p. 21). Therefore, this part of the chapter introduces the operationalization of the hypotheses and the data used for it. 1

2

The Foundation Center was founded in 1956 as a clearing house for data on American foundations and has now the “most comprehensive database on US and, increasingly, global grantmakers and their grants” (Foundation Center 2016b). Most recently, the Foundation Center and Guidestar joined forces and use now the new name “Candid.” Vignettes are short portraits that are composed of different material published by the foundation or written about the foundation, such as yearly reports, literature, newspaper articles, and other published documents (Yin 2009; Given 2008, p. 918; Anheier, Leat 2006, p. 52). Further information follows in section 3.3.2 of this chapter.

© Springer Fachmedien Wiesbaden GmbH, part of Springer Nature 2020 J. Mangold, Philanthropic Foundations in Higher Education, https://doi.org/10.1007/978-3-658-27387-3_3

46

3 Methodology

I undertook this operationalization in light of Hölscher’s operationalization for differentiating higher education teaching along VoC dimensions (Hölscher 2016, pp. 170, Table 4.1). Underneath every hypothesis and its items, I list the respective data sources. A representative survey exists only in the case of Germany. With data about German foundations as the point of reference, we can use the US data sources to approximate information about American foundations and their self-perception. Table 3-1:

Operationalization of hypotheses

Item GER USA Data source Hypothesis 1: Economic regime - market vs. state-orientation To what extent do foundations emphasize the following aspects? 1a Closeness to state and public insti+ tutions ° Close cooperation ° Complementing each other’s work ° Need of persuasion GER: representative ° Risk of co-optation survey; interviews 1b Closeness to business actors + USA: interviews (see above 1a) 1c Closeness to higher education institutions (see above 1a)

+

Support for type of institutions ° Public governance ° Private governance

+

1d Orientation towards innovation ° Incremental innovation ° Radical innovation

+

+

+

GER: interviews, Federal Statistical Office; USA: interviews, Foundation Center dataset GER/USA: interview data

Hypothesis 2: Welfare regime To what extent do foundations emphasize the following issues?

3.1 Operationalization of Hypotheses 2a Decommodification ° Public responsibility (vs. priv.) ° Enrolment/ access ° Tuition fees ° Grants/ loans system 2b Stratification ° Differentiation ° Vocational specificity ° Standardization

47

+

+

+

+ + + +

+ +

GER: Federal Statistical Office, interviews; USA: Digest of Education Statistics; interviews GER/USA: Foundation vignettes and interviews

Hypothesis 3: Nonprofit regime and foundation typology To what extent do philanthropic foundations support the following types of funding? USA: Digest of Edu3a Nonprofit Regime: cation Statistics; Higher education foundations as Council for Aid to + ° Modest source Education; Germany: + ° Stronger source Statistical Office Public funding of nonprofit HEI USA: Foundation + ° Modest source Center dataset + ° Stronger source GER/USA: Founda3b Foundation Typology tion vignettes and + + ° Innovation interviews ° Substitution + ° Complementarity + + ° Change Source:

Author’s illustration; the items with a plus appear stronger in the respective country.

The various terms listed under each hypothesis in Table 3-1 require special treatment. In the next paragraphs, I specify how I define and measure each of them. Additionally, I indicate which expectations arise from the theoretical work in the field. Hypothesis 1: Economic Regime – Market vs. State Orientation Hypothesis 1 is about the economic regime in which foundations operate. I use the terms corporatist, institutional proximity to the state to mean closeness to state and public institutions (including public higher education institutions) while the terms liberal, market-coordination would imply that there is proximity to business actors. Henceforth, I divided the operationalization of this hypothesis

48

3 Methodology

into four parts about a) the closeness of foundations to state and public institutions, b) the closeness of foundations to business actors, and c) the closeness of foundations to (public) higher education institutions. 1d) operationalizes the second aspect of the hypothesis regarding foundations and their orientation towards innovation. 1a Closeness to State and Public Institutions First, the representative survey asked German foundations to identify the three most important actors for their foundation work. They had the opportunity to choose among state and public institutions, business actors, higher education institutions and research institutes, schools, welfare state organizations, and cultural organizations. If they mentioned state and public institutions, for example, as important, they were asked to describe their relationship with them. They could state whether they see the cooperation as close, whether they complement each other’s work, whether persuasion is necessary, or whether they perceive a risk of co-optation. Moreover, foundations could choose between four categories3 to describe how much they agree with a given statement, but also could select “do not know” and “not specified.” Thanks to the representative survey among German foundations, it is possible to measure how German foundations perceive their relationship with state and public institutions. The German case, consisting of the survey and interviews, forms the basis for comparison with the results of the US interview material. According to the hypothesis, CMEs have a greater presence of governance institutions than LMEs. Self-governing and quasi-public but independent agencies are important. German foundations should be in closer institutional proximity to the state than are American foundations. 1b Closeness to Business Actors Second, the German survey data about how foundations describe their relationship with business actors enriches this first part on their closeness to state and public institutions by cataloging how it differs from their perceived relationship with state and public institutions. Here, I can rely, again, on the results of the representative survey in Germany. I compare it to the comprehensive American interview summaries. 1c Closeness to Higher Education Institutions – Support for Type of Higher Education Institutions Third, the representative survey records, as mentioned, whether foundations rated higher education institutions as important actors for their work. If they do 3

The four categories are: agree fully, agree somewhat, disagree somewhat, and disagree.

3.1 Operationalization of Hypotheses

49

evaluate higher education institutions and research institutes as important, they again could choose from the items listed above to describe, for example, how closely they cooperate or complement each other’s work. The survey allows me, again, to compare the answers of German higher education foundations with the interview material of American foundations. In addition to asking in general how foundations describe the relationship with higher education institutions, I want to ascertain whether the type of governance of the higher education institution matters for the relationship with foundations. This is a relevant question because VoC theory would lead us to assume that foundations in LMEs tend to be associated closer with private higher education institutions, while foundations in CMEs are thought to be more supportive of public institutions. The answers given by foundation representatives in the qualitative interviews supply the data sources which help to measure foundation support for public versus private educational institutions. Moreover, the funding statistics from the German Federal Statistical Office and American Foundation Center by Candid provide an overview of the universities which foundations support strongest and their respective public versus private governance. 1d Orientation Towards Innovation Fourth, from the VoC literature I derived that foundations in LMEs could be more prone to radical innovation, while foundations in CMEs could tend to support rather incremental innovation. To be able to investigate this, it is pivotal to first shed light on the term innovation. In the representative survey the term innovation encompassed the potential role of foundations to ”drive innovations and foster solutions to problems.” Closely associated with innovation is the term change. Change indicates in the survey whether they want to foster “social and political change.” Regarding philanthropic foundations, the term “radical innovation” means that I expect them to describe their higher education work as innovative. If they seek to support path-breaking, risky, and original research they would want to foster radical innovation compared to research which builds upon previous studies step-by-step and is thus incremental. The interview material gives me a better understanding of how foundations describe their approach towards innovation – and how other experts from the field describe their approach. To support radical innovation, I would expect them to want to support the aim of change, too, which would not be the case for incremental innovation. Hypothesis 2: Welfare Regime The second hypothesis refers to the welfare regimes in which foundations operate. In this hypothesis, the terms decommodification and stratification constitute

50

3 Methodology

the core. My operationalization of those two terms is based on Willems, Beer 2012. They develop five indicators for decommodification and three for stratification. I present each indicator with reference to higher education foundations below. 2a Decommodification ° Public Responsibility vs. Private Responsibility The first of the five indicators proposed by Willems and de Beer to measure decommodification concerns public spending on higher education as a percentage of GDP and the second indicator is about the share of public spending in total expenditure. Figure 2-3 and 2-4 opened up the puzzle in Chapter 2 with those indicators. Strikingly, I do not find in the conservative Germany considerably higher public expenditure compared with the US. With those two mentioned indicators, Willems and de Beer want to investigate the “weight of public responsibility for higher education relative to private responsibility” (Willems, Beer 2012, p. 108). This is exactly where I pick up their theoretical considerations and transfer them to the foundation world. In order to discover how foundations perceive public versus private responsibility for higher education, I raise this topic in the expert interviews. Since data shows that public expenditures are in both countries rather modest, I expect foundations to argue in favor of greater public commitment for higher education and its institutions. ° Access The third indicator which makes up “decommodification” is the issue of access to higher education. I can measure access by comparing the “percentage of the relevant population enrolled in a higher education programme” (Willems, Beer 2012, p. 108). I do this by referring to the relevant statistical figures in both countries. Moreover, I want to find out to what extent foundations emphasize the topic of “access” in their higher education work. If foundations provide access, as I define it, they provide the educational opportunity to enroll at institutions of higher education. Not only is it interesting to see if and to what extent foundations relate to this issue of access, but also to specify what kind of student body they want to provide access for and at what type of higher education institution. The data source which helps me to grasp the relation of foundations and the issue of access is primarily the interview material. Here, I ask foundation representatives during the second thematic block what they consider the foundation’s typical focal points and topics in the field of higher education (see Appendix D). If they mention access as an important topic, I ask them to specify their approach regarding the supported groups and institutions. The existing theoretical para-

3.1 Operationalization of Hypotheses

51

digms would lead us to predict that American foundations strongly emphasize this issue while this is not the case with German foundations. ° Tuition Fees Fourthly, when dealing with “decommodification” tuition fees are an indicator identified by Willems and de Beer since they potentially restrict access to higher education. The theory would lead us to expect that there are low tuition fees in a conservative welfare regime, like Germany, while this is not the case in a liberal country such as the US (Willems, Beer 2012, p. 116). To test this with statistical figures, I use official data to highlight the disastrous tuition fee situation in the US and compare it with the non-existent tuition fee situation in Germany. This gives us background information about the higher education activity field in which foundations operate. Moreover, foundation representatives and other experts expressed their opinion about tuition fees in the interviews. My aim is to find out in which context foundations talk about tuition fees and whether, as I derived from the theory, American foundations perceive this as something which needs to be improved while German foundations do not perceive it as pressing and relevant due to the different financing structure and the right to free education in Germany. ° Loans System Lastly, the loans system issued by the government is the fifth indicator of decommodification put forward by Willems and de Beer as they function on the level of income replacement. Again, I want to provide background numbers about the availability of grants and loans for the student population in both countries funded by the government. The theory expects us to find neither in the conservative nor liberal welfare regime a generous grants and loan system. I supply data and information on this. Moreover, I include comments by foundation representatives and other experts on loans. 2b Stratification ° Differentiation The second key term – stratification – comprises three indicators. Willems/ de Beer call the first of them differentiation, referring to the number of tracks in higher education institutions. I transfer this to my research topic by investigating to what extent foundations differentiate among the types of supported institutions and tracks. While I looked previously at the quality of the relationship of foundations with higher education institutions and then studied to what extent the governance of the schools matter, here I want to ascertain whether foundations differentiate their support across the variety of educational institutions and tracks or

52

3 Methodology

whether certain aspects are favored. Willems/ de Beer find in conservative regimes a high level of differentiation of the number of tracks in higher education institutions as well as a relatively high level in liberal regimes. If I translate this to higher education foundations, I would expect to find both German and American foundations to be differentiating their support across a variety of institutions and tracks. In turn, if foundations disproportionately favor certain types of institutions and tracks, this indicator would not be fulfilled. The interview data as well as the Foundation Center database and dataset of the German Statistical Office help me to answer this question. ° Vocational Specificity Next, vocational specificity is the second indicator of stratification. In Chapter 2, I used the definition of “the degree to which a system focuses on general or specific knowledge and skill attainment to prepare for a particular vocation (Willems, Beer 2012, p. 109).” Willems/ de Beer distinguish between three types of systems - unified, binary, and diversified systems. The binary one exhibits high vocational specificity while the other two show low vocational specificity. They classify Germany as a binary system4 and the US as a diversified system.5 Translating vocational specificity to my research topic, I want to find out whether foundations particularly support practice-oriented school types. In the US, this would be the case if foundations foster community colleges.6 In Germany, I am looking to discover to what extent foundations support the specific type of vocational academies and universities of applied sciences. We could assume that American foundations want to foster vocational specificity in the diversified system in which vocational specificity is not as pronounced as in the binary German system. The expert interviews help me to ascertain if this is indeed the case. ° Standardization Lastly, standardization in the higher education system is the third indicator of stratification. Willems and de Beer see standardization at work if there is not much variation in the quality of schools and universities. In turn, low standardization is fulfilled if higher education institutions widely act autonomously. 4

5

6

The binary system characterizes itself by first-tier institutions which put their emphasis on academic education, while the second-tier institutions stress vocational education (Willems, Beer 2012, p. 109). The diversified system takes its name from the diverse set of higher education institutions with varying amounts of reputation, resources, and selectivity of students and faculty (Willems, Beer 2012, p. 109). Two-year-colleges as well as vocational, technical, and proprietary schools belong to the type of community colleges.

