‘When problems are left unsolved citizens drift away, lose faith in the democratic system.’

After an illustrious career in both national and local politics in Italy – he has been both President of the Lombardy region and a member of the Italian parliament – and as President of Fondazione Cariplo, the largest Italian foundation, Giuseppe Guzzetti is retiring at the age of 85. He gives Andrew Milner the benefit of his accumulated wisdom and experience, discussing the importance of innovation in the social sector, the present and the future of philanthropy in Europe and, indeed, the future of Europe itself.

In your time with Fondazione Cariplo, what changes have you seen, first, in the Fondazione itself, second, in Italian philanthropy and, finally, in philanthropy in Europe?
With respect to philanthropy in Italy and, more specifically, Fondazione Cariplo, we were brought into existence by the Amato Law in 1990. Italian savings banks had previously had no shareholders, which EU law required, and any income from its banking and financial activities was allocated to social utility activities mainly in two areas, arts and culture and the welfare sector. The Amato Law separated the banking and charitable activities and the process of setting up the foundation was completed by another law, the Ciampi Law, in 1998.

This period also coincided with the crisis of welfare in Italy and elsewhere, the welfare of the elderly, of people with disabilities, of the poor – child poverty was especially significant – and the integration of migrants. What we call in Italy the Privato Sociale, the social sector made up of associations, foundations, social enterprises and cooperatives was already tackling these problems but struggling financially due the shortage of public resources. Initially, our foundations were mostly passive grantmakers – potential grantees approached us and we decided whether we could fund them or not – but as a result of the crisis, Italian and European foundations became more proactive and started identifying social priorities to be addressed jointly with third sector organisations and also involving public institutions. In short, a modern and more strategic philanthropy was born.

We live in the digital era, the era of advanced technology – today we can photograph black holes! In the face of new and emerging issues, our foundations have revised their statutes accordingly, extending the sectors they could operate in.

It’s also worth pointing out that the difference in tax systems across Europe is a handicap to a European philanthropy. For years, the European Foundation Centre (EFC) has been arguing the need for a homogeneous tax regime in Europe and the idea is central to the recent European Philanthropy Manifesto, which will be an important document in promoting joint action by European foundations in future, and joint strategies are crucial in order to address massive needs. Each country has, of course, its own peculiarities and different social conditions but we can’t have a united Europe and an economic and monetary union, with 28 different tax systems. It’s not a question of levelling everything, but we need some commonly agreed principles providing a homogeneous framework within which each country can define its own social policies.

You have four programmes of work environment, arts and culture, scientific research and technology transfer, and social and human Services. Why were these chosen and has one become more important than the others?
The Ciampi Law, that formalised the private nature of foundations, also established the sectors it was permissible to work in which, naturally, include the four sectors our foundation decided to focus on. And as I said before, the savings banks first and then the foundations, used to operate initially in the social realm and in the arts and culture sector, but over the years additional sectors have inevitably become important. Take the environment, for instance. Issues connected with it have undoubtedly become top priorities, and our foundation could not refrain from addressing them. Likewise, we live in the digital era, the era of advanced technology – today we can photograph black holes! In the face of new and emerging issues, our foundations have revised their statutes accordingly, extending the sectors they could operate in.

Philanthropy can’t simply be a band-aid and think ‘this is a problem we can’t fix, we don’t have the resources, we’ll do what little we can.’ No. We must tackle these issues with new tools and new resources, including research and innovation.

The heartland of your philanthropy is still the Lombardy region, though you have also funded internationally. Why did you decide to start funding outside Italy? Is it likely that the international dimension of your work will increase and what factors dictate where you fund?

Fondazioni4Africa Burkina Faso project in Burkina Faso guaranteeing the right to food for 60,000 people in Burkina Faso.

