NEWS RELEASE | America’s Health Conversion Foundations: A PtP Success Story

We are pleased to announce the release of an important new look at the performance of a set of U.S. PtP “health conversion foundations.” With government revenues powerfully constrained and COVID-highlighted massive social and economic problems calling out for solutions, pressures have mounted around the world to identify new sources of revenue with which to address these problems. Fortunately, one such source has recently been discovered. Known by the unlikely name of Philanthropication thru Privatization, or PtP for short, this source involves the creation of often quite enormous charitable foundations out of assets under the control of governments or quasi-governmental entities that are in process of being transformed into private, for-profit ownership or control or of being exacted from private sources as penalties or fines—and in both cases being channeled into private foundations. Over 650 such PtP foundations have so far been identified around the world drawing on assets as diverse as proceeds from the sale of state-owned enterprises, debt swaps, royalties from state-regulated industries, stolen assets, penalties for corporate misdeeds, auctions of spectrum frequencies, and the de-mutualization of nonprofits or cooperatives. But how effective has this option been? To shed additional light on the answer to this question, we are today releasing an in-depth assessment...

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PtP in the News: Nonprofit Quarterly article on how a PtP foundation can address digital inequality

In a new article published in Nonprofit Quarterly, PtP Project Director Lester Salamon highlights a recent proposal to establish a PtP-style Digital Futures Foundation funded with a portion of the tens of billions of dollars being generated by the auction of government-controlled airwaves. This foundation would be dedicated to overcoming digital equity gaps laid bare by the COVID-19 crisis by underwriting innovations in public-use digital applications and digital literacy training. The full text of this article follows, and a PDF version is available for download here. This article builds on a Concept Note, developed in collaboration with Michael Calabrese of the Open Technology Institute at New America, which was jointly published on April 5th. You can read the full Concept Note here. How a Publicly Funded Foundation Can Lower Digital Inequality April 21, 2021 By Lester M. Salamon On April 5, 2021, New America’s Open Technology Institute and the Johns Hopkins Center for Civil Society Studies, which I direct, released a joint proposal in which we make the case that the nation needs to invest a portion of the windfall proceeds from recent and anticipated auctions of public airwaves to seed a new Digital Futures Foundation dedicated to addressing digital equity gaps in education, telehealth, access to government services, and other...

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To Close Digital Equity Gaps, U.S. Should Endow a Digital Futures Foundation from Proceeds of Spectrum Auctions: New America and Johns Hopkins Experts Propose Bold Fix for Digital Inclusion Gaps

FOR IMMEDIATE RELEASEMarch 5, 2021 Today, New America’s Open Technology Institute and the Johns Hopkins University Center for Civil Society Studies jointly released a proposal to invest a portion of the windfall proceeds from recent and anticipated auctions of public airwaves in a new private Digital Futures Foundation to develop improved digital applications that address digital equity gaps in education, telehealth, online government services, and other critical areas.  While President Biden’s infrastructure plan will usefully address the national need for universal access to affordable broadband connections, getting everyone online will not solve the equally critical challenge of improving the public-purpose applications and training needed to enable full digital inclusion.  According to Michael Calabrese, director of the Wireless Future Project at New America’s Open Technology Institute (OTI) and co-author of the proposal:  “To reap the full benefits of the president’s proposed investments in universal broadband access, we need to address the serious gaps in the applications that actually provide the services that broadband can deliver and the training citizens need to access them. Auctions of the public airwaves are raising tens of billions of dollars that should be recycled back into technology investments aimed at closing persistent equity gaps in digital learning tools, telehealth, environmental justice,...

