7 March 2023

Where there is a need, there is a foundation

The Spanish foundation sector, as part of the larger non-profit sector, has the primary objective of contributing to the general interest. But do foundations meet this objective, and to what extent? The purpose of the recent study by the Asociación Española de Fundaciones (AEF), “The foundation sector in Spain: Fundamental attributes (2008-2019)” was to find this out by estimating the economic and social contribution of Spanish foundations, and their capacity to satisfy the needs of millions of people and a multitude of groups.

What we found was that, yes, foundations are essential agents in the Spanish economy and society. Fundamentally, foundations try to complement the efforts of public administrations to attend to society’s needs, which confirms foundations’ strong commitment to the general interest, and shows that “where there is a need, there is a foundation”.

These demands and needs are numerous, complex and interrelated. Many of them are, in fact, new challenges that the 21st century has brought to our society, and whose dimensions span across the economic, demographic, social, environmental, and even geopolitical contexts, just to mention the most evident. All agents are called on to help ease the seismic transformations in these areas and, where appropriate, mitigate, alleviate and/or compensate for the negative impacts that they may provoke, for example, in terms of inequality. Among these agents, prominently, one can clearly identify foundations.

Our work aimed to report on how foundations’ various activities positively contribute to the achievement of global aspirations, and how they respond to the challenges faced by Spanish society in the 21st century. For this purpose, we estimated the social and economic impact of the foundation sector’s activity in Spain, and quantified the value it creates in terms of GDP and employment.

In conducting the study, an effort was made to expand the data available for the analysis, a challenging task that allowed the researchers to identify areas for improvement in the collection and structuring of information. These include areas for which the foundations themselves are only partially responsible, as the main supervisors are the different protectorates (mostly regional), as stated by in law.

For this study, we aimed to perform a complete census of the Spanish foundation sector, investigating their main activities; the territories in which they operate; and their economic dimensions in terms of endowment, assets, income and expenses ‒ all with the overarching goal of assessing their economic and social contribution in Spain. In a nutshell, our study tried to answer the question: What would happen if Spanish foundations disappeared?

Challenges and opportunities

The foundation sector in Spain constitutes an important tool of civil society. It actively works in fields such as culture, education, research, social services, and health.

Facing the new challenges of the 21st century, foundations must strive to ensure that their experience, their knowledge, their implementation, and their capacity to capture and manage resources for the public good are all adapted to the new needs that they are called upon to meet.

A proposal to strengthen the foundational sector

Professionalisation, transparency and metrics

Talent is key to foundations, and they must ensure that they are equipped with the best technical knowledge to carry out their social interventions and manage their organisations at all levels ‒ technical, executive and volunteering staff. For this purpose, it is necessary to adapt to the new methods developed in different areas such as fundraising, management skills, digital tools, social innovation practices and strategic planning. A major professionalisation is a must for the retention and attraction of talent; staff motivation and personal development; and for the growth of the organisations and the quality of the services they offer.

Professionalization does not only apply to people. It also concerns the processes and procedures the organisations operate with, and how their stakeholders perceive them. Transparency is also a necessary condition and has its own value because not only is it mandatory for accountability reasons, but also because there is a growing demand for the measurement of outcomes, and the impact generated.

Institutional quality, engagement, innovation, and good governance

To avoid being considered exclusively as social service firms, foundations must:

  • Strengthen the institutional role of the sector as a channel for social participation and public conversation
  • Report injustices against the general interest, and/or society’s most vulnerable groups
  • Try to defend their differential value as key agents in the exercise of solidarity
  • Advance in the design and implementation of innovative interventions such as new ways of conceiving and exercising philanthropy
  • Promote the creation of inclusive and strong social networks, which are essential in articulating efficient mechanisms to overcome social difficulties

Equal opportunity

Equal opportunity is the target that underlies the whole of foundation activity in Spain. Not only as a matter of justice, but also as a socio-economic objective of our society.

Alliances and collaboration

As stated in the Sustainable Development Goal number 17, alliances and collaboration between foundations and between foundations and other agents of the public and private sectors are necessary to achieve the goals and objectives framed in the 2030 Agenda, the high-level roadmap for all foundations.

