Foundations in Austria - Roles and visions

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Contents

  Contents  

1  Preface  1

2  Introduction  4

2.1  Description of the Europe-Wide Project  4

2.2  Structure of Thesis  6

3  Research Method  8

3.1  Description of the Research Method  9

3.1.1  Methodological Approach Chosen by the CCS  9

3.1.2  Changes Made for Austria  11

3.1.3  Theoretical Background  13

3.1.4  Sampling  16

3.1.5  Procedure  18

3.1.6  Analysis  19

3.2  Reasons and Discussion  21

4  Background  24

4.1  Historical Development  24

4.1.1  Ancient World  24

4.1.2  The Middle Ages  25

4.1.3  Modern Ages  26

4.1.4  19 th and 20 th Century  28

4.1.5  The Period Between the Two World Wars  29

4.1.6  National Socialist Period  30

4.1.7  Postwar Era  30

4.1.8  The 1970’s Until Today  31

4.1.9  Present Situation  32

4.1.10  Corporatism in Austria  34

4.2  Legal Issues  36

4.2.1  General Aspects  36

4.2.2  Purpose  37

4.2.3  Establishment  38

4.2.4  Governance  39

4.2.5  Transparency Requirements  40

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Contents

4.2.6  Aspects of Taxation  40

4.2.7  Funds  42

4.3  Justification of Foundations in a Modern Society  43

4.3.1  Theoretical Background  43

4.3.1.1  Heterogenity  43

4.3.1.2  Contract Failure  44

4.3.1.3  Neocorporatism  45

4.3.1.4  Economic Background  45

4.3.2  Empirical Evidence  47

4.3.3  Foundations and Society in Austria  48

4.4  Quantitative Profile  52

4.4.1  Relevance of Foundations within the NPO Sector  52

4.4.2  Population Structure  54

4.4.3  Private Foundations  54

4.4.4  Charitable Foundations  56

5  Roles  68

5.1  Theoretical Introduction  68

5.2  Roles of Foundations in Austria  74

5.2.1  Complementarity  76

5.2.2  Substitution  80

5.2.3  Innovation  82

5.2.4  Redistribution  85

5.2.5  Social and Policy Change  86

5.2.6  Preservation  87

5.2.7  Pluralism  89

5.2.8  Others  90

5.3  Summary of the Roles  93

6  Relevance and Visions  98

6.1  Civil Society and the Position of NPOs within Society  99

6.1.1  General Aspects  99

6.1.2  Civil Society in Austria  102

6.1.3  Categorisation of NPOs  103

6.1.4  Problems with Measuring Efficiency and Success  106

6.2  Structure of the NPO Sector  109

6.2.1  Social Relevance and Forms of Influence  109

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Contents

6.2.2  Institutional Networking  112

6.2.3  Business Administration Based on the Theory of Need for Organisations within  

  Social Economy  112

6.3  Visions and Perspectives  115

6.3.1  The Cluster Model  115

6.3.1.1  The Socio-Democratic Model  116

6.3.1.2  The State-Controlled Model  117

6.3.1.3  The Corporatist Model  118

6.3.1.4  The Liberal Model  119

6.3.1.5  The Peripheral Model  120

6.3.1.6  The Business Model  121

6.3.1.7  New Public Management  121

7  Welfare State  123

7.1  Introduction and Present Situation  123

7.1.1  Sociological Aspects  124

7.1.1.1  Emergence and Functions of the Welfare State  124

7.1.1.1.1  Approaches  125

7.1.1.1.2  Growth  126

7.1.1.1.3  Effects and Contradictions  127

7.1.1.1.4  Crisis  129

7.1.1.2  Forces of Welfare Production and Core Values  129

7.1.1.2.1  Fairness and Equality  131

7.1.1.2.2  Freedom  131

7.1.1.2.3  Security  132

7.1.1.2.4  Solidarity  132

7.1.1.2.5  Subsidiarity and Responsibility  133

7.1.1.3  Winners and Losers within the Welfare State  135

7.1.1.4  Wealth  137

7.2  The Influence of International Issues on Foundations  138

7.2.1  The European Union and Globalization  138

7.2.2  The International Dimension  143

8  NPOs in a Changing Environment  146

8.1  Political Changes  146

8.2  Social Changes  148

8.3  NPOs in Change  151

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Contents

8.4  Perspectives of the Welfare State  157

8.4.1  Current Development  157

8.4.1.1  Economy of the 21st Century Space for Social Needs  157

8.4.1.2  Needs for Reformation and General Conditions  162

8.4.1.3  Changes within the Tertiary Sector  164

9  Case Studies  168

9.1  Bank Austria Stiftung zur Förderung der wissenschaftlichen Arbeit an der WU Wien  169

9.1.1  Origin  170

9.1.2  Purpose  170

9.1.3  Structure  170

9.1.4  Activities  171

9.1.5  Role  171

9.1.6  Cooperations  173

9.1.7  Future and Visions  174

9.2  Dr Maria Schaumayer Stiftung  176

9.2.1  Origin  177

9.2.2  Purpose  177

9.2.3  Structure  178

9.2.4  Activities  179

9.2.5  Role  181

9.2.6  Legal Entity: Federal Foundation (BStFG)  181

9.2.7  Future and Visions  182

9.3  Anton Proksch Institut Genesungsheim Kalksburg  184

9.3.1  Origin  185

9.3.2  Purpose  186

9.3.3  Structure and Finances  186

9.3.4  Activities  187

9.3.5  Role  190

9.3.6  PR Marketing and Cooperations  191

9.3.7  Future and Visions  192

9.4  4 Pfoten Privatstiftung  194

9.4.1  Origin and Development  195

9.4.2  Purpose  195

9.4.3  Structure  196

9.4.4  Activities  196

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Contents

9.4.5  Role  197

9.4.6  PR Marketing and Cooperations  198

9.4.7  Legal Entity: Pivate Foundation  199

9.4.8  Future and Visions  199

9.5  Stiftung Kindertraum Privtastiftung  201

9.5.1  Origin  202

9.5.2  Purpose and Vision  202

9.5.3  Structure  202

9.5.4  Activities  203

9.5.5  Role  204

9.5.6  PR Marketing and Cooperations  205

9.5.7  Legal Entity: Private Foundation  206

9.5.8  Future and Visions  206

9.6  Arnold Schönberg Center Privatstiftung  208

9.6.1  Origin and Historical Background  209

9.6.2  Purpose  209

9.6.3  Structure and Finances  210

9.6.4  Activities  211

9.6.5  Role  212

9.6.6  PR Marketing and Cooperations  213

9.6.7  Legal Entity: Private Foundation  214

9.6.8  Future and Visions  215

10  Summary and Conclusions  218

10.1  Central Results  218

10.2  Consequences and Expectations  220

11  Literature and Other Data Sources  222

12  Annexe  234

12.1  Interview Guideline for Experts Representatives and Policy Makers  234

12.2  List of Interviews  237

12.2.1  Experts and Policy Makers  237

12.2.2  Case Studies  238

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Tables

  Tables  

Table 1:  Austrian Research Sample  17

Table 2:  ICNPO-groups (source: Salamon Anheier 1992 p 18)  18

Table 3:  Contrasting of BStFG and PSG (own visaulization)  41

Table 4:  NPOs (source: Heitzmann 2001)  53

Table 5:  Public-welfare foundations (source: Grafl 2000 pp 70 and own research August 2002)  57