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PtP in the News: Boston Globe Op-Ed urges PtP solution to digital equity gaps

In a new Op-Ed published yesterday in the Boston Globe, PtP Director Lester Salamon and Michael Calabrese, Director of the Wireless Future Project at New America, argue that a portion of the tens of billions of dollars being generated by the auction of government airwaves should go towards endowing a new PtP-inspired Digital Futures Foundation dedicated to underwriting innovations aimed at closing the gaping digital equity gaps revealed by the COVID-19 crisis. A Concept Note providing further detail on this timely and important proposal will be available for distribution the week of March 8. Please contact us if you would like to receive a copy of this concept note, or if you are interested in helping us to pursue this option.   OPINION To close digital equity gaps, US should endow a private Digital Futures Foundation Auctions of government-owned airwaves produce a lot of revenue. A chunk of it should go toward closing digital equity gaps. By Lester Salamon and Michael Calabrese A high-stakes auction of government-owned airwaves to mobile broadband providers, completed last month in Washington, is set to drop a record windfall exceeding $80 billion into the US Treasury. Two additional auctions of wireless frequency bands, called spectrum, are on...

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NEWS RELEASE | The World’s Third Largest Charitable Foundation—A byproduct of the PtP concept

FOR IMMEDIATE RELEASEContact: Chelsea Newhouse We are pleased to announce the publication of an in-depth case study of the newest and largest foundation to emerge from the implementation of the PtP Concept, a recently discovered, but powerful, “third route” to the creation of significant, charitable endowments around the world through the capture of all or a portion of the proceeds of transactions involving the privatization of government-owned or -controlled assets. Prepared by Johns Hopkins University Professor and PtP Project Director Dr. Lester M. Salamon with the technical assistance of Dr. Juan-Cruz Alli-Turrillas, a noted authority on Spanish foundations and Professor at Spain’s National University of Distance Education (UNED), “Spain’s ‘la Caixa” Banking Foundation: A Global PtP Model” focuses on one of the largest charitable foundations in the world, with an estimated Gross Asset Value of €25.8 billion (roughly US$29 billion) at its founding, and annual philanthropic expenditures approaching €500 million. As this case study shows, this foundation emerged from the transformation during the 2009-12 global financial crisis of Spain’s network of trustee savings banks into for-profit banks, in the course of which the charitable arms and accumulated assets of the previous savings banks were transferred to free-standing, private charitable...

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PtP in the News: New Stanford Social Innovation Review article highlights PtP

A new article in the Fall 2020 edition of The Stanford Social Innovation Review (SSIR), the premier global journal on social purpose innovations, focuses on the “Philanthropication thru Privatization,” or PtP, concept that has identified a major new source of social purpose finance involving the capture of proceeds from transactions involving government-owned or –controlled assets to foster private charitable endowments. With enormous problems of broadband access, inadequate health care, and other societal inequities vividly exposed by the coronavirus pandemic, the need for such additional resources for social purposes has become more urgent than ever. This SSIR article, “A Vast New Source for Social Purpose Finance,” offers a powerful introduction to this concept and the opportunity it opens up to the mobilization of social purpose finance from enormous transactions already under way in countries throughout the world. It also calls attention to the more than 600 foundations that have already resulted from such capture, including some of the largest and most respected foundations in the world. Please consider sharing this article with your networks. You can read the full article at Stanford Social Innovation Review or you can download the article as a PDF from the PtP website at any...

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PtP in the News: World Financial Review article on PtP and stolen assets

A new article focusing on PtP has been published in the latest edition of The World Financial Review. Noting that past experience with the return of stolen assets to governments has too often led to disappointing results, this brief piece, “Where Should All the Stolen Money Go?,” urges consideration instead of applying the Philanthropication thru Privatization, or PtP, concept, which calls for the placement of such assets into carefully structured, private charitable foundations as exemplified in the BOTA Foundation in Kazakhstan and many other foundations around the world. This solution produces win-win benefits for countries and citizens alike, helps mobilize citizens for anti-corruption action, and ensures that preciously needed resources are used transparently and accountably to benefit citizens and not dumped into government coffers or returned to the corruption stream. In this challenging time, when massive emergency funding from governments has intensified concerns about potential corruption, it is more important than ever to ensure that when corruption-generated resources are identified and returned they are truly dedicated to citizen needs. The PtP approach is a proven alternative for achieving this. Please feel free to share the article with those in your networks. You can read the full article from The...

