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Capital Bank Group Graz Salzburg Wien Kitzbühel Klagenfurt Annual Report 2013 THE FUTURE’S SITTING PRETTY The Capital Bank 2013

Group SITTING PRETTYTHE FUTURE’S Salzburg Graz · Manfred Prisching, the author of our guest article is Professor at the Institute of Sociology at the Faculty of Business, Economics

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Page 1: Group SITTING PRETTYTHE FUTURE’S Salzburg Graz · Manfred Prisching, the author of our guest article is Professor at the Institute of Sociology at the Faculty of Business, Economics

Capital B

ank G

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Kitzbühel

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Annual R

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apital Bank 2013

Page 2: Group SITTING PRETTYTHE FUTURE’S Salzburg Graz · Manfred Prisching, the author of our guest article is Professor at the Institute of Sociology at the Faculty of Business, Economics

CHRISTIAN JAUKCHAIRMAN OF THE BOARD

Capital Bank has its roots in 1828, when Archduke Johann of Austria founded Grazer Wechselseitige Versicherung, or ‘Graz Mutual Insurance Company’. With the idea of forming a single insurance company that with its collec-tive strength would be able to safeguard the livelihood of farmers after a fire, his action was one of classic social entrepreneurship. Today the concept of bearing joint responsibility is more relevant than ever before. As an award-winning company we were Austria’s first private bank to establish a non-profit private foundation called Philanthropie Österreich, or ‘Philanthropy Austria’ with the aim of providing help when it is most needed, together with our customers.

CONSTANTIN VEYDER-MALBERGMEMBER OF THE BOARD

Since 2009 we have carried on our business under the motto ‚fair and honest‘. Our motto heralds a return to the old values of banking. From this established foundation, we have now forged ahead and initiated a charity platform for ourselves and our cus-tomers. The goal is to create social engagement by provid-ing help from the platform of a well-structured foundation; by doing this, we effectively cre-ate the room for manoeuvre, within which we can efficiently implement actions of intrinsic value and sustainably support non-profit organisations. By so doing, we jointly live out the principle of hope and together build a brighter future.

„Make a difference“ – easy to say, not always easy to put into action. The guest contribution in this annual report, written by Graz-based sociologist Manfred Prisching, deals with the topic of philanthropy in the Second Modern Age. Philanthropy, you ask? In the annual report of a private bank? Yes, exactly, because our bank is not just about monetary income, lucrative investments and the market forces. We also work on issues that affect social commitment, community engagement and the use of private resources for the general good of the public.

According to our guest author, the word philanthropy more often than not lurks on the periphery of normal European language usage. The meaning of the word has transformed from the general idea of ‘philanthropic atti-tude’ and gained a more specific meaning. Philanthropy is increasingly equated with private charity, whereby private resources are systematically and consciously allocated for the general good of the public. Philanthropy is not influ-enced by utility or power; the intention of philanthropy is to carry out an action of intrinsic value. Philanthropy ranges from personal altruism to the modern take on philanthropy found in philanthropic corporations; it also includes small donations of money as well as corporate volunteering. Although the term philanthropy encompasses so many facets, they all have one thing in common: A correspond-ing philanthropic action always requires an active decision on the part of the voluntary donor.

„We have the chance to improve peoples‘ lives. There is no better task than philanthropy,“ according to Bill and Melinda Gates, who together with Warren Buffet are the world‘s best-known philanthropists of the present time. To find out more about charitable engagement, emotional values, sustainability and the vision of a better world, as well as to learn about the roots of philanthropy, how modern philanthropic management is organised and what all of this has to do with Capital Bank, read this annual report.

Manfred Prisching, the author of our guest article is Professor at the Institute of Sociology at the Faculty of Business, Economics and Social Sciences of the Univer-sity of Graz.

Page 3: Group SITTING PRETTYTHE FUTURE’S Salzburg Graz · Manfred Prisching, the author of our guest article is Professor at the Institute of Sociology at the Faculty of Business, Economics

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CONTENTS

Page 4: Group SITTING PRETTYTHE FUTURE’S Salzburg Graz · Manfred Prisching, the author of our guest article is Professor at the Institute of Sociology at the Faculty of Business, Economics

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Introduction 4

Philanthropy in the Second Modern Age by Manfred Prisching By way of introduction: A potpourri of terms 6“Humanitarianism”: On nobles and barbarians 8“Opening oneself towards the other” Philanthropic institutions: 28“Private virtues, public benefits” Philanthropic role models: 40“The man who dies rich dies disgraced”Philanthropy’s new logic 50Criticism of philanthrocapitalism 60Working on problem areas: 70effective altruism The culture of giving: 78“In giving a gift, you give of yourself ”Endnotes 86

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3HUIRUPDQFH�DQG�NH\�ÀJXUHV� 94Company boards 96Management Report 98Risk Report 118Report of the Supervisory Board 156Balance sheet 158Income statement 160Capital adequacy 1626WDWHPHQW�RI�FKDQJHV�LQ�À[HG�DVVHWV� 168([FHUSW�IURP�WKH�QRWHV�WR�WKH�DQQXDO�ÀQDQFLDO�VWDWHPHQWV�RI�&DSLWDO�%DQN�� 166Auditor's Report 194Consolidated balance sheet 200

Imprint 208

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,1752'8&7,21

:H�KDYH�JLYHQ�RXU������DQQXDO�UHSRUW�WKH�WLWOH�³7+(�)8785(¶66,77,1*�35(77<´��6LQFH������when the financial crisis first DSSHDUHG�RQ�WKH�KRUL]RQ��ZH�KDYH�grown used to rather depressing statements and alternately sober DQG�SDQLFĥVWULFNHQ�FRPPHQWDULHV��2XU�DLP�LV�WR�RIIHU�DQ�DOWHUQDWLYH��2YHU�WKH�SDVW�VHYHUDO�\HDUV�ZH�KDYH�EUHDWKHG�QHZ�OLIH�LQWR�SULYDWH�EDQNLQJ�E\�JRLQJ�EDFN�WR�WULHGĥDQGĥWHVWHG�YDOXHV��DQG�RXU�HIIRUWV�KDYH�resulted in our being named the EHVW�SULYDWH�EDQN�LQ�$XVWULD�DQG�WKH�second best in Europe by the Fuchsĥbriefe publishing house and the Institute for Quality Assurance and $VVHVVPHQW�RI�)LQDQFLDO�6HUYLFHV�Ī,QVWLWXW�I�U�4XDOLWlWVVLFKHUXQJ�XQG�3U�IXQJ�YRQ�)LQDQ]GLHQVWOHLVWXQJHQ�Ħ�,4)ī��3RVLWLYH�EXVLQHVV�UHVXOWV�LQ������DV�ZHOO�DV�WKHVH�PRUH�V\PEROLF�successes not only strengthen our UHVROYH�WR�FRQWLQXH�RQ�RXU�FKRVHQ�path, but more importantly they HQFRXUDJH�XV�WR�WDFNOH�QHZ�SURMHFWV�WKDW�ZH�EHOLHYH�ZLOO�EH�YLWDO�LQ�HQVXULQJ�D�PRUH�SRVLWLYH�IXWXUH�

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7KLV�LV�ZK\�LQ������ZH�ZHUH�WKH�ILUVW�$XVWULDQ�SULYDWH�EDQN�WR�HVWDEOLVK�D�FRQVXOWLQJ�VHUYLFH�VSHFLILFDOO\�GHYRWHG�WR�SKLODQWKURS\��2XU�VHUYLFH�LV�WDUJHWHG�DW�SULYDWH�LQGLYLGXDOV��IDPLO\�EXVLQHVVHV��IRXQGDWLRQV�and companies with sufficient assets who are LQWHUHVWHG�LQ�SKLODQWKURSLF�JLYLQJ��UHJDUGOHVV�RI�DQ\�SUHYLRXV�H[SHULHQFH�ZLWK�FKDULWDEOH�GRQDWLRQV��7KH�FRQVXOWLQJ�VHUYLFHV�DUH�IUHH�RI�FKDUJH�IRU�&DSLWDO�%DQN�FXVWRPHUV��7KH�FKRVHQ�SURMHFWV�UHFHLYH����İ�RI�WKH�LQYHVWPHQW��7R�WKLV�HQG�ZH�KDYH�VHW�XS�DQ�XPEUHOOD�IRXQGDWLRQ��DQG�DOO�WKH�DGPLQLVWUDWLYH�FRVWV�DUH�DVVXPHG�E\�&DSLWDO�%DQN��$V�D�UHSXWDEOH�SULYDWH�EDQN��ZH�GUDZ�RXU�FXVWRPHUV¶�DWWHQWLRQ�WR�WKH�WRSLF�RI�SKLODQWKURS\�DQG�SURYLGH�DQ�DUUD\�RI�VHUYLFHV�WR�VXSSRUW�WKHLU�LQYHVWPHQW�LQ�FKDULWDEOH�RUJDQLVDWLRQV��:H�ZRUN�WR�VXSSRUW�RXU�FXVWRPHUV�LQ�WKHLU�SKLODQWKURSLF�DFWLYLWLHV�DQG�LQWHQG�WR�EH�WKH�OHDGLQJ�$XVWULDQ�SURYLGHU�RI�FRQVXOWLQJ�VHUYLFHV�DQG�LQVWUXPHQWV�UHODWHG�WR�FKDULWDEOH�JLYLQJ��7KH�JXHVW�HVVD\�LQ�WKLV�\HDU¶V�DQQXDO�UHSRUW�ZLOO�JLYH�D�JHQHUDO�RYHUYLHZ�RI�WKH�KLVWRU\�RI�SKLODQWKURS\��LQWURGXFH�D�QXPEHU�RI�SURMHFWV�HVWDEOLVKHG�DURXQG�WKH�ZRUOG�and scrutinise some of the criticisms directed against SKLODQWKURS\�

The author of our guest essay is Manfred Prisching, SURIHVVRU�DW�WKH�'HSDUWPHQW�RI�6RFLRORJ\�LQ�WKH�Faculty of Social and Economic Sciences at the 8QLYHUVLW\�RI�*UD]�DQG�DQ�H[SHUW�RQ�VRFLDO�HWKLFV��:H�KRSH�\RX�HQMR\�WKH�SLHFH�DQG�WKDW�LW�ZLOO�LQVSLUH�\RX�WR�MRLQ�XV�LQ�EXLOGLQJ�D�EHWWHU�IXWXUH�

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By way of introduction: A potpourri of terms

Philanthropy: charity, humanity, humanitarianism; from the Greek SKLODQWKURSLD�>'H¿QLWLRQ�IURP�WKH�*HUPDQ�'XGHQ�GLFWLRQDU\@

Philanthropy: GDWHG��KXPDQLWDULDQ�LPSXOVH�WKDW�LV�OLPLWHG�WR�WKH�ZHOO�EHLQJ�RI�LQGLYLGXDOV�ZLWKRXW�DGGUHVVLQJ�WKH�VRFLR�HFRQRPLF�URRWV�RI�SRYHUW\�DQG�H[SORLWDWLRQ�>*HUPDQ�':'6�GLFWLRQDU\@��&DULWDV��KXPDQLW\��EURWKHUO\�ORYH��VRFLDO�FRPPLWPHQW��FKDULW\�>*HUPDQ�2SHQ�7KHVDXUXV@

Philanthropy�LQFOXGHV�DOO�W\SHV�RI�SULYDWH�DQG�FKDULWDEOH�DFWLRQ�IRU�WKH�SXUSRVH�RI�LPSURYLQJ�WKH�FRPPRQ�JRRG��>&HQWUH�IRU�3KLODQWKURS\�6WXGLHV@

Phi·lan·thro·py QRXQ�?Iԥ�ODQ�W��WKUԥ�SƝ?��WKH�SUDFWLFH�RI�JLYLQJ�PRQH\�DQG�WLPH�WR�KHOS�PDNH�OLIH�EHWWHU�IRU�RWKHU�SHRSOH����*RRGZLOO�WR�IHOORZ�PHPEHUV�RI�WKH�KXPDQ�UDFH��HVSHFLDOO\��DFWLYH�HIIRUW�WR�SURPRWH�KXPDQ�ZHOIDUH���D��DQ�DFW�RU�JLIW�GRQH�RU�PDGH�IRU�KXPDQLWDULDQ�SXUSRVHV��E��DQ�2UJDQL]DWLRQ�GLVWULEXWLQJ�RU�VXSSRUWHG�E\�IXQGV�VHW�DVLGH�IRU�KXPDQLWDULDQ�SXUSRVHV��/DWH�/DWLQ�SKLODQWKURSLD��IURP�*UHHN�SKLODQWKUǀSLD��IURP�SKLODQWKUǀSRV�ORYLQJ�SHRSOH��IURP�SKLO����DQWKUǀSRV�KXPDQ�EHLQJ��>0HUULDP�:HEVWHU@

Philanthropy: FKDULW\��JHQHURVLW\��DOPV��DOPV�JLYLQJ��DOWUXLVP��DVVLVWDQFH��EHQHIDFWLRQ��EHQH¿FHQFH��FRQWULEXWLRQ��GROH��GRQDWLRQ��HQGRZPHQW��IXQG��UHOLHI��JLIWLQJ��JRRG�ZRUNV��KHOSLQJ�KDQG�>5RJHWV���VW�&HQWXU\�7KHVDXUXV��WKHVDXUXV�FRP@��HQGDHPRQLVP��KXPDQLW\��GHOLFLDH�KXPDQL�JHQHULV��FRPPRQ�ZHDO��XQLYHUVDO�EHQHYROHQFH��the greatest happiness of the greatest number [selection from &RQFHSW�7KHVDXUXV��LELG�@��VRFLDO�FRQVFLHQFH��NLQGQHVV��PDJQDQLP-LW\��SXEOLF�VSLULW��VHOÀHVVQHVV��JHQHURVLW\��SURIXVLRQ��XQVHO¿VKQHVV��ERXQWHRXVQHVV��ERXQW\��FKDULWDEOHQHVV��JRRGQHVV��KLJK�PLQGHGQHVV��KRVSLWDOLW\��ODUJHVVH��PXQL¿FHQFH��QREOHQHVV�>VHOHFWLRQ�RI�FRQQHFWHG�ZRUGV��LELG�@

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$�TXLFN�JODQFH�LQ�*HUPDQ�DQG�(QJOLVK�GLFWLRQDULHV�SURYLGHV�VRPH�HYLGHQFH�RI�KRZ�H[WHQVLYH�WKH�ILHOG�RI�SKLODQWKURS\�FDQ�EH��%URDGO\�XQGHUVWRRG��SKLODQWKURSLF�DFWLRQ�LQFOXGHV�Ī�ī�DQ\�FKDULWDEOH��KXPDQLWDULDQ��DOWUXLVWLF�DFWLYLW\��WRVVLQJ�D�FRLQ�LQWR�D�VWUHHW�PXVLFLDQ¶V�GRQDWLRQ�FXS��Ī�ī�DQ\�DFWLYLW\�WKDW�LV�FRQFHUQHG�ZLWK�WKH�FRPPRQ�JRRG��DQ\�LQYHVWPHQW�LQ�VRFLDO�ZHOOĥEHLQJ��DQ\�SULYDWH��YROXQWDU\�DFWLRQ�IRU�D�SXUSRVH�WKDW�LV�FKDULWDEOH�RU�QRW�IRU�SURILW��MRLQLQJ�WKH�YROXQWHHU�ILUH�EULJDGH��Ī�ī�ĪD�PRUH�OLPLWHG�GHILQLWLRQī�WKH�GRQDWLRQ�RI�PDWHULDO�JRRGV�RU�ILQDQFHV��VSRQVRULQJ�D�VFKRRO�WULS��Ī�ī�ĪDQ�HYHQ�PRUH�OLPLWHG�GHILQLWLRQī�LQYHVWPHQWV�RI�ODUJH�DPRXQWV�LQ�WKH�LQWHUHVW�RI�WKH�SXEOLF�JRRG��WKH\�DUH�RIWHQ�combined with the establishment of a philanthropic RUJDQLVDWLRQ�ĪRU�D�FKDULWDEOH�RUJDQLVDWLRQ1ī�2

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“Humanitarianism”: On nobles and barbarians

The early history of the “friends of mankind”

Is there anything we Europeans witness in our current society that ZH�FDQQRW�DOVR�GLVFRYHU�DPRQJVW�WKH�DQFLHQW�*UHHNV"�7KH�FRQFHSW�of the philanthropist is but another H[DPSOH��DV�WKH�ZRUG�LWVHOI�LV�*UHHN�DQG�PHDQV�³IULHQG�RI�PDQNLQG´��:H�can find it used by Aeschylus, ArisĥWRWOH�DQG�;HQRSKRQ��3URPHWKHXV�LV�D�YHU\�VSHFLDO�H[DPSOH�RI�D�IULHQG�RI�PDQNLQG��RQH�ZKR�FORVHO\�resembles the way we understand WKH�WHUP�WRGD\��EHFDXVH�KH�JDYH�ILUH�WR�KXPDQNLQG�HYHQ�DJDLQVW�WKH�ZLVKHV�RI�WKH�JRGV��7KLV�ZDV�DQ�action that not only resulted in the IRXQGLQJ�RI�FLYLOLVDWLRQ��EXW�ZDV�ĪDV�DUH�PRVW�PHDQLQJIXO�FKDULWDEOH�DFWLRQV�WRGD\ī�LQ�NHHSLQJ�ZLWK�WKH�concept of “helping someone to KHOS�WKHPVHOYHV´��7KLV�LV�FOHDUO\�D�modern concept, one that those in power, the gods, wanted desperately WR�SUHYHQW�EHFDXVH�LW�ZRXOG�ORRVHQ�WKHLU�KROG�RYHU�WKH�ZRUOG��%XW�

The business world would be very poor indeed if doing busi-ness was just about the numbers and the sole point of it all was just to increase wealth.

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VRPH�RI�WKH�*UHHN�JRGV�ĪPRVW�RI�ZKRP�ZHUH�VXUĥSULVLQJO\�UDWKHU�PHDQ��PDOLFLRXV�DQG�IRXO�WHPSHUHGī�VRPHWLPHV�GLG�WKLQJV�RI�EHQHILW�IRU�KXPDQNLQG�DQG�KHQFH�ZHUH�ODEHOOHG�³SKLODQWKURSLVWV´�E\�QR�OHVV�WKDQ�3ODWR��7KH�FRQWH[W�LQFOXGHG�WKH�SURIOLJDWH�WUDQVIHU�RI�NQRZOHGJH�DQG�WKH�HQWLUHW\�RI�DUWLVWLF�DFWLYLW\��:KHQ�LW�FRPHV�GRZQ�WR�LW��WKH�*UHHNV�XQGHUVWRRG�WKH�philanthropist to be someone with a noble character, D�³FLYLOLVHG´�SHUVRQ��DQ�XSULJKW�DQG�HWKLFDO�LQGLYLGXDO��D�EHQLJQ�UXOHU��7KH�RSSRVLWH�ZDV�WKH�³EDUEDULDQ´��D�WHUP�WKDW�ZH�VRPHWLPHV�HQFRXQWHU�HYHQ�WRGD\��Ī1RW�LQ�WKH�VHQVH�RI�DQLPDOĥVNLQĥFODG��ODQFHĥEUDQGLVKLQJ�SULPLWLYHV��EXW�UDWKHU�DV�³EDUEDULDQV�LQVLGH�WKH�JDWHV´�Ħ�UHIHUULQJ�WR�WKRVH�SKLOLVWLQHV�ZKR�VHHP�WR�predominate not only in the lower rungs of society, but right at the top, too, in the worlds of business, HGXFDWLRQ�DQG�UHVHDUFK�DV�ZHOO�DV�SROLWLFVī��

Philanthropy contributes to a number of attitudes DQG�EHKDYLRXUV�DQG�LV�FRQVLGHUHG�RQH�RI�WKH�FKDUDFWHULVWLFV�RI�DQ�LGHDO�SHUVRQ��$QG�HYHQ�WKH�*UHHNV�NQHZ�WKDW�WKH�QXPEHU�RI�WKHVH�SHRSOH��RU�the proportion they represented among the wider SRSXODWLRQ��ZDV�TXLWH�VPDOO��:H�DUH�QRW�WDONLQJ�DERXW�WKH�5RXVVHDXLDQ�LOOXVLRQ�KHUH��WKDW�PDQ�LV�ERUQ�JRRG�EXW�FRUUXSWHG�E\�FLYLOLVDWLRQ��+REEHV�DQG�KLV�IROORZĥHUV�FDPH�FORVHU�WR�WKH�WUXWK��7KHVH�XQWUXVWZRUWK\�EHLQJV��KXPDQ�PHQ�DQG�ZRPHQ��DUH�YHU\�PXFK�LQ�QHHG�RI�WKH�FRQVWUDLQWV�WKDW�LQVWLWXWLRQV�FDQ�SURYLGH��The concept of noblesse oblige had already appeared E\�ODWH�DQWLTXLW\��7KH�ZHDOWK\�DQG�SRZHUIXO�ZHUH�H[SHFWHG�WR�DFW�YLUWXRXVO\��DQG�WKLV�FRQFHSW�EULQJV�

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us a step closer to our topic under GLVFXVVLRQ�KHUH��,I�*RG�LV�WKH�RULJLQDO�SKLODQWKURSLVW��VR�WR�VSHDN��WKHQ�WKH�HPSHURU�DQG�WKH�NLQJV�DQG�DOO�WKHLU�XQGHUOLQJV�ZHUH�H[SHFWHG�WR�IROORZ�+LV�H[DPSOH��,W�ZDV�REYLRXV�WR�PRVW�REVHUYHUV�RI�KXPDQ�VRFLHW\�that philanthropy was essentially an DFWLYLW\�IRU�D�VRFLHW\¶V�XSSHU�FODVVHV��After all, for most of history, the ORZHU�HFKHORQV�EDUHO\�OLYHG�DERYH�VXEVLVWHQFH�OHYHO��7KH\�FRXOG�VWULYH�WR�OHDG�OLYHV�IUHH�RI�VLQ��EXW�WKH\�KDG�WRR�IHZ�DVVHWV�WKHPVHOYHV�WR�EH�DEOH�WR�JLYH�DOPV�WR�WKRVH�HYHQ�OHVV�IRUWXQDWH�WKDQ�WKH\��

(OLWHV�KDYH�VRPHWLPHV�SUDFWLFHG�RU�HYHQ�XVHG�FKDULW\�WR�VKRUH�XS�their social position, as a form of legitimation, to show off, as an H[SUHVVLRQ�RI�D�JXLOW\�FRQVFLHQFH�RU�DV�D�GHPRQVWUDWLRQ�RI�WKHLU�SRZHU��7KH\�ZHUH�RIWHQ�YHU\�ZHOO�DZDUH�WKDW�SRZHU�FDQQRW�EH�SUHVHUYHG�E\�EUXWH�IRUFH�DORQH��LW�QHHGV�D�VHQVH�RI�³OHJLWLPDF\´��LQ�ZKDWHYHU�IRUP��6RFLDO�XSKHDYDOV�KDYH�SURYHQ�WKLV�time and again throughout history, HYHQ�XS�WR�WRGD\��

Augustine was even more forceful, to put it mildly, when he asked: “What are the wealthy who lack virtue but a band of thieves?” (St Augustine, City of God)

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On charity

*LYHQ�WKH�ZD\�&KULVWLDQLW\�KDV�VKDSHG�:HVWHUQ�culture, there is no way to discuss philanthropy ZLWKRXW�PDNLQJ�UHIHUHQFH�WR�WKH�&KULVWLDQ�LGHDO�RI�DOWUXLVP��7KH�ZRUVKLS�RI�*RG�LV�LPSRVVLEOH�ZLWKRXW�ORYLQJ�\RXU�QHLJKERXU��ZKLFK�LV�WR�IROORZ�&KULVW¶V�H[DPSOH��7KH�LQIOXHQFH�RI�WKLV�UHOLJLRXV�FRQFHSW�VWUHWFKHV�ZHOO�LQWR�WKH�PRGHUQ�SHULRG��3KLORVRSKHUV��HYHQ�GXULQJ�WKH�(QOLJKWHQPHQW��FRQVLGHUHG�PDQ��in both his ancient and Christian forms, to be philĥDQWKURSLF�LQ�KLV�GLVSRVLWLRQ��GHYRWHG�WR�KLV�IHOORZ�man, predisposed to moral action, concerned for his QHLJKERXU�Ħ�D�³KRPR�VRFLDOLV´��2QH¶V�RZQ�SXUSRVH�LQ�WKH�ZRUOG�LV�HQULFKHG�E\�WKH�SXUSRVHV�RI�RWKHUV��2QH�VKRXOG�ZRUN�WR�LPSURYH�WKH�OLYHV�RI�RWKHUV��GLUHFWO\�RU�LQGLUHFWO\��%XW�LW�LV�LQFUHDVLQJO\�UHFRJQLVHG�WKDW�WKH�IRXQGDWLRQV�RI�PRUDOLW\�DUH�QRW�EDVHG�RQ�VXEMHFĥWLYH�GHFLVLRQV�DERXW�RWKHUV¶�SXUSRVHV��EXW�D�FRPPRQ�MXVWLILFDWLRQ�RI�WKHVH�SXUSRVHV�LQVWHDG���

On institutionalisation

&ODVVLF�FKDULW\�RU�EHQHYROHQFH�VHHNV�WR�SURYLGH�SHRSOH�LQ�QHHG�ZLWK�UHOLHI�IURP�WKHLU�GLVWUHVVHV��7KLV�may be done through donations, charitable gifts, DOPV��WKH�FRLQV�ZH�JLYH�WR�WKH�EHJJDU�VLWWLQJ�LQ�IURQW�RI�WKH�FKXUFK��WKH�FKDQJH�ZH�DGG�WR�WKH�MDU�RU�ER[�QHDU�D�EXVLQHVV¶V�WLOO�GHGLFDWHG�WR�UDLVLQJ�PRQH\�IRU�a good cause, the tithe you pay in church to help ILQDQFH�WKH�VHUYLFHV�WKH�FKXUFK�SURYLGHV�WKH�OHVV�IRUĥ

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12

tunate, the money you place in the RIIHULQJ�ER[�IRU�WKH�XSNHHS�RI�WKH�church buildings, the donation slips that are sent out in bunches around Christmas, the monthly donations IRU�RUJDQLVDWLRQV�OLNH�WKH�5HG�&URVV�RU�'RFWRUV�ZLWKRXW�%RUGHUV��RU�WHOHYLVHG�FKDULW\�IXQGUDLVHUV�OLNH�³/LJKW�LQWR�'DUNQHVV´��

In industrialised societies, one may EH�WHPSWHG�WR�DVN�ZKHWKHU�WKHVH�H[WUD�HIIRUWV�DUH�HYHQ�QHFHVVDU\�JLYHQ�WKH�VRFLDO�ZHOIDUH�QHW�RXU�VRFLHWLHV�SURYLGH��%XW�HYHQ�WKH�best social welfare net will not FDWFK�HYHU\RQH��UHJDUGOHVV�RI�WKH�fact that its foundational concept of solidarity is intended to offer DVVLVWDQFH�LQ�DOO�FDVHV�RI�QHHG��7KLV�LV�WKH�SDUDGR[�LQKHUHQW�LQ�EXUHDXĥFUDWLF�VWDWH�V\VWHPV��:KHQ�ZH�WU\�WR�capture all of the possible situations WKDW�FRXOG�EHIDOO�DQ�LQGLYLGXDO�ZLWK�H[FHHGLQJO\�SUHFLVH�UXOHV�GHVLJQHG�WR�SUHYHQW�DEXVH��VRPH�FDVHV�ZLOO�VLPSO\�IDOO�WKURXJK�WKH�JDSV��7KXV�altruistic actions, large and small, SURYLGH�FRPSRQHQWV�WKDW�ZRUN�WR�enhance the social welfare measures RUJDQLVHG�E\�WKH�VWDWH��7KH\�SOXJ�KROHV��H[SDQG�DVVLVWDQFH�VHUYLFHV�

Old, well-estab-lished philosophers are not the only ones to have the right ideas. We would also like to introduce here some more modern studies on the subject of hap-piness. These come to the conclusion that happiness from material wealth fades quickly.

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IRU�WKRVH�SHRSOH�ZKR�ODQG�LQ�EHWZHHQ�RU�MXVW�RXWVLGH�RI�FHUWDLQ�OHJDO�FDWHJRULHV��HWF��,Q�OHVV�GHYHORSHG�VRFLHWLHV��SULYDWH�FKDULW\�LV�RIWHQ�WKH�RQO\�PHDQV�RI�DOOHYLDWLQJ�SRYHUW\�DQG�PLVHU\��%XW�HYHQ�LQ�PRUH�GHYHORSHG�VRFLHWLHV�WKHUH�DUH�DUHDV�LQ�ZKLFK�SHRSOH�PLJKW�QHHG�D�KHOSLQJ�KDQG�WKDW�DUH�QRW�³FRYHUHG´�E\�WKH�V\VWHPV�DOUHDG\�LQ�SODFH��

Since the Enlightenment, charitable and philĥDQWKURSLF�DFWLYLWLHV�KDYH�EHFRPH�D�ZLGHVSUHDG�FXOWXUDO�SUDFWLFH�WKDQNV�HVSHFLDOO\�WR�WKH�ZRUN�RI�YROXQWDU\�RUJDQLVDWLRQV�DQG�LQGLYLGXDO�DOWUXLVWV��People on the lower rungs of society are no longer URXWLQHO\�VFRUQHG�DQG�LJQRUHG��EXW�DUH�WKH�REMHFW�RI�LQLWLDWLYHV�GHVLJQHG�WR�LPSURYH�WKH�FRPPRQ�JRRG��The institutionalisation of altruism aimed to help KRPHOHVV�FKLOGUHQ�ĪRUSKDQDJHVī��RUJDQLVH�KRVSLWDOV�ĪZKLFK�DGPLWWHGO\�ZHUH�DOUHDG\�LQ�H[LVWHQFH��KDYLQJ�EHHQ�IRXQGHG�RQ�UHOLJLRXV�SULQFLSOHVī��UHĥVRFLDOLVH�SURVWLWXWHV��DEROLVK�VODYHU\�DQG��DV�D�UHVXOW�RI�LQGXVWULDOLVDWLRQ��DOOHYLDWH�WKH�PLVHUDEOH�ZRUNLQJ�FRQGLWLRQV�RI�WKH�LQGXVWULDO�ZRUNIRUFH�From the beginning, there were two debates that are ERWK�PDWWHUV�RI�SHUVSHFWLYH�

First is the debate between those who argued that WKHVH�PDWWHUV�ZHUH�WKH�VWDWH¶V�UHVSRQVLELOLW\�DQG�WKRVH�ZKR�EHOLHYHG�WKDW�SULYDWH�DOWUXLVP�ZDV�WKH�EHVW�ZD\�WR�SURYLGH�DVVLVWDQFH��7KLV�ODWWHU�SHUVSHFWLYH�LV�VWLOO�SURPLQHQW�LQ�GLVFXVVLRQV�LQ�WKH�86�DERXW�WKH�ZHOIDUH�VWDWH��,Q�WKH�(QJOLVKĥVSHDNLQJ�ZRUOG��solidarity is generally considered to be a claim

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DJDLQVW�RQH¶V�IHOORZ�FLWL]HQV��ZKLFK�is why philanthropy is more strongly LQ�HYLGHQFH�WKHUH��,Q�FRQWLQHQWDO�Europe, solidarity is seen to be a FODLP�DJDLQVW�WKH�VWDWH�4

Second, there are the social philosophical and pragmatic debates about the permissible H[WHQW�RI�DOWUXLVP�LI�LW�LV�QRW�WR�OHDG�to laziness and idleness among its UHFLSLHQWV��7KLV�LV�WKH�RULJLQ�RI�WKH�popular debate about the difference EHWZHHQ�WKH�³GHVHUYLQJ�SRRU´�DQG�WKH�³XQGHVHUYLQJ�SRRU´��,W�DOVR�SRVHV�D�SUDFWLFDO�SUREOHP��,V�LW�ULJKW�WR�JLYH�PRQH\�WR�D�EHJJDU�VWDQGLQJ�QH[W�WR�WKH�VXSHUPDUNHW�HQWUDQFH��or are you rewarding shameless SURILWHHULQJ"�

The history of the past centuries of altruism sounds almost too good to EH�WUXH�Ħ�DQG�LQ�WKH�LGHDOLVHG�IRUP�LQ�ZKLFK�LW¶V�SUHVHQWHG��LW�LV��7KH�:HVWHUQ�SKLORVRSKLFDO�WUDGLWLRQ�DOVR�features the realists, for whom this W\SH�RI�PRUDOLW\�LV�DQ�H[FHSWLRQ��The relationship between men in an unstructured state of nature is antagonistic, so that one man sees another not as a man, but as

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15

D�ZROI��%HFDXVH�RI�WKLV��ZH�FDQQRW�DVVXPH�WKDW�D�SKLODQWKURSLF�DFWLYLW\�LV�VRPHWKLQJ�XVXDO�DQG�QDWXUDO��³*RRG�SHRSOH´�DUH�QRW�WKH�VDPH�WKLQJ�DV�³QRUPDO�SHRSOH´��(YHQ�LGHQWLI\LQJ�D�³JRRG�GHHG´�UHTXLUHV�D�EURDGHU�SHUVSHFWLYH�DQG�D�PRUH�FRPSOH[�GHFLVLRQ�ĥPDNLQJ�SURFHVV�EHFDXVH�LW�LV�QRW�UHDOO\�HDV\�WR�JLYH�PRQH\�WR�SHRSOH�SURSHUO\��0RQH\�VKRXOG�QRW�MXVW�EH�VWUHZQ�DERXW�ZLWK�QR�VHW�SXUSRVH�RU�V\VWHP�Ħ�PRQH\�VKRXOG�EH�JLYHQ�WR�DFFRPSOLVK�VRPHWKLQJ��7KLV�LV�D�SUREOHP�SUHVHQW�IRU�PDQ\�RI�XV�HYHQ�WRGD\�ZKHQ�ZH�FRQVLGHU�GRQDWLQJ�WR�D�FKDULW\��:KHUH�FDQ�P\�PRQH\�GR�WKH�PRVW"�:LOO�P\�PRQH\�EH�ZDVWHG"�$P�,�VXUH�WKLV�LV�QRW�D�IUDXG"

On solidarity

:RUGV�VXFK�DV�IUDWHUQLW\�DQG�VROLGDULW\�KDYH�DOZD\V�DSSHDUHG�LQ�FRQMXQFWLRQ�ZLWK�KXPDQLWDULDQLVP�LQ�(XURSHDQ�KLVWRU\��6ROLGDULW\�FDQ�WDNH�RQ�VHYHUDO�VKDGHV�RI�PHDQLQJ��,Q�$QJORĥ$PHULFDQ�GLVFXVVLRQV�about communitarianism, it is contrasted with the FRQFHSW�RI�LQGLYLGXDOLVP��$FFRUGLQJ�WR�WKLV�OLQH�RI�DUJXPHQW��LQGLYLGXDOLVP�UREV�DJHLQJ�VRFLHWLHV�RI�WKHLU�VWUHQJWK�DV�LW�WXUQV�LQWR�D�IRUP�RI�VHOIĥFHQWUHGQHVV�DQG�LVRODWLRQ��$QG�WKHQ�ZKHQ�\RX�ILQDOO\�QHHG�VRPHRQH�HOVH��WKHUH�LV�QR�RQH�WKHUH��,Q�FRQWLQHQWDO�(XURSHDQ�GLVFXVVLRQV��LQGLYLGXDOLVP�and solidarity are considered to be complementary of each other, two elements that always belonged WRJHWKHU��,QGLYLGXDOLW\�LV�QRW�XQGHUVWRRG�DV�D�FDVH�RI�QRPDGLF�DXWRQRPRXV�EHLQJV�ZKR�KDYH�QRWKLQJ�

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WR�GR�ZLWK�WKHLU�IHOORZ�PDQ��$QG�solidarity is not understood in the FRQYHQWLRQDO�VRFLDOLVW�WHUPV�LQ�ZKLFK�DQ\�IRUP�RI�LQGLYLGXDOLVP�LV�VHHQ�DV�³GLVVHQW´�5 These terms KDYH�EHHQ�VHHQ�DV�D�IXQGDPHQWDO�FRPSRQHQW�RI�FRUH�(XURSHDQ�YDOXHV�VLQFH�WKH�)UHQFK�5HYROXWLRQ��7KH\�DUH�EHOLHYHG�WR�LQWHUDFW�ZLWK�RQH�another in a reciprocal manner and WR�EH�GHSHQGHQW�RQ�RI�RQH�DQRWKHU��If you want to create a world in ZKLFK�OLEHUWp�DQG�pJDOLWp�H[LVW��WKHQ�\RX�QHHG�IUDWHUQLWp�WRR��$OPRVW�DOO�political parties in Europe profess a belief in solidarity, the social ZHOIDUH�VWDWH�DQG�WKH�³VRFLDO�PDUNHW�HFRQRP\´��7KH�WHUP�LV�DOVR�XVHG�LQ�D�PXFK�EURDGHU�ZD\��KRZHYHU��LQ�FRQFHSWV�OLNH�³LQWHUQDWLRQDO�VROLGDUĥLW\´��³VROLGDULW\�ZLWK�WKH�WKLUGĥZRUOG�SRRU´�DQG�HYHQ�³JOREDO�VROLGDULW\´�Ħ�ZLWK�IDU�OHVV�FOHDU�UDPLILFDWLRQV��

On the welfare state

Philanthropy is not the abstract or formalised form of solidarity that WKH�PRGHUQ�ZHOIDUH�VWDWH�HPERGLHV��Solidarity in a welfare state fits for a society in which people no

“Psychological research tells us that happiness comes from satis-I\LQJ��DɲHFWLRQDWH�relationships and reliable, trust-worthy friendships, from the ability to enjoy the pleasures OLIH�RɲHUV�XV�DQG�from undertaking meaningful, socially relevant work.” (Erich Kirchler, Glück: The World Book of Happiness, page 57)

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ORQJHU�NQRZ�HDFK�RWKHU�SHUVRQDOO\��&HUWDLQ�FROOHFWLYH�SURYLVLRQV�DUH�FOHDUO\�QHHGHG�ZKHQ�D�VRFLHW\�KDV�QR�SHUVRQDO�IDPLOLDULW\�WR�FKHFN�XS�RQ�SHRSOH��2FFDĥVLRQDOO\�SHRSOH�KDYH�DUJXHG�WKDW�LW�LV�SUHFLVHO\�WKH�VRFLDO�ZHOIDUH�VWDWH�WKDW�LV�XQGHUPLQLQJ�LQGLYLGXDO�DOWUXLVP��,W�LV��KRZHYHU��XQUHDOLVWLF�WR�DVVXPH�WKDW�D�ODWH�PRGHUQ�VRFLHW\�FDQ�PDNH�XVH�RI�WKH�VDPH�WRROV�DV�WUDGLWLRQDO�VRFLHWLHV��6 The widespread idea in American debates that social insurance is most HIILFLHQWO\�GHOLYHUHG�E\�SULYDWH��IRUĥSURILW�HQWLWLHV�ĪLQVXUDQFH�FRPSDQLHVī�LV�DOVR�DEVXUGO\�XQUHDOLVWLF��

ĪDī�7KH�SDVW�VHYHUDO�\HDUV�ĪWKH�HFRQRPLF�FULVLVī�KDYH�JLYHQ�DPSOH�HYLGHQFH�RI�WKH�YHU\�UHDO�ULVNV�ZKHQ�LW�FRPHV�WR�PDUNHWĥEDVHG�SHQVLRQ�SODQV��$�SHQVLRQ�VDYHG�XS�RYHU�D�SHUVRQ¶V�HQWLUH�ZRUNLQJ�OLIH�FDQ�VLPSO\�³GLVDSSHDU´��3D\ĥDVĥ\RXĥJR�VFKHPHV�DUH�PRUH�UHVLVWDQW�LQ�VSLWH�RI�DOO�RI�WKHLU�TXDQWLWDWLYH�SUREOHPV� ĪEī�7KHUH�LV�VWLOO�QR�VDWLVIDFWRU\�DQVZHU�WR�WKH�SUREOHP�RI�KRZ�IRUĥSURILW��SULYDWH�KHDOWK�LQVXUDQFH�FRPSDQLHV�EHKROGHQ�WR�WKH�PDUNHW�FDQ�LQFRUSRUDWH�a requirement to set premiums based on the insured LQGLYLGXDO¶V�LQFRPH��7KHVH�FRPSDQLHV�VHW�SUHPLXPV�EDVHG�RQ�ULVN�FDOFXODWLRQV�ZKLFK�OHDGV��DV�LQ�WKH�8QLWHG�6WDWHV��WR�D�VXEVWDQWLDO�QXPEHU�RI�ORZĥHDUQLQJ�LQGLYLGXDOV�EHLQJ�H[FOXGHG�IURP�WKH�V\VWHP�

:H�FRXOG�DOVR�ORRN�DW�WKH�VRFLDO�ZHOIDUH�VWDWH�IURP�WKH�RWKHU�GLUHFWLRQ��,I�WKH�ZHOIDUH�VWDWH�LV��EURDGO\�FRQFHLYHG��WKH�H[SUHVVLRQ�RI�WKH�SHRSOH¶V�SROLWLFDO�

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ZLOO��WKHQ�WDNLQJ�D�ORRN�DW�WKH�ZLGH�range of responsibilities it has assumed demonstrates that our late modern society, contrary to what many may claim, is one based on the concept of solidarity through DQG�WKURXJK��$W�OHDVW�LQ�FRQWLQHQWDO�European countries, a considerable VXP�RI�WKH�YDOXH�FUHDWHG�HYHU\�\HDU�is collected by the state and disĥbursed according to classic concepts RI�VRFLDO�ZHOIDUH��%XW�FRQWULEXWLRQV�are compulsory, as opposed to being WKH�UHVXOWV�RI�SKLODQWKURSLF�JLYLQJ�RQ�D�YROXQWDU\�EDVLV��)HHOLQJV�RI�solidarity are undergoing a shift in our society, though we will not go LQWR�WKLV�LQ�IXUWKHU�GHWDLO�KHUH�7

And now a snippet from the history of advertising and marketing: “A penny saved is a penny earned.” This was WKH�ÀUVW�DGYHUWLVLQJ�slogan used by the German Sparkasse bank. It had to be withdrawn from use DIWHU�K\SHULQÁDWLRQ�devalued savings to such a degree that it was no longer true.

