Foundations in Sweden

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SWEDEN. THEIR SCOPE,. ROLES AND. VISIONS. Filip Wijkström and Stefan Einarsson ... Nonprofit sector, Nonprofit, Third Sector, Social Economy, Sweden ...
Foundations in Sweden Their Scope, Roles and Visions

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FOUNDATIONS THEIR SCOPE, IN RO L E S A N D VISIONS SWEDEN Filip Wijkström and Stefan Einarsson

Keywords: Foundations, Charity, Donations, Grant-making, Civil Society, Nonproit sector, Nonproit, Third Sector, Social Economy, Sweden

ISBN: 91-7258-634-6 © Filip Wijkström and Stefan Einarsson 2004 Cover: Helena Lundin Layout: Annica Heldt Distributed by EFI, The Economic Research Institute at the Stockholm School of Economics www.hhs.se/ei or [email protected] Printed in Sweden by Elanders Gotab, Stockholm 2005

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CONTENTS PREFACE & ACKNOWLEDGEMENTS ................................................7 EXECUTIVE SUMMARY .......................................................................9 INTRODUCTION & BACKGROUND..............................................17 A couple of notes on the historical background ..........................18 A history of public good, but also of suspicion and irritation...23 Foundations established by government .....................................26 Legal issues .......................................................................................33 THE EMERGING CONTOURS..........................................................39 A picture of Swedish foundations before 1900 ............................40 Swedish 20th century foundation map..........................................43 Operating foundations ....................................................................47 Societal transformations..................................................................49 ROLES OF SWEDISH FOUNDATIONS ............................................53 A distinct foundation sector in society?........................................53 The roles of foundations in Sweden ..............................................55 VISIONS OF SWEDISH FOUNDATIONS .........................................71 Visions – a complicated issue .........................................................71 Small pockets of alternative visions ..............................................73 A liberal vision of society on system level....................................76 METHODOLOGY..............................................................................83 REFERENCES ......................................................................................91

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PREFACE & ACKNOWLEDGEMENTS

The material on Swedish foundations presented in this report has been collected and reined over a long period of time. We have used a number of different methods and approaches in the collection of data, as well as in the analytical work. Overall, the logic of the present report can be understood as one lowing from a more institutional, historically as well as legally informed, approach supported by more quantitative forms of data in the irst part of the report. This can be seen as a kind of institutional platform on which the latter part of the report and analysis rests. This latter, or second part of the report is more heavily, but not entirely, inspired by the use of qualitative methods and sources of data, both supporting and enhancing earlier reasoning and patterns. This part also identiies and explores a number of more speculative future issues in the development of the population of Swedish foundations. This report is the irst more extensive text published of a larger research project on Swedish foundations and their role in society. Although the focus of this particular report is on the roles and visions of foundations, we also include completely new material on the size and structure of the foundation sector in Sweden. The project and this report is published within the wider framework of a research program on Civil Society and its organisations developed at the Stockholm School of Economics since the early 1990s. The research is conducted at the Centre for Management & Organisation at the Economic Research Institute (EFI).

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A number of people have been of great help in this research and the authors irstly wish to thank all the respondents who freely gave of their time and imparted their knowledge. In particular we also wish to extend our gratitude to the following: Helmut Anheier (UCLA/LSE), Mikael Wiman at the Stockholm County Administrative Board, Jonas Grahn at Öhrlings PWC and Dan Brändström and Mats Rolén, both with the Bank of Sweden Tercentenary Foundation (Riksbankens Jubileumsfond), whom have all been very helpful and important in our work on foundations. Without their and their institutions’ support and knowledge, we would have been unable to carry out this research with the necessary quality and rigor. In addition, our Swedish research colleagues in the academic world, Katarina Olsson and Richard Arvidsson, have provided us with important input and insights, in their writing as well as in our conversations, gracefully sharing their knowledge. We wish to further express our gratitude to Niklas Egels, now at the Chalmers University of Technology, for his invaluable input and energy during a critical phase of the project in December 2003 as well as to Henning Isoz at Ernst & Young for helpful comments on an earlier version of the report. This research report has been generously funded by the Bank of Sweden Tercentenary Foundation (Riksbankens Jubileumsfond), who also provided a special grant that made it possible to publish the report. However, the authors carry full responsibility for, including all legal and intellectual rights to, the herein presented material. November 2004 Filip Wijkström & Stefan Einarsson The Economic Research Institute (EFI) at the Stockholm School of Economics

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EXECUTIVE SUMMARY

Foundations and the strategic perspective An important inding from our study on the roles and visions of Swedish foundations is that foundations in Sweden – as a group or a population – have assumed different roles in different time periods. Looking at the foundation population as a whole, we seem to be able to describe this shift in focus over time as some kind of lexible function for the foundation population in society. This would be the case although, paradoxically, individual foundations are inlexible in the very way they are established. Over the centuries and decades, there appears to be a steady inlux of new foundations equipped with new and different missions. This inlux has kept the foundation population as a whole more dynamic and lexible than we would otherwise expect. At the same time, however, foundations in general seem to be heavily bound not only by their speciic charters or bylaws, but also by the period in which they were created. In our report, we further argue that previously dominant roles or functions for foundations in society have not disappeared, but are instead either existing in parallel to other roles (newer or older ones) or understood or seen as assuming or given new meaning as a result of new, emerging environments in which they are to be understood as embedded. These two forces are at play interactively and simultaneously. First we have the cohort or population di-

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mension of foundations created in waves during the decades and even centuries. They carry their time-bound and special character with them into new or different situations and environments with other dominant logics or cultures. These societal environments and their logics are the second force necessary to include in the analysis to understand the role of foundations in a society. These environments and logics also shift over time, which leave foundations that are born in a particular period or social environment to manage in new environments. Given time, these two forces combine to shape the organisational space or landscape in society that is open for foundations. It is our impression from our interviews and case studies that there also appears to be ample room for individual foundations to manoeuvre through the representatives on their boards and the management in their executive functions. It is therefore interesting to note that some of the representatives of both older and younger foundations are now trying to ind space and relevance for their particular foundation and its mission in new or changing environments. Although the focus of our present report is on the two external forces identiied in this story, we will continue our research to identify the space available as well as the repertoire of organisational tools at hand for the long-run strategic management of foundations.

Foundations and the Swedish state When examining the originators of foundations in Sweden, the pattern is blurred as well as shifting over time. As a general observation it is easy to argue that large capital-heavy foundations are set up by actors who have been able to accumulate some kind of surplus capital or resources. In Sweden, important actors who established foundations during the second part of the 20thcentury were different parts of government administration. This is well in line with the logic that in a country with a high-tax regime, various public sector actors were generally able to accumulate substantial 10

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resources, both on a national and municipal level. Therefore, it is often the case that state or local municipalities have been the founder of foundations in Sweden. This development was especially strong during the 20 th century’s two inal decades, as is illustrated for example by the introduction of the wage-earner fund foundations in the early 1990s. However, a similar development was also visible in the debate around the appropriation foundation form in the 1990s and the problem of “governmentability” associated with this particular form. In retrospect, the new wage-earner fund foundations were possibly the clearest example of a new and more prominent role assigned to foundations in Sweden over the last couple of decades. It is dificult to understand these large and inluential foundations as being only complementary to the earlier and traditional arrangements of the Swedish state. Rather, it would be easy to consider them – as the situation has developed today – as replacing or substituting earlier government activities. Even if not as pronounced, this type of development can also be seen in other ields, such as in primary and secondary education where new private initiatives in the form of operating foundations are found.

Suspicion and irritation Historically in Sweden, and also today, we can trace elements of irritation and suspicion towards foundations. This has been highlighted before but is substantiated further in this study. In the text, it is argued that this irritation or suspicion is often a result of the very character of foundations as inlexible pools of capital without clearly identiied owners. Sometimes, it could be argued that this sense of irritation and suspicion has originated from political or ideological differences. During earlier periods in Sweden, foundations were generally set up and established by people from the wealthier segments of the population, and therefore have often

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been – implicitly or explicitly – rooted in the more conservative or liberal value systems traditionally found in these social groups. In this report, we introduce the idea that foundations in Sweden have sometimes been used as weapons in political or ideological battles. Various social tensions in society have manifested themselves in the establishment of foundations. Salient examples can be found in the media or newspaper arena, as well as in the support of various think-tank constructions (Wijkström 2001).

Different roles and functions of foundations in society In this research project, one important task was to identify and analyse the different roles or functions of foundations in society. This task has possibly been the most dificult undertaking, and our empirical material for this has mainly been interviews and case studies. The dominant role most often found and expressed in the Swedish foundation sector is, without a doubt, the perception that the foundations complement the (welfare) state. This role appeared also to be the one most preferred by our interviewees. The discussions on foundations having some kind of substitute role (i.e. to the state or municipal welfare arrangements) were much more diverse and sometimes even heated. Several of the respondents had recently been involved in discussions on where to draw the line between the obligations of their foundation on the one hand, and the understood or assumed responsibilities of the (welfare) state or municipality on the other. Another topic of discussion was the distinction between the complementary and substitution roles, in particular when trying to follow older foundations over time. When these older foundations were set up their roles may very well have been one of innovation or ”substitution”. However this latter concept would not have made any sense at that time, since the services provided or support distributed were perhaps not at all provided by state or municipality at the time. Thus nothing existed to substitute. 12

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Pluralism seems to be a role that is only relevant to discuss, at least in Sweden, for the foundation population as a whole. This brings us into more of a functional understanding of foundations and their roles. For most of the other roles it is possible to discuss the role of an individual foundation, be it as substitution, innovation or instrument of control, without taking into account the other foundations in the population. This appears to be the reverse case when we address the issue of pluralism. At least, this would only be relevant for very few foundations, as we argue in more details later in the report. A role sometimes associated with the idea of pluralism is that of using foundations to establish free zones or open up for alternative ideologies, methods and ways to relect or operate. About half of the respondents in our study could see or identify this free zone role as one performed by foundations. The idea of using foundations as instruments of control was also often discussed and the notion of “control foundations” has mainly been understood to exercise governance in an economic sense, for example in Swedish industry. This is also the most common perception of the ”power foundation” concept (maktstiftelse) in Sweden. We can further ind examples where foundations exercise this role of control and power in a more ideological sense. An interesting role emerging from our expert interviews and observations of the foundation practice in Sweden is that of using the foundation as an organisational tool. Although we will not develop this idea further in this report, we have identiied examples where a foundation – sometimes in combination with other organisational or legal forms – is used as a vehicle to promote various but speciic functions within a certain wider organisational complex. This organisational constellation could for example be sprung out of a popular movement context, where the foundation is given a certain function and connected to the other parts of the organisational complex through legal arrangements or traditions. We can also see this phenomena occurring in municipalities, where the politicians or executive civil servants shift certain re13

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sponsibilities or tasks to a foundation. In addition, we are able to identify this phenomena in a corporate context where for example stock or shares to control the company are placed in a foundation, or where the CSR activities of the corporation are located. This way to construct or see the foundation as an organisational ”tool” or ”instrument” in a certain society or cultural context, rather than giving its own ”personality” or ”life”, may be one of the most interesting differences between different national foundation cultures and well worthwhile to explore further.

Different foundation types When talking about foundations as organisational vehicles, it is also worth noting that there are a number of different foundation types in the Swedish foundation sector. In an important part of the report, a number of different types of foundation are introduced and discussed. In this discussion we partly rest on the Swedish foundation law from 1996 and different legal categories. This part of the report lays down the platform for the later discussion on different roles for foundations in society. Especially interesting in the Swedish case is the idea of operating foundations (see also Olsson 1996) – for example operating some kind of facility like a school or a day-care centre. This type of foundation appears to have grown in importance during the inal two decades of the previous century. These new operating foundations are often found in ields that at least after the Second World War in Sweden have been understood as being within the realm of the public (state, county or municipal) sector, for example education and academic research, health care and social welfare.

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Foundations used in a battle between alternative visions of society? In an even wider context, it is fruitful to discuss, study and analyse the relation between foundations and certain larger visions of how society should be organised. The challenging idea that a certain ”vision” pertains to a particular foundation or group of foundations, is also one of the key dimensions of the wider research project. First of all, we wish to stress the fact that discussing a foundation’s ”vision” is a complex topic. In the text it is argued that it may be possible to understand large segments of the Swedish foundation population today as being embedded within a wider social-democratic welfare state vision. A strong popular movement tradition is the dominant civil society tradition that emerged in Sweden during the 20th century. (See also Hvenmark and Wijkström 2004; Wijkström 2004; Wijkström, Einarsson and Larsson 2004). In this tradition, the role of foundations is at best unclear. In the inal section of the report we argue that it is possible to identify a number of minor alternative visions more or less clearly spelled out in our material. These alternative visions can be illustrated by foundations which aimed to show how women’s values and knowledge can improve and reinvigorate society. They can also be found in foundations focusing on the ideas of the movement for “fair trade” or in foundations operating care or social institutions within, for example, the wider antroposophical movement. Also included in this group of foundations are those with clear references to a religious value system. Among these alternative visions in the Swedish world of foundations we would argue that it is possible to discern traces and tracks also of a dormant liberal vision of society. This liberal vision is the strongest alternative vision identiied in the discourse on foundations in Swedish society in the beginning of the 21st century. A number of other indicators, such as the growth of operating foundations during the 1980s and 1990s, as

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well as growing interest in private donations, could be taken as signs pointing in the same general direction. This development may be understood as part of a shift in society, where earlier dominant roles of foundations are re-negotiated. In this development the substitution role may be more relevant than the role of complement to understand a new generation of Swedish foundations. In the report, we suggest that this 21st century development identiied in the Swedish foundation population should be understood as a wave of “new philanthropy” (nyilantropi). This development seems to run in parallel to other similar western-European welfare states but still we need much more research – qualitative as well as quantitative – to move from these observations.

The road ahead In this report, the space, roles and positions alloted or occupied by foundations in Sweden are analysed and discussed. It is by no means the inal word in the discussion on Swedish foundations but rather an interesting starting point for a number of questions and potential lines of thought to explore further. A couple of ields are worth highlighting in particular. Today, the large group of research foundations offers potential sources for new and interesting alternative lines of research. Also the large amount of foundations engaged in various social issues represent a huge resource pool in society. A third group of foundations, operating and grant-making, are the ones engaged in, or supporting, various forms and levels of education. In summary the rich and complex population of foundations in contemporary Sweden represents an important resource in society as well as a new challenging ield for research and analysis.

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INTRODUCTION & BACKGROUND

Sweden has a long and rich foundation history. In the early 21st century, some 15 000 larger foundations exist and function in a wide variety of ields and roles. The recent legislation on foundations from 1996 allows the legal form to be used both by grantmaking and operating bodies. Within the foundation population we also ind entities under autonomous as well as attached administration. Statistics are scarce in this ield and many changes have occurred as an effect of the new law on foundations. However, according to earlier estimates, there are perhaps as many as 20 000 or 30 000 smaller foundations in Sweden in addition to these 15 000 larger foundations (Wijkström 2001). In this report we will present and comment on some of the main indings from a multi-year research project on Swedish foundations, a project hitherto inanced largely by the Bank of Sweden Tercentenary Foundation. The project has also been conducted in close cooperation with a group of European researchers as part of a larger research undertaking coordinated by Professor Helmut Anheier. Within this report we focus on the approximately 11 500 larger Swedish foundations that have some sort of wider public benefit purpose. Therefore we exclude many other foundations, such as the large group of strong pension foundations. In earlier reports we estimated that public benefit foundations represent some 12 percent of the total operating expenditures of the wider Swedish nonprofit sector (see, e.g., Lundström and Wijkström 1997; Wijkström and Lundström 2002). However, recently we have calculated a irst-ever rough estimate 17

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of the level of annual grants by Swedish foundations: grants that in the years 2001/2002 amount to nearly SEK 6 billion annually (Wijkström and Einarsson 2004b).