3.2 Case Selection

53

Transferring this idea to philanthropic foundations, I investigate, using the qualitative interview material, whether foundations consider the quality of schools and universities when making a decision about funding. With the help of my short survey, I can count which types of schools foundations claim to support in both countries – and which they do not. I expect not to see standardized processes among foundations. Hypothesis 3: Nonprofit Regime 3a and 3b Foundation Funding at Higher Education Institutions The third hypothesis is about the public funding in relation to the foundation funding of nonprofit higher education. The social origins theory proposes that the public funding of the nonprofit sector should be higher in corporatist than in liberal regimes, and in turn, this should also be the case for higher education. I investigate this by looking at the different revenue streams coming from public sector payments, private giving, as well as private fees and charges. When comparing the quantitative data on the share of public versus foundation funding, I should find a greater public funding of nonprofit higher education in Germany compared with the US. Lastly, I include a comparison of the main foundation roles – innovation, substitution, complementarity, and capacity-building. 3.2 Case Selection This section of the chapter explains the selection of cases on three different levels: first, the selection of the two countries under consideration; second, the selection of the activity field of higher education; third, the selection of foundations in each of the investigated countries and higher education fields. The countries are key for theoretically deriving hypotheses on regime classifications. Here, I investigate higher education as a particular segment of the country regimes. If collected data and information on foundations can serve as the unit of observation (Anheier 2004, p. 31), in this book, I focus on higher education foundations at the micro-level as units of observation. The foundation case studies enable us to grasp a larger class of similar units of the population of foundations (Gerring 2012, p. 411). 3.2.1 Selection of Countries There are three main reasons for the selection of countries: Firstly, the choice was theoretically motivated. This means that the theoretical lens supplied by regime literature guided the country selection. Within the comparative regime literature, Germany and the United States represent certain, more or less distinct, ideal types of regimes. For example, Hall and Soskice regard Germany and the US as the main representatives for LMEs and CMEs respectively. Most studies

54

3 Methodology

within the VoC literature focus on German and British higher education whereas only a few investigate the United States thoroughly, as outlined in Chapter 2.7 This is the first justifiable reason for why it is appropriate to test the theory with regard to Germany and the US. Secondly, since both countries have highly developed foundation sectors,8 they present ideal country studies: the US boasts the largest and Germany likely9 the second largest foundation sector worldwide (Anheier et al. 2017a, p. 13). As research about foundations is sometimes limited due to a lack of data,10 the relative data coverage in this specific niche of higher education made these two countries highly suitable. Only by looking at more than one country is it possible to identify the commonalities and differences11 of foundation sectors. Thus, in order to understand specific national characteristics of the foundation sectors under consideration, this book undertook a comparative approach. Thirdly, the higher education systems of Germany and the US represent contrasting ideal types (see also Schulze-Cleven 2015, p. 1). Despite both having strong and established higher education systems and ranking high (and relatively high in the case of Germany) in worldwide higher education rankings,12 the systems reveal significant differences, as we will learn from the higher education literature included in Chapters 4 and 5 on the two countries. 3.2.2 Selection of Higher Education as Field of Activity After clarifying the selection procedure of the two countries, this section delineates the term “higher education.” This is important because in this dissertation, I want to shed light not on the foundation sector in two countries in general but on the foundation activity in the sub-sector of higher education in particular. This is the level on which I want to test the theories using my hypothesis. As Anheier puts it, it is important to closely look at the respective policy environment in 7 8

9

10

11

12

An exception is the dissertation of van Santen (2014). “Developed” is meant here in the sense that both foundation sectors are relatively large in terms of number of foundations, endowment size of foundations, and their yearly expenditures. Anheier et al. (2017a) emphasize that it is important to add the word “likely.” They argue that even if some methodological uncertainties remain, the German and American foundation sectors are larger than in other large national economies, such as Japan, Great Britain or France with regard to numbers, expenditures, and assets of foundations (Anheier et al. 2017a, p. 13). For further explanations, see the section 3.4 on “Research Considerations” at the end of this chapter. As will be presented later, the German and US foundation sectors are considered “implicit counter-models of each other” (Toepler 2007). The first and 16 other positions out of 25 are filled with American research universities in 2015/16. The first German university listed in this ranking is the Ludwig-MaximiliansUniversität Munich on position 29 (Times Higher Education 2016).

3.2 Case Selection

55

which foundations are active since “it is clear that the feasibility of foundations' aspirations cannot be divorced from the policy environment in which they function" (Anheier, Daly 2007c, p. 43). It is therefore important to consider in which field foundations are situated. The regulation of taxation by each country is useful to operationalize the respective field of activity. For Germany, I investigated the so-called purpose of “Wissenschaft und Forschung.” This German term is not one-to-one translatable into English. During the research process, it became apparent that the most appropriate translation of the term for both countries seems to be “higher education.” Initially, I regarded the term “science and research” as an adequate translation for “Wissenschaft und Forschung.” Expert interviews and the field research itself revealed that the term “science” is in the US context very often understood as being limited to natural sciences. Thus, even though foundations supported institutions of higher education, they did not perceive themselves as funding “science and research,” but rather higher education. As this study is not focused on natural sciences alone, but investigates also social sciences and humanities as well as medicine, I decided to use the term higher education instead of science and research while conducting my research. I deploy the term higher education throughout this book to refer to funding activities by foundations in the activity field of tertiary education as opposed to elementary and secondary education (National Center for Education Statistics 2016, p. 14). In the German tax code, higher education is listed, amongst others,13 as one of the tax-privileged, public-benefit purposes in § 52 II sentence 1 no. 1 (Vereinsbesteuerung 2014). According to this, foundations can support three different fields of study: (1) medicine/life sciences, (2) natural sciences, as well as (3) social sciences/humanities (see Figure 3-1). This book takes all three fields of studies into account.

13

Other tax-privileged purposes are, for example, public health care, children and youth welfare, arts and culture, as well as primary and secondary education (Vereinsbesteuerung 2014).

56

3 Methodology

Figure 3-1:

Visualization of the term higher education in Germany

Source:

Author’s illustration

Regarding the different types of higher education institutions, my definition of higher education institutions includes in Germany not only universities but also universities of applied science, universities of cooperative education, pedagogical universities, and open universities.14 German extracurricular research organizations,15 which I will introduce in more detail in Chapter 4, are not part of higher education. They are theoretically speaking part of “Wissenschaft und Forschung.” However, since they are a second pillar of the research system, it is possible to concentrate the analysis on the main pillar - higher education institutions. As will be shown in Chapter 4, the funding structure and degree of application of extracurricular research organizations vary among them and would constitute a research object in and of itself. In the US higher education system, I distinguish between community colleges, colleges, universities, graduate schools, professional schools and other degree-granting institutions.16 My study of these two countries includes both private and public higher education institutions. In the case of American higher education, the National Taxonomy of Exempt Entities (NTEE)17 makes an operationalization of the term higher education 14

15

16

17

This list of schools is based on the categories used in the datasets produced by the German Federal Statistical Office. The Leibniz Gemeinschaft, Fraunhofer-Gesellschaft, Helmholtz-Gemeinschaft as well as the Max-Planck-Gesellschaft are examples for extracurricular organizations. In turn, this list is based on the categories used in the individually requested Foundation Center database. The US government federal tax agency, called the Internal Revenue Service (IRS), uses NTEE to classify nonprofit organizations (National Center for Charitable Statistics 2016).

3.2 Case Selection

57

possible. The NTEE distinguishes between 26 major groups, one of which is B Education (see Figure 3-2). The NTEE includes in this code called “B40 higher education” the sub-codes of higher education (see Figure 3-3), namely at “B41 two-year colleges, B42 undergraduate colleges” and “B43 universities.” Drawing on the NTEE, the US Foundation Center by Candid has developed the Philanthropy Classification System.18 In the case of higher education, the Foundation Center works with the three similarly labeled subgroups of B41 community college education, B42 undergraduate education, and B43 university education. While the main focus is directed at the group B40 higher education, the subgroups help me to narrow down the results for the recipient groups that benefit from higher education foundations.

Figure 3-2:

Visualization of the term education in the USA

Source:

Foundation Center by Candid 2017c

18

According to it, higher education is defined as “Programs that provide opportunities for individuals who are beyond the compulsory school attendance age to acquire a higher level of knowledge, skills and specialization in their chosen area of interest within the framework of phased learning in a formal school setting. [It] Includes community or junior colleges, colleges, universities, graduate schools, professional schools and other degree-granting institutions” (Foundation Center 2016c).

58

3 Methodology

Figure 3-3:

Visualization of the term higher education in the USA

Source:

Foundation Center by Candid 2017d

3.2.3 Selection of Foundations At the outset, it is important to note that researchers wishing to study philanthropic foundations in general, and the sub-sector level of higher education in particular, have little data at their disposal in Germany and the US. I explain this situation further at the end of this chapter in the section 3.4 on research considerations. The methodological choices are informed by this situation. My sample consists of foundations as case entities. I decided to make use of a purposive, nonrandomized sampling frame. This frame is preferable over a random statistical sampling in order to sample meaningful cases with desirable characteristics (Gerring 2012, p. 411).19 This means that not every case had an equal chance for selection into the sample, but was purposefully chosen based on a list of criteria (Gerring 2012, p. 434). The weakness of this procedure is that it 19

The criteria for the selection of the respective German and American foundations are listed below.

