中欧社会论坛 - China Europa Forum

Authors: Pierre Calame

Date: 9 janvier 2012

Dear friends, I would like to share with you some difficult questions about the responsibility of foundations and about their governance. I will do that from my thirty years experience as the chief executive of an international foundation and now the Chairman of it. I will describe why we moved from local projects to a global international strategy. I don’t pretend that I will present the mainstream of European foundations but I will speak with my heart from my personal experience.

It is very interesting to think that at the very moment when we are discussing, there are two major events happening in the world. The first one is the Durban international conference on climate change. I don’t know whether our heads of state will reach an agreement, I’m afraid they won’t. And we are dealing with the survival of the planet.

And the second event is the meeting of the European Council in order to try and save the euro. And as you may know, if euro collapses, there will be a global recession in Europe and if there is a global recession in Europe, there will be a global recession in China, too – probably. So, these two events are illustrating the present shortcomings of our global governance.

The states are at stake. What are the four points on which they are at stake? First of all, we are mutually interdependent, but we don’t really form a global community. We are not convinced we share a common destiny. We don’t know each other. We think of ourselves as competitors, much more than as brothers having to manage a common planet.

The second point is about global ethics. Why will the Durban conference probably fail? And why the euro might be not saved? It is because of the lack of responsibility. We don’t see that our own action as consumers, as corporations, as states, as nations, impacts the rest of the world. In fact we don’t care about it. But it impacts all the world. How do we deal with our responsibility? How do we define it? How do we manage it? This is the second dimension.

The third dimension is about governance. We still want to manage the world with sovereign states. We think states are representative of the national interest, we imagine that we can manage the world by confronting national interests. It doesn’t work any more.. We are not able to think long term. Everybody who is in Durban today knows that we are going to build a world unsustainable for future generations. Our heads of state don’t care about it, because, in my country for example, they are just thinking about the next election. So how do we address the long term issues? And there is schizophrenia between avoiding global recession on one side, and stopping consumption to protect the planet on the other side. And we don’t solve this schizophrenia. Our societies have become completely schizophrenic.

And,last but not least, all the crises we are facing are a combination of ecological, ethical, financial, economic crises. It is the global model of development which is at stake. But are we seriously addressing this issue? We don’t. We think we can keep on going business as usual but it won’t work.

This is the stage of the world and this is what could be called “having to face the Great Transition”.

So, in front of this pretty dull situation, we have to ask ourselves four questions. First of all, what is a foundation, what is its role, what is its specificity? Second, what is its responsibility and how should we assume that responsibility, how should we assume it together? Third question: what kind of strategy does it imply to assume our responsibility toward the world? And fourth, what does it mean in terms of governance?

So this is the global landscape. I will only lay down the landscape and hope we can discuss that at length during the coming years.

First of all, what is a foundation? What is its role, what is its specificity? You know, the notion of philanthropy is extremely old. You can find it in every society at every age. In Europe, the ancient Greeks would not call it philanthropy. They would call it evergetism, which means, in Greek, to behave in the right manner, to behave in the right way. What did it mean? It meant the right use of money by rich people. In every society, it has been clear that fortune, of course can come from merit, can come from inheritance, but could not exist without the global community. So the question for any rich person is: how to return to the society a part of one’s own prosperity? Therefore, behave in a right way, and any rich person in an ancient Greek city would have to behave this way meant giving back to the community, it was not an option. Evergetism was a duty, to return money to the community.

And we can see that either with community foundations in US, or even when people donate for universities or for hospitals in China or for schools, we find the same dimension, it is part of the social prestige in fact. And you cannot imagine that rich people would accumulate wealth for their own selfish satisfaction, for their own family, at the expense of the global community. In fact you can consider that accumulation as a kind of mental disease. There is a mental disease in our own society: people accumulate wealth, they don’t know even why at the end. Just for the sake of accumulation.

But I remember participating some years ago at an internaut forum on people.com, and I was asked a very simple question, very surprising for me, from a Chinese internaut, “is it also in Europe that the poor people hate the riches?”So we can see that the gap between richness and poverty has reached in China a dramatic point. So this is about evergetism. You could not imagine in a normal society, any rich person who should not return part of its wealth to the global community. It is a moral rule, it is mental health.

