The European Foundation Centre (EFC) has a new chair, Massimo Lapucci, currently Secretary General of Fondazione CRT in Italy. Since the focus of Fondazione CRT is in the north-western region of Italy, it’s striking that he’s become a prominent figure in European philanthropy. He sat down with Charles Keidan at the EFC Conference in Warsaw and explained how he reconciles the local with the international, what he sees as the real value of philanthropy, and how he hopes that the EFC will help philanthropy speak with ‘a strong voice.’

You have a background in investment but you are also a Yale World Fellow.
I come from the so-called profit sector. My background is in corporate finance and business and economy, but my experience as a Yale World Fellow in 2006 made me start thinking about a different role in finance, beyond profit for the shareholders. At Yale, I was stimulated by colleagues from different countries and backgrounds, and I started thinking about managing endowments and resources for purposes besides pure dividend and return on investment for shareholders. After that experience, I found myself back in Europe, living in Luxembourg, and then from there I had the chance to join the foundation.

How much did you know about Fondazione CRT then?
Not much. I had worked before for non-profit initiatives, especially in research and education, but I didn’t know about the specific role of foundations of banking origin.

Massimo Lapucci talks to Alliance editor Charles Keidan.

Can you explain more about foundations of banking origin for the sake of non-Italian readers?
In the 1990s, the Italian banking sector, which was still largely state-owned, was privatized. They had a brilliant idea of creating foundations with part of the proceeds of the sales, so the foundations had an immediate endowment and a specific non-profit mission, linked to the territory where the banks operate, in our case the north west of Italy. This created an immediate backbone of non-profits, because we are talking about an important amount of endowment put together. In our case, it’s about €3.2 billion, and the overall total is around €41 billion.

So you’re essentially the man with responsibility to steward and spend that endowment?
Absolutely. That was the interesting value proposition for me when I joined the foundation, working on a large endowment but using the return for other purposes than as dividend for the shareholders. But I am not alone, of course. There is the board of directors and specific committees that also share this responsibility.

And its work is tied to the well-being of the region that you’re based in?
When I joined the foundation there was, let’s say, an international spirit. I wanted to make it stronger and more structured, as did Stefania Coni, who heads our international work. We immediately worked on convincing the governing bodies that the concept of the territory has profoundly changed in time. We reinforced national initiatives, working with other foundations, and started new international initiatives working with the United Nations (UN) and other organizations, and also creating bilateral projects with other foundations that we met here at the EFC.

Lapucci, with Fondazione CRT, began a program in conjunction with the United Nations called ‘Entrepreneurs for Social Change.’

What is the division of resources outside and inside the territory?
The vast majority remains in the territory. When we do work internationally, I always try to find a link with the territory.

For example, we launched a project with the UN called ‘Entrepreneurs for Social Change.’ Every year, the UN selects around 25 projects from young social entrepreneurs from all the countries of the Mediterranean area, not only European but also African and Middle Eastern countries. They come to Torino, they receive training on how to manage a start-up – finance, marketing, HR, etc – then they go back to their countries. So this is very international – where is the link? They come to Torino for the training and we create a special link with the region. For example, one of our very successful projects called their first production ‘Torino,’ out of gratitude. Another project, called SPEAK, chose Torino as its first international city. You create a real link and the staff, the governing body, and the people in the territory understand that our role has evolved and we need to have a broader outlook.

We also operate through a separate foundation called Fondazione Sviluppo e Crescita CRT (Development and Growth Foundation) that is dedicated to social impact investing and venture philanthropy. The reason is that, when the foundation was set up, the law stipulated that we should do purely grantmaking because venture philanthropy was largely unknown in Italy at the time.

Your endowment is around €3.2 billion and you spend €55 million each year on programmes. How do you decide what percentage of your endowment you should spend on programmes?
First of all, we don’t spend the endowment, we spend the return on it. This is not a detail. With current interest rates, we have to use different mechanisms to produce revenues. Without going into details, it is what in English is called ‘yield enhancement.’ But also, we invest in bonds and we also have the dividend from the participating company. We have diversified a lot, so that we have just 1.7 per cent in the UniCredit Bank and the rest is well diversified in different businesses.

Are there any businesses you wouldn’t invest in?
Our main participating companies and investments, besides the bank as that was our origin, are infrastructure like motorways and airports for example, and in insurance. We won’t invest in businesses that have a conflict in terms of health or environmental issues, etc.

Quite a few foundations, particularly American ones, have joined the movement to divest from fossil fuels. Others would say that we all use them to travel and therefore it’s not necessarily appropriate. What are your views on that?
I think it’s very important to understand how the single company operates, because one company could be very different from the others, even if they work in the same sector, so it’s important to analyse the specific target of your investment. But, of course, we’ve also excluded some sectors or even investment funds because, if you look inside, you sometimes find a mix of investments that are not acceptable, like investing in chemicals or weapons.

And coming back to my question about grantmaking, how do you decide what percentage of the returns to spend?
We have a governing council with a representative from the territories, from some cities, and from businesses, so it’s a mix. We also have a seven-strong board of directors, including the president, and each year we have a programme with expenditure estimates that we have to approve. Since I started working here in 2012, we increased a lot – for example, the share dedicated to our welfare programme. Because of the crisis, there was a tremendous increase of welfare needs. But there has also been an evolution in the business model over the last five years, from just grantmaking to building up expertise in each sector, so that the foundation is now considered an important reference by other entities in the territory.