3.2 Case Selection

59

is not randomly sampled from the broader population and thus not representative and unbiased. On the other hand, the strength of this purposeful sampling frame lies in the fact that I sample relevant cases of the sub-field of higher education with high explanatory power to advance our understanding of foundations. Another advantage of the purposive sampling is that it is more easily implemented when there are budget, time, and spatial restrictions. In sum, the positive aspects outweigh the negative because purposively sampling ensures a better fit of the cases. My process for selecting the foundations in both countries was similar. For reasons of precision, however, I present the selection of German and American foundations consecutively. The objective was to identify the most relevant foundations supporting higher education in this field. Selection of German Foundations Together with my team members, I used the Basis Database 201420 to identify the population of nearly all 19,000 foundations in Germany. We could then create a representative sample to conduct a representative survey among German foundations. After developing several criteria, I selected the 20 most relevant German higher education foundations. The procedure was based on the selection process of the research project “Roles and Positions of German Foundations.” The criteria were: • The thematic focus of foundations was most important. Foundations with higher education as their sole purpose were selected. Whenever foundations supported more than one purpose, those were chosen that included higher education as one of their focuses.21 • The chosen foundations have to be legally independent under civil law. This means that they should not be under the roof of other foundations. • Foundations with all three potential modes of operation (operating, grant-making, and mixed) were considered. • Foundations are prioritized that are not solely controlled by a public office holder to advance the understanding of private philanthropic engagement. • To qualify as “large,” foundations had to have annual expenditures exceeding one million Euros.

20

21

More information regarding the Basis Database 2014 as well as the representative survey is provided in section 3.4 of this chapter as well as in Anheier et al. 2017a, pp. 49–55. This was, for example, done by looking at how much of a foundation’s budget share is spent on higher education compared to the share used for other purposes.

60

3 Methodology •

• •

•

The search was complemented with further desk research and pertinent foundation literature. In the case of Germany, the handbook on foundations as partners of higher education, served as a basis since it introduces a selection of 25 foundations working in this field (Fritsche 2013). This list was helpful for validation with my own list. I enriched the list with an organization of a different legal form, the Stifterverband, that appeared to be typical for the field.22 Ultimately, the presence and visibility of foundations in the activity field of higher education was decisive, e.g. their strong media presence, their hosting of public events, or their mentioning at others’ public events.23 Foundations with different founding years (younger vs. older foundations), mode of operation (operating, grant-making, mixed), number of staff (smaller vs. larger), geographical variance, single purpose foundations vs. multipurpose foundations), and size (very large vs. large foundations) were considered.

Lastly, I asked the council members of the research project “Roles and Positions of German Foundations” to review the preliminary list along with the criteria. This step was necessary to validate the results and to add or remove foundations from the list. After the selection process, I composed vignettes for each of the 20 foundations to become more familiar with each foundation (Yin 2009; Anheier, Leat 2006, p. 52). This part aimed at “screening the candidate cases” (Yin 2009, p. 91) to explore their suitability for case studies. The part 3.3 on “Data Sources and Analysis” lists the exact content of the vignettes. Also, the availability of foundations played a role in this research process. The selected foundations were first contacted via email with both a personalized body email and a personalized PDF attachment. I announced that a phone call follows within the next few days to arrange a meeting for an expert interview with one or more foundation representatives. The overall response rate was 75 22

23

I added the Stifterverband für die Deutsche Wissenschaft e.V. to the list, even though it is strictly speaking not a foundation, but a registered association. It was included since it is a special entity in the German landscape. The Stifterverband considers itself a “joint initiative started by companies and foundations – the only one in Germany to be devoted entirely to consulting, networking and promoting improvements in the fields of education, science and innovation” (Stifterverband für die Deutsche Wissenschaft 2017a). Chapter 4 presents it in the part on “Actors and Governance.” This means that the final criterion was the perceived presence and visibility of the foundation in the field of higher education compared with other activities of the foundation in other fields.

3.2 Case Selection

61

percent: Out of 20 German foundations queried, 15 foundations agreed to participate in expert interviews and were studied in-depth and interviewed personally by me. Selection of American Foundations In the case of American foundations, the individually requested dataset24 by the Foundation Center provided a basis for further analyses. The criteria for selecting 20 American foundations engaged in the field of higher education were the following: • As presented in the case of Germany, the thematic focus of foundations on higher education was central. • The individually requested Foundation Center dataset25 was analyzed by filtering for size and mode of operation of foundations supporting higher education from 2000 through 2010. • The foundations had to be independent grant-makers.26 • They had to have high yearly expenses on higher education according to the Foundation Center dataset.27 • Further desk research and foundation literature complemented the search, e.g. the chapters on American higher education foundations in Anheier et al. (2010). • The presence and visibility of the foundations for the field of higher education were again decisive. • As in Germany, it was important to ensure variation with regard to founding year, number of staff, geography, single-purpose foundations vs. multipurpose foundations, and size (large vs. very large foundations).

24

25

26

27

Detailed information regarding this individually requested database by the Foundation Center is also presented in part 3.3 in this chapter. More information about the dataset is presented in the part “Data Sources and Analysis” of this chapter. The Foundation Center database distinguishes between four different foundation types: IN=Independent Foundation; CM=Community Foundation; CS=Corporate Foundation; OP=Operating Foundation. Only IN were selected (they may have been corporate or family foundations originally) because they are considered typical for American foundations and constitute the majority of foundations. Here, it was necessary to apply different yardsticks as in the German case. In the case of Germany, foundations with yearly expenditures exceeding one million Euros or more were chosen, but in the case of the US, priority was given to the foundations that had the largest annual expenditures according to the Foundation Center dataset. Thus, the term “high annual expenditures” refers to the foundations that made the largest total contributions to higher education during the aforementioned decade.

62

3 Methodology

After finalizing the first list, I sent it together with the criteria to the experts of the field for validation.28 As in the German case, I asked the experts to validate the list and to add or remove foundations, if applicable. Compared with the preliminary list of foundations, the few additional foundations suggested by the experts have a more regional focus or started to support higher education more recently, meaning after the beginning of the period covered by the Foundation Center dataset.29 On this basis, I assembled an excel sheet containing information about the foundation name, location(s), endowment, annual expenditures, founding year, number of staff, core areas/topics, potential interview partner(s), and remarks. While collecting the information for the vignettes, I contacted foundations via email with an official, personalized invitation letter as PDF attachment. From abroad it was often difficult to establish communication with foundation representatives. Many email queries and phone calls went unanswered. For this reason, I adjusted my strategy for entering the field. Due to the low response30 rate at the end of the selection process of American foundations, I appended additional foundations during the actual field research. Once I started my field research in the United States in May 2015, I was able to get in touch with more foundation representatives with the help of references from interviewees working at other foundations. This means in terms of sampling that in addition to the nonrandomized, purposively selected organizations, I sent requests to additional foundations as a snowball sample31 if other interviewees suggested I do so. In total, due to the personal references, I was able to interview between one and three representatives at 13 different American foundations.

28

29

30

31

Several experts were contacted in the early stage of this qualitative phase. I consulted three professors familiar with American foundations. Examples are the Lumina Foundation and the Spencer Foundation. They did not appear on the list of the top 25 funders of higher education generated from the Foundation Center data. An example for a more regionally focused foundation in the field of higher education is the Kresge Foundation which focuses on California, Florida, Michigan, and Texas (see Foundation Portrait 5-2 in Chapter 5). An example for a foundation which started its work more recently is the Lumina Foundation (see Foundation Portrait 5-1). It was first established in mid2000. In the meantime, the Lumina Foundation has risen to national prominence and is one of the few foundations that solely support higher education. Due to the extremely difficult access to the field and the adjustments I made to the procedure, I did not calculate an overall response rate. A snowball sample is a subset of a purposive sample. This type of sampling is particularly advantageous in the case of “hard-to-track” populations (UC Davis 2017).

3.3 Data Sources and Analysis

63

3.3 Data Sources and Analysis 3.3.1 Quantitative Data This study assembles and uses data from several quantitative and qualitative sources (see Table 3-2). The multi-method approach enabled me to gain a comprehensive quantitative and qualitative understanding of the importance of foundations in higher education systems in Germany and the USA. First, I introduce the quantitative phase, with its respective data sources by country, and then I follow with the qualitative data sources by country. Table 3-2:

Quantitative and qualitative data by country

Quantitative

Qualitative

Source:

Germany

United States

Objective

| Basis Database 2014 | University funding statistics | Representative survey

| Foundation Center grants dataset

| Mapping the field | Identification of relevant foundations | Contributions of foundations to higher education

| Vignettes | Survey | Expert interviews | Focus group

| Vignettes | Survey | Expert interviews

| Self-perception of foundations | Perception of foundations by other

Author’s illustration

a) Quantitative Data in Germany The first phase of the quantitative analysis in Germany consisted of mapping the higher education field in which foundations operated between 2000 and 2010. The aim of this part was to identify the overall institutional setting, including the relevant actors as well as their interplay with each other. The statistical data analysis puts the various external funders (federal government, federal states, German Research Foundation (DFG), industry, foundations), and their spending behavior toward higher education institutions (as well as their types, locations, governance) in relation to each other. I carried this data analysis out with the help of Excel and in particular with Pivot tables. It was also important to get an understanding of the financing structure and the contributions from public, private, and nonprofit sources. For this step, I used

64

3 Methodology

data on university funding statistics from the German Federal Statistical Office to map the higher education field. These funding statistics are an important data source on the German higher education system. I utilize especially two publications by the Federal Statistical Office.32 The data by the German Federal Statistical Office helps to answer the following questions: 1. On the field level: What does the higher education institutional setting look like in Germany? How has the institutional landscape developed during the last decade? 2. On funding by foundations33: What kind of schools of higher learning34 do foundations support? How has the support of foundations for higher education institutions developed between 2000 and 2010? 3. On the school level: What are the top higher education institutions receiving external funds from foundations: in 2010, from 2000 to 2010? What were the highest foundation grants to schools during that time period? Basis Database 2014 Besides the data source provided by the Federal Statistical Office dealing with the higher education landscape in Germany and its funders, I make use of datasets on philanthropic foundations. My team members and I assembled the Basis Database 2014 within the framework of the research project “Role and Positions of German Foundations.” Our database contains more than 18,800 German foundations. We collected the data by assembling single registries of foundations of the Federal states (“Länderverzeichnisse deutscher Stiftungen”). The registers came in various shapes and forms. Therefore, we compiled the data, prepared, and supplemented it through desk research. The variables include, but are not limited to, name of the foundation, address, year of establishment, legal status, as

32

33

34

Those two publications by the Federal Statistical Office are: Special Series 11, series 4.3.2 as well as Special Series 11, series 4.5. The first publication is available since 2001 and the second one since 2002. In order to be able to analyze the time period from the year 2000 through 2010, I requested further data from the Federal Statistical Office when needed. If more recent data was available, for example on current numbers of school types, it has been used to give a more recent account on the institutional setting. The Federal Statistical Office uses the following definition of a foundation: “Def. foundations or the like domestically: foundations under public law as well as foundations under private law (e.g. VW foundation)” (Statistisches Bundesamt 2014, p. 518)” Thus, it has to be noted that these studies also include public foundations in the definition, while this is not the case in the qualitative part of this book. The types of schools are, for example, universities, universities of applied science, universities of cooperative education, pedagogical universities, open universities, private universities, and state universities.

3.3 Data Sources and Analysis

65

well as foundation purposes. The comprehensive database allows, for example, for filtering for foundations with a focus on higher education. This Basis Database 2014 formed also the fundament to conduct a representative survey with the help of TNS Infratest political research35 among 1,004 German foundations. Chapter 2 in Anheier et al. 2017a contains more information about the methodological approach. With this representative survey data, I ran descriptive analyses about the self-perception of higher education foundations as to their roles and positions with the statistical software package SPSS. b) Quantitative Data in the US For the United States, the Foundation Center by Candid kindly provided the data for the analyses about higher education foundations in the United States upon request.36 The Foundation Center by Candid made a list of grants available based on a sample database37 for the time period of 2000 through 2010.38 I used this list of grants to identify the financially strongest foundations for the field of higher education with Pivot tables in Excel. Furthermore, I performed statistical analyses with SPSS. There are differences between the quantitative datasets from Germany and the US (see Table 3-3). The main difference was that the US dataset provides detailed information on all grant-making foundations, all benefitting higher education institutions, and the corresponding award made to them. However, the dataset does not contain information on other funding actors in higher education, apart from foundations, such as government-funded agencies. In contrast, the German data provided by the Federal Statistical Office contained detailed information on all funders, not only foundations, but also the DFG, EU, and industrial economy. However, the German dataset did not include information on the specific foundations and also not on the purpose of funding.