A couple of notes on the historical background In the past, Sweden was a rather poor country with a heavy toll placed on its population due to, for example, an extensive emigration to North America in the second part of the 19th century. As a country, Sweden has a fair share of natural resources such as iron ore and timber, and also access to relatively cheap hydro energy. Thanks to these resources, and a capacity to process them in the country instead of exporting them as raw material, the economic situation changed during industrialisation. As a country, Sweden has been independent for a relatively long period of time and was also able to avoid involvement in all major wars over the last two centuries. Thus, Sweden was able to carry out the shift from an agrarian economy in relatively short time and under peaceful conditions. Sweden developed into a small but rather successful industrial and trading nation in northern Europe. During the 20th century, the country has also experienced long periods of peaceful relations between the actors in the labour market. As a consequence, some economic wealth has been accumulated in the country. This wealth initially ended up in private hands but, in parallel to this increase in private wealth, later on also found its way into the state or government sector as a result of a long-standing dominance in government by the Social-Democrats and subsequent high-tax regimes. This growth of public wealth has also come to affect the development and structure of the Swedish foundation sector in interesting ways, a topic that will be addressed in more detail later on in this report. All of these more general historical factors are important in explaining the growth and development of Swedish foundations. However, the role and position of foundations in Swedish society 18

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have undergone several periods of change in the pre-20th century period. From a focus on education and scholarship in the foundations established in the period before 1800, the development can be described as one ranging over a 50-year period from 1800 to 1850 with a heavier emphasis on foundations in the ield of social services. Research foundations have been dominating the arena from the second part of the 19th century and onwards. To understand this development, it is argued in the report, a couple of other and more speciic historical developments must be brought to the fore: those dealing with the importance of the Reformation, the emergence of the welfare state and the strength of the popular movement tradition. The Reformation Of importance even before the development discussed above, is the Reformation and the process during the 16th century to create and institutionalise a Unitarian Swedish Lutheran protestant state church. This period is important because, through the introduction of the Reformation in the 1520s, all previous property of the Catholic Church was coniscated by the King (Gustav Vasa) and brought under the control of the Crown. Simultaneously the previously existing religious, social and charitable institutions of the Catholic Church was transferred to the Swedish Crown; institutional seeds that later became part and parcel of the emerging nation state and, even later on the emerging welfare state system. The new national church introduced in 1527, and the religious unity that was established through this church, was of paramount importance to keep the young Swedish nation state united and intact. Secondly, through the decision at the end of this long institutional process, when a religious monopoly is granted the new national church in 1593, the only major independent force outside of the nation state is forced to leave the country. The Catholic Church and a number of its associated religious fraternities and monastic orders – such as the Franciscans and the Blackfriars – that had

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been working in Sweden from at least the 12th century, were forced to lee Sweden and its new regime. The [Catholic] church came to the Nordic countries and Sweden with one monk – Ansgar – and from that time and onwards, we are continuously meeting people from monasteries – although often without names – in the Swedish medieval history, up until the day in the year 1596 when the last nuns from Vadstena Monastery were sent into exile over the sea to the Birgittinian monastery in Gdansk, where they were granted asylum. Härdelin (1998, p. 222)1

The extended Reformation in Sweden has lead to a situation that is somewhat different compared to many other European countries especially on the continent. In many of these countries, the Catholic Church and its various nonproit and voluntary institutions in education, social welfare and health care have often been an active part in the development of society. Not until the 1990s, following an increased Catholic immigration, has the Catholic Church returned in some force to Sweden. In 1998 the irst Swede was installed as the Catholic Bishop of Sweden, which was the seventh since the Reformation. After the formal separation of the Church of Sweden from the Swedish state in the year 2000, the Pope and the Catholic Church have also, for the irst time ever, invited and met with the Archbishop of the Church of Sweden. During the last two decades of the 20th century, not only various Christian churches but also nonproit and voluntary institutions emerging from a number of other religions, such as Muslim congregations, have enlarged and enriched Swedish religious life and the wider civil society. This expanding institutional pluralism might in fact have implications not only for the future development and focus of the sphere of 1. Kyrkan kom till Norden och Sverige med en munk – Ansgar – och klosterpersoner möter oss sedan oupphörligt – fast ofta namnlösa – i den svenska medeltidshistorien, ända till den dag år 1596 då de sista nunnorna från Vadstena kloster sändes i landslykt över havet till det birgittinska klostret i Gdansk, där de ick en fristad.

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Swedish foundations, but also for the entire nonproit sector in Sweden. The Swedish welfare state and the foundations It has been argued that an institutional “social democratic” welfare state regime has developed in Sweden, using the terminology of Esping-Andersen. This development in the second part of the 20th century has been described as a process where “the principles of universalism and de-commoditisation of social rights were extended also to the new middle classes” (Esping-Andersen 1990, p. 27). There is an abundance of interesting academic literature in this ield, describing the development and structure of the Swedish welfare state system. In general, all of these writers fail to account for the role and importance of the existing nonproit or voluntary arrangements. Only in limited welfare ields, such as the rehabilitation of drug-abusers (Stenius 1999) or in the ield of adult education, can we ind any comprehensive analysis of the role of other actors than state, municipal or other public actors in the provision of welfare services in Sweden (Lundström and Wijkström 1997). The position of foundations in the wider system of welfare provision in Sweden, and also of other civil society actors such as societies and benevolent associations of earlier periods, have been shifting over the past decades and centuries. In some instances, these actors are described as fore-runners or irst-movers into – or even creators of – new ields in Sweden. This is for example argued by the historian Per Wisselgren (2000) in his excellent and interesting analysis of the role and importance of the Lorén Foundation in the early years of the budding social sciences ield in Sweden in the second part of the 19th century. The most obvious picture, however, of the position of foundations in the larger ield of welfare provision in Sweden during the 20th century and the emergence of a public welfare state system, is that of marginal or small complementary providers of either tangible social services or economic support. This is also the

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dominant view found in our conversations with the experts interviewed during this research, as is discussed later in the report. This marginal or complementary position of foundations appears to be the function of two different processes. The irst process refers to older institutions, for example established in the mid- or late 19th century, and their development in parallel to the growth of a preferred public welfare system. From an earlier dominant, or at least strong, position in their ield, these institutions subsequently entered into this new marginal role as a result of the emergence of the welfare state. The second process refers to social welfare foundations established later on, when the public welfare system had already been established. In this case, these new actors were created or set up in relation or complimentary to an already strong dominant system. This situation was, so to say, part and parcel of their very birth, and their charters, structures, and board of trustees have been adapted accordingly. We now have a situation where either earlier foundation arrangements have been transformed, or later foundations have developed, into marginal actors in their ields. In a way, it could be argued that the institutional memory and practice of having strong independent foundation actors in society have been lost. In the changing situation of today, when a large share of the resources for scientiic research in Sweden is found in more independent foundations outside of direct state or government control, for example, this lack of institutional memory might result in a somewhat unclear situation. The popular movement tradition The foundation is one of several major organisational building blocks found in the Swedish nonproit sector (Wijkström and Lundström 2002, chapter 4). The other major form found in Swedish civil society is the modern nonproit or voluntary association ((folkrörelseföreningen). Between these two archetypical civil society forms, it may be argued, exists the society (sällskapet). The society is an older form of association with less open structures 22

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and is often directly organized around someone else’s situation or problems rather than that of the immediate members of the associations which is common in the modern mass movements (Jansson 1986; Stenius 1987). For an interesting contribution on the legal dimension of the nonproit association concept (ideell förening), see also Carlsson and Stenman (2003). During the 20th century, the popular movement association form has emerged as the most dominant civil society tradition in Sweden. This is especially obvious when they are grouped together in huge federations with hundreds of single associations. This form has in many situations replaced the two other forms as the form in which to organize nonproit or voluntary activities. The strength of the folkrörelse concept in Sweden has even been described as a “popular movement marinade” in which civil society in Sweden is embedded. (Hvenmark and Wijkström 2004; Wijkström 2004; Wijkström, Einarsson and Larsson 2004). In this strong popular movement tradition emerging in Sweden during the 20th century, the idea and existence of foundations has not always been easily integrated. Sometimes they have even been perceived as being in opposition to the popular movements and their associations. Often, this perception was due to the type of people or values associated with the foundations, but sometimes also the non-democratic and member-less form of the foundation have been part of problem.

A history of public good, but also of suspicion and irritation Katarina Olsson, as one of only a few prominent foundation scholars found in Sweden today, argues in her PhD thesis from 1996 that the general attitude in Sweden towards foundations is one of clearly positive colours. In her thesis, she writes that the attitude in Sweden today is that ”foundations are something good and beneicial for society at large” (Olsson 1996, p. 437). This kind of general positive attitude towards foundations, understood as a special sort of institution providing money for good things, may 23

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ring true when talking to the woman or man on the street. But this is only part of the story. Despite an overall positive attitude among the general public towards foundations in Sweden , these institutions – and the use of them – also appears to have attracted a fair amount of suspicion and irritation. They also seem to have created a number of disagreements, for a number of reasons over the centuries. The reasons, however, in one way or another, often seem to relate to the particular attributes associated with the foundation form. A foundation in Sweden can, in layman terminology, be understood as a self-owning asset without any owners or members, with a normally very inlexible mission and an element of eternity. This, in combination with an unclear, shifting and often debated, balance between the private and the public character of this entity, has lead to a from time to time contested position for foundations in Sweden. This is especially true for the charitable or public-good foundations. Before venturing into an analysis of the various reasons for suspicion and irritation, it is important to note, as discussed elsewhere (Wijkström 2001), a particular but often underlying basic strand of thought in many people’s understanding of foundations and other charitable arrangements. In the 17th, 18th and 19th centuries as well as in the early 20th century, foundations in Sweden were typically set up by individuals of the aristocracy and the industrial and inancial elite. It is quite understandable that people from these groups were able to establish foundations, since these were also the segments of the population who had amassed the surplus wealth in Swedish society at the time. Access to wealth is a necessary condition to establish foundations. Therefore people from these groups established their foundations and they did it based on their own personal values or points of departure, or even for “their own” purposes. Two main reasons, among several, for creating foundations in these centuries can be identiied. The irst classical role for foundations in Sweden has historically been to protect the fellow members within their own group inancially, or to ensure that 24

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the young (male) members of the upper classes or elite could be able to study and develop the skills and relationships considered necessary for them in the future. Another main reason for wealthy people to set up foundations was a drive to care for various “less fortunate” individuals or groups in society, and to help them in various ways. During the centuries discussed, many foundations were associated with values and practices found in the charity tradition. This concept has been given a very strong negative connotation in Sweden during the 20th century. It has almost exclusively been associated with private social welfare for the poor and not at all associated with the arts, culture or education, as is the case in some other countries. Traditionally, social welfare charity has been heavily dependent on the whims of the wealthy and paternalistic upper classes, often inspired by for example a ‘scientiic charity doctrine’. The root causes of poverty and suffering were thought to lay in the bad habits of the poor. Thereby, the individuals were restricted to the limited capacity of eleemosynary and, at times, capricious arrangements for their very existence (Lundström and Wijkström 1997, pp. 17–19). The negative image of charity and philanthropy found in Sweden today probably stems from this picture of poor and needy human beings, caught in pauperism. These two reasons for establishing foundations can also be seen as part of a practice to conserve existing power structures in society. This dimension is easily understood when looking at the private scholarship arrangements mentioned above. Also the social welfare charity arrangements can be understood as introduced to lessen the worst effects of an expanding industrial society. This, primarily not in order to promote a more equal distribution of wealth or the development of an egalitarian society, but rather to tone down the most apparent distress and inequalities. To avoid revolts and riots, critics of traditional charity would say. In this way, foundations as a group, at least partly and from a historical perspective, could in some cases be seen as power instruments, or insignias, of the wealthier segments of the population. The foundation concept is still today sometimes framed by 25

Wijkström & Einarsson

this opinion. This picture of foundations does not sit well with a traditional social-democratic ideology and vision for society, as it emerged in Sweden in the early 20th century and is still present in the Swedish society today. When studying historical material, the negative image and critique of foundations can be framed in one of three major approaches. The irst being (1) one of suspicion of selishness and misuse of foundations. The second approach could be described as (2) an irritation with the ineficiency and inlexibility associated with foundations. The third could be expressed (3) in terms of a disagreement over the use of foundations as instruments of power or control. These three basic approaches can also be combined in one and the same argument. In the material and from history we have repeatedly found the same questions being raised regarding the role and function of foundations: why the supervision of foundations should be expanded, why they should be registered, why laws should be introduced or at least changed, and why representatives appointed by government should be forced into the boards of certain foundations. These are all solutions that have been continuousely debated in the public forum for centuries.

Foundations established by government When looking at the individuals or bodies setting up foundations in Sweden, the picture is blurred as well as shifting over time. As a general observation, it is easy to argue that large capital-heavy foundations are set up by actors who have been able to amass some kind of surplus capital or resources. In Sweden, important actors establishing foundations during the second part of the 20th century were different parts of government. This is indeed logical given that, in a country with a high-tax regime, various public sector actors have been able to accumulate substantial resources, both on a national and municipal level. Therefore, it has often

26

Foundations in Sweden TABLE 1: Sphere link or afiliation for foundations Independent foundations Corporate foundations Government-related

State, Municipality, etc Hospitals, Academia etc Community foundations Civil society foundations Nonproit & Voluntary Church of Sweden TOTAL

Number

Assets (mkr)

3 460

65 900

430

9 900

4 720

56 400

2 380 2 340

33 200 23 200

20

100

2 870 1 890

21 200 17 300

980

3 900

11 500

153 500

been the case that national or local government have initiated foundations in Sweden (see also Table 1). In a new and unique table of foundations in Sweden, Table 1, we have coded each of the approximately 11 500 Swedish public beneit foundations in our database according to their main afiliation with other sectors or groups (“spheres”) in surrounding society. This afiliation can, for example, be one where the sole recipient of grants from the foundation is found in a particular sector (e.g., a public hospital); that the board of the foundation is controlled by actors from a certain part of society (e.g., a foundation within the sports movement), or if the foundation has been established by actors from a certain sector (e.g., a municipality or a private company). Also apparant from the analysis is that a number of inluential foundations are associated with private power spheres in society. These are groups which, through these foundations, sometimes control substantial parts of Swedish business and industrial life through owning control stock posts in Swedish companies. This practice has recently been noticed by the international business

27

Wijkström & Einarsson

press. For example, the foundations in the Wallenberg sphere have been identiied as key elements in the governance and control of the family empire (Brown-Humes 2004). The largest category of “government-related” foundations includes a wide variety of foundations connected to public “host bodies”, such as public hospital-controlled foundations or ones connected to the royal family or Swedish nobility (Riddarhuset). Very few Swedish foundations are found in the category “community foundations”, a concept which appears to be rather foreign in the current Swedish context. If we, during our classiication work, have found the foundation without any explicit or primary linkages, we have instead decided to label it “independent”. These independent foundations also make up the lion’s share of the population of Swedish public beneit foundations (Table 1). The practice of Swedish government to establish foundations was especially strong during the inal two decades of the last century, as is illustrated by the introduction of the wage-earner fund foundations in the early 1990s. However, during the 1990s, not only as creator of foundations was government visible in the debate, but also through the use of appropriation foundation form (anslagsstiftelse). In particular, the problem on “governmentability” associated with this special form was highlighted. The new wage-earner fund foundations are also the clearest example of a new and more prominent role assigned to foundations in Sweden in the last couple of decades, as discussed below. It is dificult to understand these large and inluential foundations as merely a complement to the earlier and traditional arrangements of the Swedish state. Rather, it would be easier to think of them – as the situation has developed today – as either replacing or substituting earlier government activities. Even if not as pronounced, this kind of development can also be identiied in other ields. Occasionally, this development has led to political conlict and irritation.

