How Ger­many’s Wealthy Con­tribute to a Bet­ter World

In times of mul­ti­ple crises, the phil­an­thropic efforts of Ger­many’s wealthy indi­vid­u­als are increas­ing­ly sig­nif­i­cant. Foun­da­tions like Cre­spo, Kör­ber, Fritz Thyssen, Siemens, and Ber­tels­mann rep­re­sent a long tra­di­tion of giv­ing in Ger­many. The ultra-high-net-worth indi­vid­u­als (UHN­WIs) behind these foun­da­tions often sup­port social, cul­tur­al, and envi­ron­men­tal projects through foun­da­tions, cor­po­rate engage­ment, or pri­vate donations.

How­ev­er, there is lit­tle data on their moti­va­tions and the actu­al scope of their phil­an­thropic engage­ment. Which the­mat­ic areas do they sup­port? How do they orga­nize their efforts? And what do they need to be strate­gic and effec­tive? PHI­NEO sheds light on cur­rent trends and devel­op­ments in how the wealthy make an impact.

Dis­creet Bene­fac­tors: Ger­many’s Hid­den Phil­an­thropy on the Rise

Phil­an­thropic cap­i­tal in Ger­many com­ple­ments the func­tions of the strong wel­fare state and extends beyond. Most Ger­man UHN­WIs con­tribute their time, net­works, cap­i­tal and assets to char­i­ta­ble caus­es, feel­ing respon­si­ble for using their wealth to address soci­etal issues. Unlike the pub­lic ​“cul­ture of phil­an­thropy” in the US or UK, Ger­man phil­an­thropists pre­fer to keep their con­tri­bu­tions out of the spotlight.

Signs indi­cate that phil­an­thropic efforts by Ger­man UHN­WIs will increase due to a grow­ing num­ber of wealthy indi­vid­u­als and a ris­ing will­ing­ness to sup­port char­i­ta­ble caus­es. Reflect­ing on diverse and per­va­sive crises, they increas­ing­ly see their role along­side the state in address­ing soci­etal chal­lenges. Role mod­els in phil­an­thropy are becom­ing more vis­i­ble, and par­tic­u­lar­ly the NextGens is bring­ing new impulses.

Experts esti­mate that Ger­man UHN­WIs pro­vid­ed a mid-sin­gle-dig­it bil­lion amount in phil­an­thropic cap­i­tal through dona­tions and foun­da­tions in 2022. This fig­ure varies as not all giv­ing vehi­cles, such as e.g., impact invest­ing, were con­sid­ered. Experts believe that even more phil­an­thropic cap­i­tal could be mobi­lized for char­i­ta­ble purposes.

Look­ing to the Future: Where the Wealthy Engage

Tra­di­tion­al­ly, Ger­man UHN­WIs sup­port edu­ca­tion, child and youth ser­vices, arts and cul­ture, envi­ron­men­tal pro­tec­tion, health, and sci­ence. These areas often focus on nation­al projects, though over half of UHN­WIs also sup­port inter­na­tion­al ini­tia­tives linked to their busi­ness activ­i­ties abroad.

How­ev­er, the fund­ing land­scape is chang­ing. Wealthy indi­vid­u­als increas­ing­ly sup­port projects aimed at mak­ing Ger­many ​“future-proof.” The cli­mate and bio­di­ver­si­ty crises lead to more sup­port for envi­ron­men­tal pro­tec­tion, while demo­graph­ic changes result in new health care con­cepts. The sus­tain­able trans­for­ma­tion of the Ger­man econ­o­my and its com­pet­i­tive­ness is also becom­ing a focus. Sup­port for entre­pre­neur­ial skills, inno­va­tion, STEM edu­ca­tion, and ​“future skills” like resilience, empa­thy, dig­i­tal, inter­cul­tur­al, and com­mu­ni­ca­tion com­pe­ten­cies is gain­ing momentum.

In light of the chal­lenges we face, these are pos­i­tive devel­op­ments: Broad soci­etal debates and phil­an­thropic engage­ment are mutu­al­ly rein­forc­ing, and UHN­WIs and their foun­da­tions respond to soci­etal needs. Fam­i­ly entre­pre­neur­ship and sus­tain­abil­i­ty are increas­ing­ly con­sid­ered togeth­er, mak­ing engage­ment and phil­an­thropy more than just an ​“add-on.”

From Tra­di­tion to Inno­va­tion: How the Wealthy Sup­port Today

Clas­si­cal foun­da­tions and tra­di­tion­al dona­tions still dom­i­nate phil­an­thropic engage­ment in Ger­many. The preva­lence of char­i­ta­ble foun­da­tions increas­es with fam­i­ly wealth. Addi­tion­al­ly, UHN­WIs use their (fam­i­ly) busi­ness­es as vehi­cles for diverse engage­ment, pro­vid­ing per­son­nel, finan­cial, and oth­er resources for acute and dis­as­ter relief.

Despite a long tra­di­tion of giv­ing, few UHN­WIs engage strate­gi­cal­ly, with impact-ori­ent­ed log­ic, clear strate­gic mea­sures and goals, and mon­i­tor­ing and eval­u­a­tion. How­ev­er, more are ask­ing, ​“How can I sup­port effec­tive­ly and smart­ly?” This reflects the real­iza­tion that mon­ey alone is not the answer to all challenges.

There is a grow­ing con­sen­sus that tra­di­tion­al approach­es, like per­pet­u­al­ly endowed foun­da­tions, do not ful­ly real­ize their poten­tial. New, flex­i­ble giv­ing meth­ods are being explored, dri­ven by estab­lished phil­an­thropists and NextGens. New mod­els include legal forms like gGmbH or spend-down foun­da­tions. (Multi-)Family offices are also becom­ing impor­tant phil­an­thropy part­ners for UHNWIs.

What’s Need­ed Now: Build­ing Bridges

There is still room for growth: The poten­tial to sup­port UHN­WIs in their impact-ori­ent­ed engage­ment, address chal­lenges togeth­er, and cre­ate an ​“ecosys­tem for phil­an­thropy” in Ger­many is sig­nif­i­cant. Experts agree that more phil­an­thropic activ­i­ties are pos­si­ble, from wealthy indi­vid­u­als to bil­lion­aires. To achieve this, var­i­ous mea­sures could be helpful:

• Edu­ca­tion­al and expe­ri­en­tial offers on the basics of phil­an­thropic engage­ment for UHNWIs
• Strength­en­ing phil­an­thropy advi­so­ry skills in the advi­sors’ envi­ron­ment of UHNWIs
• Cre­at­ing exchange oppor­tu­ni­ties with oth­er UHN­WIs and the non­prof­it sector

Back­ground:

Through var­i­ous con­sult­ing projects, PHI­NEO reg­u­lar­ly ana­lyzes spe­cif­ic ques­tions about the work, impact, and fund­ing of non­prof­it orga­ni­za­tions. The insights men­tioned above come from con­sol­i­dat­ing var­i­ous sources, inter­nal PHI­NEO exper­tise, analy­ses of wealthy fam­i­lies and their engage­ment, and 15 inter­views with exter­nal Phil­an­thropy experts.