The geographic focus of Fondazione Cariplo, like the other Italian foundations of banking origin, coincides with the territory the banks used to operate in, which for us, means the Lombardy Region and two provinces of the Piedmont Region, so yes, this is the heartland of our philanthropy. Nevertheless, both Cariplo and other Italian foundations also operate beyond these regional borders and we have also supported some international initiatives outside Italy and Europe. We have funded a multi-year programme in Malawi, for instance, and we are still supporting the project Fondazioni4Africa Burkina Faso in partnership with other foundations and a variety of initiatives in Central and South America and Southern Asia, countries that undeniably need our solidarity and support for the development and growth of democracy. In the last decade we have also established international partnerships with some European foundations – from Portugal, Spain, Germany, the Netherlands and other countries – with a similar mindset and organisation which has made collaboration easy – the EFC has also facilitated networking opportunities – in various sectors, from scientific research (for instance advanced research on agriculture and food production) to education and arts and culture. We have also strongly supported knowledge and best practice exchange with other philanthropic institutions. We’ve also been involved in co-funding European projects with the EU, particularly in the environmental field – water preservation, pollution reduction, the preservation or restoration of natural corridors, through which species pass from one patch of habitat to another – supporting non-profits in implementing the Italian elements of European projects. In the scientific research field, we took part at an important European project – RRI Tools – led by La Caixa Foundation that has been funded thanks to a €7 million grant by the European Commission to promote responsible research and innovation in Europe.

Given the size of resources, is there a bigger role that you and other very large foundations, like Wellcome Trust in the UK and Gates and Ford in the USA, can play in shaping events?
We definitely can, and that’s what we are trying to do. Our work has always consisted in providing solutions to various needs in the four sectors we talked about, but constantly introducing novelty. As well as providing grants, we have explored new actions and new models in these sectors, we have fostered research and innovation, often supporting initiatives that appeared impracticable at first sight. As an example, high quality social housing did not exist in Italy until some years ago. It was ‘invented’ by Fondazione Cariplo and now that experiment is a national programme. Another example concerns the elderly. Nowadays, people live longer – that’s the positive side – but their quality of life depends on our ability to provide solutions to new social and medical needs. For this reason, Fondazione Cariplo has been investing significant resources in research into age-related diseases and analysis of the social impact of aging populations.

What do you see as the proper role of philanthropy?
In the light of constantly decreasing public resources, philanthropy can’t simply be a band-aid and think ‘this is a problem we can’t fix, we don’t have the resources, we’ll do what little we can.’ No. We must tackle these issues with new tools and new resources, including research and innovation, because a solution must be found despite the crisis.

You were one of the first foundations in the field of mission-connected investing (MCI). Why was the decision taken to invest this way?

Public housing has been in crisis for many years due to lack of resources.

Since 2008 Fondazione Cariplo has adopted a socially responsible approach to its investments on 100 per cent of its assets, in line with best practice worldwide. The main purpose of this SRI approach is not to seek a blended social and financial return, it’s meant to ensure that we don’t invest in things that run counter to our work and principles. With the MCIs, however, there is a concrete trade-off between financial and social return and the foundation decided to accept a moderate financial return (two per cent above inflation) on such investments. At the end of last year, MCIs amounted to nearly €300 million – 4.1 per cent of the market value of the foundation’s total assets – invested in sectors like agribusiness, green energy and energy efficiency, social housing, social finance and venture capital. Our experience in the social housing field led us to this type of investment. In Italy, we have a clear demand: university students, young couples, the elderly, migrants, people with a salary or pension but can’t afford the market rents. On the other hand, public housing has been in crisis for many years due to lack of resources. Research conducted by the Politecnico di Milano showed that the availability of land at affordable prices was key to providing affordable, and good-quality housing, with rents 50 per cent lower than those of the private sector. So, in 2004, Fondazione Cariplo promoted the establishment of a separate foundation – the Fondazione Housing Sociale (FHS) – specifically dedicated to the development of innovative and economically sustainable solutions to housing needs.

I believe that the main challenges foundations will have to confront in the future are the challenges we are already facing today – the crisis of the social state, youth unemployment, a dramatic rise in child poverty

How influential has your example of MCI been? Do you see more foundations following it?
Well, the first ethical real estate fund launched by FHS in Lombardy in 2006 initially raised €85 million from private and public investors and today the fund is €500 million. The success of the model inspired the Sistema Integrato di Fondi [Integrated Fund System] that was introduced in the national Housing Plan in 2009. The national fund, now called Fondo Investimenti per l’Abitare, amounts to €2 billion and is one of the three biggest and most important impact investment programmes worldwide. Another thing was that the experience of FHS and the national Housing Plan highlighted various key success factors in social housing initiatives, like the ability to develop innovative financial tools and to build solid public-private partnerships. More generally, I believe that our work has inspired other foundations to initiate similar activities in their territories, and in this connection, ACRI plays an important role in disseminating best practice among the association’s members.

During your time as President, which of the Fondazione’s achievements has given you most satisfaction and why?

