Suzy Bibko is editor of Families in Business.
Once again, Microsoft and Google are making headlines. But this time it is for their (and their founders') philanthropic efforts rather than technological breakthroughs. Both are being hailed for their "for-profit" approach to charity, using company profits to fund philanthropic ventures. In short, they're doing good by doing well. Their approaches are being lauded as innovative, but it is really nothing new. In fact, the Robert Bosch Stiftung (Foundation) has been practicing for-profit philanthropy for over 40 years, using €735 million from Robert Bosch GmbH (Bosch) profits to fund a diverse range of programmes around the world, in the hope of having a positive impact on society and its practices, triggering development and bringing about change.
Where there's a will …
When Robert Bosch died in 1942, he was a very wealthy family business owner. However, he was also very philanthropic and wanted his legacy to live not only through the Bosch company, but also through charitable endeavours. To further that dream, his will stipulated that upon his death, most of the profits of the Bosch Group were to be used for charitable purposes: "It is my intention, apart from the alleviation of all kinds of hardship, to promote the moral, physical, and intellectual development of the people". It took almost 20 years for his executors to come up with a suitable solution that combined Robert Bosch's wishes with the necessities of the future of the company (he always wanted Bosch to be a success). Finally, in 1964 and within the 30-year limit set forth in German law, the Foundation was established by acquiring the stakes belonging to Robert Bosch's heirs (and renouncing all voting rights that came with them). Thus, the Foundation came to own 92% of Bosch (the Bosch family owns the remaining 8%), without influence, which is its only source of funding. Therefore, if the company does well, the Foundation receives dividends, and is able to fulfil its philanthropic mission and vision.
Christof Bosch, Robert Bosch's grandson and a Trustee of the Foundation, says that the family is very happy that his grandfather was so forward thinking. "My grandfather died in 1942, so he died in the midst of WWII and the Nazi regime," explains Christof Bosch. "The question at that time was how can the company survive. He had to plan for a future he didn't know. He had a son who was 14 when he died, and he couldn't know how things would turn out. So, his last will was about how to steer the company through the coming disaster that he foresaw. Then, he had to think about what the guidelines would be to re-establish it after the war. He couldn't tell his successors how to do it because he didn't know what kind of society would be there, how things would work. But his successors tried to do it in his spirit, and I think the whole family knows this. What was established in 1964 was the best approximation, the best adaptation of my grandfather's last will to the situation. We are happy that the whole thing survived, and it survived well."
The Foundation certainly has survived well. Today, it is a well-structured body of about 80 employees, including a board of management and six divisional heads (relating to the different programme focuses). It is governed by a board of trustees, all of whom are shareholders of the Foundation and two of whom are Bosch family members, that makes the final decisions on the Foundation's numerous programmes and grants. Each year, about 70% of the Foundation's funds are spent on its "own" projects and 30% are handed out as grants to other recipients. However, the ratio is inverse (30:70, respectively) in terms of the number of projects developed. Dieter Berg, Chairman of the Board of Management, says that the Foundation's own programmes "result from our own thinking about what's wrong in society or in relation to other countries and where we, as a Foundation and with this small amount of money, can really do something to try and bring things forward."
Forty years on, it's good to see that the Foundation has not wavered from Robert Bosch's original intentions. "He believed that his company by itself was his biggest contribution to society," stresses Christof Bosch. "So, the company in itself should be run in a way that really supports society. That was his primary thinking. So, when there is more profit than is actually needed for the survival of the company, for the flowering of the company, or for his family to have a good life, when there's a surplus, then this should be spent for the elevation of need, for international understanding, things like that."
… there's a way
When the Foundation first started, its main focus was the Robert Bosch Hospital in Stuttgart. The Hospital was founded and created during Robert Bosch's lifetime (it opened in 1940), but the Foundation came to own it after the Foundation was created in 1964. Their first project was to build a new building, which was completed in 1973, and until that time, most of the funds that were available went towards projects related to the Hospital.
Over the years, however, as Bosch grew and prospered, dividends increased and Robert Bosch's dream really became a reality. Today, the Foundation uses funds for a diverse range of focus areas and programmes that address important social issues. According to its Funding Policy, the Foundation implements its own programmes or cooperates with public and private partners, depending on the nature of the project. The list of programmes is impressive (the overview of programme areas in the Foundation's Profile is a healthy four pages; the Profile itself is a hefty 70 pages) and centres around six main areas: Science and Research; Health and Humanitarian Aid; International Relations, Western Europe, USA; International Relations, Central and Eastern Europe; Education and Society; and Society and Culture.
One of the first programme areas started in the 1970s focused on German-French relations, as Robert Bosch had made a strong case for German-French reconciliation in the interwar years when he was still alive. So far, €29.4 million have been spent in this area, and the focus has been expanded to other countries, including the US, Turkey and Poland. "Over the years," explains Dieter Berg, "we have been able to concentrate on other and more focus areas, although everything we do today was, from the beginning, part of the purposes of the Foundation according to our bylaws."
The programmes within the international relations arena are varied, and include some that the Foundation are understandably proud of. "One of the most important programmes of the Foundation is the Robert Bosch Foundation Fellowship with the US," reveals Dieter Berg. "It has existed since 1985. We invite 20 young American leaders or future leaders every year to come to Germany for about one year and work in German institutions, government, companies and other organisations. And that will hopefully foster the relationship between the two countries in the future. We now have over 350 alumni from this programme who are lawyers, journalists, public policy makers and economists." The Foundation also recently devised a programme in response to the deteriorating relationship, due to the Iraq war, between the US and Germany. In the hopes of bringing more understanding between the two countries and their decision-makers, the Foundation created the Congress-Bundestag Forum in 2004, where US Congressmen and German Members of Parliament meet annually to promote transatlantic dialogue and foster personal ties.
Dieter Berg says that the Foundation is now set to focus on Asia, concentrating on German-Japanese, German-India and German-Chinese relations. But with Asia as the buzzword in business, this seems more like a path for Bosch than the Foundation, whose past work has focused on countries where ties have been strained. "We do not have the difficulties and challenges with these countries like we did with our immediate neighbours like France and Poland, where we had a completely different relationship that was negatively affected by the wars of the past," concedes Dieter Berg. "So, we don't have that history with China, Japan and India. But we feel that those are very important regions today and in the future. And it is important to understand those people, how they are thinking, to improve the relationship, to look for an exchange of young people, to invite scientists to come to Germany or send German scientists to those countries so that they can learn from each other. In particular, the economic relations area, especially with India and China, will become more and more important, so I think that it should not only be an economic relationship, but also a cultural one." Dieter Berg says that they plan on starting slowly, developing the focus area over time. However, they know what works well, and plan on using some of the same or similar programmes in Asia that have been developed with other countries. "We have already started a summer school in Japan for young leaders, and we will continue doing that," says Dieter Berg. "And we will invite journalists from Japan to Germany and vice versa, and the same for China and India, too. And maybe one day we will install a fellowship programme like we have with the US and Eastern European countries."
The way forward?
The Foundation has certainly gone from strength to strength over the years, holding steadfast to its founder's wishes, even though the founder wasn't there to guide his successors on this new journey through uncharted territory. The success can't be argued and begs the question whther this is the way forward for other families and businesses. "Situations are, of course, very different [for each family], so the model of the Robert Bosch Company is probably not one that is adaptable to most situations," admits Christof Bosch. "We have a very specific structure for very specific needs. On the other hand, wherever there is a successful company and a family behind it, they'll need to think about how the company can serve society and common welfare, otherwise the family will have internal problems if they don't do that." Sounds like common sense, as well as common good.