Table 6:  Charitable Foundations based on Provincial Acts according to ICNPO (source: Grafl  

2000,  p 70 and own research August 2002)  63

Table 7:  Foundations based on the BStFG according to the ICNPO-Groups (source: Grafl  2000

  p 70 and own research August 2002)  65

Table 8:  Austrian Role Model (own visualization)  94

Table 9:  Types of Activities of NPOs (adapted from Simsa 2001 p 130)  104

Table 10:  The Organisation of the Nonprofit-sector (adapted from Wex 1998 in Arbeitskreis  

  Nonprofit-Organisationen 1998 p 255)  106

Table 11:  Evaluation of organisational effectiveness in profit and nonprofit organisations  

  (adapted from Murray Tassie 1994 p 310 quoted in Simsa 2001 p 145)  107

Table 12:  Contrasting features of profit organisations and socio-economic institutions (adapted  

  from Schober-Schmutz 2000 in Schauer et al 2000 p 184)  114

Table 13:  Comparison of the public and the private sector model (Stewart Ranson 1988 p  

15,  quoted in Naschold 1995 p 55)  122

Table 14:  Effects and contradictions of welfare-state policy (adapted from Lessenich 2000 in  

  Allmendinger et al 2000 p 61)  128

Table 15:  Forms of Subsidiary and Responsibility in the Welfare State (adapted from Möhle  

2001,  p 181)  135

Table 16  Communication pattern between NPOs and the EU (adapted from Rondo-Bovetto  

2002,  in Badelt 2002 p 643)  139

Table 17:  Models of State-NPO Relations (adapted from Gidron et al 1992 quoted in Toepler  

1996,  p 188)  146

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Charts

Charts

Chart 1: Connection between goals, instructions and methods .......................................................8 Chart 2: Institutional Triangle (adapted from Badelt, 1998, p. 23) ...............................................46 Chart 3: Austria’s population, total: 8,121,300 (source: Statistik Austria

(www.statistik.at/statistische_uebersichten/deutsch/pdf/k14t_1.pdf) ...................................54 Chart 4: Private foundations, total: 2,306 (source: own research in company register, August 28, 2002)......................................................................................................................................55 Chart 5: Private foundations per 100,000 inhabitants (source: own research in company register, August 28, 2002) ...................................................................................................................56 Chart 6: Distribution of charitable foundations over the ICNPO-groups, total 475 (source: own research, August 2002) ..........................................................................................................59 Chart 7: Distribution of charitable foundations over the provinces, total: 475 (source: own research, August 2002) ..........................................................................................................60 Chart 8: Austrian regions according to their geographical size (source: Compact Verlag, 1985, p.689 ......................................................................................................................................61 Chart 9: Charitable federal foundations per 100,000 inhabitants according to provinces, total (Austrian) average: 5.85 (source: own research, August 2002) ............................................62 Chart 10: Charitable foundations established through Provincial Foundations Acts, total 261 (source: Grafl, 2000, p. 70 and own research, August 2002) ................................................64 Chart 11: Charitable foundations established through BStFG (source: Grafl, 2000, p. 71 and own research, August 2002) ..........................................................................................................66 Chart 12: Influencing strategies of NPOs (adapted from Simsa, 2000, quoted in Schauer et al., 2000, p. 200)........................................................................................................................110 Chart 13: Target system of socio-economic organisations (adapted from Schober-Schmutz, 2000 in Schauer et al., 2000, p. 183) ............................................................................................113 Chart 14: Elements of the broad security term (taken from Meyers, 1993, p. 101) ....................144 Chart 15: Stakeholder profile of the ‚Bank-Austria-Stiftung zur Förderung der wissenschaftlichen Arbeit an der WU Wien’ (own visualization) ......................................169 Chart 16: Stakeholder profile of the ‘Dr. Maria Schaumayer Stiftung’ (own visua lization) ......176 Chart 17:Stakeholder profile of the ‘Anton Proksch Institut Genesungsheim Kalksburg’ (own visualization) .......................................................................................................................184 Chart 18: Stakeholder profile of the ‘4 Pfoten Privatstiftung’ (own visualization) ....................194 Chart 19: Stakeholder profile of the ‘Stiftung Kindertraum Privatstiftung’ (own visualization) 201 Chart 20: Stakeholder profile of the ‘Arnold Schönberg Center Privatstiftung’ (own visualization) .......................................................................................................................208

1 Preface

1 Preface

As a methodological introduction and explanation it is important to note that the empirical section of this doctoral thesis emerged as part of an international research project dealing with the roles and future of foundations in various countries. It was planned and coordinated by the Centre for Civil society (CCS) of the London School of Economics (LSE).

With the participation of 26 European countries as well as the USA background data on this topic were collected, case studies completed and expert interviews carried out with the goal of examining the current position of foundations in each country and the future prospects held within this sector. The result of this project was a separate report for each country which will be referred to in this paper.

In each country, this research and analysis process took place within a team, that is why particular findings and facts described in this doctoral thesis are also to be found in the final Austrian country report of the project and, additionally, in the master’s thesis of Reinhard Haslinger, the author's team member. As a result, there may be some selective overlappings in certain cases. In such cases, references to the report will be provided as mentioned.

All empirical steps necessary for the project have been taken in tight coordination and mutual assistance. In order to clearly define each team member's areas of main research at the beginning, the issues were distributed as follows: Data on the historical development of the Austrian foundation sector were collected by the author while Reinhard Haslinger dealt with the legal background. The quantitative part was written in cooperation and is therefore a joint effort.

The division of tasks is more evident for the case studies. Those of the ‘Dr. Maria Schaumayer Foundation’, the ‘Bank Austria Foundation for the Promotion of Scie nce at the Vienna University of Economics and Business Administration’, the ‘Anton-Proksch-Institut Genesungsheim Kalksburg’, the ‘Arnold Schönberg Center Private Foundation’, the ‘4 Pfoten Private Foundation’ as well as the ‘Stiftung Kindertraum Private Foundation’ have been carried out by the author while Reinhard Haslinger has been responsible for the ‘Leopold Museum’, the ‘Erwin Ringel Foundation’, the ‘Caritas Socialis Private Foundation’ and, finally, the ‘Köck Private Foundation’. Statements and theories on those institutions are based on the corresponding results.

1 Preface

In this thesis special emphasis was put on the historical aspect and the welfare state, the economic and political surroundings of the NPO sector as well as the position of NPOs in Austria whereas Reinhard Haslinger went into greater details with the relevant legal issues and the quantitative profile of the Austrian foundation sector. Indeed, those aspects will also be briefly discussed in this paper. The same is true for the splitting of the case studies as mentioned above.

The basic purpose of this doctoral thesis is generally congruent with the question of the international research project: The aim is to find out about the roles of foundations in Austria as well as the examination of their quantitative profile, the legal background and the historical development of the foundation sector. This is to be completed by a discussion of the environment this sector exists in and the aspect of the welfare-state system which is very distinct in Austria and often induces the question whether it makes foundations redundant or not. In this connection, it is important to keep in mind that there are not only charitable foundations in Austria but also those serving private purposes only as there might be differences regarding the relevance associated with them.

Social and political changes are present everywhere. Both striving for independence of many European countries on one hand as well as the expansion of the European Union (EU) on the other hand result in dynamic circumstances and in insecurity about the future. Thus, it is not surprising that the question for a materially secured living and for a social net guaranteeing survival for everybody is more pertinent than ever.