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7KH�H[LVWHQFH�DQG�EDVLF�IXQGDPHQWDO�FRQILJXUDWLRQ�of our welfare state has not been called into TXHVWLRQ��EXW�LWV�GHWDLOV�DUH�WKH�REMHFW�RI�FORVHU�VFUXWLQ\��³(YHQ�LI�WKH�FRQFHSW�RI�WKH�VRFLDO�PDUNHW�economy has been a successful response to the ULVNV�DQG�LQHTXDOLWLHV�FUHDWHG�E\�DQ�DEVROXWHO\�IUHH�DQG�XQUHJXODWHG�PDUNHW��WKH�ZHOIDUH�VWDWH¶V�LQWHQVH�preoccupation with redistribution now poses a FRQVLGHUDEOH�FKDOOHQJH�WR�WKH�YHU\�LGHD�RI�IDLUQHVV�DQG�SXWV�RXU�GHPRFUDWLF�SROLWLFDO�V\VWHP�DW�ULVN�´8

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Defining philanthropy: “Open-ing oneself to the other”

&RQFHSWV�KDYH�KLVWRULHV�DQG�WKHLU�PHDQLQJV�RIWHQ�FKDQJH�RYHU�WLPH��&KDULW\�DQG�DOWUXLVP�Ħ�WKHVH�ZRUGV�GRQ¶W�MXVW�KDYH�DQ�DQWLTXDWHG�FKDUP�in the language of our late modern VRFLHW\��

³3KLODQWKURS\´��D�ZRUG�WKDW�KDV�been somewhat marginalised in FRQYHQWLRQDO�Ī(XURSHDQī�GLVFRXUVH��comes from the generalised term IRU�³V\PSDWK\�IRU�RQH¶V�IHOORZ�PDQ´�EXW�KDV�GHYHORSHG�D�PXFK�PRUH�VSHFLILF�PHDQLQJ��3KLODQWKURS\�LV�LQFUHDVLQJO\�FRQQHFWHG�WR�SULYDWH�acts of charity, those that direct SULYDWH�UHVRXUFHV�LQ�D�V\VWHPDWLF�DQG�considered manner towards aims that are understood to be for the FRPPRQ�JRRG��7KLV�LQFOXGHV�IRUPV�RI�VHOIOHVV�DFWV��IURP�SURYLGLQJ�neighbourly help to certain social PRYHPHQWV��&RUSRUDWH�6RFLDO�5HVSRQVLELOLW\�DQG�&RUSRUDWH�6RFLDO�Citizenship, depending on the form WKH\�WDNH��PD\�DOVR�EH�LQFOXGHG�XQGHU�WKH�FRQFHSW�RI�SKLODQWKURS\�

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*LYLQJ�ZLWKRXW�H[SHFWDWLRQV

³*LYLQJ´��DFFRUGLQJ�WR�WKH�FDQRQLFDO�VRFLRORJLFDO�WKHRULVW�*HRUJ�6LPPHO��³LV�RQH�RI�WKH�VWURQJHVW�VRFLRORJLFDO�IXQFWLRQV�LQ�H[LVWHQFH��7KHUH�ZRXOG�be no society if there were not continuous acts RI�JLYLQJ�DQG�UHFHLYLQJ��HYHQ�RXWVLGH�RI�H[FKDQJH��*LYLQJ�LV�QRW�D�PDWWHU�RI�RQH�SHUVRQ�KDYLQJ�DQ�HIIHFW�RQ�DQRWKHU��,W�LV�SUHFLVHO\�ZKDW�LV�UHTXLUHG�RI�D�VRFLRORJLFDO�IXQFWLRQ��LW�LV�LQWHUDFWLRQ��:KHWKHU�WKH�RWKHU�DFFHSWV�RU�UHMHFWV��KH�HYRNHV�D�SDUWLFXODU�UHDFWLRQ�LQ�WKH�JLYHU��7KH�ZD\�LQ�ZKLFK�WKH�JLIW�LV�DFFHSWHG�Ħ�ZLWK�WKDQNV�RU�ZLWKRXW��LQ�D�ZD\�WKDW�VKRZV�KH�H[SHFWHG�LW�RU�ZDV�VXUSULVHG��WKDW�KH�was pleased with the gift or not, or that he feels XSOLIWHG�E\�WKH�JLIW�RU�VKDPHG�E\�LW�Ħ�JLYH�ULVH�WR�ILUP�HPRWLRQDO�UHVSRQVHV�RQ�WKH�SDUW�RI�WKH�JLYHU��HYHQ�LI�WKH\�FDQQRW�EH�H[SUHVVHG�FOHDUO\�LQ�ZRUGV�RU�DFWLRQV��$QG�WKLV�LV�ZK\�HYHU\�DFW�RI�JLYLQJ�PXVW�EH�VHHQ�DV�DQ�LQWHUDFWLRQ�EHWZHHQ�WKH�JLYHU�DQG�WKH�UHFLSLHQW�´9 This also means that philanthropy must be the result RI�D�SHUVRQDO��GHHSO\�KHOG�DWWLWXGH�ĪZKLFK�PXVW��KRZĥHYHU��DOVR�ILQG�H[SUHVVLRQ�LQ�DSSURSULDWH�EHKDYLRXU�DQG�WKURXJK�VXLWDEOH�LQVWLWXWLRQVī��$QG�WKLV�DWWLWXGH�is as compatible with Catholic social ethics as it LV�ZLWK�VRFLDOLVW�LPSXOVHV�10�,Q�KLV�ZULWLQJV��*HRUJ�6LPPHO�GLVFXVVHV�HYHU\�IRUP�RI�³JLYLQJ´�DQG�KH�compares it not with the imperfect act of barter or H[FKDQJH��EXW�UDWKHU�DQ�DXWRQRPRXV�DFW��$�FORVHU�ORRN�DW�WKH�SKHQRPHQRQ�RI�SKLODQWKURS\�ZLOO�DOORZ�XV�WR�VNHWFK�RXW�D�IHZ�DGGLWLRQDO�FKDUDFWHULVWLFV�

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Firstly, no one can demand philanĥWKURS\��7KHUH�PD\�EH�H[SHFWDWLRQV�and standards attached to philanĥWKURSLF�DFWLYLW\��EXW�WKHUH�DUH�QR�legal or economic duties regarding LWV�SUDFWLFH��$Q\�DFWLYLW\�LV�WKH�UHVXOW�RI�DQ�DFWLYH�GHFLVLRQ�WDNHQ�E\�D�YROXQWDU\�GRQRU�11�7KH�JLYHU�LV�D�IUHH�DJHQW�DQG�WKH�DFW�RI�JLYLQJ�LV�RQH�WKDW�LV�DQ�H[SUHVVLRQ�RI�KLV�RZQ�H[SHULHQFHDEOH�IUHHGRP��*HRUJ�6LPPHO�ZULWHV�WKDW�WKLV�DFWLYLW\�embodies “a beauty, a spontaneous GHYRWLRQ�DQG�VXUJH�RI�IHHOLQJ�towards the other, a laying oneself EDUH�WR�WKH�RWKHU��12

Secondly, philanthropy is not VXEMHFW�WR�WKH�SULQFLSOH�RI�H[FKDQJH�Ħ�FHUWDLQO\�QRW�LQ�WKH�IRUP�LW�DVVXPHV�LQ�PDUNHW�HFRQRPLFV��LQ�which it has the sense of being a VSHFLILDEOH�FDVH�RI�TXLG�SUR�TXR��1RU�LV�LW�VXEMHFW�WR�WKH�SULQFLSOH�RI�reciprocity, that somewhat more YDJXH�QRWLRQ�RI�PXWXDO�GXWLHV�RI�JLYLQJ��7KH�UHFLSLHQW�LV�XQGHU�QR�obligation to do anything other than what common notions of decency UHTXLUH���

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23

Thirdly, no money may be earned from philanthropy, nor may any profit be generated or any monetary JDLQV�RI�DQ\�NLQG�EH�UHDOLVHG��:KHQ�WKHVH�IDFWRUV�describe the situation, we are dealing with the QRUPDO�EXVLQHVV�RI�WUDGH��7KHUH�PD\�ZHOO�EH�ZHOOĥUHDVRQHG�DQG�EHQHILFHQW�DVSHFWV�WR�OXFUDWLYH�LQYHVWPHQW�GHFLVLRQV��DIWHU�DOO��WKH�ZRUN�RI�WKH�PDUNHW�KDV�EURXJKW�JUHDW�EHQHILWV�WR�WKH�PDMRULW\�RI�SHRSOH�OLYLQJ�LQ�LQGXVWULDOLVHG�VRFLHWLHV��%XW�ZH�DUH�not dealing with philanthropy in cases where profit LV�H[SHFWHG��7KLV�LV�WKH�ZHDNQHVV�IRXQG�LQ�PDQ\�RI�WKH�FXUUHQW�DUJXPHQWV�GHDOLQJ�ZLWK�EXVLQHVV�HWKLFV��7KH\�UHSHDW�WKH�DVVXPSWLRQ�SUHYDOHQW�LQ�GHYHORSĥPHQW�VHPLQDUV�WKDW�PRUDO�EHKDYLRXU�EULQJV�UHZDUGV��7KHUH�DUH�DGYDQWDJHV�WR�SODFLQJ�DQ�HPSKDVLV�RQ�WUXVW��UHOLDELOLW\�DQG�VHULRXVQHVV��7KLV�LV�JHQHUDOO\�WUXH��%XW�WKLV�GRHV�QRW�PDNH�D�SDUWLFXODU�DSSURDFK�HWKLFDO��MXVW�FOHYHU��$Q\RQH�ZKR�DFWV�LQ�DQ�XQHWKLFDO�way when ethical action is clearly more profitable is MXVW�IRROLVK��+RZHYHU��QHLWKHU�WKH�VLPSOH�DYRLGDQFH�RI�WDNLQJ�ZLWOHVV�GHFLVLRQV�QRU�WKH�PD[LPLVDWLRQ�RI�SURILW�WKDQNV�WR�UHSXWDEOH�EHKDYLRXU�DUH�³HWKLFDO´�LQ�DQG�RI�WKHPVHOYHV��(WKLFDO�EHKDYLRXU�LV�VRPHWLPHV�XQFRPIRUWDEOH��6RPHWLPHV�LW�KDV�FRVWV�DWWDFKHG�WR�LW��7KRXJK�HWKLFDO�EHKDYLRXU�DQG�SURILWDELOLW\�PD\�IUHTXHQWO\�DSSHDU�WRJHWKHU�LQ�DFWXDO�H[SHULHQFH��DQ\�FODLP�WKDW�RQH�LV�UHDOLVLQJ�D�³PRUDO�JDLQ´�DORQJ�ZLWK�ILQDQFLDO�SURILW�LV�PRUH�OLNHO\�WKDQ�QRW�WR�EH�D�WULFN�

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Motivations for philanthropy

Philanthropy stems from a certain PRWLYDWLRQ��IURP�DQ�HWKLFDO�RXWORRN��It is not based on notions of XWLOLW\�RU�SRZHU��,W�DLPV�WR�HQJDJH�LQ�DFWLYLWLHV�WKDW�DUH�JURXQGHG�LQ�YDOXHV��<RX�LQYHVW�PRQH\�EHFDXVH�\RX�WKLQN�LW�LV�ULJKW�DQG�LPSRUWDQW�WR�GR�VR��,W�PDNHV�\RX�IHHO�EHWWHU��LW�PDNHV�\RX�IHHO�OLNH�D�GHFHQW�SHUVRQ��%HFDXVH�\RX�UHFRJQLVH�KRZ�OXFN\�\RX�\RXUVHOI�KDYH�EHHQ��As is always the case, the PRWLYDWLRQV�EHKLQG�SKLODQWKURS\�are attributable to an array of IHHOLQJV��7KHUH�LV�QRWKLQJ�ZURQJ�ZLWK�³IHHOLQJ�EHWWHU´�DV�D�UHVXOW�RI�SKLODQWKURSLF�DFWLYLW\�Ħ�WKDW¶V�JRRG��Ħ�RU�ZLWK�DQ�RUJDQLVDWLRQ¶V�LPDJH�EHQHILWLQJ�IURP�WKDW�DFWLYLW\�Ħ�ZK\�QRW��DIWHU�DOO"�

ĪDī� Half of the wealthy individuals in the US engage in some form of philanthropic activity. They do not limit WKHPVHOYHV�WR�GRQDWLQJ�PRQH\�ħ�WKH\�SXW�WKHLU�RZQ�SHUVRQDO�NQRZĦKRZ�and abilities to use. They are rarely motivated by publicity. Bill Gates14 is not at all concerned with selling more software based on his foundation’s good

Slowly but surely we are approaching a topic that lies close to our hearts and in which we have invested quite a bit of energy in the past several years. Here’s a teaser: altruism should not be kept private and hidden.

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image. Besides, his foundation would hardly be the most efficient means of achieving that goal. Not to mention that he already has enough money to be able to support dozens of JHQHUDWLRQV�RI�GHVFHQGDQWV�LQ�OX[XULRXV�FRPIRUW�

ĪEī�:KDW�LV�ZURQJ�ZLWK�&RFDĦ&ROD�ZRUNLQJ�ZLWK�WKH�WWF to promote a campaign to protect polar bears and Antarctica?15 What objections could we level against campaigns in which companies’ donations are tied to their FXVWRPHUV·�SXUFKDVLQJ�DFWLYLW\�ħ�IURP�6XEDUX�WR�$PHUĦLFDQ�([SUHVV"�:K\�VKRXOG�DQ\RQH�EH�DJDLQVW�&RUSRUDWH�Volunteering16? All of these may play a role in a company’s campaign to improve its image. And it is perhaps overly optimistic to think that consumers will substitute one product for another because of campaigns like these. Maybe FRPSDQLHV�H[SHFW�WKDW�WKH\�ZLOO�EHFRPH�PRUH�DWWUDFWLYH�DV�an employer. But these types of activities definitely do play a role in any company’s public relations concept, how the company wants to present itself to the public.

1RW�DOO�SKLODQWKURSLF�DFWLYLWLHV�FDQ�EH�DWWULEXWHG�WR�PDUNHWLQJ��$QG�WKHUH�DUH�LQGLYLGXDOV�ZKRVH�FUHGLELOĥLW\�LV�EH\RQG�UHSURDFK�ZKHQ�ZH�ILQG�WKHP�DVVHUWLQJ��,�KDYH�PXFK�PRUH�PRQH\�WKDQ�,�QHHG�DQG�,�ZRXOG�OLNH�WR�GR�VRPHWKLQJ�PHDQLQJIXO�ZLWK�LW��:HDOWK\�SHRSOH�ZKR�KDYH�QRW�JRQH�WKURXJK�WKH�VDPH�SURFHVV�RI�³ULVLQJ�DERYH�WKH�RWKHUV´�WKDW�PRVW�JR�WKURXJK�ZKHQ�WKHLU�EDQN�DFFRXQWV�EHJLQ�WR�ILOO�XS��7KHUH�DUH�ODUJH�VXPV�RI�PRQH\�LQYROYHG�LQ�WKHVH�FDVHV��7R�QDPH�VRPH�RI�WKH�PRVW�IDPRXV�H[DPSOHV��%LOO�*DWHV�DQG�:DUUHQ�%XIIHWW�WRGD\�DUH�IROORZLQJ�WKH�SDWK�ILUVW�FKDUWHG�E\�-RKQ�'��5RFNHIHOOHU�DQG�$QGUHZ�&DUQHJLH�

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LQ�WKH�HDUO\���WK�FHQWXU\��7KHUH�ZLOO�EH�PRUH�WR�VD\�DERXW�WKDW�ODWHU��

%XW�WKRVH�DUH�MXVW�WKH�³JUDQGHVW´�H[DPSOHV��1RUPDO�SKLODQWKURSLF�EHKDYLRXU�DSSHDUV�LQ�VXEVWDQWLDOO\�PRUH�PRGHVW�IRUPV��7KH�PRWLYDĥtions behind all of these are the VDPH��KRZHYHU��$W�LWV�KHDUW��WKLV�LV�DERXW�³WUDQVFHQGLQJ�QDWXUDO�HJRLVP´�in order to “disrupt the boundaries RI�VHOIĥFHQWUHGQHVV´��2QH�SKLORVRĥSKHU�ZULWHV��³$OO�VRFLDO�YLUWXHV�DUH�IRUPV�RI�DOWUXLVP��+RZHYHU��LW�LV�clear that this transcendence of RQH¶V�VHOI�GRHV��DW�WKH�VDPH�WLPH��GHHSHQ��EURDGHQ�DQG�HQULFK�RQH¶V�own self, which prior to this was small and misshapen because it had EHHQ�FRQFHUQHG�RQO\�ZLWK�LWVHOI��7KRVH�ZKR�DUH�DEOH�WR�JLYH�consideration to the concerns and problems of others are those who SURILW�WKH�PRVW�IURP�WKLV�DELOLW\��7KHLU�YLUWXH�LV�WKHLU�RZQ�UHZDUG�´17

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27

The French sociologist Marcel Mauss made a more VZHHSLQJ�DVVHUWLRQ�WRZDUGV�WKH�HQG�RI�KLV�ERRN�RQ�WKH�³*LIW´��7KHUH�LV�³RQO\�RQH�NHUQHO�RI�ZLVGRP�LQ�DOO�RI�KXPDQ�GHYHORSPHQW��DQG�ZH�ZRXOG�EH�ZHOO�DGYLVHG�WR�DFFHSW�DV�D�JXLGLQJ�SULQFLSOH�IRU�RXU�RZQ�OLYHV�WKDW�ZKLFK�KDV�DOZD\V�JXLGHG�KXPDQ�EHKDYLRXU�DQG�ZLOO�FRQWLQXH�WR�GR�VR��:H�QHHG�WR�VHW�DVLGH�RXU�VHOYHV��WR�JLYH��YROXQWDULO\�DQG�REOLJDWRULO\��7KHUH�LV�QR�GDQJHU�LQ�WKLV�´18

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28

Philanthropic organisations: “Private virtues, public benefits”

Community, volunteering, civil society

The communitarian concept that RULJLQDWHG�LQ�WKH�86�DOHUWHG�VRFLROĥogists to the fact that we cannot understand society as an opposition EHWZHHQ�LQGLYLGXDOV�RQ�WKH�RQH�VLGH�DQG�WKH�VWDWH�RQ�WKH�RWKHU��7KLV�LV�the predominant way discussions LQ�(XURSH�DUH�IUDPHG��:H�VSHQG�D�VXEVWDQWLDO�SRUWLRQ�RI�RXU�OLYHV�LQ�intermediary forms of communities, in clubs and societies, associations, and groups, and we frequently HQJDJH�LQ�YROXQWHHULQJ�ZRUN��7KHVH�include sports clubs, bands and orchestras, museum membership organisations and support groups, KHOSLQJ�LQ�FULVLV�LQWHUYHQWLRQ�DQG�ZLWK�HQG�RI�OLIH�FDUH��LQ�YROXQWHHU�fire brigades and alpine rescue organisations, choirs and acting as a VH[WRQ�IRU�RQH¶V�FKXUFK��RU�DV�YROXQĥWHHUV�IRU�FKDULWDEOH�VHUYLFH�SURYLGHUV�RU�IRU�WKH�5HG�&URVV��9ROXQWHHUV�DERXQG�LQ�DOO�RI�WKHVH�DUHDV�RI�FLYLO�society, encompassing all unpaid

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29

DFWLYLWLHV�XQGHUWDNHQ�LQ�WKH�LQWHUHVW�RI�LPSURYLQJ�WKH�FRPPRQ�JRRG��9ROXQWHHU�ZRUN�LV�D�ĪSHUVRQDOī�FDWHĥJRU\�RI�DFWLYLW\�WKDW�LV�SDUDOOHO�WR�SKLODQWKURS\�DV�D�ĪPDWHULDOī�FDWHJRU\��<RX�DUH�HQJDJHG�DV�DQ�LQGLYLGXDO�SHUVRQ�LQ�YROXQWHHU�ZRUN��\RX�WDNH�SDUW�LQ�DFWLYLWLHV�DQG�SURYLGH�VHUYLFHV�IUHH�RI�FRVW��3KLODQWKURSLF�DFWLYLWLHV�SURYLGH�ĪPDWHULDOī�UHVRXUFHV��<RX�GRQDWH�PRQH\��WLPH�RU�JRRGV�

,QVWLWXWLRQĦEXLOGLQJ

Traditional forms of charity are about more than MXVW�SURYLGLQJ�PRQH\��3HRSOH�KDYH�EHHQ�FUHDWLQJ�institutions for this purpose since the earliest days RI�UHFRUGHG�KLVWRU\��%DFN�WKHQ��UHOLJLRXV�GRQRUV�ZHUH�WKH�PRVW�SURPLQHQW�SURYLGHUV�RI�FKDULW\��IROORZHG�E\�WKH�QRELOLW\��&ODVVLF�HQGRZPHQWV�QRW�RQO\�DLPHG�WR�FUHDWH�UHOLJLRXV�LQVWLWXWLRQV�ĪVXFK�DV�PRQDVWHULHV�RU�UHFWRULHVī��EXW�DOVR�WR�SURYLGH�KRVSLWDOV�DQG�DOPVKRXVHV��ROG�SHRSOH¶V�KRPHV�DQG�QXUVLQJ�KRPHV��SRRU�UHOLHI�DQG�HGXFDWLRQ�IRU�FKLOGUHQ��7KHUH�DUH�VWLOO�important and influential charitable organisations associated with religious institutions, including WKH�&DWKROLF�&DULWDV�DQG�3URWHVWDQW�'LDNRQLH�RUJDQLVDWLRQV�LQ�*HUPDQĥVSHDNLQJ�(XURSH��+RVSLWDOV�DIILOLDWHG�ZLWK�UHOLJLRXV�RUGHUV�SURYLGH�D�QRWDEOH�VKDUH�RI�KRVSLWDO�EHGV�WRR�ĪDURXQG���İ�LQ�$XVWULDī�19 7KHUH�DUH�PDQ\�UHODWLYHO\�XQNQRZQ�JURXSV�DPRQJ�WKH�QXPHURXV�EHQHYROHQW�VRFLHWLHV�DQG�FKDULWDEOH�organisations in our communities, but there are a JUHDW�QXPEHU�RI�LQVWLWXWLRQV�WKDW�DUH�ZHOOĥNQRZQ�

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30

among the broader public here LQ�$XVWULD��7KHVH�LQFOXGH�WKH�$UEHLWHUĥ6DPDULWHUĥ%XQG��WKH�0DOWHVHUĥ+LOIVGLHQVW��WKH�-RKDQQLWHU�DPEXODQFH�VHUYLFH��DV�ZHOO�DV�WKH�water rescue, alpine rescue and PLQLQJ�UHVFXH�VHUYLFHV��:RUOG�9LVLRQ�DQG�6DYH�WKH�&KLOGUHQ�SURYLGH�VHUYLFHV�IRU�FKLOGUHQ�ZKLOH�626�&KLOGUHQ¶V�9LOODJHV�ZRUNV�ZLWK�RUSKDQHG�FKLOGUHQ��*HUPDQ�&DQFHU�$LG�DQG�WKH�'HXWVFKH�.UHEVJHVHOOVFKDIW�ZRUN�WRJHWKHU���0LVHUHRU�XQG�%UHDG�IRU�WKH�:RUOG��WKH�DQWLĥKXQJHU�RUJDQLVDWLRQ�:HOWKXQJHUKLOIH�DQG�WKH�FKLOGUHQ¶V�ZHOIDUH�RUJDQLVDWLRQ�'HXWVFKH�.LQĥGHUKLOIVZHUN�DUH�RWKHU�ZHOOĥNQRZQ�QDPHV��$QLPDO�ZHOIDUH�RUJDQLVDWLRQV�FDQ�EH�IRXQG�HYHU\ZKHUH��,Q�$XVWULD�specifically, other prominent organĥLVDWLRQV�LQFOXGH��1DFKEDU�LQ�1RW�Ī1HLJKERXU�LQ�1HHGī��WKH�$XVWULDQ�+LOIVZHUN��WKH�9RONVKLOIH�DQG�WKH�$XVWULDQ�*UHHQ�&URVV��DPRQJ�PDQ\�RWKHUV��7KH�LQWHUQDWLRQDO�&$5(�organisation has a branch in Austria, WRR��&$5(�gVWHUUHLFK�20

Do you know what a “falling action” is? It describes the part of a classic drama in which the plot resolution is delayed and the opposite of the expected outcome appears to be possible again. This short text uses the description of the falling action in precisely this manner.

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Social goods

7KH�PDUNHW��IRU�DOO�RI�LWV�ZHOOĥNQRZQ�DGYDQWDJHV��LV�FOHDUO\�QRW�DQ�LGHDO�LQVWUXPHQW�IRU�GHOLYHULQJ�WKRVH�JRRGV�WKDW�ZH�GHVFULEH�DV�VRFLDO�RU�SXEOLF��7KHVH�are goods that are intended for use by all and which LPSURYH�OLYHV�JHQHUDOO\��EXW�ZKLFK�DUH�QRW�SURYLGHG�E\�SULYDWH�FRPSDQLHV�EHFDXVH�SURILWV�VWHPPLQJ�IURP�WKHP�PD\�QRW�EH�SULYDWLVHG��)XUWKHUPRUH��WKHUH�FDQ�EH�QR�H[WUD�FRVWV�IRU�DGGLWLRQDO�XVH�E\�RWKHU�FRQVXPĥers, and additional use cannot in most normal cases EH�SUHYHQWHG�RU�SURKLELWHG��,W�LV�QRUPDOO\�WKH�VWDWH�WKDW�SURYLGHV�WKHVH�JRRGV�ĪH�J��OLJKWKRXVHV��VWUHHWV��SDUNV��UHVHDUFK�IXQGLQJ�DQG�QDWLRQDO�GHIHQFHī��:KHQ�SULYDWH�IRXQGDWLRQV�DOVR�EHJLQ�WR�SURYLGH�WKHVH�NLQGV�RI�JRRGV��WKH�VWDWH¶V�PRQRSRO\�RQ�WKHLU�SURYLVLRQ�LV�FKDOOHQJHG��7KHUH�DUH�WKHQ�SOXUDOLVW�VRXUFHV�IRU�WKH�GHOLYHU\�RI�SXEOLFO\�XVHIXO�VHUYLFHV�DQG�SURGXFWV�21

0DMRULWLHV�DQG�QLFKHV��3ROLWLFDO�HFRQRP\�WHDFKHV�XV�WKDW�LQYHVWPHQW�LQ�VRFLDO�JRRGV�ZLOO�SURFHHG�LQ�DFFRUGDQFH�ZLWK�WKH�ZLVKHV�RI�WKH�PDMRULW\�RI�WKH�YRWLQJ�SXEOLF��,I�WKH�PDMRULW\�ZDQW�EHWWHU�PRWRUZD\V�DQG�RQO\�D�PLQRULW\�SUHIHU�LPSURYHG�F\FOH�SDWKV��WKHQ�WKH�FKDQFHV�ORRN�JRRG�IRU�PRWRUZD\V��,I�WKH�PDMRULW\�ZDQW�WKHUPDO�VSDV�DQG�RQO\�D�PLQRULW\�ZDQW�PRUH�DYDQWĥJDUGH�DUW��WKHQ�ZDUP�ZDWHU�ORRNV�VHW�WR�ZLQ��2I�FRXUVH�WKH�VWDWH�FDQQRW�FRPSOHWHO\�LJQRUH�WKH�ZLVKHV�RU�QHHGV�RI�WKH�PLQRULW\��EXW�SULYDWH�IRXQGDWLRQV�KDYH�PXFK�PRUH�OHHZD\�LQ�WDNLQJ�GHFLVLRQV��7KH\�DUH�IUHH�WR�XQGHUZULWH�LQLWLDWLYHV�WKDW�

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32

face significant political resistance and suffer from insufficient support DV�D�UHVXOW��

'LYHUVLW\��*LYHQ�WKH�GLYHUVLW\�RI�priorities among sponsors, there is D�FRUUHVSRQGLQJ�GLYHUVLW\�DPRQJVW�WKH�JRRGV�WKH\�SURYLGH��7KHLU�RZQ�SUHMXGLFHV�DQG�SUHIHUHQFHV�PD\�WDNH�WKH�RUJDQLVDWLRQV�LQ�D�YDULHW\�RI�different directions, which decenĥWUDOLVHV�WKH�GHFLVLRQĥPDNLQJ�SURFHVV�ZKHQ�LW�FRPHV�WR�SURYLGLQJ�VRFLDO�JRRGV��7KLV�LQ�WXUQ�FRQWULEXWHV�WR�FLYLO�VRFLHW\¶V�GLYHUVLW\�

,QQRYDWLRQ��$�SROLWLFDO�V\VWHP�XQGHU�VWURQJ�SUHVVXUH�WR�MXVWLI\�LWV�GHFLVLRQV�ZLOO�WHQG�WR�WDNH�OHVV�ULVN\�RQHV��3URMHFWV�QHHG�VXFFHVVHV�LQ�RUGHU�WR�MXVWLI\�WKHPVHOYHV��DQG�a string of missteps or failures will turn public opinion against WKHP��7KLV�UHVXOWV�LQ�DQ�LQHYLWDEOH�GULIW�WRZDUGV�PRUH�FRQYHQWLRQDO�PHWKRGV�DQG�D�WHQGHQF\�WR�DYRLG�SROLWLFDO�H[SHULPHQWDWLRQ��%XW�LW�LV�especially the latter that can result LQ�LPSRUWDQW�LQQRYDWLRQV��7KH�+HZOHWW�)RXQGDWLRQ�DVVHUWV��³Ĭ7KHĭ�solutions to serious problems are VHOGRP�NQRZQ�ZLWK�DQ\WKLQJ�FORVH�

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WR�FHUWDLQW\��7KH�)RXQGDWLRQ�PXVW�WKHUHIRUH�EH�SUHSDUHG�WR�H[SHULPHQW�DQG�WDNH�ULVNV�LQ�LWV�JUDQWĥPDNLQJ��7KLV��WRR��UHTXLUHV�VHWWLQJ�FOHDU�REMHFWLYHV�DQG�FUHDWLQJ�ZD\V�WR�PHDVXUH�VXFFHVV�ZKHQHYHU�SRVVLEOH��:LWKRXW�WKLV�LQIRUPDWLRQ��LW�ZRXOG�EH�YHU\�GLIILFXOW�WR�NQRZ�KRZ�WKH�ULVN�HYHQWXDWHG��7KLV�DSSURDFK�DOVR�UHTXLUHV�D�ZLOOLQJQHVV�WR�DFNQRZOĥHGJH�DQG�OHDUQ�IURP�IDLOXUHV�´22

7KH�WZRĦOHYHOV�SUREOHP

Philanthropic structures are normally comprised of WZR�OHYHOV��2Q�WKH�RQH�KDQG�WKHUH�DUH�IXQGUDLVHUV�DQG�GRQRUV�ĪW\SLFDOO\�LQ�WKH�LQVWLWXWLRQDOLVHG�IRUP�RI�IRXQGDWLRQV��IXQGV�DQG�WUXVWVī�DQG�RQ�WKH�RWKHU��FRQFUHWH�DFWRUV�HQJDJHG�LQ�SURMHFWV�RQ�WKH�JURXQG�ĪW\SLFDOO\�LQ�WKH�LQVWLWXWLRQDOLVHG�IRUPV�RI�1*2V�DQG�QRQĥSURILW�RUJDQLVDWLRQVī��,Q�WKH�FDVH�RI�UHVHDUFK�RU�DUW�SURMHFWV��LW�LV�UHODWLYHO\�FOHDU�WKDW�WKH�IRXQGDWLRQV�GR�QRW�HQJDJH�LQ�WKH�IXQGHG�DFWLYLWLHV�WKHPVHOYHV��7KHVH�WHQG�WR�EH�WDNHQ�RQ�E\�XQLYHUVLW\�UHVHDUFK�ERGLHV�DQG�PXVHXPV��IRU�H[DPSOH��%XW�WKH�VDPH�LV�WUXH�IRU�VRFLDO�SURMHFWV�VXFK�DV�GHYHORSPHQW�DLG��HGXFDWLRQDO�LQLWLDWLYHV�DQG�FRPPXQLW\�SURMHFWV��7KH�SURYLGHUV�DQG�UHFLSLHQWV�RI�WKH�IXQGLQJ�DUH�RIWHQ�GLIIHUHQW�ERGLHV�DQG�LW�LV�WKH�ODWWHU�ZKLFK�XQGHUWDNH�FRQFUHWH�DFWLYLWLHV��6RPH�ODUJH�IXQGHUV��IRU�H[DPSOH��FRQWULEXWH�ILQDQFLDOO\�WR�WKH�5HG�&URVV��ZKLFK�LV�DFWLYH�RQ�WKH�JURXQG�SURYLGLQJ�PHGLFDO�KHOS��IRRG�DLG��GLVDVWHU�UHOLHI�DQG�RWKHU�VHUYLFHV��5HJDUGOHVV��LW�LV�LPSRUWDQW�WR�UHPHPEHU�WKDW�ERWK�OHYHOV�RI�HQJDJHĥ

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34

ment constitute philanthropic RUJDQLVDWLRQV�

Increasing attention has been paid in the past few decades to a problem that is now referred to in organisational science as the SULQFLSDOĥDJHQW�SUREOHP��7KH�funder/principal is on the one side and the funded party/actor is on WKH�RWKHU��+RZ�FDQ�WKH�IRUPHU�ensure that the latter fulfils its obligations and uses the donated IXQGV�ZLVHO\"�,W�ZRXOG�EH�LPSRVVLEOH�WR�OLPLW�\RXUVHOI�WR�FKHFNLQJ�ELOOV�DQG�ILQDQFLDO�VWDWHPHQWV��7KHUH�DUH�numerous other things that are in WKH�IXQGHU¶V�LQWHUHVW��LQFOXGLQJ��WKDW�WKH�SURMHFW�IXQGHG�LV�DQ�HIILFLHQW�RQH�ĪHQVXULQJ��IRU�H[DPSOH��WKDW�GHYHORSPHQW�RUJDQLVDWLRQV�GR�QRW�VHW�XS�EDVH�LQ�D�FRXQWU\¶V�FDSLWDO�city, where life is more comfortable, but instead out in the countryside, ZKHUH�WKH�QHHGV�DUH�JUHDWHUī��WKDW�money is put to use in those areas and places that are in the greatest QHHG�ĪWKDW�LV��WKDW�WKH�RUJDQLVDWLRQ�GRHV�QRW�VWLFN�WR�VLPSO\�GRLQJ�ZKDW�LW�KDV�DOZD\V�GRQHī��WKDW�HIIRUWV�DUH�QRW�GHYRWHG�WR�SUREOHPV�WKDW�DUH�being addressed by dozens of other

This often distin-guishes it from earned assets. As-sets are infrequently used in the second sense of the term. To draw on the work of another well-known philosopher: Aristotle stated that assets are the active potential to create something or to make something happen.

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35

RUJDQLVDWLRQV�ĪWKDW�LV��FKRRVLQJ�SURMHFWV�EHFDXVH�WKH\�are easier to manage or successes are more easily DFKLHYHG�LQVWHDG�RI�FKRRVLQJ�EDVHG�RQ�WKH�FULWHULD�RI�LPSRUWDQFHī��7KH�SOD\HUV�RQ�WKH�JURXQG�FDQ�EXLOG�DOO�VRUWV�RI�3RWHPNLQ�YLOODJHV�LQ�WKHLU�DQQXDO�UHSRUWV�DQG�SURMHFW�UHSRUWV��DQG�HYHQ�FXUVRU\�VLWH�YLVLWV�DUH�QRW�always enough to gather the information necessary WR�DSSURSULDWHO\�MXGJH�D�SURMHFW¶V�HIIHFWLYHQHVV��

5HFRJQLVLQJ�WKLV�SUREOHP�KDV�FRQVHTXHQFHV�IRU�WKH�ZD\�IRXQGDWLRQV�GRQRUV�JR�DERXW�WKHLU�ZRUN��They need to put institutional precautions into SODFH�WR�EH�DEOH�WR�HYDOXDWH�WKH�DFWLYH�RUJDQLVDWLRQV��DVVHVV�SURMHFWV��UDWH�WKH�DSSURDFK�XWLOLVHG�DQG�MXGJH�WKH�RXWFRPHV��Ī1DWXUDOO\�DQ\�PHDVXUHV�OLNH�WKLV�SUHVHQW�WKHLU�RZQ�FRPSOLFDWLRQV��)RU�H[DPSOH��ZKHQ�HYDOXDWLRQ�FULWHULD�DUH�VHW��WKH�DIIHFWHG�RUJDQLVDWLRQV�EHJLQ�WR�RSHUDWH�LQ�ZD\V�WKDW�ZLOO�HQVXUH�D�SRVLWLYH�HYDOXDWLRQ�DFFRUGLQJ�WR�WKRVH�FULWHULD��7KH\�PD\�WKHQ�QHJOHFW�FHUWDLQ�DFWLYLWLHV�WKDW�DUH�QHFHVVDU\�with regard to the situation they are supposed to EH�DGGUHVVLQJ��2U�WKH\�PD\�HYHQ�DWWHPSW�WR�WDPSHU�ZLWK�WKH�LQGLFDWRUV�EHLQJ�XVHG�WR�HYDOXDWH�WKHP�ī�2YHU�WKH�SDVW�VHYHUDO�GHFDGHV��HODERUDWH�V\VWHPV�RI�UXOHV��SURFHGXUHV�DQG�URXWLQHV�KDYH�EHHQ�GHYHORSHG�WR�DVVLVW�WKH�SULQFLSDO�LQ�PRQLWRULQJ�LWV�³DJHQWV´��:H�ZLOO�WRXFK�RQ�WKH�QHZ�ORJLF�JRYHUQLQJ�SKLODQWKURS\�LQ�WKH�QH[W�VHFWLRQ�

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36

Philanthropy by social groups

Small donations and grants do not DWWUDFW�PXFK�DWWHQWLRQ��HYHQ�WKRXJK�WKH\�FDQ�DGG�XS�WR�VXEVWDQWLDO�VXPV��+RZHYHU��WKHUH�DUH�HPSLULFDO�VWXGĥies that show that people belonging to the lower and middle classes donate more money proportionally WKDQ�GR�WKH�ZHDOWK\����,W�LV�MXVW�WKDW�WKH�ODWWHU¶V�GRQDWLRQV�WHQG�WR�EH�IRU�larger sums and this is what wins WKHP�DWWHQWLRQ�:HDOWK�VSRLOV�SHRSOH��PDQ\�VD\��New empirical studies do not, as a matter of fact, put the wealthy in a good light with regard to their EHOLHIV�DQG�DFWLRQV��:KHQ�D�FDU�EORFNV�SHGHVWULDQV�DW�WKH�]HEUD�FURVVLQJ��RU�GRHVQ¶W�VWRS�WR�OHW�people cross more often than not it LV�D�ELJ�FDU��7KH�ZHDOWK\�DUH�PRUH�OLNHO\�WR�OLH�LQ�MRE�LQWHUYLHZV�DQG�cheat during games or sport in order WR�ZLQ�D�SUL]H��7KH\�HYHQ�WHQG��LQ�FHUWDLQ�FRQWUROOHG�H[SHULPHQWV��WR�HDW�FKLOGUHQ¶V�VZHHWLHV�LI�WKH\�FDQ¶W�EH�VHHQ��5LFK�LQGLYLGXDOV�KDYH�D�VWURQJ�EHOLHI�WKDW�WKH\�GHVHUYH�PRUH�WKDQ�RWKHU�SHRSOH��1DUFLVVLVP�LV�PRUH�SUHYDOHQW��7KHVH�DVSHFWV�of their personality promote their

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37

VHQVH�WKDW�WKH\�GHVHUYH�WR�EH�WUHDWHG�GLIIHUHQWO\��7KH\�VKRXOG�QRW�KDYH�WR�ZRUN�KDUG�WR�JHW�WKH�WKLQJV�WKH\�IHHO�WKH\�GHVHUYH�24�7KLV�³VHQVH�RI�HQWLWOHPHQW´�among the upper classes increases during times of rising social inequality and results in an “empathy JDS´��25 They simply ignore the consequences RI�WKHLU�EHKDYLRXU�IRU�SHRSOH�EHORQJLQJ�WR�WKH�VRFLRĥHFRQRPLF�VWUDWD�EHORZ�WKHP�26 But we can VHH�IURP�WKHVH�VWXGLHV��WRR��WKDW�WKH�ZHDOWK\�KDYH�LQWHUQDOLVHG�0DQGHYLOOH¶V�³SULYDWH�YLFHV��SXEOLF�EHQĥHILWV´�DUJXPHQW��$IWHU�DOO��SHRSOH�DUH�DVWRQLVKLQJO\�good at finding moral and social arguments that put WKHPVHOYHV�DW�DQ�DGYDQWDJH��0RQH\�FKDQJHV�SHRSOH¶V�FRQFHSWXDOLVDWLRQV�DERXW�KRZ�VRFLHW\�IXQFWLRQV��

7KHVH�FKDUDFWHU�DVSHFWV�DUH�QRW�RQO\�DQ�H[SUHVVLRQ�RI�DEQRUPDO�SHUVRQDO�WUDLWV��7KH\�DOVR�VHHS�LQWR�RXU�FROOHFWLYH�FRQVFLRXVQHVV��DQG�DUH�KLJKOLJKWHG�E\�SURPLQHQW�HYHQWV�VXFK�DV�WKH�ILQDQFLDO�FULVLV�DQG�WKH�EHKDYLRXU�RI�FHUWDLQ�JURXSV�OHDGLQJ�XS�WR�DQG�GXULQJ�LW��$OO�RI�WKHVH�ELWV�RI�LQIRUPDWLRQ�FRQWULEXWH�WR�WKH�ZD\�D�VRFLHW\�FROOHFWLYHO\�LQWHUSUHWV�LWVHOI��This is why it is particularly important that a ³FRXQWHUĥVWRU\´�EH�WROG�DV�SDUW�RI�RXU�SXEOLF�GLVFRXUVH��7KLV�VWRU\�ZLOO�IRFXV�RQ�SHRSOH�ZKR�KDYH�not lost all of their contact with the social realities around them and who are in a position to critically H[DPLQH�WKHLU�RZQ�SHUVRQDO�VLWXDWLRQ��7KHUH�DUH�D�QXPEHU�RI�LQGLYLGXDOV�ZKR�ILW�WKLV�GHVFULSWLRQ��DQG�WKH\�DUH�MXVWLILDEO\�UHFRJQLVHG�DV�UROH�PRGHOV�

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38

Certain traditions are especially ORQJĥOLYHG��ZKLFK�LV�ZK\�FKDULWDEOH�DFWLYLW\�LV�FRQVLGHUHG�D�VXLWDEOH�DFWLYLW\�IRU�WKH�ZLYHV�RI�OHDGLQJ�SROLWLFLDQV��$PHULFDQ�)LUVW�/DGLHV��DV�LV�WUXH�IRU�WKRVH�LQ�*HUPDQ\�DQG�$XVWULD��GHGLFDWH�WKHPVHOYHV�WR�WKH�establishment or support of philĥDQWKURSLF�RUJDQLVDWLRQV��7KH\�XVH�their influence to support cultural DQG�VFLHQWLILF�HQGHDYRXUV��WRR��LQ�DGGLWLRQ�WR�FKDULWDEOH�SURMHFWV�³6WDUV´�IRUP�D�FDWHJRU\�XQWR�WKHPVHOYHV��E\�ZKLFK�,�PHDQ�DFWRUV��VLQJHUV�DQG�SRS�VWDUV�RI�DOO�VRUWV��An increasing number of them HQMR\�XVLQJ�WKHLU�PRQH\�RU�WKHLU�VRFLDO�SURPLQHQFH�WR�ZRUN�WRZDUGV�LPSURYLQJ�WKH�FRPPRQ�JRRG��7KH�HDVLHVW�H[DPSOH�RI�WKLV�LV�WKH�VDOH�RU�DXFWLRQ�RI�WLFNHWV�IRU�D�PHHWLQJ�RU�GLQQHU�ZLWK�D�VWDU��,Q�WKH�SDVW�IHZ�\HDUV��*HRUJH�&ORRQH\��0DWW�'DPRQ��%HQ�$IIOHFN�DQG�/DG\�*DJD�KDYH�DOO�HQJDJHG�LQ�WKLV�W\SH�RI�IXQGUDLVLQJ�DFWLYLW\��7KHUH�LV�DOVR�a website27�GHYRWHG�WR�FHOHEULWLHV¶�FKDULWDEOH�ZRUN�DQG�LQWHUHVWV�ZLWK�WKH�VXEWLWOH�³7KH�:RUOG�RI�&HOHEULW\�*LYLQJ´��7KH�VLWH�SURYLGHV�D�YDULHW\�RI�LQIRUPDWLRQ�ZLWK�KHDGĥOLQHV�LQFOXGLQJ��6WLQJ�$QQRXQFHV�

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39

�����5DLQIRUHVW�)XQG�%HQHILW�&RQFHUW��+LOODU\�'XII�6XSSRUWV�0DUFK�RI�'LPHV��6WHYH�0F4XHHQVV�&KDUĥLW\�:RUN�VXSSRUWV�$QWLĥ6ODYHU\�,QWHUQDWLRQDO��%XW�LW�DOVR�RIIHUV�LQIRUPDWLRQ�RI�PRUH�VXEVWDQFH��,W�WHOOV�YLVLWRUV��IRU�H[DPSOH��WKDW�&ROGSOD\�KDV�VXSSRUWHG����RI�WKH�OLVWHG�FKDULWLHV��3DXO�0F&DUWQH\�����.DQ\H�:HVW�����0LOH\�&\UXV�����%RQR�����%RE�*HOGRI�����*HRUJH�&ORRQH\����DQG�VR�RQ�28

7RS�FKDULWLHV�RQ�WKH�OLVW�LQFOXGH�81,&()�DQG�WKH�5HG�&URVV��WKH�(OWRQ�-RKQ�$,'6�)RXQGDWLRQ��3(7$��WKH�0DNHĥ$ĥ:LVKĥ)RXQGDWLRQ�DQG�6DYH�WKH�&KLOGUHQ�

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40

Philanthropic role models: “The man who dies rich dies disgraced”

3KLODQWKURSLF�DFWLYLW\�EHFDPH�almost fashionable amongst the middle and upper classes LQ���WKĥFHQWXU\�$PHULFD�DQG�*HUPDQĥVSHDNLQJ�(XURSH��$QGUHZ�Carnegie came to symbolise the ³JHQHURXVO\ĥVL]HG�SKLODQWKURS\´�DPRQJVW�WKH�$PHULFDQ�QRXYHDX�ULFKH��,Q�KLV�*RVSHO�RI�:HDOWK�Ī����ī�KH�ZURWH�DERXW�WKH�GXWLHV�of the wealthy and the importance RI�VRFLDO�MXVWLFH�29 His focus was on IXQGLQJ�VFKRROV�DQG�XQLYHUVLWLHV�DV�ZHOO�DV�SURYLGLQJ�UHVRXUFHV�WR�SXEOLF�OLEUDULHV�LQ�QXPHURXV�(QJOLVKĥVSHDNLQJ�FRXQWULHV��0DQ\�PHPEHUV�of this new elite, who had amassed WKHLU�IRUWXQHV�DPLGVW�YHU\�WXUEXOHQW�social changes, felt a profound sense of duty to contribute to the common good of the society to ZKLFK�WKH\�EHORQJHG��7KLV�LV�ZK\�,�KDYH�WLWOHG�WKLV�VHFWLRQ�ZLWK�RQH�RI�$QGUHZ�&DUQHJLH¶V�PRVW�IDPRXV�VD\LQJV��³7KH�PDQ�ZKR�GLHV�ULFK�GLHV�GLVJUDFHG´��

Wealth, however, is often hoarded.