28

Foundations in Sweden

The appropriation foundation (anslagsstiftelsen) During the 1990s, a couple of other developments occurred which added to the earlier discussed irritation in relation to foundations. First of all, we can notice a growing irritation within government with the unrestricted use of “public” foundations, set up by public sector bodies in certain policy areas. Therefore, according to the new law on foundations, there is no such thing as a public foundation in Sweden today. Although Swedish foundations are private legal entities, i.e. they are not part of the public legislative system, the donors or original creators of foundations can still be public entities. Once the foundation is created and the assets transferred, the new foundation becomes a private legal entity with a life of its own, regulated only by its statutes, board, assets and purpose. In the proposals leading up to the new law, a special foundation form was discussed, but was never instated in the law, the appropriation foundation (anslagsstiftelse). Equipped with a structure similar to the fundraising foundation, this form was not required to obtain an original donation or endowment to sustain it in its purpose. Instead the foundation was to rely on annual grants or appropriations since the returns of the assets of the foundation would not be enough to run its programs or other operations. Quite a number of the operating foundations already existing in Sweden have this appropriation character, and many of these have been established by public sector bodies. This type of foundation form had been in popular use within government, for example for various cultural institutions and also in the area of regional development. The existence of these appropriation foundations has been perceived as reducing the “governmentability” of government. Established by earlier governments, these appropriation foundations were considered as a way to bind future governments and to limit the opportunities for implementing a new political agenda. A number of public bodies have therefore issued strong recommendations against the use of foundations by the state administra-

29

Wijkström & Einarsson

tion (especially the use of the appropriation form). The foundation is not considered an appropriate form for government initiatives since it is not lexible enough for a political system and it has been decided that the use of foundations for governmental purposes as well as in government’s cooperation with other actors should be restricted (Riksrevisionsverket 1990; SOU 1994:147; Statskontoret 1997:25; Riksdagens Revisorer 2000). The dissolution of the Swedish wage-earner funds The other major development in the Swedish foundation sphere during the 1990s was the dissolution of the wage-earners funds (löntagarfonderna). Through the creation of the so-called wage-earner fund foundations (löntagarfondsstiftelserna), a number of new foundations were created with a focus on research and higher education. Apart from the establishment of several large pension foundations from the 1940s onwards, the transformation of the former wage-earner funds into independent foundations was the single most important 20th century event, in terms of inlux of new foundation capital into the Swedish foundation world. This transformation was carried out in the beginning of the 1990s, via the creation of a number of large foundations during 1993–94. These new foundations were set up by the conservative government in power 1991–94, by redeploying the capital from the earlier established, and highly debated, wage-earner funds. A Social-Democratic government established the wage-earner funds in 1984, after several years of intense debate and investigation. The idea was to transfer some of the proits of large and successful Swedish corporations into these funds and that these funds should be major stockowners in Swedish corporate life. There were three main purposes for their creation. They should: (1) contribute to a more fair distribution of income among different groups in society; (2) reduce the trend that large corporate proits tended to lead to an increased wage drift and subsequent inlation; and (3) counter-act an increased demand for venture capital. Needless to say, the creation of these funds met with severe

30

Foundations in Sweden

criticism from liberals and conservatives in the political arena, as well as from members of the business community. Through the dissolution of these wage-earner funds and the redeployment of their assets to a number of independent foundations in the early 1990s, a considerable amount of resources was transferred by the conservative government to a number of new foundations over a relatively short period of time. In total, almost SEK 20 billion was used as the endowment for, in total, eleven new foundations. In 2002 , ive of these foundations were among the 28 largest foundations in Sweden (each with more than SEK 1 billion in assets). In the same year another foundation within this group of 28, the Bank of Sweden Tercentenary Foundation (already established in the early 1960s), received a considerable separate donation. The oficial reasons behind the creation of these new large foundations, given by the conservative government at the time, were that foundations allowed for a more lexible way to organise and operate, and that the foundation structure was an already well tested form to managing and distributing resources for research. Later, it was also argued that the independent position of the foundations and the fact that they were so tightly bound by their original missions also ensured stability and a long-term perspective in their operations (Riksdagens Revisorer 2000, p. 41). The new foundations were established in several stages. During 1993, it was decided that only two foundations should be set up, that the separate donation mentioned earlier should be granted and that the ownership of two earlier public sector universities should be transferred into private foundations, through the creation of two completely new operating foundations. However, during late 1993 and early 1994, it became clear that the assets from the former wage-earner funds had increased in value and that several billion SEK would still remain after the irst foundations were created. In March 1994, more than SEK 8 billion remained, and so it was decided that another seven smaller foundations should be created to utilize these new and unexpected resources. Five new research foundations and two others were therefore es31

Wijkström & Einarsson

tablished in 1994, one to further a more vital cultural life and the other to increase the inancial support for innovations (Riksdagens Revisorer 2000, pp. 41-46). The creation of the wage-earner fund foundations (löntagarfondsstiftelserna) has been hotly contested by the following SocialDemocratic governments, as well as by individual Social-Democratic Members of Parliament, ever since they were established (see, e.g., Silfverstrand and Bernhardsson 1995). In a number of steps, Social-Democratic governments have also tried to revoke, or at least change, the effects of the original decisions of the conservative government. The irst attempt was launched to try to actually dissolve the new foundations and in second attempt, the new government tried to change the purposes of the foundations. Both of these attempts have failed so far, but in another initiative, the process through which the board members are to be selected has been changed. From a system where the earlier foundation boards were self-generating, they are now instead to be appointed by government (Riksdagens Revisorer 2000, pp. 28–32). Subsequent actions by the Social-Democratic government to reduce the economic and political inluence of the establishment of the new foundations have been to cut down general government grants for scientiic research. Even at the very shift of government in fall 1994, the new Social-Democratic government met with representatives from the foundations. The government then tried to persuade them to promise to contribute with resources to compensate for planned cuts in the state research budget. None of the foundation boards were at that time willing to accept this, since it would be to violate the conditions of the boards, as expressed in the provisions of the foundations (Riksdagens Revisorer 2000, pp. 28–29). A recent special committee, appoined by the Association of Swedish Higher Education, proposed an increase of the percentage of general university overhead costs. These costs should be paid by external inanciers of research to cover university adminis-

32

Foundations in Sweden

tration (SUHF 2002). This suggestion has now been put into effect and more are expected to follow. This move is, as considered by some, to be yet another way to strike back at the establishment of the wage-earner fund foundations. This time, however, the actions have also affected civil society actors other than these particular foundations. Among them we would ind societies and foundations founded much earlier and entirely with private money, gathered either through endowments and donations or through an active fund-raising (IVA 1998). For example, Karin Hallerby, Secretary-General of the Swedish Society for Heart- and Lung Diseases, is one of the actors in this debate. She argues that since the people giving money to this kind of private nonproit organisation is taking their gifts out of their already taxed money, these organisations should be treated differently than the state-run research councils and other foundations. The political and ideological battle around these foundations, as well as this latter debate regarding who should inance the public universities and their administration, stand at the very centre of a transformation and shift of responsibilities in Swedish society. Both the role and governance of Swedish foundations appear to be in the midst of this process, a topic we will return to in the inal section of this report.

Legal issues The most important formal event in the Swedish legal scene for foundations in recent times was the introduction of the Foundation Law (1994:1220), which came into effect as of 1 January 1996. Prior to the introduction of this law the foundation form had never before been regulated in a law, even though fragments of this law existed within an earlier law from 1929 and in previous iscal legislation. At this time, the situation in Sweden was, in some ways, more similar to that of common law countries, such as the

33

Wijkström & Einarsson

UK, where legal praxis is used to decide whether a legal entity should be considered a foundation or not. In the new law, it is clearly stated that a foundation exists only when: (1) an asset or property (2) has been set aside from the donor(s) (3) to be administrated separately and permanently (4) with the aim to serve a speciic purpose. A Swedish foundation can not have owners or members, but are instead described as a ”selfowning entity” (självägande). A foundation is required to have a board and the word stiftelse must be part of the oficial name, a word that is reserved for foundations only. The new foundation law also requires all larger foundations, or those operating some kind of business, to report and register with their County Administrative Board (länsstyrelsen).2 According to the new law, a Swedish foundation can be administered through one of two arrangements. It can either have an autonomous board that governs the foundation (egen förvaltning) or it can be run through an administration connected to the board of another institution (anknuten förvaltning). This other organisation or institution may, for example, be a municipality, a bank or the board of a nonproit organisation like the Swedish Red Cross or the YMCA. We estimate the number of larger Swedish foundations with attached administration present in the registers in 2002, to amount to approximately 6 000, accounting for a total 2001 book value assets of more than SEK 30 billion. Different types of foundations In the new law, several types of foundations are also mentioned, and, as reiterated before in this report, this does not include the public foundation as this form does not legally exist in Sweden. Firstly, there is the main form of foundation (allmän stiftelse) that includes approximately 9 500 of all the larger foundations.

2. A large foundation is here considered to be one with assets of more than ten basic amounts, geared to the price index, in 2002 approximately SEK 350 000.

34

Foundations in Sweden

Secondly, two special types of safeguarding foundations (tryggandestiftelser), present already in a separate law from 1967, are also recognised and mentioned in the new law, those being the pension and the personnel foundation. A pension foundation (pensionsstiftelse) is set up by an employer with the sole purpose of safeguarding a pension commitment to the employees, while a personnel foundation (personalstiftelse) is created for the staff´s recreational purposes. Thirdly, the new law also details the collective-agreement foundation (kolllektivavtalsstiftelse). A collective-agreement foundation is based on an agreement between the employers and the trade unions, to support development programs that contribute to the security of the employees. In this text, the collective-agreement foundations together with the safeguarding foundations mentioned above, will be regarded and referred to as the labour-market-related foundations. However, these foundations will not be the focal point of this report, since they are not generally considered as being primarily set up for the purpose of “public good”. Of the 28 largest foundations found in Sweden in 2002, each with book value assets of more than SEK 1 billion, over half of these foundations (15) were such labour-market-related foundations and together they controlled assets in 2001 valued at nearly SEK 120 billion (Table 2). A fourth special form of foundation recognised in the law is the new fund-raising foundation (insamlingsstiftelse). The fund-raising foundation type has a unique feature, unlike all other Swedish foundations, because it is not reqired to have an initial donation to be considered a foundation. Instead a public call for donations sufices for the foundation to have legal capacity. In the early 21st century, only approximately 400 fund-raising foundations existed in the public registers. As mentioned earlier, the Swedish foundation law acknowledges two methods to administer a foundation; either through an autonomous board, or through the care and administration of the board of another organisation or institution. This latter form is here called attached administration (anknuten förvaltning). In the

35

Wijkström & Einarsson

2002 registers, a total of some 6 000 foundations were placed under attached administration, which is more than half of all public good foundations in the database (See Table 2). The three major ields in which we can identify attached foundations (in terms of number as well as assets) include education, research and social services. This mirrors the general application and picture of foundations in Sweden. However numerous, the combined assets of these smaller foundations, with their administration attached to the board of another organisation or institution, only represents approximately 20 % of the total foundation capital (excluding the labour-market foundations). To conclude this section on different foundation forms it is worthwhile to note that approximately 2 000 foundations in Sweden were considered enterprise foundations in 2002, according to the County Administration Boards. The existence of enterprise foundations (näringsdrivande stiftelser) has also been the topic of some legal debate, for example when the new law was introduced (see Olsson 1996 for an excellent overview and discussion). Foundations operating some kind of business are especially mentioned in the law and are also required to register with the authorities. The enterprise foundation concept can be closely compared to the international notion of an operating foundation, although there is a slight but, in our opinion, important difference. An enterprise foundation can, as the term is deined by Olsson (1996), operate or own some kind of commercial activity or enterprise not necessarily connected to the purpose of the foundation, for example as a form of investment only. An enterprise foundation, by our deinition, can only be deined as an operating foundation if this enterprise also is connected to or part of the purpose of the foundation. Fiscal legislation Apart from the new foundation law, which to a large extent can be thought of as a codiication of existing case law and previous legal doctrine, also the tax laws are of importance. Current iscal legislation concerning foundations dates back to the 1940s, although 36

Foundations in Sweden

earlier examples of favourable treatment can be found, such as in 1810. In particular scholarship funds and some speciic charitable foundations ((fromma stiftelser) were then granted tax-exemption (Hagstedt 1972; Isoz 1997, p. 23). In the early 1990s, an overhaul of the tax legislation for foundations and nonproit associations was carried out and published in a public government report in 1995 where new legislation was proposed (SOU 1995:154). This revision was met with criticism, and in 2003, the proposal was inally put to rest. To receive tax-exempt status in Sweden today, a foundation must belong to one of two main groups: (1) the charitable foundations, or (2) the foundations found in the ”Catalogue”. To be considered charitable in Sweden, a foundation must comply with three prerequisites; (a) its aim and purpose should be considered as a ”qualiied” public good purpose; (b) about 80 % of its income over a ive-year-period should be spent; and (c) its main activity should be carried out along the aim or purpose stated (Law 1947: 576, as presented in SOU 1995:154). See also (Olsson 1996; Carlsson and Stenman 2003). Qualiied public good purposes include health care, strengthening of the national defence, relief work among the needy, furthering child care and education, promoting scientiic research (included in a revision from 1942), and furthering cooperation between the Scandinavian countries (included in 1991). In general, foundations are traditionally less favoured regarding the range of activities for which they are granted tax-exemption, and are also often held to stricter standards and kept under tougher control than nonproit associations (ideella föreningar). In the 1940s, it was suggested that the limited range of areas in which a foundation could engage, without losing its tax-exempt status, should be expanded to culture ields like theatre, music, the arts or sports – activities that would be considered tax-exempt if carried out in a nonproit association. However, the Social-Democratic minister at the time explicitly repudiated the idea of

37

Wijkström & Einarsson

expanding the ields of tax-exemption in a government bill from 1942 (Proposition 1942:134, p.48). The original idea behind The Catalogue (“Katalogen”) grew from the 1947 tax law cited previously (Law 1947:576, 7 § 4 mom) where a total of 14 categories of legal entities (e.g., compulsory student unions) and 45 speciically mentioned organisations or institutions are listed (e.g. the Nobel Foundation). The foundations included in the Catalogue (as well as the other organisations in the Catalogue) are subject to paying tax solely on income from real estate property, and not, for example, on income from other business activities. The practice of operating some kind of business within a foundation, as discussed briely above, is also of interest from a iscal point of view, but then posed in a different language and understanding.3 According to Swedish iscal doctrine, operating a business (att bedriva rörelseverksamhet), is deined by three elements. The main point of interest is whether or not the economic returns, or proit from the operation in question will be taxed or not. The two irst elements are following on the idea that the activity irst of all should be understood as being commercial (yrkesmässig), which demands that the business is conducted with some kind of regularity (regelbunden) and has some kind of durability (varaktighet). The third requirement is that there should also exist an element of proit-generation (ett visst vinstmoment) (Hagstedt 1972, pp. 161ff). The consequence of having two different parallel legal systems with occasional overlapping terminology and use of similar words, does not simplify attempts at classifying or deining different types of foundations or their activities. For a deeper discussion on iscal legislation see also Melz (1998) as well as Gunne and Löfgren (2001). 3. The Swedish civil law concept used by Olsson (1996) is “näringsdrivande stiftelse”, while for example Hagstedt (1972) uses the iscal concept of “rörelseverksamhet”. The former usage focus on the character of the legal entity, the foundation, while the latter instead focus on the character of a particular activity carried out, for example in a foundation.