In Austria, the presence of a strong welfare-state system covers most of the issues connected with it, which is why the NPO sector, and especially foundations, have been rather neglected by politics and the media so far. Consequently, scientific research projects have not yet focused on the issue of foundations in such great depth.

So the reason for the choice of this topic is twofold: Firstly, to update and integrate the data about the structure and activities of Austrian foundations and, secondly, to obtain comparability with other countries in the course of participating at the multinational research project. As it has turned out, only limited information is available on the present situation of foundations in Austria. Most of the figures given had to be raised empirically, and some information about noncharity private foundations are not accessible at all.

1 Preface

Still, the public-welfare institutions have been subject to detailed examination and the present thesis offers an overview of the foundation scene in Austria as well as its perspectives. Both theoretical information and the findings of selective case studies and expert interviews have been included in order to have extensive insight into this field.

This exploration of the Austrian foundation scene will include a theoretical description of backgrounds and surroundings as well as an empirical examination which will firstly describe the present situation including number, activities and legal issues regarding foundations and, secondly, present six detailed case studies of institutions w ith different purposes and legal entities. This section will bridge the theoretical and the empirical parts by showing what implications the situation has on particular foundations thereby allowing an insight into the Austrian foundation practice, and highlighting their successes and problems as well as their own future expectations.

The thesis includes more theoretical information than required for the international project and goes into greater detail concerning the situation in Austria. Still, the research was guided by the aim of finding out more general rather than individual or specific aspects so as to cast light on the foundation sector on a broad basis. This ensures conclusions valid for virtually all foundations in every field of activity irrespective of the particular law they happen to be based on.

Starting from the project, the main areas of this thesis are the social welfare state in connection with foundations and their significance as well as the roles foundations play in Austria. The empirical material was utilized and interpreted with regard to this specification. In other words, although data have been used by the team, the hypothesis and arguments presented in this doctoral thesis were elaborated for this purpose only. The common research represents the basis for both the project and the background for the two theses, but the questions raised additionally and individually constitute the main part of this thesis.

Due to the close association between the researchers, the same argumentation applies the other way round: Quotations and references made in the master’s thesis of Reinhard Haslinger will lead on to the report and therefore be the link to this doctoral thesis as a data source.

2 Introduction

2 Introduction

2.1 Description of the Europe-Wide Project

The starting point of this doctoral thesis was a Europe-wide research project aiming at a comparison of the roles foundations play and the visions connected with them in the participating countries. Under the central coordination of the Centre for Civil society (CCS) at the London School of Economics headed by Mr. Helmut Anheier, 23 European nations as well as the USA joined in. Because of this, results are not limited to the EU member countries.

The CCS elabourated five research memoranda which were distributed to the researchers serving as the guideline of the whole project. Thus, its basic structure and information to be seeked were predetermined and not subject to discussion for the author of this thesis. Still, as will be explained later in this section, specific changes of the general demands had to be made for Austria.

As a first step, a team of researchers was formed for each country. Along with the given time schedule and general guidelines, those groups were supposed to work autonomously and follow their own individual project structure. In Austria the team consisted of three members, one in the supervising and coordinating position whilst the other two (the author and a colleague) have been responsible for the operative parts.

The study is based on both theoretical and empirical data. While the historical background, quantitative profile, and legal issues had to be raised by literature research and several telephone and Internet requests, the empirical part involved direct contact with several foundations. The sampling strategy had previously been determined, but the actual selection and contact procedure were up to the discretion of each country.

At this point, it is necessary to describe which guidelines had been laid out by the CCS and where completions had to be made for the thesis. First of all, the CCS proposed the definitions of core terms such as foundations, roles as well as visions and gave a classification of foundations by type of operation and field of activity plus a categorisation of founders (CCS, Research Memo 1, 2002).

2 Introduction

The theoretical roles and visions were specified by models. These underlying models are described in section 5.1 explaining which theoretical roles foundations might play and section 6.3, dealing with the issue of visions. In the course of the research, accordances, mismatches and possible further roles were analysed.

Then the demanded sampling procedure and case study selection were introduced (CCS, Research Memo 2, 2002). After stating clearly why quantitative research and randomization would be neglected in favour of a qualitative approach, the peer review process was explained expecting each country’s sample to be supervised and checked by two other participating teams. Following this, the structure of the sample was presented and some instructions given for the selection process concerning number and types of foundations and experts.

The next point was the checklists for data collection including all research requests and already offering some proposals for structuring the material (CCS, Research Memo 3, 2002). The CCS also specified the expert and policy interview schedule. The Research Memo 4 (CCS, 2003) contains the interview guideline in terms of questions to ask, which were not surprisingly rather general in scope and had to be individually adapted in the course of the research.

The final instructions concerned the Country Reports and the time schedule (CCS, Research Memo 5, 2002). They outlined the chapters of the final papers and their lengths by exactly describing the expected contents and structure. The project schedule gave an orientation regarding the research progress and the steps to be completed in sequence starting with March 2002 notifying the final conference for October 2003.

The Austrian Country Report i s the basis for this thesis and will be referred to frequently (cf. preface) while this thesis will exceed the frame proposed for the projects by the aspects mentioned in section 1.

2 Introduction

2.2 Structure of Thesis

This section provides an overview of the present thesis by giving a short summary of the chapters and their basic contents. First of all, the research method will be described and discussed in greater detail in section 3 which will encompass the arguments for the choice of the method as well as the sample, fo llowed by the research procedure and analysis. Of course, the pros and cons of the methods applied will also be covered.

Next, the institutional and economic background of the wide field of foundations will be the focal point in chapter 4. After a description of the historical development of this sector, a compact explanation of the legal framework for foundations will be shown, putting emphasis on the comparison of two laws governing this area. The background of foundations also encompasses the discussion of their justification in present days regarding society and economy. Empirical data to describe the current situation in Austria will complete this chapter.

An important aspect of foundations are their roles within society. This issue will be the subject of section 5 where theoretical information on role models will be included, followed by a description of the roles as well as the respective relevance foundations have in Austria. This part is based on the information gained in the course of the interviews together with a close examination of the material submitted by the institutions contacted.

The points raised are based on empirical research and analysis, that is, this chapter has to be interpreted specifically and especially for Austria. It provides an overview of the Austrian foundation scene and how it can be structured. As a conclusion, a new role model of foundations applicable to practice in Austria will be developed.

Section 6 completes the picture of Austrian foundations by dealing with their relevance and visions. In this connection it is essential to pay attention to the definition of ‘visions’ proposed by the CCS for the research project which clearly deviates from what one would spontaneously expect of the term. In contrast to this common understanding, here ‘visions’ comprise the present situation and the self- image of foundations rather that a future-oriented perspective.

The aim of this section is to show how foundations are embodied in society and which conditions promote their exsistence and which are obstructive to it. Moreover, the theoretical

2 Introduction

basis of the foundation sector gives an insight into connected socio-economic theories. The proposed cluster model of visions finally offers possible sets of visions regarding the foundation sector in Austria to round off the roles discussed in chapter 5.

After the description of Austria’s NPO sector and its position within society as well as the issue of civil society which is particularly important for foundations, the structure of this sector will be described on a more general level encompassing all NPOs thereby referring to foundations as one subtype. Subsequently, the different models underlying the visions and perspectives will be introduced.

To provide an extensive picture of the foundation sector in Austria as a whole, section 7 takes a step away from foundations themselves by discussing the general topic of the welfare state as it is found in Austria. The welfare-state system is a decisive factor concerning the relevance of charity institutions. After the system is presented, the social structure will be dealt with, followed by the discussion of the effects the European Union and its extension may well have on domestic foundations followed by a more general description of the international perspective.