Now, philanthropy is much more ambitious, it is about giving your fortune for the love of the human being, it is much larger, for example our founder and a lot of people like him in Europe gave all their fortune, and they think that their children should earn their lives with their own merit and not with an inheritance of their fathers. So philanthropy is larger than only giving a part of one’s fortune for social prestige.

Now, having defined what a foundation is, that is, and endowment given by a rich person or by a corporation for common good, what roles for a foundation? There are many choices to be addressed. First of all, you say r”eturn a part of the wealth to your community”. But what is the scale of the community? Do you mean local community or do you mean global community? That is the first choice. The second choice is about your return on investment. If you would be really a non-profit person, you will accept to have no return on your investment, no personal return, in terms of visibility, or in terms of social prestige. So, do you want a visible return, or do you accept just to be coherent between your own deeds and your own values? This is a major choice, as I will show, for the governance of foundations.

Third choice, do you want to be do-gooders, to just address one single issue, health, handicap, poverty, and so on so forth, or do you want to address more general issues? What is your position? Are you only addressing the symptoms, or are you addressing the causes? For example, it has been shown that in our society now, , every year you need more growth to get 1% less of .poverty. That means that our society had becoming more and more inefficient in solving the poverty issues. So do you want just to be a drop in the sea and say “Okay I can’t help it, but I bring my small stone to mitigating poverty,” or do you want to address the causes of poverty?

Of course, each of these choices are commendable, but it will influence very strongly your strategy and governance.

Other major question: should philanthropy be a substitute to taxation of wealth? “No, no, I don’t want to be taxed, because I think private philanthropy is better than taxation” is the position that you have in the US conservatives. They are pushing for philanthropy just to avoid taxation. Is it your own position or do you want to act as a personal contribution to the public good?

Let us move to my third point: what are the specificities of a foundation. I mean a foundation in the European and American sense, maybe not in the Chinese sense, that is giving an endowment and using the revenue of this endowment for common good. With these characteristics, foundations have two major specificities. First one: independence. It can act local, it can act global, it can change the issues it is working on. And, second: acting long term.

Those two characteristics are enormous privileges. Very few institutions have independence and are able to act long term. And it is because of these characteristics that foundations have a very high responsibility. Now, what is responsibility about? There is an Italian philosopher who says that the 20th century was the era of rights, and the 21st century will be the era of responsibility. And the German philosopher Hans Jonas showed long ago that when the size of interdependence has grown, then the very nature of responsibility has changed. So we have to understand responsibility in a new way. There comes the emergence of the concept of universal responsibility. What does universal responsibility mean? First of all it means that responsibility is an universal value. That you can find it in every society, because it is at the roots of reciprocity and at the roots of any social fabric. So if you are looking at what is common ethics to all societies, you find the issue of responsibility. Secondly, responsibility has become universal because the impact of our actions concerns the whole world now. So that’s why there has been a dramatic change in the concept of responsibility.

Now one of the discussions that has to take place and might take place at the next international conference, Rio+20 is about should we have a third pillar for the international community, along with athe UN Charter and the Universal Declaration of Human Rights?. Because until we have this concept of universal responsibility at the core of international law, we will not address the issue of interdependence. And the Charter of Universal responsabilities says: there are three characteristics of responsibility: first , you have to assume the impact of your acts, second, the more freedom, the more power, the more knowledge, the more responsibility. That is why, because foundations have a high level of independence, they have a high level of responsibility; and third we cannot say we are powerless unless we have tried to overcome this powerlessness by uniting. These are the three dimensions which are the yardsticks of a foundation’s responsibility.

What does this mean, the strategic implications of responsibility? First of all I must confess that 90% of the foundations escape their responsibility. How do they manage to escape? I will give you some very useful pretexts to escape responsibility.

First of all, “there are so many needs everywhere. Why should I think? I can just pick the needs I am most familiar with to do the public good. No need to have a strategy!” Let us think of mortality, education, health, and you’ve got it! Why do I need to think about it so long? No need for a strategy.

Second way to escape: “I want concrete actions, I’m not this kind of guy thinking all the time, I want to act, I want to be concrete”. Unfortunately, is being concrete relevant? Most of the time not. Because generally speaking the causes that you should address are much larger than any one action. And if you just want to act inside the system, you could call that hypocrisy.