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41

Europe and the United States

'RQRUV�LQ�WKH�86�IUHTXHQWO\�WDON�DERXW�ZDQWLQJ�WR�³JLYH�VRPHWKLQJ�EDFN´�WR�VRFLHW\�DIWHU�EHLQJ�WUHDWHG�VR�ZHOO�WKHPVHOYHV�DQG��WKH\�VRPHWLPHV�DGG��EHLQJ�XQGHVHUYLQJ�RI�WKH�IRUWXQH�WKH\�KDYH�JDLQHG��7KLV�sentiment is less frequently heard from the wealthy LQ�(XURSH��

The difference is partly attributable to a specifically $PHULFDQ�DWWLWXGH��QDPHO\�D�GLVWLQFWLYH�GLVWUXVW�RI�WKH�VWDWH�DQG�D�SUHIHUHQFH�IRU�WKH�SURYLVLRQ�RI�VHUYLFHV�E\�SULYDWH�HQWLWLHV��7KLV�LV�LQ�FRQWUDVW�WR�WKH�European mentality, which was influenced by the HDUO\�UROH�RI�WKH�QRELOLW\�DQG�WKH�FKXUFK�ĪDV�FRUSRĥUDWLVW�RUJDQLVDWLRQV�WKDW�DEVRUEHG�VRFLHWDO�ZHDOWKī�LQ�FUHDWLQJ�D�EDODQFH�DPRQJVW�WKH�YDULRXV�VRFLDO�FODVVHV�DQG�H[HUFLVLQJ�D�UHVSRQVLELOLW\�WR�DOOHYLDWH�REYLRXV�VRFLDO�PLVHU\��/DWHU��DIWHU�WKH�DSSHDUDQFH�RI�the welfare state, it was the state itself that assumed WKH�UHVSRQVLELOLW\�WR�SURYLGH�WKRVH�WKLQJV�WKDW�ZHUH�essential for a decent life and soon it was considered D�ZDVWH�RI�SULYDWH�DVVHWV�VLQFH�WKH�SXEOLF�FRIIHUV�GLG�QRW�PLQG�SD\LQJ�IRU�WKHP��,Q�WKH�86��RQ�WKH�RWKHU�KDQG��ZLWK�LWV�EURDG�GLVWUXVW�RI�WKH�JRYHUQPHQW��SHRSOH�RIWHQ�WKLQN�HYHU\�GROODU�JREEOHG�XS�E\�WKH�JRYHUQPHQW�LV�D�GROODU�ZDVWHG��0DQ\�LQ�WKH�86�WKHUHĥIRUH�FRQVLGHU�LW�DSSURSULDWH�WKDW�HYHQ�WKH�ZHDOWK\�GR�HYHU\WKLQJ�WKH\�FDQ�WR�SD\�OHVV�LQ�WD[��GHGLFDWLQJ�WKH�PRQH\�WKH\�VDYH�WR�SULYDWHO\�KHOG�SKLODQWKURSLF�RUJDQLVDWLRQV�

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42

The 19th century was a golden age for philanthropic organisations in *HUPDQĥVSHDNLQJ�(XURSH�DV�ZHOO��where a large share of the elite HQJDJHG�LQ�FKDULWDEOH�DFWLYLW\�LQ�VRPH�IRUP�RU�DQRWKHU��³,Q�)UDQNIXUW�DP�0DLQ��IRU�H[DPSOH��WKHUH�ZHUH�WKH�6HQFNHQEHUJ�)RXQGDWLRQV�ĪD�SXEOLF�KRVSLWDO�DQG�D�PHGLFDO�UHVHDUFK�IRXQGDWLRQ�ZLWK�OLEUDU\ī��WKH�6WlGHO�)RXQGDWLRQ�ĪDUW�VFKRRO�DQG�PXVHXPī��WKH�3RO\WHFKQLF�6RFLHW\�ĪWUDLQLQJ�IRU�ZRUNHUV�DQG�D�VDYLQJV�EDQN�IRU�³WKH�OLWWOH�SHRSOH´ī��WKH�5RWKVFKLOG�-HZLVK�+RVSLWDO�ĪZKLFK�RQO\�WUHDWHG�SD\LQJ�SDWLHQWVī��the Orphanage Foundation, as well DV�D�VRXS�NLWFKHQ�WKDW�ZDV�ILQDQFHG�and run by the bourgeois members RI�WKH�:RPHQ¶V�$VVRFLDWLRQ��7KH�:RPHQ¶V�$VVRFLDWLRQ�DOVR�UDQ�D�VFKRRO�´�� The spectrum of DQDORJRXV�VRFLDO�ZHOIDUH�DFWLYLWLHV�KDV�JURZQ�HYHQ�ODUJHU�WRGD\��6RFLDO�SURMHFWV�DUH�VWLOO�D�SULPDU\�IRFXV��DV�WKH\�ZHUH�EDFN�WKHQ��DVVLVWLQJ�WKH�poor, the homeless, families, the elderly, people addicted to drugs, prisoners, people with disabilities DQG�YLFWLPV�RI�FULPH��SHRSOH�OLYLQJ�ZLWK�+,9�$,'6��DQG�LPPLJUDQWV�DQG�UHIXJHHV��$GGLWLRQDO�SURMHFWV�

What can we do about this? Do good (and talk about it!)

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43

LQFOXGH�DPEXODQFH�DQG�UHVFXH�VHUYLFHV��FULVLV�LQWHUYHQWLRQ�DQG�GLVDVWHU�UHOLHI��2WKHU�RUJDQLVDWLRQV�IUHTXHQWO\�UHO\�RQ�XQSDLG�YROXQWHHUV�DQG�FKDULWDEOH�donations, too, such as those concerned with the HQYLURQPHQW��FRQVHUYDWLRQ�DQG�DQLPDO�ZHOIDUH��GHYHORSPHQW�DLG�RUJDQLVDWLRQV��DQG�FLYLO�ULJKWV�DQG�KXPDQ�ULJKWV�JURXSV��,Q�WKH�FXOWXUDO�VSKHUH��WKHUH�DUH�KLVWRULFDO�SUHVHUYDWLRQ�VRFLHWLHV��FLUFOH�RI�IULHQGV�groups dedicated to museums, galleries, orchestras, WKHDWUHV��RSHUD�KRXVHV�DQG�IHVWLYDOV��DV�ZHOO�DV�PHPĥbership organisations for libraries, sponsorship clubs IRU�YDULRXV�FXOWXUDO�HQWLWLHV��DQG�PDQ\�RWKHU�WDUJHWHG�LQLWLDWLYHV�

<RX�FRXOG�HYHQ�VD\�WKDW�WKH�86�LV�H[SHULHQFLQJ�D�VHFRQG�³JROGHQ�DJH´�RI�ODUJH�FKDULWLHV�DQG�IRXQGDĥWLRQV��7KH�QXPEHU�RI�WKHVH�W\SHV�RI�RUJDQLVDWLRQV�PXOWLSOLHG�GXULQJ�WKH�����V��7KH�*DWHV�)RXQGDWLRQ�DQG�*DWHV�7UXVW��IRU�H[DPSOH��FRQWURO�DVVHWV�YDOXHG�DW����ELOOLRQ�GROODUV��,I�WKH�IRXQGDWLRQ�ZHUH�D�QDWLRQ��LW�ZRXOG�UDQN���WK�LQ�WKH�ZRUOG�LQ�WHUPV�RI�*'3��7KH�reputations of the people who establish foundations SOD\�QR�VPDOO�UROH��%LOO�*DWHV�DQG�:DUUHQ�%XIIHWW�FRXQW�DPRQJVW�WKH�PRVW�DGPLUHG�$PHULFDQV���

$Q�H[DPSOH�VKRXOG�KHOS�LOOXVWUDWH�ZKDW�WKH�FXUUHQW�VLWXDWLRQ�ORRNV�OLNH�

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44

The Bill & Melinda Gates Foundation

7KH�FRĥIRXQGHU�RI�0LFURVRIW�PDGH�WKH�ILUVW�PRYHV�WRZDUGV�establishing his foundation in 1994 and succeeded in 1999 in creating WKH�ODUJHVW�SULYDWH�IRXQGDWLRQ�LQ�WKH�ZRUOG����:LWK�LWV�KHDGTXDUWHUV�in Seattle, the foundation has about 1,000 employees, an endowment of DERXW����ELOOLRQ�GROODUV��DQG�JLYHV�DERXW���ELOOLRQ�GROODUV�DQQXDOO\�LQ�JUDQW�PRQH\��7KH�IRXQGDWLRQ�IRFXVHV�RQ�JOREDO�GHYHORSPHQW��KHDOWK�DQG�HGXFDWLRQ��$JULFXOWXUDO�GHYHORSPHQW�LV�D�NH\�IRFXV�LQ�WKH�DUHD�RI�JOREDO�GHYHORSPHQW�DQG�includes support for the Alliance IRU�D�*UHHQ�5HYROXWLRQ�LQ�$IULFD�ĪZKLFK�DOVR�UHFHLYHV�IXQGLQJ�IURP�WKH�5RFNHIHOOHU�)RXQGDWLRQī��WKH�+DUYHVW�3OXV�SURJUDPPH�IRU�WKH�GHYHORSPHQW�RI�QXWULWLRQDOO\�HQKDQFHG�FURSV��DQG�SURMHFWV�DLPHG�DW�GHYHORSLQJ�GURXJKWĥUHVLVWDQW�FRUQ�DQG�GXUDEOH�UXVWĥUHVLVWDQW�ZKHDW��2WKHU�LQLWLDWLYHV�LQFOXGH�WKH�support of coffee growers and dairy farmers as well as helping to ensure PDUNHW�DFFHVV�IRU�VPDOO�IDUPHUV�LQ�$IULFD��,Q�WKH�DUHD�RI�KHDOWK��WKH�IRXQGDWLRQ�VXSSRUWV�LQLWLDWLYHV�WKDW�

What is the real truth about the dis-tribution of earned capital?

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45

FDUH�IRU�$,'6�SDWLHQWV�DQG�SURYLGH�KHDOWK�VHUYLFHV�WR�FKLOGUHQ�LQ�,QGLD�DQG�$IULFD��7KH�IRXQGDWLRQ�DOVR�VXSSRUWV�WKH�GHYHORSPHQW�RI�YDFFLQHV�WR�FRPEDW�D�YDULHW\�RI�LOOQHVVHV�WKDW�DUH�HVSHFLDOO\�SUHYDOHQW�LQ�WKH�7KLUG�:RUOG��7KH�IRXQGDWLRQ�IXQGV�HGXFDWLRQDO�LQLWLDWLYHV�LQ�WKH�86��LQFOXGLQJ�VFKRODUVKLSV�IRU�VWXGHQWV�IURP�HFRQRPLFDOO\�GLVDGYDQWDJHG�IDPLOLHV�

:DUUHQ�%XIIHW�DQQRXQFHG�KLV�LQWHQWLRQ�LQ������WR�GRQDWH�VHYHUDO�ELOOLRQ�GROODUV��WKH�HTXLYDOHQW�RI�DERXW���İ�RI�KLV�ZHDOWK��+H�DOVR�DQQRXQFHG�WKDW�KH�ZRXOG�OHDYH���İ�RI�KLV�DVVHWV�WR�SKLODQWKURSLF�DQG�FKDULĥWDEOH�RUJDQLVDWLRQV�IROORZLQJ�KLV�GHDWK��� In addition WR�GRQDWLQJ�WR�WKH�*DWHV�)RXQGDWLRQ��%XIIHW�DOVR�supports the Susan Thompson Buffett Foundation, WKH�+RZDUG�*��%XIIHWW�)RXQGDWLRQ��WKH�6XVDQ�$��%XIIHWW�)RXQGDWLRQ�DQG�WKH�1R9R�)RXQGDWLRQ��%XIIHWW�KDV�VSRNHQ�FULWLFDOO\�RQ�QXPHURXV�RFFDVLRQV�DERXW�WKH�SRODULVDWLRQ�RI�$PHULFDQ�VRFLHW\�DQG�HYHQ�RI�D�FODVV�ZDU��³0\�IULHQGV�DQG�,�KDYH�EHHQ�FRGGOHG�ORQJ�HQRXJK�E\�D�ELOOLRQDLUHĥIULHQGO\�&RQJUHVV��,WV�WLPH�IRU�RXU�JRYHUQPHQW�WR�JHW�VHULRXV�DERXW�VKDUHG�VDFULILFH�´��

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46

The Giving Pledge

,Q�-XQH������%XIIHWW�DQG�%LOO�*DWHV�FDOOHG�D�QHZ�FDPSDLJQ�LQWR�OLIH��7KH�*LYLQJ�3OHGJH��,W�ZDV�D�SXEOLF�appeal for the wealthiest members of society to donate at least half of WKHLU�ZHDOWK�WR�FKDULW\��$�QXPEHU�RI�ELOOLRQDLUHV�����DW�ILUVW��WRRN�WKH�SOHGJH��7KH�*HUPDQ�QHZV�PDJD]LQH�'HU�6SLHJHO�ZURWH��³7KH�OLVW�RI�ELOOLRQDLUHV�ZKR�KDYH�SOHGJHG�WR�donate a considerable portion of WKHLU�ZHDOWK�UHDGV�OLNH�D�:KR¶V�:KR�RI�WKH�$PHULFDQ�VXSHUĥULFK��1HZ�<RUN¶V�PD\RU�0LFKDHO�%ORRPEHUJ�LV�RQ�WKH�OLVW��DV�LV�2UDFOHĥFRĥIRXQGHU�/DUU\�(OOLVRQ��WKH�RLO�W\FRRQ�7��%RRQH�3LFNHQV��DQG�PHGLD�PRJXO�7HG�7XUQHU��2WKHUV�LQFOXGH�WKH�ELOOLRQDLUH�UHDO�HVWDWH�GHYHORSHU�(OL�%URDG��WKH�YHQWXUH�FDSLWDOLVW�-RKQ�'RHUU��WKH�PHGLD�RZQHU�*HUU\�Lenfest, and the former CEO of &LVFR��-RKQ�0RUJULGJH�´��

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47

Wellcome Trust

7KH�7UXVW�GDWHV�LWV�IRXQGLQJ�EDFN�WR�������,W�LV�EDVHG�LQ�/RQGRQ�DQG�FRQWUROV�DVVHWV�ZRUWK������ELOOLRQ�SRXQGV��$ERXW�����PLOOLRQ�SRXQGV�DUH�PDGH�DYDLODEOH�IRU�XVH�HYHU\�\HDU��7KH�SULPDU\�IRFXV�RI�WKH�WUXVW�LV�ĪEDVLFī�ELRPHGLFDO�UHVHDUFK��DQG�WKH�7UXVW�LV�WKH�VHFRQGĥODUJHVW�IXQGHU�LQ�WKLV�DUHD�DIWHU�WKH�*DWHV�)RXQGDWLRQ��,W�DOVR�VXSSRUWV�RSHQ�DFFHVV�LQLWLDWLYHV�LQ�WKH�PHGLFDO�ILHOG�DV�ZHOO�DV�PXVHXPV�DQG�H[KLELĥtions on medical science and the history of medicine ĪLQ�WKH�:HOOFRPH�%XLOGLQJ��RSHQHG�LQ�����ī�

Hewlett Foundation

7KH�:LOOLDP�DQG�)ORUD�+HZOHWW�)RXQGDWLRQ�LV�D�SKLODQWKURSLF�RUJDQLVDWLRQ�WKDW�KDV�EHHQ�DFWLYH�LQ�WKH�DUHDV�RI�VRFLDO�SROLF\�DQG�GHYHORSPHQW�SROLF\�VLQFH�WKH�����V��,W�KDV�DQ�HQGRZPHQW�RI�MXVW�RYHU�����ELOOLRQ�GROODUV�DQG�LQYHVWV�����WR�����PLOOLRQ�GROODUV�HYHU\�\HDU�LQ�D�YDULHW\�RI�SURMHFWV��$�SDUWLFXODU�IRFXV�RI�WKH�IRXQGDWLRQ�LV�RQ�HGXFDWLRQDO�SURMHFWV��VXFK�DV�2SHQ�(GXFDWLRQDO�5HVRXUFHV��0,7¶V�2SHQ&RXUVHĥ:DUH�DQG�WKH�2SHQ�<DOH�&RXUVHV�SURJUDPPH��� A VHFRQG�DUHD�RI�NH\�LQWHUHVW�LV�WKH�HQYLURQPHQW��7KH�WKLUG�FOXVWHU�RI�IXQGHG�SURMHFWV�LV�JURXSHG�WRJHWKHU�XQGHU�WKH�*OREDO�'HYHORSPHQW�DQG�3RSXODWLRQ�3URJUDP��ZKLFK�WDFNOHV�HYHU\WKLQJ�IURP�HGXFDWLRQ�LQ�WKH�7KLUG�:RUOG�WR�IDPLO\�SODQQLQJ�VHUYLFHV��7KH�IRXQGDWLRQ¶V�IRXUWK�IRFXV�LV�RQ�WKH�SHUIRUPLQJ�DUWV�LQ�WKH�6DQ�)UDQFLVFR�%D\�DUHD�

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48

Other institutions

The Howard Hughes Medical Institute, which has an endowment of more than 16 billion dollars, was IRXQGHG�LQ������DQG�LV�GHGLFDWHG�to medical research, on which it spends about 825 million dollars DQQXDOO\��7KH�)RUG�)RXQGDWLRQ��IRXQGHG�LQ�������KDV�DQ�HQGRZPHQW�of 11 billion dollars and was for a long time the largest and most LQIOXHQWLDO�IRXQGDWLRQ�LQ�WKH�ZRUOG��,W�VXSSRUWV�LQLWLDWLYHV�WDUJHWHG�DW�UHGXFLQJ�SRYHUW\�DQG�LQHTXDOLW\��VXSSRUWLQJ�GHPRFUDWLF�YDOXHV��GHYHORSLQJ�KXPDQ�NQRZOHGJH�DQG�FUHDWLYLW\��KXPDQ�ULJKWV��IUHHGRP�RI�VSHHFK��XUEDQ�GHYHORSPHQW�DQG�VXVWDLQDELOLW\��7KH�KLVWRU\�RI�charitable donations also offers DPSOH�HYLGHQFH�RI�WKH�EURDG�DLPV�WKH�IRXQGDWLRQ�KDV�VHW�IRU�LWVHOI��The endowment of the -��3DXO�*HWW\�7UXVW��IRXQGHG�LQ�������OLHV�VRPHZKHUH�LQ�WKH�UHDOP�RI���ELOOLRQ�GROODUV��,WV�IRFXV�LV�on art institutions and artistic DFWLYLWLHV�ĪHVSHFLDOO\�WKH�-��3DXO�*HWW\�0XVHXP�LQ�/RV�$QJHOHVī��7KH�0RKDPPHG�ELQ�5DVKLG�$O�0DNWRXP�)RXQGDWLRQ�LQ�'XEDL�

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49

Ī���ELOOLRQ�GROODUV��IRFXV�RQ�HGXFDWLRQī��WKH�5REHUW�:RRG�-RKQVRQ�)RXQGDWLRQ�Ī86����ELOOLRQ�GROODUV��IRFXV�RQ�KHDOWKī�DQG�WKH�/L�.D�6KLQJ�)RXQGDWLRQ�Ī+RQJ�.RQJ������ELOOLRQ�GROODUV��IRFXV�RQ�HGXFDWLRQ�DQG�PHGLFDO�VHUYLFH�SURYLVLRQLQJī��$VKRND��D�QRWĥIRUĥSURILW�RUJDQLVDWLRQ�IRFXVHG�RQ�VXSSRUWLQJ�VRFLDO�HQWUHSUHQHXUVKLS��ZDV�IRXQGHG�LQ�:DVKLQJWRQ�LQ������DQG�LV�QRZ�DFWLYH�LQ�DERXW����FRXQWULHV�DURXQG�WKH�ZRUOG��,W�VXSSRUWV�VRFLDO�HQWUHSUHQHXUV�ZKR�VHHN�FUHDWLYH�VROXWLRQV�WR�VRFLHWDO�SUREOHPV��6RPH�������³IHOORZV´�LQ�PRUH�WKDQ����FRXQWULHV�UHFHLYH�VXSSRUW��7KH�SULPDU\�DUHDV�LQ�ZKLFK�WKH\�DUH�LQYROYHG�DUH�HGXFDWLRQ��FLWL]HQV¶�LQLWLDWLYHV��KHDOWK��KXPDQ�ULJKWV��WKH�HQYLURQPHQW�DQG�HFRQRPLF�GHYHORSPHQW��7KH�EHVWĥNQRZQ�$VKRND�)HOORZ�LV�0XKDPPDG�<XQXV��WKH�IRXQGHU�RI�WKH�PLFURĥFUHGLW�FRQFHSW���

7KHVH�RUJDQLVDWLRQV�KDYH�QR�UHVHPEODQFH�WR�WKH�FKDULW\�GRQDWLRQ�FHQWUHV�RI�GD\V�JRQH�E\��WKH\�PXFK�PRUH�FORVHO\�UHVHPEOH�PRGHUQ�EXVLQHVVHV��3KLODQĥthropy has indeed transformed itself institutionally WR�DQ�DVWRXQGLQJ�GHJUHH�

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50

Philanthropy’s new logic

0DQ\�UHJDUG�SKLODQWKURSLF�DFWLYLW\�DV�D�SHUIHFW�LQVWUXPHQW�IRU�PDNLQJ�WKH�ZRUOG�MXVW�D�OLWWOH�ELW�EHWWHU��%XW�modern philanthropy is no longer geared towards the aggrandisement of a religious institution or an LQGLYLGXDO��(IILFLHQF\�SOD\V�DQ�increasingly important role in its VWUXFWXUH�DQG�DLPV��,W�LV�QRW�HQRXJK�WR�GR�JRRG��WKH�EHVW�SRVVLEOH�RXWFRPH�PXVW�EH�DFKLHYHG�XVLQJ�WKH�DYDLODEOH�UHVRXUFHV�

3KLODQWKURĦPDQDJHPHQW

A new generation of philanthropists understand how to establish RUJDQLVDWLRQV��PDQDJH�ULVNV��DQG�HQFRXUDJH�LQQRYDWLRQ��,W�LV�VRPHWLPHV�EHOLHYHG�WKDW�WKLV�QHZ�approach has superior potential for actually contributing to VROYLQJ�WKH�ZRUOG¶V�PRVW�SUHVVLQJ�SUREOHPV��6RPH�RI�WKH�EHVWĥNQRZQ�SKLODQWKURSLF�LQLWLDWLYHV�EHORQJ�WR�WKLV�JURXS��3LHUUH�2PLG\DU�DQG�-HIIUH\�6NROO�ĪWKH�IRXQGHUV�RI�H%D\ī�donate millions to support socially

We have asked our-selves this question and decided to take the most logical step: Capital Bank LV�WKH�ÀUVW�$XVWULDQ�SULYDWH�EDQN�WR�RɲHU�consulting services VSHFLÀFDOO\�UHODWHG�to philanthropy. Together with the Fundraising Verband Austria, we have created WKH�QRWĦIRUĦSURÀW�private foundation Philanthropie Österreich as an umbrella foundation for our customers.

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51

FRQVFLRXV�EXVLQHVVHV�Ī6NROO�KDV�DOVR�XQGHUZULWWHQ�ILOPV�VXFK�DV�$Q�,QFRQYHQLHQW�7UXWKī��/DUU\�3DJH�DQG�6HUJH\�%ULQ�ĪWKH�IRXQGHUV�RI�*RRJOHī�KDYH�HVWDEOLVKHG�*RRJOH�RUJ��7KH�RUJDQLVDWLRQ�GHVFULEHV�its particular areas of interest as empowering women DQG�JLUOV��SURWHFWLQJ�WKUHDWHQHG�ZLOGOLIH��LPSURYLQJ�computer science education, responding to crises, launching an impact challenge in Brazil as well as ILJKWLQJ�KXPDQ�WUDIILFNLQJ�DQG�FKLOG�DEXVH��� None of these aims are new, and it would certainly be strange if institutions that claim to want to address the most pressing problems facing humanity came up with FRPSOHWHO\�GLIIHUHQW�JRDOV��%XW�³SKLODQWKURĥFRUSRUDĥWLRQV´�LV�D�SKHQRPHQRQ�WKDW�KDV�RQO\�UHDOO\�EHJXQ�WR�HYROYH�RYHU�WKH�SDVW�VHYHUDO�GHFDGHV�

2QH�SUHUHTXLVLWH�IRU�WKLV�GHYHORSPHQW�LV�WKH�HPHUĥJHQFH�RI�D�QHZ�FODVV�RI�WKH�VXSHUĥULFK��7KH�QXPEHU�RI�1*2V�DQG�QRWĥIRUĥSURILW�RUJDQLVDWLRQV�GHGLFDWHG�WR�WKH�DFWLYLWLHV�WKDW�DUH�LQ�GHPDQG�KDV�DOVR�ULVHQ�FRQVLGHUDEO\��DQG�WKH\�KDYH�JDLQHG�D�UHPDUNDEO\�LQIOXHQWLDO�YRLFH�LQ�WKH�SXEOLF�VHFWRU��,Q�PDQ\�FDVHV��WKH�GLIIHUHQFH�EHWZHHQ�IRUĥSURILW�DQG�QRWĥIRUĥSURILW�organisations is as difficult to identify as the distincĥtion between public institutions and those run by the SULYDWH�VHFWRU��7KH�,QWHUQHW�KDV�DOORZHG�HYHQ�VPDOO�RUJDQLVDWLRQV�WR�EHQHILW�IURP�HQWLUHO\�QHZ�PDUNHWLQJ�techniques, from ethical consumerism to crowd VRXUFLQJ��LQ�RUGHU�WR�DFKLHYH�D�JUHDWHU�UHVRQDQFH��6LPLODUO\��WKH�GLIIHUHQFH�EHWZHHQ�FKDULWDEOH�DFWLYLWLHV�DQG�SROLWLFDO�DFWLYLVP�LV�QRW�VR�HDV\�WR�GLVWLQJXLVK�VLQFH�D�QXPEHU�RI�FKDULWDEOH�RUJDQLVDWLRQV�DGYRFDWH�

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52

for the rights of children or animals, for the emancipation of women, RU�IRU�WKH�HQYLURQPHQW��$Q�HQWLUH�DUUD\�RI�DX[LOLDU\�RUJDQLVDWLRQV�KDV�DULVHQ�WR�KDQGOH�WKH�PDUNHWLQJ��HYDOXDWLRQ��DQG�FHUWLILFDWLRQ�RI�SKLODQWKURSLF�LQVWLWXWLRQV��7KH�H[SDQVLRQ�RI�PDUNHWLQJ�DQG�SXEOLF�UHODWLRQV�DFWLYLWLHV�KDV�OHG�WR�D�blurring of lines between charitable DQG�LGHRORJLFDO�ZRUN��� There are smaller donations, as always, but something new has also appeared that goes by a number of different QDPHV�EXW�LV�PRVW�RIWHQ�FDOOHG�ĪDQG�QRW�DOZD\V�LQ�D�ZHOOĥLQWHQWLRQHG�PDQQHUī�SKLODQWKURFDSLWDOLVP�40

Venture Philanthropy

9HQWXUH�3KLODQWKURS\�DLPV�WR�PDNH�VRFLDO�LQYHVWPHQWV�LQ�RUJDQLVDWLRQV�WKDW�ZRUN�IRU�WKH�FRPPRQ�JRRG�and uses methods from the business ZRUOG�WR�GR�VR��,Q�������WKH�+DUYDUG�%XVLQHVV�5HYLHZ�SXEOLVKHG�DQ�DUWLFOH�HQWLWOHG�³9LUWXRXV�&DSLWDO��:KDW�)RXQGDWLRQV�&DQ�/HDUQ�IURP�9HQWXUH�&DSLWDOLVWV´�41 in which the DXWKRUV�FULWLFLVHG�WKH�EHKDYLRXU�RI�PDQ\�SKLODQWKURSLF�RUJDQLVDWLRQV��

If you don’t “have to”, you “can”. You can engage in chari-table works.

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53

7KH�GHVLUHG�GHYHORSPHQW�LQ�WKH�VHFWRU�VHHPHG�WRR�slow in coming and familiar problems continued WR�SODJXH�SURMHFWV��7KHVH�RUJDQLVDWLRQV�QHHGHG�WR�learn how to deploy their limited resources more HIIHFWLYHO\��/DUJH�IRXQGDWLRQV�ZHUH�DGYLVHG�WR�SD\�DWWHQWLRQ�WR�SURMHFW�GHVLJQ�ZKHQ�JLYLQJ�PRQH\�WR�QRQĥSURILW�RUJDQLVDWLRQV��1RQĥSURILWV�WHQG�WR�concentrate most on the design of their programmes when it is most important for them to increase their LQVWLWXWLRQ¶V�RUJDQLVDWLRQDO�FDSDFLW\��)RXQGDWLRQV�ZHUH�WROG�WR�H[DPLQH�KRZ�YHQWXUH�FDSLWDO�ILUPV�GR�EXVLQHVV��WKH\�SURYLGH�FDSLWDO��\HW�WKH\�DOVR�FDUHIXOO\�VXSHUYLVH�WKH�RUJDQLVDWLRQV�LQ�ZKLFK�WKH\�LQYHVW�ZKLOVW�RIIHULQJ�VXSSRUW�WR�PDQDJHPHQW��

,Q�PDQ\�FDVHV��DQ�RUJDQLVDWLRQ¶V�HIIHFWLYHQHVV�FDQ�EH�QRWLFHDEO\�LPSURYHG�ZKHQ�RUJDQLVDWLRQDO�H[SHUWV�DUH�EURXJKW�LQ�DQG�WKH�RUJDQLVDWLRQ¶V�VWUHQJWKV�DUH�GHYHORSHG�RYHU�WKH�ORQJ�WHUP��2Q�WKH�RWKHU�KDQG��LW�VKRXOG�QRW�EH�D�GLVDGYDQWDJH�LI�D�QRQĥSURILW�organisation indicates in its funding applications WKDW�LW�QHHGV�RU�ZDQWV�WR�LPSURYH�LWV�RUJDQLVDWLRQDO�HIIHFWLYHQHVV�

7KH�(XURSHDQ�9HQWXUH�3KLODQWKURS\�$VVRFLDWLRQ�Ī(93$ī�VHHNV�WR�LQFUHDVH�WKH�QXPEHU�RI�GRQRUV�DQG�foundations whilst at the same time creating dependĥDEOH�RUJDQLVDWLRQDO�IUDPHZRUNV��WKHUHE\�LPSURYLQJ�WKH�HIIHFWLYHQHVV�RI�WKH�UHVRXUFHV�EHLQJ�SXW�WR�XVH��7KH�(93$¶V�KRPHSDJH�GHILQHV�WKH�WHUP�IRU�YLVLWRUV��³9HQWXUH�SKLODQWKURS\�ZRUNV�WR�EXLOG�VWURQJHU�VRFLDO�SXUSRVH�RUJDQLVDWLRQV�E\�SURYLGLQJ�WKHP�ZLWK�ERWK�

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54

ILQDQFLDO�DQG�QRQĥILQDQFLDO�VXSSRUW�in order to increase their societal LPSDFW��(93$�SXUSRVHO\�XVHV�WKH�word societal because the impact PD\�EH�VRFLDO��HQYLURQPHQWDO��PHGLFDO�RU�FXOWXUDO��7KH�9HQWXUH�Philanthropy approach includes ERWK�WKH�XVH�RI�VRFLDO�LQYHVWPHQW�DQG�JUDQWV��$V�93�VSUHDGV�JOREDOO\�specific practices may be adapted to local conditions, yet it maintains D�VHW�RI�ZLGHO\�DFFHSWHG�NH\�FKDUDFWHULVWLFV���7KHVH�DUH��KLJK�engagement, tailored financing, PXOWLĥ\HDU�VXSSRUW��QRQĥILQDQFLDO�VXSSRUW��LQYROYHPHQW�RI�QHWZRUNV��RUJDQLVDWLRQDO�FDSDFLW\ĥEXLOGLQJ�DQG�SHUIRUPDQFH�PHDVXUHPHQW��42 High engagement means that, in addition to financial capital, social DQG�LQWHOOHFWXDO�FDSLWDO�DUH�SURYLGHG��7DLORUĥPDGH�ILQDQFLQJ�LQFOXGHV�D�YDULHW\�RI�UHVRXUFH�VWUHDPV��IURP�GRQDWLRQV�WR�ORDQV�WR�HTXLW\�FDSLWDO��6XSSRUW�RYHU�WKH�FRXUVH�RI�VHYHUDO�years ensures sustainable success, SURYLGLQJ�IHZHU�RUJDQLVDWLRQV�ZLWK�IXQGLQJ�IRU�D�ORQJHU�SHULRG�RI�WLPH��

1RQĥILQDQFLDO�VXSSRUW�LV�SURYLGHG�in the form of collaboration and DGYLVLQJ�DV�ZHOO�DV�WKH�SURYLVLRQ�

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RI�QHWZRUNV�DQG�DFFHVV�WR�LQYHVWRUV��GRQRUV�DQG�H[SHUWV��7KH�H[SDQVLRQ�RI�RUJDQLVDWLRQDO�FDSDFLW\�places the focus on efficient and sustainable organĥLVDWLRQDO�VWUXFWXUHV��)LQDOO\��SHUIRUPDQFH�PHDVXUHV�UHTXLUH�WUDQVSDUHQW��HYLGHQFHĥEDVHG�UHVXOWV��LQFOXGLQJ�WKH�XVH�RI�EXVLQHVV�SODQV�DQG�PLOHVWRQHV��93�RUJDQĥLVDWLRQV�FDQ�EH�IXOO\�ILQDQFHG�RU�SDUWLDOO\�ILQDQFHG��WKHUH�DUH�DOVR�WKRVH�WKDW�VHUYH�DV�DFTXLVLWLRQ�DJHQWV�IRU�JRRGV�RU�DV�VHUYLFH�SURYLGHUV�DQG�LQWHUPHGLDULHV��7KHUH�DUH�D�IHZ�YLWDO�DVSHFWV�LQ�WKLV�UHVSHFW��5LVN�management is an important component of normal EXVLQHVV�DFWLYLWLHV��DQG�YHQWXUH�FDSLWDOLVWV�NQRZ�WKDW�RQO\�WZR�RXW�RI�WHQ�LQYHVWPHQWV�HDUQ�D�JRRG�UHWXUQ��2WKHUV�ZLOO�VXFFHHG��EXW�QRW�HDUQ�D�YHU\�ODUJH�SURILW��$QG�VRPH�ZLOO�IDLO��&KDULWDEOH�IRXQGDWLRQV�GR�QRW�spend much time worrying about whether their SURMHFWV�ZLOO�JHQHUDWH�³SURILWV´��ZKHUH�SURILWV�DUH�XQGHUVWRRG�WR�EH�QRQĥPRQHWDU\��%XW�HYHQ�DOWUXLVWLF�SURMHFWV�KDYH�VSHFLILF�JRDOV��DQG�LW�LV�HQWLUHO\�UHDVRQĥDEOH�WR�DVN�WR�ZKDW�H[WHQW�WKHVH�JRDOV�KDYH�EHHQ�PHW�and whether the funding was applied in places where LW�FRXOG�DFKLHYH�WKH�PRVW�

Catalytic philanthropy

7KHUH�DUH�D�QXPEHU�RI�LQLWLDWLYHV�LQ�WKH�VDPH�YHLQ�that are referred to by such names as “strategic SKLODQWKURS\´��³FROOHFWLYH�LPSDFW�SKLODQWKURS\´�DQG�³FDWDO\WLF�SKLODQWKURS\´��7KH\�HPSKDVLVH�HIIHFWLYHĥQHVV�DQG�DFKLHYLQJ�REMHFWLYHV�DQG�EHOLHYH�WKHUH�LV�more to doing a good deed than donating money

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56

for some important charitable SXUSRVH��7KH�UHDO�JRDO�LV�WR�PDNH�D�GLIIHUHQFH��

2QH�YDULHW\�RI�WKLV�DSSURDFK��LQ�ZKLFK�WKH�GRQRU�PRUH�DFWLYHO\�PRQĥLWRUV�WKH�SURMHFW��WKHUHE\�DGGUHVVLQJ�WKH�WZRĥOHYHOV�SUREOHP�GLVFXVVHG�DERYH��LV�FDWDO\WLF�SKLODQWKURS\��� This entails cases in which the GRQRUV�WKHPVHOYHV�EHFRPH�LQYROYHG�SHUVRQDOO\�LQ�WKH�SURMHFW�44 This concept stems from the recognition WKDW�WKH�FRQYHQWLRQDO�V\VWHP�XVHG�E\�IRXQGDWLRQV�WKDW�JLYH�PRQH\�WR�D�large number of different organisaĥWLRQV�PDNHV�LW�GLIILFXOW�WR�HQJDJH�LQ�D�VLQJOH��FRQVLVWHQW�³FDPSDLJQ´�WKDW�FDQ�HIIHFWLYHO\�'RQRUV�KDYH�WKHLU�RZQ�DJHQGDV��DQG�LQGLYLGXDO�1*2V�DQG�QRQĥSURILW�RUJDQLVDWLRQV�KDYH�programmes, targeted outcomes DQG�KRUL]RQV��DV�ZHOO�DV�IUDPHZRUNV�LQ�ZKLFK�WKH\�DUH�XVHG�WR�RSHUDWLQJ��

7KH�SRLQW�RI�FRPSDULQJ�YDULRXV�logics behind types of philanthropic programmes is not to find the perfect model that can then be DSSOLHG�WR�HDFK�DQG�HYHU\�FDVH�DV�D�PDWWHU�RI�URXWLQH��7KHUH�WHQGV�WR�EH�VRPH�H[DJJHUDWLRQ��WRR��LQ�

As a reputable pri-vate bank, we draw our customers’ at-tention to the topic of philanthropy and provide an array of services to support their investment in charitable organi-sations.