35

36

37

38

TNS Infratest Politikforschung is an institute for market research, opinion polling as well as social research (TNS Infratest Politikforschung 2016). This request was based on all grants awarded to an institution of higher education from the Foundation Center’s grants national sample database for 2000-2010 of over 1,000 US foundations based on grants of $10,000 or more. The fee of approximately $4,500 for the dataset was waived (Foundation Center 2014b). Regarding the sampling base, the Foundation Center explains that “the search set is based on Foundation Center’s 2000 to 2010 grants sample database, which includes all grants of $10,000 or more awarded to organizations by a sample of app. 1,000 of the largest private and community foundations.” (Foundation Center 2014b). This time period mainly refers to the individually requested dataset by the Foundation Center. In some other cases, more recent data is also available.

66 Table 3-3:

3 Methodology Comparison of quantitative data

Institution providing the data File Filetype Variables

Amounts awarded Time period Source:

Germany Federal Statistical Office

USA Foundation Center

Several Excel External funding according to Federal states, school types, governance, recipient school

1 file with ~19,000 entries Excel 49, e.g. grantmaker, grantmaker type, year of foundation establishment, recipient, amount awarded, year issued Absolute numbers

Absolute and relative numbers 2000-2010

2000-2010

Author’s illustration

3.3.2 Qualitative Data The second methodological phase was fourfold and consisted of (1) qualitative vignettes, (2) surveys, (3) semi-structured expert interviews as well as (4) a focus group (in the case of Germany). Vignettes First, after I completed the selection of foundations based on the quantitative analysis, I composed so-called “vignettes” (Yin 2009) for each of the 40 foundations. The vignettes are short profiles including contact information for the foundation, name, legal status, founding date/year, mode of operation, mission, founder and endowment; main activities, yearly expenditures, project information, typical activities and projects of the foundation in the policy field; position of the foundation relative to state, market and civil society, roles of the foundation; the sources of the vignette, and a field for notes and comments. I gathered the information about the foundations from its homepage, annual reports, other official foundation documents, and newspaper articles. An example of a vignette can be found in the Appendix A. Survey Second, I created a two-page survey to be sent out to the foundations prior to interview appointments. I have chosen to do this for three reasons: to remind the interviewees about the upcoming appointment, to get pre-researched infor-

3.3 Data Sources and Analysis

67

mation39 about them validated and to gather some additional data. The additional questions added to the survey required estimation from the representative and were better answered in a written form (see Appendix B). Semi-structured Expert Interviews40 Third, following the research topic, semi-structured expert interviews were an appropriate method of collecting data. During spring/early summer 2015, I conducted in total N=49 expert interviews (see Appendix C) with a semi-structured41 questionnaire (see Appendix D). I refer to the interviewees without mentioning their names throughout the book in order to ensure anonymity. 15 of the interviews took place in March/April with German foundation representatives all over Germany in Berlin, Frankfurt, Munich, Jena, Stuttgart, Hanover, Essen, Hamburg and Heidelberg (see part about selection of German foundations). During the following May and June of 2015, I conducted interviews with US representatives at the East and West coast of the United States.42 The 34 interviews were also in large part with foundation representatives (18 current or former representatives of 13 foundations). Not only did I interview foundation representatives but also experts of the field, such as professors, experts on philanthropy, government-funded agencies as well as representatives from development offices at universities. I contacted them because they were recommended by my advisors, foundation representatives, or other experts in the field (see 3.2.3). For 48 out of 49 interviews audio records exist.43 The interviews lasted between 27 and 107 minutes, on average 58 minutes. The interview with foundation representatives44 consisted of six parts about (1) Introductory questions (2) 39

40

41

42

43

44

The pre-researched information about the foundations referred to the founder, the amount of assets, the annual expenditures, grantmaker type, and number of employees which I already filled in. The foundation representatives were asked to check the information and correct/supplement it when needed. They are called “expert interviews” in the sense that the interviewed people can be considered specialists for this particular constellation and topic of higher educational philanthropy. I sought to attain their interpretations, explanations, and viewpoints (see Mayring 2010, p. 33). A semi-structured interview process was chosen over an unstructured process. This means that “the researcher has a specific topic to learn about, prepares a limited number of questions in advance, and plans to ask follow-up questions” (Rubin, Rubin 2012, p. 31). The interviews took place in New York, Sleepy Hollow, Princeton, Washington DC, San Francisco, Palo Alto, and Los Angeles. A few expert interviews could not take place face-toface due to time and place limitations. I conducted them over the telephone or via Skype. One foundation representative did not agree to be recorded. Thus, the interview information was handwritten during the interview. Right after the interview, the notes were typed with computer and enriched with information kept in memory. The interview questionnaire for all other interviewees besides foundations was slightly adjusted.

68

3 Methodology

Typical activities of foundation (3) Role of foundation (4) Position of foundation compared with others (list) and (5) Future of foundation landscape as well as (6) Final remarks. In the first part of the interview, I posed some introductory questions about the fascination for working at a foundation and this particular foundation. I also invited the interviewees to assess how the foundation working environment differs from previous jobs (if applicable). For this purpose, I collected biographical data on the foundation representative45 in order to become aware about other professional experiences (e.g. in other foundations, at universities etc.). Second, I requested foundations to describe their main topics, projects and greatest successes in the field of higher education. In the third part, interviewees should describe how foundation funding in the field of higher education can be distinguished from state and private sector funding. Besides, I showed a list of twenty foundations considered relevant for the field of higher education to the representative(s). I asked the interviewees with whom they collaborate, whom they consider comparable and what their unique selling position is compared to the other foundations listed. The penultimate part of the interview contained three open-ended questions about the challenges the interviewee foresees for his/her foundation and for the foundation landscape as a whole in their respective country. Additionally, I raised the question whether they generally believe that German/American foundations can optimistically look ahead or if not, why this is the case. In the final part, I asked the interviewee whether (s)he would like to add any remarks and whether I may contact him/her again in the future if necessary. Focus Group The fourth and last qualitative step was to conduct a focus group46 in the German case. It was only possible to invite experts to join a focus group due to the available research project resources. The aim of the German focus group was to validate the preliminary results and receive feedback from the experts in the field. I conducted the focus group in September 2015 with nine participants of the German higher education system. The participants were two representatives of higher education foundations, three representatives from third-party funding departments of large universities, a professor, a political representative from Berlin, a representative from the DFG and one from the university rectors’ conference. Due to a brief time window during the field research in the US and lacking resources, I did not undertake this step there. Instead of a focus group, I inter45

46

Internet searches through online networks such as LinkedIn (https://www.linkedin.com/) or Xing (https://www.xing.com/de) helped in this matter. On focus groups see Bryman 2016, pp. 500–524 and Rubin, Rubin 2012, p. 30.

3.4 Research Considerations

69

viewed 19 additional actors from the field in the US. The advantage of this was that I reached a larger number of experts than would have been possible in a focus group. The Appendix C discloses a full list of the field experts. Comprehensive Interview Summary Reports Due to an enormous amount of about 2,900 minutes of interview material, I decided in consultation with my advisors to not transcribe the interviews verbatim. Instead, I summarized the main statements for each of the interview parts in an interview protocol (see also Mayring 2002, pp. 94–97). The comprehensive summary reports were enriched with pertinent quotations in the form of partial transcriptions when the statement seemed to be particularly interesting, controversial, or relevant. I followed the same analytical grid in the two countries. I used the comprehensive summary reports, in addition to the other qualitative data, to triangulate it with the quantitative data sources (Mayring 2002, pp. 147– 148). 3.4 Research Considerations This final section of the chapter lists the main data and research considerations. Here, I explain the choices I made given the data availability, sample specifics, data quality, and generalizability. Looking forward, I want to suggest ways for overcoming potential limitations in future research. Data Availability Research about philanthropic foundations on the sub-sector field level of higher education is characterized by poor data availability in Germany and the USA. However, I triangulated different data sources and generated my own data to overcome this data shortage. Using, for example, federally collected data sources, analyzing it with philanthropic lenses and complementing it with the collection of my own data made it possible to cope with the lack of data. Especially the Basis Database 2014, which will be accessible for future researchers through Zivilgesellschaft in Zahlen (ZiviZ),47 is a major step toward making data about German foundations more transparent and available for exploration. Sample Specifics The access to interview experts in the US turned out to be a serious hurdle. In the case of Germany, the field was more accessible than in the US. This is mostly due to the framework of the research project on “Roles and Positions of German 47

As a data agency, ZiviZ is since 2014 part of the Stifterverband. It was established as a joint initiative of the Stifterverband, Bertelsmann Stiftung, and Fritz Thyssen Stiftung in 2008 (Zivilgesellschaft in Zahlen 2017).

70

3 Methodology

Foundations” which was also funded by five major German foundations and the Stifterverband. However, in the case of the US, access to the field turned out to be much more difficult than in Germany. Initially, there was a very low level of willingness to participate among American foundations. Only after entering the field and establishing personal contacts did a snowball sampling start to develop. This enabled me to conduct more interviews than initially expected. This way of sampling might affect the validity of the sample since, again, nonrandomized interviewees were added that previously were not part of the preliminary list of foundations. However, the validity, defined as the extent to which we actually measure what we want to measure (see (Mayring 2002, p. 140), is not threatened by the addition of further foundations. This is the case because the added foundations still fulfil the criteria listed for selection.48 On a positive note, the addition even enhanced the number of interviewed foundation representatives and thus the insights into the field. Data Quality With regard to the quality of the quantitative data, it can be noted that this data is representative and thus of high quality. In the case of the representative survey on German foundations, it can be considered a contribution to filling parts of the existing data gap. The representative survey now allows us to draw representative conclusions on the roles and positions, but also size and budget, of the German foundation sector in general. Regarding the quality of the qualitative data, I am aware that the interview data gathers the subjective perception of respondents. In this case, it is the selfperception of foundation representatives. The self-perception does not align with an external perception and does not necessarily present the general standpoints of the whole foundation. Instead it is an individual, subjective snapshot of the views of only one foundation representative. Even if it was possible for me to interview more than one representative of a foundation, they still represent individual opinions. Nevertheless, it was my intention all along to gather subjective views on the self-perception of foundations. Generalizability The quantitative survey data allows for empirical generalizations since it fulfils representativeness for the foundation sector. However, with regard to the qualitative interview data, it is not possible to claim generalizability for the whole foundation sector. This is the case because it would have been beyond the resources to talk to hundreds of foundations in the two countries. A purposive 48

Even if the added higher education foundations do not appear among the top 20 foundations with the highest annual budgets, they still meet the criterion of “high yearly budgets.”

3.4 Research Considerations

71

sampling of relevant foundations seemed to be most feasible for me as a single researcher. There may well be important variation within a country that I did not register. However, I still claim analytic generalizability. This means that I want to make use of the previously developed theory with which I compare the results of the case studies (Yin 2009, pp. 38–39). The next two chapters are dedicated to my two country cases, Germany and the United States, and their higher education foundation landscapes.