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PtP in the News: WINGS Philanthropy in Focus Blog Highlights PtP

A new article by Project Director Lester Salamon published on the WINGS Philanthropy in Focus blog introduces a promising new route to creating endowed charitable foundations through the process we have termed “Philanthropication thru Privatization,” or PtP for short. This process involves capturing for charitable endowments the proceeds of a host of non-traditional transactions under way around the world. These transactions involve assets that are “invisible in plain sight:” they are in the ground in the form of mineral deposits, in the air in the form of broadband spectrum auctions, in foreign banks in the form of stolen assets, and in legal cases imposing penalties for corporate misdeeds. The PtP Project has already identified well over 600 foundations around the world that have gained endowments from such transactions. This brief piece provides a concise overview of the PtP initiative, introduces the asset classes to which this concept has already been applied, and provides examples of the resulting foundations. We are actively involved in promoting the implementation of this concept in locales across the world and would be eager to learn of possibilities in other areas. Please contact us. Please feel free to share this article with those in your...

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The PtP Beat Goes On: Another Newly-Discovered Major PtP Foundation

As we recently reported, our list of PtP foundations continues to grow. Today, we are pleased to introduce you to our latest discovery: the roughly US$1 billion Truth Initiative (formerly the American Legacy Foundation) created in 1998 out of the same Master Settlement Agreement that brought an end to the litigation brought by a large collection of American states against the manufacturers of cigarettes. Renamed the Truth Initiative in 2014, this PtP foundation grew out of the recognition that the US$246 billion in tobacco settlement funds would largely be absorbed into state treatment programs—leaving little for the preventative programs desperately needed to avoid additional nicotine addictions, especially among youth. The signatories to the agreement thus turned to the vehicle of an endowed charitable foundation as the best channel to promote the “comprehensive, coordinated program of public education and study” that it felt to be “important to further the remedial goals” of the tobacco agreement. The result is “America’s largest nonprofit public health organization committed to making tobacco use a thing of the past.” Thanks in important part to this PtP foundation’s efforts, youth smoking rates in the U.S. have dropped from 23% in 2000 to under 4% today. Recognition...

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The PtP Beat Goes On: Number of PtP Foundations & Amount of Assets Continues to Grow

635 PtP foundations, $200 billion in assets, and counting We are pleased to let you know that the number of identified PtP foundations around the world has continued to expand, as has the amount of assets these foundations control. During the past year, an additional 100 PtP foundations have come to light, representing $65 billion in assets and a nearly 20% jump in the identified number of foundations. Included here are: The Renova Foundation in Brazil, a US$7 billion foundation that got its assets from a penalty arising from an environmental disaster; The enormous US$25 billion “la Caixa” Foundation in Spain, created from the assets of a pre-existing cooperative savings bank that underwent a transformation into a for-profit company along with a network of similar Spanish savings banks in 2014; The US$1.2 billion Lumina Foundation in the United States, established with the assets resulting from the conversion of a nonprofit student loan guarantee organization into a for-profit business in 2000; The US$3.2 billion Mother Cabrini Health Foundation in the United States, established with the assets resulting from the sale of a nonprofit hospital by a for-profit hospital chain in 2018; and The Voqal Foundation, which was the recipient of...

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PtP Highlighted at Recent World Bank Spring Meeting Session on Combatting Corruption

At the recent the World Bank Spring Meetings in Washington, DC, Project Director Lester Salamon had an opportunity to introduce PtP’s potential for encouraging citizen involvement in anti-corruption efforts—a point which was highlighted as one of the “6 Takeaways From the World Bank Spring Meetings,” as excerpted below. By Sophie Edwards // 19 April 2018   WASHINGTON — Representatives from the World Bank, business, technology companies, media, and law enforcement discussed ways in which they can work together to combat corruption during the Spring Meetings….   Wednesday’s session brought together a diverse range of actors from government, the private sector, media, and academia to discuss new ways and challenges to ending corruption.     6. New models for spending seized assets “Citizens will not get serious about working on corruption unless they see a better result coming from the capture of corrupt assets than they are seeing now,” according to Lester Salamon, director of the Center for Civil Society Studies at Johns Hopkins University. “Currently, these assets are put back into government agencies and flow back into corruption,”...