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57

publications describing new aspects of organisational IRUPV�ĪLQFOXGLQJ�SURSDJDWLQJ�QHZ�WHUPLQRORJ\�DQG�ODEHOVī��,Q�PRVW�FDVHV��ZKDW�LV�QHHGHG�LV�DQ�DSSURDFK�WR�GHVLJQ�WKDW�LV�WDUJHWHG�WRZDUGV�D�VSHFLILF�VLWXDWLRQ��7KH�LGHD�RI�D�³FDPSDLJQ´�LV��IRU�H[DPSOH��QRW�YHU\�UHOHYDQW�RU�DSSOLFDEOH�LQ�VXSSRUWLQJ�DUWLVWLF�SURMHFWV�RU�VFLHQWLILF�UHVHDUFK��

Social Return on Investment

652,�LV�PDUNHWHG�DV�D�QHZ�GLVFRYHU\��EXW�LW�KDV�DOZD\V�EHHQ�WKHUH�WR�VHH��,W�LV�VLPSO\�FRPPRQ�VHQVH�WKDW�D�JRRG�GHHG�GRHV�QRW�HQG�ZLWK�JLYLQJ�D�SDUWLFXODU�SURMHFW�IXQGLQJ��:H�PXVW�PDNH�FHUWDLQ�WKDW�IXQGLQJ�GHSHQGV�RQ�HYLGHQFH�WKDW�WKH�SURSRVHG�SURJUDPPH�LV�VHQVLEOH��GRDEOH�DQG�HIILFLHQW��)XUĥthermore, this must be demonstrable by means of an REMHFWLYH�HYDOXDWLRQ�45

7KHUH�LV�RQH�VLPSOH�FULWHULRQ�IRU�MXGJLQJ�WKH�VXFFHVV�RI�PDUNHWĥEDVHG�DFWLYLWLHV��WKH�ILQDQFLDO�SURILW�UHDOLVHG�DW�WKH�HQG�RI�D�SURMHFW��$�ILQDO�HYDOXDWLRQ�LV�H[WUHPHO\�GLIILFXOW�ZKHQ�LW�FRPHV�WR�FKDULWDEOH�DFWLYLWLHV�VLQFH�PDQ\�SURMHFW�JRDOV�FDQQRW�EH�RSHUDWLRQDOLVHG��%XW�WKH�RXWFRPH�PXVW�EH�HYDOXDWHG�QRQHWKHOHVV��LI�RQO\�E\�WKH�DPRXQW�RI�KHOS�SURYLGHG��7KLV�RXWFRPH�FDQ�RI�FRXUVH�RQO\�EH�measured against the goals set by the organisation RU�WKH�SURMHFW��DQG�LQGLFDWRUV�PD\�LQFOXGH�HFRQRPLF��HQYLURQPHQWDO��VRFLDO�DQG�VFLHQWLILF�RQHV��+RZHYHU��SURJUDPPHV�RSHUDWHG�DFFRUGLQJ�WR�WKH�652,�FRQĥ

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58

FHSW�XQGHUWDNH�FDOFXODWLRQV�WKDW�DUH�RYHUZKHOPLQJO\�ILQDQFLDOĥEDVHG��

7KHUH�LV�DQ�REYLRXV�FULWLFLVP��WKHUH�is a certain element of arbitrariness LQ�DQ\�DWWHPSW�WR�WUDQVIRUP�QRQĥfinancial factors into financial ones, DQG�WKHUH�LV�D�GDQJHU�RI�GLVWRUWLRQ��The problem is that this creates a IDOVH�LOOXVLRQ�RI�PHDVXUDELOLW\��2QH�KDQGERRN�IRU�PRGHUQ�SKLODQWKURS\�has pointed out that critics argue ³WKDW�DQ�REMHFWLYH�PHDVXUH�RI�HIIHFWLYHQHVV�LQ�D�VHFWRU�WKDW�LV�FKDUDFWHULVHG�E\�VXEMHFWLYH�MXGJHĥments simply cannot be realised, DQG�WKH�DVVHVVPHQW�RI�FDXVHĥHIIHFW�relationships is furthermore rendered impossible by the sheer QXPEHU�RI�GLIIHUHQW�SURMHFWV�DQG�SURJUDPPHV��&ULWLFV�DGGLWLRQDOO\�find fault with the focus on quantiĥfiable and demonstrable successes EHFDXVH�ULVN\�RU�LQQRYDWLYH�SURMHFWV�with uncertain prospects will be GLVDGYDQWDJHG�EHIRUH�WKH\�HYHQ�KDYH�D�FKDQFH��7KH\�DOVR�UHJUHW�WKH�ORVV�RI�WKH�FKDULW\�VHFWRU¶V�SDUWLFXODU�character to some degree as a result RI�D�VWURQJHU�PDUNHWĥEDVHG�RULHQWDĥWLRQ��7KH�UHVXOW�LV�WKDW�WKH�FKDULW\�sector increasingly focuses on

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59

SURMHFWV�WKDW�SURGXFH�SRVLWLYH�HIIHFWV�WKDW�DUH�HDV\�WR�PHDVXUH�DQG�SURYH��LQVWHDG�RI�IXQGLQJ�SURMHFWV�WKDW�WDUJHW�WKH�SHULSKHU\�´46

Online fundraising

7KLV�LV�DOVR�D�QHZ�GHYHORSPHQW��PDGH�SRVVLEOH�E\�WHFKQRORJLFDO�GHYHORSPHQWV�RYHU�WKH�UHFHQW�\HDUV��%HWWHUSODFH�RUJ��IRU�H[DPSOH��LV�RQH�RSHQ�IXQGUDLVLQJ�ZHEVLWH��2UJDQLVDWLRQV�DQG�LQGLYLGXDO�SURMHFWV�FDQ�use the site to solicit donations of money or of VRPHRQH¶V�WLPH��³2XU�VLWH�EULQJV�WRJHWKHU�SHRSOH�ZKR�ZDQW�WR�KHOS�ZLWK�SHRSOH�ZKR�QHHG�KHOS�´47 The RSHUDWLRQ��ZKLFK�LV�LQFRUSRUDWHG�DV�D�QRQĥSURILW�company, does not solicit donations for organisaĥWLRQV¶�JHQHUDO�RSHUDWLRQV�RU�PLVVLRQV��EXW�IRU�VSHFLILF�SURMHFWV�RQO\��/DUJHU�RUJDQLVDWLRQV��VXFK�DV�81,&()��WKH�*HUPDQ�5HG�&URVV�DQG�WKH�*HUPDQ�.LQGHUĥKLOIVZHUN��DOVR�XVH�WKH�VLWH��(YHU\WKLQJ�LV�PRQLWRUHG�LQ�D�ZD\�WKDW�KDV�EHFRPH�W\SLFDO�IRU�RQOLQH�VHUYLFHV��WKURXJK�FRPPHQWV�SURYLGHG�E\�LQGLYLGXDOV�ZKR�NQRZ�WKH�SURMHFW¶V�VSRQVRU�RU�KDYH�YLVLWHG�WKH�SURMĥect itself and who discuss proposals and rate them, ZLWK�DOO�RI�WKH�DGYDQWDJHV�DQG�GLVDGYDQWDJHV�WKDW�D�V\VWHP�OLNH�WKLV�EULQJV�48

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60

Criticism of philanthrocapitalism

&LWLQJ�WKH�ZHOOĥNQRZQ�$PHULFDQ�MXGJH�5LFKDUG�3RVQHU��5REHUW�5HLFK�has said that a charity organisation is an institution that is completely XQDFFRXQWDEOH��,W�LV�VXEMHFW�WR�QR�competition and responsible to QR�RQH��PXFK�OLNH�DQ�DEVROXWLVW�PRQDUFK��,W�LV�DFWXDOO\�VRPHWKLQJ�RI�D�VFDQGDO��

Criticism 1: Authority to dispose of assets

5HLFK¶V�UHDVRQV�IRU�KLV�KDUVK�MXGJHĥPHQW�ZHUH�OHVV�WKDQ�FRQYLQFLQJ��+H�complained that foundations are not forced to organise democratic elections, and they do not submit WKHPVHOYHV�WR�HFRQRPLF�FRPSHWLĥWLRQ��³$�GHPRFUDWLF�VRFLHW\�LV�FRPĥmitted to the equality of citizens, EXW�IRXQGDWLRQV�DUH�WKH�YRLFH�RI�WKH�SOXWRFUDF\�´49 This is correct, HVSHFLDOO\�LQ�WKH�86��ZKLFK�KDV�RQH�RI�WKH�KLJKHVW�OHYHOV�RI�LQFRPH�DQG�ZHDOWK�GLVSDULW\�DPRQJVW�GHYHORSHG�FRXQWULHV��5HLFK¶V�FULWLFLVP�WDNHV�aim at the fact that essential public

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61

VHUYLFHV�DQG�GXWLHV�DUH�VXERUGLQDWHG�WR�WKH�ULJKW�ĪDQG�LQ�PDQ\�ZD\V��WKH�LGLRV\QFUDWLF�GHFLVLRQV�WDNHQ�WKHUHLQī�RI�WKH�ZHDOWKLHVW�PHPEHUV�RI�VRFLHW\�WR�GLVSRVH�RI�WKH�DVVHWV�WKH\�KROG�

But at the same time, this type of criticism misses WKH�WDUJHW��,W�PD\�EH�WKH�FDVH�WKDW�D�PRUH�GHPRFUDWLF�and egalitarian society is desirable, but things are the ZD\�WKH\�DUH��:KHQ�LW�FRPHV�WR�WKH�H[LVWLQJ�VWDWH�RI�DIIDLUV��WKH�GHFLVLRQ�LV�VLPSO\�ZKHWKHU�WKH�³ULFK´�ZLOO�VSHQG�WKHLU�PRQH\�RQ�D�IHZ�PRUH�YLOODV�RU�SULYDWH�MHWV��XVH�LW�WR�H[SDQG�WKHLU�ILQDQFLDO�LQYHVWPHQWV��RU�GRQDWH�D�SRUWLRQ�RI�WKHLU�H[FHVV�ZHDOWK�WR�FKDULWLHV�DQG�IRXQGDWLRQV�50 Only the latter option is comĥPRQO\�FRQVLGHUHG�³DFFHSWDEOH´��

7KHUH�DUH��KRZHYHU��WZR�OHJLWLPDWH�REMHFWLRQV��The first is that there are foundations that support DGYRFDF\�JURXSV�RI�YDULRXV�W\SHV�DQG�DUH�WKHUHIRUH�FRQVLGHUHG�DV�HQJDJHG�LQ�SROLWLFV�51 The second is that the resources being donated are not only UHVRXUFHV�EHORQJLQJ�WR�WKH�GRQRUV�WKHPVHOYHV��+DG�WKH�GRQRUV�QRW�JLYHQ�WKH�IXQGV�WR�WKHVH�FKDULWDEOH�institutions, then about half of this money would KDYH�JRQH�WR�WKH�VWDWH�LQ�WKH�IRUP�RI�WD[HV�52 In other ZRUGV��KDOI�RI�LW�LV�³SXEOLF�IXQGV´��EXW�WKH�GHFLVLRQ�about how to dispose of these funds has been priĥYDWLVHG����,Q�WKLV�ZD\��SRWHQWLDO�WD[�UHYHQXH�KDV�EHHQ�DEDQGRQHG�WR�SULYDWH�SDWURQV��7KH�EHQHIDFWRUV�HQMR\�SXEOLF�UHFRJQLWLRQ�IRU�KDYLQJ�³GRQDWHG´�WKH�HQWLUH�VXP��ZKHQ�LQ�UHDOLW\�WKH\�RQO\�FRQWULEXWHG�KDOI�

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62

7KHUH�DUH�KRZHYHU�WKUHH�DUJXPHQWV�LQ�GHIHQFH�RI�FKDULWDEOH�LQVWLWXWLRQV��

Firstly, there are forms of accountĥability other than democratic HOHFWLRQV��2QH�PLJKW�DVN�KRZ�HIIHFWLYH�HOHFWLRQV�DFWXDOO\�DUH�LQ�KROGLQJ�SHRSOH�DFFRXQWDEOH��,W�is also unclear why all problems VKRXOG�EH�VROYDEOH�YLD�VRPH�W\SH�RI�ĪEURDGO\�GHILQHGī�³GHPRFUDWLVDWLRQ´�LQ�VSLWH�RI�SUDFWLFDO�H[SHULHQFH�WKDW�GHPRQVWUDWHV�RWKHUZLVH��7KH�RWKHU�forms of ensuring accountability DUH�UHSXWDWLRQ�DQG�VFDQGDO��:KHQ�it comes to philanthropic organisaĥWLRQV��WKHUH�DUH�QRW�RQO\�³LQWHUQDO´�PHDVXUHV�ĪYLD�GRQRUV��DGYLVRU\�ERDUGV��EDQNV��ILVFDO�DXWKRULWLHVī�IRU�PRQLWRULQJ�ĪZKLFK�IRU�WKHLU�part must attend to legality and UHSXWDWLRQī��2QH�VKRXOG�QRW�IRUJHW�WKH�³H[WHUQDO´�PHDQV�RI�PRQLWRULQJ�DV�ZHOO��

ĪDī�,QVRIDU�DV�IRXQGDWLRQV�FRQWULEXWH�WR�D�GRQRU¶V�UHSXWDWLRQ��WKH�SXEOLF¶V�MXGJHPHQW�RI�WKH�DSSURSULDWHQHVV�RI�WKH�IRXQGDWLRQ¶V�DLPV�DQG�H[SHQĥGLWXUHV�LV�HVSHFLDOO\�UHOHYDQW��0DQ\�of these institutions therefore place JUHDW�HPSKDVLV�RQ�WUDQVSDUHQF\��,I�

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63

WKH�SXEOLF�EHOLHYHV�WKDW�ZKDW�LV�EHLQJ�GRQH�ZLWK�WKH�funding is nonsense, the reputation of the institution ĪDQG�WKH�GRQRUī�ZLOO�EH�GDPDJHG��

ĪEī�$V�ORQJ�DV�WKHUH�DUH�LQYHVWLJDWLYH�PHGLD��WKHVH�ZLOO�NHHS�DQ�H\H�RQ�LQVWLWXWLRQV¶�EHKDYLRXU��1RWKLQJ�can stop the media from reporting a scandal if bad EHKDYLRXU�FRPHV�WR�OLJKW��

ĪFī�$SSURSULDWH�RUJDQLVDWLRQV�DUH�LQFUHDVLQJO\�LQYROYHG�LQ�DZDUGLQJ�FHUWLILFDWHV�DQG�VHDOV�RI�DSSURYDO��DQG�LQ�SHUIRUPLQJ�HYDOXDWLRQV��0RUH�RQ�WKLV�LQ�WKH�QH[W�VHFWLRQ�

Secondly, the freedom of charitable foundations to GLVSRVH�RI�IXQGLQJ�LV�DQ�DGYDQWDJH�ZKHQ�ORRNHG�DW�IURP�WKH�SHUVSHFWLYH�RI�WKH�FRQIRUPLVP�WKDW�VHHPV�to be a natural result of both politics and competiĥWLRQ��DV�PHQWLRQHG�DERYH��)RXQGDWLRQV�FDQ�XVH�WKH�IDFW�WKDW�WKH\�KDYH�D�FHUWDLQ�DPRXQW�RI�IUHHGRP��especially in relation to their need to legitimate WKHPVHOYHV��LQ�RUGHU�WR�GLVWDQFH�WKHPVHOYHV�IURP�WKH�³PDLQVWUHDP´��7KH\�FDQ�RFFXS\�³QLFKHV´�RU�DWWHPSW�³H[SHULPHQWV´�WKDW�ZRXOG�RWKHUZLVH�EH�LPSRVVLEOH�due to concerns about political legitimation and HFRQRPLF�SURILWDELOLW\��7KDW�LV�WR�VD\��WKH\�FDQ�EHFRPH�SODFHV�IRU�LQQRYDWLRQ�WKDW�VWHPV�IURP�WKH�QHZ�VWUDWHJLHV�DQG�LGHDV�WKDW�WKH\�KDYH�UHVHDUFKHG�DQG�SXW�LQWR�SUDFWLFH��ZKLFK�ZRXOG�QRW�KDYH�EHHQ�the case had they not possessed the freedom to GLVSRVH�RI�WKHLU�IXQGV�DV�WKH\�VHH�ILW�54

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64

7KLUGO\��IRXQGDWLRQV�KDYH�WKH�DGYDQWDJH�RI�EHLQJ�DEOH�WR�SODQ�RYHU�D�ORQJHU�WHUP�WKDQ�LV�SRVVLEOH�IRU�PDQ\�SROLWLFDO�RU�PDUNHWĥEDVHG�RUJDQLVDWLRQV��)URP�WKLV�SHUVSHFĥWLYH��D�ORZHU�OHYHO�RI�DFFRXQWDELOLW\�ĪWR�YRWHUV�RU�WR�VKDUHKROGHUVī�FDQ�DOVR�KDYH�SRVLWLYH�HIIHFWV��3ROLWLFV�DQG�WKH�PDUNHW�KDUGO\�HYHU�UHZDUG�ULVN\��ORQJĥWHUP�H[SHULPHQWV��WKH\�DUH�WRR�EHKROGHQ�WR�OHJLVODWLYH�VHVVLRQV�DQG�DQQXDO�UHSRUWV��)RXQĥGDWLRQV�FDQ�HPEDUN�RQ�DFWLYLWLHV�equipped with a source of funding WKDW�ĪDV�LV�WKH�FDVH�OHJDOO\�IRU�FKDULWDEOH�IRXQGDWLRQVī�LV�GHVLJQHG�WR�ODVW�³IRUHYHU´��

Criticism 2: Unproven effectiveness

Many regard a focus on effecĥWLYHQHVV�ZLWK�VXVSLFLRQ�EHFDXVH�they do not want to see charity FRQWDPLQDWHG�E\�WKH�³FROGQHVV´�of calculations about means DQG�HQGV��%XW�LQHIILFLHQF\�LV�QR�JXDUDQWHH�RI�KXPDQ�NLQGQHVV��,Q�addition to this emotionally based FULWLFLVP��KRZHYHU��LQGLFDWRUV�RI�VXFFHVV�FRPH�XQGHU�ILUH��,W�LV�not always certain whether the

3HRSOH�FDQ�LQÁXHQFH�areas where they have a particular interest or goals in mind, where their families have long been active or where the social welfare state is not meeting its obligations. You decide yourself how and where you want to help. There have been rules regarding charitable donations since society’s earli-est days. Today the tithe takes the form of a donation. Or it ÀQGV�D�GLɲHUHQW�ZD\�WKDW�ÀWV�EHWWHU�

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most appropriate indices are being used or whether FRQYHQWLRQDO��EXVLQHVVĥRULHQWHG�LQGLFDWRUV�DUH�HYHQ�DSSURSULDWH�IRU�WKH�W\SHV�RI�SUREOHPV�WKDW�SKLODQWKURSLF�RUJDQLVDWLRQV�DUH�VXSSRVHG�WR�DGGUHVV��,Q�DGGLWLRQ��WKH�SRVLWLYH�DVSHFWV�RI�WKHVH�DSSURDFKHV�DUH�H[DJJHUDWHG��7KHUH�LV�OLWWOH�HYLGHQFH�DQG�OLWWOH�DQDO\VLV�WKDW�VXSSRUWV�WKH�H[WHQVLYH�SRVLWLYH�FODLPV�WKDW�DUH�PDGH�ZLWK�UHJDUG�WR�WKHVH�PHWKRGV��7KHUH�DUH��KRZHYHU��VHYHUDO�LQGLFDWRUV�WKDW�VXJJHVW�WKH�RSSRVLWH��

7KH�PDQDJHPHQW�SHUVSHFWLYH�FDQ�WHQG�WR�GLVWRUW�the particular character of these specific areas of DFWLYLW\��ZLWK�WKHLU�FRPSOH[�FRPELQDWLRQ�RI�SROLWLFV��SRZHU�DQG�FXOWXUDO�DQG�VRFLDO�UHODWLRQV��7KLQJV�KDSSHQ�GLIIHUHQWO\�LQ�WKLV�OLQH�RI�ZRUN�IURP�ZKDW�SHRSOH�DUH�XVHG�WR�LQ�PRUH�PDUNHWĥEDVHG�EXVLQHVVHV��7KRVH�SKLODQWKURSLVWV�ZKR�KDYH�VRXJKW�WR�UHRUJDQLVH�DQ�DLG�RUJDQLVDWLRQ�DQG�WKH�SURMHFWV�LW�HQJDJHV�LQ�DFFRUGLQJ�WR�EXVLQHVV�ORJLF�GR�DSSHDU�WR�KDYH�EHHQ�ULJKWO\�DFFXVHG�RI�NQRZLQJ�WRR�OLWWOH�DERXW�TXHVWLRQV�RI�GHYHORSPHQW��DERXW�FRQFHSWV�RI�VRFLDO�MXVWLFH�DQG�DERXW�SURFHVVHV�UHODWHG�WR�GLVFULPLQDWLRQ��2UJDQLĥVDWLRQV�WKDW�DUH�³UHDOO\´�FRQFHUQHG�ZLWK�FLYLO�VRFLHW\�are better placed to mobilise people, negotiate SROLWLFDO�VROXWLRQV�DQG�SURYLGH�HPSRZHUPHQW�WR�DIIHFWHG�SRSXODWLRQV��

This critical stance was put forward in an article HQWLWOHG�³-XVW�$QRWKHU�(PSHURU"´�55�³,Q�PDUNHWV´��Edwards writes, “we are customers, clients or conĥVXPHUV��ZKHUHDV�LQ�FLYLO�VRFLHW\�ZH�DUH�FLWL]HQV��DQG�

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HDFK�KDV�YHU\�GLIIHUHQW�LPSOLFDWLRQV��0DUNHWV�SURFHVV�DQG�GHOLYHU��ZKLOH�FLWL]HQV�JURXSV�HQJDJH�LQ�FRĥFUHĥation, shared responsibilities and mobilizing people around a comĥPRQ�FDXVH�´56 The idealistic descripĥWLRQ�RI�³FLWL]HQV´�ZKR�WDNH�WKHLU�responsibilities seriously is nothing less than an idealistic description of SKLODQWKURSLF�RUJDQLVDWLRQV�

In spite of or because of all of these criticisms, an orientation towards efficiency and monitoring/transĥparency is considered necessary DPRQJVW�FKDULWDEOH�RUJDQLVDWLRQV��Firstly, one can find little fault with WKH�REMHFWLYH�RI�SXWWLQJ�UHVRXUFHV�WR�ZRUN�ZKHUH�WKH\�DUH�PRVW�QHHGHG�RU�ZLOO�DFFRPSOLVK�WKH�PRVW��0DQ\�large programmes began with great hopes and promises, only to end with limited results and uncertain SURVSHFWV��6RPHWLPHV�IDLOXUH�LV�D�UHVXOW�RI�H[WHUQDO�IDFWRUV��EXW�sometimes it is a matter of an LQVWLWXWLRQ¶V�OLPLWHG�FDSDFLWLHV�when it comes to planning and PDQDJHPHQW�

Secondly, monitoring and transparĥHQF\�DUH�LQGLVSHQVDEOH�57 This is not

Prominent sup-porters of this idea include Bill und Melinda Gates, who have said the following about their own activities: “We have the chance to improve people‘s lives. There is no better task than philanthropy.”

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67

D�PDWWHU�RI�LQYHVWLQJ�PRQH\�LQ�XQGHUWDNLQJV�WKDW�spend a large share of their resources on running WKHLU�RZQ�RUJDQLVDWLRQ��7KH�FKDULWLHV�PDUNHW�LV�D�PDUNHW�RI�HPRWLRQV��DQG�WKLV�PHDQV�WKDW�WKHUH�is plenty of potential for all sorts of fraudulent EHKDYLRXU��,W�LV�FHUWDLQO\�UHFNOHVV�WR�SXW�GRQDWHG�PRQH\�WRZDUGV�DFWLYLWLHV�WKDW�DUH�HVVHQWLDOO\�QRWKLQJ�PRUH�WKDQ�SUHWW\�GHFRUDWLRQ�

Criticism 3: The aid industry

7KH�WHUP�³UHOLQGXVWU\´�LV�DQRWKHU�PDQLIHVWDWLRQ�RI�WKH�SXEOLF¶V�FULWLFDO�DWWLWXGH�WRZDUGV�EHLQJ�RYHUO\�burdened by demands made on their sense of good ZLOO�E\�FKDULW\�SURJUDPPHV�DQG�WKH�ULVH�RI�FRPSDQ\ĥOLNH�FKDULWLHV��LQFOXGLQJ�LQIODWHG�EXUHDXFUDFLHV��58 The term plays on the fact that a large number of WKHVH�RUJDQLVDWLRQV�LQ�WKH�86�DUH�UXQ�E\�UHOLJLRXV�JURXSV�RU�DUH�JURXQGHG�LQ�UHOLJLRXV�DUJXPHQWV��Ī,W�LV�important to remember that the religious sphere in $PHULFD�LV�TXLWH�IUDFWXUHG��JDWKHULQJ�WRJHWKHU�DQ\�number of paying members allows you to establish D�³FKXUFK´�ī�,W�LV�QRW�DOZD\V�FOHDU�ZKDW�VRPH�VPDOOHU�foundations or fundraising campaigns are actually FROOHFWLQJ�GRQDWLRQV�IRU�59

$ERYH�DQG�EH\RQG�WKDW��WKH�FULWLFLVP�LV�WKDW�WKH�IRXQGDWLRQV�FUHDWHG�E\�WKH�PHJDĥULFK�KDYH�ZRUNHG�to create an aid industry that is incompatible with WKH�GHPRFUDWLF�YDOXHV�DFFRUGLQJ�WR�ZKLFK�ZH�DUH�VXSSRVHG�WR�EH�OLYLQJ��7KH�QHZ�FDSLWDO�DYDLODEOH�DV�

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a result of these surplus resources HQGV�XS�MXVWLI\LQJ�WKH�FRQWLQXHG�retreat of the state, which finds that it no longer needs to pay for the YDULHW\�RI�DVVLVWDQFH�SURJUDPPHV�LW�XVHG�WR�IXQG��

These arguments play a significant role in societies that are highly politically charged and in which funding for the welfare state has GULHG�XS��DV�ZH�KDYH�VHHQ�LQ�WKH�SDVW�VHYHUDO�\HDUV�LQ�WKH�86�DQG�LQ�WKH�GLVSXWHV�EHWZHHQ�2FFXS\�:DOO�6WUHHW�DQG�WKH�7HD�3DUW\��7KLV�LV�not the case in European countries, WKRXJK��,Q�(XURSH��SKLODQWKURSLF�organisations are smaller and the state is bigger, and most countries are still a long way from any sort of radical dismantling of the social ZHOIDUH�VWDWH�PRGHO��

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69

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Working on problem areas: effective altruism

Though meant as a reproach, it is not entirely incorrect to UHJDUG�SKLODQWKURSLF�LQLWLDWLYHV�DV�³RGGLWLHV´�LQ�D�PDUNHW�HFRQRP\��7KLV�GRHV�QRW��KRZHYHU��PDNH�WKHP�DQ\�OHVV�YDOXDEOH��$W�WKH�VDPH�WLPH��VHYHUDO�SUREOHP�DUHDV�KDYH�EHHQ�PHQWLRQHG�DOUHDG\�WKDW�GHVHUYH�VRPH�DGGLWLRQDO�FRPPHQW�

3UREOHP����,QVWLWXWLRQDO�VHOIĦUHIOHFWLRQ

Large, professional foundations KDYH�LPSOHPHQWHG�JXLGHOLQHV��strategic regulations and reporting requirements that hold their DFWLYLWLHV�DFFRXQWDEOH�WR�REMHFWLYH�conditions whilst also responding WR�SROLWLFDO�QHFHVVLWLHV��7KXV�WKH�following papers can be found, for H[DPSOH��RQ�WKH�ZHEVLWH�RI�WKH�+HZOHWW�)RXQGDWLRQ��&RQIOLFW�RI�Interest Policy, Equal Employment Opportunity Policy, Policy Against 6H[XDO�DQG�2WKHU�)RUPV�RI�+DUDVVPHQW��5HSRUWLQJ�RI�)LQDQFLDO�,PSURSULHWLHV�Ī:KLVWOHEORZHU�

And as a subsidiary of a company that has been indepen-dently active on the market for nearly 185 years and that is founded on a core mission with social responsibility at its heart, we are the ÀUVW�SRLQW�RI�FRQWDFW�for people wishing to engage in philan-thropy.

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3ROLF\ī��6RFLDO�,QYHVWPHQW�3ROLF\��:HEVLWH�3ULYDF\�3ROLF\��*XLGHOLQHV�IRU�6WDII�6HUYLFH�RQ�*UDQWHH�%RDUGV��*UDQWHH�5HIHUHQFHV�WR�WKH�)RXQGDWLRQ��&RQVXOWDQW�DQG�9HQGRU�5HIHUHQFHV�WR�WKH�)RXQĥGDWLRQ��DQG�([WHUQDO�8VH�RI�)RXQGDWLRQ�)DFLOLWLHV�3ROLF\�60 �7KHVH�SROLFLHV�QHHG�QRW�EH�H[DPLQHG�KHUH�LQ�DQ\�GHWDLO��ZH�PHQWLRQ�WKHP�RQO\�WR�GHPRQVWUDWH�how philanthropic organisations must be conscious RI�WKH�IDFW�WKDW�WKH\�DUH�MXGJHG�DFFRUGLQJ�WR�D�YDULHW\�RI�FULWHULD��LQFOXGLQJ�³SROLWLFDO�FRUUHFWQHVV´��$OO�RI�WKHVH�SOD\�KDUGO\�DQ\�UROH�LQ�³GD\ĥWRĥGD\�EXVLQHVV´��EXW�FRXOG�EH�D�FDXVH�IRU�SURYRNLQJ�D�SXEOLF�VFDQGDO�LQ�FHUWDLQ�FDVHV�

Studies on the philanthropic sector itself are also a SDUW�RI�UHFRPPHQGHG�LQVWLWXWLRQDO�VHOIĥUHIOHFWLRQ��/HW�XV�WDNH�WKH�+HZOHWW�)RXQGDWLRQ�DJDLQ�DV�DQ�H[DPSOH��7KLV�RUJDQLVDWLRQ�FRQVLGHUV�WKH�H[SDQVLRQ�and dissemination of information about philanĥthropy to belong to its remit, to say nothing of DQDO\VLQJ�SKLODQWKURSLF�SURMHFWV�LQ�RUGHU�WR�LPSURYH�VSRQVRUV¶�GHFLVLRQĥPDNLQJ�SURFHVVHV��5HOHYDQW�SURMHFWV�XQGHUWDNHQ�E\�XQLYHUVLWLHV�DQG�UHVHDUFK�institutions, consulting firms, institutions belonging to the philanthropic sector and other practitioners are therefore offered support, as are efforts to GLVVHPLQDWH�WKH�ILQGLQJV��61

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72

Problem 2: Observability

:KHQ�LW�FRPHV�WR�³HIIHFWLYH�DOWUXĥLVP´��WKH�HIILFLHQF\�DQG�HIIHFWLYHĥQHVV�RI�WKH�RUJDQLVDWLRQV�UHFHLYLQJ�support play a crucial role since there are considerable differences ZKHQ�LW�FRPHV�WR�WKHVH�IDFWRUV��This is why those institutions that FRPSLOH�VROLG�DQDO\VHV�DQG�HYDOXDWH�WKH�SKLODQWKURSLF�PDUNHW�RQ�WKLV�EDVLV�DUH�YHU\�XVHIXO��

These types of monitoring organĥisations are especially important when it comes to those institutions that operate on the edges of the SKLODQWKURSLF�ZRUOG�ĪRU�DUH�DFWLYHO\�IUDXGXOHQW��FKDULW\�VFDPVī��/DUJHĥVĥFDOH�FDWDVWURSKHV�ĪH�J��+XUULFDQH�.DWULQD�RU�����ī�UHVXOW�LQ�D�IORRG�RI�LQLWLDWLYHV�DQG�IXQGUDLVHUV�WKDW�H[KLELW�D�FULPLQDO�FKDUDFWHU�

The American Institute of Philanĥthropy, founded in 1992 and now NQRZQ�DV�&KDULW\:DWFK��SURYLGHV�information about philanthropic RUJDQLVDWLRQV¶�HIILFLHQF\��DFFRXQWĥDELOLW\�DQG�JRYHUQDQFH��7KLV�LV�meant to encourage donors to support those organisations that are

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ZRUNLQJ�WRZDUGV�JRDOV�FORVH�WR�WKHLU�KHDUW�DQG��DW�WKH�same time, to guarantee the efficient and transparent XVH�RI�GRQDWHG�IXQGV��7KH�JURXS�JDWKHUV�LQIRUPDWLRQ�on the portion of the budget spent on fundraising DQG�WKH�DPRXQW�VSHQW�RQ�DFWXDO�SURMHFW�ZRUN��DV�ZHOO�DV�WKH�UHPXQHUDWLRQ�UHFHLYHG�E\�WKUHH�KLJKHVWĥHDUQĥLQJ�HPSOR\HHV�RI�HDFK�RUJDQLVDWLRQ��,Q�HIIHFW��LW�LV�VRPHWKLQJ�RI�D�UDWLQJ�DJHQF\�IRU�FKDULWLHV�62

7KLV�RUJDQLVDWLRQ�LV�RQO\�RQH�RI�VHYHUDO�WKDW�HQJDJH�LQ�WKLV�NLQG�RI�HYDOXDWLRQ��RWKHUV�LQFOXGH�&KDULW\�1DYLJDWRU���DQG�WKH�%HWWHU�%XVLQHVV�%XUHDX�:LVH�*LYLQJ�$OOLDQFH�64�$�FRPSDUDWLYH�VWXG\�65�KRZHYHU��questions whether the criteria being used are the VDPH�DQG�ZKHWKHU�WKH\�DUH�UHDVRQDEOH�LQ�DOO�FDVHV��The study also criticises the fact that many of the criteria are too simplistic, that in many cases ILQDQFLDO�HIILFLHQF\�LV�JLYHQ�PRUH�ZHLJKW�WKDQ�WKH�HIIHFWLYHQHVV�RI�WKH�DFWXDO�FKDULWDEOH�ZRUN�EHLQJ�XQGHUWDNHQ�DQG�WKDW�LW�LV�GLIILFXOW�WR�DVVHVV�WKH�FRPSHWHQFH�RI�WKH�HYDOXDWRUV�WKHPVHOYHV��6RPH�RI�WKH�RUJDQLVDWLRQV�RIIHU�³VHDOV´�IRU�D�FRPSOHWHG�RU�VXFFHVVIXO�HYDOXDWLRQ��ZKLFK�FDQ�FUHDWH�D�FRQIOLFW�RI�LQWHUHVW��2WKHU�DJHQFLHV�HQJDJHG�LQ�HYDOXDWLRQ�LQ�WKH�SKLODQWKURSLF�VHFWRU�LQFOXGH�*LYH:HOO�66��*LYLQJ�:KDW�:H�&DQ67�RU�7KH�/LIH�<RX�&DQ�6DYH�68

7KLV�W\SH�RI�PHWDĥRUJDQLVDWLRQ�H[LVWV�LQ�WKH�*HUPDQĥVSHDNLQJ�ZRUOG�WRR��7KH�'HXWVFKH�=HQWUDOLQVWLWXW�I�U�VR]LDOH�)UDJHQ�Ī'=,ĥ*HUPDQ�&HQWUDO�,QVWLWXWH�IRU�6RFLDO�,VVXHVī�LV�DQ�LQGHSHQGHQW�IRXQGDWLRQ�KHDGTXDUWHUHG�LQ�%HUOLQ��,W�HYDOXDWHV�*HUPDQ�

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FKDULWDEOH�QRQĥJRYHUQPHQWDO�organisations according to their use of donated funds and awards a seal RI�DSSURYDO��7KLV�LV�PHDQW�WR�JXDUĥDQWHH�WKDW�WKH�UHOHYDQW�RUJDQLVDWLRQ�has been found to be trustworthy and transparent, that it has sound financial reporting and transparent fundraising practices, and that donated funds are used responsibly and in accordance with the stated DLPV�

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&KDULWDEOH�RUJDQLVDWLRQV�DUH�VXEMHFW�to an array of restrictions when it FRPHV�WR�XWLOLVLQJ�WKHLU�IXQGV��,W�LV�precisely the increasing similarity EHWZHHQ�FKDULWDEOH�DFWLYLWLHV�DQG�PDUNHWĥEDVHG�DFWLYLW\�WKDW�EOXUV�WKH�OLQH�EHWZHHQ�WKHP��7KLV�LV�DOO�the more true when philanthropic RUJDQLVDWLRQV�KDYH�JURZQ�LQWR�ODUJH�FRPSDQLHV�WKHPVHOYHV��7KLV�QDWĥXUDOO\�H[FOXGHV�RUJDQLVDWLRQV�WKDW�turn a profit, but it is not always clear to what degree an organisation may dedicate its operations to NHHSLQJ�LWVHOI�LQ�H[LVWHQFH��Ī2QH�RI�the uncontested findings of organĥ

We have demon-strated with our “declaration of independence” that we intend to act responsibly and in accordance with tried and tested values. Our clients’ trust shows that we are on the right path: intelligibility, accountability and transparency are the foundations of a well functioning partnership. We are taking a further step in this direction with our consulting services for philan-thropy.

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LVDWLRQDO�UHVHDUFK��DIWHU�DOO��LV�WKDW�DQ�RUJDQLVDWLRQ¶V�QHHG�WR�HQVXUH�LWV�RZQ�H[LVWHQFH�WDNHV�SUHFHGHQFH�RYHU�LWV�RWKHU�DFWLYLWLHV�ī�/X[XULRXV�H[HFXWLYHV¶�H[SHQVH�DFFRXQWV��WRR��DUH�VRPHWKLQJ�WKDW�ZRXOG�FDOO�DQ�RUJDQLVDWLRQ¶V�WUXVWZRUWKLQHVV�LQWR�TXHVWLRQ�

It is the relationships between philanthropic organiĥsations that is of interest here, between those higher XS�DQG�WKRVH�ORZHU�GRZQ�RQ�WKH�³PRQH\�FKDLQ´��1RUPDOO\�ODUJHU�IRXQGDWLRQV�JLYH�IXQGLQJ�WR�VPDOO�1*2V�RU�&62V�ĪQRQĥJRYHUQPHQWDO�RUJDQLVDWLRQV�RU�FLYLO�VRFLHW\�RUJDQLVDWLRQVī��/DUJH�GRQRUV�RU�IRXQGDWLRQV�DUH�DEOH�WR�YHW�³ORZHU´�RUJDQLVDWLRQV�WKDW�DUH�³LPSOHPHQWLQJ´�WKH�FKDULWDEOH�SURMHFW��,W�LV�much more difficult for small funders and donors to gather reliable information on the trustworthiness of RUJDQLVDWLRQV��(YHQ�VLPSOH�IXQGUDLVLQJ�FDPSDLJQV�DUH�DGYLVHG�WR�HYDOXDWH�WKH�LQWHQGHG�UHFLSLHQW��

7KH�RUJDQLVDWLRQ�7KH�/LIH�<RX�&DQ�6DYH�SURYLGHV�DQ�H[FHOOHQW�LOOXVWUDWLRQ�RI�KRZ�RQH�WKLQJ�OHDGV�WR�WKH�RWKHU��7KH�/LIH�<RX�&DQ�6DYH�LV�GHYRWHG�WR�JHWWLQJ�SHRSOH�WR�FRPPLW�WR�UHVHUYH���İ�RI�WKHLU�LQFRPH�IRU�VXSSRUWLQJ�JOREDO�FKDULWDEOH�HIIRUWV�ĪLPSURYLQJ�WKH�OLYHV�RI�WKH�ZRUOG¶V�����ELOOLRQ�SRRUHVW�SHRSOHī��2QH�UHVXOW�LV�WKH�UHODWHG�WDVN�RI�SURYLGLQJ�UHFRPĥPHQGDWLRQV�RI�RUJDQLVDWLRQV�GHVHUYLQJ�RI�IXQGLQJ�IRU�WKRVH�SHRSOH�ZKR�GR�ZDQW�WR�GRQDWH�PRQH\��$QG�that requires differentiating transparent and efficient RUJDQLVDWLRQV�IURP�WKRVH�WKDW�DUH�QRW��

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In this case, the organisation has FKRVHQ�WKH�HDVLHVW�ZD\�WR�SURYLGH�DFFHVV�WR�LQIRUPDWLRQ�Ħ�WKH\�OLVW�WHQ�UHFRPPHQGHG�SURMHFWV�RQOLQH��'HZRUP�WKH�:RUOG��*LYH'LUHFWO\��$JDLQVW�0DODULD�)RXQGDWLRQ��2[IDP��3URYHQ�,PSDFW�)XQG��'LVSHQVHUV�IRU�6DIH�:DWHU��7KH�)LVWXOD�)RXQGDWLRQ��6HYD���)UHG�+ROORZV�)RXQGDWLRQ��3URMHFW�+HDOWK\�&KLOGUHQ��1\D\D�+HDOWK��3RSXODWLRQ�6HUYLFHV�,QWHUQDWLRQDO��7KLV�SURYLGHV�D�JXDUDQWHH�RI�WKH�quality and efficiency of the listed SURMHFWV��

Problem 4: Priority ranking

The most significant areas of fundĥing for philanthropic institutions DUH�WKH�VDPH�DV�WKRVH�WKDW�KDYH�EHHQ�OLVWHG�E\�WKH�5RFNHIHOOHU�)RXQGDWLRQ��IRU�H[DPSOH��KHDOWK�DQG�VDIHW\��HGXFDWLRQ��DUWV��FXOWXUH�DQG�KHULWDJH��KXPDQ�DQG�FLYLO�ULJKWV��HFRQRPLF�VHFXULW\��DQG�WKH�HQYLURQPHQW��7KLV�may encompass a great deal, and the question naturally arises as to which areas are more in need of sponsors ULJKW�QRZ��%XW�WKHUH�LV�QR�REMHFWLYH�DQVZHU�WR�WKLV�LVVXH�

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3HWHU�6LQJHU�EHOLHYHV�WKDW�LW�LV�SRVVLEOH�WR�UDQN�SULRULĥWLHV�DPRQJ�YDULRXV�DUHDV�DQG�SURMHFWV�69 Someone may choose to donate 100,000 dollars to build an addition to the local museum to allow for the better presentation of its collection, or the same amount could be donated to an organisation treating and SUHYHQWLQJ�FRQMXQFWLYLWLV�DPRQJVW�$IULFDQ�FKLOGUHQ��7KLV�DPRXQW�RI�IXQGLQJ�FRXOG�SUHYHQW�������FKLOGUHQ�IURP�JRLQJ�EOLQG��7KLV�NLQG�RI�FRPSDULVRQ�LV�RI�FRXUVH�TXLWH�FRPSHOOLQJ�Ħ�EXW�DOVR�XQIDLU��7KHUH�will always be horrible conditions somewhere in the ZRUOG�DV�D�PDWWHU�RI�FRXUVH�WKDW�FRXOG�WDNH�SUHFHĥGHQFH�RYHU�GRQDWLRQV�IRU�FXOWXUDO��HGXFDWLRQDO�RU�VSLULWXDO�DFWLYLWLHV��,I�DOWUXLVWLF�EHKDYLRXU�ZHUH�WR�EH�GHILQHG�VR�VWDUNO\��WKHQ�HYHQ�RQH¶V�SHUVRQDO�OLIHVW\OH�ZRXOG�QHFHVVDULO\�KDYH�WR�³GRZQVL]HG´�WR�VXFK�D�GHJUHH�WKDW�LW�ZRXOG�LWVHOI�QRW�EH�XQHQMR\DEOH��$IWHU�DOO��HYHQ�IRU�WKRVH�OLYLQJ�LQ�PRGHVW�FLUFXPVWDQFHV�LQ�GHYHORSHG�FRXQWULHV��RQH�ZRXOG�KDYH�WR�IRUHJR�PRVW�H[SHQGLWXUHV�VLQFH�HYHU\�����GROODUV�FRXOG�EH�EHWWHU�VSHQW�SUHYHQWLQJ�EOLQGQHVV�

:H�DUH�OHIW�WKHQ�ZLWK�D�GLOHPPD��PHDQLQJIXO�DUHDV�for philanthropic funding can be defined, but there FDQ�EH�QR�UHDO��SXUHO\�³REMHFWLYH´�ZD\�RI�UDQNLQJ�WKHP��$QG�WKLV�LV�DV�LW�VKRXOG�EH��JLYHQ�ZKDW�ZH�KDYH�DOUHDG\�VDLG�DERXW�WKH�GLYHUVLW\�RI�JRDOV�DQG�PHWKRGV�

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The culture of giving: “In giving a gift, you give of yourself ”

/DWH�PRGHUQ�FXOWXUH�LV�QRW�YHU\�KRVSLWDEOH�WR�SKLODQWKURS\��,W�LV�RIWHQ�GHVFULEHG�DV�LQGLYLGXDOLVWLF��egocentric, narcissistic and conĥVXPHULVW��6XFK�DVVHVVPHQWV�GUDZ�on a number of larger trends in contemporary society, but a wealth of theoretical analyses and practical REVHUYDWLRQV�GR�LQGLFDWH�WKDW�WKHUH�LV�DQ�LQFUHDVLQJ�HJRFHQWULVP��,V�SKLODQWKURS\�RXWGDWHG"

The public aspect of philanthropy

'R�JRRG�DQG�WHOO�RWKHUV�DERXW�LW�Ħ�WKLV�UHDGV�OLNH�D�VD\LQJ�RQH�ZRXOG�find on a wall calendar, something WKDW�VRXQGV�OLNH�LW�LV�EDVHG�RQ�VRXQG�UHVHDUFK��OLNH�PXFK�LQ�WRGD\¶V�VHOIĥKHOS�PDWHULDOV��7KHVH�W\SHV�RI�VD\LQJV�DUH�KDOIĥWUXWKV��WKRXJK��3KLODQWKURS\�WHQGV�WR�KDYH�QDPHV�and faces attached to it, and this aspect is a matter of contentious GHEDWH��7KHUH�LV�D�GRQRU�RU�IXQGHU��this is not a matter of an anonyĥPRXV�IXQGUDLVLQJ�FDPSDLJQ��7KHUH�

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are two good arguments to be made when it comes WR�WKH�SXEOLFLVLQJ�RI�SKLODQWKURSLF�DFWLYLWLHV��RQH�IRU�DQG�RQH�DJDLQVW�

The argument against publicising is that doing VRPHWKLQJ�IRU�RQH¶V�IHOORZ�KXPDQ�EHLQJV�LV�D�FRPĥmandment of sorts, and there is more than a little embarrassment attached to depicting or promoting RQHVHOI�DV�EHLQJ�D�³JRRG�SHUVRQ´��,W�LV�VRPHZKDW�OHVV�HPEDUUDVVLQJ�ZKHQ�FRPSDQLHV�MXVWLI\�WKHLU�DOWUXLVWLF�RU�FKDULWDEOH�DFWLYLWLHV�E\�SRLQWLQJ�WR�WKH�DGGLWLRQDO�DGYDQWDJHV�EHVWRZHG�RQ�WKH�FRPSDQ\¶V�LPDJH�E\�VXFK�XQGHUWDNLQJV�DQG�WKDW�WKHUHIRUH�WKHVH�³PXVW´�ĪLQ�D�EURDG�VHQVHī�EH�VHHQ�DV�UHODWHG�WR�WKHLU�PDUNHWLQJ�RU�SXEOLF�UHODWLRQV�DFWLYLWLHV��7KH�FKDUJH�RI�VHOIĥSURPRWLRQ�LV�VRPHZKDW�PRUH�SRWHQW�ZKHQ�LW�FRPHV�WR�VPDOO�EXVLQHVVHV�RU�SULYDWH�LQGLYLGXDOV�as they are not held to the same standards of public accountability and there is always a fine line in SXEOLFLVLQJ�WKHVH�W\SHV�RI�DFWLYLWLHV��7KHUH�LV�DOVR�the question of how it is done and how credibly it is GRQH�

The argument in support of publicising philanĥWKURSLF�DFWLYLWLHV�LV�WKDW�GRQDWLRQV�RU�WKH�LQWHQW�WR�GRQDWH�RQ�WKH�SDUW�RI�SULYDWH�LQGLYLGXDOV�RU�E\�FRPSDQLHV�SURYLGHV�DQ�LPSHWXV�IRU�RWKHU�SHRSOH�DQG�RUJDQLVDWLRQV�WR�IROORZ�WKHLU�H[DPSOH��,I�HJRFHQWULF�DQG�HJRWLVWLFDO�EHKDYLRXU�KDV�EHFRPH�WKH�QRUP�LQ�ODWH�PRGHUQ�VRFLHWLHV��WKHQ�LPSUHVVLYH�SKLODQWKURSLF�GRQDWLRQV�DQG�SURMHFWV�PD\�SURYLGH�D�FRXQWHUZHLJKW�WR�DQ�HJRWLVWLFDO��FDOFXODWLQJ�PLQGĥVHW�

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7KH�/LIH�<RX�&DQ�6DYH�RUJDQLVDWLRQ�ZULWHV�LQ�LWV�PLVVLRQ�VWDWHPHQW��³7KH�/LIH�<RX�&DQ�6DYH�LV�D�PRYHPHQW�RI�SHRSOH�ILJKWLQJ�H[WUHPH�SRYHUW\��:H�KROG�WKDW�DQ�HWKLFDO�OLIH�LQYROYHV�XVLQJ�VRPH�RI�RXU�ZHDOWK�DQG�UHVRXUFHV�WR�VDYH�DQG�LPSURYH�WKH�OLYHV�RI�WKRVH�OHVV�IRUWXQDWH�WKDQ�XV��)RU�WKLV�UHDVRQ��ZH�VSUHDG�NQRZOHGJH�RI�ZKDW�DOO�RI�XV�FDQ�GR�WR�UHGXFH�SRYHUW\�DQG�ZH�encourage people to publicly pledge a percentage of their income to KLJKO\�HIIHFWLYH�DLG�RUJDQL]DWLRQV�´70 7KLV�VSHDNV�WR�WKH�VHQVH�WKDW�WKHUH�LV�D�SXEOLF�HIIHFW�RI�VHOIĥSURPRWLRQ��As was the case in the 19th century as the social welfare state was being formed, philanthropy may embody an element of concern for promotĥLQJ�VRFLDO�VWDELOLW\��7KDW�LV��LW�PD\�VHHN�WR�SUHYHQW�SURWHVW��DOOHYLDWH�VRFLDO�FRQIOLFW�DQG�OHJLWLPDWH�RQH¶V�RZQ�SRVLWLRQ��%XW�LW�LV�WKH�H[DPSOH�WKDW�LV�PRUH�LPSRUWDQW��:KHQ�D�society considers altruism to be a PDQLIHVWDWLRQ�RI�³PHQWDO�FRQIXVLRQ´�because a healthy dose of egocenĥWULVP�ĪLQ�WHUPV�RI�PD[LPLVLQJ�WKH�use of something or increasing SURILWVī�LV�FRQVLGHUHG�³DSSURSULDWH´��WKHUH�LV�VRPH�DGYDQWDJH�WR�EHLQJ�

Brightening the future of many.

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SUHVHQWHG�WKH�³RSSRVLQJ�YLHZ´��VLJQV�RI�DOWUXLVP��DFWV�RI�VHOIOHVVQHVV��V\PEROV�RI�KXPDQLWDULDQLVP��/HW�me conclude with two additional comments, one VRPHZKDW�DEVWUDFW�DQG�WKH�RWKHU�FRQFUHWH�7KH�DEVWUDFW�UHPDUN�KDV�WR�GR�ZLWK�WKH�VRFLRORJLVW�*HRUJ�6LPPHO��ZKR�QRWHG�WKDW�HYHU\�DFW�RI�VRFLDOLĥsation was based on the effects of the relationships enduring and continuing beyond that moment in ZKLFK�WKH\�ZHUH�FUHDWHG��7KLV�LV�WUXH�IRU�JLYLQJ�DQG�UHFHLYLQJ��IRU�WKH�DFW�RI�JLIWĥJLYLQJ�DQG�WKH�IHHOLQJ�RI�WKDQNIXOQHVV��

This creates an emotional element in the world that is not dependent on relationships between conĥFUHWHO\�GLVWLQJXLVKDEOH�LQGLYLGXDOV��7KH�³JRRG�GHHG�LV�not only the passing of material from one person to DQRWKHU��,QVWHDG�ZH�WKDQN�WKH�DUWLVW�DQG�WKH�ZULWHU��QHLWKHU�RI�ZKRP�NQRZV�DQ\�RI�XV��7KLV�IDFW�FUHDWHV�P\ULDG�FRQQHFWLRQV�Ħ�LGHDOLVHG�DQG�WDQJLEOH��ORRVH�DQG�FRQFUHWH�Ħ�DPRQJ�WKRVH�ZKR�VKDUH�D�WKDQNIXOĥQHVV�WRZDUGV�WKLV�JLYHU��:H�QRW�RQO\�WKDQN�VRPHRQH�IRU�ZKDW�WKH\�KDYH�GRQH��7KLV�VDPH�VHQVH�GHVFULEHV�WRR�WKH�IHHOLQJ�WKDW�PDUNV�RXU�UHDFWLRQ�WR�WKH�YHU\�H[LVWHQFH�RI�D�SHUVRQ¶V�FKDUDFWHU��:H�JLYH�WKHP�WKDQNV�VLPSO\�EHFDXVH�WKH\�DUH�WKHUH��EHFDXVH�ZH�JHW�WR�KDYH�WKH�H[SHULHQFH�RI�NQRZLQJ�WKHP�´71 7KH�FRQFUHWH�REVHUYDWLRQ�LV�WKDW�SHRSOH�GLVFRYHU�KRZ�WKH�ZRUOG�LV�FRQVWLWXWHG�QRW�OHDVW�ĪDQG�ZLWK�HYHU�LQFUHDVLQJ�LQWHQVLW\ī�WKURXJK�PHGLD�FKDQQHOV��,I�RQO\�WKH�RQH�VLGH�LV�UHSUHVHQWHG�WKHUH�Ħ�WKH�GLVSOD\�RI�SURILW��JUHHG��SUL]HV��ERQXVHV��SULYLOHJHV�Ħ�WKHQ�WKH�ZRUOG�LV�JLYHQ�D�GLIIHUHQW�IDFH�RYHU�WKH�FRXUVH�

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RI�WLPH��³6WDQGDUGV�RI�QRUPDOLW\´�FKDQJH��7KHVH�W\SHV�RI�LPDJHV�RI�WKH�ZRUOG�WDNH�URRW�LQ�SHRSOH¶V�heads and people become different WKHPVHOYHV��

If society is not to become a sphere characterised by egocentrism and HJRLVP��WKHQ�DOWUXLVWLF�EHKDYLRXU�PXVW�EH�³GHSLFWHG´�WRR��LW�PXVW�EHFRPH�YLVLEOH��JURZ�PRUH�LQWHQVH�DQG�ILQDOO\�GRPLQDWH�VRFLHW\��

Charitable acts must also find a place in the media so that people H[SHULHQFH�WKHP�DV�FRPSOHWHO\�normal, not simply the actions of QDwYH�SHRSOH�RQ�WKH�HGJHV�RI�VRFLHW\��A society would be in a bad state if paying attention to the common JRRG�ZDV�RQO\�VHHQ�DV�EL]DUUH��

$ELOLW\�WR�EH�SHUVRQDOO\�VHOIĦUHIOH[LYH

A philanthropic attitude is founded RQ�DQ�DELOLW\�WR�EH�VHOIĥUHIOH[LYH��VHHLQJ�RQHVHOI�ZLWK�RWKHUV¶�H\HV��:H�FDQ�VHH�WKLV�NLQG�RI�VHOIĥUHIOH[LRQ�LQ�WKRVH�ZHDOWK\�LQGLYLGXDOV�ZKR�withdraw to the simplest manifesĥWDWLRQ�RI�WKH�WKLQJV�ZH�KDYH�EHHQ�

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7KLV�VHOIĥUHIOH[LRQ�EHJLQV�ZLWK�ORRNLQJ�DW�WKHLU�RZQ�UHTXLUHPHQWV��:KDW�GR�WKH\�UHDOO\�QHHG"�7KLV�question is not a hidden appeal for a puritanical OLIHVW\OH�EXW�UDWKHU�D�UHTXHVW�WR�WKLQN�DERXW�DOO�RI�those foolish things that are commonplace in a ZHDOWK\�ĪFRQVXPHULVWī�VRFLHW\��WKH�H[SHQVLYH�FDU��WKH�OX[XU\�ZDWFK��WKH�ILIWK�DSDUWPHQW��WKH�WULS�DURXQG�WKH�ZRUOG��9HUHQD�:LQLZDUWHU��DQ�HQYLURQPHQWDO�KLVWRULDQ�DQG�6FLHQWLVW�RI�WKH�<HDU��H[SODLQV�LW�LQ�D�VXFFLQFW�ZD\��³$W�KHDUW�ZH�NQRZ�WKDW�D�3RUVFKH�LVQ¶W�JRLQJ�WR�PDNH�XV�PRUH�SRWHQW�RU�KDSS\�´72

7KH�TXHVWLRQ�FDQ�DOVR�EH�ORRNHG�DW�IURP�WKH�RWKHU�VLGH��ZH�VKRXOG�EH�LUULWDWHG�WKDW�DQ�H[SHQVLYH�FDU�Ħ�D�UHDOO\�H[SHQVLYH�FDU�Ħ�KDV�QRW�ORQJ�WXUQHG�LQWR�DQ�DQWLĥVWDWXV�V\PERO��$IWHU�DOO��LW�LQGLFDWHV�D�UDWKHU�OLPLWHG�ZRUOGYLHZ�ZKHQ�VRPHRQH�QHHGV�WR�JLYH�WKHPVHOYHV�YDOXH�YLD�WKHVH�NLQGV�RI�V\PEROV��7KH�PDMRULW\�RI�OX[XU\�SURGXFWV�FRXOG�HYHQ�EH�UHJDUGHG�DV�D�ZRUULVRPH�LQGLFDWLRQ�LQ�WKDW�WKH\�PDNH�XV�wonder what psychological flaw the owner or user RI�VXFK�DQ�LWHP�LV�WU\LQJ�WR�FRPSHQVDWH��(DFK�RQH�RI�WKHVH�SURGXFWV�LV�D�ZDUQLQJ�VLJQ��D�FKLOGLVK�VKRZĥDQGĥWHOO�EHWUD\V�DQ�LPPDWXUH�SHUVRQDOLW\��7R�SXW�LW�DQRWKHU�ZD\��XSVWDUWV��VRFLDO�FOLPEHUV��SDUYHQXV�DQG�&ĥOLVW�FHOHEULWLHV�QHHG�WR�GHPRQVWUDWH�ZKR�WKH\�DUH�E\�PHDQV�RI�ZKDW�WKH\�RZQ��$QG�WKH\�DUH�QRWKLQJ�PRUH�WKDQ�ZKDW�WKH\�FDQ�VKRZ�RII�

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:KHQ�\RX�ZDQGHU�WKURXJK�WKH�endless fields of the superfluous, you will find a staggering number of products that can be found in the DYHUDJH�KRPH�LQ�ZHDOWK\�ZHVWHUQ�FRXQWULHV��SURGXFWV�WKDW�DUH�QHYHU�XVHG�DQG�ZLOO�LQHYLWDEO\�EH�WKURZQ�DZD\��$QG�WKLV�GRHVQ¶W�VWRS�DW�DOO�DW�DYHUDJH�LQFRPH�OHYHO��VLQFH�WKHUH�DUH�DOO�GLIIHUHQW�VWDQGDUGV�RI�OLYLQJ�LQ�WKH�KLJKO\�GHYHORSHG�FRXQWULHV��DQG�WKRVH�ZKR�HDUQ�DERYH�WKH�DYHUDJH�LQFRPH�OHYHO�KDYH�D�JUHDW�GHDO�RI�ODWLWXGH�WR�ILOO�WKHLU�OLYHV�ZLWK�FRQYHQLHQFHV��6WDWLVWLFV�WHOO�XV��KRZHYHU��WKDW�WKHUH�LV�D�ODUJH�JURXS�of people who earn an income that YDVWO\�H[FHHGV�WKH�DPRXQWV�WKDW�DUH�QHFHVVDU\�WR�SURYLGH�IRU�D�FRPIRUWĥDEOH�OLIH��7KH\�SRVVHVV�FRQVLGHUDEOH�assets that are, simply put, not QHFHVVDU\�Ħ�RU�WKDW�DUH�MXVW�VSHQW�RQ�IULSSHULHV��

7KH�DOWHUQDWLYH�WR�WKLV�W\SH�RI�³OLIH�IXOO�RI�IULSSHULHV´�LV�QRW�D�³FKHDS�OLIH´��GHSULYLQJ�RQHVHOI��SUDLVLQJ�IXQFWLRQDO�DQG�DHVWKHWLF�LQH[SHQĥVLYHQHVV��8JOLQHVV�LV�QRW�WKH�EDVLV�IRU�DQ\�FODLP�WR�PRUDOLW\��7KHUH�LV�DOVR�WKDW�D�UDWKHU�ZLVH�VD\LQJ��³,�GRQ¶W�KDYH�PXFK�PRQH\��VR�,�FDQ¶W�

And the old saying sounds better when slightly reworked: “Waste not, rather donate.”

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DIIRUG�DQ\WKLQJ�FKHDS�´�$�GLJQLILHG�OLIHVW\OH�LV�QREOH��EXW�QRW�ZDVWHIXO��,W�SURYLGHV�HYLGHQFH�RI�D�SHUVRQ¶V�VRYHUHLJQW\�DQG�FRPSHWHQFH��QRW�MXVW�WKH�PRQH\�DW�KLV�GLVSRVDO��,W�LV�FRQFHUQHG�ZLWK�TXDOLW\��QRW�TXDQWLW\�Ħ�DQG�TXDOLW\�LV�QRW�QHFHVVDULO\�VRPHWKLQJ�WKDW�FDQ�EH�PHDVXUHG�ZLWK�PRQH\��7KHUH�LV�D�VHUHQLW\�LQ�WKH�GLJQLILHG�OLIHVW\OH��LW�WDNHV�QR�SDUW�LQ�WKLV�FRQVXPHULVW�IUHQ]\��,I�ZH�WDNH�WKHVH�EHQFKPDUNV�DV�our guide, then the group of people who can afford to engage in notable philanthropy is not actually so VPDOO�DIWHU�DOO��

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(1'127(6

1 What is referred to here is a QRWĦIRUĦSURILW�RUJDQLVDWLRQ�WKDW�ZRUNV�in the interest of the common good. The objectives may be charitable, educational, religious, scientific, artistic or anything else that serves the public interest or ameliorates conditions related to the common good.

2��,Q�WKH�IROORZLQJ�WH[W��FHUWDLQ�´ZRUG�

packets” will be used without further VSHFLILFDWLRQ�RI�WKHLU�H[DFW�PHDQLQJ�in every case in which they are used, though each one may have several different nuanced meanings according WR�WKH�REMHFWLYH�RU�VXEMHFWĦVSHFLILF�FRQWH[W�LQ�ZKLFK�LW�LV�XVHG��,Q�VSLWH�of these nuances, there is insufficient space to differentiate between charitable organisations, foundations, QRWĦIRUĦSURILW�RUJDQLVDWLRQV��FKDULWLHV��civil society and social welfare organisations as well as trusts, IRU�H[DPSOH��ZKHQ�DOO�RI�WKHVH�DUH�philanthropic organisations, even though they may take different legal forms and possibly have different objectives. These groups may also take the form of clubs, societies, cooperatives or similar types of organisations. Therefore, I use the word “foundation” throughout not to refer to a particular legal form of organisation, but in a more general, practical sense: an organisation in which assets are put to use for shared, social purposes. Something has been “endowed”. These include foundations established to benefit IDPLO\�PHPEHUV��IRU�H[DPSOH��ĭ7KH�word “Philanthropie” used in the RULJLQDO�*HUPDQĦODQJXDJH�YHUVLRQ�RI�WKLV�WH[W�LV�IDU�OHVV�FRPPRQO\�XVHG�than the equivalent “philanthropy” in English. The German concept of ´3KLODQWKURSLVPXVµ�īSKLODQWKURSLVPĬ�again means something entirely different. It is related to a pedagogical reform movement started by Johann Bernhard Basedow that was embodied in the Philanthropinum, an HLJKWHHQWKĦFHQWXU\�VFKRRO��WKH�QDPH�

of which lives on today in the name RI�WKH�*\PQDVLXP�īVHFRQGDU\�VFKRROĬ�located in Dessau. Our discussion here has nothing to do with this movement RU�PHDQLQJ�Į

��Rescher 1975.

4 Claims made on the state may UHVXOW�RI�FRXUVH�LQ�H[SHFWDWLRQV�WKDW�H[FHHG�WKH�ILQDQFLDO�PHDQV�WKDW�DUH�available. This is due not least to the fact that the general public has no realistic or reasonable conception of the magnitude of the figures being discussed.

5 Bayertz 1998; Brunkhorst 2002; +RQGULFK�DQG�.RFKĦ$U]EHUJHU������

6 Wolfgang Kersting writes, “What we understand under a mutual VXSSRUW�JURXS�LV�ĭ«Į�D�FRPSHQVDWRU\�system of mutual social care that is particularly concerned with the needy, disadvantaged and aged populations, WKH�LOO��WKRVH�ZKR�KDYH�H[SHULHQFHG�failure, those who have fallen on hard times and victims. Modern versions of mutual support societies are abstract, whereas traditional types take more concrete form. In concrete mutual support societies, people help people. In abstract versions, a centralised bureaucracy distributes a growing proportion of WKH�OHJDOO\�FROOHFWHG�WD[�UHYHQXH�WR�those with legitimate claims to it. Abstract mutual support societies JLYH�DOWUXLVP�D�VWDWHĦEDVHG�IRUP�and transform Samaritans into civil servants. These developments were admittedly necessary. The processes of VRFLRĦHFRQRPLF�PRGHUQLVDWLRQ�UHVXOWHG�in the progressive weakening of the ameliorative capabilities of the more concrete forms of mutual support societies. This is why new, modern organisations dedicated to mutual support needed to take the place of the PRUH�WUDGLWLRQDO�IRUPV�µ�ī.HUVWLQJ�������S����Ĭ

7 Prisching 2010, 2003.

8 Kersting 2000, p. 15.

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9 Simmel 1983, p. 444.

10 Matthias Zimmer outlined the boundaries of feelings of responsibility stemming from a sense of solidarity: “The legal figure in the concept of sovereignty shares an etymological root with the modern concept of property, and there must be no doubt that solidarity has clear limits when property is involved. All systems of solidarity that are involuntary in character impinge upon one’s property, whether in the IRUP�RI�WD[HV�RU�RWKHU�ILQDQFLDO�GXWLHV��6ROLGDULW\��LQ�WKRVH�FRQWH[WV�in which it is legally required, must be weighed against property rights. This begins with property in the sense of one’s own person: there can be no legal compulsion to donate RQH·V�RUJDQV��IRU�H[DPSOH��UHJDUGOHVV�of whether one is alive or already deceased. Consent is required in every case. The sanctity of one’s own body is a fundamental principle of human freedom and a central negative right in terms of being free from the state or societal demands. Property limits solidarity in other cases, too, in terms of both material and intellectual property. If I were to have discovered a drug that could FXUH�$,'6��IRU�H[DPSOH��WKH�FRQFHSW�of solidarity cannot place any legal obligation on me to share my discovery without compensation. This may be regrettable, but this principle is logically derived from the concept of intellectual property. In addition, I cannot be forced to share my home with other people. There is similarly no legal obligation to make my property available to others without limit in accordance with a concept of VROLGDULW\��ĭ«Į�7KH�GHJUHH�WR�ZKLFK�the state may make a claim on individuals’ material or intellectual property in a normal democracy differs from country to country. There is however one basic condition: there is a point after which claims on individuals’ property no longer conform to the concepts of justice, and these claims must therefore be seen to be LOOHJLWLPDWHµ�ī=LPPHU�����Ĭ� Furthermore, solidarity tends to decrease as the distance between

people grows. Solidarity is connected to the notion of reciprocity: mutual responsibility is based on reciprocal H[SHFWDWLRQV��)LQDOO\��WKH�REOLJDWLRQV�attached to solidarity must be sustainable, otherwise any sense of solidarity between generations will grow increasingly limited. 11 The attitudes surrounding H[SHFWDWLRQV�DQG�VWDQGDUGV�may assume a certain powerful HIIHFW��7KHUH�DUH�H[SHFWDWLRQV�about appropriate activities and behaviour. Savings banks in less densely populated areas, for H[DPSOH��DUH�RIWHQ�H[SHFWHG�WR�support local clubs and initiatives. 3HRSOH�H[SHFW�FHUWDLQ�FRQWULEXWLRQV�from companies at Christmastime or to mark particular anniversaries. 12 Simmel 1983, p. 446. ��� People may disagree on the specifics when it comes to general requirements regarding proper behaviour. One may offer thanks or provide reports on how the funds are being used. There is some contention regarding the question of whether one must refrain from voicing criticism related to a donor. ī7KLV�EHFRPHV�D�WRSLF�IRU�GLVFXVVLRQ�when companies sponsor schools RU�XQLYHUVLWLHV��IRU�H[DPSOH��RU�when companies have cooperative DUUDQJHPHQWV�ZLWK�PHGLD�RXWOHWV�Ĭ

14 �)ROORZLQJ�D�IRXUĦ\HDU�DEVHQFH��

Bill Gates was again ranked as the world ’s richest person in 2014. Forbes lists 1,645 billionaires, of which eleven are Austrian. With his assets of 55 billion euros, *DWHV�UHOHJDWHG�WKH�0H[LFDQ�telecommunications tycoon Carlos Slim to second place. He is followed by the founder of the Spanish fashion chain Zara. The founders of Aldi and Lidl are listed among the top few dozen. The US is home to the greatest number of GROODUĦELOOLRQDLUHV��IROORZHG�E\�China and Russia.

15 See secure.corporate.coke.at/FRQWHQW�DW�FRUSRUDWH�ZZI�DVS[�ĭ������Į�

16 Corporate volunteering involves voluntary work taken up by the entire company or the encouragement of and support for employees individually engaging in volunteering work. In this way, a company’s human resources are devoted to charitable work that is separate and distinct from the company’s core business activities. (PSOR\HHV�īRU�D�SRUWLRQ�RI�WKHLU�WLPHĬ�DUH�GHSOR\HG�WR�HQJDJH�LQ�FKDULWDEOH�DFWLYLWLHV�īWKLV�FDQ�be simple physical work or the XVH�RI�HPSOR\HHV·�NQRZĦKRZĬ�or, alternatively, their own volunteering work is encouraged. This can take the form of GHGLFDWHG�GD\V�īH�J��WKH�HUHFWLRQ�RI�D�SOD\JURXQGĬ��D�V\VWHPDWLF�PHQWRULQJ�īH�J��SURYLGLQJ�DGYLFH�IRU�RUJDQLVDWLRQVĬ�RU�SURĦERQR�VHUYLFH�SURYLVLRQ�īH�J��DQ�DWWRUQH\�DGYLVLQJ�DQ�LPPLJUDQWV·�ULJKWV�RUJDQLVDWLRQĬ��When employees of a company are deployed to another organisation IRU�D�VHW�DPRXQW�RI�WLPH�ħ�JHQHUDOO\�WKUHH�PRQWKV�ħ�WR�RIIHU�WKHLU�SURIHVVLRQDO�H[SHULHQFH��WKLV�LV�FDOOHG�secondment.

17 Hösle 1997, p. 370. 18 Mauss 1990, p. 165.

19 The following orders and congregations act as trustees of Austrian hospitals: the St John of God Hospitaller Ministries ī%DUPKHU]LJHQ�%U�GHUĬ� WKH�)UDQFLVFDQV�īLQ�VHYHUDO�YDULHWLHVĬ��WKH�2UGHU�RI�6W�(OLVDEHWK��die Barmherzigen Schwestern, the Vincent de Paul Group ī9LQ]HQ]JUXSSH�ħ�FRPSULVHG�RI�D�YDULHW\�RI�RUGHUVĬ��DQG�VHYHUDO�projects run by Diakonie, the social welfare organisation of Austria’s Protestant churches. 20 “After WWII, Austria lay in ruins and people were starving. This made the one million CARE packages distributed throughout the country all the more important. Some forty years later, Austria ranked among the richest countries in the world and was thus in a position to provide aid to others. CARE Austria was founded on 14

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May 1986 as the eighth member of the global CARE aid organisation. ĭ«Į�,Q�������(8�SXEOLF�IXQGLQJ�DFFRXQWHG�IRU������ı�RI�WKH�ILQDQFLQJ�for CARE Austria’s projects; domestic IXQGV�DFFRXQWHG�IRU������ı�DQG�SULYDWH�GRQDWLRQV�PDGH�XS������ı��2I�WKLV�������ı�RI�WKH�IXQGLQJ�ZDV�directly used to fund programmes and SURMHFWV�ZKLOH������ı�ZDV�GHGLFDWHG�to fundraising and general public UHODWLRQV�HIIRUWV��2QO\�����ı�ZDV�spent on administrative costs. The focus of CARE Austria’s projects in 2012 was overwhelmingly Africa, ZKLFK�UHFHLYHG���ı�RI�WKH�IXQGLQJ�UDLVHG����ı�ZDV�XVHG�IRU�SURMHFWV�LQ�$VLD�DQG���ı�LQ�WKH�0LGGOH�(DVW�� Projects in Eastern Europe received ��ı�µ�īZZZ�FDUH�DW�XHEHUĦFDUH��FDUHĦLQĦRHVWHUUHLFK�ĭ������ĮĬ

21 See Reich 2013.

22 www.hewlett.org

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ILIWK�RU���ı�RI�WKH�ZHDOWK\�DUH�generally spoken of, which counts among the rich anyone with a monthly net income greater than ������HXURV�ħ�ZKLFK�LV�FHUWDLQO\�QRW�what people generally think of when they use the term. In these upper ranges, things really only begin to get “interesting” when you reach gross annual incomes of 250,000 or 300,000. Only then are we discussing people who are actually wealthy, up to and including top managers from the worlds of industry and finance with annual incomes in the millions. 5REHUW�)UDQN�ī����Ĭ�FDPH�XS�ZLWK�an amusing descriptive word for the phenomenon, which also served as the title of his book: This is the borderless FRXQWU\�RI�WKH�VXSHUĦZHDOWK\��IXOO\�removed from the world, where everything has much more to do with your assets than your income. Having freely disposable assets of around 500 million dollars is what separates the super wealthy from the merely wealthy. This global inner circle LQFOXGHV���������8+1:,V�īXOWUDĦKLJK�QHW�ZRUWK�LQGLYLGXDOVĬ�ZLWK�assets of between 30 and 500 million, ��PLOOLRQ�+1:,V�īKLJK�QHW�ZRUWK�LQGLYLGXDOVĬ�ZLWK�DVVHWV�RI�DERXW����million and around 10 million people with assets of between one and five

million dollars. This last group of people frequently includes highly qualified service providers who serve the other top asset holders. Among WKH�WUXO\�DVVHWĦULFK��WKHUH�DUH�WKRVH�whose capital is inherited from one JHQHUDWLRQ�WR�WKH�QH[W��QRXYHDX�ULFKH�entrepreneurs from the technology sector or financial services as well as WKH�JURZLQJ�HOLWH�IURP�QRQĦ:HVWHUQ�FRXQWULHV�ħ�DQG�D�IHZ�:HVWHUQ�FRXQWULHV�ħ�ZKRVH�DVVHWV�KDYH�EHHQ�drawn from corrupt privatisation schemes. The polarisation between income and assets over the past several years has contributed to the development of a plutocracy in Western societies which is bringing WKH� H́[FHSWLRQDO�KDOIĦFHQWXU\µ��WKH�second half of the 20th century, to an HQG�īVHH�+DQV�-�UJHQ�.U\VPDQVNL�LQ�KLV�ī*HUPDQĦODQJXDJHĬ�7HOHSROLV�interview http://www.heise. de/tp/artikel/31/31762/1.html and his book .U\VPDQVNL�����Ĭ��

24 Kraus et al. 2009; Kraus et al. 2012; Piff et al. 2010; Piff et al. 2012a; Piff et al. 2012b; Twenge 2006; Twenge and Campbell 2009.

25 American studies on fundraising demonstrate that while the wealthy donate large sums of money, these UHSUHVHQW�RQO\����ı�RI�WKHLU�LQFRPH��while the poorest members of society GRQDWH����ı�RI�WKHLU�LQFRPH�WR�charities. 26 Billionaires, removed from reality as they are, are prone to PDNH�RXWUDJHRXV�FRPPHQWV�īPXFK�OLNH�SURYLQFLDO�SROLWLFLDQVĬ��7KH�American billionaire Tom Perkins, IRU�H[DPSOH��WDONV�DERXW� D́�ZDU�RQ�the rich in America”, a war aimed DW�WKH��ı��ZKLFK�KH�FRPSDUHV�WR�WKH�Nazi persecution of the Jews and .ULVWDOOQDFKW�ī'HU�6WDQGDUG�����-DQXDU\�����Ĭ�

27 www.looktothestars.org 28Of course, the number of organisations that receive support says nothing about the degree or volume of that support. But a list of the pertinent organisations gives us some sense of the dimensions of the “philanthropic market”. Using Bob *HOGRI�DV�RXU�H[DPSOH��WKH�IROORZLQJ�

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organisations appear on the list: 21st Century Leaders, 46664, Aegis Trust, Amnesty International, Bottletop, Cinema For Peace, Elton John AIDS Foundation, Estamos, Live 8, Make Poverty History, Mo Farah Foundation, ONE Campaign, Population Services International, RADD, Raisa Gorbachev Foundation, War Child, Whatever It Takes, Willow Foundation. 29 Carnegie 1901.

�� Original: de.wikipedia.RUJ��NH\ZRUG�´1RQĦ3URILWĦ2UJDQLVDWLRQµ��ĭ������Į� �� The ten largest donors in the 86�DUH��:DUUHQ�%XIIHW�īHVWLPDWHG�GRQDWLRQV�RI����ELOOLRQ�GROODUVĬ��%LOO��0HOLQGD�*DWHV�ī���ELOOLRQĬ��*HRUJH�.DLVHU�īEDQN�&(2��DERXW���ELOOLRQĬ��*HRUJH�6RURV�ī��ELOOLRQĬ��:LOOLDP�%DUURQ�+LOWRQ�īKRWHO�FKDLQ������ELOOLRQĬ��WKH�:DOWRQ�IDPLO\�ī:DOPDUW����ELOOLRQĬ��+HUEHUW��0DULRQ�6DQGOHU�īVDYLQJV�EDQN������ELOOLRQĬ��3HWHU�3HWHUVRQ�ī%ODFNVWRQH������ELOOLRQĬ��'RQDOG�%UHQ�īUHDO�HVWDWH������ELOOLRQĬ��0LFKDHO�%ORRPEHUJ�ī����ELOOLRQĬ��Spiegel Online 04 August 2010, with information taken from %XVLQHVV�:HHN�ĭ������Į� �� With reference to volume alone, the Stichting INGKA Foundation in the Netherlands is somewhat larger, but it was created by Ingvar Kamprad for the IKEA chain and spends only between 65 and 82 PLOOLRQ�HXURV�DQQXDOO\�ī�����DQG�����Ĭ�IRU�FKDULWDEOH�SXUSRVHV��7KH�money is donated to organisations such as UNICEF, UNHCR and UNDP.

�� Buffett comes up with other ideas as well to raise money for charitable causes: “Millions for a meal with Warren Buffett. The legendary investor once again auctioned off the opportunity to have a meal with him, which ZHQW�IRU�����PLOOLRQ�GROODUV��ħ�7KH�legendary investor Warren Buffett auctioned off a lunch date with him and broke his previous record by an astounding margin. On late Friday

HYHQLQJ�īORFDO�WLPHĬ��DQ�XQQDPHG�bidder won the annual auction, securing a lunch date in New York with the third richest man in the world. The 106th and final bid was IRU�����������GROODUV�ī�����PLOOLRQ�HXURVĬ��/DVW�\HDU·V�ZLQQLQJ�ELG�was 2.6 million. The winner and seven of his or her friends will join Buffett for lunch at the New York steakhouse Smith & Wollensky. The bid will go to support the charity GLIDE, which works with the homeless and other disadvantaged people in San Francisco. The lunch is regarded as a huge accolade in the financial sector. Buffett, who will be 82 in August, is a living legend in the investment world. Though he is ranked as the third richest person in the world by Forbes thanks to KLV����ELOOLRQ�GROODU�IRUWXQH�ī�����ELOOLRQ�HXURVĬ��KH�OLYHV�UHODWLYHO\�simply and donates large sums of PRQH\�µ�ī$3$���-XQH�������'HU�Standard 9 June 2012, derstandard.DW�ĭ������ĮĬ

�� Warren E. Buffett: “Stop &RGGOLQJ�WKH�6XSHUĦ5LFKµ��1HZ�York Times, 14 August 2011. ĭ������Į��%XIIHWW�FDQ�MXVWLI\�KLV�argument: “Our leaders have asked for ‘shared sacrifice’. But when they did the asking, they spared me. I checked with my PHJDĦULFK�IULHQGV�WR�OHDUQ�ZKDW�SDLQ�WKH\�ZHUH�H[SHFWLQJ��7KH\��too, were left untouched. While the poor and middle class fight for us in Afghanistan, and while most Americans struggle to make HQGV�PHHW��ZH�PHJDĦULFK�FRQWLQXH�WR�JHW�RXU�H[WUDRUGLQDU\�WD[�breaks. Some of us are investment managers who earn billions from our daily labors but are allowed to classify our income as ‘carried interest’, thereby getting a bargain ���SHU�FHQW�WD[�UDWH��2WKHUV�RZQ�VWRFN�LQGH[�IXWXUHV�IRU����PLQXWHV�and have 60 per cent of their gain WD[HG�DW����SHUFHQW��DV�LI�WKH\·G�EHHQ�ORQJĦWHUP�LQYHVWRUV��7KHVH�DQG�RWKHU�blessings are showered upon us by legislators in Washington who feel compelled to protect us, much as if we were spotted owls or some other endangered species. It’s nice to have friends in high places. Last year my IHGHUDO�WD[�ELOO�Ĩ�WKH�LQFRPH�WD[�,�

SDLG��DV�ZHOO�DV�SD\UROO�WD[HV�SDLG�E\�PH�DQG�RQ�P\�EHKDOI�Ĩ�ZDV�ij�����������7KDW�VRXQGV�OLNH�D�ORW�of money. But what I paid was only �����SHUFHQW�RI�P\�WD[DEOH�LQFRPH�Ĩ�DQG�WKDW·V�DFWXDOO\�D�ORZHU�percentage than was paid by any of the other 20 people in our office. 7KHLU�WD[�EXUGHQV�UDQJHG�IURP����percent to 41 percent and averaged 36 percent. If you make money with PRQH\��DV�VRPH�RI�P\�VXSHUĦULFK�friends do, your percentage may be a bit lower than mine. But if you earn money from a job, your percentage ZLOO�VXUHO\�H[FHHG�PLQH�Ĩ�PRVW�likely by a lot.”

�� www.spiegel.de on 04.08.2010 ĭ������Į�

�� The foundation’s website lists the following objectives: “The Foundation’s programs have ambitious goals that include: helping to reduce global poverty, limiting the risk of climate change, improving education for students in California and elsewhere, improving reproductive health and rights worldwide, supporting vibrant performing arts in our community, advancing the field of philanthropy, and supporting disadvantaged communities in the 6DQ�)UDQFLVFR�%D\�$UHD�µ�īZZZ�KHZOHWW�RUJĬ

�� Yunus won the 2006 Nobel Peace Prize and is described on the Nobel Prize Committee’s website as “Banker to the Poorest of the Poor”: “Muhammad Yunus and Grameen Bank were awarded the Nobel Peace Prize for 2006 for their work to ‘create economic and social development from below’. Grameen Bank’s objective since its establishment in 1983 has been to grant poor people small ORDQV�RQ�HDV\�WHUPV�ħ�VRĦFDOOHG�PLFURĦFUHGLW�ħ�DQG�<XQXV�ZDV�WKH�bank’s founder. In 1972, following studies in Bangladesh and the USA, Yunus was appointed professor of economics at the University of Chittagong. When Bangladesh suffered a famine in 1974, he felt that he had to do something more for the poor beyond simply teaching. +H�GHFLGHG�WR�JLYH�ORQJĦWHUP�ORDQV�

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to people who wanted to start their own small enterprises. This initiative ZDV�H[WHQGHG�RQ�D�ODUJHU�VFDOH�through Grameen Bank. According to Yunus, poverty means being deprived of all human value. He regards PLFURĦFUHGLW�ERWK�DV�D�KXPDQ�ULJKW�and as an effective means of emerging from poverty: Lend the poor money in amounts which suit them, teach them a few basic financial principles, and they generally manage on their own, <XQXV�FODLPV�µ�īZZZ�QREHOSUL]H�RUJ�ĭ������ĮĬ

�� ZZZ�JRRJOH�FRP�JLYLQJ�ĭ������Į��They point out with regard to disasters: “Since 2005, we’ve donated PRUH�WKDQ�ij���PLOOLRQ�WR�UHOLHI�and recovery efforts around the world, including Hurricane Sandy, Hurricane Katrina, Northern India flooding, the Oklahoma tornado, the Japan earthquake and tsunami. In addition to critical crisis response tools, we provide grants that support first responders DQG�ORQJĦWHUP�UHEXLOGLQJ�HIIRUWV�µ�In the area of community grants they note: “Google has offices in 70 cities and more than 40 countries around the world. Wherever we are, we give to nonprofits that are working to make these communities better, with initiatives ranging from robotics training in Germany to park rehabilitation in New York to historic conservation sites in the UK.” The VLWH·V�NH\�WDNHĦDZD\�LV��´(DFK�\HDU��ZH�GRQDWH�ij������������LQ�JUDQWV���������KRXUV��ij���ELOOLRQ�LQ�SURGXFWV�´�

��Critics are sceptical about the various results of this process: “Crammed with large and small private foundations, charities and PXOWLĦELOOLRQ�GROODU�SXEOLF�LQVWLWXWLRQV�ZLWK�KXJH��FRPSOH[�DQG�XQZLHOG\�bureaucracies, each competing for funds and attention, the industry offers a quagmire of goals and purposes, supported by powerful public relations campaigns, lobbyists and political allies. As HELP has H[SDQGHG��LW�FRQIOLFWV�ZLWK�WKH�democratic values we live by, choices of our representatives, and checks and balances. Peopled with saints and charlatans, self interested and devoted, and, on the side, professionals hired to raise money, earning a

percentage of all money raised, academics hired to support policies that many consider questionable, consultants and employees who fight for their own agendas, to preserve their job or advancement, the industry has become an unwieldy PHVV�µ�ī:RUWPDQ�����Ĭ 40 Bishop and Green 2008. 41 Letts et al. 1997.

