Philanthropy for a better Sweden

On Monday April 27 2015, Swedish Entrepreneurship Forum arranged a conference discussing philanthropy as an important factor for entrepreneurship, diversity and change in both the Swedish and the international economy. Prominent researchers in the field as well as well-known philanthropists, politicians and practitioners presented new research and participated in the discussions and the subsequent reception.

 

Philanthropy contributes to a better Sweden

Johan Eklund, CEO Swedish Entrepreneurship Forum and Professor JIBS, opened the conference by giving a presentation of Swedish Entrepreneurship Forum, Philanthropy Forum and the program of the day. He also invited Maria Rankka, CEO Stockholm Chamber of Commerce and co-founder of Philanthropy Forum, on stage. Maria Rankka stressed the importance of nourishing the Swedish debate on philanthropy and how it can contribute to the growth perspective.

Johan Eklund

– We have put philanthropy on the agenda during our four years working within Philanthropy forum. Philanthropy can contribute to making Stockholm and Sweden an even better place!

 

Two sides of the coin

The conference started out from an academic perspective and Pontus Braunerhjelm, Research Director, Professor and moderator invited Zoltan Acs, Professor London School of Economics to speak about Moral capital in the 21st century. At first he told the audience how he got into research on philanthropy.

– It started when I was asked to make a small business policy for entrepreneurship for the US. I said it can’t be done. I can’t make a policy that will make rich white men richer. Then I understood that entrepreneurship and innovation is on one side of the coin while moral capital and philanthropy is on the other.

Zoltan Acs stated that he hates Piketty (because he has written the best selling book). According to Acz, Piketty, after 600 pages, concludes that the current model of capitalism is not sustainable and that it will end up in revolution, collapse or by taxing the rich.

– My twist in the book Why philanthropy matters is that philanthropy is a necessary component of a capitalist society. Moral capital is when you let the rich people keep their money and use them for something good. Read about Leland Stanford for example. Ha gave up ten million dollars and some acres of land and created the most successful university in the world.

 

Capitalism, philanthropy and democracy

Zoltan Acs then discussed Joseph Schumpeter, capitalism, socialism and democracy. He underlined that Schumpeter saw entrepreneurs, the gifted few, as individuals driving the economy forward. Zoltan Acs said it is all about investing in the brightest.

Zoltan Acs

Schumpeter thought that socialism, where the state decides everything, could work. Why was Schumpeter wrong, Acs asked rhetorically. Two things happened. Socialism wasn’t democratic and the redistribution of wealth didn’t work, but philanthropy survived.

– I would say that we have ended up with capitalism, philanthropy and democracy. Philanthropy is a cultural phenomenon that you learn. It is about human nature, we have evolved it since we were in the caves looking out for each other.

 

Reinvent the Swedish model!

Piketty says the rate of return on capital is greater than the growth rate of the economy. Moral capital corrects this inequality, Zoltan Acs said. When the best and the brightest are creating million dollar companies it produces productivity and wealth. It leads to real wealth that can be invested to create opportunity which gives even more growth in a society.

Sweden has a strong history of moral capital with Alfred Nobel among others. It is time to reinvent the Swedish model and go back to the origin. We need to understand the options, either you go this way or turn out as Egypt or Argentina, Acz concluded.

 

Establish a European Journal of Philanthropy!

Charles Keidan, Philanthropy Practice Research Fellow, Centre for Giving and Philanthropy, City University London, was the next speaker. He talked on the theme Does philanthropy merit scholarly attention? and started out from the perspective that philanthropy means private resources used for public purposes based on the love of humanity in the civil society.

Charles Keidan

Charles Keidan thought that there has been a resistance to scholarship about philanthropy. In his own studies gathering data from 20 countries, 40 academic contacts including reviewing public listings he had covered the landscape of philanthropy education. Among the findings was the fact that the scale and scope now is changing towards a distinctive role for philanthropy in society: 11 of 20 universities now offer university based philanthropy education. There are also two academic chairs, 23 higher education institutions etc.

– A multidisciplinary engagement I personally think is the way to go. Also, there is need for establishing a European Journal of Philanthropy and also more courses on philanthropy, including US-style experimental ‘student philanthropy’ elements.

 

Education is key

After Zoltan Acs and Charles Keidan, Cristina Ljungberg, Founder Giving Wings, was invited on stage to be part of the following panel. She shared with the audience how she got engaged as a philanthropist.

Cristina Ljungberg

– It is not an amazing story, it is a part of who I am. As an American you often start doing voluntary work early. I went to the Institute of Philanthropy and have been inspired ever since. There should be many more of me here today!

The mentality towards philanthropy has changed, fundraisers have, for example, been more visible in the UK the last ten years, Cristina Ljungberg said.

– Education is a key. Most of us attending the Skoll Network are active afterwards. Philanthropy is appealing to everyone in the next generation.

Zoltan Acs confirmed that philanthropy is big in the US and now getting bigger in the UK, but still absent in the Scandinavian countries. He thought that there is a need for public debate, philanthropy should be a part of Scandinavian culture.

 

Philanthropy – not a response to market failure

Maria Rankka also mentioned the long history of philanthropy in Sweden.

– We had a proud history, then the 70s happened. Instead of copying the US we should align with our own past.

She believed that a new generation of entrepreneurs actually is building a broad culture around philanthropy. What is key in Sweden, she said, is to get rid of the idea that philanthropy a response to public market failure. It has a value in itself.