Digital transformation     

The challenges that are accompanying the 21st century must be overcome with the support of new technologies, especially through digitalisation, which implies upgrading the manner in which organisations work. Also, foundations are expected to transfer the benefits of digitisation to their beneficiaries, either in the form of tools and channels to improve access or care, or by contributing to reducing the digital divide.

Effective supervision

The AEF has repeatedly demanded the improvement of the Protectorates’ capabilities, their structure, and their equipment, in order to comply with their responsibilities effectively. The present work emphasises and justifies such a demand.

The economic activity generated by the foundation sector reached 18 billion euros in 2020 (Gross Value Added, GVA), which was equivalent to 1.6% of total Spanish GDP. Moreover, foundations helped employ around 400,000 people, which equals 2.6% of the total workers (full-time equivalent) in Spain that year.

A 2030 vision of the Spanish foundation sector:

Reflections from the Board of Directors of the Spanish Association of Foundations

AEF is the main representative of the sector in Spain. It has mobilised resources to help foundations meet their missions, attend to social demands and guarantee the continuity of their work.

The Covid-19 pandemic and the new geopolitical scenario that has opened up due to Russia’s aggression against Ukraine have aggravated the threats faced by our society. The AEF proposes a number of thoughts to guide present and future debates based on these challenges and other global trends that foundations must respond to.

Foundations should be oriented towards the direction the world is taking

International organisations, governments, think tanks, social organisations, foundations, universities, and companies have focused their work on a number of global trends that will affect humanity as a whole. An agreement on how to respond to these trends was reached back in September 2015, with the adoption of the Sustainable Development Goals, confirming that all of the above are fundamental agents to meet these challenges.

The AEF underlines the need to improve the interpretation of the economic crisis that began in 2022 to refocus actions and embrace new challenges such us climate change, growing inequalities, global migrations and digital exclusion, to name a few. Foundations must provide concrete answers within their respective fields of specialisation, priorities and resources.

Threats and opportunities

In the face of any economic crisis, the foundation sector not only acts as an “automatic stabiliser”, but also is itself a sector of growth, investment, and generation of employment opportunities.

In that sense, economic crises manifest the risks of reduced economic growth, accelerated loss of household income, deterioration of business margins and, therefore, of the businesses’ capacity to generate employment. Access to finance becomes more expensive. The consequences have a social dimension in terms of deterioration of income, and increased risk of poverty and inequality.

In this context, the not-for-profit sector has occupied an important place and attends a group of needs not reached by the public sector. However, this occurs with limited capacities: waning business profits and unexpected losses in the value of patrimonial assets reduce the foundations’ ability to increase donations. This scenario outlines a framework for action to better attract and stabilise resources on a permanent basis.

The foundation sector against the war

The global risks exacerbated by the war, the economic crisis and the erosion of democracies call for an in-depth reflection process within the foundation sector to reach a broad-based consensus to face together all these new challenges while focusing on their mission at the service of the general interest.

Strengthened institutional quality

The general interest is not an abstract issue. Nor are the foundations’ dimension, activities, impact, and contribution to the general interest. Nor are the foundations’ financial statements, strategies, strengths and weaknesses. If foundations are to be key agents in the future as they have always been, their Institutional strengthening is essential, a process in which the authorities have a shared responsibility as regulators and supervisors.

Therefore, AEF, reinforced with the results of the research work performed, stresses the urgency of improving the institutional quality of the foundation sector, which implies the urgent adoption of a State Pact with these three essential purposes:

  • The improvement of the incentives for the general interest.
  • The establishment of a stable and collaborative framework coordinated by the Superior Council of Foundations.
  • Upgrading the Protectorates to guarantee that they not only excel in their supervisory responsibilities but also become data and analytical hubs for the general interest.

There is indeed an enormous analytical potential, but this relies on the necessary standardisation and digitalisation of the information that all the foundations in Spain are obliged to deposit in their corresponding supervisory agencies (Protectorate). Such modernisation will allow for a complete, homogeneous and reliable vision of the activity of all the active foundations in Spain for the sake of the general interest.

Download link: https://www.fundaciones.org/es/ecm-docs/Analisis-de-la-contribucion-economica-y-social-de-las-fundaciones-espanolas


Verónica López
Economist, Analistas Financieros Internacionales (AFI)
Juan Sosa
Economist, Analistas Financieros Internacionales (AFI)