Italy’s Charitable Alchemy

By Lester M. Salamon*

For those of us who are students of philanthropy and the third, or nonprofit, sector, the Amato Law, and the foundations to which it gave formal birth, are developments of truly historic importance. Almost overnight, as a direct result of this law, Italy was transformed from a country whose private philanthropic resources, on a per capita basis, were among the smallest in Europe, to perhaps the leading country in Europe in terms of per capita philanthropic assets under the control of private, grant-making foundations.

Indeed, while it may be blasphemous to suggest it, the emergence of Italy’s foundations of banking origin appears, from the outside, as a kind of  “immaculate conception”  akin to that other immaculate conception with which Italy has long been associated – a kind of miraculous creation that has produced a powerful force for good in the form of charitable resources that, thanks to the Amato and subsequent Ciampi laws, the wise stewardship of the boards of the banking foundations, and the good fortune of the banks in which these foundations are partly invested, have grown to a scale that, at least on a per capita basis, now rivals the assets of the entire foundation sector of my own country, which has long had powerful tax and other incentives encouraging the growth of private charitable foundations, and which has long considered itself the leader in such charitable endeavors.

I want to call the attention to the powerful contribution that Italian foundations of banking origin are in the process of making on the international stage, to philanthropy and the strengthening of civil society globally.  And they are making this contribution not chiefly through their grant-making, which remains mostly focused on Italy, but through the power of their example.

How can this be so?

The answer, I believe, lies in the fact that the experience of the Italian foundations of banking origin has illuminated an alternative route to amassing charitable assets that is gaining increased attention throughout the world, a route that I have called “Philanthropication thru Privatization.”

This is significant because without privately controlled charitable assets, it is almost impossible to foster a vibrant and independent civil society sector.  And without a vibrant and independent civil society sector, it is extremely difficult to establish and maintain democratic political institutions or a functioning market system. This is so because these organizations build the bonds of trust and reciprocity on which democracy and the market system ultimately depend, and because they mobilize individual initiative for the common good, give voice to the voiceless, and improve  the quality of life in countless other ways.

Unfortunately, however, such charitable assets are in critically short supply in many developing or transitional regions, and this despite some heroic efforts, encouraged by a number of northern foundations, to encourage the growth of community based philanthropic endowments in these areas.

Meantime, however, in many of the same regions where important foundation-building efforts are going starved for capital, enormous privatization sales are under way that are transferring huge stores of publicly owned or community-owned assets into private, often foreign, hands.

*Lester M. Salamon is a professor at the Johns Hopkins University, director of the Johns Hopkins Center for Civil Society Studies, and Director of the Philanthropication thru Privatization Initiative.