Chapter 8 deals with the transformations of foundations’ environment and in how far these affect them. The interconnection of foundations within society will also be described. Special emphasis will be placed on social and political changes as well as on the foundations themselves. Thus, internal and external factors will also be given some attention. Apart from that, starting with current developments emerging trends and respective forecasts will be mentioned.

As the main part of empirical research deals with concrete foundations, several case studies have been elaborated which will finally constitute chapter 9. It comprises detailed presentations of the following six Austrian institutions: The ‘Bank-Austria Foundation for the Promotion of Science and Research at the Vienna University of Economics and Business Administration’, the ‘Dr.-Maria-Schaumayer-Foundation’, the ‘Anton-Proksch-Institut Genesungsheim Kalksburg’, the ‘4 Pfoten Private Foundation’, the ‘Stiftung Kindertraum Private Foundation’ and the ‘Arnold Schönberg Center Private Foundation’.

Lastly, section 10 closes the circle and offers conclusions and implications regarding the situation of the Austrian foundation sector by briefly suming up and highlighting the main facts under discus sion.

3 Research Method

3 Research Method

Generally, the guidelines from the CCS specified the research method, process, schedule and the extension of the samples as well as the contents of the interviews (cf. annexe). In this section, an explanation of the research design applied in the course of the international project will be offered to ensure the reader fully unterstands this basis for further steps in the project. To make the process clear, the following graph will illustrate the connection between research goals, CCS instructions and methods applied.

Chart 1: Connection between goals, instructions and methods

3 Research Method

3.1 Description of the Research Method

3.1.1 Methodological Approach Chosen by the CCS

This section addresses the research design proposed for the international project, and then gives an overview of the sample and a description of the procedure applied. Finally the additional information provided within this thesis will be summarised.

For this study, the guiding questions that should lead to corresponding theories, were the following:

• What are the roles foundations perform in Austria? Are they important or can the responsibilities be covered by others?

• Have the activities of foundations changed? Are they conservative and traditional or progressive and innovative?

• Have the purposes of foundations changed in the course of time?

• Are they linked with the state’s political and/or economic conditions such as the need for social policy and jobs in the 1960’s or the general access to education in the 1970’s?

• What visions do representatives and experts have? Are changes expected for the future? Does the common European market play a role?

• What relevance if any do non-charitable private foundations have?

In order to gain a comparable overview of the situation concerning foundatio ns in various countries, a centralized standard definition for foundations had to be applied as a guiding concept for the international research project (cf. section 5.1).

Furthermore, a classification scheme was introduced as an orientation for the structuring procedure. Regarding the types of foundations, grant- making, mixed and operating organisations

3 Research Method

were distinguished, while the type of founder can be identified stating whether it is an individual, corporate, community or government-created/-sponsored foundation.

Due to the complexity and the heterogenous structure of the foundation landscape, a random sample was not aimed at right from the beginning because, as already discussed, quantitative methods were not suitable (CCS, Research Memo 2, p. 1). The goal of the project was rather to gain an overview of the foundation scapes of the participating countries as well as an insight into the common foundation practices which should be raised by numerous case studies of organisations operating in various f ields and in different ways. Thus, the sample was not supposed to be representative in terms of statistics, but to allow for inductive conclusions that contribute to a general understanding of this sector.

The project plan of the CCS also included the audition of the samples by one to two other countries for each participant. In our case the Czech and the German teams were responsible. After these cross-examinations of the suggestions for selection among the participants. The chosen samples were approved by the CCS thereby giving the project groups the go-ahead.

As explorative qualitative interviews, case studies and content analysis were chosen by the CCS for the international project, a short methodological explanation will be given at this point. In such interviews, the knowledge, experience and attitudes of the interview partner are of interest while the narrative moment constitutes the focus (Kepper, 1994, pp. 36). During a conversation, several techniques are possible, and three principles are adhered to:

Openness reflects the search process implying that there are no predetermined limits at the beginning of the research process. The researcher is open for new inputs and flexible to adjust the direction of the process if some relevant info off the envis aged research line is discovered. Communicativity, the second principle, represents the understanding aimed at. That is, it ought to be possible to communicate in an understandable manner and to keep the conversation going. Finally, the target of typologisation is a systematic characterisation. A categorisation of the information gained is important in order to keep an overview of what has been said and what to associate the findings with.

A special kind of explorative interview that was applied in this research process is the expert interview. ‘Experts’ are defined as those people who have a certain authority on account of their

3 Research Method

knowledge (Kepper, 1994, pp. 40). The open conversation allows for touching rather complex issues here.

And, case studies were proposed that included interviews with representatives of foundations as well as external stakeholders and were completed with an analysis of the content of written material on the foundations selected. This selection was also defined by the CCS which structured the sample according to the foundations’ purposes and years of existence and so determined the number of institutions for each country.

This specific form of research, the individual case study, is not a special method, but rather a research approach consisting in “ […] the extensive and individual examination of social units.” (Kepper, 1994, p. 120). In other words, the approach describes the perspective from which an empirical phenomenon is examined and explained while the method means the specific way it is implemented.

The third important aspect of the research method applied was the content analysis of both the interviews as well as the written material provided by the foundations. It represents an empirical method for a systematic, intersubjetively understandable description of content-related and formal features of statements and information (Alemann, 1995, pp. 120). The same holds true for document analysis. It can be applied for various reasons. Clearly, it is very important that the research object is not altered by this method, moreover, it can be reproduced or repeated for the same object with a modified instrument.

In addition to these empirical research methods, secondary analysis had to be done so as to get a picture of the theoretical background of the foundation sector and the state of the art regarding previous research in this area. Consequently, previous studies, statistics, handbooks and other relevant material were consulted.

3.1.2 Changes Made for Austria

At this point it is important to highlight again that both the qualitative and the quantitative methods as well as the structure of the interviews and the sample were predetermined by the CCS (Research Memoranda 1 to 5, 2002). Thus, the individual leeway for the participants was already limited at the beginning of the research process. Some adaptations, however, were made

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as the domestic situation did not always fit into the international scheme. Those changes will be referred to at the corresponding points.

In Austria, it was impossible to precisely associate the present, predominant institutions with the types of foundations given, but it has been tried to be as accurate as possible with the categorisation by the detailed identification of the organisations’ activities and the appropriate association with the respective groups. What has been taken into account furthermore is the classification by the major field of activity according to the corresponding ICNPO-group (CCS, Research Memo 1, pp. 5), as already explained in the chapter dealing with quantitative issues (cf. section 4.4). In other words, the proposed categorisation has not been applied exactly but following a slightly modified scheme.

Another aspect is the twofold legal basis of the foundation scene that is unique in Austria as there are the two parallel laws governing foundations, the ‘Bundesstiftungs- und Fondsgesetz’ (abbrev. BStFG, literally Federal Foundations and Funds Act) and the ‘Privatstiftungsgesetz’ (abbrev. PSG, literally Private Foundations Act) (cf. section 4.2). Taking this into account, a new sample structure was introduced on the current situation in Austria. The distinction between ‘old’ and ‘new’ was made according to the differentiation between the BStFG of 1974 and the PSG of 1993 as this criterion of the legal basis seemed to be more sound in this connection. It is worth mentioning that only PSG foundations with a public-welfare purpose were considered for case studies. Although there are still some new establishments based on the BStFG, most new founders choose the PSG as the legal background for their institutions since it allows for more flexibility (cf. section 4.2).

