Foundations in Austria - Roles and Visions

Dissertation zur Erlangung des akademischen Grades
einer Doktorin/eines Doktors
der Sozial- und Wirtschaftswissenschaften an der Wirtschaftsuniversität Wien

by

Mag. (FH) Mag. phil. Marion Kern

Wien 2003

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 19th and 20th 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
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
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
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
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

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

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 visualization) ... 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
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 Science 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.

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 non-charity private foundations are not accessible at all.

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 with 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
2.1 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).

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 is 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.

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