4

Germany

This chapter, and the following country Chapter 5, prepare and ultimately lead to the comparative analysis in Chapter 6. This preparation is pivotal to set the stage and introduce background knowledge about philanthropic foundations, the activity field, and higher education foundations in particular. All this information is necessary for a better understanding about how different the country contexts and activity field contexts are for the foundations under consideration. The context matters to understand why foundations choose to take on certain roles and positions vis-à-vis field actors – and neglect others. This chapter contains three main parts: First, I introduce German foundations with their definitions, types of foundations, and their modes of operation. The second part of this chapter presents the policy field of higher education in Germany, including the central tensions moving the field, the structural principle, and field governance. It also raises the question of what those tensions and governance imply for foundations as an organizational form. This part is purposefully kept short since the center of attention is not higher education per se, but higher education foundations in particular. In the following third part, I connect German foundations with their work in the policy field of higher education. My three hypotheses guide this part. It contains selected illustrative portraits of German foundations that are relevant1 for higher education. 4.1 Philanthropic Foundations in Germany Germany has likely the second largest foundation sector worldwide after the United States (Anheier et al. 2017a, p. ix). The German foundation sector is solid and still growing: In 2014, about 18,820 legally responsible foundations existed in Germany.2 The country hosts foundations with estimated assets of about 100 billion Euros at the end of 2013 (Bundesverband Deutscher Stiftungen 2014, p. 25). Those assets enable German foundations to commit annual budgets of about 17 billion Euros to their philanthropic purposes (ibid.). This first empirical tidbit sets the stage to go into detail about the definitions of German foundations, their different types as well as modes of operation in the next sections of this chapter. All of this is important background information for understanding the peculiarities of higher education foundations. 1 2

The methodology Chapter 3 explains what I defined as a “relevant” foundation. The research project “Roles and Positions of German Foundations” gathered all data referring to German foundations unless otherwise specified. TNS Infratest Politikforschung helped conduct the representative survey (Anheier et al. 2017a).

© Springer Fachmedien Wiesbaden GmbH, part of Springer Nature 2020 J. Mangold, Philanthropic Foundations in Higher Education, https://doi.org/10.1007/978-3-658-27387-3_4

74

4 Germany

4.1.1 Definitions There is no legal definition of the term foundation in Germany. In the context of the German civil law system, foundations can belong to a variety of legal forms of civil law, public law, and church law. However, the prototype of a German foundation is a philanthropic foundation under civil law, as I will illustrate in the section on types of foundations in this chapter. Schlüter appropriately describes the legal context for German foundations when he concludes that “the term ‘foundation’ appears to be in the current language practices as comprehensive as the actual appearances of the institution” (Schlüter 2004, p. 19). Under German civil law, the core of a foundation’s legal personality is its endowment. This is in contrast to voluntary registered associations which are based on their members (Anheier 2014, p. 160). While the German Civil Code does not provide an explicit definition for foundations, it nevertheless includes three fundamental criteria. Those criteria are according to §81 BGB 1) one or more specific purposes 2) an asset base, and 3) an organizational structure to pursue its purposes (ibid.). The second criterion of an asset base in the German Civil Code supplies an important element for several other definitions of foundations used in the German literature and context. The Association of German Foundations defines them as follows: “The foundation is characterized by assets which are dedicated permanently3 towards a particular purpose, especially charitable purposes4” (Bundesverband Deutscher Stiftungen 2014, p. 14). The sociologist Adloff also points to the importance of the assets of foundations, but describes the work of foundations as an “act to establish institutions” that does not reduce assets in order to permanently pursue the will of the foundation. The will of the founder of a charitable foundation has to be respected also after his death to make sure the established institutions are durable (Adloff 2010, p. 13). The Association of German Foundations also mentions in its presented definition the statutes as “highest guiding principle” in which the founder assigns the purposes and internal organization of the foundation (ibid.). Schlüter also emphasizes the importance of the foundation statutes when he adds that they contain “minimum indications” about the name, location, purpose, assets as well as the organization of the board (Schlüter 2004, p. 21). Borgolte further breaks 3

4

The term “permanently” does not apply to all foundations anymore, since there is also the new form of spent-down foundations in Germany. Spent-down foundations exhaust their assets within a certain period of time which is assigned by the founder, e.g. ten years after the death of the founder. This possibility exists in Germany since March 2013 after the passage of the law “Gesetz zur Stärkung des Ehrenamtes” (Bundesverband Deutscher Stiftungen 2014, p. 18). Almost all German foundations (95%) are charitable foundations (Bundesverband Deutscher Stiftungen 2014, p. 25).

4.1 Philanthropic Foundations in Germany

75

down this aspect of foundation administration and specifically refers to trustees, administrators, executors, provisors, and guardians (Borgolte 2014, p. 31). 4.1.2 Types of Foundations, Mode of Operation There is a variety of types of foundations in Germany, such as civil law foundations, public law foundations, ecclesiastical foundations, corporate foundations, and dependent fiduciary foundations.5 The next paragraphs introduce each type briefly and Figure 4-1 illustrates them. Firstly, civil law foundations are the prototypical foundations in Germany and amount to approximately 18,000 according to the Basis Database 2014. The Alfred Toepfer Stiftung F.V.S. as well as the Hertie Foundation6 are examples of German foundations under civil law. Regarding corporate foundations, there are approximately 2,000 of them in Germany (Junck 2007, Stolte 2011).7 They can in turn be distinguished by four types: 1) foundation as carrier of a company (“Unternehmensträgerstiftung”)8 2) shareholder foundation9 (“Unternehmensbeteiligungsstiftung”) and 3) corporate foundation (“Unternehmensstiftung”)10 as well as the 4) entrepreneur foundation (“Unternehmer/innen-Stiftung”)11 (Hirsch et al. 2016, pp. 21–22). Thirdly, we have to distinguish the foundations established under ecclesiastical law. They number approximately 20,000 in Germany (Bundesverband Deutscher Stiftungen 2014, p. 17). They must be seen as separate from the foundation sector (Anheier et al. 2018, p. 1624). Church foundations can also be established under civil law. They amount to approximately 900 (Bundesverband Deutscher Stiftungen 2014, p. 17). Fourthly, public law foundations (without ecclesiastical connection) are a much less common type of foundation amounting to only 566 foundations (Bun5

6 7

8

9

10

11

I do not consider dependent fiduciary foundations in my analysis since they are not acting independently. I present both foundations in more detail in the remainder of this chapter. This number refers to German foundations which have a connection to a private company since they are either company owners or were founded by a company (Stolte 2011, p. 31). In the case of a foundation as a carrier of a company, the foundation itself is active on the market and can be equated with the company (Hirsch et al. 2016, p. 27). An example is the SRH Holding presented in Foundation Portrait 4-4. The shareholder foundation cannot be equated with the company, but the shareholder foundation holds shares of the company (Hirsch et al. 2016, p. 27). Examples are the Robert Bosch Stiftung, Körber-Stiftung, Bertelsmann Stiftung, and Carl-Zeiss-Stiftung. The foundation received its assets from a company (Hirsch et al. 2016, p. 28). An example is the Daimler und Benz Stiftung. The assets of the foundation stem from the private wealth of the founder or the family of the founder (Hirsch et al. 2016, p. 30). Examples are the Alfred Toepfer Stiftung F.V.S., Fritz Thyssen Stiftung, and Gerda Henkel Stiftung.

76

4 Germany

desverband Deutscher Stiftungen 2014, p. 17). Foundations of public law are established on different levels of the state, such as the federal, state, or communal level. Their purposes are of particular importance for the public (ibid.). Community foundations are a more recent phenomenon in Germany since the past twenty years. The first German community foundation was established in 1996 in the city of Gütersloh as Bürgerstiftung Gütersloh. Most recently, there were 400 registered community foundations in 2015 in Germany (Stiftung Aktive Bürgerschaft 2017, p. 3). 18000 16000 14000 12000 10000 8000 6000 4000 2000 0 Civil law foundations

Corporate foundations

Church Public law foundations foundations under civil law

Figure 4-1:

Types of German foundations sorted according to size

Source:

Author’s illustration of different data sources (see text)

Community foundations

The focus of the qualitative approach of this book is on independent charitable foundations with all three modes of operation. While I prioritize the “prototypical” foundation of civil law, I also consider some foundations linked to companies if they appeared to be relevant for the activity field.12 Thus, it is necessary to clearly demarcate foundations from other actors which call themselves founda-

12

The methodology Chapter 3 describes the selection of German foundations.

4.2 The Activity Field of Higher Education

77

tions but are in fact not, such as political foundations.13 Also, I do not consider foundations associated with trade unions.14 In the case of Germany, previous research finds a combination of an operating foundation landscape closely connected to the welfare state as well as civil society oriented grant-making foundations (Anheier et al. 2017a, p. 210). According to our recent representative survey, more than half (52%) of all German foundations are grant-makers with relative equal proportions of operating (24%) and mixed foundations (25%).15 The majority of German foundations (73%) were established after 1991. In turn, only a quarter (27%) of foundations was founded before 1990. 4.2 The Activity Field of Higher Education This second part of the chapter turns to the policy field in which foundations pursue their work. This is important because “the feasibility of foundations' aspirations cannot be divorced from the policy environment in which they function" (Anheier, Daly 2007c, p. 43). In this monograph, I investigate the policy environment of “higher education.” Furthermore, Anheier/Daly submit that the roles of foundations are influenced by the policy environment in which they work (Anheier, Daly 2007c, p. 11).16 In order to be able to draw conclusions about foundations in higher education, therefore, we first have to consider the activity field. Given my research focus on higher education foundations, I depict the policy field in a more condensed manner. Higher education is in Germany a highly complex, but largely undercapitalized activity field with high political relevance. Due to the fact that there exists no sustainable financing concept, universities and research institutes face increasing competition for third-party funds, such as those from philanthropic foundations. The degree-granting institutions of higher education are mostly under public governance: Most recently, out of 471 institutions, two-thirds (66%) were public institutions, while 26% were private institutions and only 8% were governed by the church (Statistisches Bundesamt 2019, p. 164). This means that the German

13

14

15 16

An example of a political foundation is the Konrad-Adenauer-Stiftung e.V. which has the organizational form of a registered association (www.kas.de) and is essentially a statesupported political party organization. An example of a foundation associated with a trade union is the Hans-Boeckler-Stiftung which is related to the Confederation of German Trade Unions (www.boeckler.de). The percentages do not add up to 100 due to rounding. The research team of the project called “Roles and Positions of German Foundations” has investigated this in detail for four policy fields in Germany, see Anheier et al. 2017a as well as Anheier et al. 2017b.

