On the Verge of a Legitimacy Crisis

, by Elisa Ricciuti - SDA Bocconi associate professor of practice
Whether banking, family, company or community foundations, they are all undergoing a soul search as they reassess their role and impact on society

Italian foundations, only a few hundred of them active, although there are more than six thousand registered according to the latest ISTAT data available (from 2011), have one thing in common: they all are under stress as they search for a new identity. There are operational foundations, which multiply the original endowment (typically from private individuals or families) thanks to a remarkable ability in fundraising and operate like veritable NGOs. Their problem is to communicate their impact, and to do so in a quick, transparent and useful manner, by following the well-known charity logic that seeks to retain donors while recruiting new ones. Then there are foundations that give out grants and so are always looking for good minds and good projects. They do not fear dearth in funds (something that sets them apart from any other type of foundation), but lack of visible impact: looking for the best way to disburse the funds available, through large-scale grants that attain the critical mass to make an observable change in the frame of reference and, why not, are influence it politically. As always, between these two extremes there is also a jumble of foundations falling in between, which often give sums to small projects rather than wide-ranging programs, or orient their operations in very specific fields (such as medical charities that fund scientific or clinical research).

But why an identity crisis, if every foundation has the power to choose its own vision, translate it into a mission, and implement a strategy that pursues it as the foundation sees fit? Because foundations seem to oscillate between conflicting forms of behavior, which suggests that a crisis is there, and a moment of reflection, processing and judgment is needed. At times, foundations manifest the need for networking, while others are jealous of their independence. On the one hand, they want to emerge as pioneers of innovative approaches (the need to be acknowledged and identified as "creator" of something is perhaps the clearest manifestation of the philanthropic ego), or conversely, to fall back on traditional, yet always useful solutions (think of foundations whose only activity is to hand out scholarships).

Why this confusion? In my view, the answer lies in the craving for social and political legitimacy that – more or less intensely, more or less consciously – all foundations share. Some might think that the issue of legitimacy is a non-problem, in the sense that "if I show I make a positive impact on the community, I have a right to exist." The issue, however, is more subtle: management at any foundation feels the need to be legitimized by strong stakeholders, which are not necessarily communities. This is the case with company foundations, at a moment so critical for the Italian economy, which feel they need to justify their request for funds with the parent company each year to ensure the continuity of the strategies announced for the near future. And this should highlight the role of innovative strategies, but at the same time the ability to network with other foundations to achieve change. As for banking foundations, in some cases thought to be too involved in local politics for their own good, they are struggling to prove to the political decision-makers they can play a major role in social innovation, the current buzzword to rethink the existing welfare state. As for private foundations named after individuals and families, they seem to be torn between accepting transparency and assessment of their performance, and deafness towards most kinds of democratic demands.

Finally there are community, not-for-profit foundations, which deserve a separate discussion because of their nature and the composition of their revenue sources, which place them a bit outside the current debate on legitimacy. Perhaps a more widespread reflection on the role of foundations and their relationships with the public sector and the citizenry could benefit all actors in the system, and bring an extra element of reflection about how to remedy to the economic crisis. The aim would be to ensure that foundations are fully integrated in the democratic mechanism, and keen to discuss their future openly with the rest of society, including about the needs they will have to address.