As research has shown, the main period regarding the establishment of foundations in Austria took place between 1970 and 2000 (cf. section 4.1). Regarding the fields of activites (the classification scheme is described in section 3.1.4 in great detail, cf. table 2) have developed as follows: ICNPO 1 (culture, sports and leisure time) emerged during this time, ICNPO 2 (education and research) had its peak then and ICNPO 4 (social services) has remained relatively constant since earlier decades (cf. section 4.1). That is why the decision regarding ‘old’ or ‘new’ between age and new (1993) or old law has been made in favour of the latter one as the outcome will be of much more relevance that way.

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The most important change was due to the fact that in the course of the interviews it was not appropriate to ask all interviewees the same questions. The external stakeholders usually did not have enough knowledge concerning the structure of the foundation sector which would have been necessary to answer the questions. Hence, the guidelines were adapted to the individual situations of each partner.

3.1.3 Theoretical Background

While the descriptive data’s purpose is to give a picture of the current situation, it is the purpose of the qualitative research to generate theories on the areas examined. Thus, quantitative research aims at measuring and obtaining comparable figures about the topic under examination. It is based on statistical methods as well as hypotheses to be examined and satisfies the usual criteria applied to such calculations.

In contrast to this, the starting point of qualitative research is the assumption that the construction of reality is based on a subjective and active process (Lueger, 2000, p. 18). Theoretically, qualitative research is person-related (Kepper, 1994, pp. 16). Thus, the methods comprise the collection and analysis of human statements and behaviour which means they depend on written, oral or observable expressions.

The object of qualitative research is the sociological content including opinions, attitudes or motives with the aim of realization, description and understanding of psychological and sociological connections, but not t heir measurement. Its utilization is targeted at a complete coverage as far as possible as well as an interpretation of those aspects relevant for the topic in order to gain an insight in the problem dimensions as seen by the interviewees.

The qualitative perspective aims at a compressed description of the social reality and its constitutive subjects (Alemann, 1995, pp. 58). Qualitative researchers should first of all be good listeners and observers with the intention not to have any undue influence on the empirical phenomenon being examined. Given this, the approach is open and considers the information provided by the research objects or persons. The outcome of qualitative research is the explanation and interpretation of behaviour by constructing meanings.

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In contrast to quantitative methods, there are no standardized stimuli to provoke precise reactions, qualitative research encounters the phenomena without prior assumptions or the aim of reconstructing them. It is not guided by a hypothesis but rather by questions to be answered. The advantage of this approach is that information can be generated that would not have been considered before, therefore the scope of available knowledge is wider. Conversely, it is more difficult to achieve methodological control.

To compare quantitative and qualitative research, a brief comparison will now follow on this point. Regarding validity, there are crucial differences to be distinguished. Quantitative methods strive to discover general patterns of causal nature as fa r as possible which ought to cross the borders of laboratories (which is called external vaidity). Moreover, hypotheses are tested whereby rejections of the false ones leads to the results (internal validity). The constructs mentioned in the hypothesis are operationalized and measured by the utilization of variables.

Here, the appropriate terms are construct- and criterion validity. They aim at the evaluation of these variables regarding to what extent they are suitable to measure the underlying constructs. Qualitative researchers, however, talk about communicative and ecological validity as there are no such variables. The first term refers to the results gained which are, in another communicative process, presented to the interviewee. The researcher examines the reactions thereby putting his/her own explainations and interpretations to the test. Thus, the degree of validity depends on the mutual agreement of researcher and interview partner.

Ecological validity, however, deals with the behaviour of the interviewee during the conversation which is regarded as situation-specific element of an extensive behavioural system. It is high if the test surroundings trigger a clear set of behaviours which occur in the social environment of the interviewee. In other words, the situation must offer so many stimuli that the broadest possible cluster of individual behaviours is shown.

As far as reliability is concerned, there are theoretical tests for quantitative instruments estimating how far they actually measure wha t they are supposed to, which is not possible with qualitative research. Therefore, the terms validity and reliability are not traditionally included in this field of research.

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As a rule, a qualitative interview seeks to systematically acquire information through targeted questions in order to examine the attitudes, opinions, facts and motivations involved (Alemann, 1995a, p. 170). For this project, semi- structured interviews were selected as the individual background of each interview partner had to be taken into account. Thus, it would not have been useful to confront everybody with exactly the same questions and possibilities of an answer. This would have dramatically reduced the amount of information uncovered.

Expert interviews are located in the middle of the continuum between a low and a high structure (Alemann, 1995, p. 117). While standardisation factually undermines experts, which they generally disapprove of, a guideline-oriented interview allows for the possibility of describing facts from the experts’ own perspective and environment. So, researchers might be obstructive to themselves by insisting on standardization as mentioned above.

The term ‘social unit’ mentioned above subsummizes persons, groups, organisations or even cultures (Reinecker, 1984, p. 277, quoted in Kepper, 1994, p. 120) and the analysis of each of these units can be seen as a complete, independent examination (Kepper, 1994, p. 120). In this respect, it is a way of rearranging the existing material and information while still maintaining the character of the research object.

The qualitative case study is characterized by the selection of one individual social element as research object and unit (Alemann, 1995, p. 60). However, the problem concerning this method is the lack of a control group, and therefore the impossibility of testing a causal hypothesis. That is why case studies are often subject to harsh criticism. Yet, for empirical scientists, case studies are not a specific method but tend toward a research approach. As the objective is to gain as much information as possible, this already implies that studies encompassing high numbers of cases are contraindicated.

Qualitative content analysis is a technique to identify and describe the linguistic features of a text to draw conclusions about non- linguistic characteristics of people and social aggregates (Alemann, 1995a, p. 173). Thus, it is an instrument to ascertain meanings and contents applied to spoken and written information. Being a way to analyse the data gained by explorative interviews, it is a method of analysis often combined with this form of obtaining data.

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3.1.4 Sampling

As a general guideline for the project (cf. section 3.1), a structure was defined by the CCS that split the sample into ‘older’ and ‘younger’ institutions and what distinguished them according to the dimension leaving optional country-specific forms on the second dimension. The required types were further separated into grant- making, operating and corporate foundations, community foundations were suggested for the optional group.

In the following, the composition of the Austrian sample will be described and explained. The matrix proposed in the first run contained 17 foundations and was oriented according to an individual scheme. After having collected data about foundations in Austria which turned out to be rather difficult, as there is no central administration or any reference for information, numerous foundations were selected in the first run according to their field of activity, legal basis and their y ears of existence from which 17 remained. Many organisations, especially private foundations without public-welfare purposes, did not reply or were assessed as being unsuitable for elaborating a case study because the material was not sufficient, or the fo undation’s purpose did not fit into the scheme, or was not really clear.

Generally, private foundations serving private purposes have only marginally been the subject of the present research project as the general topic concerns public welfare institutions. As far as there are private foundations serving a charitable purpose, they have been included, especially because they were only founded on this basis because it allows for more flexibility regarding internal structures and processes. In these cases, the legal entity of a private foundation has already been explored.

These encompass the ‘4 Pfoten Private Foundation’, the ‘Caritas Socialis Private Foundation’, the ‘Arnold Schönberg Center Private Foundation’, the ‘Stiftung Kindertraum Private Foundation’ and the ‘Leopold Foundation’. These and the foundations based on the BStFG are easier to compare with institutions of other countries than the non-charitable private foundations. Their purposes are geared towards an increase in public welfare and they can be classified according to their fields of activity (cf. section 4.3, table 3).