The third way to escape is to claim realism.” I am not that kind of idealist, where you go to war against a windmill. I am small. I act according to my size. How could I address the big picture? “Here again it sounds like common sense, but in fact it is not. Just think a minute about what it means to be realistic. It means that you take the word as it is. And idealism? It means you take the dream for the reality. But then when the world is confronted with two major challenges, realism should mean to address these big challenges. On the contrary, acting according to your size is taking your projection of the world for the world itself. Isn’t that idealism?

The fourth way to escape is to claim” you need to measure your impact”. This is very often a strong requirement of the Board of Trustees. It wants to know where the money goes. It wants to assess the impact of the action as if it were the only way to measure the efficiency. And it also often considers that a good partner should know where it goes, that action should be carefully planned. But here again, in order to measure you own impact, you need to concentrate on limited action and very often with quick return on investment. Because in the real world, action interacts with other factors and most of the changes occur in the longer term. And you’re acting in an uncertain world, where you should be able to adapt to new circumstances. Therefore, to require detailed planification, as also do many public agencies, is a good way to limit the relevance and efficiency of action.

If you take those four ways to escape from you responsibility, you will find 90% at least of philanthropy which falls into one of these four categories.

Now let us see the way to assume responsibility. First of all, when the challenges ahead are great, you have to address the big picture. Efficiency is about bringing a little stone to large challenges, much more than addressing limited issues. Furthermore, most challenges we are facing, we should address the real causes and not the symptoms. For example, alleviating poverty means addressing the causes of poverty, not helping people to survive, because in this case they fall back into poverty as soon as the support comes to an end. And in most of the problems that we have to face, causes are related to the mindset, to the vision of the world, to the institutions, to the economic and political logics .Therefore dealing with the causes means a lot of intellectual work. When the mindset is inadequate, the most concrete action should be to think in a new way.

A second way to assume responsibility is to contribute to the emergence of new actors and networks. Most of foundations pretend to support partners. This assumes that the partners already exist. But one of the main sources of our problems nowadays, is the contradiction between the inertia of mindsets and institutions, which contrasts with the very quick technical and economical changes. You cannot take for granted that the institutions and the actors inherited from the past are fit for addressing the present challenges. On the contrary, there is very often a growing gap between the very nature of the problems, and the mindsets, institutions and tools with which we pretend to address them. In this case, the existing partners might be unfit and you need to undertake a long term action to help to the emergence of new actors.

The third way to assume your responsibility is to build long term complex strategies and alliances. What is a strategy compared with planification? Strategy means a clear vision of where we want to go, combined with a great flexibility on how to go there. It’s like walking in the mountain. You know you want to reach the top, but they way you will go depends on the obstacles you meet, the weather, etc. Being strategic means being flexible and allow the partners to be flexible.

Fourth you need to be able to develop new processes, going back and forth from action to reflexion. A responsible organization is a learning organization adapting its strategy thanks to a feedback from previous actions.

These characteristics of responsibility strongly influence the way Fondation Charles Leopold Mayer for the Progress of Human Kind has conceived its own strategy. I sometimes call it: “The duty of ambition”. Ambition is not an option. It is the direct consequence of independence and of the possibility to act long term. I will give you four examples.

The first one is the creation of the China- Europa Forum, and the contribution to the building of a responsible global community. Our initial statement was that intense diplomatic and commercial relationships between China and Europe would not prevent a deep and sometimes even growing misunderstanding between both societies. Such misunderstanding will at one moment or another, put peace at stake : our interdependencies are irreversible, and we will have, like it or not, to share the limited resources of the planet. Europe more and more considers China as an unfair competitor, while China fears that it will still be underestimated by Europeans. If we want a peaceful world, we need to build a deeper understanding between both societies. It is a long way, it is complex, it is an urgency.That is what the China Europa Forum is about.

