Reimagining European Philanthropy
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Reimagining European philanthropy European philanthropic foundations have an opportunity to step up and address the needs arising from or exacerbated by the coronavirus. June 2020 Cover image: © Ray Massey/Getty Images Copyright © 2020 McKinsey & Company. All rights reserved. This publication is not intended to be used as the basis for trading in the shares of any company or for undertaking any other complex or significant financial transaction without consulting appropriate professional advisers. No part of this publication may be copied or redistributed in any form without the prior written consent of McKinsey & Company. Contents 2 Introduction Strategic challenges and opportunities arise in all 3 program areas European foundations need to reimagine where and 19 how they work 25 Conclusion 26 Acknowledgments 27 Endnotes Introduction by Michael We are facing an irreversible humanitarian and economic crisis that Conway, Karen Hadem, and Nina will permanently change our world. As societies around the world Probst remain near a standstill, the COVID-19 pandemic has magnified the preexisting vulnerabilities and inequalities of our social systems. Although governments have put a sweeping range of policies and programs in place to combat the pandemic’s impact on public health and the economy, the scale of the challenge requires more. Web 2020 ExhibitMcK PSSP 1 European Foundations European foundations have an opportunity to step Exhibit 1 of 12 up and address the rising needs. European philanthropic commitments European philanthropic commitments With economic forecasts predicting the biggest-ever peacetime for COVID-19 response totaltotal almostalmost recession and stock markets and other asset prices being down, the €1.1 billion. value of foundation endowments has declined substantially. One might expect financial pressure and self-preservation instincts to lead Publicly announced COVID-19 donations from European donors, € million (%) foundations to reduce their payouts. 544 Corporations But to the contrary, the coronavirus crisis has mobilized an (50%) unprecedented response by the global philanthropic community, with commitments of €10 billion. The list is led by Jack Dorsey’s donation 410 Foundations of $1 billion and 16 grants from Google.org totaling €850 million.1 (37%) But does this picture also hold true when looking at Europe? Our analysis2 identified combined commitments for COVID-19 response Wealthy 141 individuals (13%) by European philanthropy of almost €1.1 billion from corporations, foundations, and wealthy individuals (Exhibit 1). Similarly, the majority Source: Funds for coronavirus relief, Candid; Member announcements, ECF; Billionaire tracker, Forbes of executives we interviewed from large European foundations confirmed that their organizations are planning to maintain or even increase their grant-making budgets for 2020 and 2021 to address the rising needs in their program areas despite financial pressures. 2 Reimagining European philanthropy Strategic challenges and opportunities arise in all program areas The current crisis challenges all the programmatic areas that About the research foundations typically address. While COVID-19 is first and foremost a public-health crisis, we believe the recent developments in the global Our analysis of “Europe” focuses on EU countries public health space and their implications for foundations are relatively plus Norway, Switzerland, and the United Kingdom. well researched and documented. We want to focus this report on some References to other subsets of geographies are of the other programmatic areas of foundations and how they are being called out accordingly. affected by the current crisis—and in turn will shape how our society will emerge from this crisis (for more, see sidebar “About the research”). This analysis combines publicly available Indeed, basic needs such as food, housing, education, and employment 3 data with some proprietary insights. To complement have been shown to account for 40 percent of health status. When our data, we interviewed 24 foundation these health-related basic needs are not fulfilled, populations find it representatives from seven countries across more difficult to adhere to COVID-19 recommendations and are more Europe (see “Acknowledgments”) to learn about vulnerable to severe outcomes. their organizations’ responses to the crisis. To provide foundation leaders with a strategy and initial knowledge base for evaluating their portfolios of initiatives, we illustrate a changing environment across six exemplary program areas. For each program area, our analysis explores the underlying social challenges before the pandemic, how the COVID-19 crisis is changing the situation, and