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The selected institutions were then contacted again for material, and additional research led to new insights concerning both the actual activities of those contacted and regarding the existence of further foundations which seemed to be of relevance for the project.

Initially, the 17 foundations were contacted for cooperation and information. According to the willingness of the representatives and the material placed at our team’s disposal, a small number of ten potential case studies remained. The instructions demanded the number of ten to 17 foundations for countries with smaller foundation sectors (CCS, Research Memo 2, 2002, p. 3) to which Austria definitely belongs.

So for Austria, the final sample consisted of ten foundations again selected out of the 17 according to their suitability, their readiness to cooperate and the relevance of the information submitted. It was composed as follows:

Table 1: Austrian Research Sample

As there are two laws governing the Austrian foundation sector (cf. section 4.2), a distinction between them was made. Moreover, the question of being operative or only making grants was also taken into consideration. The abbreviation ‘PSt’ represents the term ‘Privatstiftung’ (literally: private foundation) that has to be part of the name of each institution founded according to the PSG. As corporate foundations do not play a relevant role in Austria, this category proposed by the CCS was neglected in favour of the other two.

Still, there are also public-welfare foundations governed by the PSG whose role is completely different and similar to the ones’ established through the BStFG or a Provincial Act. That is why they have been integrated into the research and sampling procedure and have likewise been made objects of case studies. In these cases, the PSG has been chosen because it allows for more

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flexibility regarding the structure and the procedures as well as the administration and accountability of the foundations still following a charitable purpose.

The numbers in the brackets indicate the foundations’ association with the corresponding ICNPO-group of the International Classification of NPOs which structures the organisations along twelve content factors into the ICNPO-groups. The table below shows the groups and the fields of purposes that are associated with them.

Table 2: ICNPO-groups (source: Salamon & Anheier, 1992, p. 18)

Although there are 13 groups to be distinguished. only the first five listed in the table (p. 43) have been included. The reason for this limitation is the fact that the demanded number of foundations to be examined in Austria did not allow for a complete cross-section of all groups. That is why the chioce was made for those where the majority of foundations are active, in other words, which are most characteristic for Austria.

3.1.5 Procedure

Subsequently, a detailed presentation of the research process will be given by a description of the single steps, the discussion of their pros and cons and their methodological and practical consequences.

So after the sample had been established, the documents of the foundations selected were analysed for relevant information about the purpose of the foundations, their establishment,

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development, financial structure, organigrams, etc. as a next step. During the same phase, a questionnaire was designed – again according to the demands of the CCS (cf. annexe) – that should be applied to the interviews. The questions were open-ended in order to get as much information as possible from the interviewees and to leave them the space for responding in their own way.

Afterwards, the representatives of the foundations were asked for an interview to take a closer look at their practice, aims, success, etc. In the course of the conversations, there was also an attempt to identify crucial external stakeholders who were later contacted with the intention of getting an interview, too. The objective was to gain as much knowledge as possible about all aspects of the institutions, their purposes and cooperation partners.

At the same time, experts on economy, culture and NPOs as well as policy makers were selected according to their affinity to the foundation sector and then also invited to interviews. The CCSinstructions demanded eight to ten in Austria’s case (CCS, Research Memo 2, 2002, p. 4), the final number done was twelve. For the politicians it was also necessary to have a fair distribution of respondents from the various political parties. However, in practice this was not always possible because the willingness to cooperate varied (cf. section 3.6).

Finally, the data collected and the information gained were utilized for two purposes: Firstly, detailed and individual case studies were elaborated (cf. section 9 and Haslinger, 2003) describing all aspects of the institutions selected. Secondly, the general situation of the Austrian foundation sector could now empirically be presented which was both the aim of the research project as well as of the thesis.

3.1.6 Analysis

As a last step, after all relevant data had been collected, the interviews were analysed. The answers were put into an extensive table to be made comparable, then the different questions were dealt with according to the reactions of the interviewees connected with the issues. What could be taken from the interviews were the general attitudes towards the foundations, the knowledge and the scenarios developed. Moreover, the representatives of the institutions drew quite a distinct picture of their self- images and the relevance of their foundations compared to the external interview partners.

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In addition, the information was used for finding out more about the roles and visions held by the interview partners with regard to foundations (cf. sections 5 and 6). These chapters were oriented along the guidelines and the structure proposed by the CCS to ensure international comparability of the outcomes (CCS, Research Memo 1, 2002).

To compress and categorize the data available on every institution examined, case studies were elaborated for each of the ten organisations (cf. section 9). Thus, all information that had been collected was accumulated and transformed into reports of the foundations comprising development, quantitative figures, activities and self- image – that is, the picture they draw regarding the present situation of the ir foundations – as well as future prospects and selfreflections, dealing with the critical considerations of the strenghts and weaknesses of their institutions.

So, each country report encompasses an extensive overview of the national foundation scene and paints a picture of both the external and internal views regarding the foundation sector.

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3.2 Reasons and Discussion

This section is dedicated to problems that occurred during the research process as well as general weaknesses of the method applied. Because the various situations throughout Europe are very heterogenous, the CCS decided on the methodological approach described above: Apart from secondary research on the theoretical background and the development of the foundation sectors in each country, expert interviews were to be conducted with a view to obtaining a general overview of the situation.

As only little knowledge on the topic of foundations existed at the beginning of this project, a qualitative approach seemed fitting, especially as regards the face-to-face interviews conducted with foundation representatives, experts and policy makers. Here, the explorative type was chosen within the problem-centered methods to gain additional insight into the issue. That is, the questions were not completely open-ended but oriented along some main points to be covered so as to provide international comparability of the outcomes.

Due to this lack of prior knowledge, the existing and/or accessible literature was not sufficient to serve as a solid basis for a qua ntitative approach. In that case, the hypothesis would have been examined, but the data and findings so far were not sufficient for elaborating a reasonable questionnaire. In addition, a main area of the research was to cast light on attitudes and opinions held towards foundations. With this aim in mind, the only possibility was to apply qualitative methods as such constructs cannot be tackled by quantitative means.

Of course, the method chosen is biased and so cannot be utilized for generalizations, which is particularly true for case studies. To be sure, this kind of combination of qualitative and descriptive research was considered the most suitable approach for the considerable number of participants and institutions involved. Moreover, the internal comp arability highlighted as one of the project’s targets was to identify analogies and differences between the countries’ foundation scenes. This can be ensured by using identical methods throughout the project.

To continue with the political aspect mentioned before, some difficulties were encountered that should be highlighted as regards the appointment of interviews. While the political parties SPOE (socialists), Die Grünen (green party) and OEVP (conservatives) were willing to cooperate (cf. interviews II, III, IV, VI and VIII), the FPOE (liberalists) refused cooperation.

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This might have a connection with the general attitude of this fraction and should be mentioned at this point: Within this party, a high number of officials have a foundation themselves and thus tend to be very much in favour of the instrument as a way of accumulating assets. They represent the capitalistic viewpoint. Therefore, the attempt to avoid public insight into the practice seems logical as the issue is a very controversial one in Austria because of the tax privileges these foundations enjoy without serving the public.

The same is generally true for the OEVP, and the one interview they granted (cf. interview VIII) was not done with a political purpose and focus in the first place. So, it must be remembered that policy makers’ attitudes quoted in this paper might be subject to some ideological bias to varying degrees.