78

4 Germany

higher education system is to a large degree dominated by publicly governed institutions. 4.2.1 Structural Principle, Actors and Governance There are three institutional principles governing the public-nonprofit sector relations in Germany: 1) the principle of subsidiarity, 2) the principle of selfgovernance, and 3) the principle of communal economy. The subsidiarity principle, considered the “bedrock for the German nonprofit sector” (Anheier, Seibel 2001, p. 4), describes that the “decisions should always be taken at the lowest possible level,” meaning at the local instead of national level or through private instead of public action (ibid., p. 97). Historically, the partnership between the state and the nonprofit sector developed particularly well in the social service and health care sector and thus led to a strong growth of the nonprofit sector. The large networks of nonprofit organizations called free welfare associations have come to dominate the sector and are thus the “embodiment of subsidiarity” (ibid.). This means that the principle applies less to this book’s field of higher education: the partnership between the state and the nonprofit sector did not flourish as in social services which means that also the nonprofit sector did not develop as strongly (ibid.). Anheier/ Seibel (2001) explains that the public sector supports the German nonprofit sector to a high proportion in the fields in which the principle of subsidiarity is pronounced: social services and health care (p. 99), but by implication not in higher education. Instead, the principle of self-governance, also called self-administration, is of greater significance in the case of higher education. This principle is crucial for higher education institutions as “quasi-governmental” public law corporations (Anheier, Seibel 2001, p. 73). The reason is that higher education institutions are “an operational arm of some […] state ministry” (p. 22), i.e. they are a subordinate office of the respective state ministry. At the same time, this armslength principle guarantees higher education institutions the capacity to make use of their given autonomy and operational leeway. In the case of Germany, the higher education system is interrelated with divided responsibilities among various actors. A multitude of actors on the European, federal, and state levels work towards issues in higher education in Germany. Speth (2009, p. 390) pictures the field as “a fully differentiated structure of state, intermediary, and private institutions” (author’s translation). A drastic change occurred from his point of view, leading to the fact that not only public but also private actors and intermediaries prove significant. Due to their “close interplay” and “high degree of integration,” for example caused by cooperation of actors from all sectors, it is hard to single out individual subjects (author’s

4.2 The Activity Field of Higher Education

79

translation; cf. Mayntz 2005 in Knie, Simon 2009, p. 29). Figure 4-2 depicts the multitude of actors. A brief introduction of the most important actors follows below.

Figure 4-2:

Actors in German higher education

Source:

Bundesministerium für Bildung und Forschung 2018, p. 58

At the federal level, the Federal Ministry of Education and Research (BMBF) is of particular relevance for the activity field. Besides, two more ministries have to be mentioned: The Federal Ministry of Defense, and the Federal Ministry for Economic Affairs and Energy (Bundesministerium für Bildung und Forschung 2012, p. 418). Moreover, there are the 16 state governments for each of the Länder, which are in charge of their higher education institutions in the state. The Joint Science Conference (GWK)17 coordinates the activities of the federal and

17

The GWK coordinates all questions of research funding as well as science and research policy that affect its members equally. Members of the GWK are the federal government, represented

80

4 Germany

state levels. Unlike the coordinating GWK, the Science Council18 does not function as a coordinator, but as a consulting body in the case of disagreement. Belonging to the category of public research are not only the already introduced higher education institutions across Germany but also the extracurricular research organizations. Non-university research organizations, such as the Leibniz-Gemeinschaft, Fraunhofer-Gesellschaft, and Max-Planck-Gesellschaft, are jointly supported by the federal government and its states, however with a varying proportion (Hinze 2009, p. 163; Stucke 2015). Examples of intermediary actors are the DFG, the Stifterverband as well as philanthropic foundations. The DFG assumes a prominent role and is of special importance for the activity field since it provides the largest amount of thirdparty funds.19 Even though its English terminology “German Science Foundation” could suggest so, the DFG is in fact not a foundation. The DFG is an association under private law and considers itself “the self-governing organization for science and research in Germany” (Deutsche Forschungsgemeinschaft 2019a). Thus, it is neither a foundation nor a direct government agency. The DFG’s role as self-governing body is highlighted also by its voting system which ensures science-driven decisions: About 130,000 scientists and researchers working in the German higher education system choose the members of the DFG review boards, who are researchers themselves (DFG 2019b). The DFG is funded to 99% by public money. Due to the DFG’s funds stemming from the federal government (65%), the states (34%) as well as EU funds and private donations, it can be considered state-funded external and thus a quasi-public but independently acting agency.20 The two other intermediaries, the Stifterverband and foundations, are not state-funded external sources like the DFG, but private external sources. The Stifterverband is a unique actor since it is an umbrella organization for about 3,000 donors including foundations,21 companies, and private citizens with an annual budget of 150 million Euros (Stifterverband für die Deutsche Wissenschaft 2017a).

18

19

20

21

by the BMBF and Federal Ministry of Finance, as well as the 16 state governments (Joint Science Conference 2017). The Science Council gives advice to the federal and state governments regarding the structure and development of higher education and research (German Science Council 2017). The DFG’s annual budget amounts to three billion Euros (Deutsche Forschungsgemeinschaft 2016). I take the distinction between internal, state-funded external, and private external from Schubert, Schmoch 2009, p. 249. It manages foundation assets amounting to 2.7 billion Euros of about 652 foundations (Stifterverband für die Deutsche Wissenschaft 2017b, p. 64).

4.2 The Activity Field of Higher Education

81

4.2.2 Central Challenges The field of higher education in Germany is currently confronted with three central tensions which I briefly present in the paragraphs below. Tension 1: Basic Funds vs. Third-Party Funds For one, the higher education system is chronically underfunded. The relation between basic funding22 and third-party funding has increasingly lost its balance. Basic funds increased between 1995 and 2014 from 15 to 25 billion Euros which equals an increase of 60 percent. In turn, third-party funds increased more than 300 percent from 2 to 7.3 billion Euros. Those numbers imply that the dependence of higher education institutions on funds from third parties, such as the DFG, the federal government, the EU, industry, ministries, and also foundations, has risen considerably. The president of the DFG goes as far as to claim: “Thirdparty funds become more and more the substitute of basic funds” (Der Spiegel 2013). With no sustainable financing concept in place, the tight household budgets of universities and thus their competition for third-party funds persist. The lack of tuition fees as a source of income for universities aggravates the difficult financial situation. In Germany, higher education institutions do not charge tuition fees in any of the 16 federal states.23 At the same time, higher educational institutions enroll as many students as never before: 2.8 million students were enrolled in 2016/17 (Statistisches Bundesamt 2017b). This number increased in one decade by almost one million students from 1.9 million in 2006/2007 (Statistisches Bundesamt 2017a). Tension 2: Federal Government vs. States Secondly, there is a continuing tension regarding the competence distribution between the federal government and the federal states. While the states bear the primary responsibility for higher education, they are financially too weak to maintain an internationally competitive university infrastructure. For this reason, the article 91b paragraph 1 of the German Constitution was changed in January 2015 to enable the federal government to engage in long-term higher education activities with the states. Due to this suspension of the ban on cooperation, the inherent tensions between the two groups of actors have at least been ameliorat22

23

Basic funds refer to the funds which are provided by the carrier of higher education institutions to cover the current expenses. In contrast, third-party funds are defined as funds which are, in addition to basic funds, acquired from public and private funders to financially support research, development as well as young researchers and teaching (Federal Statistical Office, 2013). Lower Saxony was the last state which abolished its tuition fees during the winter semester 2014/15.

82

4 Germany

ed, if not entirely overcome. In case of disagreement or unclear implementation of plans, as with the Excellence Strategy24 as of 2017, the Science Council and GWK help to advise and coordinate the activities. Tension 3: Research vs. Teaching Thirdly, there is little support for teaching, but arguably a lot of support for research. Two special reform initiatives by the government and the states, the Excellence Initiative for universities as well as the Pact for Research and Innovation at extracurricular research institutions, have helped foster cutting-edge research, but teaching does not receive much attention. As the reform initiatives run out at a time of historically high student enrollments at higher education institutions, the system needs to find quick solutions. The federal government and states agreed to consider teaching more strongly in the Excellence Strategy after 2017. This suggestion has been subject to extensive criticism since it is argued that good teaching is hard to measure (Deutschlandfunk Kultur 2014). Moreover, the question remains how teaching at the critical mass of higher education institutions can be improved and reached if the Excellence Strategy only takes care of a handful of selected schools. 4.3 German Higher Education Foundations A short empirical profile of higher education foundations looks as follows: • Higher education is according to the representative survey the fourth most often pursued foundation purpose. About one fifth25 (19%) of representatives indicate that higher education is the main purpose of their foundation. • A quarter of them (26%) support solely higher education. The remaining foundations support higher education in combination with primary/secondary education (51%), arts/culture (49%), social services (37%) as well as other purposes (22%). This means that higher education foundations most often like to combine their work with other educational purposes or artistic/cultural purposes. • The preferential mode of operation of higher education foundations is grant-making (50%), followed by equal proportions of operating (25%) 24

25

The last round of the Excellence Initiative started in 2012 and lasted until 2017. The initiative’s aim is to “strengthen cutting-edge research and to make German science and research more visible in the scientific community” (Excellence Initiative 2014). In a competitive process, 39 institutions of higher education receive additional funding to pursue top-level research. The DFG and the Science Council implement the succeeding program “Excellence Strategy.” This percentage corresponds to NHigherEducation = 195 out of N=1,004 foundations.

4.3 German Higher Education Foundations

83

and mixed (25%) approaches (see Figure 4-3). These numbers suggest that foundations like to function as “capacity builders”, e.g. as supporters of research projects, as I will also discuss in the part on the nature of the foundation regime.

25%

grant-making 50%

operating mixed

25%

Figure 4-3:

Mode of operation of higher education foundations

Source:

Representative survey

4.3.1 Orientation Towards the State, Businesses, and HEI Nonprofit organizations, such as foundations, are “firmly ‘embedded’ in prevailing social and economic structures, often serving as ’the knots within networks of elites with reputation, finance, and power” (Salamon, Anheier 1998, p. 227). In this part of the chapter about the proximity of higher education foundations to other actors, the aim is to trace how foundations are embedded in social and economic structures as outlined by the quotation above. Individual sections below cover the orientation of higher education foundations towards the state and public institutions, the economy, higher education institutions and research institutes as well as civil society.

84

4 Germany

° State and Public Institutions State proximity is expressed by the number of public-law foundations,26 but also by networks of nonprofits and operating foundations which provide services in accordance with the principle of subsidiarity (Anheier et al. 2018, p. 1642). The German foundation landscape thus was long considered to develop in institutional proximity to the public – sometimes even as supplier for the public, especially in the social and education sector (Anheier et al. 2017a, p. 14; Adloff et al. 2007). However, more recent research shows that German foundations are not as close anymore to state and public institutions and are turning instead more towards civil society (Anheier et al. 2018, p. 1643). But what exactly does the relationship between explicitly higher education foundations and state and public institutions look like? In the case of higher education, foundations do not show on average a much higher affinity to work as an operating foundation (25%) compared with 24 percent of foundations with other main purposes. However, especially the financially stronger higher education foundations having more than 100,000 Euros per year at their disposal show a strong tendency towards the operating mode of operation: more than one third (37%) declare in the representative survey that they follow operating motives together with another quarter of foundations (28%) that follows a combination of operating and grant-making motives. This means that there is a pronounced part of higher education foundations working as operating foundations which are as part of the system providing services for higher education. Nevertheless, the share of “funders” of the field, the grantmakers, is much more distinct as we have seen before (see Figure 4-3). There were 566 public-law foundations in Germany in 2014 (Bundesverband Deutscher Stiftungen 2014, p. 17). In the case of higher education, some public-law foundations do exist, such as the Max Weber Stiftung – Deutsche Geisteswissenschaftliche Institute im Ausland.27 Another example is the Johann Wolfgang Goethe-Universität Frankfurt am Main28 which operates as a public-law foundation (see Mangold 2017a, pp. 147–148). However, in this context, it is even more proximate to mention publicly funded foundations under 26

27

28

Public-law foundations are typically created by a legislative act, such as a law or administrative act, to pursue public interests (Hof et al. 2010, p. 15). In comparison with the foundations under private law, they are under legal supervision, but also subject-specific supervision (ibid.) The Max Weber Stiftung is among the financially strongest top ten foundations under public law. The BMBF provides its annual budget of 40 million Euros. It is a direct federal institution (“bundesunmittelbar”) (Max Weber Stiftung 2017). The citizenry of Frankfurt founded the Johann Wolfgang Goethe-Universität Frankfurt am Main in 1914. It is the oldest university in the form of a foundation under public law (Johann Wolfgang Goethe Universität Frankfurt am Main 2017).