38

Foundations in Sweden

THE EMERGING CONTOURS

There are an unknown number of foundations in Sweden today. Thanks to the new foundation law, however, we now know that almost 15 000 larger foundations existed in the beginning of the 21st century. Only after the law´s requirement for these larger foundations to register, could we obtain a fair picture of even these foundations in Sweden. Nevertheless, it was estimated in the early 20th century, that between 12 000 to 13 000 foundations existed. By 1976 the estimate had grown to some 51 000 foundations with a combined wealth of SEK 24 billion. About 48 100 of these were classiied as nonproit or charitable (ideella), while the rest were considered to be family foundations, or labour market foundations (Ds 1979:153). A later survey identiied altogether 16 169 Swedish foundations registered with the Swedish tax authorities in 1990, and it was estimated that some 1 500 new foundations were created in the period 1982–1988 (SOU 1995:154, pp. 56-57). Higher total wealth estimates have been provided and the estimated total number of foundations has also been questioned, see, for example, Frii (1989, p. 9) or Isoz (1997, p. 23). In December 2002, data on approximately 14 500 foundations was collected and imported from the registers of the Swedish County Administration Boards for this research project. In this report, there is a focus on these larger foundations. The larger foundations have reported assets of more than SEK 270 billion in 2001 (book value). Rough estimates of their actual wealth (valued at market-prices instead of book value) are at least the double (Birath, Hallgren et al. 2001, p. 11), indicating a total foundation wealth in Sweden surpassing SEK 500 billion. 39

Wijkström & Einarsson

As we can see in Table 2, the Swedish foundation population can be divided into three main sub-populations along two major lines of division. The irst line (horizontal) is drawn between what we roughly consider to be some kind of “public good” foundation on one hand, and a group of foundations more narrowly deined as “labour-market” foundations on the other. As mentioned earlier, labour-market-related foundations control a substantial part of the foundation wealth in Sweden. Although we will not deal with these foundations in further detail, we note that the combined assets of the circa 3 000 foundations that are related to the labour market, came close to SEK 120 billion, thus representing approximately 44 % of total registered foundation wealth. These foundations will not be discussed further in this report as they are the result of an agreement between the parties of the labour market, rather than set up to promote some kind of more generalised public good. The second dividing line (vertical) separates autonomous foundations – with a board of their own to govern and lead the operations of the foundations – from those foundations that are administered through attached administration with the board of another organisation or institution. In our database, approximately 6 000 foundations were found under attached administration (anknuten förvaltning). In total, they are reported to hold more than SEK 30 billion in assets. Further in this report we discuss the general development of foundations over time, including analysis of the circa 1 500 operating foundations.

A picture of Swedish foundations before 1900 In Sweden, it is evident that the focus and emphasis shifts over different periods of time, in terms of the fields of activity in which the foundation form is used. When looking at Table 3, it is obvious that education was at the heart of the foundation world before 1800. More than half of the pre-1800 foundation wealth still

40

Foundations in Sweden TABLE 2 The Swedish Foundation Population in 2002 Autonomous Administration Number

Assets(mkr)

Attached Administration Number Assets (mkr)

Normal Fund-raising Operating

3 571 352 1 506

94 373 556 27 051

5 971 57 40

30 677 153 654

PUBLIC GOOD

5 429

121 980

6 068

31 484

Pension Personnel Collective A.

2 391 586 20

111 351 2 086 5 134

-

-

LABOUR-MARKET

2 997

118 571

-

-

TOTAL

8 426

240 551

6 068

31 484

active (expressed in terms of book value) and 39 out of the less than 100 foundations from that period which still existed in 2002, were found in the ield of education. The second group consists of more than 40 social service foundations created before 1800 and accounts for 34 % of the total Swedish foundation wealth in the early 21st century. However, one major foundation, established in 1624, dominates the picture (Gustavianska stiftelsen vid Uppsala Akademi). This is an ancient foundation established by King Gustav II Adolf to support the Uppsala University. By 2001, this foundation alone was valued of more than SEK 750 million (representing close to 35 % of total assets held by foundations established before 1800). But even if that particular foundation is removed from the picture, foundations present in the ield of education still accounts for a large part of the assets in the foundation sector, and together with social services education represent almost 80% of the capital prior to 1800.

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Wijkström & Einarsson

In the 50-year period from 1800–1849 education was still a major ield in which foundations were created. Some 27 % of the foundations created in this period and still operating in the irst years of the 21st century are found in education. However, foundations engaged in the ield of social services seem to have stepped forward during the period to become the charity champion of that period and hold approximately 62 % of the total book value assets from the foundations created between 1800 and 1849. In total, less than 140 foundations established during the irst 50 years of the 19th century have survived into the early 21st century. The total book value assets of these foundations amounted to close to SEK 1 300 million. During the next period from 1850-1899, the map appears to shift considerably, due to only a few major donations. Instead of education or social services, research is now for the irst time at the top of the list. Indeed nearly 50 % of that period’s foundation wealth (SEK 7,8 billion) was found within the ield of research. The reason is the creation of the internationally reknown Nobel Foundation in 1895, which as of 2001, managed more than SEK 3.2 billion in book-value assets. The ield of health care moved to second place in terms of total assets (17 %), due to the establishment of one single hospital foundation in 1867 (Stockholms Sjukhem), with a capital of more than SEK 1.1 billion. When excluding the assets of these two giants (representing close to 2/3 of total foundation wealth still in existence from the period 1850–1899), the joint assets of the approximately 200 remaining social service foundations exceeds SEK 1.2 billion represent almost 40 % total assets, still in existence from 1850–1899. The ield of social services therefore dominates the picture, with the ield of education, consisting of more than 200 foundations with combined assets representing over 20 % of the period’s total wealth, coming in second. The foundation activity in the ield of education how-ever seems to fall in relative terms during this period. This is a trend that continues into the next century and is probably a result of the law on compulsory public schools passed in 1842. 42

Foundations in Sweden TABLE 3 Foundation Assets in Different Time Periods Pre 1800– 1850– 1900– –1800 1849 1899 1949 Education Research Social services Health care

1950– –2002 1999

53% 5% 34% 7%

27% 1% 62% 5%

10% 46% 16% 17%

13% 32% 23% 5%

16% 50% 12% 2%

1% 57% 2% 0%

Development & Housing

0%

0%

6%

16%

12%

37%

Culture & Recreation N.E.C*

0%

4%

3%

4%

4%

1%

1%

1%

3%

7%

4%

2%

Proportion of total capital 2002

1%

1%

5%

24%

67%

2%

* Not Elsewhere Classiied

In conclusion, apart from a few major donations, remnants of the Swedish foundation world in existence before 1900 is dominated by a large number of relatively small foundations, primarily found in the ield of education and social services. Of the approximately 800 Swedish foundations pre-dating the 20th century whom still exist in 2002, around 300 are found in each of education or social services.

Swedish 20th century foundation map The absolute bulk of foundations and foundation wealth in Sweden is found in foundations created in the 20th century. Almost 75 % of all existing foundations and more than 90 % of the 2001 assets originate from the previous century. Only some 800 foundations pre-date the start of the 20th century. Moreover, most of the foundations existing in 2001 – approximately 9 200 – were actually established as late as in the period 1950-1999. 43

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In the newly constructed Table 4, where we present the current situation for Swedish foundations and their assets according to the ICNPO classiication system4, it is clear that research (followed by social services and education) dominate the foundation population. The ICNPO system is used to classify nonproit organisations by their “economic activity”. Foundations are here classiied according to the grants made to speciic ields, or, in the case of operating foundations, their operating expenditures. We have, for this project, assigned each individual foundation to one speciic ICNPO ield by reading and analysing the purpose paragraph of each individual foundation. The ICNPO system contains some seventy sub-ields which we have also used to classify TABLE 4 Swedish foundations presented per ICNPO ield (2002) Number

Assets (mkr)

Culture & Recreation

1 150

6 500

Education

2 290

23 200

Research

2 240

66 300

Health care Social services

570

5 900

3 430

24 700

Environment

190

1 700

Development & Housing

670

19 700

International activities

190

1 200

Religion

510

3 300

Not elsewhere classiied

190

900

11 430

153 400

TOTAL

4. International Classiication of Nonproit Organisations, see Salamon and Anheier Salamon, L. M. and H. K. Anheier (1996). The emerging nonproit sector : an overview. Manchester ; Manchester University Press. view

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foundations in this particular project. In Table 4 we present our data on aggregated ICNPO levels. During the 20th century, research was clearly the most popular ield in which to create foundations, especially in terms of the wealth donated. As many as one out of ive foundations set up during the previous century was a research foundation, and their combined assets of approximately SEK 60–70 billion represented almost 45 % of total foundation wealth in the early 21st century. This development has also effected the total capital found in this particular ield, which is today the largest, followed by education and social services. This focus on research among Swedish foundations is even further pronounced when we study Table 5, where the most recent foundations (established from 1980–2002) and their book value wealth are presented. Approximately 3 400 new Swedish foundations were created during 1980-2002 (excluding labour-market foundations). Those new foundations had a combined book value of approximatly SEK 49 billion. An important explanation for this is the establishment of the so called wage-earner-fund foundation, and the assets belonging to the research foundations set up in these years well surpass 60 % of the total capital for this period.

TABLE 5 New Swedish foundations ICNPO ield (1980-2002) Education Research Social services Health care Development & Housing Culture & Recreation Not elsewhere classiied Total

Number 147 980 864 196 318 479 467 3 451

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Assets (mkr) 871 32 322 3 870 571 6 886 2 335 2 476 49 331

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It is worth noting that although approximately 2 600 social service foundations were established during the 20th century (and still are active in the 21st century), these foundations merely hold approximately 15 % of total foundation assets in the beginning of the 21st century. For the traditional section of the broader ield of education we can see a similar story. Close to 1 600 foundations were established in education during the 20th century, yet only representing some 15 % of total 21st century assets. However, in the ield of education, an interesting parallel development can be identiied during the two last decades of the 20th century. In the aggregated igures, there appears to be a downward trend in terms of the relative number of foundations and in total foundation wealth in the ield of education. However, these crude numbers seem to hide a more qualitative shift appearing during the 1980s and 1990s, where we notice an increasing number of operating foundations in the ields of primary, secondary and higher education. Salient examples of the latter are the transformation of Chalmers Tekniska Högskola and Högskolan i Jönköping. Both universities were established as private operating foundations in the mid-1990s, and were thus changed from public sector bodies to foundations through the transformation of the earlier wage-earner funds. It should also be noticed that the ield of culture and recreation during the 20th century moved from its position at the bottom of the list. With less than one percent of the 2001 foundation capital held by foundations created in previous periods, the assets of foundations in the ield of culture and recreation reached some four percent of the total book value assets during the last century. Also of interest is the strong growth of foundations and their wealth in the ield of development and housing during the mid20th century. This expansion is particularily pronounced during the 1940s and 1950s since several Swedish municipalities used the foundation form to create and run a number of their large municipal public good housing programs (allmännyttan).

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Operating foundations Of signiicance is the recent development and expansion of operating foundations in Sweden. This foundation form appears to have been used more progressively during the inal two decades of the 20th century, and they seem to be found in the midst of a number of interesting societal transformations. Our current estimate is that there are approximately 1 500 operating foundations in Sweden (see Table 6). Approximately half of these operating foundations were established in the 1980s or later, operating for example universities, primary schools or kindergartens. Apart from the earlier dominant ields of education and research, the ield of culture and recreation as well as that of development and housing, also accounted for a large part of the operating segment of the Swedish foundation sector (see Table 6). The concept of an enterprise foundation in Sweden, näringsdrivande stiftelse, is similar to the international understanding of an operating foundation, except for one important difference, as we argued earlier. The operating foundation, as understood in this TABLE 6 Operating foundations per ICNPO ield Operating Foundations

Total Number Total Assets (mkr)

Culture & Recreation

340

1 870

Education

290

7 030

Research

90

960

Health care

90

2 860

270

2 500

40

500

Social services Environment Development & Housing

300

11 200

International activities

20

130

Religion

80

600

Not elsewhere classiied

40

200

1 560

27 850

TOTAL

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text, runs some kind of establishment or facility (for example a school, radio station or museum) either as its primary purpose or as an instrument to fulil its purpose. This would also be deined in Sweden as an enterprise foundation, näringsdrivande stiftelse (Olsson 1996). Nevertheless, according to the Swedish law, a foundation would also be considered an enterprise foundation if it owns and manages an entity, such as real estate, as only a means to manage its capital, and not as part of its mission. This seems to be the major difference between the Swedish (legal) concept of an enterprise foundation and the traditional international understanding of an operating foundation. At the end of the 20th century, we note a relative increase in the number of operating foundations. In Sweden a number of private and from the public sector free-standing (not operated or owned by a municipality) kindergartens, primary and secondary schools have been set up in the form of foundations during the 1980s and 1990s. Although nearly 55 % of all Swedish operating foundations existing in 2002 were created during 1980-2000, in terms of capital, they only represent about 35 % of the total wealth found in Swedish operating foundations. This foundation form therefore appears to have attracted increased intention over the last decades, as a way to operate or house a variety of activities, but not necessarily to equip these foundations with enough capital (endowment) to run the operation. Leaning on Katarina Olsson’s PhD thesis from 1996, the most authoritative work on operating, or rather enterprise, foundations in Sweden, the population of operating foundations in Sweden can be divided into three main types. We have foundations (1) with the explicit purpose to run some kind of business. We have foundations (2) where the board has decided to operate some kind of business as a means to fulil the mission of the foundation; and we have a special kind of (3) holding foundation, where the foundation owns and controls a substantial amount of a company’s total stock (Olsson 1996).

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Of the latter foundations (type 3), Olsson distinguishes between two categories where either (a) the ownership of a particular corporation or group of companies is important in itself, and the charitable purpose rather secondary, or (b) the oficial purpose is at the fore and the stock-holding is only a way to generate best possible yield or dividend on the investment. However, it is not always easy to decide whether it is a foundation of category (a) or (b), or as Katarina Olsson explained in our interview. When you read a provision with its description of the purpose, this does not necessarily need to relect reality. You might instead have reason to go beyond this statement to see and understand what it is really about.

