GIVING IT AWAY | August 19th 2008

American-style philanthropy is finally catching on in Europe. Matthew Bishop explains ...

A couple of hundred wealthy continental Europeans gathered in the achingly modern Philharmonie concert hall in Luxembourg on April 23rd. The reason? To discuss "seizing the opportunity for philanthropy" in a country traditionally known for helping the rich to keep more of their money from the tax man, not for encouraging them to give it away. Even the prime minister showed up, promising new laws to help turn Luxembourg into a centre for European philanthropy.

This is the latest evidence that the philanthropy boom that has been under way for a decade or so in America, and for a few years in Britain, is now spreading to continental Europe. The symposium was organised by the Banque de Luxembourg, which is responding to demand from its wealthiest clients for help and advice on giving. The bank believes that this is a big opportunity to win new, more enlightened customers--though the reality is that wealthy Europeans are increasingly telling their bankers that if they do not offer useful help with their philanthropy, they will take their money to a bank that can.

Similar pressures have already led banks in Switzerland to build serious philanthropic advisory businesses. UBS, for example, has hosted a well-regarded philanthropy forum there since 2005. Even Monaco, famous as the European playground of the rich tax exile, has started to re-brand itself as a home of philanthropy. The symbol of this is Prince Albert, who has raised and given money to protect endangered species, and teamed up to fight climate change with the un foundation created by the American billionaire Ted Turner. Last September, the prince hosted a glitzy Blue Auction at which wealthy bidders competed for the naming rights to ten newly discovered species, including a walking shark.

Meanwhile, in Germany, about 1,000 new charitable foundations were created last year, a record. Much of this is the result of a decade-long effort to promote philanthropy by the huge Bertelsmann Foundation, which owns the media conglomerate of the same name, and there is growing speculation that the company's matriarch, Liz Mohn, is about to launch a dramatic increase in the amount that the foundation gives away. There is also a rise in the number of foundations being set up in traditionally étatiste France--admittedly promoted by a state-created entity, the Fondation de France.

A preference for statist solutions is the most common explanation for why continental European philanthropy has lagged behind its counterparts in more laissez-faire Britain and, especially, America. Yet a century ago, philanthropy was as vibrant among the newly rich industrialists on the continent as it was in Britain and America. And even during the second half of the 20th century, charitable foundations played an important role, albeit largely unrecognised, in shaping post-war Europe, according to a fascinating new book, "Philanthropy in Europe: A Rich Past, a Promising Future", by Norine McDonald and Luc Tayart de Borms.

One reason this role has been unrecognised is that, in contrast to their counterparts in Britain and America, wealthy continental Europeans have tended not to shout about their philanthropy, preferring to do it below the radar. Why is much debated: a less individualistic, Catholic culture? A reluctance to draw their wealth to the attention of the tax man? Events such as the Blue Auction suggest this is starting to change. And there are now leading European philanthropists willing to talk about their giving and urge others to do so, such as the Swiss billionaire Stephan Schmidheiny, who has given away hundreds of millions of euros to causes in Latin America.

In America and Britain the new generation of philanthropists have emphasised their determination to make a real impact with their giving, often by applying the sort of business thinking that helped them make their money to solving society's biggest problems. It remains to be seen if continental Europeans will embrace this philanthro-capitalism. Some critics think the rise in foundations in Germany, for example, has less to do with giving than with retaining control of family businesses.

Yet there are some promising signs. Etienne Eichenberger of Wise in Geneva, one of a new crop of continental philanthropy advisory firms, says he sees "more and more European families taking a strategic approach to their giving". The European Venture Philanthropy Association, founded in 2004 to promote innovative ways of giving, now boasts members from nine countries, including a magnificently named Italian outfit, Fondazione Oliver Twist.

Perhaps the biggest obstacle to even faster growth is that, compared with America and Britain, it can be hard to create a charitable foundation in some European countries and there are none of the tax advantages. Much may hang on the fate of an attempt under way in Brussels to create a new European foundation law.

Photo credit: guano/flickr

(Matthew Bishop is New York City bureau chief of The Economist. He is writing a book on philanthropy. His last piece about giving for Intelligent Life was "Robin Hood and the Ark".)