Second example. We know the shortcomings of our development model, but we don’t know how to act in order to change it, we don’t know how to overcome the contradictions arising from the pretention from every state to be sovereign at the moment when we have to manage global interdependencies. There is one unique opportunity over the coming years to address these questions: the Rio +20 international conference convened in Rio de Janeiro for the 20th anniversary of the first summit in 1992. As far as we can see, Rio +20 is scheduled to fail. There has been a consensus between the different stakts to adopt a very limited agenda and to stick to a kind of consensus conferences which gives each and every state the de facto veto right. What can a middle sized foundation do in front of this situation? Over the years we have built a large network of partners in many countries. And we have also found that in front of global interdependencies, societies should agree on a common set of principles focussed on the notion of universal responsibilities. If the principles were agreed upon by the international community, it would help overcome national sovereignties, each society being confronted to its impact on the others. As the host country Brazil is the most legitimate to take an initiative regarding the Rio +20 agenda. We managed to meet key person in the Brazilian government to try and convince them that they should promote the inclusion of the Charter of Universal Responsibilities on the agenda of the conference. Then, captured their interest, we went in different Asian countries to meet top officials and tried to convince them to support the Brazilian initiative. And we got some positive results. But this kind of action is in fact the outcome of years of work which have generated mutual trust.

Third example. In Africa, there is a huge number of organisations which are supporting projects dealin with f poverty alleviation, capacity building at the level of local communities, support to farmers’ organizations, etc. But these projects do not really help African countries and societies to develop. We found that a major cause for that failure was the very nature of present African governance, inherited from the colonial past often placated on the society. Therefore instead of granting our own local projects in African, we decided 10 years ago to help and create an Alliance to refound African governance. An international network linking initiatives to think and reform governance in different countries. Of course you cannot expect to measure your impact over 3 or 4 years. It is a long term effort, but one can see that, over the years, this alliance has been able to articulate proposals and to begin and disseminate them. Of course, when you address the roots of the problems and not the symptoms, you are not sure you will succeed, and you accept the risk.

The fourth example has been the creation of a publishing company and the support for books which it would be found hard to publish in a commercial company. Their public might be too small or uncertain, at least in the beginning. In a context of outdated mindsets, elaborating and disseminating new ones is one of the most concrete actions to be undertaken.

The governance implication of responsibilities

As you easily understand, assuming responsibility in the way I defined it and supporting the type of actions I just described would be impossible if you adopt the conventional wisdom on the governance of foundations. You need an effort of “institutional engineering”, that is the design of institutions and processes adapted to the kind of strategy you want to develop. Experience shows that institutional and governance design are decisive as the very nature and governance of an institution frame the type of action that an institution is able to undertake. Let me give you some examples of the way we designed our foundation in order to meet this “duty of ambition”

First, although any organization has its own institutional framework and its own history, there are two different types of organization and governance. The first type is dominated by the institutional framework: the action is molded out of the institutional features, such as a strict a priori definition of the mission and objectives of the institution, and by the respective roles of the Board of Trustees and the Secretariat, as well as, for example, by the obligation, in the name of accountability, to quantitatively measure the impact of the action in the short and medium term. Such an organization will establish a clear distinction between the foundation and the beneficiaries of its actions, through the elaboration of a set of criteria that the grantees must respect. In that case, you can hardly talk of a strategy. In the second type of organization, however, the history is dominating over the formal institutional framework. Such an organization will pay much more attention to flexibility, to learning processes, to confidence building between the foundation and the grantees. Although the legal definition of the organs and of their respective competencies exists, the organization is seen as a unique historical undertaking and attention is paid to the concrete working procedures elaborated over the years. These differences between two types of organization refer in fact to two different conceptions of governance, which I developed in my book “democracy at tatters” (published in China under the title…..). The first one relates to what I call the static conception of governance, characterized by three pillars: institutions, competencies and rules. The second type refers to a dynamic conception of governance where the three pillars are: objectives, ethical principles and working procedures and processes, elaborated and improved over time.

Importantly, if you look at the mantra for foundations governance, as disseminated for example by the training of governance staff professionals, you can very easily see its shortcomings. You will first find recommendations related to mission and principles: to have a “niche” approach directly inspired from the corporate world where many trustees of foundation come from: choose a market niche where you will be able to “make the difference” and acquire visibility. Second, insist on impact evaluation in the name of the control of the Board of Trustees on the secretariat activity. But as I early showed you, the requirement for impact evaluation strictly predefines the kind of actions that a foundation is able to undertake. Third, a great insistence on transparency and accountability. Please, understand me. China has been recently confronted with scandals of corruption in public foundations, which have generated public suspicion against institutions supposed to be devoted to general interest. Honesty, transparency, need to account for your action to the general public, robust analytical accounting of every expense in order to control the use of money are fundamental, even more in this second type of organizations.