What is more, it is also important to note that the majority of non-political private foundations that were additionally contacted to cast light on this aspect of the Austrian foundation landscape, also flatly refused to give any information. The representatives were either unavailable for weeks or they promised they would call back but never did.

The general unwillingness of private foundations’ representatives to talk about their organisations and their activities led to the assumption of the intention not to make internal aspects publicly accessible. Thus, something was to remain covered. This fact goes in line with the commonly held opinion of opponents to private foundations that the establishment of these institutions serves solely as an instrument of capitalism that is not really justified or at least not seen as completely ‘correct’ in terms of social aspects even by the founders themselves. Along with this, any comments regarding this offense or statements supporting the opposite were rejected by private foundations.

Concerning the research method itself, it has already been mentioned that the characteristic of being representative was not defined as a criterion for sampling and analysis keeping an eye on the feasibility of the project. In particular, this would not have been possible in Austria because no reliable data exists on the actual structure of the domestic foundation scene. In fact, information about private foundations is not generally accessible to the public.

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Another problem one has to face in Austria is the impossibility of access to information on the

endowment size of the foundations. It was not possible to find out the numbers actually

requested by the CCS for either federal and provincial institutions or for private entities.

4 Background

4 Background

4.1 Historical Development

4.1.1 Ancient World

The development of foundations can be traced back to the Ancient World. For the first time they were to be found in the Egyptian as well as Greek-Roman culture (Jandl, 1985, p. 3). At that time, they primarily served religious and ritual purposes and, therefore, enjoyed the special protection of both church and state (Mraz, 2001, pp. 37).

The first legal traditions that are still influencing our present law emerged with the Christian empire, strictly speaking, with the statutes of Justinian (530 a. d. ). Based on the development of the Christian church, foundations in today’s sense arose due to the principle of charity. In this context, Christians were supposed to leave a part of their assets for social purposes to guarantee an immortal soul.

The concern for the soul in the next life promoted the establishment of foundations. With the capital donated, ritual activities were ensured that were believed to help the founder. Thus, pure egoism and the fear of what would happen after death were the actual reasons for the existence of foundations. It took thousands of years, though, until this primitive model was finally replaced by the idea of the founder’s survival through his good deeds.

Ancient foundations were donations among the living or due to death where the contribution of assets was strictly tied up to be used for a given purpose. The investment, however, did not gain its own legal capacity (Stammer, 1983, p. 269).

The economic fall of the Ancient World was followed by a desastrous mass impoverishment without the availability of any state-based support (Mraz, 2001, p. 38). Private charity could not cope with the sheer scale of this poverty. As a result, the charity which had always been practised by the church was particularly needed. The idea of foundations has its root within this spirit of Christian charity as clerical institutions received capital for defined purposes by the donations of various charitable organisations.

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Within the church, the idea of foundations was also established theologically and dogmatically. One aspect that is still valid and very important in nowaday’s regulations is the prohibition for the administrators of foundations to sell land and buildings belonging to the foundations.

4.1.2 The Middle Ages

In the medieval times, the Roman-Catholic church successfully fostered the permission of wills. Moreover, it gained the main responsibility for this practice. This was especially important for the development of foundations.

As the charitable role of the church expanded, a wide variety of foundations were created. Apart from public-welfare purposes, educational institutions and the church itself became their target groups. The institutions established for these reasons were placed under the administration of the church.

A slow change of this strictly clerical welfare service began during the 13 ^th century when the political power of the middle classes emerged. The church-owned institutions were unable to deal with the needs of the rapidly growing poor urban population. So, the bourgeoisie raised the material resources to have influence over the property administration of the ecclesiastical foundations. Finally, they took over the leadership for all secular administration agendas. Despite all the striving for autonomy of the middle classes, secular charitable practices outside the church remained unimaginable for centuries.

The Middle Ages was the golden era for foundations. The rapidly expanding cities with their new prosperity as well as their pious spirit offered the ideal soil for the setting up of foundations. As to be seen above, the secular foundations derived from the clerical type which was the basis for charitable giving.

This development was clearly eased by the transition from a barter to a money economy. Barter economy led to the dedication of land where any building like a hospital or a church could be erected, so it was then possible to use money for foundations. Capital foundations were born. They now only represented something of value that could be used for following any purpose. As a consequence, secular foundations became dominant.

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The canon law accepted the will of the founder and the foundation as a legal capacity. In the late Middle Ages, secularisation of both church and foundations took place simultaneously. The church’s prosperity within foundations represented a strong incentive for secular powers. Moreover legislation enabled the testator to impose the obligation on the heirs to use his assets for charitable purposes (Seifart, 1987 quoted in Mraz, 2001, p. 40).

4.1.3 Modern Ages

In the modern age the civil element became more important. In Austria, hospital foundations were developed in the 12 ^th century, reached a peak 200 years later and finally declined again after another two centuries (Stammer, 1983, p. 276). The construction of new streets provided the conditions for the spread of diseases as more and new illnesses appeared, so the need for hospitals increased significantly. The founders were mainly patrons but later on cities and individual citizens were also to be seen.

Austrian foundations dating back to the 13 ^th century are for example the Bürgerspitalfonds Krems (founded in 1212) and the Bürgerspitalstiftung Eggenburg (1299) (Stammer, 1983, p. 276). Another representative case for the development of foundations was the practice of Jakob Fugger in Augsburg, Germany, in 1511 (Mraz, 2001, p. 43). He transferred a moderate sum of money to a special account, at the beginning without any specific purpose. Assets grew as interest was added. This method was subsequently also observed in Austria.

Three years later, he constructed a housing estate for poor workmen. A written formulation followed some years later, including details of how to erect the buildings and how to run the settlement. During the following years, additional capital was raised and invested. This example was the model for the modern idea of foundations: an entrepreneur uses assets for charitable utilisation and, therefore, the improvement of social conditions. The relief of social poverty was and has been ever since the main motivation for founders.

Still, the church was dominating the field of foundations in Austria. It took the insight that actually state-run administration ought to be in charge of it for a long time to gain acceptance. The emperor Ferdinand Ist and his successor were the first ones to make efforts for putting foundations under governmental authority. It was at the same time when the first foundations for

4 Background

educational purposes were established in Austria, the oldest one was registered in 1404 (Pues, 1998, p. 21, quoted in Mraz, 2001, p. 44).

However, the execution of a will still remained under episcopal control (Mraz, 2001, p. 45). A problem that frequently arose was the change of purpose which never crossed the limits of the church as it was assumed that the dedication of capital for profane purposes was against the will of the genuine founder.

Yet it was possible to establish an autonomous institution such as a hospital that could be run independently by the founder or his chosen representative. Such institutions can be seen as the first self-supporting foundations as long as they were not surrendered to the church.

The empress Maria Theresia finally assigned foundations to the control and authority of the state (Jandl, 1985, p. 4). She created special commissions for the administration within government. Moreover accounting departments were established in order to keep the assets in evidence and to check both the accounts and accountants.

In 1753, the decree of the imperial court separated the foundations’ agendas from those of general national security issues (Mraz, 2001, p. 46). Then, Earl Lamberg was put in charge of the foundations. In those days, two types of foundations could be distinguished: On the one hand those that had been administrated by lower positions, and on the other hand larger Viennese institutions that were then distributed to individual representatives.