Societal transformations Foundations, (both grant-making and operating), are today visible in, or part of, larger transformational processes in society. This is illustrated and also partially discussed regarding the Swedish funding system for research and universities. The commentators also speciically identify the earlier discussed wage-earner fund foundations and their role as crucial in this transformation (Sandström 2003). Before addressing issues like identity, role and vision of Swedish foundations, we wish to illustrate a few of the more challenging developments facing Swedish foundations today. In the schematic matrix presented, we indicate a development emerging over time running from A to D in the matrix. It is predominantly the shift from the left side of the matrix (grant-making foundations) to the right side (business operating foundations) that has caused debate in Sweden. This shift is also the foundation for the earlier debate on whether schools on primary and secondary level should be allowed to be operated by others than the municipality ((friskoledebatten). Further-

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more the idea of moving universities or hospitals outside of the public sector through the use of for example foundations have been an element of the political debate during the 1990s and well into the early 21st century. The irst wave of operating foundations created was between 1800 and 1900 when several hospital foundations were established. Some of those are still active today. The second wave was between 1940 to 1969 when a large group of housing foundations were established. The third wave was the more recent establisment of anumber of private primary and secondary schools in foundation form during the 1980s and 1990s. Grant-making foundations

Small

Large

Operating foundations

Type A) Small grant-making foundations

Type C) Small operating foundations

Predominantly active in education, research and social services. Often created in remembrance of a person.

Predominantly active in small scale child care, pre-school and social services.

Type B) Large grant-making foundations

Type D) Large operating foundations

Predominantly active in research and social services.

Predominantly active in education and housing and development, but also in health care

Examples: • Bank of Sweden Tercentary Foundation • Nobel Foundation

Examples: • Chalmers University of Technology • Jönköping University • Stora Sköndal Foundation

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Type A foundations are often well known to the Swedish general public. There are numerous small foundations who give grants to successful students, local associations or religious congregations. This is probably the type of foundation that most people have come in personal contact with sometime in the past. Type B is perhaps the kind of foundation that most people think about when talking about foundations. Swedish society contains a number of these foundations and they occasionally make spectacular and highly visible grants. One example is the annual Nobel Prize ceremony that is broadcasted live not only in Swedish television but also internationally. Another example is the Knut and Alice Wallenberg foundation, the centrepiece of the Wallenberg family empire, which recently cut down grants to research with approximately SEK 250 million. This development has caught considerable attention in the Swedish business press (Steneberg 2004). These larger grant-making foundations are, according to our database, predominantly active in research and social services and are also important contributors to Swedish research. Type C is the small operating foundation discussed earlier in the chapter. Especially since the change in the Swedish law making it possible for private persons and organisations to start and run day-care centres and primary schools. This type of foundation has increased in usage and visibility in the Swedish society. Type D is a form of foundation that we are not accustomed to in Sweden. However, we can still identify a couple of new large operating foundations. There is currently a heated debate in Swedish media concerning which organisational or legal form should be used or allowed for running hospitals. This debate has so far been fairly one-sided and only two alternatives have in reality been discussed, private (meaning commercial) and public. The main argument is built around the idea of whether or not it should be possible to make a proit on health care (Socialdepartementet 2004). From our analyses, it appears as if there is no room for another dimension than public-private, even though Sweden already has a number of hospitals operated as foundations of which some are old and large institutions. 51

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ROLES OF SWEDISH FOUNDATIONS

A distinct foundation sector in society? In general, Swedish foundations do not seem to be looked upon as constituting a sector of their own in society. Nevertheless, certain individuals in their expert capacity sometimes tend to treat them as a more or less distinct group of institutions. Instead, foundations are, according to our interviews and reading, often grouped or perceived in accordance with (a) the type of institution they represent (for example operating a museum or a school), or more or less as part of (b) the same sphere in society as the recipients of their grants or services. They may also be associated with (c) a certain activity which they engage in, like fund-raising or grant-making. The second situation is true for example within the handicap movement, the voluntary youth work ield or the particular ield or type of scientiic research inanced. For example this is true for the SRF Foundation and its position within the movement for visually impaired people, according to Lars Jonsson at SRF. It also holds true for the corporate foundation ”Idéer för Livet” in our sample, where our respondent Tina Hedström compared the foundation to nonproit or voluntary organisations like the Red Cross or Save the Children. Another example is the case of the Gustaf V’s 90th Anniversary Foundation where the foundation distributes cash-grants to youth organisations, to encourage and promote voluntary work among young people. Lennart Elbe said in our interview:

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One important factor in deciding what answer to give to this question appeared to be related to the respondent´s personal perspective on the foundation, or what his or her role is in relation to the foundation. Therefore, one and the same foundation and where it ”belongs” could be described in several different ways. In fact, this complicated picture is enhanced further by the diversity of parallel typologies found in the legal system and legal literature, such as in the new foundation law where elements from different typology approaches are mixed into the very same text. Therefore, to understand a particular foundation, we must acknowledge the existence of multiple roles, existing in parallel at the same time, all depending on the perspectives used. However, all of these alternatives are still rather weak as a basis for a truly common and broad Swedish foundation identity, as one of our experts, Richard Arvidsson, pointed out. Furthermore these categories do not simply cover foundations, but associations or societies with the same or similar characteristics are also often considered to be classiied in the very same categories. This is for example true if the organisations are using fund-raising to acquire resources or if they are distributing funds in the same ield as the foundations. Instead of being viewed as a separate sector or sphere of their own in society, Swedish foundations commonly appear to be associated with a particular ”family” or ”group” of organisations. A salient example of this perception is in the case of Sparbankstiftelsen Nya. This foundation was in our interview, described by Carl-Göran Wallman, as a member of a family of foundations, associated with the savings bank sector:

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Foundations in Sweden The Savings Bank Foundations are like a family, especially the irst eleven foundations; it is those that we call the Family. We have a very intimate cooperation with each other.

The family metaphor is also used in an internal report of the SRF, dealing with the relations between the three main parts of this organisational complex, the Association of the Visually Impaired (SRF), the Foundation for the Visually Impaired (Synskadades Stiftelse) and the IRIS Company Group (IRIS-Företagen). These three entities are described in the report as three parts of the “SRF Family” (SRF 2000). The use of other metaphors is also true for the SRF foundation, as it is described by Per-Arne Krantz as one of the “legs” or “branches” of the SRF movement. These descriptors are also valid in the case of the various foundations around and associated with the Stockholm School of Economics (SSE), which are described as belonging to the ”SSE Group”.

The roles of foundations in Sweden During the interviews, a list of alternative foundation roles was presented and discussed with the interviewees. A short summary of the discussions around these alternatives is presented below. Besides a surprisingly strong common perception held by the people interviewed, where the role of a foundation was commonly described as a complement to the (welfare) state or the municipalities, there was no other unanimous understanding or description of what the role was or should be. The opinions differed between the respondents, as well as between the foundations brought up as illustrative examples in the interviews. In general, the experts were able to give empirical examples of foundations to it almost all of the roles presented in the list. While interviewing the representatives of foundations, the conversation instead went back and forth between the possible roles of their particular foundation, what they thought the role of foundations is in general and in some cases, what they believed should be the 55

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role of foundations in society. This was particularily true when the discussion focused on the substitution role, where foundations are understood to be running (or expected to run) operations earlier or otherwise carried out or run by government on national or local level. During some of the interviews, we touched on the interesting issue wether we were actually talking about the de facto effect, the intention behind the foundation or even the most preferred (the should-be) solution. This situation occured when the conversation for example spun around the role of re-distribution of wealth or about foundations as instruments of control. Several times we also debated the distinction between, and analytical use of, the complementary and substitution roles, particularily when tracking older foundations over time. Foundations in Sweden are not, as a rule, allowed to change their original mission. On the contrary, unless the mission of the foundation is considered fulilled or impossible to carry out anymore, the original one must be adhered to. When these older foundations were set up, maybe in the 18th or 19th century, their roles may very well have been one of innovation or ”substitution”. However, this latter concept would not have made any sense at that time, since the services provided or support given were probably not provided at all in any kind of state or municipal solutions at the time. Over time, this foundation with its originally innovative purpose would then be constructed and considered both as a complement or a substitute in relation to newer welfare state arrangements. But the change of framework was not then dependent on the operations of the foundations but rather on the changes in its environment, or on what had happened in the surrounding society. Whether we then understand the role of the foundation as innovative, a substitute or a complement, could thus – from this kind of perspective – better be understood more as a relection of the changes in the contemporary society around the foundation, instead of a particular character inherent in the foundation. For an interesting international view on roles for foundations, see Anheier (2001). 56

Foundations in Sweden

Complementarity All of our interviewees agreed that the role of complementarity was the most common role they could identify in relation to foundations in general as well as with their particular foundation in mind. This complementarity role, together with innovation, also appeared to be the most generally preferred choice among the various roles presented. Not one single critical voice or negative opinion was raised regarding foundations’ complementary role, neither in the discussions with the experts nor with the foundation representatives. Two metaphors were used by our respondents when describing the complementary role of foundations; to depict them as some kind of ”lubricant or oil in the machinery”, where machinery indicated larger society (”olja i systemet”); or as something ”extra to top up with” (”grädde på moset”). Other ways they used to describe this role was to refer to foundations as ”illing gaps” in society’s fabric, or ”identifying shortcomings” in the existing system. In these two latter cases, the complementary role appears to be considered as being similar to some kind of innovative role, depending on context and situation. In an internal report, the IRIS Company Group (owned by the Foundation for the Visually Impaired) is clearly described as a complement to government (or “the society”, as is read in the report) when government fails in its responsibilities towards the visually impaired: With assistance from the IRIS Company Group the Association of the Visually Impaired has been able to act in areas where society has not been able to live up to its responsibility. (SRF 2000, p. 19)

Substitution or replacement The discussions around the substitutive role were much more diverse and occasionally even heated. This theme appeared to be more actively on the minds of respondents than any of the other alternatives proposed. Several people had recently been involved in discussions concerning where to draw the line between the 57

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obligations of the foundation, and the responsibilities of various government, municipal or state institutions. In one of the positive remarks concerning foundations as substitutes Niklas Rengen, working with the Fryshuset Foundation, stated that the Fryshuset Foundation and some of their programs, in their work with young people in Stockholm and its suburbs, were better suited to work among young people than the traditional social ield workers found in Stockholm city. Since the foundation works with and through young people, whom have often come from dificult circumstances themselves, he meant that they were able to do things at Fryshuset that the municipality could not. There existed almost a competitive relationship between the foundation and the city in some cases. This was clear, for example, in the case where the city previously inanced programs run by the foundation but later took over control themselves once the programs were considered successful. Sometimes, the discussion on substitutions also covered elements of critique of politics, public sector reforms and government policies. There were, in some cases, a feeling of unjust treatment beneath the surface, of the politicians changing the rules of the game, indicating some kind of a policy shift. We will return to this theme later in the report. This disappointment could be traced to the situation where the welfare state retreated from its earlier responsibilities. The feeling was that the foundation – which was set up to complement but not replace the welfare state arrangements – was left to assume a larger and more burdensome task than it was originally designed, funded or intended for. But this feeling was also stressed when discussing how the local tax authorities (LTA) during the last couple of years seem to have increased their attention when testing the tax-exempt status of foundations. This is especially true when tax authorities are trying to further expand the available basis for taxation, as it was put in several cases. The LTAs are now enforcing the iscal legislation from the 1940s more rigidly than they had done previously. This attention from the tax authorities seems to be an indirect and probably unintended effect of the new law and the subsequent 58

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regional registers set up with the County Administration Boards (länsstyrelserna). With the use of these registers, the tax authorities are now able to extend their reach further into the foundation world, as expressed by one respondent. The situation facing some of the Swedish foundations today is, as a result of this development, somewhat of a paradox. As several of the foundations are now being expected to take over or to replace what at least previously was considered a state or municipal responsibility, they are also experiencing a tougher tax climate. This is particularly apparent in ields like social services for people in need or research and higher education, where representatives of some foundations feel that the other hand of the government – the tax authorities – are trying to more narrowly deine their degrees of freedom. It appeared to some of the respondents that these different policy changes were not really coordinated or even intended. Clearly this dimension of a larger theme require further investigetion and debate when evaluating the future development of foundations in Sweden. Innovation The attitude towards innovation as a major role of foundations was almost as unanimous and positive as when we discussed foundations being complements of the state. Sometimes these two alternatives appeared to overlap, for example when the innovative role was described as ”illing gaps” or ”identifying shortcomings” in society that should be ”taken care of”. This kind of language very much points toward a complementary role. A couple of times research foundations were mentioned spontaneously when discussing the role of innovation. These foundations were expected to have the innovative role built into their raison d’être. In an interesting version of the innovative role, Gunnar Hambreus, the chairman of The Scandinavia-Japan Sasakawa Foundation, mentioned the transfer of knowledge and cultural patterns between these regions as one important task for this particular foundation. There are strong positive connotations associated with the word 59

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”innovation” in the interviews, and it sometimes seemed as if the foundation representatives genuinely liked their foundation to be placed in this category. However, in some of the interviews, there seemed to be a slight confusion between the deinition of innovation; whether foundations are regarded as innovative because they are set up in a new ield or by using new methods, and on the other hand, a foundation promoting innovation among their recipients as part of their mission (as in the case of research foundations). A third alternative sometimes identiied in the interviews was that the role of innovation referred to the foundations themselves working in an innovative way, dealing with their mission and ield of operation in new, inventive ways. Overall, very few if any concrete examples were given by our respondents of foundations being innovative. The reasons why foundations were said to be better suited for innovation was because they were quicker and more lexible, in general, than public sector institutions in addressing new issues or problems. Marianne af Malmborg also indicated that the innovative dimension of a foundation may be enhanced, since foundations can concentrate on a very narrow ield or on a speciic issue, and do not have to assume any wider responsibilities. In comparison to business actors, the foundations have been said to have more stamina and endurance, especially today when economic life as a whole has become more and more short-sighted. As Rolf Kjellman highlighted to us: If the investment is not successful within 2-3 years, it will be discontinued, while for example the Wallenberg Foundation [Knut and Alice Wallenbergs stiftelse], in their investments in science and research, is an excellent example of endurance in the longer run.