However, the conventional approach of accountability, which is presented as common sense, has huge and damaging implications for the nature of the strategy a foundation could adopt. Accountability, in a world dominated by quantitative yardsticks, often requires to deliver figures on the impact of the action whereas, as already shown, most influential changes relate to qualitative transformations such as the mindset or the conceptual framework.

Second bias, accountability means the need to be accountable for your actions. It implies that you have to specify to whom you are accountable and for what. And most often than not, accountability restricts itself to referring to the Board of Trustees or documenting the actions in every quantitative manner.

And the third bias is to predefine the objectives of the action and then to measure the efficiency with the yardstick of these objectives. But in the real world, the positive impact of actions can very well be different from the predefined objectives: this kind of accountability focuses on planning and ignores strategy in an uncertain and “open” world.

Let me tell you at the conclusion some distinctive features of our own governance.

First, the management of time. When you want to create a dynamic governance, which privileges flexibility, learning processes and strategic adaptation to an evolving context, management of time becomes critical. Aside from the legal obligations to present the annual activity report, you need to create the landmarks for the evolution of the organization. In fact, our Foundation has a periodic approach based on four cycles.

The first one is a thirty years cycle, which I call the “cycle of visions”: every thirty years, we define the vision of the world, the theory of change, the major risks which will be the core sources of inspiration for the action of the Foundation.

The second cycle, which I call the “cycle of orientations” is ten years long. Every ten years, we redefine our strategy: where to work, with whom to work, with which thematic focus and with which methods.

The third cycle is a biannual one. Most foundations are, because of their legal obligations, put under what is called “the spending pressure”. In order to keep benefiting from fiscal exemptions, foundations are required to spend every year the revenues of their fortune or a certain percentage of it. Importantly, this fortune and its revenues can fluctuate in great proportion from year to year due to the instability of financial markets. Therefore, the budget devoted to your action fluctuates accordingly, impeding for example stable long term relationships with partners. We also found that a yearly budget would fragment our action, with too much time devoted to preparing the budget and checking that the annual expenses have conformed to the budget. Ten years ago, we decided to move to a biannual budget which gives more continuity to partnerships and more time devoted to action than to the reporting on action.

The fourth cycle is a weekly one. Over the mast twenty years, we never miss the “monday morning meeting”. The entire staff participates and each member reports on his or her activity, on the basis of the “report files” that he or she has written and which represent the lively memory of the foundation. As it is the case for any dynamic governance, the management of our own memory has to be continuous and strict: the computerized data base of our report files contains more than 25000 files, the first ones from 1985. The report of the discussions of each weekly staff meeting is sent to the Board of Trustres which receives a permanent flow of information on the foundation. At this weekly meeting, we exchange information about our activity and interactions between the members are the source of most of the new thinking.

A third distinctive feature of our governance is the importance we give to the links between the different actions that we support. In most foundations, action is split into pieces; it is a series of grants, conform to the criteria of choice that the institution has adopted, but with very few relations between the different partners and grants. On the contrary, we consider our action as a whole and relationships between our different partners are strongly encouraged. To have an idea of the importance we give to these links, we detail every year the time devoted by our staff to different activities. And through this accounting, we discovered that the members of our staff would devote more time to interacting with each other than to work separately with each partner. Because only very strong interactions between the members of the staff will create interactions between our different actions.