The Cariplo Factory helps young people learn new skills that exists in the marketplace.

It’s an extremely difficult question, or rather it is difficult to name just a few, considering my 22 years here. For sure, one of the achievements I’m particularly proud of is our social housing programme, thanks to which we have now thousands of social homes in Lombardy and in the whole country. A different type of achievement, and one which spans all four of our areas of work, is the methodology we adopt to address social issues. Despite the crisis and the lack of resources, we have never taken a ‘best we can do’ attitude. We have kept experimenting with new models, fostering innovation and persuading our grantees to innovate. One of our ongoing projects has the ambitious goal of developing a new and more efficient welfare system for our communities. We are asking potential grantees to submit innovative projects based on collaboration and coordination among different entities that work in the same or related areas, in addition the involvement of the citizens/communities themselves. Another remarkable initiative is Cariplo Factory, which supports youth employment. The Factory operates in disuses industrial premises, now owned by the Municipality of Milan. We set ourselves the challenging goal of creating 10,000 jobs for young people in three years and – also thanks to the collaboration of corporates like Microsoft, Fastweb, Terna, Novartis and Intesa Sanpaolo – that goal has been achieved ahead of time. Last but not least, I take pride in the Foundation’s work to support the environment, of our efforts to combat air pollution and the pollution of lakes and rivers, and our contribution to the opening of VENTO, the longest cycle path in Italy, which runs almost 700 kilometres from Turin to Venice following the river Po. So many activities, as you can see, that go beyond our traditional regional borders.

When social problems are addressed and solved, communities are more cohesive and our democracy stronger. When problems are left unsolved citizens drift away, lose faith in the democratic system, and that’s when you see the rise of populism and the survival of democracy itself is called in question.

Looking to the future, what do you see as the main challenge or challenges which foundations will have to confront?
I believe that the main challenges foundations will have to confront in the future are the challenges we are already facing today – the crisis of the social state, youth unemployment, a dramatic rise in child poverty. National statistics here in Italy show that a million and a half children live in poverty. Here in Milan, it’s at least 21,000. If we don’t address this issue today we may well find these children among tomorrow’s NEETs or tomorrow’s adults struggling to access the labour market. It is very clear that our ability to build a better future depends on the effort we put into the resolution of today’s problems of our children, our young people and our elderly.

If there was only one piece of advice you could give to your successor, what would it be?
A very simple but fundamental one: to preserve his or her sensitivity and constantly pay attention to social problems. It is important to continue innovation and research, but the priority must always be that of solving social problems. Our communities are relatively cohesive, many of us are able to live well, but the most disadvantaged – people struggling with disabilities or living in poverty because they have lost their jobs – cannot. These are the priorities that should always guide the Foundation’s actions if the main goal is that of creating hope for a better future.

Europe is passing through almost a crisis in democracy, with the rise of populism and right-wing governments. What are the implications for philanthropy of this development?

“I realise this may sound utopian, and it is quite unbelievable that Brexit is taking the United Kingdom out of Europe.”

Democracy means the ability to provide solutions to citizens’ problems, in terms of both social and economic development. When social problems are addressed and solved, communities are more cohesive and our democracy stronger. On the other hand, when problems are left unsolved citizens drift away, lose faith in the democratic system, and that’s when you see the rise of populism and the survival of democracy itself is called in question. Our Europe is in crisis. Nationalism is on the increase in some places, and there are calls to withdraw from Europe. I am convinced that philanthropic institutions can contribute to solving these problems and to mitigating any potential crisis of democracy, of the European idea. In the last years, we have distanced ourselves from the founding values of the European union, values shared by Europe’s founding fathers – Adenauer, De Gasperi, Schuman, Monnet…great men that, between two wars fought mainly in Europe, exhorted us to unite. Our commitment must not be to dissolving the European Union, but rather to strengthening it. I realise this may sound utopian, and it is quite unbelievable that Brexit is taking the United Kingdom out of Europe. We must reinforce Europe and go on building the united states of Europe, a goal that today seems light years away, but which should be our central aim. Only then can we eradicate excessive forms of nationalism. It will require massive efforts and a great commitment but I believe this is the role of foundations and of all the organisations that pursue social goals: besides giving financial support to social causes and solving social problems, we reinforce pluralism and ultimately contribute to strengthening democracy in our countries.

Andrew Milner is associate editor of Alliance magazine