Pluralism The role of pluralism is interesting. Very few of the foundations in our database have this kind of statement written into their missions. However, foundations might function this way in larger groups or populations, since they often are equipped with 60

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different approaches or attitudes when created. Hypothetically, a foundation could be established within a irm liberal political ideological framework to preserve and develop the liberal press in Sweden. This may be done in an attempt to counteract the expansion or dominance of what is understood to be Social-Democratic newspapers. This foundation would, as is most often the case, not be set up primarily to promote pluralism, but to enhance and strengthen the liberal voice in society. Most religious schools and foundations promoting alternative pedagogical methods for example, kindergartens, will be of the same sort. As long as Social-Democratic newspapers also exist, a liberal foundation contributes to pluralism. But if the Social-Democratic press disappeared and was replaced only by other liberal newspapers, this liberal press foundation would no longer be supporting pluralism but rather be part of a liberal hegemony or monopoly in society. Foundations in Sweden do not, in general, have any form of built-in corrective devices or systems to change their values or operations in a response to a changing world, where their religion or political agenda would be the only existing or dominant value. It is therefore dificult, except in a very small number of truly pluralistic foundations, to talk about a role like pluralism for individual foundations. Instead, the role of pluralism seems to be a role that it is only relevant to discuss, at least in Sweden, for foundations as a group, that is, for the foundation population. This brings us to a more functional understanding of foundations and their roles in society. When evaluating most of the other roles, it is possible to discuss the role of an individual foundation, be it as substitution, innovation or instrument of control, without taking into account the other foundations in the population. However, this does not appear to be the case when discussing pluralism. Establishing free zones A role sometimes associated with the idea of pluralism is that of using foundations to establish free zones or to open up for alter-

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native ideologies, methods, or ways to relect or operate. This role does not demand that the creation of the foundation be based in a quest for pluralism, but rather in the intention to set up an institution to support or guard a particular community, a special methodology or certain values. About half of the respondents in our study could envisage or identify this free zone role as one that foundations perform. Mikael Wiman mentions the existence and expansion in Sweden of both Catholic and Muslim schools in the form of foundations as examples of this free-zone role. In a special version of this role, the use of foundations can be seen as establishing a zone in society, free from both market and state, as is expressed precisely by the Swedish Antroposophical Society (Antroposoiska Sällskapet): The Society wants to defend the time-honoured free zone that always has been open for the popular movements through the possibility to establish foundations and associations […] For the part of the Society, the foundation form has been the most appropriate. Due to the conservatism that often is present within state and municipal administration, and correspondingly the rigorous tax regulations for joint-stock companies, it has not been possible to create the necessary and quite large amounts of capital needed for creating the antroposophical oriented public good activities. […] We want to distance us from both private capitalism and state ownership by the use of the foundation form. (Ds 1992:36, pp. 70–71)

Preservation of values and traditions About half of our respondents said they agreed that preservation of values and traditions was a role they would recognise for foundations. Once again, there is a certain overlap between different foundation roles. The foundations taking this preservation role can, for example, have some similarities with the earlier two alternatives – pluralism and the establishment of free zones. The

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major difference, according to our respondents and their examples, is that while pluralism and the establishment of free zones refers to any kind of community or value system, including new or foreign ones, the preservation role particularily relates to values and traditions which have long existed in Swedish society but are, for one reason or another, threatened or fading away. Carl-Olof Nilsson, offered this perspective during our interview: I would say preserve values, but I would like to sharpen that formulation a little. In a society where values age fast it can be important to have institutions or organisations that are able to safeguard their survival. Using foundations can be one way to do this. There are several lifestyle associations that have a hard time getting funds today, the temperance movement for example, but it would be much easier if they had access to a foundation. I mean, the foundation is one of the last bastions to fall.

Also Carl-Göran Wallman indicated, during our conversations, that the value dimension seemed to be an important aspect of the Savings Banks Foundations created in the 1990s. From reading the homepages of these foundations, it is clear that the savings bank movement has a long and strong tradition of encouraging savings in Sweden. The goal of encouraging savings is not only self-assumed by the foundations, but is also stated in the Swedish Savings Bank Act. The beginning of the savings banks was actually based on the wish of the founders to contribute to the creation of welfare and security for large numbers of people by means of inancial planning. During the Swedish economic crises in the beginning of the 1990s, several banks were near bankruptcy and were forced to request for infusion of new capital from the owners. However as Sparbanken was a savings bank, it had no owners and as such, the government was hesitant in helping the bank if there were no clear owners to hold responsible in case of bankruptcy. The situation was solved through the restructuring of eleven major

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regional savings banks into limited banking companies and the creation of equal number of savings bank foundations, each with 100% ownership of a limited savings bank company. A number of additional foundations have subsequently been formed, primarily due to new capital requirements in conjunction with the purchase of former Föreningsbanken branches. Due to the subsequent acquisition and merger with Föreningsbanken into a new bank corporation as well as new capital requirements, the share capital of the eleven original foundations has been diluted and is at present just under 20%. Nevertheless the foundations are still striving to increase their ownership of the new bank. These foundations have now been assigned two key tasks. Firstly, they are required to act as owners, and secondly, they must be active within their regional area in promoting trade and industry, research, education, sports or culture. The activities of the foundations are also reqired to assist in promoting the fundamental ideas and values of the savings banks movement. Remembrance Often, foundations have been set up in memory of a private person or a personal moment. Although this role was not originally included in our list of alternative roles, it appears to be a relevant and ancient role associated with foundations. This role was spontaneously mentioned at least a couple of times in our interviews, when we asked about other or alternative roles foundations could have in society. For example, the foundation could be established in memory of oneself prior to death, in memory of a lost family member, or to commemorate some kind of anniversary. This role can be viewed as a sub-category of the previously mentioned role of ”preservation of values and traditions”, but is also somewhat complicated, since the remembrance role often coincides with other roles, may be expressed in terms of scientiic research or the preservation of a church building. It is indeed dificult to classify whether a foundation is primarily understood as to preserve a memory; or to inance, for example, scientiic

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research or the work of humanitarian organisations. The interpretation greatly depends on the way the researchers frame their own understanding of foundations and their roles in society. Jan Lindman, at the SEB bank, provides an example of an elderly man with a small fortune, who wished to set up a foundation. His request was that the returns of the capital should be distributed to a number of nonproit and voluntary organisations. However, the donator also wanted the foundation to take care of his grave in the future. This part of the mission was not in line with the tax authorities concept of a tax-exempt purpose. However the donator also believed that tax payments should be avoided if possible and no foundation was established. Jan Lindman explains further: I believe there was also a psychological twist to this. Since he was prepared to do all this good for society, why could they not allow this foundation to take care of his grave? To create a foundation out of a private fortune is in many cases very much an emotional issue.

Re-distribution of wealth A couple of the responses in our interviews concerning the re-distribution role are worthy of extra discussion. First of all, the charity issue, as discussed earlier in the report, is important in the Swedish context, when discussing the idea of viewing foundations as vehicles for the re-distribution of wealth in society. The immediate reaction of one respondent, Lars Jonsson, was for example: I would never have expressed it in that way, but there is some truth to it. This is very much of a top-down approach that a wealthy benefactor donates his money to a foundation that can be used for the poor people. This is not the way I would like to see changes in society, or a more equal distribution of wealth, come about.

He reacted against the positive connotations to this foundation role, saying that the practice of: “re-distribution of wealth”, is something that he himself would consider as negative or unwanted in society. Another interesting point regarding the idea of foundations promoting re-distribution of wealth is the discus65

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sion whether this is an intended role or a result of a more de facto situation, as indicated by a couple of our respondents: This [re-distribution] might not be the primary purpose when establishing a foundation; that the intention of the donator is to re-distribute his or her wealth. I do not believe so. But if you look strictly only at the economic reality of the foundation, this might very well be the case. But this is not the guiding principle behind a donation, nor is it an argument for more favourable tax treatment of foundations. (a quote from the interview with Richard Arvidsson) If a very rich person makes the donation, a re-distribution of wealth is in the nature of the transaction in itself. And it is this re-distribution that constitutes the basis for tax-exemption for foundations. This is the reason why they are tax-exempt; it is a way of paying your taxes. The law requires some kind of re-distribution to grant the foundation tax-exemption. (a quote from the interview with Jan Lindman)

The argument could very easily be made that the people setting up foundations generally have more money and resources than the people who normally beneit from these very same foundations. Few cases are apparent where the recipient in general has more money or resources than the person establishing the foundation. Whether or not beneiciaries of foundations are better or worse off than other people in society is then another issue, as well as the question if this was the intention when the foundation was created. Instrument of power or control The question about the alternative role for foundations as instruments of control gave interesting results in our interviews. Several of the respondents immediately recognised this role and could even give us actual examples of such foundations. Foundations mentioned where those connected to famous and wealthy 66

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Swedish industrial or trading families or groups, for example the Wallenberg, Ax:son Johnson or Kamprad families. These foundations are sometimes perceived to be part of a governance or control system through their ownership of stock. In our research, the case of Sparbankstiftelsen Nya closely resembled this particular version of the control role and is therefore a salient example as Carl-Göran Wallman explains: The foundation shall provide for the purpose of further thrift in Sweden by holding shares in banks within the savings bank sector and further the ideals and values that are inherent in the savings bank movement and making the savings bank sector into a competitive factor. The primary mission of the foundations is to act as owners of Föreningssparbanken and make sure that the old values and ideals of the old savings bank sector survive and develop. This means that we irst and foremost are an owner foundation. This is something that the public is not always aware of, they often think that our purpose is to hand out grants. But that is only our secondary role.

The previously discussed “control or governance foundations” are mainly considered to exercise governance in an economic sense. This is also the most common understanding of the ”power foundation” concept (maktstiftelse) in Sweden. However we can also ind examples where foundations exercise this role of control and power in a more ideological sense. One such clear example is the three foundations set up to own and control the liberal UNT newspaper (Uppsala Nya Tidning). They were created when the founder of the newspaper, Axel Johansson, wanted to secure its continued existence and liberal proile, even after he had to relinquish control of the newspaper. He therefore invested this power and mission in three separate foundations, with the explicit intention to make sure that his shares in the company: […] were not to be sold at losing price, and that they would be secured in such a way that the paper will be edited in a liberal,, not in a pro-

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In our sample, the one foundation that most clearly identiies with this kind of role is the SRF foundation, where one important mission initially was to be able to receive gifts and endowments to promote the cause for blind people (SRF 2000, p. 27). At that time [1954], when the foundation was set up by De Blindas Förening [DBF, an earlier name for SRF], it was more seen as a strategic issue to take care of the assets and to secure these resources for the organisation [DBF/SRF].

The same kind of reasoning was offered by Per-Arne Krantz. Today, through the foundation as 100 % owner, we have an impact on where the company is going, a capacity to carry through corrections and exercise control through the decision on what people we shall have on the board of the corporation.

In a similar view, Marianne af Malmborg in her interview stressed the importance of foundations to secure and control resources or some kind of assets for a certain cause. This can, according to her, be done both to protect it from misuse within another form of less controlled organisation, like an association; and to make sure the resources are used for that particular purpose and not appropriated or taxed away by government. Organisational tools In a slightly broader and extended understanding, the governance or control-instrument role can be interpreted as a special dimension or way of viewing foundations more generally – as organisational tools or building blocks. Our respondent Lars Jonsson, for example, views both the related foundation for the visually impaired and the business group it owns as means to an 5. ”icke bortslumpas till underpris och att de så placeras, att tidningen redigeras i liberal, icke i förbudistisk, frireligiös eller socialdemokratisk anda”

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end, rather than having an identity or vision of their own. In his words the foundation is more of a ”tool or an instrument”. This is also the view supported by Dan Berggren on the board of the same foundation. In a similar vein, Katarina Olsson also pointed to the use of foundations within a certain movement or larger organisation to separate out certain more business-like operations, for example a related conference centre or commercial operation, not to risk the tax-exempt status of other parts or operations of the organisation. This common perception, held by some of our respondents, of foundations beeing instruments or tools, was one of the most interesting results of the study from an organisational perspective. This role was not part of our pre-understanding when the survey was designed, but has instead emerged both from the interviews and the literature during the course of the study. This method of constructing a foundation as a type of organisational building block appears to partly contradict the sometimes found practice of furnishing (giving) a foundation with some kind of personality; or to treat and discuss foundations as if they have an independent ”life of their own”, as if the foundations have intentions and can act upon them. Social or political change Although a number of our respondents agreed with the suggestion that one role for foundations could be to induce social or political change, even more people said they could not see this as a main role for foundations. In general, this type of activity was instead linked with associations, in particular the popular movements ((folkrörelserna). A version of this role of social or political change, is given by Lennart Elbe when he describes the role of their foundation as occasionally trying to create public opinion to put pressure on for example local politicians in ”their” questions, related to voluntary youth work.

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Empowerment According to our interviews, the perception of empowerment as a role for foundations was even weaker than the alternative of social or political change. Only two respondents agreed with this suggestion, while three clearly said that they could not at all see this as a role for foundations. The general feeling was the same as towards social or political change – that these two roles are more often associated with the Swedish popular movement tradition and therefore with associations and not foundations.

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VISIONS OF SWEDISH FOUNDATIONS

Crucial in the interviews conducted, and also central to the objective of our study, is the exploration of respondents’ understanding of foundations as part of a larger vision for society. This was also the most complicated part of the interviews, since it was dificult to frame the questions and discussions on an appropriate level of analysis. However, this issue was implicitly present also in other sections of our interviews, and was often a taken-for-granted mental framework for the discussion. In this part of the report, we aim to gather reasoning from different parts of our interviews with a bearing to this topic.

Visions – a complicated issue Firstly, it is important to distinguish between what could be seen as two different main approaches. The most common approach is when respondents discuss the (sometimes alternative) visions of society, as they may be visible and expressed in one particular foundation. The other approach is when our respondents refer to foundations as a population. In these cases, it is this population that is assumed to have – or being part of – a certain vision of society. One major issue here appears to be whether the foundation itself (and the vision it could be associated with) is the focal entity of interest in the conversation and analysis. Or if the focus is rather on the entire population or a particular subgroup of foundations such as grant-making foundations. In the latter case, the 71

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technically challenging question is how to aggregate something like a vision of society for a group of institutions, in this case foundations. Secondly, it should be noted that several of our respondents expressed doubts as to whether the average founder really could be expected to have such a grandiose agenda or scheme behind the establishment of the foundation as a vision for society. “They just wanted to do something good for society” or “He just wanted to be remembered after he died”, are the types of comments received. Jan Lindman from the Swedish bank SEB mentioned, for example, that foundations were often set up as expressions of some kind of general humanistic idea or social consideration, but without any reference to a greater picture of the problems or the current shape of society. However, it is important to acknowledge the possibility that larger visions may be associated with a single foundation both on an implicit as well as on a more explicit level. For example, in the very way a certain group of foundations are established, set up or linked together, they could perhaps be described and understood as part of a particular larger and joint vision of society. This is apparent in the type of missions they are bestowed and the ways that people in these foundations reason and act. Although this could arguably be the case, no explicit reference to any overarching vision or ideology is necessary. This might be a result of the embeddedness of foundations in a particular society and it´s surrounding culture. Thirdly and inally, the blurred borders between roles and visions are also a complicating factor. The relevant theoretical or analytical question could be framed as if it is a certain vision that subsumes a certain role for foundations, or if it is rather a certain role played by foundations that make up the larger vision. In our interviews, we had a number of interesting discussions regarding the issue of whether visions are to be understood as something inherent in the character of the foundations, and therefore leading up to the situation where foundations assume particular roles, or if

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these visions are the analytical result derived out of the particular roles foundations are perceived to play in society.

