Reimagining German Philanthropy

“Never let a good crisis go to waste,” Winston Churchill is credited with saying towards the end of World War II. We are again living in difficult times where we might want to heed the opportunity to reimagine our global systems. We have been experiencing waves of crises: a pandemic that has weakened our health, education, and social welfare systems; wars from Yemen to Ukraine; declining trust in government and media; racial and colonial reckonings; and an increasingly urgent climate crisis.

It may be worth pondering why we should care about philanthropy, and foundations, in particular, during this perfect storm of events? The reality is we only have so many tools in our toolbox and philanthropy can be another kind of tool, and very influential when used smartly. Throughout modern history, civil society has played an important role as the third sector to the public and private sectors. Foundations are key stakeholders in, and often the fuel for, a dynamic and well-functioning civil sector. They are at the critical intersection of private money being put to use for public good. At their best, private philanthropic foundations are well placed to fill needs not served by the government, support civil society voices and participation, provide risk capital for new ideas, and facilitate sharing knowledge and best practices across borders.

However, as key actors in setting our development agenda, they are often the least understood and least transparent actors.Thus, it is important to critically examine how foundations carry out their work, and how they can facilitate open and informed conversations about effective philanthropy.

Becoming more supportive partners in driving transformational change

The need for the philanthropic sector to be an active participant in funding and shaping global solutions is more urgent than ever before; it cannot afford to be a neutral bystander and certainly not a hindrance to action. Many are calling for a reimagining of philanthropic foundations, where much of the potential funding resides, to evolve into more effective, generous, and supportive partners to nonprofit organizations in driving transformational change. This has been happening in Germany, as it is elsewhere, particularly during the Covid-19 pandemic that revealed many of the long-standing practices and ideas we believed immutable in the foundation sector are, with focused attention and leadership support, changeable.

Some of the practices that foundations in Germany have been experimenting with are the like of providing more flexible general operating support grants; reducing reporting; funding innovation; developing more open, two-way communication with grantees; funding a more diverse set of nonprofit leaders; experimenting with participatory grantmaking modalities; and supporting more nonprofits internationally. The question now is: will the sector sustain these new grantmaking practices or revert back to more traditional ones?

Since the German foundation sector has been grappling with reform options, I decided, as part of my fellowship at the Robert Bosch Academy, to speak with over 40 key stakeholders to solicit their opinions on where they saw room for improvement. My conversations were largely with leaders and staff of foundations and nonprofit organizations, with a few stakeholders from government and academia, and also a number of conversations with people in the philanthropic infrastructure support ecosystem.

What German stakeholders say about improving the philanthropic sector

There was a wealth of feedback I received in these rich conversations. A summary of some of the key points that underscore the need to sustain and build on the progressive reforms in the German foundation sector are as follows:

Experiment more with evolving grantmaking practices:
Project-based funding is still the norm in Germany and many stakeholders feel evolving modalities of funding in Germany is a key first step to being more effective. This can mean more flexible, longer-term, unrestricted grants for nonprofit organizations and funding more innovation and institutional strengthening. People feel foundations need to embrace greater risk as there is a need to experiment with new ways of working to solve our pressing problems.

Focus on shifting mindsets in our own organizations to focus on greater impact:
Many feel the German foundation sector is slowly beginning to embrace more progressive change, and we need to nurture and support this. Foundations need to give themselves time to experiment within their own organizations with different practices, taking more risks, and reflecting on the learnings together. Change will only be sustainable if boards, leadership, and staff are all aligned and committed. It was also commonly recommended that foundations should be more transparent: we can do more collectively as civil society if we understand each other’s strategies and approaches better.

Listen more, engage more:
Acknowledging the power dynamics in philanthropy and working to flatten them was a key area cited for improvement in Germany. This starts with engaging with nonprofit partners more and differently, being more approachable, and communicating more clearly and openly. Foundations generally spend too much time internally focused, rather than engaged externally, so there is a need to focus on balancing this tension. Foundations need to center their work on the greater purpose, not just on their own organization’s needs.

Embrace diversity:
Stakeholders shared they would like to see the German foundation sector embrace the value of diversity not because of external pressures, but because diversity and lived, proximate experience is critical to developing better and more relevant solutions that drive greater impact. People recommended taking a wide view of diversity that can be about age, gender, ethnicity, sexual orientation, socio-economic status, career pathways, immigration experience, and so on, and encouraging more fluidity of staff between nonprofit, philanthropic, government and business sectors. Diversity of people and ideas at the leadership and board level of foundations was noted as particularly important.

Define what a new German leadership style looks like:
Germans are cautious about legitimacy given their country’s complicated history but finding a German way to lead in these turbulent times with soft power is an area people suggested foundations may be able to help with by supporting civil society organizations in their convening and collaborative efforts. German leadership can be about partnering, collaboration, and building a coalition around a European perspective on key issues, which perhaps is needed now more than ever.

At the end of the day, our world needs more active and engaged stakeholders working together to solve our numerous challenges. German foundations are an important component of this as one of the largest and well-endowed foundation sectors in the world.