Tuesday, August 03, 2004

Philanthropy? I think not.

Daniel Drezner points to this article in the Economist. The article reports on, among other things, philanthropy research made by The Center for Civil Society Studies at Johns Hopkins University. According to a graph in the article (graph number 2), Sweden is number two among the studied countries, just behind Netherlands, when it comes to private philanthropy.

I guess that the Swedish estimate comes from an economist at the Stockholm School of Economics, Filip Wijkström. I know that he is doing research on the nonprofit sector and that he has published a book, The nonprofit sector in Sweden, in the Johns Hopkins Nonprofit Sector Series. The estimate as such, 4% of GDP, is more or less the same reported by Wijkström(Swedish only).

I don't doubt that estimate as such, it is probably accurate. What I want to do is to draw a picture of the Swedish nonprofit sector. The text that describes graph 2 says private philanthropy, but I’m not entirely sure that such a description is accurate in the Swedish context.

There are two main types of nonprofit organizations in Sweden, associations and foundations. The associations can be divided into five different types:

1) Recreational and service associations
2) Associations with social or ideological objectives
3) Economic or cooperative associations
4) Business associations
5) Labor-market associations

The most common kind of associations within the first group is sports-related. But there are also other kinds, such as minority organizations, associations furthering the arts, science, outdoor activities (scouting, tourism, etc.) and hobbies.

Groups that protect and preserve the environment belong to the second group. One will also find associations representing handicapped and disabled as well as political parties, various human right associations, associations that provide relief and development assistance and religious congregations.

The third group contains different kinds of cooperatives. Not just consumer and producer cooperatives but also associations who own and take care of common ground or roads. These roads are mostly small and situated on the countryside. The fourth group also contains cooperatives, but these business associations are not nonprofit.

Both trade unions and employer associations belong to the fifth group, labor-market associations.

Lundström and Wijkström (1995) exclude the fourth group from the nonprofit sector. They also exclude some of the associations in the third group, those with profit distribution. So called neo-cooperatives on the other hand belongs the nonprofit sector. One kind of neo-cooperatives is child care centers, established and run by parents.

They also include some of the labor-market associations, at least the labor movement and their educational associations, and private foundations that provide public service. Lundström and Wijkström want to exclude some parts of the Swedish Church with the argument that it is a state church. That was the case in 1995 but church and state was separated in the year 2000.

In Sweden, 90 percent of the population aged between 16 and 84 is a member of one association or more. The most common association is trade unions, 80 percent of the population is member in the union. Pensioner organisations are second with 42 percent and sports-related associations are third with 31 percent (note that those under 16 isn’t accounted for and the membership rate is probably higher. According to the Swedish Sports Confederation, more than 3 million is a member of a sports association).

It is here, I think; that the problem with the graph arises. As I said above, the graph says “private philanthropy”. The question is if one should regard the kind of associations that is most common as philanthropic associations. I have to say no to that question. The trade unions act on the behalf of their members. So does the pensioner organisations. The action of the sports clubs is the sport itself. The fourth largest kinds of association, the consumer-cooperatives, also act on the behalf of their members.

Granted, some of (and when it comes to trade unions, most of) this associations I have just mentioned do perform activities that should be regarded as philanthropic. But those activities are not the main objective of the different associations.

Also, the associations, and membership in them, might lead to good consequences for the society as a whole. Robert Putnam’s theory of social capital is one example on how it might work. But those consequences are unintended consequences and should not be confused with the intended.

So where can one find the philanthropic associations on the list? Well perhaps one can see culture organisations as philanthropic. 11 percent of the population is a member of such associations. But they are not necessarily philanthropic; some of them also act on the behalf of their member.

Next on the list with 8 percent is humanitarian organisation, and it is probably the largest group of the true philanthropic associations. Second on that list are environmental organisations with 4 percent.

Now, as I mentioned above, some of the non-philanthropic organisations do perform philanthropic activities so one can’t say that such activities are limited to the humanitarian, environmental and other organisations in the same “branch”. It’s hard to decide to which extent the associations in the nonprofit sector perform philanthropic activities. If one looks at how the sector use its money (about 60 billion SEK, 4 percent of GDP), one will find that somewhere between 7 and 35 percent* is used on “leisure and culture”, “social care” and “others”** and it is a very rough estimate. Some of these areas are only partly related to philanthropy, which means that the estimate as such is quite poor.

One interesting fact though is that only 30 percent of the money comes from the government, which is more or less the same as in the United States. The difference is that Sweden has a higher share of self-generated (for example, member fees and lotteries) where the US nonprofit sector relies more on gifts.

Another problem here is that the graph in the Economist is based on voluntary work and not how the money is spent. A study conducted by Filip Wijkström ten years ago might help us on that issue. Wijkström asked 5200 different organisations and one result that the survey gave us was that the nonprofit sector provides 480 million hours of voluntary work during one year. That is equivalent to 300 000 full-time jobs.

Wijkström’s study gives information on how that time is being used as well. The result is that the areas health care, social care, education, aid and peace and environment sum up to 13 percent of all the voluntary work provided by the nonprofit sector. One concern is that membership in associations which deal primarily with such activities has changed during the last ten years. For instance, membership in environmental organisations has decreased by 3-4 percentage points while the membership in humanitarian organisations has increased by 4-5 percentage points. But one might expect, and it is also confirmed by a study conducted by Statistics Sweden (SCB), that those leaving are the “passive” members and not the “active”.

The point of all this is that while the nonprofit sector in Sweden is quite large, emphasize is not on providing services as it might be in other countries. Lundström and Wijkström (1995, p. 1) write:

“There is substantial empirical evidence that the Scandinavian nonprofit sector has had a considerable impact on society during the 20th century, and that it evolved consistently with the welfare state, rather than in opposition to or instead of it. In contrast to other countries, however, the Swedish nonprofit sector developed less in the fields of health and social services, and more in the areas of culture, leisure, and advocacy.”

One can perhaps argue that while the welfare state hasn’t crowded out the nonprofit sector as such, it has crowded out health and social services from that particular sector. Whether or not that is the case, it looks like that the nonprofit sector is a poor proxy for private philanthropy in Sweden.

* Unfortunately, all these numbers are quite old, from 1992.
** “Others” contains “international activities”, “religion”, “health care”, “philanthropy”, “environmental” and yet another post “others”. What philanthropy in this context means is not specified, but I think it’s fair to say that some of the other areas I mention here should be regarded as philanthropy as well.

References:

Lundström, Tommy and Filip Wijkström. "Defining the Nonprofit Sector: Sweden." Working Papers of the Johns Hopkins Comparative Nonprofit Sector Project, no. 16. Baltimore: The Johns Hopkins Institute for Policy Studies, 1995.

Riksidrottförbundet. Idrotten i den ideella sektorn: en kunskapsöversikt. FoU-rapport 2004:6.

SCB + Politiska resurser och aktiviteter 1992–2001

Wijkström, Filip. Den ideella sektorns roll.