Small pockets of alternative visions The main point, as it develops in this section of the report, is the idea of viewing foundations as a key element and ingredient in what could be understood as a more liberal civil society tradition. This is also one way of framing and understanding the current and earlier debates surrounding foundations in a society traditionally associated with a Social-Democratic vision. The section will end with a discussion on the strongest and most elaborate vision appearing in our material. In several of the interviews, elements or fragments of what we have chosen to call a liberal vision are present, but it was one of our respondents in particular, Richard Arvidsson at the Stockholm School of Economics, who helped us to pull the bits and pieces together to form a more coherent picture. The interviews further helped us to integrate the idea of foundations and their role into this larger picture and to describe it in a wider system, where iscal regulations and our way to understand gifts were also included. However, before bringing this argument to end, we wish to highlight the use of foundations in the establishment and defence of small pockets of minor or alternative visions for society. All of these visions appeared in the interviews as examples given by our respondents of visions that could be considered associated with or held by certain foundations. When requesting examples of foundations that had some kind of vision of society, the respondents most often gave us examples of smaller and recently founded foundations where the ideological stamp is explicit and clear. One such example is the foundation A Non-smoking Generation (Stiftelsen En Rökfri Generation) established in 1978. The purpose of this foundation is to combat the use of tobacco, with the special aim of preventing children and youth from starting to smoke. 73

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Another salient example is the Women Can Foundation (Stiftelsen Kvinnor Kan) established in 1982, with the explicit aim to show how women’s values and knowledge can improve and reinvigorate society. The foundation also has the overall ambition to work with women to achieve a fair share of power and decision-making. A third exemple of this type, with an overt reference to a larger vision of an ideal society, is the Fair Trade Foundation (Stiftelsen Fair Trade). This foundation was set up in 1996 with the mission to promote an ecologically sustainable and socially just world. As pointed out in discussion with Mikael Wiman at the County Administrative Board in Stockholm, the foundations with larger visions of society are usually small and isolated. Their mission statements often express some kind of alternative vision of what society could or should be, as if in some kind of opposition to the current situation. A comment made by Henning Isoz also highlights this dimension, where he talks about this type of foundation as some kind of counter-ire to combat a development in society that is considered negative. According to Henning Isoz at Ernst & Young, a group of foundations where the ideological or political vision often stands out clearly are the newspaper or publishing foundations. This idea also corresponds with our example presented earlier in the section on roles, regarding the daily newspaper UNT in Uppsala and the founder’s wish to keep the paper within a liberal political tradition. Mikael Wiman, as well as other respondents, speciically mentioned the use of foundations within the antroposophical movement as an example of foundations that held a larger ideology or vision of society. Some respondents referred to religiously inluenced foundations. Carl-Olof Nilsson, for example, explained that their educational foundation within the Pentecostal movement was irmly based on a Christian value system and, as such, aimed to carry those values into society. Foundations associated with the co-operative movement were also mentioned as examples, as well as foundations attached to the more conservative and free market oriented interests in society.

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Jan Lindman also spoke about the KAW foundation (the major foundation within the Wallenberg family sphere). This foundation is, according to Jan Lindman, an interesting example of a foundation where the vision can be considered as the well-being of the nation. The idea being that the foundation shall contribute to the success of the nation and through this also beneit to the general development in society (see also Hoppe, Nylander et al. 1993). In general, it was easier for us to relate to the idea of foundations as part of a larger vision or ideology in our conversation with those of our respondents with more of a helicopter or expert perspective on foundations in their day-to-day activities. And it was also easier for them to give clear examples of what they meant. When talking to the representatives of a certain foundation, our conversation about visions and ideology naturally circled more around that particular foundation. When talking about the Foundation for the Visually Impaired (Synskadades Stiftelse), a couple of our respondents said that the overall vision was to strive for a society where blind people should have the same rights and possibilities as everyone else. One of the respondents, however, did not wish to associate this vision with the foundation directly but rather expressed it in terms of the foundation being a tool or vehicle for the movement and the members, for achieving this vision. When talking to the people associated with the Dunker Foundations, no larger vision of society was mentioned, but they instead described the vision behind these foundations as preserving the previous owner’s majority of the corporation intact. They explained that when he set up the foundation, the founder wanted to ensure the ownership structure of, (in his own words), “the best corporation in the world” was left intact and united. When viewed as a group, it may be argued that these small pockets of alternative ideologies or visions could be interpreted as parts of a larger liberal system. However, when viewed individually, these different foundations represent such a huge diversity of visions. In our opinion, we would have to stretch the material

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and the interviews too far to otherwise discuss and identify any form of joint or common vision among these foundations on a more aggregated level.

A liberal vision of society on system level In our interviews, some of the basic ingredients of something that maybe could be called and understood as a traditional Swedish Social-Democratic vision of society were mentioned. This kind of a vision has been the most dominant political or ideological vision in Sweden during the 20th century. The peak period of the dominance of this vision in Swedish political life could very loosely, and for the limited sake of this report be described as an approximately ifty-year period starting in the 1930s and running into the early 1980s. The essence of this vision is aptly described in this quote from a recent book in Swedish on philanthropy and economic growth, published by SNS, the Swedish Centre for Business and Political Studies: In Sweden, people in general resist large differences in income as well as private wealth. The general public have more trust in government to re-distribute income and support public-good activities, rather than through private donations. The implicit social contract in Sweden has more emphasis on the collective protection of the individual and the public good, rather than on the duty of individuals to help. Neither are people with high incomes or large wealth expected to donate. (Braunerhjelm and Skogh 2004b, p. 25)

Almost the only, and certainly the most elaborate and coherent, larger alternative ideological framework or vision for foundations on a more systematic level identiied by the various respondents was offered by Associate Professor Richard Arvidsson. In his way to present this alternative to the existing Social-Democratic regime he was very clear in his perspective. He described foundations 76

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and the surrounding legislation, as part of a much larger system in society and was able to summarise, into one coherent thought, what other respondents had only referred to in passing. The basic story goes like this. The existing and overall dominating vision in Sweden, when it comes to the role of foundations in society, can today be described as a classical social-democratic vision, where state and municipalities bear the overall power and responsibility in a number of welfare areas. This power and responsibility runs all through the system, from the regulatory and legislative systems found in various ields via the funding of the services (through taxes) down to the actual production or provision of these services. On all of these levels, the public sector is the one and only relevant actor. In this classical model, the role of foundations is inferior or marginal. The language (as visible in the practice and the various regulations) in which the system is framed is at best one of complement. Arvidsson also argued in our interview that this situation is changing today, partly because of Sweden’s membership in the European Union. The Swedish welfare state may be in a process to withdraw or retreat from a number of areas and earlier assumed responsibilities. In these areas, the reduction of services will, at least partly, have to be met by an increased foundation activity, not only in a complementary function but also in direct substitution of earlier government arrangements. This development was compared to the current situation in the US, where foundations are much more commonly used and active, both to inance welfare services and to run or operate some of these services. A development like the one described above, would in a subsequent step also require a corresponding change in the tax system. This is necessary, it is argued, if we are to be able to inance the increased responsibilities assigned to foundations. These foundations should, in this model, be granted larger tax beneits and the available space for foundations to operate welfare programs must be expanded. The general level of income tax must in this model, according to Arvidsson, also be reduced and the will to donate private money for welfare purposes should be encouraged, for small 77

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gifts as well as for larger donations. Instead of distributing the available resources through a general income tax system, this redistribution should be shifted over to gifts and private donations directly to the foundations operating the welfare programs. See also some of the arguments in Braunerhjelm and Skogh (2004b). One interesting element in this type of discussion is the focus on grants made by private foundations to certain issues. We have created Table 7 in an attempt to estimate the volume and direction of grants made by Swedish foundations. In this table we present a irst-ever rough estimate of how much Swedish foundations distribute in grants annually (for a methodological note, see the section on method) and we can see the research focus of the Swedish foundation sector where some 1/3 of the Swedish foundation grants go to research (Table 7). Interestingly, the second most important area for foundation grants in Sweden is the ield of social services, amounting close to SEK 700 million. This welfare spending is equal to the entire social welfare spending of a public authority like the City of Malmö, the third largest city in Sweden. Especially in an advanced welfare society like Sweden, this might provoke some attention. There has also recently been an increased attention towards private donors and the motivations behind large donations. There is currently a debate in Sweden around the issue whether or not donations and the creation of foundations should be encouraged, and if so, how this should be accomplished. The debate is mostly conined to the business news sections of newspapers and magazines, and there are yet hardly any scientiic or analytical studies of this phenomenon. One exception worth noting is however Braunerhjelm & Skogh (2004b). This is a debate that we do not recognise as clear or distinct in earlier discussions about the boundaries of the state and the civil society and the role of private philanthropy. We can also perhaps trace a parallel development between this increased interest in donors and the recent interest in corporate social responsibility (CSR) where the role of large corporations in wider society is highlighted and discussed. 78

Foundations in Sweden TABLE 7 Foundation grants – a irst rough estimate Culture & Recreation

Number

Grants (mkr)

790

130

Education

1 990

560

Research

2 130

4 000

480

90

Health Social services

3 140

690

Environment

150

30

Development & Housing

370

260

International activities

170

30

Religion

410

80

Not elsewhere classiied TOTAL

310

30

9 940

5 900

Although the evidence is fairly scattered and still of piecemeal character we wish to challenge the reader with the idea that these new phenomena could be seen as elements of what could be understood as an emerging generation of “new philanthropy” (nyilantropi). This could be viewed as part of a larger conservative/ liberal political shift that has had more and more impact on the Swedish society. In this development, foundations could be seen as an interesting but challenging alternative vehicle (for example to government tax or market solutions) for the distribution of wealth between different groups in society. This if of course something which in a strong Social-Democratic regime and tradition, like the Swedish one, would be dificult to leave entirely unquestioned. The increased use of foundations, the introduction of CSR and the call for more private donations may be considered as elements of a more liberal vision of society. Popular movements and their democratic and open associations are rather better understood as the key instruments and building blocks in a Social-Democratic vision of society, where a "popular 79

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movement marinade" is the dominant civil society paradigm, as argued in Wijkström (2004) or Hvenmark and Wijkström (2004). A couple of quotes from the new book by Braunerhjelm & Skogh mentioned above are salient illustrations to a similar line of reasoning: A preliminary question was if we in the future will have to rely on the good will of foundations and private donors to for example inance research. The answer is that we already are. And this dependency will with all probability only increase in a future where the resources of the state hardly can be expected to increase. (Braunerhjelm and Skogh 2004a, p. 25)

There is much that points to the fact that the private will to donate is dependent on favourable tax treatment. (Sjögren 2004, p. 69)

Many respondents touched on these same ideas and thoughts during our interviews, but did not go into as much detail as expressed in these texts or by Arvidsson as discussed above. Sometimes these discussions were paired with a negative perception of this development (for example in the discussions around foundations as complements or substitutes). Many of the people we have talked to seem to recognise this development. However, it was not clear if they see the foundations as an important group of actors in this development. It was also unclear if they are prepared for the subsequent changes in their role as foundation representatives or experts. This is obviously an issue of governance; but as yet, this issue has still not reached the active agenda of Swedish foundations, as far as we can assess the situation today and with the kind of empirical data available to us.

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In these inal sections of the report we have consciously gone further in our analysis and been a little more speculative than our data today can sustain. We stress the connection between a certain political or ideological vision and a particular legal and organisational form. We have used fragmented evidence and we also know that this is a story with a number of very clear exceptions. However, in an attempt to put the foundations more in the limelight, we are conident that foundations represent a challenge to traditional civil society policy and thinking in Sweden. Both in the very form of this institution, and in the content or missions of many foundations, they differ not only from available for-proit solutions or public sector entities, but also from the traditional popular movement associations so dominant in Swedish society. We thus consider it essential to seriously analyse the use of foundations when trying to understand not only the social changes addressed in this report, but also the overall development of Swedish society.

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METHODOLOGY

Construction of the database For the purpose of this project an extensive research database was constructed during 2002–2003. This was made possible by the inancial support from the Bank of Sweden Tercentenary Foundation (Riksbankens Jubileumsfond). As a result of the introduction of the foundation law in 1996, and thanks to the invaluable assistance offered us by Mikael Wiman at the County Administrative Board (CAB, länsstyrelsen) in Stockholm, we have also had access to unique raw data for approximately 14 500 Swedish foundations, as of 2002. This raw data was imported into the new research database and further developed in the present research project. The Swedish foundation law requires two major categories of foundations to report and register with the County Administrative Board in their county. First of all, this requirement covers larger foundations (with total assets of more than ten basic amounts, geared to the price index – the basic amount being about SEK 35 000 in 2002). Secondly, foundations operating some kind of business are also demanded to report and register (Isoz 1997). Some 1 700 of the foundations in the registers had assets valued at less than ten basic amounts. Due to size, those foundations fall into a segment of the Swedish foundation population not required to register. We do not know the total number of foundations in this segment, but the total assets of these smaller foundations from the registers accounted for SEK 166 million (representing less than 83

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0.01 % of the total 2001 foundation asset value found in the registers). The exact number and wealth of the smaller foundations in Sweden is still unknown, but it is very unlikely that they have an aggregated book value assets of more than SEK 12 billion.6 Not only do we not know the exact number of these small foundations, we are also ignorant about when they were established and in which areas they operate. Our preliminary estimate, however, is that the sum of all assets from these smaller foundations, is not likely to represent more than, at the most, less than 5 % of the total foundation wealth in Sweden at the beginning of this century. The data from the CAB register has subsequently been substantially improved. We have updated and completed the original material through the correction of existing, or completion of missing, register data. During 2003 and 2004 for example, we have been able to ill in the missing years of establishment for some 800 larger and/or older foundations, as well as missing information on individual foundation assets for another 600 foundations. Through this work, we have in our calculations been able to use the extra information available from another approximately 1 400 foundations, with an additional book value capital of approximately SEK 40 billion. We are still working on improving our database and thus our knowledge of the Swedish foundation sector, but we are today conident that the numbers and tables in this report are fairly accurate. In parallel to this increase in the quality and the range of the data in the database, we have also been classifying (coding) every individual public benefit foundation (in total approximately 11 500 foundations) according to a couple of classiication systems. We have studied the purpose statement of each individual foundation and classiied them according to the ICNPO system (International Classiication of Nonproit Organisations), where the codes refer to the ield of activity in which the individual foundation is 6. This is a maximum estimate based on an estimated total of 50 000 Swedish foundations, with each of the 35 000 small foundations having assets with a book value of SEK 350 000. Approximatly 15 000 Swedish foundations, belong to the segment "larger foundations".

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engaged (Salamon and Anheier 1996)7. We have chosen to present tables based on this classiication on an aggregated level but we have in our work used some 70 sub-categories for this task. The other major coding exercise conducted, is what we have called the ”sphere” coding. In this, we have identiied the type of main afiliation for each foundation, for example whether it is primarily a government-related, a corporate or an independent foundation. We have for this decision considered facts like whether or not there is a statute in the foundation charter that the majority of the board members should come from another organisation or if there are some other rule that gives another entity inluence over the foundation. In addition, the character of the founders of the foundation and of the type of establishments or organisations that receive the majority of the resources from the foundation have also been important in this analysis. During the year 2003, we further collected data for a special sample of nearly 400 individual foundations to calculate a irstever estimate of annual foundation grants in Sweden. The foundations were selected from our database according to size, type, geographical distribution and relevant ICNPO ield. After this stratiied sampling, economic data concerning for example annual grants, expenditures and the market value of the foundations´ stock portfolios was gathered through personal on-site visits at the premises of several of the County Administrative Boards in Sweden (CAB), where annual reports and statements for all Swedish foundations are kept. Our overall purpose was to create average grant/capital ratios for various groups or categories of foundations, to be able to estimate total annual grants made by the Swedish foundation sector. For these categories, separate average ratios were calculated and through our knowledge of total foundation assets in each of these sub-populations, we were able to produce an estimate of the value of the total annual grants in 7. For a Swedish version of the ICNPO classiication system, see Wijkström and Lundström (2002).

