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PHILANTHROPICATION thru PRIVATIZATION : A New Approach to Building Charitable Endowments in Developing Regions LESTER M. SALAMON Johns Hopkins University.

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Presentation on theme: "PHILANTHROPICATION thru PRIVATIZATION : A New Approach to Building Charitable Endowments in Developing Regions LESTER M. SALAMON Johns Hopkins University."— Presentation transcript:

1 PHILANTHROPICATION thru PRIVATIZATION : A New Approach to Building Charitable Endowments in Developing Regions LESTER M. SALAMON Johns Hopkins University and East-West Management Institute

2 BACKGROUND Major efforts under way to foster community foundations in less developed areas These efforts are hampered by lack of capital Growing frustration the result

3 Meanwhile, enormous privatization sales going forward in same countries  Hungarian mortgage bank FHB (2007)  Ukraine’s Kryvorishstal Steel Mill (2005)  Kenya Generating Company (2008)  Turkey’s power grid (2006-2008)  Kenya telephone grid sold to Vodaphone in 2008  2005-09: $545+ billion of privatization sales Meanwhile, enormous privatization sales going forward in same countries

4 249Georgia 10 Rwanda 61Pakistan 27 Turkey Pending Sales Country Shenyang Province, China24 Kosovo 40-50 Kenya26 PRIVATIZATION STILL UNDERWAY PENDING TRANSACTIONS

5  Kenya Pipeline Co.  Kenya Ports Authority—Eldoret Container Terminal  Chemelli Sugar Co.  South Nyanza Sugar Co.  Kabarnet Hotel  Mt. Elgon Lodge Ltd  Kenya Safari Lodges and Hotels  Agrochemical and Food Corporation  Kenya Wine Agencies  East African Portland Cement  New Kenya Co-operative Creameries  Various power stations PENDING PRIVATIZATIONS: KENYA

6  Capturing a fraction of the privatization proceeds for community foundations could revolutionize the foundation landscape of the world  10% of proceeds of Kryvoriszhstal Steel in Ukraine could have yielded a $480 million Ukrainian community foundation  10% of proceeds of Kenya-Vodaphone deal would have yielded a $70 million Kenya community foundation THE OPPORTUNITY

7  Italian banking foundations  Blue Cross/Blue Shield Sales in US  New Zealand Community Trusts  Volkswagen Foundation  Czech Foundation Investment Fund  415 verified cases so far Not Just a Theoretical Idea

8  Little systematic information  No cross-fertilization of experience  No assembly of best practices  Limited analysis of lessons  No effort to seize the opportunity to build on the experience in other places THE PROBLEM

9 Defuse opposition to privatization  CEE Survey  Citizen protests Ukraine/China  Sales halted in: Sweden, Germany, France, Italy  Sarkozy dedication of 2007 sale to universities An Opportune Moment

10 Build the case for PtP by documenting prior cases Identify best practices/useful lessons Disseminate materials/increase awareness Promote implementation PtP PROJECT

11 Track I: Building the Case  Identify past cases of PtP  Analyze cases, identify best practices  Disseminate results Track II: Implementation Assistance— 3-4 sites TWO-TRACK APPROACH

12 A public or quasi-public asset A resulting privately controlled charitable endowment A process of transformation 3 Defining Features

13 5 TYPES I.State-owned enterprise II.Other state-owned asset III.Government lottery IV.Debt swap V.Quasi-governmental organization (e.g. nonprofit ) Depends on Initial asset

14 NEXT STEPS  Conduct case studies  Form advisory committee  Develop “best practice” guidelines  Disseminate results–conferences/PtP website  Identify pilot test countries  Launch pilot implementations  Chronicle pilot implementation progress/lessons  Publicize & promote further implementation

15  Increased interest in global philanthropy  Increased resistance to privatization  Business community looking for win-win opportunities  Institutional structure for community foundations in place in many locales THE TIME IS RIPE Let’s seize the moment!

16 Lester M. Salamon lsalamon@jhu.edu For further information CONTACT

17 Proceeds by region, 2005-2008 Region Value in US$ billion Percent of total value Total$328.6100% East Asia & Pacific $153.546.7% Eastern Europe & Central Asia $120.236.6% Latin America & Caribbean $17.35.3% Middle East & North Africa $20.56.2% South Asia $8.72.6% Sub-Saharan Africa $8.42.6% PRIVATIZATION STILL UNDERWAY DEVELOPING COUNTRIES Source: World Bank Group

18 YearValue in US$ billion Total$216.0 2006$46.7 2007$51.6 2008$72.5 2009$45.2 Proceeds by year, 2006-2009 PRIVATIZATION STILL UNDERWAY OECD COUNTRIES Source: Privatization Barometer


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