opportunities for intervention by foundations. Web 2020 ExhibitMcK PSSP 2 European Foundations Basic needs Exhibit 2 of 12 Compared with the rest of the world, European countries have extensive European countriescountries havehave aroundaround and relatively well-functioning public safety nets. These social-security 900,000 documenteddocumented homeless homeless people. people. measures should ensure universal access to basic human needs such as adequate housing, sufficient food, and personal safety. People in unsuitable housing, millions; 2018 in Europe Housing: European countries have around 900,000 documented Homeless 0.9 homeless persons, with the largest numbers in France, Germany, and the United Kingdom. The homeless population, which has been steadily rising since 2010, now includes more young people and children, women, No sanitation 8.0 migrants, and other disadvantaged minorities.4 Even among those who have housing, some individuals endure severely deprived living conditions (Exhibit 2). Two percent of European households don’t have access to 79.9 Overcrowded a flushing toilet; this number reaches 26 percent in Romania.5 Space is another important element of housing quality: nearly 80 million Europeans Source: OECD Aordable Housing Database 2018 live in overcrowded housing. The overcrowding rate—determined from an individual household’s personal-space needs based on each member’s age, gender, and relationship to others—is especially an issue in Eastern Europe and the Mediterranean.6 Reimagining European philanthropy 3 Web 2020 McK PSSP European Foundations Exhibit 3 of 3 12 Food: Even before the crisis, millions of Europeans’ basic needs were not being met. Overall, 22 percent were at risk of poverty or social exclusion Women and children are most Women and children are most in 2018, and 5.9 percent of the EU population was severely materially vulnerable to not having their vulnerable to not having their deprived—that is, they could not afford items considered necessary to basic needsneeds met. met. lead an adequate life.7 Between 2014 and 2017, the Fund for European Aid to the Most Deprived (FEAD) supported an average of 12.7 million people a People receiving Fund for European Aid to the Most 8 Deprived (FEAD) support, %1 year, including a large percentage of women and children (Exhibit 3). Women 50 Food insecurity has been a rising issue in Europe for the past ten years. Across 30 countries, 6.5 percent of the population (more than 34 million people) faces moderate to severe difficulties in accessing sufficient Children 30 nutritious food.9 Indeed, the Federation of European Food Banks (FEBA), which consists of 326 food banks from 23 countries, distributed food to 9.3 million people across Europe in 201810—almost double the number of Seniors 9 recipients in 2010.11 Disabled 5 Personal safety: Personal safety, especially of women and children, is problematic in Europe. In the European Union and United Kingdom, 35 percent of children experience physical, sexual, or psychological Homeless 4 violence by an adult perpetrator before the age of 15; 33 percent of women have experienced physical or sexual violence (or both) since turning 1Multiple categories can apply. 15, 21 percent sometimes worry about being assaulted, and 4 percent Source: FEAD evaluation 2019 sometimes avoid going home because of potential threats there.12 Effect of the COVID-19 crisis The ongoing public-health emergency has made it more obvious than ever that adequate housing and health are intrinsically linked: living without suitable accommodations is directly damaging to health. Homeless people often have many complex health issues, including tri-morbidity (the coexistence of problems with physical health, mental health, and addiction). Compromised immune systems, poor nutrition and hygiene, and long-term residence in overcrowded shelters increase the risk of contracting contagious diseases; several studies outline the negative effects of overcrowded dwellings on health outcomes.13 Moreover, many of the coronavirus-containment measures aimed at the general population—such as self-isolation, increased hygiene, staying at home, and strict physical distancing—are not realistic for people who lack adequate housing. And at the same time that the needs of homeless people are increasing, reports from several countries indicate that pertinent medical and other services are closing because staff either lack protective equipment or have to care for their own families.14 With several million livelihoods on the line due to the economic crisis, housing issues will substantially increase in the coming months and years. The coronavirus crisis puts about 54 million people (10.4 percent) in Europe who are already housing insecure at risk of losing the roofs above their heads.15 Today, 6.3 percent of