4.3 German Higher Education Foundations

85

civil law. The state makes in this case use of its freedom of choice to decide for a foundation under civil law instead of public law (Battis 2003, p. 47). Examples for publicly funded foundations under civil law are the Alexander von Humboldt Foundation29 as well as the Stiftung Wissenschaft und Politik30 (German Institute for International and Security Affairs) (Mangold 2017a, pp. 148–149). Consulting the empirical survey data will help us determine whether they corroborate what we observed so far about higher education foundations and their existing connection to state and public institutions. First, I want to investigate to what extent higher education foundations consider state and public agencies as important for their work according to the representative survey. Secondly, if they consider them important, the question is how they assess the relationship with those actors, that is, whether they consider the relationship as complementary or close and cooperative - or whether they rather need to convince public agencies or see themselves at risk of being co-opted by them. The empirical results show that higher education foundations evaluate state actors as significantly more important as foundations with other main purposes (52% vs. 50%). However, it is especially the large operating/mixed foundations that, to 70 percent, see need for coordination and assess state and public institutions as important for their work. This means that the financially strong and operating/mixed foundations are the ones especially in exchange with state actors and thus with the opportunity to raise issues from a non-political and impartial position. When higher education foundations are asked to describe the quality of the relationship with state and public institutions, the data shows a collaborative partnership between them. They chose cooperation (88%) and complementarity (86%) most often to describe the relationship. Regarding cooperation, we see a difference compared with foundations with other main purposes (88% vs. 82%). Only a third of higher education foundations mention confrontation (38%) and co-optation (35%) as a characteristic describing the relationship with public institutions (see Figure 4-4). I can conclude that the perceived move away of foundations from public and state institutions is less strong in the case of higher

29

30

The Federal Republic of Germany established the Alexander von Humboldt Foundation as a foundation under civil law. It supports academic cooperation between excellent German and foreign scientists and scholars (Alexander von Humboldt Foundation 2017). Stiftung Wissenschaft und Politik receives its funding from the budget of the Federal Chancellery. In 2016, it received 12.3 million Euros (Stiftung Wissenschaft und Politik 2017a). It has the purpose to “conduct scholarly research in the fields of international politics and foreign and security policy, in consultation with the German Bundestag and the German government, with the objective of providing independent research-based policy advice and publishing the findings where appropriate” (Stiftung Wissenschaft und Politik 2017b).

86

4 Germany

education where there is still a closer cooperation and exchange of ideas among the actors.

need of persuasion 100% 80% 60% 40% 20% close cooperation

0%

risk of co-optation

complement each other

Figure 4-4:

Relationship between foundations and public bodies

Source:

Representative survey (see also Mangold 2018)

Foundation Portrait 4-1: Baden-Württemberg Stiftung gGmbH One of the German higher education foundations closely associated with state and public institutions is the Baden-Württemberg Stiftung based in Stuttgart. The state of Baden-Württemberg established the regional foundation as a legal entity under public law in 2000.31 The close connection between state government and the foundation once more becomes strongly visible when looking at the governance of the foundation which is comprised of the management board and the supervisory board. The 18 positions of the latter are entirely 31

The state of Baden-Württemberg established the foundation in 1999 when the state sold its shares of EnBW, a publicly traded electric utilities company to the French utility company Electricité de France (EdF) (Baden-Württemberg Stiftung 2017b).

4.3 German Higher Education Foundations

87

filled with officials from the state: half of it come from the state government and half of it are members of state parliament (Baden-Württemberg Stiftung 2017a). The Baden-Württemberg Stiftung builds upon a 2.3 billion Euro endowment capital and has 30-40 million Euros annually at its disposal to operate its own programs (Baden-Württemberg Stiftung 2017b). 22 permanent employees and eight project-based employees contribute to operating 1,500 ongoing projects and programs (ibid.). The foundation supports not only higher education but also education as well as society and culture. According to the foundation representative, in higher education, the foundation covers a wide range of issues from life sciences, modern technologies, environment and sustainability as well as STEM programs for students. ° Business Actors The German foundation sector is believed to have a certain proximity to the corporate world. This is legally possible since foundations are allowed to “be sole or joint owners of a company, to hold private equity, and be endowed with voting rights” (Anheier et al. 2018, p. 1642; Fleishman 2001, p. 373). The connection of German foundations with private companies not only pertains to large companies but also medium-sized ones, the so-called German Mittelstand, which belong to families as owner-managers (ibid.). Medium-sized corporations might consider establishing a foundation in order to do something for the public good, to protect the company from a difficult succession, or to enhance its local ties (Anheier et al. 2017a, p. 15, see also Fleishman 2001, p. 382). There are an estimated 2,000 corporate foundations in Germany (Stolte 2011). According to the quoted study, higher education is the purpose followed most often by corporate foundations (28%). Research about the connection of companies and corporate higher education foundations identifies a personnel interweaving of foundation heads with the respective companies. About 20 percent of representatives of the foundation bodies also hold a position at the corresponding company. In 22 percent of the investigated foundations, there is even a match between the highest foundation and company representative (Hirsch et al. 2016). How do representatives of higher education foundations perceive the relationship with business actors according to the representative survey? As in the case of public and state institutions, the empirical findings from the representative survey about the self-perception of German foundations can help us to obtain a better picture about the relationship between higher education foundations and economic actors. Foundations which consider “higher education” their main purpose were asked about their relationship with companies and trade associations. It turns out that economic actors are rated significantly more

88

4 Germany

important for foundations in higher education (31%) compared with foundations with other main purposes (24%). Again, they are even more important for smaller (43%) and larger (46%) operating/mixed higher education foundations. Younger higher education foundations founded after 1991 perceive them more often as very important and important compared with older higher education foundations established before 1990 (14% vs. 2% “very important; 20% vs. 19% “important”). This means that there is a tendency towards business actors among younger higher education foundations. Two thirds of the higher education foundations (67%) evaluate the quality of the relationship with companies and trade associations as close and cooperative and as a good complement (63%). Only one in ten foundations (11%) argues that they fear being co-opted by business actors. However, very often they feel the need to convince business actors of their work (74%) (see Figure 4-5). So overall the foundation representatives confirm the close connection and collaboration with business partners.

need of persuasion 100% 80% 60% 40% 20% close cooperation

0%

complement each other

Figure 4-5:

Relationship between foundations and companies

Source:

Representative survey (see also Mangold 2018)

risk of co-optation

4.3 German Higher Education Foundations

89

Foundation Portrait 4-2 about the Haniel Foundation illustrates the close connection between foundations and the corporate world: Foundation Portrait 4-2: Haniel Stiftung The founder of the Haniel Foundation is the Franz Haniel & Cie.GmbH which established the foundation in 1988 with an initial endowment of five million Euros (Haniel Foundation 2017d). Thirty years later, the foundation holds assets of 45 million Euros which grew ninefold since the foundation was established due to external donations by the founding company and its shareholders (Haniel Foundation 2017a). It has a shareholding role and thus receives a dividend from the founding company (ibid.). The annual budget to support projects amounted to 2.2 million Euros in 2015 (ibid.). A look at the board of trustees reveals the close connection between the foundation and the company. Two of six trustees are senior representatives of the Franz Haniel & Cie. GmbH (Haniel Foundation 2017e).32 The Haniel Stiftung is not a foundation which supports higher education per se, but it focuses as an operating foundation on scholarships, cooperation, events and educational opportunities (Haniel Foundation 2017c). Its mission is to foster value-oriented entrepreneurship (ibid.). In higher education, the Haniel Foundation works, for example, as strategic partner of the Willy Brandt School of Public Policy.33 According to a foundation representative, it did not establish the school as an institution builder, but it helped towards “building it up” and partially covering several professorships, such as the Franz Haniel Chair of Public Policy, Gerhard Haniel Professorship for Public Policy and International Development as well as the Aletta Haniel Professorship for Public Policy and Entrepreneuship (Willy Brandt School of Public Policy 2017b). The aim of the foundation is to foster entrepreneurial thinking among students of public policy (Haniel Foundation 2017c).

32

33

Founded in 1756, the family-equity company Franz Haniel & Cie. GmbH is based in Duisburg (Haniel Foundation 2017b). Its portfolio comprises five divisions, namely Bekaert Textiles, CWS-boco and ELG, TAKKT and METRO GROUP. The Haniel group employed in 2014 11,500 people and had sales of about 4 billion Euros (ibid.). The Willy Bandt School of Public Policy is Germany’s first professional school of public policy established in 2002. Located in Thuringia’s capital Erfurt, the school offers Master’s and doctorate degrees (Willy Brandt School of Public Policy 2017a).

90

4 Germany

Another example of a foundation which received its endowment not from a company but from the entrepreneurial founder or the entrepreneurial family of the founder is the Fritz Thyssen Stiftung. Foundation Portrait 4-3: Fritz Thyssen Stiftung The wife of Fritz Thyssen (1873-1951), Amélie Thyssen, and her daughter Anita established in 1959 the Fritz Thyssen Stiftung to honor their husband and father Fritz and his father August (Fritz Thyssen Stiftung 2017b). The two female donors made use of their private fortunes, namely stock packages of shares in August Thyssen-Hütte AG worth DM 100 million, to create the foundation (ibid.). The foundation that officially started its work in 1961 both makes grants and follows its own operating approach. Up until today, the Fritz Thyssen Stiftung promoted its sole foundation purpose of higher education with about 494 million Euros (ibid.). During 2015, the foundation distributed 16.7 million Euros (Fritz Thyssen Stiftung 2017a). Within its focus on higher education, the foundation is not limited to a discipline. History, language and culture is its financially strongest area of support (8.2 million Euros) followed by state, economy, and society (5 million Euros) and medicine and natural sciences (2.8 million Euros) (ibid.). Finally, international grants, scholarships, and exchange programs received 0.7 million Euros in 2015 (ibid.). Numerous examples of corporate foundations supporting higher education are the Alfred Toepfer Stiftung F.V.S., Alfried Krupp von Bohlen und HalbachStiftung, Carl-Zeiss-Stiftung, Daimler und Benz Stiftung, Dieter Schwarz Stiftung, Dietmar Hopp Stiftung, Friede Springer Stiftung, Körber-Stiftung, Robert Bosch Stiftung, and Software-AG Stiftung. ° Higher Education Institutions German higher education foundations assess their relationship with higher education institutions34 and research institutes very positively: Among those that evaluate the relationship as important, almost all see the relationship as a good complementation (92%) and close cooperation (85%). Only one fourth of higher education foundations describe the quality of the relationship as a fear of cooptation (27%) and only one fifth sees a need for persuasion (19%). Those num-

34

Here, higher education institutions were meant in general regardless of their type of governance (public vs. private).