Panel 1

Zoltan Acs thought that Sweden needs to get rid of the tax debate. It is the wrong question. You need to raise an engaged discussion about the greater good, not only taxes.

Do you have any favorite legal reforms, Pontus Braunerhjelm asked. The panel was unanimous – restrict the foundations to have shorter life and bigger payouts. You do not want the money to get accumulated, Charles Keidan concluded.

 

Social impact investing for entrepreneurship and innovation

Karen E Wilson, Senior Fellow Breugel and Science, Technology and Innovation Directorate OECD, shared results from an OECD report on social impact investment (SII). Social impact investment means expecting social as well as financial returns and, according to Wilson, it’s a growing trend. New financing models are developing at multiple levels and in parallel to traditional markets. On the spectrum of capital we find investors ranging from financial-only to impact-only and the strategies depend on where one sits on that spectrum and a lot of experimenting with different approaches is currently happening. The market is evolving from both sides.

Karen Wilson

– Social impact investment cannot replace the public sector but it’s a way to inject new money and new solutions. It brings innovation into the system.

An SII taskforce was established at the G8 summit of 2013 and Karen Wilson is involved in writing a global report on the subject and thus building the evidence base. The report is investigating how to best address social needs with private funds as well as mapping the characteristics and attributes of social impact investment. Wilson also pointed out the importance of establishing measures to hinder “social washing”.  All in all, Wilson sees great promise in social impact investing but there is need for further studies to address the many persisting challenges.

– There is no trade-off in return expectations. You can do well on both financial and social measures. However, we need more evidence in order to create good policy around social impact investment.

 

Societal gains from investing in children

Professor Lars Hultkrantz, Örebro University, described research on social returns from investing in children, from which it is possible to make long term projections on society. Hultkrantz pointed to the fact that most research on investing in children is done in USA, a few studies in Europe and none in Sweden.

– Strange that we haven’t studied this in Sweden given that we brag about being at the forefront of childcare.

Lars Hultkrantz

Hultkrantz emphasized the usefulness of such research for long term societal projections.

– For example, school performance determines future wage, risk of drug abuse, social problems and many other things.

Some Swedish studies are finally underway and, luckily, the Swedish institutional context provides unique longitudinal data on the whole population over generations to the benefit of both Swedish and foreign researchers, Hultkrantz concluded.

 

Sound policy considers social context

Ulf Kristersson, the Deputy Chair of Committee on Finance from The Moderate Party, brought up the issue of wise public spending.

– Politics is full of people who want to spend other people’s money, but how do we spend our public money in the best way?

Ulf Kristersson

Kristersson thought that public money needs to generate measurable results, something which hasn’t been part of the Swedish model up until now.  There are general programs and extremely selective targeted instruments and nothing in between. If measuring is introduced, professionalism increases which means relying more on science and less on local politicians. Ulf Kristersson also highlighted the benefit of looking outside Swedish borders when formulating policy.

– Social welfare policy is created from and affected by domestic traditions but this should not be used as an excuse for not addressing problems and not seek inspiration from well-functioning solutions abroad.

All panelists agreed that solutions to social problems cannot be copied; the social context has to be taken into consideration in order for policy to have positive impact. Karen Wilson underlined the importance of philanthropy to generate social impact investments and Ulf Kristersson thought it very positive that Swedish interest in philanthropy is on the rise.

– We always think that we only need to do something when local institutions fail. This is not the way forward.

 Panel 2

Civil society innovations

Torbjörn Enström, Administrative Manager Fryshuset, described his journey from the private sector to non-profit Fryshuset and the shift in perspective it has entailed. According to Enström, Fryshuset started as an innovation. And, he added, we need to keep in mind that in the beginning, schools, libraries, day care centers etc were all innovations, now we take them for granted.

– Civil society should stand for innovations which the public sector should enable alongside the provision of a long term framework.

Torbjörn Enström

Enström also thought that municipalities/public sector should ask for better quality when buying services and be prepared to pay for success. The selection should be done by looking at impact. However, Enström warned, don’t let measuring and evaluation kill innovation!

 

Measure impact rather than costs

The philanthropist Mikael Ahlström, chairman and founder Procuritas, shared his thoughts on philanthropy. Ahlström has invested in a large number of companies, a socially oriented real estate company, VC funded start-ups and a number of Swedish films. In addition, he has founded two organizations.

Ahlström became a philanthropist because he wanted to give back to society using his knowledge from working in private equity. And, he added, because it’s fun! Over the years, the Swedish philanthropy sector has become more sophisticated and the interest is increasing.

Miakel Ahlström

– The current cost focus is holding Swedish civil society back. The sector will become increasingly professionalized, measuring impact rather than costs will be hugely beneficial.

 

Future of philanthropy in Sweden

Amelie Silfverstolpe, program director Axfoundation, spoke about the foundation’s new initiative “open the door” addressing the major challenge of integration in Sweden.

– We need to broaden the networks to include “new” swedes.

Silfverstolpe pointed out one strong trend in Swedish philanthropy today – increasing interest in how to invest to do good and looking at root causes rather than curing symptoms.

Amelie Silfverstolpe

The panel agreed that role models are important for increasing philanthropy in Sweden, people like Niklas Zennström, Daniel Ek and Antonia Ax:on Johnsson all create positive examples for future philanthropic engagements. Regarding future prospects for Swedish philanthropy the panel was optimistic, it will continue to grow and become a larger and more integrated part of society, they concluded.

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