In 1759, clerical bodies were granted more influence on secular foundation practices. After Maria Theresia’s death, her son Joseph II drastically restricted the possibilities of free religious exercise. He prohibited pilgrimage and closed down several cloisters. As a consequence, the first foundations soon ceased to exist.

Under his power, control over foundations changed from the special commissions to the regional political authorities. All the assets of hospital foundations were integrated into one religious fund. Even the capital of cloisters was deemed to flow into these funds, but in fact mismanagement often occurred: Only a small part finally arrived in this account. Places of land were sold off cheaply, valuable equipment, formerly belonging to the cloisters, disappeared (Stammer, 1983, p. 279).

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19 th and 20 th Century

4.1.4

The era of the Enlightenment and the secularisation that followed was the most hostile towards foundations, but a core survived those hard times (Mraz, 2001, p. 48). In the 19 ^th century, the Romanticism ensued where the social values of the medieval foundations such as charity and compassion for those in need became important again. The genuine ideas of founders enjoyed high acceptance and the administrations of foundations regained their autonomy. Due to this increase in faith, many new institutions with a widespread range of purposes were established.

Apart from this social spirit, the era of natural sciences began at this time. Capital, work, technology and industry fostered more potential of work resources which, consequently, led to growing poverty because many people lost their employment. That was too much for the foundations to cope with. To solve this social problem, large associations created by both the church and the middle classes emerged. Famous examples are the charitable institutions Caritas and the Red Cross (Mraz, 2001, pp. 48).

In the first half of the 19 ^th century there was no standardized legislation for foundations in Austria. In most of the crown countries, different instructions were developed that dealt with rules how to establish, administrate and run a foundation.

In 1841, a new decree was introduced that completely changed the practice of foundations. Now, the state-controlled right of supervision over ecclesiastical foundations was tied to the agreement of the chairs. In other words, accepting, amending or repealing of foundations as well as the administration of the assets were in the hands of the administrative authority whereas decisions regarding ecclesiastical foundations had to be made with the so-called ‘agreement of the chairs’. In short, decisions were not up to the state alone or the church.

After the administrative reform in 1853, the governmental right of control was assigned to political regional and local authorities (Stammer, 1983, p. 280). Two years later the supervisory system over ecclesiastical foundations was finally abolished. The highest leading position was held by the ministries of internal administration, only the competence for military foundations was handed over to the Ministry of Defense.

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During the 20 ^th century, the spirit of foundations developed significantly (Mraz, 2001, p. 49). Their autonomy and the respect of the founders’ wills became natural. The empirial constitution of Weimar contributed to this tendency, especially by separating the ecclesiastical foundations from state and community.

Despite inflation and the subsequent decline of foundations, large private and state-owned foundations of institutions highlighted the importance of the foundation practice again. Public trust in the state-run control and bureaucracy as well as the security of the constitutional state showed a promoting effect (Bertelsmann Foundation, 1999, p. 41).

4.1.5 The Period Between the Two World Wars

The fall of the Monarchy forced the foundation sector into tighter limits. Before this time, the area covered by foundations extended from Lemberg and Prague to Triest and Meran. On the contrary, now only the region of today’s Austria remained. Since then, the Austrian foundation sector has had a poor existence as far as new establishments, legal and literal treatment are concerned.

The federal constitutional law of 1920 regulated the separation of competences regarding legislation and execution between federation and provinces. According to this law, the federation is responsible for those foundation-relevant agendas which exceed the provincial sphere of activity while otherwise the authority remains within the provinces.

The law of 1925 additionally made it possible for foundations endowing solely mobile assets or a total capital of less than a certain sum to be associated with other institutions or to be closed down (Mraz, 2001, p. 50). In 1938, about 5,700 foundations remained in Austria after the introduction of these measures.

The regulation and distribution of competences from 1925 is still valid in an only slightly modified version, but not without being critizised. The first World War caused a deep economic crisis followed by high inflation rates that were survived mainly only by foundations which had mostly real assets. Again, foundations’ dependence on a flowering economy was proved. All state-run institutions were in need of help from any social and charitable private initiative.

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4.1.6 National Socialist Period

During the Nazi period, the Austrian foundation sector experienced drastic changes. A total of 2,400 institutions were closed down without their assets being transferred to any other establishment. This practice was based on the law regulating the integration of societies, associations and organisations at the same time declaring that orders of foundations or bonds to their documents were not relevant any longer. No arguments were necessary and appeals were initially excluded.

Foundations were not systematically destroyed, but the ideological delusion gave way for any arbitrariness mainly effecting the will of founders and the purpose of foundations. Often the institutions simply adapted to the spirit of the times by changing the legal circumstances instead of the foundation law itself. One could easily find out whether the purpose of a foundation was in accordance with the Nazi policy or whether it was undermining its entity. Denominational purposes were generally considered unacceptable (Bertelsmann Foundation, 1999, p. 41).

4.1.7 Postwar Era

At the end of the second World War, many foundations were extinct (Mraz, 2001, p. 55). To hand back the assets to those who had remained, the reorganisation laws for foundations and funds started to be developed in 1945. Now, the foundations regained their legal capacity that had been erased during the Nazi period and recovered their capital. In 1946, all existing foundations were registered together with their loss of assets caused by the Nazi regime. Moreover, the administrative authorities were checked and substituted where necessary.

Coming to the legal issue (cf. section 4.2), it should be mentioned that before the BStFG of 1974 – which was the first nationwide legal basis for the establishment of foundations – , up to the formation of the Second Republic in 1945 and after World War II, corresponding regulations had been outdated and too heterogenous to cope with the situation. In other words, there was no single and extensive law governing foundations but only parallel and independent single statutes without mutual compatibility and influence. The same is true for the period between 1945 and 1974, especially since the majority of foundations had been destroyed during the war and there was only a slow growth in the numbers registered.

4 Background

4.1.8 The 1970’s Until Today

In 1974, the BStFG created the basis for the foundation practice still valid in Austria today. For the first time, clear guidelines for not only administrative authorities but also the foundations themselves were given thereby bringing the situation of numerous loosely coupled regulations to an end.

A strong demand for transferring accumulated assets into foundations arose in 1980. The existing law was considered inappropriate because of the limited number of purposes open to charitable and public-welfare institutions. That is why more and more Austrian capital went to foreign foundations located in countries with more liberal regulations.

This development was accompanied by seve ral suggestions and demands for reform during the following years. In 1992, a draft for a new law was submitted to the ministry of justice by the Ludwig- Boltzmann institution. Bearing all this in mind, the governmental parties aimed at a modernisation of the law for foundations which finally led to the introduction of the law for private foundations in 1993.

At this point, it shall briefly be presented how the historical development of the federal foundations, namely the ones based on the BStFG took place according to the classification of the ICNPO-groups (cf. section 4.3, table 3). It is of particular interest to get an idea of when exactly certain fields of activity emerged and during which periods the main areas changed. The data described below were raised in the course of the Austrian team’s own research process.

It is hard to keep track of foundations dating back to the monarchy, but the available data show a relative significance of foundations at that time. Generally speaking, there was a steady increase in the numbers until World War II, when many foundations were closed down by the Nazis. After World War II, new foundations were established because people were becoming wealthy again and dedicating assets and work to helping others. In particular, it was the initiative of the common federal foundations act that encouraged the establishment of foundations, since it can be seen that in the subsequent ten years not less then 25 new foundations were established.

The dominant fields of foundations’ activities are social services followed by education and research as well as culture and sports (cf. table 4). Foundations began to emerge at the turn of the