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each of the major categories, for example small foundations (with less than SEK 10 million in assets), found in certain ICNPO ields. Information on all of these sub-categories has then been merged together to create an estimate of grants from Swedish foundations (see Table 7).

Quality of the data and estimates Although we feel conident in the overall picture derived, some caution is nevertheless called for, especially when looking at the results for single, speciic ICNPO ields. Caution is also necessary when looking at the broader picture, particularily because the years around the shift of the millennium have been turbulent in terms of the development in the stock market. It must also be noted that due to rounding errors in our calculations, some small differences occur between different tables in the report. Differences may also occur due to the fact that we use different categories of data in different tables. Most tables are based on a mix of the variables ICNPO, the founding year and capital. Since we still lack data on one or more of those categories for some foundations, different tables are based on (partly) different foundation populations. It is also important to notice that the data in foundation wealth presented in our database is based on book value. Since many of the foundations are old and several own for example buildings and land, the real worth of the capital could be higher. We have nonetheless chosen to use this data, since it is available for the total foundation sector and because it is almost impossible to gain access to accurate market-value based data for all of the foundations in our database. Another possible weakness in the database is that we use data on foundations in the CAB register as of 2002. This means that we fail to take into account those foundations that have existed prior to 2002 but now have expired. We have also used the date on the oldest known statute of each foundation as an approximation of 86

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its founding year, since this is the only date available in the CAB register. This is in most cases correct, but it must be stated that this is only an approximation and not, in all cases, the correct year. Finally, it must also be noted that the Church of Sweden has recently been separated from the Swedish State, a process that is not completely inished in all details at the time of the writing of this report. In combination with the fact that the effects of the new law on foundations are not yet fully known, the role of the Church of Sweden and its effect on the Swedish foundation sector is still somewhat unclear.

Case studies In the project we have further requested extra material from and conducted interviews with representatives from 40 individual foundations. We have done this with the objective of describing some of the unique facets of the Swedish foundation sector. To select sample foundations for this report, we have considered several dimensions: the age of the foundation, if the foundation is grant-making or operating and to which sphere in society the foundation belongs. The operationalisation of which sphere a certain foundation belongs to is described above. In our sample we have also tried to cover the most important ICNPO groups. The four largest areas in which foundations are active in Sweden today are education, social services, development and housing and culture. Our ambition has also been to create a sample that would be representative for the Swedish foundation sector according to size. Foundations of every size and from the most relevant ICNPO categories are represented.

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Interviews We conducted some 30 interviews in the project, and we have been trying to capture as many different views on foundations as possible. We have as a consequence interviewed experts on foundation and tax law (both academics and practitioners), advisors to founders, government oficials who supervise the foundation sector and, of course, various representatives from the foundation sector itself. When selecting the foundations and its representatives we wished to interview, we have often included individuals from the board of the foundation; from the beneiciaries of the foundation; or from other interest groups somehow related to the foundation. For example, when studying the Foundation for the Visually Impaired, we interviewed representatives from the board of the foundation, representatives from the board of the Swedish Association of the Visually Impaired (who are also represented on the board of the foundation), the Administrative Director of the Association and representatives from the company group IRIS AB (which is owned by the foundation). This enabled us to better analyse and describe the different roles, strategies and visions that are present in the Swedish foundation sector.

Interviews Ingegerd Almén Alenskog, Project Manager for Youth Education at Stockholm Transport (Stockholms Lokaltraik) (2003-03-04) Richard Arvidsson, Associate Professor at the Department of Law of Stockholm School of Economics (Handelshögskolan i Stockholm) (2002-12-17) Dan Berggren, member of the board of both the Swedish Association of the Visually Impaired (Synskadades Riksförbund) and the Foundation for the Visually Impaired (Synskadades stiftelse) (2002-12-10) Eva Birath, Head of Department and Prosecuting Councel of The Legal, Financial and Administrative Services Agency of Sweden (Kammarkollegiet) (2002-12-17) Lennart Elbe, General Secretary of the King Gustaf V’s 90th Anniversary Foundation (2003-02-07)

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Foundations in Sweden Anna de Geer, Secretary-General of the Mentor Foundation at the time of the interview (2003-01-28) Jonas Grahn, Authorized Public Accountant and Partner, Nonproit sector leader at Öhrlings PricewaterhouseCoopers Sweden (October 2003) Håkan Gunnarsson, legal expert at The Association of Parishes of the Church of Sweden (Svenska Kyrkans Församlingsförbund) (2002-11-27) Per Ola Gunnarsson, Management Consultant at Öhrlings PriceWaterhouse Coopers, former Financial Manager of the municipality of Helsingborg (200302-28) Cecilia Gunne, tax law expert at the Swedish bank SEB (2002-12-18) Gunnar Hambreus, Chairman of The Scandinavia-Japan Sasakawa Foundation and former Chairman of the Royal Swedish Academy of Engineering Sciences (Kungliga Ingenjörsvetenskapsakademien, IVA) (2002-12-11) Tina Hedström, employed at the insurance company Skandia, with responsibility for the Foundation Ideas for Life (Idéer för Livet) (2003-02-12) Henning Isoz, former Judge of Appeal, today legal expert at Ernst & Young (2002-11-20) Lars Jonsson, Administrative Director of the Swedish Association of the Visually Impaired (Synskadades Riksförbund) (2002-12-20) Rolf Kjellman, Executive Director of Henry and Gerda Dunkers Foundation No. 2 (2003-02-11) Per-Arne Krantz, Second Vice-Chairman of the Swedish Association of the Visually Impaired (Synskadades Riksförbund) and board member of the Foundation for the Visually Impaired (Synskadades Stiftelse) (2003-02-14) Jan Lindman, Executive Director of the department for Foundations and Corporations at the Swedish bank SEB (2002-11-21) Göte Långberg, Chief Financial Oficer of the Swedish Cancer Society (Cancerfonden) (2004-08-31) Marianne af Malmborg, former Secretary General of the Swedish Cancer Society (Cancerfonden) and Trustee of the King Gustaf V’s 90-years Foundation (200302-12) Carl-Olof Nilsson, Director (Direktor) of The Pentecostal Foundation for Education (2003-01-27) Katarina Olsson, Associate Professor at the Faculty of Law at Lund University (2003-02-28) Niklas Rengen, Administrative Director of the YMCA Fryshuset Foundation (2003-02-19) Britta Rundström, Director at the Swedish Association of Local Authorities (Svenska Kommunförbundet) (2003-02-10) Thomas Schneider, vice Managing Director at Vidarkliniken (2003-01-20) Tjia Torpe, CEO of Iris AB (company group owned by the Foundation for the Visually Impaired) (2003-01-28)

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Wijkström & Einarsson Carl-Göran Wallman, Managing Director of the New Savings Bank Foundation (Sparbanksstiftelsen Nya) (2002-12-19) Mikael Wiman, Judge of Appeal and foundation expert at the County Administrative Board of Stockholm (Länsstyrelsen i Stockholm) (2002-12-18)

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Referenser

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EFI, the Economic Research Institute Reports since 2000 A complete publication list can be found at www.hhs.se/efi Published in the language indicated by the title 2005 Andersson, M., Making a Difference – Project Result Improvement in Organizations. Nordin, F., Externalising Services – Walking a Tightrope between Industrial and Service Logics. Redovisningens teori, praktik och pedagogik. En vänbok till Lars Östman. Lind, J. och Schuster, W. (red). Thodenius B., Användning av ledningsinformationssystem: en longitudinell studie av svenska storföretag. 2004 Andersson, A., Essays in Behavioral Finance. Balsvik, G., Information Technology Users: Studies of Self-Efficacy and Creativity among Swedish Newspaper Journalists. Blix, M., Essays in Mathematical Finance – Modelling the Futures Price. Emotioner och värderingar i näringslivet. Sevón, G. och Sjöberg L. (red). González Gómez, A., Nonlinear dynamics and smooth transition models. Grönqvist, E., Selection and Moral Hazard in Health Insurance: Taking Contract Theory to the Data. Ivarsson Westerberg, A., Papperspolisen – varför ökar administrationen i moderna organisationer. Juerström, M., A påverka beslut – företag i EUs regelsäande. Jönsson, K., Macroeconomic Aspects of Capital Flows to Small Open Economies in Transition. Larsson, P., Förändringens villkor. En studie av organisatoriskt lärande och förändring inom skolan. Lagerwall, B., Empirical Studies of Portfolio Choice and Asset Prices. Malmsten, H., Properties and Evaluation of Volatility Models. Marshall, C., Dating for Innovation. Creating and Recognizing Opportunities through Collaborative Interorganizational Relationships in Fluid Environments. Masson, S., På gränsen mellan ordning och oordning – tingens betydelse vid marknadsombildningar. En studie av svenska postväsendets ombildning under 1990-talet.

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Nilsson, C., Studies in Environmental Economics: Numerical Analysis of Greenhouse Gas Policies. Nilsson, H., Medborgaren i styrsystemet – beskrivning av VAD och HUR i styrning av kommunal verksamhet. Nystedt, J., Competition, Regulation and Integration in International Financial Markets. Pajuste, A., Corporate Governance and Controlling Shareholders. Regelexplosionen. Ahrne, G., Brunsson, N. (red). Richtnér, A., Balancing Knowledge Creation. Organizational Slack and Knowledge Creation in Product Development. Salabasis, M., Bayesian Time Series and Panel Models – Unit Roots, Dynamics and Random Effects. Sandberg, R., Testing the Unit Root Hypothesis in Nonlinear Time Series and Panel Models. Skallsjö, S., Essays on Term Structure and Monetary Policy. Strategi och ekonomistyrning. En studie av sambanden mellan koncernstrategi, affärsstrategi och ekonomistyrning. Lind, J. Strikholm, B., Essays on Nonlinear Time Series Modelling and Hypothesis Testing. Söderström, J., Från Produkt till Tjänst. Utveckling av affärs- och miljöstrategier i produktorienterade företag. Talia, K., The Scandinavian Currency Union, 1873–1924 – Studies in Monetary Integration and Disintegration. 2003 Andersson, H., Valuation and Hedging of Long-Term Asset-Linked Contracts. Bergman, M., Essays on Human Capital and Wage Formation. Damsgaard, N., Deregulation and Regulation of Electricity Markets. Eklund, B., Four Contributions to Statistical Inference in Econometrics. Exploring Paerns in Information Management. Concepts and Perspectives for Understanding IT-Related Change. Sundgren, B, Mårtensson, P., Mähring, M. och Nilsson, K., (editors) Globalization and its Enemies. Lundahl, M. (editor). Hakkala, K., Essays on Restructuring and Production Decisions in Multi-Plant Firms. Holgersson, C., Rekrytering av företagsledare. En studie i homosocialitet. Ivaschenko, I., Essays on Corporate Risk, U.S. Business Cycles, International Spillovers of Stock Returns, and Dual Listing. Lange, F., Brand Choice in Goal-derived Categories – What are the Determinants?

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Le Coq, C., Quantity Choices and Market Power in Electricity Market. Magnusson, P.R., Customer-Oriented Product Development – Experiments Involving Users in Service Innovation. Meisiek, S., Beyond the Emotional Work Event Social Sharing of Emotion in Organizations. Mårtensson, A., Managing Mission-Critical IT in the Financial Industry. Nilsson, G., Processorientering och styrning – Regler, mål eller värderingar? Sandberg, R., Corporate Consulting for Customer Solutions Bridging Diverging Business Logics. Sturluson, J.T., Topics in the Industrial Organization of Electricity Markets. Tillberg, U., Ledarskap och samarbete – En jämförande fallstudie i tre skolor. Waldenström, D., Essays in Historical Finance. Wallén, U., Effektivitet i grundskolan i anslutning till en stadsdelsnämndsreform. Ögren, A., Empirical Studies in Money, Credit and Banking – The Swedish Credit Market in Transition under the Silver and the Gold Standards, 1834 – 1913. 2002 Barinaga, E., Levelling Vagueness – A study of cultural diversity in an international project group. Berglund, J., De otillräckliga – En studie av personalspecialisternas kamp för erkännande och status. Bolander, P., Anställningsbilder och rekryteringsbeslut. Damjanovic, T., Essays in Public Finance. Ekman, M., Studies in Health Economics – Modelling and Data Analysis of Costs and Survival. Företagerskan – Om kvinnor och entreprenörskap. Holmquist, C. och Sundin, E. (red) Heyman, F., Empirical Studies on Wages, Firm Performance and Job Turnover. Kallifatides, M., Modern företagsledning och omoderna företagsledare. Kaplan, M., Acquisition of Electronic Commerce Capability – The Cases of Compaq and Dell in Sweden. Mähring, M., IT Project Governance. Nilsson, M., Essays in Empirical Corporate Finance and Governance. Rekrytering av koncernstyrelsen – Nomineringsförfaranden och styrelsesammansäning med focus på kvinnors ställning och möjligheter. Sjöstrand, S-E. och Petrelius, P.,(red)

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Scener ur e företag – Organiseringsteori för kunskapssamhället. Löwstedt, J. och Stymne, B.,(red). Schenkel, A., Communities of Practice or Communities of Discipline – Managing Deviations at the Øresund Bridge. Schuster, W., Företagets Valutarisk – En studie av horisontella och vertikala styrprocesser. Skogsvik, S., Redovisningsmå, värderelevans och informationseffektivitet. Sundén, D., The Dynamics of Pension Reform. Ternström, I., The Management of Common-Pool Resources – Theoretical Essays and Empirical Evidence. Tullberg, J., Reciprocitet – Etiska normer och praktiskt samarbete. Westling, G., Balancing Innovation and Control – The Role of Faceto-face Meetings in Complex Product Development Projects. Viklund, M., Risk Policy – Trust, Risk Perception, and Aitudes. Vlachos, J., Risk Maers – Studies in Finance, Trade and Politics. 2001 Adolfson, M., Monetary Policy and Exchange Rates – Breakthrough of Pass-Through. Andersson, P., Expertise in Credit Granting: Studies on Judgment and Decision-Making behavior. Björklund, C., Work Motivation – Studies of its Determinants and Outcomes. Center for Management and Organization 50 (1951-2001). Charpentier, C., Uppföljning av kultur- och fritidsförvaltningen eer stadsdelsnämndsreformen. Dahlén, M., Marketing on the Web – Empirical Studies of Advertising and Promotion Effectiveness. Eckerlund, I., Essays on the Economics of Medical Practice Variations. Ekelund, M., Competition and Innovation in the Swedish Pharmaceutical Market. Engström, S., Success Factors in Asset Management. Ericsson, D., Kreativitetsmysteriet – Ledtrådar till arbetslivets kreativisering och skrivandets metafysik. Eriksson, R., Price Responses to Changes in Costs and Demand. Frisell, L., Information and Politics. Giordani, P., Essays in Monetary Economics and Applied Econometrics. Gustavsson, P., Essays on Trade, Growth and Applied Econometrics. Hedlund, A., Konsumentens erfarenhet – och dess inverkan på livsmedelsinköp på Internet. Hill, M., Essays on Environmental Policy Analysis: Computable General Equilibrium Approaches Applied to Sweden.

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