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“How to Apply PtP to State-Owned Enterprises” by William L. Megginson and Lester M. Salamon

FOR IMMEDIATE RELEASE Contact: Chelsea Newhouse Governments around the world have recently been involved in a significant new wave of privatizations-sales of state-owned enterprises to private companies. The 48-month period between January 2013 and December 2016 saw governments raise more money through privatization sales than during any comparable previous period. Yet three times worth of government enterprises than the $3.5 trillion sold since 1977 still remain in government hands, many of them awaiting sale. What happens to the vast resources secured through such sales? Too often, it is difficult to determine. Stories of widespread corruption are rampant. Even when the proceeds are appropriately channeled into government budgets, however, their uses are hard to track. But these are the people’s assets, often the only real assets a population has. Surely a case can be made for handling them more responsibly and ensuring that citizens get a clearer benefit from their use. This is especially so given what is often the “upside-down” effects such asset sales can produce-yielding positive economic benefits for companies and citizens that are often long in coming and too dispersed to be clearly felt; while producing immediate harms in the form of lost jobs and community disruptions...

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“How to Apply PtP to Stolen or Stranded Assets” by Aaron Bornstein and Lester M. Salamon

FOR IMMEDIATE RELEASE Contact: Chelsea Newhouse According to a recent UN report, close to US$4 trillion is stolen from governments or generated by bribes or other forms of corruption each year in countries around the world—an annual sum well above the total budgets of numerous developing and transition country governments. Despite often heroic efforts, however, the record of successful discovery, confiscation, and effective return for social re-use of these vast assets has been frustratingly meager. This limited success in returning such assets for effective social re-use is largely due to the complexity of the process. Also at work, however, is that so much of the attention has had to focus on the challenges of locating, documenting, freezing, and confiscating stolen assets that too little attention has been available to focus on the all-important question of what to do with these assets if and when they become available for potential return. The document being released today seeks to remedy this shortcoming by focusing on one of the most promising of the social re-use and return options available. This is the option exemplified by the case of the BOTA Foundation in Kazakhstan, and by close to 600 other foundations that have...

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The PtP Beat Goes On: A New Cache of PtP Foundations

The recent identification of stolen or stranded assets as another asset class to which the PtP concept can be applied has surfaced a number of new PtP foundations. Already, the PtP Project has issued a case study focusing on one foundation that emerged from this asset class—Kazakhstan’s BOTA Foundation—which came into being out of the confiscated proceeds of a bribe paid to the then-president of this Central Asian country.   Now, however, a new route to the capture of significant resources from illegal activity has come into view: settlements from legal cases in which corporations have been charged with improper, illegal, or negligent behavior.   While such settlements often involve penalty payments to governments, the penalty payments are also often accompanied by settlements in which the offending company agrees to commit resources to help ameliorate a problem similar to one that its behavior helped to perpetuate. Thus, for example, to offset the damage done by the explosion of their Deepwater Horizon drilling rig in the Gulf of Mexico and the subsequent leak of millions of barrels of oil into the surrounding ecosystem, oil giant BP and its drilling partner, Transocean, were required to commit US$20.8 billion for reclamation and...

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Project Director Lester Salamon presents the PtP concept in Beijing

In January 2017, Center Director Lester Salamon visited Beijing at the invitation of the Asia Foundation Beijing Office to speak to foundation leaders and students at the China Foundation Centre (CFC), China Donor Roundtable (CDR), and the China Global Philanthropy Institute (CGPI) about key issues facing the foundation and nonprofit sectors in China.   From a PtP perspective, this visit represented a key opportunity to bring the Philathropication thru Privatization concept to one of the most fertile fields in privatization today. In fact, as detailed by the Privatization Barometer’s PB Report for 2014-2015: “China was, by far, the leading privatizing country during both 2014 and 2015, raising $73.6 billion (€55.7 billion) during 2014, and an astonishing $133.3 billion (€123.0 billion) through August 2015.”   The massive scale of these privatization transactions present a crucial opportunity to build endowed foundations to advance social progress in the country—but only if stakeholders are aware of and advocate for PtP outcomes during the privatization process itself. With this in mind, Dr. Salamon presented the PtP project and conducted an extended conversation on the concept with students, scholars, and philanthropic leaders at CGPI on January 12, 2017. The full session is available here: Part 1 |...

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