4.3 German Higher Education Foundations

91

bers underline the strong connection between foundations and universities as well as research institutions (see Figure 4-6).

need of persuasion 100% 80% 60% 40% 20% close cooperation

0%

risk of co-optation

complement each other

Figure 4-6:

Relationship between foundations and research institutions

Source:

Representative survey (see also Mangold 2018)

In the representative survey, foundation representatives state most often that higher education institutions and research institutions are significantly important for their work (83%) compared with foundations with other main purposes (28%). In order to be able to collaborate with institutions of higher educations or research institutions, a considerable amount of funding is necessary to move something forward. This is probably why universities and research institutions are particularly important for large grant-making (96%) and large operating/mixed foundations (94%). ° Foundations as Part of Civil Society Previous research on community foundations shows that higher education is not a common purpose among them. The most popular purposes are education

92

4 Germany

(47%), arts and culture (17%), social issues (15%), other issues (14%) as well as health and sports (7%) (Stiftung Aktive Bürgerschaft 2017, p. 7). Conversely, this means that higher education as an institutionalized form must be present in six or less percent of community foundations. Therefore, I claim that there is a very distant proximity of higher education and community foundations. The representative survey, however, shows a pronounced and increasing connection of foundations with civil society in terms of volunteers. On average, only about 16 percent of higher education foundations do not have volunteers at their disposal. Two thirds of the surveyed foundations have one to ten volunteers. Especially the grant-making foundations benefit from one to ten volunteers in their foundations. Additionally, about one fifth (21%) of the foundations have even more than ten volunteers (see Table 4-1). Table 4-1:

Number of volunteers according to mode of operation

Mode of Operation Operating

Volunteers

Mixed

Total

No volunteers

5%

6%

4%

16%

1 to 10 volunteers More than 10 volunteers

12%

37%

14%

63%

8%

6%

7%

21%

47 (25%)

93 (50%)

47 (25%)

187 (100%)

Total Source:

Grantmaking

Representative survey35; see also Mangold (2018)

Especially among the younger foundations founded after 1991, almost all foundations (90%) work together with volunteers. This means that only ten percent cannot or do not rely on volunteers. Comparing this with older foundations founded before 1990, the data indicate that about one third does not have volunteers. This means that among younger higher education foundations, there is a greater reliance on volunteers for their work. In summary, one can affirm that they are closer with state and public institutions than other German foundations. The move away from public and state institutions perceived in the literature of German foundations is less pronounced 35

The differences are significant at p=0.000.

4.3 German Higher Education Foundations

93

in the case of German higher education foundations. The overwhelming majority of foundations state that there is a close cooperation or complementarity with state and public institutions. When looking at the economy, I notice that corporate foundations pursue most often the purpose of higher education. Numerous well-known foundations have strong ties with companies, founders or families of the founder of a company or even hold shares of a company. Thus, higher education foundations inhabit a closer proximity to business actors, such as companies and trade associations, than German foundations with other main purposes. In addition to the continuing and collaborative partnership with the state and the strong ties to the economy, there is an increasing connection with actors from civil society among younger foundations even though higher education is not a common purpose among community foundations. Last but not least, religion in terms of ecclesiastical foundations, plays a negligible role for higher education foundations (see Figure 4-7). While the original graph by Anheier et al. (2018) illustrated the proximities in general and only looked at state, religion, and business, my development of the graph adds a fourth dimension – “higher education” – and depicts in particular the connection between higher education foundations and those four aspects.

Figure 4-7:

Institutional proximities of German foundations

Source:

Based on Anheier et al. 2018, p. 1641

94

4 Germany 4.3.2

The Issues of Decommodification and Stratification

2a) Decommodification In this part, I want to single out the issue of public vs. private responsibility for higher education. The two foundation aims of “protection” and “relief” exemplify how much German foundations do in order to protect or relieve certain parts in higher education which are not well enough cared for by public actors. Protection Protection is the aim most often chosen by higher education foundations. Well above half of the foundations (58%) see themselves as protecting higher education from their point of view. If we compare this result with other German foundations with a different main purpose, considerably more higher education foundations identify with it (58% vs. 48%). Irrespective of the main purpose, I can conclude that about half of all German foundations perceive themselves as pursuing this aim. When looking at the differences in yearly budget and mode of operation, I find that the aim of protection is very popular among small, operating/mixed higher education foundations (74%), while large, grant-making foundations (29%) identify themselves much less often with it. Thus, the structural variables of size and mode of operation help us predict the different selfperception of the aims of higher education foundations. An example for foundations protecting higher education would be the ones not building new institutions but supporting existing ones which are struggling due to a lack of publicly provided funds. One quotation of an anonymous foundation representative underlines what it means to protect higher education: “If the foundation was not there, the faculty would not be able to attend to its research assignment to the current extent” (large, grant-making foundation). An example of a foundation protecting a higher education institution is the SRH Holding which is presented in the Foundation Portrait 4-4 below. In this case, it was a private and not a public actor who filled in for the school. Foundation Portrait 4-4: SRH Holding SRH is a provider of educational and health-care services. It was founded in 1966 and functions as private, legally incorporated nonprofit foundation (SRH 2017b). The headquarters are based in the south of Germany, in the city of Heidelberg. SRH has almost 12,000 employees, is present in 64 locations

4.3 German Higher Education Foundations

95

worldwide, and its sales amounted to 840.7 million Euros in 2015 (SRH 2017a). SRH functions as a carrier of ten higher education institutions providing higher education for 12,000 students (SRH 2017c). The newest acquisition of SRH Higher Education36 is the EBS University,37 which became part of SRH in July 2016 (SRH 7/28/2016). This means that the SRH Higher Education GmbH now holds 100 percent of the shares of EBS (ibid.). No other financial details were disclosed in the press release. However, the SRH is now also responsible for eight properties on campus including their renovation and expansion (ibid.). The change in ownership became necessary since the EBS University was struggling with financial issues, personnel issues, the loss of renowned professors, and decreasing student numbers for years (Hergert 2016).

Relief The second most important aim for higher education foundations (45%) is relief. However, foundations with another main purpose (58%) chose this aim even more often than higher education foundations. The aim “relief” stands in close connection to the roles of complementarity and substitution. They are presented in detail below in the section on “Foundation Regime.” This aim applies more often to small, operating/mixed foundations (55%) than to the large, grantmaking foundations (48%). The next quotations of anonymous foundation representatives from the field of higher education serve as examples for foundations that used to substitute state tasks: “The university that we support is very under-financed and we support it to plug the gaps” (small, grant-making foundation). “There are very few platforms that promote dialogue between contemporary art and natural sciences. If the work of our foundation ceased, there would be as good as no replacement” (large, operating foundation). A representative of a small, grant-making foundation said that “meetings at universities and higher education institutes and their results would be lacking” if 36 37

The parent company SRH Holding has a nonprofit subsidiary called SRH Higher. The EBS University consists of the EBS Business School in Oestrich-Winkel and the EBS Law School in Wiesbaden. Thus, the EBS is a private business and law school educating 2,000 students. The founding of the EBS Business School as the first private school for business studies in Germany dates back to 1971 (EBS Universität 2017).

96

4 Germany

they did not exist. A large, mixed foundation with an annual expenditure of more than 100,000 Euros said that “a well-organized and scientifically intensive exchange in the field of physics” would be lacking without their existence. The last quotations underline that foundations not only provide relief when the public hand does not but also function as a bridge-builder and moderator in the field. 2b) Stratification In this part about the key term stratification, I want to single out one of the three indicators, namely the differentiation of support across the variety of education institutions. By elaborating on how much higher education foundations want to pursue the aim of change in the activity field when they establish their own institutions, I show that they do not distribute their support equally. The aim which higher education foundations support least is social and political change. More than one third (39%) of the foundation representatives perceive their higher education foundation as pursuing the aim of social and political change. In this case, the results for foundations with other main purposes do not differ considerably. A fairly clear picture emerges when we differentiate the results according to the size and mode of operation of foundations. This aim of social and political change applies mostly to large operating or mixed foundations (58%) whereas small, grant-making foundations rarely pursue this goal (22%). Higher education foundations pursuing change establish, for example, their own universities or research institutions within the higher education system. This means that, in their opinion, some higher education institutions are missing in the landscape. By founding them and providing a substantial amount of money, they favor them over other, already established institutions. The following Foundation Portrait 4-5 introduces a foundation that wants to provide change by establishing a higher education institution of its own in the field: Foundation Portrait 4-5: ZEIT-Stiftung Ebelin und Gerd Bucerius Gerd Bucerius38 and his wife Ebelin founded the ZEIT-Stiftung Ebelin und Gerd Bucerius Foundation in 1971 (ZEIT-Stiftung 2017c). The foundation received their joint wealth after they both passed away in 1995 and 1997 (ZEIT-Stiftung Ebelin und Gerd Bucerius 2017b). It has both a grant-making and operating nature. The yearly expenditures amounted to 22 million Euros in 2015 (ZEIT-Stiftung Ebelin und Gerd Bucerius 2017a). Two-thirds of the 38

Gerd Bucerius (1906-1995) was a lawyer, publisher, and member of the parliament for the Christian Democratic Party in the German Bundestag in Bonn (ZEIT-Stiftung Ebelin und Gerd Bucerius 2017b).

4.3 German Higher Education Foundations

97

grants budget went into the field of higher education, but the foundation also supports arts and culture as well as education and training (ibid.). About 40 employees support the aspirations of the foundation according to the contact list of the team. In the field of higher education, by far the largest foundation project is the Bucerius Law School. With this institution, the foundation wants to reform German higher legal education (Bucerius Law School 2017a). The foundation established the Law School in the year 2000. Both the foundation and the school are based up north in the city of Hamburg. It is the first private law school in Germany. Its mission is to “strive to reform German legal education” and to “educate outstanding individuals who are willing to place their expertise at society’s disposal and to accept responsibility for others” (ibid.). The budget of the Law School amounted to 17.8 million Euros in 2016, of which the foundation as the sole shareholder and largest donor covered almost half (45%) (Bucerius Law School 2017b). 4.3.3 The Nature of the Foundation Regime Figure 4-8 illustrates the significant roles of German foundations supporting higher education (black) in comparison with the roles of foundations with other main purposes (grey). Higher education foundations see their role more frequently than the average as the supporter of talents and special achievements (71% vs. 48%), to find solutions to problems and driving innovations (64% vs. 41%) and to protect tradition and culture (58% vs. 46%) as well as to support cultural pluralism in Germany (52% vs. 37%). Additionally, they want to connect those more often who are interested in solutions to problems (51% vs. 38%). Moreover, they see a strong role for themselves as a connector of those who are interested in solutions to problems (51% vs. 38%) and facilitating an exchange of opinion (35% vs. 22%). In turn, their charitable roles are not as pronounced, meaning that they want less often to help those who otherwise no-one helps (45% vs. 62%). They also preserve the memory of the benefactor less often (38% vs. 47%) than other foundations as well as protecting family assets or a company (7% vs. 12%).

98

4 Germany

Promoting talent or honoring achievements Finding solutions to problems and driving innovations

48

71

41

64

46

Protecting tradition and culture Promoting cultural diversty in Germany Connecting those who are interested in solutions to problems Helping those who otherwise no-one helps Preserving the memory of the benefactor We are facilitators and bring different opinions together. Protecting our family assets or our company

37

58 52

38

51 45

38 22 7 0

62

47

35

12

10 20 30 40 50 60 70 80 in percent

Figure 4-8:

Roles of German foundations in comparison

Source:

Representative survey; All differences significant at p