42 HYSD�HX�FRP�NQRZOHGJHĦFHQWUH�ZKDWĦLVĦYS��ĭ������Į

�� Kramer 2009.

44 One project that is offered as DQ�H[DPSOH�RI�WKLV�W\SH�RI�FDWDO\WLF�approach is Thomas Siebel’s DQWLĦPHWKDPSKHWDPLQH�FDPSDLJQ��Methamphetamine is an addictive and highly dangerous drug that can lead to psychological problems and all sorts of destructive behaviour. Its use is widespread in rural America. Living on his Montana ranch in 2005, Siebel learned of the especially high incidence of use in that state. A preliminary study showed that not only adults, but especially younger people, had little idea about the harm the drug posed. Siebel hired an advertising firm to develop a ILUVWĦFODVV�FRPSUHKHQVLYH�FDPSDLJQ�īSULQW��RQOLQH��SRVWHUV��79Ĭ�LQFOXGLQJ�using some of the best directors in Hollywood. The result was a shocking campaign with disturbing photos. ī7KH�FDPSDLJQ�DOVR�KDSSHQHG�WR�ZLQ����LQWHUQDWLRQDO�DGYHUWLVLQJ�DZDUGV�Ĭ�7KH�ZKROH�WKLQJ�ZDV�H[FHHGLQJO\�professional in approach, including the use of focus groups to ensure that it would reach teenagers. Siebel established a 2 million dollar annual budget. After three years, meth use in 0RQWDQD�KDG�IDOOHQ���ı�DPRQJVW�WHHQDJHUV�DQG���ı�DPRQJVW�DGXOWV��while crime associated with the use RI�WKH�GUXJ�ZDV�UHGXFHG�E\���ı��Knowledge about the dangers posed by WKH�GUXJ�KDV�ULVHQ�IURP���ı�WR���ı�among young people. Following the initial phase, “reminder campaigns” are initiated from time to time, too. ī.UDPHU�����Ĭ

45 There are two corresponding forms of SROIs: prognostic and

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evaluative analyses. These are distinctly related to social DFFRXQWLQJ�DQG�FRVWĦEHQHILW�DQDO\VHV��All the same, SROI analyses aim to establish a financial quantification in accordance with normal business accounting practices, with financial SUR[LHV�LI�QHHG�EH��6HH�WKH�KRPHSDJH�www.thesroinetwork.org.

46 Issuu.com/csspcompany/docs/ formendermodernenphilanthropie_FVVS��S�����ĭ������Į��

47 ZZZ�EHWWHUSODFH�RUJ�ĭ������Į��According to the website, more good projects are made available to choose from, transparency and a sense of connection are created DQG�ħ�WKDQNV�WR�WKH�´ZHE�RI�WUXVWµ��the interactive messages provided E\�XVHUV�ħ�D�VLJQLILFDQW�OHYHO�RI�reliability is achieved. “Our ‘Web of Trust’ provides you with a greater number of evaluations from more differentiated perspectives. Nowadays, everyone has their own criteria for determining what makes a good social project. One may support a small, local project in Kenya because a friend recommended it after having travelled there. Another may support a German aid organisation because it has done good work for decades now. Others may only trust organisations with a “donors’ seal” or Ashoka, the largest organisation for social entrepreneurs. We are able to reflect all of these individual perspectives and assessments in this ‘web of trust’ that is being spun around all of the projects included on betterplace.org.”

48 This is a variation on that model for creating and disseminating information that LV�GHULYHG�IURP�LQIRUPDWLRQĦSRRU�FRQQHFWLRQV�RQ�WKH�LQWHUQHW�ħ�LW�is meant to compensate for this by creating a sense of trust. You can find similar opportunities to provide reviews on travel sites, Amazon and eBay as well as with many companies. This way of providing reactions and responses functions less well in those areas that place a great emphasis on “discourse”, such as in the opinion columns offered in many daily

newspapers. In these types of fora, little else receives attention aside from the unbelievable malice, pessimism and hypocrisy we can find in our fellow human beings.

49 Reich 2013.

50 This argument only becomes convincing when the fact that wealthy individuals dedicate a portion of their assets to philanthropic activities is used to justify not spending time or effort to ensure a more just societal distribution of income because the money will in fact be redistributed via secondary or tertiary channels.

51 In this case, however, we will KDYH�WR�ORRN�DW�FRQFUHWH�H[DPSOHV��If the term is understood in its broadest sense, then everything a foundation does has “political” significance. But it is something else entirely, of course, when the +HZOHWW�)RXQGDWLRQ��IRU�H[DPSOH��supported a lawsuit against the state of California that sought to LPSURYH�WKH�VWDWH·V�VFKRROV�īZLWK�respect to school infrastructure DQG�WKH�TXDOLW\�RI�WHDFKHUVĬ��7KH�3HZ�&KDULWDEOH�7UXVW�H[SOLFLWO\�supported a lobbying campaign to improve legal standards related to HQHUJ\�HIILFLHQF\��ī.UDPHU�����Ĭ

52 Another may support a German aid organisation because it has done good work for decades now. �� Robert Reich summarised WKLV�ZHOOĦNQRZQ�LVVXH�DV�IROORZV��“Philanthropy in the United States is not just the voluntary activity of a donor. Philanthropy in general, including the work of foundations, LV�JHQHURXVO\�WD[ĦVXEVLGL]HG��7KH�assets transferred to a foundation E\�D�GRQRU�DUH�OHIW�XQWD[HG�LQ�two respects: the donor makes the GRQDWLRQ�PRUH�RU�OHVV�WD[ĦIUHH��GLPLQLVKLQJ�WKH�WD[�EXUGHQ�VKH�would face in the absence of the donation; and the assets that constitute a foundation’s endowment, invested in the PDUNHWSODFH��DUH�DOVR�PRVWO\�WD[Ħfree. The details of the subsidy have varied over time, but philanthropy in the United States has long

LQYROYHG�VXEVLGL]LQJ�WKH�H[HUFLVH�RI�LQGLYLGXDO�OLEHUW\�µ�ī5HLFK�����Ĭ�These types of state contributions GLG�QRW�H[LVW�GXULQJ�WKH�ILUVW�JROGHQ�age of foundations.

54 Reich 2013. Increased innovation brings with it increased risk, which also means a higher rate of failure. But failure is to be avoided at all costs in both politics and in the financial markets, which is why there is a tendency towards less innovation in the mainstream.

55 Edwards 2008.

56 Edwards 2008, p. 62.

57 Robert Reich encourages transparency: “Transparency might increase accountability. But apart from fulfilling the payout and WD[ĦILOLQJ�REOLJDWLRQV��IRXQGDWLRQV�can, and frequently do, act secretly. They need not have a Web site or office, publish an annual or quarterly report, or articulate any JUDQWĦPDNLQJ�VWUDWHJ\��7KH\�QHHG�not evaluate their grant making. If they do, they need not make such evaluations public. Foundations sometimes do act transparently, providing all of the above information and more. You can find similar opportunities to provide reviews on travel sites, Amazon and eBay as well as with many FRPSDQLHV�µ�ī5HLFK�����Ĭ

58 Wortman 2014.

59 See Reich 2013.

60 Similar documents can be found at other foundations as well. See www.fordfoundation.org, for H[DPSOH�

61 www.hewlett.org

62 www.charitywatch.org

�� www.charitynavigator.org

64 www.bbb.org

65 National Council of Nonprofit Associations: Rating the Raters. An Assessment of Organizations and Publications That Rate/Rank

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Charitable Nonprofit Organizations īDYDLODEOH�DW��ZZZ�GRQRUVIRUXP�RUJĬ�ĭ������Į�

66 www.givewell.org

67 www.givingwhatwecan.org

68 www.thelifeyoucansave.org. Some of these organisations, like the one named here, have grown out of GLIIHUHQW�DLPV�ħ�3HWHU�6LQJHU�ZURWH�a book entitled The Life You Can Save in 2009, which is the origin of this group.

69 Peter Singer, “Good Charity, Bad Charity”, New York Times Sunday Review, 10 August 2013. Jake Hildner provided a reply: “Is There a ‘Better’ Worthy Cause?”, New York Times Sunday Review, 12 August 2013 īZZZ�Q\WLPHV�FRP��ĭ������ĮĬ�

70 www.thelifeyoucansave.org ĭ������Į

71 Simmel 1983, p. 444. The French anthropologist and philosopher Marcel Hénaff similarly argued in his book on the price of truth that it was misguided to think of the category of giving as simply an antecedent of WKH�HFRQRPLF�H[FKDQJH�RI�JRRGV�ħ�LW�FUHDWHG�VRFLDO�FRKHVLRQ�ī+pQDII�����Ĭ��But it also indicates a challenge: it is an act of generosity in the game of recognition. When one gives, one gives VRPHWKLQJ�RI�RQHVHOI�WRR��ī6HH�DOVR�%HGRUI������Ĭ

72 Interview in Der Standard from 7 January 2014. This succinct sentence manages, in its banality, to hit the target, as depth psychologists have continually speculated on the degree to which cars in generally, and powerful cars more specifically, may DFW�DV�V\PEROV�RI�VH[XDO�SRWHQF\��7KHUH�are good reasons to believe, however, that a particular object in the garage FDQQRW�H[HUW�PXFK�LQIOXHQFH�RQ�WKH�pertinent biological functions. But the parties involved seem to believe it does.

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%D\HUW]��.XUW�īHG�Ĭ�ī����Ĭ��Solidarität. Begriff und Problem. ĭ6ROLGDULW\��7KH�WHUP�DQG�WKH�SUREOHP�Į�)UDQNIXUW�D�0���Suhrkamp.%HGRUI��7KRPDV�ī����Ĭ��Verkennende Anerkennung. Über ,GHQWLWlW�XQG�3ROLWLN��ĭ7KH�ZURQJ�recognition. On identity and SROLWLFV�Į�)UDQNIXUW�D�0��6XKUNDPS�Bishop, Matthew; Green, Michael ī����Ĭ��3KLODQWKURFDSLWDOLVP��+RZ�the Rich Can Save the World. New York: Bloomsbury Press.%UXQNKRUVW��+DXNH�ī����Ĭ��Solidarität. Von der %�UJHUIUHXQGVFKDIW�]XU�JOREDOHQ�5HFKWVJHQRVVHQVFKDIW��ĭ6ROLGDULW\��From civic friendship to a global OHJDO�FRPPXQLW\�Į�)UDQNIXUW�D�0���Suhrkamp.&DUQHJLH��$QGUHZ�ī����Ĭ��7KH�Gospel of Wealth and Other Timely Essays. New York: The Century.(GZDUGV��0LFKDHO�ī����Ĭ��-XVW�Another Emperor? The Myths and Realities of Philanthrocapitalism. New York: Demos.)UDQN��5REHUW�/��ī����Ĭ��5LFKLVWDQ��A Journey Through the 21st Century Wealth Boom and the Lives of the New Rich. London: Piatkus.+pQDII��0DUFHO�ī����Ĭ��'HU�3UHLV�der Wahrheit. Gabe, Geld und 3KLORVRSKLH��ĭ7KH�3ULFH�RI�7UXWK��JLIWV��PRQH\�DQG�SKLORVRSK\Į�Frankfurt a.M.: Suhrkamp. Hondrich, Karl Otto; .RFKĦ$U]EHUJHU��&ODXGLD�ī����Ĭ��Solidarität in der modernen *HVHOOVFKDIW��ĭ6ROLGDULW\�LQ�WKH�PRGHUQ�VRFLHW\�Į�)UDQNIXUW�D�0���Fischer TaschenbuchVerlag. +|VOH��9LWWRULR�ī����Ĭ��0RUDO�und Politik. Grundlagen einer SROLWLVFKHQ�(WKLN�I�U�GDV�����-DKUKXQGHUW��ĭ0RUDOV�DQG�SROLWLFV��3ROLWLFDO�HWKLFV�IRU�WKH���VW�FHQWXU\�Į�Munich: Beck..HUVWLQJ��:ROIJDQJ�īHG�Ĭ�ī����Ĭ��Politische Philosophie des 6R]LDOVWDDWV��ĭ3ROLWLFDO�SKLORVRSK\�RI�WKH�VRFLDO�ZHOIDUH�VWDWH�Į�:HLOHUZLVW��9HOEU�FN�.UDPHU��0DUN�5��ī����Ĭ��&DWDO\WLF�Philanthropy. In: Stanford Social ,QQRYDWLRQ�5HYLHZ�ī)DOOĬ�

Kraus, Michael W.; Piff, Paul K.; .HOWQHU��'DFKHU�ī����Ĭ��6RFLDO�Class, Sense of Control, and Social ([SODQDWLRQ��,Q��-RXUQDO�RI�Personality & Social Psychology 97 ī�Ĭ��S�����ħ������Kraus, Michael W.; Piff, Paul .���0HQGR]DĦ'HQWRQ��5RGROIR��Rheinschmidt, Michelle L.; Keltner, 'DFKHU�ī����Ĭ��6RFLDO�&ODVV��6ROLSVLVP��DQG�&RQWH[WXDOLVP��+RZ�the Rich are Different from the Poor. In: Psychological Review 119 ī�Ĭ��3�����ħ����.U\VPDQVNL��+DQV�-�UJHQ�ī����Ĭ��+LUWHQ��:|OIH��:LH�*HOGĦ�XQG�Machteliten sich die Welt aneignen. ĭ6KHSKHUGV�DQG�ZROYHV��+RZ�money and power elites seize the ZRUOG�Į��QG��HGLWLRQ��0XQVWHU��9HUO��Westfälisches Dampfboot.Letts, C. W.; Ryan, W.; Grossman, $��ī����Ĭ��9LUWXRXV�&DSLWDO��:KDW�Foundations can Learn from Venture Capitalists. In: Harvard %XVLQHVV�5HYLHZ����ī�Ĭ��3����ħ���0DXVV��0DUFHO�ī����Ĭ��'LH�*DEH��Form und Funktion des Austauschs in archaischen Gesellschaften. ĭ7KH�*LIW��)RUPV�DQG�IXQFWLRQV�RI�H[FKDQJH�LQ�DUFKDLF�VRFLHWLHV�Į�Frankfurt a.M.: Suhrkamp.Piff, Paul K.; Kraus, Michael W.; Côté, Stéphane; Cheng, Bonnie +D\GHQ��.HOWQHU��'DFKHU�ī����Ĭ��Having Less, Giving More: The Influence of Social Class on Prosocial Behavior. In: Journal of Personality and Social Psychology ���ī�Ĭ��3�����ħ�����Piff, Paul K.; Stancato, Daniel M.; &{Wp��6WpSKDQH��0HQGR]DĦ'HQWRQ��5RGROIR��.HOWQHU��'DFKHU�ī����DĬ��Higher Social Class Predicts Increased Unethical Behavior. In: Proceedings of the National Academy of Sciences of the United 6WDWHV�RI�$PHULFD�����ī��Ĭ��3������ħ�����Piff, Paul K.; Stancato, Daniel M.; Martinez, Andres G.; Kraus, Michael W.; Keltner, Dacher ī����EĬ��&ODVV��&KDRV��DQG�WKH�Construction of Community. In: Journal of Personality and Social 3V\FKRORJ\�����ī�Ĭ��3�����ħ����3ULVFKLQJ��0DQIUHG�ī����Ĭ��Solidarität: Der vielschichtige Kitt menschlichen Zusammenlebens. ĭ6ROLGDULW\��WKH�FRPSOH[�FHPHQW�RI�KXPDQ�FRH[LVWHQFH�Į�,Q��6WHSKDQ�

/HVVHQLFK�īHG�Ĭ��:RKOIDKUWVVWDDWOLFKH�Grundbegriffe. Historische und DNWXHOOH�'LVNXUVH��ĭ%DVLF�FRQFHSWV�of the welfare state. Historical and FXUUHQW�GHEDWHV�Į�)UDQNIXUW�0DLQ��&DPSXV��S�����ħ����3ULVFKLQJ��0DQIUHG�ī����Ĭ��Solidarität und europäische /LIHVW\OHV��ĭ6ROLGDULW\�DQG�(XURSHDQ�OLIHVW\OHV�Į�,Q��&OHPHQV�6HGPDN�īHG�Ĭ��6ROLGDULWlW��9RP�:HUW�GHU�*HPHLQVFKDIW��ĭ6ROLGDULW\��2Q�WKH�YDOXH�RI�FRPPXQLW\�Į�'DUPVWDGW��:%*��S����ħ���5HLFK��5REHUW�%��ī����Ĭ��:KDW�DUH�Foundations for? In: Boston Review. Online bostonreview.net/forum, last checked on 140223.5HVFKHU��1LFKRODV�ī����Ĭ��Unselfishness. The Role of the Vicarious Affects in Moral Philosophy and Social Theory. Pittsburgh: University of Pittsburgh Press.6LPPHO��*HRUJ�ī����Ĭ��6R]LRORJLH��8QWHUVXFKXQJHQ��EHU�GLH�Formen der Vergesellschaftung. ĭ6RFLRORJ\��6WXGLHV�RQ�WKH�IRUPV�RI�VRFLDOLVDWLRQ�Į�%HUOLQ��'XQFNHU��Humblot.7ZHQJH��-HDQ�0��ī����Ĭ��Generation Me. Why Today’s Young Americans are More Confident, $VVHUWLYH��(QWLWOHG�ħ�DQG�0RUH�Miserable Than Ever Before. New York: Free Press.Twenge, Jean M.; Campbell, W. .HLWK�ī����Ĭ���1DUFLVVLVP�(SLGHPLF��Living in the Age of Entitlement. New York: Free Press.:RUWPDQ��0LOHV�ī����Ĭ��7KH�Road to HELP. The Revolution in Charity, Philanthropy and International Development: Create Space.=LPPHU��0DWWKLDV�ī����Ĭ��*UHQ]HQ�GHU�6ROLGDULWlW��ĭ/LPLWV�RI�6ROLGDULW\�Į�,Q��0HUNXU����ī���Ĭ��S�����ħ����

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HTXLYDOHQWVī��7KH�PHWKRG�XVHG�IRU�GHWHUPLQLQJ�IXOOĥWLPH�HTXLYDOHQWV�LQ������ZDV�PRGLILHG�FRPSDUHG�ZLWK�WKH�PHWKRG�XVHG�LQ�������(PSOR\HHV�RQ�SDUHQWDO�RU�XQSDLG�OHDYH�DUH�QRZ�RQO\�LQFOXGHG�LQ�WKH�RYHUDOO�KHDGFRXQW��EXW�QRW�LQ�WKH�IXOOĥWLPH�HTXLYDOHQWV��ZKLFK�LV�ZK\�WKHUH�LV�D�corresponding discrepancy FRPSDUHG�ZLWK�WKH�ILJXUHV�IRU������

&DSLWDO�%DQN�LV�FRQVFLRXV�RI�LWV�social responsibility as a member of VRFLHW\��'XULQJ�WKH�\HDU�XQGHU�UHYLHZ��LW�RIIHUHG�D�ODUJH�QXPEHU�RI�presentations and lectures on HFRQRPLF�LVVXHV�IUHH�RI�FKDUJH��,Q�WKH�VSHFLDOLVW�OHFWXUHV�GHOLYHUHG�DW�XQLYHUVLWLHV��WKH�EDQNV�SULPDU\�DLP�LQ�DOO�FDVHV�ZDV�WR�SURYLGH�VWXGHQWV�ZLWK�H[SHUW�NQRZOHGJH�DQG�JLYH�WKHP�DQ�LQVLJKW�LQWR�GD\ĥWRĥGD\�EXVLQHVV�SUDFWLFH�LQ�WKH�EDQNLQJ�LQGXVWU\��&DSLWDO�%DQN�DOVR�SURYLGHV�financial support for numerous social and higher education LQVWLWXWLRQV��

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General economic conditions

The factors underlying the economic conditions in �����ZHUH�WKH�VDPH�IDFWRUV�WKDW�KDG�GHWHUPLQHG�HFRQRPLF�WUHQGV�LQ�SUHYLRXV�\HDUV��7KH�SHUVLVWHQW�VRYHUHLJQ�GHEW�FULVLV�LQ�(XURSH��GLVSXWHV�LQ�WKH�86�about the debt ceiling, slowing growth in the &KLQHVH�HFRQRP\�DQG�LQWHUYHQWLRQ�E\�WKH�OHDGLQJ�FHQWUDO�EDQNV�GRPLQDWHG�WKH�\HDUV�HFRQRPLF�QHZV�

7KH�HXUR�]RQH�H[SHULHQFHG�LWV�VHFRQG�\HDU�RI�UHFHVVLRQ�LQ�D�URZ��+LJK�XQHPSOR\PHQW�ILJXUHV�DQG�the repayment of debt dampened down economic JURZWK��7KHUH�ZDV�QR�VKRUWDJH�RI�UHIRUPV��HLWKHU�LQ�WKH�SHULSKHUDO�FRXQWULHV�RI�WKH�HXUR�]RQH�RU�DW�(8�OHYHO��'HVSLWH�UHFHVVLRQ�DQG�WKH�VXVWDLQHG�KLJK�OHYHO�of budget deficits, there was some easing in capital PDUNHW�SUHVVXUH�RQ�WKH�FRXQWULHV�RI�WKH�HXUR�]RQH�SHULSKHU\��7KLV�QRW�RQO\�UHGXFHG�WKH�ULVN�SUHPLXPV�imposed on these countries, it also ultimately IDFLOLWDWHG�,UHODQGV�UHWXUQ�WR�WKH�FDSLWDO�PDUNHWV��$W�WKH�PLGSRLQW�LQ�������WKH�HXUR�]RQH�UHWXUQHG�WR�JURZWK�IROORZLQJ�VL[�VXFFHVVLYH�TXDUWHUV�LQ�UHFHVVLRQ��SRVWLQJ�TXDUWHUĥRQĥTXDUWHU�JURZWK�RI����İ��+RZHYHU��WDNLQJ�WKH�\HDU�DV�D�ZKROH��HFRQRPLF�RXWSXW�LV�H[SHFWHG�WR�KDYH�IDOOHQ�E\����İ�RYHUDOO��DOWKRXJK�WKLV�LV�VWLOO�WKH�DJJUHJDWH�IURP�WZR�GLIIHUHQW�WUHQGV��7KHUH�UHPDLQV�D�VLJQLILFDQW�GLYHUJHQFH�EHWZHHQ�WKH�QRUWKHUQ�DQG�VRXWKHUQ�FRXQWULHV�RI�(XURSH��$V�D�result of failures in the monetary policy mechanism, WKH�H[SDQVLRQDU\�PRQHWDU\�SROLF\�RI�WKH�(XURSHDQ�&HQWUDO�%DQN�Ī(&%ī�LV�QRW�UHDFKLQJ�WKH�FRXQWULHV�

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106

WKDW�QHHG�LW�PRVW�XUJHQWO\��,Q�������WKH�(&%�ORZHUHG�LWV�NH\�LQWHUHVW�UDWH�LQ�WZR�VWDJHV�IURP������WR�������1HYHUWKHOHVV��LQIODWLRQ�LQ�WKH�HXUR�]RQH�IHOO�IURP�����LQ������WR�MXVW�����LQ�������)XUWKHUPRUH��D�ELJ�DUHD�RI�FRQFHUQ�IRU�SROLF\PDNHUV�was also the rate of unemployment in Europe, the estimate for 'HFHPEHU������EHLQJ����

In the second half of the year, the 86�HFRQRP\�UHFRYHUHG�IURP�WKH�LQWHULP�ORZ�DW�WKH�VWDUW�RI�������7KH�QXPEHU�RI�MREOHVV�IHOO�IURP����İ�DW�WKH�EHJLQQLQJ�RI�WKH�\HDU�WR����İ�LQ�'HFHPEHU�������WKH�NH\�UHDO�HVWDWH�PDUNHW�DOVR�SXW�LQ�D�VWURQJ�SHUIRUPDQFH�RYHU�WKH�VHFRQG�KDOI�RI�WKH�\HDU��$W�D�PDFURHFRQRPLF�OHYHO��this resulted in economic growth in WKH�WKLUG�TXDUWHU�RI����İ�ĪDQQXDOLVHG�UDWHī��DOWKRXJK�JURZWK�LQ������LV�IRUHFDVW�DW����İ��,Q�YLHZ�RI�WKH�IDYRXUDEOH�HFRQRPLF�WUHQGV��WKH�)HGHUDO�5HVHUYH�Ī)HGī�IHOW�WKH�QHHG�LQ�'HFHPEHU������WR�EHJLQ�WKH�WDSHULQJ�RI�LWV�4(��ERQGĥEX\LQJ�SURJUDPPH��7KLV�ZDV�D�VLJQDO�IURP�)HG�FKDLUPDQ�%HQ�%HUQDQNH�RI�WKH�VZLWFK�IURP�DQ�HFRQRPLF�UHFRYHU\�led by monetary policy to one

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GULYHQ�E\�GHPDQG��%DFN�LQ�-XQH��%HQ�%HUQDQNHV�pronouncements about an imminent tapering of the ERQGĥEX\LQJ�SURJUDPPH�KDG�FDXVHG�ZLGHVSUHDG�WXUPRLO�RQ�JOREDO�FDSLWDO�PDUNHWV��+RZHYHU��E\�WKH�WLPH�'HFHPEHU�FDPH�DURXQG��WKH�PDUNHWV�ZHUH�ZHOO�SUHSDUHG�DQG�WKH�UHVSRQVH�ZDV�UDWKHU�UHOD[HG�

,Q�-DSDQ��WKH�HFRQRP\�EHQHILWHG�LQ������IURP�WKH�ILVFDO�VWLPXOXV�SDFNDJHV�LQWURGXFHG�E\�WKH�JRYHUQPHQW�DQG�WKH�H[SDQVLRQDU\�PRQHWDU\�SROLF\�SXUVXHG�E\�WKH�FHQWUDO�EDQN��$FFRUGLQJ�WR�FXUUHQW�HVWLPDWHV��WKH�ZRUOGV�WKLUGĥODUJHVW�HFRQRP\�LV�WKRXJKW�WR�KDYH�JURZQ�E\����İ�LQ�������7KH�FRXQWU\�DOVR�DSSHDUV�WR�KDYH�EURNHQ�RXW�RI�LWV�GHIODWLRQDU\�VSLUDO��(YHQ�VR��SULFHV�URVH�E\�MXVW����İ�LQ�WKH�\HDU�XQGHU�UHYLHZ��(FRQRPLVWV�DUH�SUHGLFWLQJ�DQ�LQIODWLRQ�UDWH�RI����İ�IRU������

)ROORZLQJ�D�SRRU�VWDUW�WR�������HFRQRPLF�DFWLYLW\�LQ�WKH�(8�PHPEHU�VWDWHV�RI�FHQWUDO��HDVWHUQ�DQG�VRXWKHUQ�(XURSH�VORZO\�EHJDQ�WR�SLFN�XS�DJDLQ�LQ�WKH�WKLUG�TXDUWHU��$YHUDJH�TXDUWHUO\�JURZWK�LQ�WKH�UHJLRQ�FDPH�WR�����

,Q�$XVWULD��JURVV�GRPHVWLF�SURGXFW�Ī*'3ī�JUHZ�E\����İ��VLJQLILFDQWO\�EHORZ�WKH�UDWHV�DFKLHYHG�LQ�SULRU�\HDUV��,I�WKH�HFRQRPLF�IRUHFDVWV�SXEOLVKHG�E\�:,)2�DQG�,+6�SURYH�WR�EH�DFFXUDWH�KRZHYHU��$XVWULD�KDV�therefore already reached the low in the current HFRQRPLF�F\FOH��(FRQRPLF�IRUHFDVWHUV�DUH�SUHGLFWLQJ�DQ�LQIODWLRQ�UDWH�RI����İ�IRU�������7KHUH�ZHUH�DOUHDG\�VLJQV�RI�SRVLWLYH�WUHQGV�LQ�WKH�H[SRUW�VHFWRU�LQ�WKH�

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VHFRQG�KDOI�RI�������2Q�WKH�RWKHU�hand, consumer spending remains muted because of the stagnation in ZDJHV�LQ�UHDO�WHUPV��*LYHQ�WKH�ULVH�in the number of unemployed and SHRSOH�LQ�WUDLQLQJ��WKHUH�LV�XQOLNHO\�WR�EH�D�PDUNHG�UHFRYHU\�LQ�consumer spending in the short WHUP��7KH�XQHPSOR\PHQW�UDWH�GHWHUPLQHG�E\�(XURVWDW�ZDV����İ�LQ�'HFHPEHU��$XVWULD�WKHUHIRUH�KDV�WKH�ORZHVW�MREOHVV�UDWH�LQ�WKH�HXUR�]RQH��,Q�FRQWUDVW��FRQVXPHU�SULFH�inflation in Austria measured using WKH�KDUPRQLVHG�LQGH[�RI�FRQVXPHU�SULFHV�Ī+,&3ī�ZDV����İ�LQ�'HFHPEHU��VLJQLILFDQWO\�KLJKHU�WKDQ�the rate for the euro zone as a whole Ī'HFHPEHU����������İī��,Q������RYHUDOO��WKH�+,&3�LQIODWLRQ�LQGLFDWRU�IHOO�WR����İ�

Capital markets

(YHQ�WKRXJK�HTXLW\�LQGLFHV�VXFK�DV�WKH�*HUPDQ�'$;�RU�WKH�86�63�����DUH�FXUUHQWO\�DW�DQ�DOOĥWLPH�KLJK��WKH�WUHQGV�KDYH�EHHQ�QHLWKHU�LQHYLĥWDEOH�QRU�HYHQO\�VSUHDG�DFURVV�DOO�UHJLRQV��,Q�SDUWLFXODU��WKH�SHUIRUĥmance of the emerging economies

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ZDV�GLVDSSRLQWLQJ�LQ�������7KH\�IHOO�LQWR�WKH�WUDS�VHW�by the looser monetary policy pursued by the Fed in WKH�86��$W�WKH�HQG�RI�WKH�\HDU��WKH�06&,�(PHUJLQJ�0DUNHWV�,QGH[��D�EDURPHWHU�IRU�WUHQGV�LQ�HTXLWLHV�LQ�WKH�HPHUJLQJ�PDUNHWV��ZDV�GRZQ�E\��İ��7KH�GLVDSĥSRLQWPHQW�DOVR�H[WHQGHG�WR�$XVWULDV�HTXLWLHV�PDUNHW��ZKLFK�ZDV�XS�E\�MXVW��İ��2Q�WKH�RWKHU�KDQG��*HUĥPDQ\V�EOXHĥFKLS�VWRFN�PDUNHW�LQGH[��WKH�'$;��ZDV�XS�E\���İ��DV�ZDV�WKH�63�����LQ�WKH�86��+RZHYHU��gold suffered the highest fall in price for more than WKUHH�GHFDGHV��GURSSLQJ�E\�PRUH�WKDQ���İ��%UHQW�&UXGH�DW�HQGHG�WKH�\HDU�DW�86IJ�����SHU�EDUUHO��RQO\�VOLJKWO\�EHORZ�WKH�SULFH�DW�WKH�EHJLQQLQJ�RI�WKH�\HDU�

*RYHUQPHQW�ERQGV�IURP�WKH�5HSXEOLF�RI�$XVWULD�IHOO�E\�DQ�DYHUDJH�RI��İ�ĪLQFOXGLQJ�FRXSRQī��,QYHVWRUV�LQ�86�JRYHUQPHQW�ERQGV�ORVW�DQ�DYHUDJH�RI����İ��'HEW�LQVWUXPHQWV�LVVXHG�E\�WKH�)HGHUDO�5HSXEOLF�RI�*HUPDQ\�GLG�QRW�IDUH�PXFK�EHWWHU��,QYHVWRUV�LQ�HPHUJLQJ�PDUNHW�ERQGV�ZHUH�KLW�E\�WKH�JUHDWHVW�ORVVHV�VLQFH�WKH�FULVLV�LQ�$VLD�LQ�������7KH�RQO\�JDLQV�were on debt instruments issued by the peripheral FRXQWULHV�RI�WKH�HXUR�]RQH��+RZHYHU��FRUSRUDWH�DQG�KLJKĥ\LHOG�ERQGV�DOVR�HQGHG�WKH�\HDU�RQ�D�SRVLWLYH�QRWH�

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BUSINESSPERFORMANCE

Balance sheet

The total assets/total equity and OLDELOLWLHV�RI�&DSLWDO�%DQN�URVH�RYHU�WKH�\HDU�XQGHU�UHYLHZ�E\�DSSUR[LĥPDWHO\�����İ�IURP�Ͱ������PLOOLRQ�WR�Ͱ������PLOOLRQ��7KLV�ZDV�SULPDUĥily attributable to the increase of ����İ�LQ�GHSRVLWV�IURP�FXVWRPHUV�IURP�Ͱ������PLOOLRQ�WR�Ͱ������PLOĥOLRQ�DQG�WKH�ULVH�LQ�WKH�YROXPH�RI�RZQ�LVVXHV�IURP�Ͱ������PLOOLRQ�WR�Ͱ������PLOOLRQ�Ī����İī��2Q�WKH�assets side of the balance sheet, ORDQV�DQG�DGYDQFHV�WR�FXVWRPHUV�FOLPEHG�VLJQLILFDQWO\�IURP�Ͱ������PLOOLRQ�WR�Ͱ������PLOOLRQ��DQ�LQFUHDVH�RI�����İ�

Eligible capital as defined by section ���Ī��ī�RI�WKH�$XVWULDQ�%DQNLQJ�$FW�Ī%:*ī�URVH�RYHU�WKH�\HDU�XQGHU�UHYLHZ�IURP�Ͱ������PLOOLRQ�WR�Ͱ������PLOOLRQ��7KH�FDSLWDO�UHTXLUHĥPHQW�ZHQW�GRZQ�E\�DSSUR[LPDWHO\�����İ�IURP�Ͱ�����PLOOLRQ�DV�DW����'HFHPEHU������WR�Ͱ�����PLOOLRQ�DV�DW�WKH�UHSRUWLQJ�GDWH��$V�D�FRQVHĥ

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TXHQFH��WKH�FDSLWDO�VXUSOXV�DPRXQWHG�WR�DSSUR[LĥPDWHO\�Ͱ������PLOOLRQ��XS�E\�����İ�\HDU�RQ�\HDU��Capital as a percentage of the measurement basis UHPDLQHG�DW�DQ�H[FHSWLRQDOO\�KLJK�OHYHO�FRPSDUHG�ZLWK�WKH�LQGXVWU\�DV�D�ZKROH��7KH�ILJXUH�RI�����İ�ZDV�HYHQ�����SHUFHQWDJH�SRLQWV�KLJKHU�WKDQ�LW�KDG�EHHQ�WZHOYH�PRQWKV�SUHYLRXVO\��2I�WKH�UHSRUWHG�HOLJLEOH�FDSLWDO�RI�Ͱ������PLOOLRQ������İ�ZDV�DFFRXQWHG�IRU�E\�7LHU���FDSLWDO�

5HWXUQ�RQ�HTXLW\�Ī52(ī�LQ�LQ������ZDV����İ�Ī���������İī��XS�E\�DURXQG�����SHUFHQWDJH�SRLQWV�\HDU�RQ�\HDU��5HWXUQ�RQ�DVVHWV�UHPDLQHG�URXJKO\�DW�WKH�VDPH�OHYHO�LQ�WKH�\HDU�XQGHU�UHYLHZ�DW����İ��*LYHQ�WKH�VOLJKW�LQFUHDVH�LQ�SURILW�IURP�RUGLQDU\�DFWLYLWLHV�DQG�the lower capital requirement, return on capital HPSOR\HG�LPSURYHG�E\�����SHUFHQWDJH�SRLQWV�IURP�����İ�WR�����İ�IRU������

$V�WKH�IRFXV�DW�&DSLWDO�%DQN�LV�RQ�IHH�DQG�FRPPLVĥsion business, the changes in total assets and the FRPSDULVRQ�ZLWK�WUDGLWLRQDO�UHWDLO�EDQNLQJ�DUH�OHVV�LPSRUWDQW�LQ�DQ�DQDO\VLV�RI�WKH�EDQNV�SHUIRUPDQFH��7KH�ORQJĥWHUP�REMHFWLYH�RI�WKH�EDQN�LV�WR�JHQHUDWH�UHWXUQV�FRPPHQVXUDWH�ZLWK�WKH�ULVNV�LQYROYHG�LQ�WKH�interests of the owner and thereby to continue to increase the profitability of the business in the IXWXUH�

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Income statement

'HVSLWH�WKH�DFFXPXODWLQJ�FKDOOHQJHV�presented by regulatory changes and increasingly fierce competition, &DSLWDO�%DQN�RQFH�DJDLQ�VXFFHHGHG�LQ�JHQHUDWLQJ�DQ�HQFRXUDJLQJ�OHYHO�RI�HDUQLQJV��,Q�������SURILW�IURP�RUGLQDU\�DFWLYLWLHV�DPRXQWHG�WR�Ͱ����PLOOLRQ��DURXQG����İ�KLJKHU�WKDQ�WKH������ILJXUH�RI�Ͱ����PLOOLRQ��1HW�fee and commission income and net financial income together rose by Ͱ����PLOOLRQ�WR�Ͱ�����PLOOLRQ��1HW�LQWHUHVW�LQFRPH�IHOO�IURP�Ͱ����PLOOLRQ�WR�Ͱ����PLOOLRQ�LQ�WKH�\HDU�XQGHU�UHYLHZ��D�\HDUĥRQĥ\HDU�GHFUHDVH�RI����İ�

3HUVRQQHO�H[SHQVHV�ZHUH�XS�VOLJKWO\�E\����İ�WR�Ͱ�����PLOOLRQ��ZKHUHDV�RWKHU�DGPLQLVWUDWLYH�H[SHQVHV�ZHUH�FXW�IRU�WKH�IRXUWK�\HDU�LQ�VXFFHVVLRQ��2WKHU�DGPLQLVWUDWLYH�H[SHQVHV�WRWDOOHG�Ͱ����PLOOLRQ�IRU�������GRZQ�E\����İ�FRPSDUHG�ZLWK�WKH�HTXLYDOHQW�ILJXUH�IRU������

&DSLWDO�%DQN�JHQHUDWHG�DQ�RSHUDWLQJ�SURILW�RI�Ͱ�����PLOOLRQ�IRU�������7KLV�HTXDWHG�WR�DQ�LQFUHDVH�RI�DSSUR[LPDWHO\����İ�RQ�WKH�

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RSHUDWLQJ�SURILW�RI�Ͱ�����PLOOLRQ�JHQHUDWHG�LQ�������7KH�FRVWĥLQFRPH�UDWLR�DOVR�VDZ�D�\HDUĥRQĥ\HDU�LPSURYHPHQW�IURP�����İ�WR�����İ�

Volume of client custody accounts

,Q�������&DSLWDO�%DQN�FRQWLQXH�WR�IRFXV�RQ�JDLQLQJ�PDUNHW�VKDUH�DQG�WKXV�H[SDQGLQJ�LWV�YROXPH�RI�FOLHQW�FXVWRG\�DFFRXQWV��+RZHYHU��WKH�JURZWK�RI����İ�LQ�WKH�YROXPH�RI�FOLHQW�FXVWRG\�DFFRXQWV�IURP�Ͱ����ELOOLRQ�WR�Ͱ����ELOOLRQ�IHOO�VKRUW�RI�IRUHFDVWV��2XU�VXEVLGLDU\��6HFXULW\�.DSLWDODQODJH�$NWLHQJHVHOOVFKDIW��VXEVWDQWLDOO\�LQFUHDVHG�LWV�YROXPH�RI�FXVWRG\�DFFRXQWV�IURP�Ͱ�����ELOOLRQ�DV�DW����'HFHPEHU������WR�Ͱ�����ELOOLRQ�DV�DW����'HFHPEHU�������7KLV�HTXDWHV�WR�D�\HDUĥRQĥ\HDU�LQFUHDVH�RI�����İ��,Q�������WKH�&$3,7$/�%$1.�Ħ�*5$:(�*5833(�$*�subgroup generated growth in assets under PDQDJHPHQW�ĪLQFOXGLQJ�RZQ�LVVXHVī�RI�Ͱ������PLOOLRQ��DFKLHYLQJ�LQ�WRWDO�D�QHZ�UHFRUG�ILJXUH�RI�Ͱ������ELOOLRQ�ĪXS�E\����İī�

Proposed dividend

7KH�SURILW�IURP�RUGLQDU\�DFWLYLWLHV�JHQHUDWHG�LQ������DPRXQWHG�WR�Ͱ����PLOOLRQ��$IWHU�DQ�DSSURSULDWH�resolution has been passed at the annual general PHHWLQJ��&DSLWDO�%DQN�ZLOO�SD\�D�GLYLGHQG��ZKLFK�LV�H[SHFWHG�WR�EH�LQ�WKH�DPRXQW�RI�Ͱ����PLOOLRQ��WR�LWV�RZQHU�+<32ĥ%$1.�%85*(1/$1'�$NWLHQJHVHOOVFKDIW�

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114

Outlook

The global economy was showing FOHDU�VLJQV�RI�LPSURYHPHQW�LQ�WKH�VHFRQG�KDOI�RI�������$FFRUGLQJ�WR�current assessments, the global HFRQRPLF�UHFRYHU\�ZLOO�FRQWLQXH�GXULQJ������DQG�������7KH�,QWHUQDWLRQDO�0RQHWDU\�)XQG�Ī,0)ī�LV�SUHGLFWLQJ�JURZWK�RI����İ�IRU�������7KH�ODWHVW�IRUHFDVWV�H[SHFW�JURZWK�WR�ULVH�WR����İ�LQ������

7KH�LQGXVWULDOLVHG�QDWLRQV�DUH�OLNHO\�WR�EH�WKH�PDLQ�GULYHUV�EHKLQG�WKLV�HFRQRPLF�XSWXUQ��$OWKRXJK�WKH�emerging economies will continue WR�PDNH�D�VLJQLILFDQW�FRQWULEXWLRQ�to this growth, the pace of growth LQ�WKHVH�PDUNHWV�ZLOO�VODFNHQ��$�W\SLFDO�H[DPSOH�RI�WKLV�WUHQG�LV�China where economic output will RQO\�ULVH�E\�����LQ������FRPSDUHG�ZLWK�����LQ�������(FRQRPLVWV�H[SHFW�WR�VHH�HFRQRPLF�JURZWK�LQ�WKH�86�LQFUHDVH�WR������)ROORZLQJ�WKH�DXVWHULW\�RYHU�WKH�ODVW�IHZ�\HDUV��WKH�86�FRQVXPHU�LV�OLNHO\�WR�PDNH�D�considerable contribution to the XSWXUQ�

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combine personal economic success with contributions to the common JRRG��:H�DUH�SXWWLQJ�RXU�QDPH�WR�WKLV�SURMHFW�WR�HQVXUH�WKDW�LWV�LV�professionally implemented and we ILUPO\�EHOLHYH�WKDW�WKH�SURMHFW�FDQ�GHOLYHU�EHQHILWV�IRU�DOO��

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Events after the balance sheet date

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Risk Report-CAPITAL BANK – GRAWE GRUPPE AG 2013

Introduction

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implementing the latest regulatory requirements, H[WHQGLQJ�WKH�VWUHVV�WHVWV�DQG�FRQWLQXLQJ�WKH�GHYHOĥRSPHQW�RI�WKH�UHSRUWLQJ�PHWKRGV�LQ�WKH�+<32ĥ%$1.�%85*(1/$1'�$NWLHQJHVHOOVFKDIW�EDQNLQJ�JURXS��

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Risk management

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Basic principles of risk management

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the department responsible for the ULVN��JHQHUDOO\�LQ�FROODERUDWLRQ�ZLWK�the Internal Audit and Organisation XQLWV�

The management of operational ULVN�DW�&$3,7$/�%$1.�Ħ�*5$:(�*5833(�$*�LV�WKH�UHVSRQVLELOLW\�RI�WKH�ULVN�PDQĥDJHPHQW�XQLW��7KH�GXWLHV�RI�WKH�XQLW�LQFOXGH�FODVVLI\LQJ�WKH�ULVNV��drawing up standard guidelines IRU�XVH�WKURXJKRXW�WKH�EDQNLQJ�group, managing the content of the RSHUDWLRQDO�ULVN�GDWDEDVH��DQDO\VLQJ�ORVV�HYHQWV�DQG�SUHSDULQJ�UHSRUWV�for the Management Board and YDULRXV�FRPPLWWHHV��%DVHG�RQ�WKH�standards applicable throughout the EDQNLQJ�JURXS��ORVV�HYHQWV�UHODWHG�WR�RSHUDWLRQDO�ULVN�DUH�DVVHPEOHG�LQ�one database used by the whole of WKH�EDQNLQJ�JURXS��7KLV�GDWDEDVH�can then be used as a basis for LGHQWLI\LQJ�ZHDNQHVVHV�LQ�V\VWHPV�and processes and then for initiating DSSURSULDWH�FRUUHFWLYH�DFWLRQ��

The systems and structures used E\�&$3,7$/�%$1.�Ħ�*5$:(�*5833(�$*�WR�PLQLPLVH�RSHUĥDWLRQDO�ULVN�DOVR�LQFOXGH�LQWHUQDO�

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FRQWURO�V\VWHPV�ĪLQFOXGLQJ�FRQWURO�V\VWHPV�PDQDJHG�E\�,QWHUQDO�$XGLWī��FOHDUO\�GRFXPHQWHG�LQWHUQDO�JXLGHOLQHV�ĪZRUN�LQVWUXFWLRQVī��VHJUHJDWLRQ�RI�IXQFWLRQV�ĪSULQFLSOH�RI�GRXEOHĥFKHFNLQJ�E\�D�VHFRQG�SHUVRQī��DOORFDWLRQ�DQG�OLPLWDWLRQ�RI�GHFLVLRQĥPDNLQJ�authority, together with an ongoing process of WUDLQLQJ�DQG�SURIHVVLRQDO�GHYHORSPHQW�ĪSHUVRQQHO�GHYHORSPHQWī�WR�HQVXUH�WKDW�HPSOR\HHV�KDYH�WKH�UHTXLVLWH�VNLOOV�DQG�TXDOLILFDWLRQV��ZKLFK�WKH\�WKHQ�FRQWLQXH�WR�HQKDQFH��7KHVH�LQWHUQDO�PDQDJHPHQW�and control measures integrated into the business processes are intended to ensure that there is an DSSURSULDWH��DFFHSWDEOH�OHYHO�RI�ULVN�ZLWKLQ�WKH�EDQN��

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&$3,7$/�%$1.�Ħ�*5$:(�*5833(�$*�XVHV�the Basic Indicator Approach to determine its FDSLWDO�DGHTXDF\�IRU�RSHUDWLRQDO�ULVN�LQ�DFFRUGDQFH�ZLWK�%DVHO�,,��

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Credit risk

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LQJ�DQ\�HDUO\�ZDUQLQJ�LQGLFDWRUV��7KH�ULVN�PDQDJHĥment unit is responsible for identifying, measuring, assembling, planning, managing and monitoring the RYHUDOO�FUHGLW�ULVN�SRUWIROLR��7KH�WRWDO�OHQGLQJ�H[SRĥVXUH�ĪORDQV�DQG�DGYDQFHV�WR�FOLHQWV�LQFOXGLQJ�VHFXULĥWLHVī�DQG�WKH�EUHDNGRZQ�RI�WKH�ULVN�YROXPH�E\�FXUĥUHQF\��ULVN�FDWHJRU\�DQG�FRXQWU\�LV�UHJXODUO\�UHSRUWHG�WR�WKH�0DQDJHPHQW�%RDUG��6WUHVV�VFHQDULRV�KDYH�DOVR�EHHQ�GUDZQ�XS�IRU�ORDQV�DJDLQVW�PDUNHWDEOH�FROODWHUDO�Ī/RPEDUG�ORDQVī��WKH�PDLQ�W\SH�RI�OHQGLQJ�DW�&$3,ĥ7$/�%$1.�Ħ�*5$:(�*5833(�$*��7KH�SXUSRVH�of these stress scenarios is to model the impact on FROODWHUDO�IURP�FKDQJHV�LQ�WKH�PDUNHW�SULFHV�RI�VHFXULWLHV�SOHGJHG�DV�FROODWHUDO��,Q�DGGLWLRQ��FRQFHQĥtrations in the securities furnished as collateral are continuously analysed in order to highlight any UHVXOWLQJ�FOXVWHU�RU�FRQFHQWUDWLRQ�ULVN��&UHGLW�ULVN�GDWD�IURP�&$3,7$/�%$1.�Ħ�*5$:(�*5833(�$*�LV�DOVR�IHG�LQWR�WKH�DQDO\VLV�DQG�DVVHVVPHQW�RI�WKH�FUHGLW�ULVN�IRU�WKH�ZKROH�RI�WKH�EDQNLQJ�JURXS�

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$W�&$3,7$/�%$1.�Ħ�*5$:(�*5833(�$*��ULVN�in the lending business is managed in accordance with the principles agreed by the Management %RDUG�DQG�VSHFLILHG�LQ�WKH�FUHGLW�ULVN�PDQXDO��7KHVH�guidelines meet the minimum standards for lending EXVLQHVV�LVVXHG�E\�WKH�$XVWULDQ�)LQDQFLDO�0DUNHW�

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$XWKRULW\�Ī)0$ī�DQG�DUH�XSGDWHG�LI�there are any legal or other changes DIIHFWLQJ�WKLV�W\SH�RI�EXVLQHVV��7R�PDQDJH�FRXQWU\�ULVN��FRXQWU\�OLPLWV�KDYH�EHHQ�VHW�ERWK�DW�EDQNLQJ�JURXS�DQG�LQGLYLGXDO�EDQN�OHYHOV��&$3,ĥ7$/�%$1.�Ħ�*5$:(�*5833(�$*�KDV�ODLG�GRZQ�JXLGHOLQHV�IRU�WKH�DSSURYDO�RI�FRXQWHUSDUWLHV�ZLWK�WKH�aim of minimising counterparty ULVN��7KH�ULVN�PDQDJHPHQW�XQLW�LV�UHVSRQVLEOH�IRU�YHWWLQJ�QHZ�WUDGLQJ�SDUWQHUV��7KH�XQLW�FDUULHV�RXW�FKHFNV�RQ�QHZ�SDUWQHUV�DQG�DSSURYHV�WKHP�XVLQJ�LQWHUQDO�FULWHULD��

The basic principles of lending EXVLQHVV�DW�&$3,7$/�%$1.�Ħ�*5$:(�*5833(�$*�LQFOXGH�D�FOHDU�FUHGLW�DQG�DVVRFLDWHG�ULVN�SROLF\��$�FRUH�SULQFLSOH�RI�WKLV�SROLF\�is that lending is granted first and IRUHPRVW�DJDLQVW�WKH�SURYLVLRQ�RI�FROODWHUDO��7KH�PDLQ�W\SHV�RI�DFFHSWĥable collateral are appropriate securities, the rates for which are GLIIHUHQWLDWHG�DFFRUGLQJ�WR�YDULRXV�FULWHULD��7KH�OHQGLQJ�GHFLVLRQ�WDNHV�into account not only an analysis of WKH�DYDLODEOH�FROODWHUDO�EXW�DOVR�WKH�financial circumstances of the

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ERUURZHU��&$3,7$/�%$1.�Ħ�*5$:(�*5833(�$*�XVHV�D�V\VWHP�FRPSULVLQJ�WHQ�OHYHOV�WR�EUHDN�GRZQ�FOLHQWV�LQWR�GLIIHUHQW�ULVN�FDWHJRULHV�RU�FODVVHV�

Liquidity risk

/LTXLGLW\�ULVN�HQFRPSDVVHV�ERWK�LQVROYHQF\�ULVN�DQG�OLTXLGLW\�PDWXULW\�WUDQVIRUPDWLRQ�ULVN��7KH�DLP�RI�PDQDJLQJ�OLTXLGLW\�ULVN�LV�WR�HQVXUH�WKDW�WKH�EDQN�FDQ�meet its payment obligations by the due date at all WLPHV�ZLWKRXW�KDYLQJ�WR�LQFXU�XQDFFHSWDEO\�KLJK�FRVWV��

The group treasury function together with cash SRROLQJ�IRU�WKH�HQWLUH�EDQNLQJ�JURXS�LV�WKH�UHVSRQVLĥELOLW\�RI�*URXS�7UHDVXU\�DW�+<32ĥ%$1.�%85ĥ*(1/$1'�$NWLHQJHVHOOVFKDIW��/LTXLGLW\�ULVN�LV�PDQDJHG�FHQWUDOO\�IRU�WKH�ZKROH�RI�WKH�EDQNLQJ�group under the auspices of the assets and liabilities FRPPLWWHH��ZKLFK�PHHWV�UHJXODUO\��

8QGHU�UHJXODWRU\�UHTXLUHPHQWV��D�EDQN�LV�GHHPHG�WR�KDYH�VXIILFLHQW�OLTXLGLW\�LI�WKH�ZHLJKWHG�FDVK�DQG�FDVK�HTXLYDOHQWV�IRU�D�SHULRG�FRYHU�WKH�ZHLJKWHG�payment obligations potentially due for payment RYHU�WKH�VDPH�SHULRG��7KH�UHOHYDQW�OLTXLGLW\�UDWLR�DW�&$3,7$/�%$1.�Ħ�*5$:(�*5833(�$*�ZDV�higher than the regulatory ratio at all times during ������7KH�IROORZLQJ�RSWLRQV�HQVXUH�WKDW�WKH�EDQN�FDQ�REWDLQ�IXUWKHU�OLTXLGLW\�WR�FRYHU�DQ�XQIRUHVHHQ�increased liquidity requirement or obtain liquidity at

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VKRUW�QRWLFH��WKH�EDQN�FDQ�PDNH�XVH�RI�DYDLODEOH�IXQGLQJ�OLQHV�RI�FUHGLW�DW�RWKHU�EDQNV�RU�FRYHU�DQ\�additional liquidity requirement at ĪUHODWLYHO\ī�VKRUW�QRWLFH�E\�VHOOLQJ�some of the securities held in its ERRNV�WKDW�KDYH�QRW�EHHQ�SOHGJHG�DV�FROODWHUDO�HOVHZKHUH��$�UHSRUW�RQ�the current liquidity situation and RQ�WKH�VHFXULWLHV�KHOG�E\�WKH�EDQN�that can be liquidated at any time is submitted regularly to the ManageĥPHQW�%RDUG��7KH�SRWHQWLDO�OLTXLGDĥtion and duration of the liquidation RI�VHFXULWLHV�KHOG�E\�WKH�EDQN�LV�analysed for a normal operations scenario and for certain stress VFHQDULRV�ĪE\�DSSO\LQJ�DSSURSULDWH�KDLUFXWVī��:LWKLQ�WKH�IUDPHZRUN�RI�WKH�WUHDVXU\�OLPLWV��WKH�EDQN�KROGV�D�SRUWIROLR�RI�DYDLODEOH�VHFXULWLHV�HOLJLEOH�DV�FROODWHUDO�DW�WKH�(&%��This portfolio can be used to obtain liquidity at short notice and FRYHU�DQ\�XQH[SHFWHG�OLTXLGLW\�RXWIORZV��,Q�DGGLWLRQ��VWDQGDUG�OLTXLGLW\�VLPXODWLRQV�KDYH�EHHQ�VHW�XS�IRU�WKH�ZKROH�RI�WKH�EDQNLQJ�JURXS�FRYHULQJ�WKH�IROORZLQJ�VFHQDULRV��QRUPDO�VFHQDULR��EDQNĥVSHFLILF�FULVLV��PDUNHW�FULVLV�DQG�FRPELQHG�FULVLV��7KHVH�VLPXODĥ

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tions are run on a regular basis and the results UHSRUWHG�WR�WKH�0DQDJHPHQW�%RDUG��&$3,7$/�%$1.�Ħ�*5$:(�*5833(�$*�KDG�VXIILFLHQW�OLTXLGLW\�DW�LWV�GLVSRVDO�DW�DOO�WLPHV�LQ�������

Macroeconomic risk

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Other risks

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%XVLQHVV�ULVN�LV�GHILQHG�DV�WKH�ULVN�RI�D�ORVV�IURP�D�QHJDWLYH�WUHQG�LQ�WKH�HFRQRPLF�HQYLURQPHQW�DQG�LQ�WKH�EDQNV�EXVLQHVV�UHODWLRQVKLSV��%XVLQHVV�ULVN�PD\�DULVH�SULPDULO\�from a significant deterioration in PDUNHW�FRQGLWLRQV��IURP�FKDQJHV�LQ�WKH�FRPSHWLWLYH�SRVLWLRQ�RU�IURP�FKDQJHV�LQ�FOLHQW�EHKDYLRXU��This can lead to a sustained fall in earnings and thus a decrease in HQWHUSULVH�YDOXH��7KH�PDQDJHPHQW�RI�EXVLQHVV�ULVN�LV�WKH�UHVSRQVLELOLW\�of those business units that focus particularly on increasing the YROXPH�RI�DVVHWV�XQGHU�PDQDJHPHQW�and thus on enhancing earnings FDSDFLW\�

6WUDWHJLF�ULVN�UHIHUV�WR�WKH�ULVN�RI�losses arising from decisions on the fundamental direction and GHYHORSPHQW�RI�WKH�EDQNV�EXVLQHVV�DFWLYLWLHV��,Q�WHUPV�RI�DWWDLQLQJ�ORQJĥWHUP�FRUSRUDWH�REMHFWLYHV��the consequences can be a range of problems from undesirable GHYHORSPHQWV�WR�D�FRPSOHWH�IDLOXUH�WR�DFKLHYH�REMHFWLYHV��5HVSRQVLELOLW\�for strategic corporate management lies with the Management Board RI�&$3,7$/�%$1.�Ħ�*5$:(�

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Summary and outlook

$W�&$3,7$/�%$1.�Ħ�*5$:(�*5833(�$*��VXLWDEOH�DFWLRQ�LV�WDNHQ�WR�OLPLW�DQG�PLQLPLVH�DOO�PDWHULDO�ULVNV��$Q�DQDO\VLV�RI�ULVNĥEHDULQJ�FDSDFLW\�LV�FDUULHG�RXW�LQ�ZKLFK�DOO�WKH�PHDVXUDEOH�ULVNV�WKURXJKRXW�WKH�ZKROH�RI�WKH�EDQN�DUH�DJJUHJDWHG��7KH�PHDVXUHV�WR�OLPLW�ULVN�DOVR�LQFOXGH�D�VXLWDEOH�OLPLW�V\VWHP�DQG�WKH�FDOFXODWLRQ�RI�GLIIHUHQW�NH\�ULVN�LQGLFDWRUV��7KH�FDOFXODWLRQ�RI�ULVNĥEHDULQJ�FDSDFLW\�VKRZV�WKDW�RQO\�SDUW�RI�WKH�ULVNĥEHDULQJ�FDSDFLW\�DW�&$3,7$/�%$1.�Ħ�*5$:(�*5833(�$*�LV�XWLOLVHG�E\�H[LVWLQJ�ULVN�DQG�D�VXIILFLHQW�EXIIHU�LV�DYDLODEOH�LQ�WKH�SUHVHQW�DJJUHJDWH�ULVN�FRYHU��

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*LYHQ�WKH�VSHFLDO�QDWXUH�RI�WKH�business model at CAPITAL %$1.�Ħ�*5$:(�*5833(�$*��ULVN�PRQLWRULQJ�LQ�WKH�SULYDWH�EDQNLQJ�EXVLQHVV�ZLOO�DOVR�FRQWLQXH�WR�EH�D�IRFXV�RI�ULVN�PDQDJHPHQW�DFWLYLWLHV�LQ�������

2WKHU�ULVN�PDQDJHPHQW�SULRULWLHV�LQ�the coming year will include ongoĥing compliance with the ICAAP requirements, capital guarantees, modification of the reporting V\VWHP��IXUWKHU�H[SDQVLRQ�RI�WKH�JURXSĥZLGH�GDWD�SRRO�DQG�WKH�associated further standardisation RI�ULVN�PHDVXUHPHQW�PHWKRGV��WRJHWKHU�ZLWK�FRQWLQXRXV�LPSURYHĥPHQW�LQ�H[LVWLQJ�ULVN�PDQDJHPHQW�DFWLYLWLHV��1RW�OHDVW��ULVN�PDQDJHĥPHQW�DFWLYLWLHV�LQ������ZLOO�DOVR�KDYH�to include action to address the latest regulatory issues,

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149

GHYHORS�PDQDJHPHQW�WRROV��VXSSRUW�WKH�SURIHVVLRQDO�GHYHORSPHQW�RI�HPSOR\HHV�DQG�HQVXUH�FRQWLQXRXV�LPSURYHPHQWV�LQ�LQWHUQDO�ULVN�TXDQWLILFDWLRQ�PHWKRGV�

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The Management Board

&KULVWLDQ�-DXN��0%$��P�S� Chairman of the Management Board

0DJ��&RQVWDQWLQ�9H\GHUĥ0DOEHUJ�P�S� Member of the Management Board

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150

01. Profit from ordinary actiVities in eur k

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02. total assets in eur k

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03. oPerating Profit in eur k

������ ������������ ������������ ������������ ������������ ������������ ������������ ����������� ������������ ������������ ���������������������

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152

04. assets under management (incl. security kag) in eur million

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05. oPerating income in eur million

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06. net interest income in eur k

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154

07. Personnel eXPenses in eur million

������ ��������� ���������� ���������� ���������� ���������� ���������� ���������� ���������� ���������� ���������� ����

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155

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156

,Q�������WKH�6XSHUYLVRU\�%RDUG�monitored the Management Board DQG�HQGRUVHG�LWV�DFWLYLWLHV�RQ�the basis of four meetings of the 6XSHUYLVRU\�%RDUG�WR�ZKLFK�WKH�Management Board submitted reports and documents as well as on the basis of repeated contact EHWZHHQ�WKH�WZR�ERDUGV�

The annual financial statements IRU�WKH�\HDU�HQGHG����'HFHPEHU������DQG�WKH�DQQXDO�UHSRUW��WR�WKH�H[WHQW�WKDW�LW�SURYLGHV�H[SODQDWLRQV�IRU�WKH�DQQXDO�ILQDQFLDO�statements, were audited by .30*�:LUWVFKDIWVSU�IXQJVĥ�XQG�6WHXHUEHUDWXQJV�$*�������9LHQQD��7KLV�DXGLW�GLG�QRW�JLYH�FDXVH�IRU�DQ\�UHVHUYDWLRQV�DQG�WKH�DXGLWRUV�LVVXHG�DQ�XQTXDOLILHG�DXGLW�RSLQLRQ�

7KH�6XSHUYLVRU\�%RDUG�KDV�DFNQRZOHGJHG�WKH�UHSRUW�DQG�proposal for the appropriation of profits submitted by the Management Board and has UHYLHZHG�DQG�DSSURYHG�WKH�DQQXDO�financial statements IRU�WKH�\HDU�HQGHG����'HFHPEHU�������7KHVH�DQQXDO�ILQDQFLDO�VWDWHPHQWV�KDYH�WKHUHIRUH�EHHQ�

Report of the Supervi-sory Board

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IRUPDOO\�DGRSWHG�SXUVXDQW�WR�VHFWLRQ����Ī�ī�RI�WKH�$XVWULDQ�6WRFN�&RUSRUDWLRQ�$FW�Ī$NW*ī�

7KH�6XSHUYLVRU\�%RDUG�ZRXOG�OLNH�WR�WDNH�WKLV�RSSRUWXQLW\�WR�WKDQN�DOO�FOLHQWV�IRU�WKHLU�FRQILGHQFH�LQ�&$3,7$/�%$1.�Ħ�*5$:(�*5833(�$*�DQG�WR�H[SUHVV�LWV�JUDWLWXGH�WR�WKH�0DQDJHPHQW�%RDUG�DQG�DOO�HPSOR\HHV�IRU�WKHLU�FRQWULEXWLRQV�LQ������

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158

08. Balance sHeet of caPital Bank – graWe gruPPe ag as at 31 decemBer 2013

ASSETS 1. Cash in hand and balances with central banks 2. Public-sector debt instruments eligible as collateral for central bank funding 3XEOLF�VHFWRU�GHEW�LQVWUXPHQWV�DQG similar securities 3. Loans and advances to banks ������D��'XH�GDLO\������E��2WKHU�DGPLQLVWUDWLYH 4. Loans and advances to customers 5. Bonds and other � ¿[HG�LQFRPH�VHFXULWLHV� 6. Shares and other variable-yield securities 7. Equity investments

RI�ZKLFK��LQ�EDQNV������6KDUHV�LQ�DI¿OLDWHG�FRPSDQLHV

RI�ZKLFK��LQ�EDQNV������,QWDQJLEOH�¿[HG�DVVHWV10. Property and equipment11. Other assets12. Deferred income

TOTAL ASSETS

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159

EQUITY AND LIABILITIES 1. Deposits from banks D��5HSD\DEOH�RQ�GHPDQG E��:LWK�DJUHHG�PDWXULW\�RU�QRWLFH�SHULRG 2. Deposits from customers

D��6DYLQJV�GHSRVLWV�����DD��5HSD\DEOH�RQ�GHPDQG�����DE��:LWK�DJUHHG�PDWXULW\�RU�QRWLFH�SHULRGE��2WKHU�GHSRVLWV������ED��5HSD\DEOH�RQ�GHPDQG�����EE��:LWK�DJUHHG�PDWXULW\� RU�QRWLFH�SHULRG

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4. Other liabilities 5. Provisions

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6. Subscribed capitalNominal amount

7. Capital reservesD��1RQ�GLVWULEXWDEOH��VKDUH�SUHPLXP�E��'LVWULEXWDEOH�

8. Retained earningsD��/HJDO�UHVHUYHE��2WKHU�UHVHUYHV

9. Liability reserve pursuant to section 23 (6) BWG����'LVWULEXWDEOH�SUR¿W

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TOTAL EQUITY AND LIABILITIES

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2. Credit risks 3. Liabilities from trust transactions 4. Eligible capital pursuant to section 23 (14) BWG 5. Capital requirement pursuant to section 22 (1) BWG

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1. Interest and similar incomeRI�ZKLFK��IURP�¿[HG�LQFRPH�VHFXULWLHV

�����,QWHUHVW�DQG�VLPLODU�H[SHQVHV I. NET INTEREST INCOME 3. Income from securities and equity investments

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4. Fee and commission income�����)HH�DQG�FRPPLVVLRQ�H[SHQVHV�����,QFRPH�H[SHQVHV�IURP�¿QDQFLDO�RSHUDWLRQV 7. Other operating income

II. OPERATING INCOME �����*HQHUDO�DQG�DGPLQLVWUDWLYH�H[SHQVHV

D��3HUVRQQHO�H[SHQVHVDD��:DJHV�DQG�VDODULHVEE��6RFLDO�VHFXULW\�FRVWV�������FRPSXOVRU\�DQG�RWKHU������FRQWULEXWLRQV�OLQNHG�WR�SD\FF��2WKHU�VRFLDO�VHFXULW\�H[SHQVHVGG��3RVW�HPSOR\PHQW�DQG�RWKHU������HPSOR\HH�EHQH¿W�FRVWVHH��$GGLWLRQV�WR�SHQVLRQ�SURYLVLRQVII��([SHQVHV�IRU�VHYHUDQFH�SD\PHQWV�DQG� contributions to occupational pension IXQGV�IRU�HPSOR\HHV

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9. Write-downs of assets reported under asset items 9 and 10����2WKHU�RSHUDWLQJ�H[SHQVHV

III. OPERATING EXPENSES

09. income statement of caPital Bank – graWe gruPPe ag for tHe year ended 31 decemBer 2013

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161

IV. OPERATING PROFIT

11. Allowances for losses on loans and advances and additions to provisions for contingent liabilities and credit risks

12. Income from the reversal of allowances for losses on loans and advances and of provi-sions for contingent liabilities and credit risks

13. Write-downs of securities recognised as ¿QDQFLDO�DVVHWV�DQG�RI�VKDUHV�LQ�DI¿OLDWHG�companies

14. Income from the reversal of write-downs of VHFXULWLHV�UHFRJQLVHG�DV�¿QDQFLDO�DVVHWV��RI�HTXLW\�LQYHVWPHQWV�DQG�RI�VKDUHV�LQ�DI¿OLDWHG�companies

V. PROFIT FROM ORDINARY ACTIVITIES

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VI. PROFIT FOR THE YEAR

17. Changes in reserves

VII. NET PROFIT FOR THE YEAR

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VIII. DISTRIBUTABLE PROFIT

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10. caPital and caPital requirement in eur k

Tier 1 capital6XEVFULEHG�FDSLWDO&DSLWDO�UHVHUYHV5HWDLQHG�HDUQLQJV/LDELOLW\�UHVHUYH&RQVROLGDWLRQ�SXUVXDQW�WR�VHFWLRQ��������%:*,QWDQJLEOH�DVVHWV

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163

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164

11. statement of cHanges in fiXed assets as at 31.12.2013, caPital Bank – graWe gruPPe ag

Public-sector debt instrumentsLoans and advances to banks (securities)Loans and advances to customers (securities)%RQGV�DQG�RWKHU�¿[HG�LQFRPH� securitiesShares and other variable-yield securitiesEquity investments6KDUHV�LQ�DI¿OLDWHG�FRPSDQLHVIntangible assetsProperty and equipmentLow-value assets

TOTAL FIXED ASSETS

As at1.1.2013

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165

As at 31.12.2013

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166

Excerpt from the notes to the annual ÀQDQFLDO�statements of CAPITAL BANK – GRAWE GRUPPE AG for the year ended 31 De-cember 2013

A. GENERAL

&$3,7$/�%$1.�Ħ�*5$:(�*5833(�$*�ĪUHIHUUHG�WR�EHORZ�DV�&DSLWDO�%DQNī�RSHUDWHV�DV�D�SDUWQHU�IRU�DOO�FDSLWDO�PDUNHW�SDUWLFLSDQWV��LQFOXGLQJ�SULYDWH�PRQWKO\�VDYHUV��VPDOO�DQG�PHGLXPĥVL]HG�HQWHUSULVHV�DQG�LQVWLWXWLRQDO�LQYHVWRUV��7KH�UDQJH�RI�VHUYLFHV�LQFOXGH�ERWK�LQYHVWPHQW�DQG�WKH�SURFXUHPHQW�RI�FDSLWDO��

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167

FRQVROLGDWHG�ILQDQFLDO�VWDWHPHQWV�IRU�WKH�EDQNLQJ�JURXS�RI�HQWLWLHV�LV�+<32ĥ%$1.�%85*(1/$1'�$NWLHQJHVHOOVFKDIW��(LVHQVWDGW��$XVWULD��7KH�FRQVROLGDWHG�ILQDQFLDO�VWDWHPHQWV�RI�+<32ĥ%$1.�%85*(1/$1'�$NWLHQJHVHOOVFKDIW�DUH�VXEPLWWHG�WR�WKH�(LVHQVWDGW�UHJLRQDO�FRXUW�

7KH�FRPSDUDWLYH�ILJXUHV�LQFOXGHG�LQ�WKLV�UHSRUW�DUH�WDNHQ�IURP�WKH������DQQXDO�ILQDQFLDO�VWDWHPHQWV�DQG�DUH�VKRZQ�LQ�SDUHQWKHVHV��7KH�DQQXDO�ILQDQFLDO�VWDWHPHQWV�RI�&DSLWDO�%DQN�KDYH�EHHQ�SUHSDUHG�LQ�DFFRUGDQFH�ZLWK�WKH�SURYLVLRQV�RI�WKH�$XVWULDQ�%DQNLQJ�$FW�Ī%:*ī�DV�DPHQGHG�DQG�DOVR�Ħ�ZKHUH�DSSOLFDEOH�Ħ�LQ�DFFRUGDQFH�ZLWK�WKH�SURYLVLRQV�RI�WKH�$XVWULDQ�&RPPHUFLDO�&RGH�Ī8*%ī��7KH�EDODQFH�VKHHW�DQG�WKH�LQFRPH�VWDWHPHQW�KDYH�EHHQ�EURNHQ�down in accordance with the templates included in DQQH[���WR�VHFWLRQ����RI�WKH�%:*�

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168168

Excerpt from the notes

WR�WKH�DQQXDO�ÀQDQFLDO�statements of

CAPITAL BANK –

GRAWE GRUPPE AG

for the year ended 31

December 2013

B. ACCOUNTING POLICIES

The annual financial statements of &DSLWDO�%DQN�DQG�LWV�VXEVLGLDULHV�KDYH�EHHQ�SUHSDUHG�LQ�DFFRUGDQFH�with generally accepted accounting principles and the standard requireĥPHQW�WR�SURYLGH�D�WUXH�DQG�IDLU�YLHZ�of the financial position and finanĥFLDO�SHUIRUPDQFH�RI�WKH�FRPSDQ\��The principle of complete disclosure of all assets, liabilities, income and H[SHQVHV�KDV�EHHQ�REVHUYHG��$VVHWV�DQG�OLDELOLWLHV�KDYH�EHHQ�PHDVXUHG�LQGLYLGXDOO\��$OO�LGHQWLILDEOH�ULVNV�and impending losses that arose in �����RU�LQ�DQ�HDUOLHU�ILQDQFLDO�\HDU�KDYH�EHHQ�UHFRJQLVHG�LQ�WKH�ILQDQĥFLDO�VWDWHPHQWV��7KH�PHDVXUHPHQW�PHWKRGV�XVHG�WR�GDWH�KDYH�EHHQ�UHWDLQHG�

In accordance with the principle of prudence, only those gains realised as DW�WKH�EDODQFH�VKHHW�GDWH�KDYH�EHHQ�UHSRUWHG��DOO�LGHQWLILDEOH�ULVNV�DQG�LPPLQHQW�ORVVHV�KDYH�EHHQ�LQFOXGHG�

7KH�UHIHUHQFH�H[FKDQJH�UDWHV�SXEĥOLVKHG�E\�WKH�(&%�RQ����'HFHPEHU������ĪPLGGOH�UDWHVī�KDYH�EHHQ�XVHG�

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169

for measuring assets and liabilities denominated in foreign currency��

&XUUHQF\�IRUZDUG�DJUHHPHQWV�KDYH�EHHQ�PHDVXUHG�XVLQJ�WKH�IRUZDUG�UDWH�DV�DW�WKH�EDODQFH�VKHHW�GDWH�

Securities DUH�PHDVXUHG�DW�WKH�ORZHU�RI�FRVW�RU�PDUNHW�ĪVWULFW�ORZHU�RI�FRVW�RU�PDUNHW�SULQFLSOHī�UHJDUGOHVV�RI�ZKHWKHU�WKH\�DUH�FODVVLILHG�DV�IL[HG�DVVHWV�RU�FXUUHQW�DVVHWV��7UDGLQJ�VHFXULWLHV�DUH�PHDVXUHG�DW�PDUNHW�YDOXH��7KH�FULWHULD�IRU�FODVVLI\LQJ�VHFXULWLHV�DV�IL[HG�assets are the use of the securities for generating UHWXUQV�RYHU�WKH�ORQJ�WHUP�DQG�WKH�H[LVWHQFH�RI�UHVWULFWLRQV�RQ�WKH�XVH�RU�VDOH�RI�WKH�VHFXULWLHV��6KRUW�SRVLWLRQV�ĪIRU�VHWWOHPHQW�WHFKQLFDO�UHDVRQVī�RI�VHFXĥULWLHV�DUH�UHSRUWHG�XQGHU�RWKHU�OLDELOLWLHV��7KH�EDQN�KDV�PDGH�XVH�RI�WKH�RSWLRQ�WR�DPRUWLVH�QHJDWLYH�differences between cost and settlement amounts on D�SUR�UDWD�EDVLV�DV�SHUPLWWHG�E\�VHFWLRQ����Ī�ī�RI�WKH�%:*�

Loans and advances to banks and customers are generally FDUULHG�DW�WKHLU�SULQFLSDO�DPRXQWV��$SSURSULDWH�VSHFLILF�YDOXDWLRQ�DOORZDQFHV�DUH�UHFRJQLVHG�WR�WDNH�LQWR�DFFRXQW�DOO�ULVNV�LGHQWLILDEOH�LQ�WKH�OHQGLQJ�EXVLQHVV��&OLHQWV�KDYH�DOVR�KHGJHG�ULVNV�E\�HQWHULQJ�LQWR�GHULYDWLYHV�ZLWK�&DSLWDO�%DQN��)RU�LWV�SDUW��WKH�EDQN�KDV�HQWHUHG�LQWR�PDWFKLQJ�WUDQVDFWLRQV�ZLWK�SDUWQHU�EDQNV�WKDW�DUH�WKH�RSSRVLWH�RI�WKHVH�KHGJHV��The transactions together form hedge accounting UHODWLRQVKLSV�

Page 171: Group SITTING PRETTYTHE FUTURE’S Salzburg Graz · Manfred Prisching, the author of our guest article is Professor at the Institute of Sociology at the Faculty of Business, Economics

170170

Excerpt from the notes

WR�WKH�DQQXDO�ÀQDQFLDO�statements of

CAPITAL BANK –

GRAWE GRUPPE AG

for the year ended 31

December 2013

Equity investments and shares in affiliated companies are recognised at WKH�ORZHU�RI�FRVW�DQG�IDLU�YDOXH��WKH�ODWWHU�LQ�WKH�HYHQW�RI�DQ\�SHUPDQHQW�LPSDLUPHQW�DV�DW�WKH�UHSRUWLQJ�GDWH�

Buildings and office and operating equipment are measured at cost and UHGXFHG�E\�GHSUHFLDWLRQ��'HSUHFLDĥWLRQ�LV�UHFRJQLVHG�RQ�D�VWUDLJKWĥOLQH�EDVLV��/RZĥYDOXH�DVVHWV�DUH�ZULWWHQ�RII�LQ�IXOO�LQ�WKH�\HDU�RI�DFTXLVLWLRQ�

'HSUHFLDWLRQ�UDWHV�RI�IRU�LPPRYDEOH�DVVHWV�DUH�LQ�WKH�UDQJH�����İ�WR���İ�SHU�DQQXP��DQG�IRU�PRYDEOH�DVVHWV��İ�WR�����İ�SHU�DQQXP��$�IXOO�\HDUV�GHSUHFLDWLRQ�LV�UHFRJĥnised for additions in the first half of the financial year, but only half of D�\HDUV�GHSUHFLDWLRQ�IRU�DGGLWLRQV�LQ�WKH�VHFRQG�KDOI�RI�WKH�ILQDQFLDO�\HDU�

,QWDQJLEOH�IL[HG�DVVHWV solely comprise SXUFKDVHG�VRIWZDUH��7KLV�VRIWZDUH�LV�DPRUWLVHG�RQ�D�VWUDLJKWĥOLQH�EDVLV�DW�UDWHV�RI���İ�WR�����İ�SHU�DQQXP�

Liabilities evidenced by certificates include items for which the settleĥment amount depends on the price of the defined underlying instruĥ

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171171

ment and are therefore measured at the current PDUNHW�YDOXH�RI�WKH�LWHPV�FRQFHUQHG��7RJHWKHU�ZLWK�WKH�DVVHWV�DQG�GHULYDWLYHV�UHSRUWHG�XQGHU�YDULRXV�LWHPV��WKHVH�OLDELOLWLHV�HYLGHQFHG�E\�FHUWLILFDWHV�IRUP�hedging relationships and are therefore recognised DFFRUGLQJO\�DW�IDLU�YDOXH��6RPH�RI�WKH�OLDELOLWLHV�HYLGHQFHG�E\�FHUWLILFDWHV�KDYH�D�FDSLWDO�JXDUDQWHH�

The remaining liabilities are recognised at their VHWWOHPHQW�DPRXQW��

In accordance with statutory requirements, the measurement of provisions�WDNHV�LQWR�DFFRXQW�DOO�LGHQWLILDEOH�ULVNV�DQG�LPPLQHQW�ORVVHV�DV�ZHOO�DV�WKH�DPRXQW�RI�FRQWLQJHQW�OLDELOLWLHV�

The calculation of the provision for severance obligations is based on recognised actuarial principles using WKH�$9g������Ħ�3�3DJOHU��3DJOHU�WDEOHV�IRU�WKH�FDOFXODWLRQ�RI�SHQVLRQ�LQVXUDQFH��7KH�REOLJDWLRQV�DUH�GHWHUPLQHG�XVLQJ�WKH�SURMHFWHG�XQLW�FUHGLW�PHWKRG��The calculations are also based on a pensionable age RI����IRU�PHQ�DQG����IRU�ZRPHQ��7KH�REOLJDWLRQV�ZHUH�GLVFRXQWHG�DV�DW����'HFHPEHU������XVLQJ�D�ORQJĥWHUP�PDUNHW�GLVFRXQW�UDWH�RI����İ�Ī���'HFHPEHU����������İī��7KH�VDODU\�LQFUHDVH�WUHQG�XVHG�LQ�WKH�FDOFXODWLRQV�ZDV����İ�Ī���'HFHPEHU����������İī�

7KH�FDOFXODWLRQ�RI�WKH�SHQVLRQ�SURYLVLRQ�LV�DOVR�EDVHG�RQ�UHFRJQLVHG�DFWXDULDO�SULQFLSOHV�XVLQJ�WKH�$9g������Ħ�3�3DJOHU��3DJOHU�WDEOHV�IRU�WKH�FDOFXODWLRQ�

Page 173: Group SITTING PRETTYTHE FUTURE’S Salzburg Graz · Manfred Prisching, the author of our guest article is Professor at the Institute of Sociology at the Faculty of Business, Economics

172172

Excerpt from the notes

WR�WKH�DQQXDO�ÀQDQFLDO�statements of

CAPITAL BANK –

GRAWE GRUPPE AG

for the year ended 31

December 2013

RI�SHQVLRQ�LQVXUDQFH��7KH�SURMHFWHG�unit credit method is used to FDOFXODWH�WKH�REOLJDWLRQ��7KH�JURXS�of beneficiaries consists solely of SHQVLRQ�UHFLSLHQWV��7KH�FDOFXODWLRQ�DV�DW����'HFHPEHU������XVHG�D�ORQJĥWHUP�PDUNHW�GLVFRXQW�UDWH�RI����İ�Ī���'HFHPEHU����������İī� Actuarial gains and losses on nonĥFXUUHQW�SHUVRQQHO�SURYLVLRQV�DUH�recognised in profit and loss in the SHULRG�LQ�ZKLFK�WKH\�DULVH�

,Q�WKH������DQQXDO�ILQDQFLDO�VWDWHPHQWV��WKH�EDQN�PDGH�XVH�RI�WKH�HOHFWLRQ�RSWLRQ�DYDLODEOH�XQGHU�VHFWLRQ����Ī�ī�RI�WKH�%:*��DV�LW�KDG�DOVR�GRQH�LQ������

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173173

Page 175: Group SITTING PRETTYTHE FUTURE’S Salzburg Graz · Manfred Prisching, the author of our guest article is Professor at the Institute of Sociology at the Faculty of Business, Economics

174174

Excerpt from the notes

WR�WKH�DQQXDO�ÀQDQFLDO�statements of

CAPITAL BANK –

GRAWE GRUPPE AG

for the year ended 31

December 2013

C. BALANCE SHEET DISCLOSURES

Fixed assets

7KH�EUHDNGRZQ�RI�IL[HG�DVVHWV�DQG�WKH�FKDQJHV�LQ�IL[HG�DVVHWV�RYHU������are reported in the statement of FKDQJHV�LQ�IL[HG�DVVHWV�ĪVHH�DQQH[���WR�WKH�QRWHVī��$V�DW�WKH�UHSRUWLQJ�GDWH��WKH�EDQN�KHOG�QHLWKHU�GHYHORSHG�QRU�XQGHYHORSHG�ODQG�DV�part of its property and equipment, DV�KDG�DOVR�EHHQ�WKH�FDVH�DV�DW����'HFHPEHU������

Securities

7KH�WRWDO�YDOXH�RI�WKH�VHFXULWLHV�SRUWIROLR�ĪLQFOXGLQJ�SUR�UDWD�LQWHUHVWī�DV�DW����'HFHPEHU������DPRXQWHG�WR�Ͱ������PLOOLRQ�Ī���'HFHPEHU�������Ͱ������PLOOLRQī��2I�WKLV�WRWDO��DQ�DPRXQW�RI�Ͱ������PLOOLRQ�Ī���'HFHPEHU�������Ͱ������PLOOLRQī�ZDV�DFFRXQWHG�for by underlying instruments for OLDELOLWLHV�HYLGHQFHG�E\�FHUWLILFDWHV�and total return swaps with which hedging relationships were UHFRJQLVHG��$V�DW����'HFHPEHU�

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175175

������XQGHUO\LQJ�LQVWUXPHQWV�DPRXQWLQJ�WR�Ͱ�����PLOOLRQ�Ī���'HFHPEHU�������Ͱ�����PLOOLRQī�KDG�EHHQ�SOHGJHG�DV�FROODWHUDO�LQ�IDYRXU�RI�LVVXH�EX\HUV�DQG��RI�WKLV�DPRXQW��Ͱ����PLOOLRQ�Ī���'HFHPEHU�������Ͱ����PLOOLRQī�KDG�EHHQ�DVVLJQHG�WR�RQH�FROODWHUDO�WUXVWHH��%RQGV�DQG�RWKHU�IL[HGĥLQFRPH�VHFXULWLHV�ZLWK�D�FDUU\LQJ�DPRXQW�RI�Ͱ�����PLOOLRQ�Ī���'HFHPEHU�������Ͱ�����PLOOLRQī�ZHUH�GXH�ZLWKLQ�RQH�\HDU��

7KH�GLIIHUHQFH�EHWZHHQ�WKH�FRVW�DQG�KLJKHU�IDLU�YDOXH�as at the balance sheet date for the listed securities not classified as financial assets and recognised DW�FRVW�ZDV�Ͱ����PLOOLRQ�Ī���'HFHPEHU�������Ͱ����PLOOLRQī�

7KH�EDQNV�IL[HG�DVVHWV�DV�DW����'HFHPEHU������LQFOXGHG�VHFXULWLHV�ZLWK�D�FDUU\LQJ�DPRXQW�RI�Ͱ�����PLOOLRQ�Ī���'HFHPEHU�������Ͱ�����PLOOLRQī��7KH�GLIIHUHQFH�EHWZHHQ�WKH�FRVW�DQG�KLJKHU�IDLU�YDOXH�DPRXQWHG�WR�Ͱ����PLOOLRQ�Ī���'HFHPEHU�������Ͱ����PLOOLRQī��7KH�GLIIHUHQFH�EHWZHHQ�WKH�FDUU\LQJ�amount and the lower settlement amount for IL[HGĥLQFRPH�VHFXULWLHV�FODVVLILHG�DV�IL[HG�DVVHWV�DPRXQWHG�WR�Ͱ����WKRXVDQG�Ī���'HFHPEHU�������Ͱ����WKRXVDQGī�

Page 177: Group SITTING PRETTYTHE FUTURE’S Salzburg Graz · Manfred Prisching, the author of our guest article is Professor at the Institute of Sociology at the Faculty of Business, Economics

176176

Excerpt from the notes

WR�WKH�DQQXDO�ÀQDQFLDO�statements of

CAPITAL BANK –

GRAWE GRUPPE AG

for the year ended 31

December 2013

$V�DW����'HFHPEHU�������VHFXULWLHV�FODVVLILHG�DV�IL[HG�DVVHWV�ĪLQFOXGLQJ�SUR�UDWD�LQWHUHVWī�ZHUH�LQFOXGHG�LQ�WKH�IROORZLQJ�LWHPV�

Ħ�LQ�$���3XEOLFĥVHFWRU�GHEW�LQVWUXPHQWV��LQ�DQ�DPRXQW�RI�Ͱ�����PLOOLRQ�Ī���'HFHPEHU�������Ͱ�����PLOOLRQī�

Ħ�LQ�$���%RQGV�DQG�RWKHU�IL[HGĥLQĥcome securities, in an amount of Ͱ�����PLOOLRQ�Ī���'HFHPEHU�������Ͱ�����PLOOLRQī

Ħ�LQ�$���6KDUHV�DQG�RWKHU�YDULĥDEOHĥ\LHOG�VHFXULWLHV��LQ�DQ�DPRXQW�RI�Ͱ�����PLOOLRQ�Ī���'HFHPEHU�������Ͱ�����PLOOLRQī�

For further information please refer to the attached statement of FKDQJHV�LQ�IL[HG�DVVHWV�ĪDQQH[��ī�

The company maintains a trading ERRN�DV�GHILQHG�E\�VHFWLRQ���Q�RI�WKH�%:*��,WHPV�LQ�WKH�WUDGLQJ�ERRN�DUH�UHFRJQLVHG�DW�PDUNHW�YDOXH��$V�DW����'HFHPEHU�������WKH�WUDGLQJ�ERRN�GLG�QRW�LQFOXGH�DQ\�VHFXULWLHV�Ī���'HFHPEHU�������Ͱ����PLOOLRQī�

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$V�DW�WKH�UHSRUWLQJ�GDWH��&$3,7$/�%$1.�Ħ�*5$:(�*5833(�$*�KDG�SURYLGHG�FDSLWDO�JXDUDQWHHV�LQ�WKH�WUDGLQJ�ERRN��VSHFLILFDOO\�LQ�FRQQHFWLRQ�ZLWK�WKH�3=9�ĪSUlPLHQEHJ�QVWLJWH�=XNXQIWVYRUVRUJHī�SURGXFW��D�VSHFLDO�SHQVLRQ�SODQ�SURGXFW�RIIHUHG�LQ�$XVWULD�ZLWK�D�JRYHUQPHQW�VXEVLG\��LQ�DQ�DPRXQW�RI�Ͱ������PLOOLRQ�Ī���'HFHPĥEHU�������Ͱ������PLOOLRQī�DQG�LQ�FRQQHFWLRQ�ZLWK�IXQGĥOLQNHG�OLIH�LQVXUDQFH�LQ�DQ�DPRXQW�RI�Ͱ�����PLOOLRQ�Ī���'HFHPEHU�������Ͱ�����PLOOLRQī��8QGHU�WKH�DUUDQJHPHQWV�IRU�FDSLWDO�JXDUDQWHHV�LQ�WKH�3=9�SURGXFW�DQG�IXQGĥOLQNHG�OLIH�LQVXUDQFH��WKH�DVVRFLĥDWHG�PDUNHW�ULVN�LV�WUDQVIHUUHG�IURP�WKH�SHQVLRQ�RU�LQVXUDQFH�SURYLGHU�WR�&$3,7$/�%$1.�Ħ�*5$:(�*5833(�$*��(DFK�RI�WKH�DVVHWV�EHKLQG�WKH�FDSLWDO�JXDUDQWHHV�LV�FRQVLGHUHG�VHSDUDWHO\�ĪDV�D�VXEVWLWXWH�IRU�WKH�JXDUDQWHHī�WR�DVVHVV�ZKHWKHU�WKHUH�LV�DQ\�QHHG�IRU�D�SURYLVLRQ�IRU�WKH�JXDUDQWHHV�

Page 179: Group SITTING PRETTYTHE FUTURE’S Salzburg Graz · Manfred Prisching, the author of our guest article is Professor at the Institute of Sociology at the Faculty of Business, Economics

178178

Excerpt from the notes

WR�WKH�DQQXDO�ÀQDQFLDO�statements of

CAPITAL BANK –

GRAWE GRUPPE AG

for the year ended 31

December 2013

7KH�EUHDNGRZQ�RI�WKH�VHFXULWLHV�included in bonds and other IL[HGĥLQFRPH�VHFXULWLHV�DQG�LQ�VKDUHV�DQG�RWKHU�YDULDEOHĥ\LHOG�VHFXULWLHV�ZDV�DV�IROORZV�

As in 2012, the bonds did not include any assets of a subordinated QDWXUH��

As a consequence of the crisis LQ�*UHHFH��WKH�EDQN�KDV�FORVHO\�monitored trends in the peripheral countries of the euro zone and has LPSRVHG�VWULFW�ULVN�UHTXLUHPHQWV�UHODWLQJ�WR�H[SRVXUHV�ZLWK�DQG�LQ�WKHVH�FRXQWULHV�

in EUR K

2012%RQGV�DQG�RWKHU�¿[HG�LQFRPH securities6KDUHV�DQG�RWKHU�YDULDEOH�\LHOG� securities

2013%RQGV�DQG�RWKHU�¿[HG�LQFRPH securities6KDUHV�DQG�RWKHU�YDULDEOH�\LHOG� securities

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Page 180: Group SITTING PRETTYTHE FUTURE’S Salzburg Graz · Manfred Prisching, the author of our guest article is Professor at the Institute of Sociology at the Faculty of Business, Economics

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Equity investments

7KH�UHSRUWHG�HTXLW\�LQYHVWPHQWV�DQG�VKDUHV�LQ�affiliated companies are not admitted to trading on a VWRFN�H[FKDQJH�

$V�DW����'HFHPEHU�������WKH�EDQN�KHOG�GLUHFW�HTXLW\�LQYHVWPHQWV�LQ�WKH�IROORZLQJ�HQWLWLHV�ZLWK�VKDUHKROGĥLQJV�RI�DW�OHDVW���İ�ī�

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Security Kapitalanlage Aktiengesellschaft

Corporate Finance – Grawe Gruppe GmbH

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BK Immo Vorsorge GmbH

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C = Consolidated in full1� �1RW�LQFOXGHG�LQ�FRQVROLGDWLRQ�SXUVXDQW�WR�VHFWLRQ�����Ī�ī�DQG�VHFWLRQ�����8*%�LQ�FRQMXQFWLRQ�ZLWK�VHFWLRQ����Ī�ī�%:*�ī�(OHFWHG�WR�PDNH�XVH�RI�VHFWLRQ�����Ī�ī�8*%��ī�(TXLW\�FDOFXODWHG�LQ�DFFRUGDQFH�ZLWK�VHFWLRQ�����8*%�LQFOXGLQJ����UHVHUYHV�DIWHU�WD[��LQFOXGLQJ�GLVWULEXWDEOH�SUR¿W��ī�3XUVXDQW�WR�VHFWLRQ�����Ī�ī�QR�����8*%��SUR¿W�ORVV�IRU�WKH�\HDU�LV�¿JXUH�EHIRUH�DGMXVWPHQWV�WR�UHVHUYHV��

list of equity inVestments

Page 181: Group SITTING PRETTYTHE FUTURE’S Salzburg Graz · Manfred Prisching, the author of our guest article is Professor at the Institute of Sociology at the Faculty of Business, Economics

180180

Excerpt from the notes

WR�WKH�DQQXDO�ÀQDQFLDO�statements of

CAPITAL BANK –

GRAWE GRUPPE AG

for the year ended 31

December 2013

Loans and advances to, and deposits from, banks and customers

7KH�ORDQV�DQG�DGYDQFHV�WR�EDQNV�LQFOXGHG�Ͱ����PLOOLRQ�Ī���'HFHPEHU�������Ͱ����PLOOLRQī�UHODWLQJ�WR�ORDQV�DQG�DGYDQFHV�HYLGHQFHG�E\�FHUWLIĥicates but not admitted to trading RQ�DQ�H[FKDQJH��/RDQV�DQG�DGYDQFHV�WR�EDQNV�DPRXQWLQJ�WR�Ͱ������PLOOLRQ�Ī���'HFHPEHU�������Ͱ������PLOOLRQī�UHODWHG�WR�WKH�DVVLJQPHQW�to a collateral trustee of underlying LQVWUXPHQWV�IRU�OLDELOLWLHV�HYLGHQFHG�E\�FHUWLILFDWHV�

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������

Loans and advances/deposits not repayable on demandTotal for banks and customers (EUR K)

Up to 3 monthsMore than 3 months to 1 yearMore than 1 year to 5 yearsMore than 5 years

Total

Deposits

maturity structure

Page 182: Group SITTING PRETTYTHE FUTURE’S Salzburg Graz · Manfred Prisching, the author of our guest article is Professor at the Institute of Sociology at the Faculty of Business, Economics

181181

&$3,7$/�%$1.�Ħ�*5$:(�*5833(�$*�IRUPV�SDUW�RI�D�WD[�JURXS�IRU�YDOXH�DGGHG�WD[�SXUSRVHV�ZLWK�&RUSRUDWH�)LQDQFH�Ħ�*UDZH�*UXSSH�*PE+�DQG�&(17(&�$7�6RIWZDUHHQWZLFNOXQJV�XQG�'LHQVWOHLVĥWXQJV�*PE+�

&DSLWDO�%DQN�LV�SDUW�RI�D�FRUSRUDWH�JURXS�DV�GHILQHG�E\�VHFWLRQ���RI�WKH�$XVWULDQ�&RUSRUDWLRQ�7D[�$FW�Ī.6W*ī��WKH�SDUHQW�FRPSDQ\�RI�WKH�JURXS�EHLQJ�+<ĥ32ĥ%$1.�%85*(1/$1'�$NWLHQJHVHOOVFKDIW��

7KH�GLVFORVXUHV�SXUVXDQW�WR�VHFWLRQ����RI�WKH�%:*�DUH�WKH�UHVSRQVLELOLW\�RI�WKH�SDUHQW�EDQN�+<32ĥ%$1.�%85*(1/$1'�$NWLHQJHVHOOVFKDIW�

$V�DW����'HFHPEHU�������WKH�EDQN�KHOG�WUXVW�fund deposits, but these deposits were of minor VLJQLILFDQFH�

in EUR K

Loans and advances to banksRI�ZKLFK�WR�DI¿OLDWHG�FRPSDQLHVRI�ZKLFK�WR�RWKHU�ORQJ�WHUP�LQYHVWHHV� DQG�LQYHVWRUV

Loans and advances to customersRI�ZKLFK�WR�DI¿OLDWHG�FRPSDQLHV

Deposits from banksRI�ZKLFK�WR�DI¿OLDWHG�FRPSDQLHVRI�ZKLFK�WR�RWKHU�ORQJ�WHUP�LQYHVWHHV� DQG�LQYHVWRUV

Deposits from customersRI�ZKLFK�WR�DI¿OLDWHG�FRPSDQLHV

31.12.2012

�������

���

������

��

������

31.12.2013

�������

8

���

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loans and adVances to, and dePosits from, affiliated comPanies and otHer long-term inVestees and inVestors

Page 183: Group SITTING PRETTYTHE FUTURE’S Salzburg Graz · Manfred Prisching, the author of our guest article is Professor at the Institute of Sociology at the Faculty of Business, Economics

182182

Excerpt from the notes

WR�WKH�DQQXDO�ÀQDQFLDO�statements of

CAPITAL BANK –

GRAWE GRUPPE AG

for the year ended 31

December 2013

Other assets

$V�DW����'HFHPEHU�������RWKHU�assets included underlying instruĥPHQWV�IRU�OLDELOLWLHV�HYLGHQFHG�E\�FHUWL¿FDWHV�DPRXQWLQJ�WR�Ͱ������PLOOLRQ�Ī���'HFHPEHU�������Ͱ������PLOOLRQī�

Other liabilities

/LDELOLWLHV�WR�WD[�DXWKRULWLHV�RI�Ͱ������WKRXVDQG�Ī���'HFHPEHU�������Ͱ������WKRXVDQGī�DQG�VHFXULWLHV�FOHDULQJ�OLDELOLWLHV�RI�Ͱ������WKRXĥVDQG�Ī���'HFHPEHU�������Ͱ������WKRXVDQGī�ZHUH�UHSRUWHG�XQGHU�WKLV�LWHP�DV�DW����'HFHPEHU�������([SHQVHV�WKDW�ZHUH�RQO\�SD\DEOH�after the reporting date largely FRQVLVWHG�RI�SHUVRQQHO�H[SHQVHV�RI�Ͱ������WKRXVDQG�Ī���'HFHPEHU�������Ͱ����WKRXVDQGī�DQG�YDULRXV�RWKHU�DGPLQLVWUDWLYH�H[SHQVHV��2WKHU�

in EUR K

2WKHU�VKDUHV�LQ�FRPSDQLHV9DOXDWLRQ�DOORZDQFHV�SXUVXDQW�WR�VHFWLRQ����%:*&DUU\LQJ�DPRXQW�RI�RWKHU�VKDUHV�LQ�FRPSDQLHV7D[�FOHDULQJ�ZLWK�JURXS�SDUHQW/RDQV�DQG�DGYDQFHV�WR�DI¿OLDWHG�FRPSDQLHV)DLU�YDOXHV�RI�FXUUHQF\�IRUZDUG�DJUHHPHQWV9DULRXV�VDOHV�LQYRLFHV

31.12.2013

�������������

���������������������������

Maturity

!���\HDU!���\HDU!���\HDU����\HDU����\HDU����\HDU����\HDU

31.12.2012

�������������

���������������������������

items of eur 1 million or more (all Values in eur k)

Page 184: Group SITTING PRETTYTHE FUTURE’S Salzburg Graz · Manfred Prisching, the author of our guest article is Professor at the Institute of Sociology at the Faculty of Business, Economics

183183

OLDELOLWLHV�DPRXQWLQJ�WR�Ͱ�������WKRXVDQG�Ī���'HFHPĥEHU�������Ͱ�������WKRXVDQGī�ZHUH�GXH�IRU�SD\PHQW�ZLWKLQ�RQH�\HDU��7KH�RWKHU�OLDELOLWLHV�LQFOXGHG�OLDELOLĥWLHV�GXH�WR�DIILOLDWHG�FRPSDQLHV�DPRXQWLQJ�WR�Ͱ������WKRXVDQG�Ī���'HFHPEHU�������Ͱ����WKRXVDQGī�

/LDELOLWLHV�HYLGHQFHG�E\�FHUWLÀFDWHV

/LDELOLWLHV�HYLGHQFHG�E\�FHUWLILFDWHV�DPRXQWLQJ�WR�Ͱ����PLOOLRQ�Ī���'HFHPEHU�������Ͱ����PLOOLRQī�ZLOO�EH�GXH�IRU�SD\PHQW�LQ�WKH�QH[W�ILQDQFLDO�\HDU�

Other provisions

2WKHU�SURYLVLRQV�DV�DW����'HFHPEHU������SULPDULO\�FRQVLVWHG�RI�SURYLVLRQV�IRU�ORVVHV�DPRXQWLQJ�WR�Ͱ������WKRXVDQG�Ī���'HFHPEHU�������Ͱ������WKRXVDQGī��SURYLVLRQV�IRU�XQXVHG�OHDYH�DPRXQWLQJ�WR�Ͱ����WKRXVDQG�Ī���'HFHPEHU�������Ͱ����WKRXVDQGī��SURYLVLRQV�IRU�RWKHU�SHUVRQQHO�H[SHQVHV�RI�Ͱ������WKRXVDQG�Ī���'HFHPEHU�������Ͱ������WKRXVDQGī�DQG�SURYLVLRQV�IRU�IHH�DQG�FRPPLVVLRQ�SD\PHQWV�RI�Ͱ������WKRXVDQG�Ī���'HFHPEHU�������Ͱ����WKRXVDQGī��

Share capital

7KH�FRPSDQ\V�VKDUH�FDSLWDO�UHPDLQHG�XQFKDQJHG�DW�Ͱ�����PLOOLRQ�DQG�ZDV�GLYLGHG�LQWR�����������QRĥSDUĥYDOXH�VKDUHV��2I�WKH�WRWDO�VKDUHV����������ZHUH�EHDUHU�VKDUHV�DQG���������UHJLVWHUHG�VKDUHV�

Page 185: Group SITTING PRETTYTHE FUTURE’S Salzburg Graz · Manfred Prisching, the author of our guest article is Professor at the Institute of Sociology at the Faculty of Business, Economics

184184

Excerpt from the notes

WR�WKH�DQQXDO�ÀQDQFLDO�statements of

CAPITAL BANK –

GRAWE GRUPPE AG

for the year ended 31

December 2013

D. INCOME STATEMENT DISCLOSURES

$�EUHDNGRZQ�RI�LQFRPH�E\�JHRJUDSKLFDO�PDUNHWV�DV�UHTXLUHG�E\�VHFWLRQ����Ī�ī�QR����RI�WKH�%:*�has not been included because the JHRJUDSKLFDO�PDUNHWV�GR�QRW�GLIIHU�materially from the location of the EDQN�RUJDQLVDWLRQ�

Income from securities and equity investments�LQFOXGHG�Ͱ������WKRXVDQG�Ī������Ͱ������WKRXVDQGī�UHODWLQJ�WR�GLYLGHQGV�IURP�DIILOLDWHG�FRPSDQLHV� ,QFRPH�H[SHQVHV�IURP�ILQDQFLDO�RSHUDĦtions�FRQVLVWHG�RI�FXUUHQF\�YDOXDWLRQ�gains and gains on the disposal of securities together amounting WR�Ͱ������WKRXVDQG�Ī������Ͱ������WKRXVDQGī�DV�ZHOO�DV�ORVVHV�RQ�VLPLODU�WUDQVDFWLRQV�DPRXQWLQJ�WR�Ͱ������WKRXVDQG�Ī������Ͱ������WKRXVDQGī�

Other operating income largely comĥSULVHG�LQFRPH�IURP�VHUYLFH�OHYHO�DJUHHPHQWV�DPRXQWLQJ�WR�Ͱ������WKRXVDQG�Ī������Ͱ������WKRXVDQGī�DQG�LQFRPH�IURP�WKH�UHYHUVDO�RI�

Page 186: Group SITTING PRETTYTHE FUTURE’S Salzburg Graz · Manfred Prisching, the author of our guest article is Professor at the Institute of Sociology at the Faculty of Business, Economics

185185

SURYLVLRQV�DPRXQWLQJ�WR�Ͱ���WKRXVDQG�Ī������Ͱ���WKRXVDQGī�

([SHQVHV�IRU�VHYHUDQFH�SD\PHQWV and contributions to occupational pension funds included occupational SHQVLRQ�IXQG�H[SHQVHV�RI�Ͱ���WKRXVDQG�Ī������Ͱ���WKRXVDQGī��

7KH�UHFRJQLWLRQ�RI�DQ�LQFRPH�WD[�SUHSD\PHQW�SHUPLWWHG�LQ�DFFRUGDQFH�ZLWK�VHFWLRQ�����Ī��ī�RI�WKH�$XVWULDQ�&RPPHUFLDO�&RGH�Ī8*%ī�DPRXQWHG�WR�Ͱ����PLOOLRQ�DV�DW�WKH�UHSRUWLQJ�GDWH�Ī���'HFHPEHU�������Ͱ����PLOOLRQī��7KH�EDQN�GLG�QRW�PDNH�DQ\�XVH�RI�WKH�FDSLWDOLVDWLRQ�RSWLRQ�

The allowances for losses on loans and advances and additions to provisions for contingent liabilities and credit risks�ZHUH�DGMXVWHG�DV�SHUPLWWHG�E\�VHFWLRQ����Ī�ī�RI�WKH�%:*��

5HYHUVDOV�RI�ZULWHĥGRZQV�RQ�VHFXULWLHV�QRW�UHFRJQLVHG�IRU�UHDVRQV�LQ�FRQQHFWLRQ�ZLWK�WD[�ODZ�DPRXQWHG�WR�Ͱ������WKRXVDQG�Ī������Ͱ������WKRXĥVDQGī��7KLV�FRXOG�OHDG�WR�WD[�H[SHQVHV�LQ�VXEVHTXHQW�\HDUV�RI�XS�WR�Ͱ����WKRXVDQG�Ī������Ͱ����WKRXVDQGī��

2EOLJDWLRQV������������2EOLJDWLRQV����������������������

EUR K

�������������

EUR K

������������������

oBligations from tHe use of ProPerty and equiPment not rePorted in tHe Balance sHeet (eXcluding indeXation):

Page 187: Group SITTING PRETTYTHE FUTURE’S Salzburg Graz · Manfred Prisching, the author of our guest article is Professor at the Institute of Sociology at the Faculty of Business, Economics

186186

Excerpt from the notes

WR�WKH�DQQXDO�ÀQDQFLDO�statements of

CAPITAL BANK –

GRAWE GRUPPE AG

for the year ended 31

December 2013

1HW�LQFRPH�WD[ pursuant to section ����QR���E�RI�WKH�8*%�DWWULEXWDEOH�WR�WKH�\HDU�XQGHU�UHYLHZ�DPRXQWHG�WR�Ͱ������WKRXVDQG�Ī������Ͱ����WKRXVDQGī��$�QHW�WD[�LQFRPH�DPRXQW�RI�ĥ���WKRXVDQG�Ī������WD[�LQFRPH�RI�Ͱĥ��WKRXVDQGī�DUH�UHODWHG�WR�WD[HV�IURP�SULRU�SHULRGV���

'LVFORVXUH�RI�WKH�H[SHQVHV�LQFXUUHG�LQ������IRU�DXGLWRU�IHHV�KDV�QRW�EHHQ�included because these disclosures DUH�SXEOLVKHG�DW�EDQNLQJ�JURXS�OHYHO�E\�+<32ĥ%$1.�%85*(1ĥ/$1'�$NWLHQJHVHOOVFKDIW�

E. ADDITIONAL DISCLO-SURES

As at the reporting date, assets reported on the balance sheet denominated in foreign currency DPRXQWHG�WR�Ͱ������PLOOLRQ�Ī���'HFHPEHU�������Ͱ������PLOOLRQī�DQG�the liabilities on the balance sheet denominated in foreign currency ZHUH�Ͱ�����PLOOLRQ�Ī���'HFHPEHU�������Ͱ�����PLOOLRQī�

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187187

Currency forward agreements and swaps were measured using the rates published by the ECB for WKH�UHSRUWLQJ�GDWH�WDNLQJ�LQWR�DFFRXQW�WKH�LQWHUHVW�UDWHV�IRU�WKH�FXUUHQFLHV�LQYROYHG�DQG�WKH�UHVLGXDO�PDWXULWLHV��7KLUGĥSDUW\�PHDVXUHPHQWV�ZHUH�XVHG�IRU�RWKHU�GHULYDWLYHV��3RVLWLYH�DQG�QHJDWLYH�IDLU�YDOXHV�DUH�UHFRJQLVHG�LI�GHULYDWLYHV�DUH�DVVLJQHG�WR�WKH�trading portfolio or form part of a hedge accounting UHODWLRQVKLS�ZLWK�WKH�EDQNV�RZQ�LVVXHV�RU�RWKHU�XQGHUO\LQJ�WUDQVDFWLRQV�

1HJDWLYH�IDLU�YDOXHV�WKDW�DUH�QRW�FRYHUHG�E\�DQ�HTXLYDOHQW�SRVLWLYH�IDLU�YDOXH�IURP�DQ�XQGHUO\LQJ�WUDQVDFWLRQ�LQ�D�KHGJLQJ�UHODWLRQVKLS�DUH�WDNHQ�LQWR�DFFRXQW�E\�UHFRJQLVLQJ�D�SURYLVLRQ�IRU�LPPLQHQW�ORVVHV�IURP�SHQGLQJ�IRUZDUG�WUDQVDFWLRQV��$V�DW����'HFHPEHU�������QR�VXFK�SURYLVLRQ�KDG�EHHQ�UHFRJĥQLVHG��DV�KDG�DOVR�EHHQ�WKH�FDVH�DW�WKH�HQG�RI������

7KH�HQWLUH�HTXLW\�LQYHVWPHQW�LQ�%.�,PPR�9RUVRUJH�*PE+�ĪFRPPHUFLDO�UHJLVWHU�QXPEHU�Ī)1ī��������Sī�ZDV�WUDQVIHUUHG�WR�&$3,7$/�%$1.�Ħ�*5$:(�*5833(�$*�IURP�%U�OO�.DOOPXV�%DQN�$*�XQGHU�D�GHPHUJHU�DQG�WDNHRYHU�DJUHHPHQW�ZLWK�UHWURDFWLYH�HIIHFW�IURP����'HFHPEHU�������7KH�UHVXOWLQJ�JDLQ�RQ�WKH�WUDQVIHU�RI�VKDUHV�ĪFRQWULEXWLRQ�JDLQī�DPRXQWLQJ�WR�Ͱ���WKRXVDQG�ZDV�UHSRUWHG�LQ�WKH�LQFRPH�statement under income from securities and equity LQYHVWPHQWV�

Page 189: Group SITTING PRETTYTHE FUTURE’S Salzburg Graz · Manfred Prisching, the author of our guest article is Professor at the Institute of Sociology at the Faculty of Business, Economics

188188

Excerpt from the notes

WR�WKH�DQQXDO�ÀQDQFLDO�statements of

CAPITAL BANK –

GRAWE GRUPPE AG

for the year ended 31

December 2013

Notional amountin EUR K Positive fair value

1. Interest-rate contracts OTC products:

,QWHUHVW�UDWH�IRUZDUG�FRQWUDFWV,QWHUHVW�UDWH�VZDSV,QWHUHVW�UDWH�RSWLRQV2WKHU�FRPSDUDEOH�FRQWUDFWV

([FKDQJH�WUDGHG�SURGXFWV

���)RUHLJQ�H[FKDQJH�FRQWUDFWV OTC products:

&XUUHQF\�IRUZDUG�DJUHHPHQWV&XUUHQF\�RSWLRQV&XUUHQF\�VZDSV2WKHU�FRPSDUDEOH�FRQWUDFWV

([FKDQJH�WUDGHG�SURGXFWV

3. Securities-based contracts OTC products:

(TXLW\�RSWLRQV��FDOOV(TXLW\�RSWLRQV��SXWV6HFXULW\�EDVHG�VZDSV2WKHU�FRPSDUDEOH�FRQWUDFWV

([FKDQJH�WUDGHG�SURGXFWV(TXLW\�RSWLRQV��FDOOV(TXLW\�RSWLRQV��SXWV

Total

-������

--

-

�������---

-

-���

������-

--

�������

-(46,300)(168,489)

-

-

(129,287)-

(1,025)-

-

-(104)

(35,220)-

--

(380,426)

31.12.2013 31.12.2012 31.12.2013 31.12.2012

-���

--

-

����---

-

----

--

�����

-(822)

--

-

(2,298)-

(43)-

-

----

--

(3,162)

as yet unsettled forWard transactions as at tHe Balance sHeet date

Page 190: Group SITTING PRETTYTHE FUTURE’S Salzburg Graz · Manfred Prisching, the author of our guest article is Professor at the Institute of Sociology at the Faculty of Business, Economics

189189

-(1,971)

--

-

(240)-

(43)-

-

----

--

(2,255)

-�����

--

-

���---

-

----

--

�����

---

-

�����---

-

----

--

�����

----

-

���---

-

-���

--

--

230

Negative fair value Carrying amount31.12.2013 31.12.2012 Asset Liability

Page 191: Group SITTING PRETTYTHE FUTURE’S Salzburg Graz · Manfred Prisching, the author of our guest article is Professor at the Institute of Sociology at the Faculty of Business, Economics

190190

Excerpt from the notes

WR�WKH�DQQXDO�ÀQDQFLDO�statements of

CAPITAL BANK –

GRAWE GRUPPE AG

for the year ended 31

December 2013

Contingent liabilities and other ÀQDQFLDO�FRPPLWPHQWV

$V�DW����'HFHPEHU�������FRQWLQJHQW�liabilities included capital guaranĥWHHV�IRU�3=9�SURGXFWV�DPRXQWLQJ�WR�Ͱ������PLOOLRQ�Ī���'HFHPEHU�������Ͱ������PLOOLRQī�DQG�RWKHU�FDSLWDO�JXDUDQWHHV�WRWDOOLQJ�Ͱ������PLOOLRQ�Ī���'HFHPEHU�������Ͱ������PLOOLRQī��

7KH�FUHGLW�ULVNV�UHSRUWHG�EHORZ�WKH�line on the balance sheet related to loans that had not yet been drawn DV�DW����'HFHPEHU������DPRXQWLQJ�WR�Ͱ�����PLOOLRQ�Ī���'HFHPEHU�������Ͱ�����PLOOLRQī�

7KH�EDQN�LV�DOVR�VXEMHFW�WR�DQ�REOLĥgation arising from its membership of the deposit protection scheme (LQODJHQVLFKHUXQJ�GHU�%DQNHQ��%DQNLHUV�*HVHOOVFKDIW�PE+��DV�SUHVFULEHG�XQGHU�VHFWLRQ����RI�WKH�%:*��,Q�WKH�HYHQW�RI�D�FDOO�RQ�funds under the deposit protection DUUDQJHPHQWV��VHFWLRQ���D�Ī�ī�RI�WKH�%:*�VSHFLILHV�WKDW�WKH�PD[LPXP�REOLJDWLRQ�IRU�DQ�LQGLYLGXDO�EDQN�LV����İ�RI�WKH�PHDVXUHPHQW�EDVLV�SOXV������WLPHV�WKH�FDSLWDO�UHTXLUHPHQW�IRU�WKH�H[SRVXUHV�LQ�WKH�WUDGLQJ�

Page 192: Group SITTING PRETTYTHE FUTURE’S Salzburg Graz · Manfred Prisching, the author of our guest article is Professor at the Institute of Sociology at the Faculty of Business, Economics

191191

ERRN�DV�DW�WKH�ODVW�EDODQFH�VKHHW�GDWH��7KH�XSSHU�OLPLW�IRU�WKH�EDQN�DV�DW����'HFHPEHU������ZDV�WKHUHĥIRUH�FDOFXODWHG�WR�EH�Ͱ����PLOOLRQ�Ī���'HFHPEHU�������Ͱ����PLOOLRQī�

As at the reporting date, securities with a carrying DPRXQW�RI�Ͱ�����PLOOLRQ�Ī���'HFHPEHU�������Ͱ�����PLOOLRQī�KDG�EHHQ�ORGJHG�DV�DQ�DUUDQJHPHQW�ERQG��$�VXP�RI�Ͱ����PLOOLRQ�Ī���'HFHPEHU�������Ͱ����PLOOLRQī�KDG�DOVR�EHHQ�GHSRVLWHG�DV�D�FDVK�ERQG��,Q�DGGLWLRQ��WKH�EDQN�KHOG�FRYHU�DVVHWV�IRU�SHQVLRQ�SURYLVLRQV�LQ�D�YROXPH�RI�Ͱ����WKRXVDQG�Ī���'HFHPEHU�������Ͱ����WKRXVDQGī�DQG�FRYHU�IXQGV�IRU�WUXVW�PRQH\�DPRXQWLQJ�WR�Ͱ����WKRXVDQG�Ī���'HFHPEHU�������Ͱ����WKRXVDQGī�

F. OTHER DISCLOSURES

'XULQJ�������WKH�EDQN�KDG�DQ�DYHUDJH�RI�����Ī���������ī�VDODULHG�DQG����Ī��������ī�QRQĥVDODULHG�HPSOR\HHV��

$V�KDG�DOVR�EHHQ�WKH�FDVH�DV�DW����'HFHPEHU�������WKH�ORDQV�DQG�DGYDQFHV�WR�FXVWRPHUV�DV�DW����'HFHPEHU������GLG�QRW�LQFOXGH�DQ\�ORDQV�to members of the Management Board or the 6XSHUYLVRU\�%RDUG��

7KH�H[SHQVHV�IRU�VHYHUDQFH�DQG�SHQVLRQV��LQFOXGLQJ�DGGLWLRQV�WR�SURYLVLRQV��IRU�DFWLYH�PHPEHUV�RI�WKH�0DQDJHPHQW�%RDUG�DQG�IRU�RWKHU�H[HFXWLYHV�FDPH�

Page 193: Group SITTING PRETTYTHE FUTURE’S Salzburg Graz · Manfred Prisching, the author of our guest article is Professor at the Institute of Sociology at the Faculty of Business, Economics

192

WR�Ͱ����WKRXVDQG�Ī������Ͱ����WKRXVDQGī��WKH�HTXLYDOHQW�H[SHQVHV�IRU�RWKHU�HPSOR\HHV�ZHUH�Ͱ����WKRXVDQG�Ī������Ͱ����WKRXVDQGī�([SHQVHV�IRU�SHQVLRQV�SDLG�to former members of the Management Board amounted to Ͱ���WKRXVDQG�Ī������Ͱ���WKRXVDQGī�

5HJDUGLQJ�UHPXQHUDWLRQ�SDLG�WR�WKH�members of the Management Board,the details are not disclosed in DSSOLFDWLRQ�RI�WKH�RSWLRQ�DYDLODEOH�XQGHU�VHFWLRQ�����Ī�ī�8*%��7KH�PHPEHUV�RI�WKH�6XSHUYLVRU\�%RDUG�GXULQJ�WKH�\HDU�XQGHU�UHYLHZ�GLG�QRW�UHFHLYH�DQ\�UHPXQHUDWLRQ�

Page 194: Group SITTING PRETTYTHE FUTURE’S Salzburg Graz · Manfred Prisching, the author of our guest article is Professor at the Institute of Sociology at the Faculty of Business, Economics

193

Page 195: Group SITTING PRETTYTHE FUTURE’S Salzburg Graz · Manfred Prisching, the author of our guest article is Professor at the Institute of Sociology at the Faculty of Business, Economics

194

:H�KDYH�DXGLWHG�WKH�DFFRPSDQ\LQJ�financial statements, including the accounting system, of CAPITAL %$1.�Ħ�*5$:(�*5833(�$*��*UD]��IRU�WKH�ILQDQFLDO�\HDU�IURP���-DQXDU\������WR����'HFHPEHU�������These financial statements comprise WKH�EDODQFH�VKHHW�DV�DW����'HFHPEHU�������WKH�LQFRPH�VWDWHPHQW�IRU�WKH�ILQDQFLDO�\HDU�HQGHG����'HFHPEHU�������DQG�WKH�QRWHV�

Management's responsibility for the ÀQDQFLDO�VWDWHPHQWV�DQG�IRU�WKH�accounting system

2XU�UHVSRQVLELOLW\�LV�WR�H[SUHVV�an opinion on these financial VWDWHPHQWV�EDVHG�RQ�RXU�DXGLW��:H�conducted our audit in accordance with laws and regulations applicable in Austria and Austrian Standards RQ�$XGLWLQJ��7KRVH�VWDQGDUGV�require that we comply with professional guidelines and that we plan and perform the audit to obtain reasonable assurance as to whether the financial statements are IUHH�IURP�PDWHULDO�PLVVWDWHPHQW�

Auditor's Report

The full DQQXDO�ÀQDQ-cial statements of CAPITAL BANK – GRAWE GRUPPE AG for the year ended 31 De-cember 2013 were given the following XQTXDOLÀHG�DX-dit opinion by the appointed independent auditors:

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$Q�DXGLW�LQYROYHV�SHUIRUPLQJ�SURFHGXUHV�WR�REWDLQ�DXGLW�HYLGHQFH�DERXW�WKH�DPRXQWV�DQG�GLVFORVXUHV�LQ�WKH�ILQDQFLDO�VWDWHPHQWV��7KH�SURFHGXUHV�VHOHFWHG�GHSHQG�RQ�WKH�DXGLWRUV�MXGJHPHQW��LQFOXGLQJ�WKH�DVVHVVPHQW�RI�WKH�ULVNV�RI�PDWHULDO�PLVVWDWHPHQW�RI�the financial statements, whether due to fraud or HUURU��,Q�PDNLQJ�WKRVH�ULVN�DVVHVVPHQWV��WKH�DXGLWRU�FRQVLGHUV�LQWHUQDO�FRQWURO�UHOHYDQW�WR�WKH�FRPSDQ\V�preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not IRU�WKH�SXUSRVH�RI�H[SUHVVLQJ�DQ�RSLQLRQ�RQ�WKH�HIIHFWLYHQHVV�RI�WKH�FRPSDQ\V�LQWHUQDO�FRQWURO��$Q�DXGLW�DOVR�LQFOXGHV�HYDOXDWLQJ�WKH�DSSURSULDWHQHVV�RI�accounting policies used and the reasonableness of accounting estimates made by management, as well DV�HYDOXDWLQJ�WKH�RYHUDOO�SUHVHQWDWLRQ�RI�WKH�ILQDQFLDO�VWDWHPHQWV�

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Auditor's responsibility and description of type and scope of the statutory audit

2XU�UHVSRQVLELOLW\�LV�WR�H[SUHVV�an opinion on these financial VWDWHPHQWV�EDVHG�RQ�RXU�DXGLW��:H�conducted our audit in accordance with laws and regulations applicable in Austria and Austrian Standards RQ�$XGLWLQJ��7KRVH�VWDQGDUGV�require that we comply with professional guidelines and that we plan and perform the audit to obtain reasonable assurance as to whether the financial statements are IUHH�IURP�PDWHULDO�PLVVWDWHPHQW�

$Q�DXGLW�LQYROYHV�SHUIRUPLQJ�SURFHGXUHV�WR�REWDLQ�DXGLW�HYLGHQFH�about the amounts and disclosures LQ�WKH�ILQDQFLDO�VWDWHPHQWV��7KH�procedures selected depend on WKH�DXGLWRUV�MXGJHPHQW��LQFOXGLQJ�WKH�DVVHVVPHQW�RI�WKH�ULVNV�RI�material misstatement of the financial statements, whether GXH�WR�IUDXG�RU�HUURU��,Q�PDNLQJ�WKRVH�ULVN�DVVHVVPHQWV��WKH�DXGLWRU�FRQVLGHUV�LQWHUQDO�FRQWURO�UHOHYDQW�WR�WKH�FRPSDQ\V�SUHSDUDWLRQ�DQG�fair presentation of the financial

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statements in order to design audit procedures that are appropriate in the circumstances, but not IRU�WKH�SXUSRVH�RI�H[SUHVVLQJ�DQ�RSLQLRQ�RQ�WKH�HIIHFWLYHQHVV�RI�WKH�FRPSDQ\V�LQWHUQDO�FRQWURO��

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Opinion

2XU�DXGLW�GLG�QRW�JLYH�ULVH�WR�DQ\�REMHFWLRQV��,Q�our opinion, which is based on the findings of our audit, the financial statements comply with legal UHTXLUHPHQWV�DQG�JLYH�D�WUXH�DQG�IDLU�YLHZ�RI�WKH�ILQDQFLDO�SRVLWLRQ�RI�WKH�FRPSDQ\�DV�DW����'HFHPEHU������DQG�RI�LWV�ILQDQFLDO�SHUIRUPDQFH�IRU�WKH�ILQDQFLDO�\HDU�IURP���-DQXDU\������WR����'HFHPEHU������LQ�DFFRUGDQFH�ZLWK�$XVWULDQ�JHQHUDOO\�DFFHSWHG�DFFRXQWLQJ�SULQFLSOHV�

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Comments on the Management Report

3XUVXDQW�WR�VWDWXWRU\�SURYLVLRQV��WKH�PDQDJHPHQW�report is to be audited as to whether it is consistent with the financial statements and as to whether the other disclosures are not misleading ZLWK�UHVSHFW�WR�WKH�FRPSDQ\V�SRVLWLRQ��7KH�DXGLWRUV�UHSRUW�DOVR�KDV�WR�FRQWDLQ�D�VWDWHPHQW�DV�to whether the management report is consistent ZLWK�WKH�ILQDQFLDO�VWDWHPHQWV�

In our opinion, the management report is FRQVLVWHQW�ZLWK�WKH�ILQDQFLDO�VWDWHPHQWV�

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The following consolidated ÀQDQFLDO�statements in accordance with UGB/BWG for the subgroup of CAPITAL BANK – GRAWE GRUPPE AG are intended to provide the reader with information on WKH�ÀQDQFLDO�performance of Capital Bank and its subsidiaries. The consoli-GDWHG�ÀQDQFLDO�statements for the subgroup in accordance with UGB/BWG were audited by the independent auditors as part of the audit of the consoli-GDWHG�ÀQDQFLDO�statements of HYPO-BANK BURGEN-LAND Aktieng-esellschaft.

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12. caPital Bank – graWe gruPPe ag suB-grouPconsolidated Balance sHeet as at 31 decemBer 2013

ASSETS 1. Cash on hand and balances at with central banks 2. Public-sector debt instruments eligible as collateral for central bank funding 3XEOLF�VHFWRU�GHEW�LQVWUXPHQWV�DQG similar securities 3. Loans and advances to banks 4. Loans and advances to customers 5. Bonds and other � ¿[HG�LQFRPH�VHFXULWLHV� 6. Shares and other variable-yield securities 7. Equity investments

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EQUITY AND LIABILITIES

1. Deposits from banks 2. Deposits from customers

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13. caPital Bank – graWe gruPPe ag suB-grouP consolidated income statement for tHe year ended 31 decemBer 2013

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IV. OPERATING PROFIT

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