Fourth, we have given extreme importance to confidence building between the Board of Trustees and the Secretariat. In a foundation, the board of trustees has the ultimate power. Trustees are often older than the staff members, are often executives or past executives of companies, and they are required by the law to act on a volunteer basis, which explains that they only devote a limited part of their time to the foundation. Moreover, in many foundations, the conventional governance rules require a limited mandate for the Board of Trustees, in order to avoid clientelism or corruption. The presence of so-called “independent trustees” which do not belong to the founders’ family in the case of family foundation or to the executive board of the company when it is a corporate foundation, is often recommended, as it is the case in corporate governance, in order to escape from conflict of interests. The implicit idea behind these rules is that corporate governance is a model of efficiency which can be applied to every sector of society. In my opinion, this is wrong. For example, how can you expect a trustee, without proper training about governance of foundations and the way for them to assume their responsibilities, who ignores the long term history of the foundation, who does not really know the partners, who has very limited time devoted to the foundation, with very limited interactions with the professional staff, to be able to understand and stimulate strategic thinking? This kind of Board of Trustee, with their corporate experience, will require the kind of quantitative global data used for the company accounts. He or she will of course favor a niche approach, impact assessment, benchmarking and all the like. In order for a foundation to assume its responsibilities, we have to look at the relationship between the Board and the Secretariat in a very different way. We need Trustees who really understand and approve the long term strategy, who are able to spend time reading, discussing, eventually meet the grantees, and who participate in the collective learning process.

Being a learning organization means, first of all, to document in a qualitative manner all that happens in the foundation and with the outside world, first of all with the partners, to be able to think, sometimes years after, about what has happened, what was the state of the discussion and of the understanding at any moment of time. Qualitative reporting structured in computerized databases is paramount for our Foundation, whether it be our common directory, which reflects what we call our social capital, reports from partners, internal reflections, report files conferences, etc. We have paid a great attention to the thesaurus of keywords which describe our activity. It is a condition for an effective use of our common databases. Learning organization means also constant interaction between action and reflection . They are the two legs of our permanent learning process. But even if at every moment of your life you think and act together, for an organization you need to create cycles with definite periods devoted to reflection.

I already mentioned the weekly meeting which is the most frequent moment when we think together, in real time, about our action. Then comes the biannual opportunity: at the occasion of the preparation of the biannual budget, we discuss the results and the shortcomings of our strategy and action. We strengthen the links between the different actions and we occasionally decide evolutions inspired by these qualitative evaluations. It is a collective process, involving the entire staff, including the purely administrative one, in order for every member of the secretariat to be part of this evolution.

And, last but not least, every ten years, when the time has come to redefine the strategy in accordance with the experience accumulated and with the evolution of the context, we have a long sabbatical period – up to one year and a half – which involves the Board of Trustees and the Secretariat in order to take stock of all the experience we have gathered at the moment when we redefine the strategy.

Instead of evaluation, which always implicitly evokes giving good or bad marks to the action, we prefer to speak of “capitalization of experience”: we can learn more from failure than from successes, we have to talk of processes even more than of results, we have to involve all our partners in this collectives learning process. These sabbatical periods are certainly a distinctive feature of our Foundation. We also give a very great importance to learning by doing. We think that the most useful knowledge for action derives from the action itself. That is why, in our strategy, we support wide international case studies databases, which help build general knowledge out of the lessons taken from action.

And to avoid the “impact evaluation” methodology, we focus on the “relevance evaluation”: are we addressing the real roots of the problems? have we been able to find or create the good partners? is our methodology fit to the problem? have we been able to increase at every occasion our social, intellectual, symbolic and methodological assets, which we consider even more important than our financial ones?

Last but not least, instead of contemplating the difference of nature between a grant making foundation and its grantees, we look at both in terms of co-production of the common good. Co-production can even be taken first degree: looking at our strategy, which deals with the gap between the existing mindsets of institutions and actors, and the reality of the challenges we face, actors often do not preexist. We have to create them, nurture them until they become independent. Very often, foundations and civil society organizations pretend to respond to the needs expressed by communities and existing actors. They have a kind of supply and demand approach and they will frequently pretend that they respond to an external demand. But, most often than not, they cheat themselves: for an actor to exist, for example in a community, it needs to have its own material and financial means. These means frequently come from external supports, from foundations or NGOs. Therefore, it is the very criteria used by these funding institutions which define what can be supported or not and therefore what actors can exist or not! actually it is the supply which creates the demand. We pay great attention to this paradox. We know that our strategy will contribute to the very definition of our partners, we accept to give birth to new partners and networks. We know that the more innovative they are, the more difficult it will be for them to find supports from other sources than our Foundation, and therefore we know that in many cases, creating new kinds of actors means that they will be dependent, on the middle or even the long term, on the support of our Foundation.

Pierre Calame