So you’ve increased your welfare expenditure because that’s where the needs are?
We are not an ATM. It’s not a question of the state reducing its budget in those sectors and we pay the difference. We always have a very clear approach. We study the best way of helping people by developing new models and then we try to cover the needs of people that are left behind. There’s a growing imbalance in the distribution of wealth which, historically, has always been dangerous. As long as 2000 years ago, Plutarch said that the increasing gap between the rich and the poor is ‘the oldest and most fatal ailment of all republics.’ Today, we haven’t gone too far.

As long as 2000 years ago, Plutarch said that the increasing gap between the rich and the poor is ‘the oldest and most fatal ailment of all republics.’

Plutarch, Greek-Roman biographer and essayist

Some would say that philanthropy is made possible by the wealth creation which has produced that inequality. In an ideal world, would welfare needs be provided by the state as opposed to philanthropy, which is a product of that wealth concentration?
At the moment, I can’t imagine a world where all needs are met by the public sector. But, in any case, I think that our role is not only to give money – the contribution is also to innovation. We can be more innovative and, at the end of the day, the public sector comes to us for ideas and support in innovating. For example, we work a lot with the schools and create innovative ways to get important messages across. An important part of our capacity for innovation is using ideas and initiatives. It’s no less important than financial resources.

Talking of innovation, I believe Fondazione CRT is using a venture philanthropy approach to renovate and develop a particular industrial area of Turin.
I’m a fan of using a mix of approaches. For example, venture philanthropy is good – though it’s now probably more fashionably called social impact investing – not just because you can actually have a financial return on investment but because it also creates a different mindset in people. You enter into a sort of partnership.

But grantmaking is also very important. It’s a new instrument that you use as well as traditional instruments. If you look at the definition of venture philanthropy, you have long-term commitment, human capital investment, long-term financial support, and impact measurement. But I say I’m doing that with grantmaking, too. Our welfare programme Vivo Meglio, for example, is a long-term commitment but you don’t have to relabel it venture philanthropy, or call it philanthropy 1.0, not philanthropy 2.0. In the mix of tools and approaches, we have the real enrichment. But also let me say, in many projects that are considered to be venture philanthropy, any financial return on investment takes a very long time to come. At the beginning, the fuel is grantmaking. There’s nothing wrong with that because part of philanthropy is also being able to understand the most suitable tool to address a particular need and I think this is why it’s extremely important to increase dialogue within the sector.

You’ve talked about how you want Fondazione CRT to take a more international view and work with the wider philanthropy sector. Is that what led you to your new role as chair of the EFC?
When I joined the foundation, they were already part of the EFC. I have represented the Fondazione CRT on the governing council since 2013 and I was elected to the management committee in 2014. I really liked that because it was incredibly inspiring for me to work with the people there. In all my previous jobs, I have worked internationally because I know that it’s from the understanding and involvement with different experiences that you can really grow as a professional or as a person.

I found people in the foundation that were very receptive, like Stefania, and discovered networks like the EFC.

Fondazione CRT formed in 1991

So what’s your next step now that you are the chair of the EFC?
It’s a moment of change but, at the end of the day, even if the situation is complex, you have to tell yourself that it is a privilege when you have the option to make changes. The worst situation is where you find yourself in a position where no change is possible because everything is already decided or when you are in a situation when you cannot act, you can only react. We are not in that position.

The question for the EFC is to shape our role as a European philanthropic association. When you look around at a world where war, terror, and instability seem to be taking over as a new order, I think we need to reaffirm our work and our values and – it’s the topic of the conference – solidarity and courage. I cannot emphasize more how important this work is today, probably more than ever. Our sector flourishes because it exists in a free democratic space, governed by the rule of law. It’s very important that we start from this principle. The EFC spoke out recently in support of the Central European University and we hope it made a difference. In the future, we have to speak louder. We have something to say but as a sector, with specific roles and needs. That starts for me in our Brussels building, talking to and working more closely with our neighbour organization, EVPA and with our colleagues in DAFNE and NEF. We need to create more informal and formal dialogue but also we need to define common policy. I think that the sector has reached a different level of maturity where we need to identify quicker and different forms of decision-making. In a world that is moving fast, we must be seen as part of a powerful sector, not just an association.

What do you hope that will look like in practical terms by the end of your term?
First of all, I would like to increase the level of cooperation among different associations in the sector. Sometimes I talk to people and they ask ‘what’s the difference between the EFC and EVPA, DAFNE and NEF – what exactly do you do?’ There is also an increasing overlap in membership, which can be good but also means that probably we need to clarify the message because we have the same needs, we want to turn the potential of wealth into tangible advantage for people, even though we go about it differently. Those are the ground values that make us a sector. But that is not clear yet, and we need to have a stronger voice. I think the experiment that we undertook by advocating for the Central European University could be an example of good practice in that regard.

We’re here in Warsaw where there’s a lot of concern about the situation of liberal democracy in Poland as well as in Hungary and, as you say, the conference theme is solidarity. What do you think the EFC can do about the situation?
Ewa Kulik, my predecessor, did a wonderful job in bringing the issue to an international level. Sometimes when I talk to colleagues in western Europe, I realize that we are not really aware of what is going on because there is not so much media coverage of those events. My Hungarian colleagues told me that after the statement, there was a huge reaction in the media in Hungary and the government has come under a lot of pressure. So I think that first of all, we can raise our voice and, probably, we can also find initiatives and ideas to help increase the dialogue about these issues among people in specific countries. But there is also an issue about democracy. In some countries the people who are taking these decisions are elected by the public and we’re not. So it’s also something that we need to consider carefully.

The upcoming issue of Alliance is about diversity and whether the staff and boards of foundations reflect the communities they serve. Most of your colleagues, or at the least the ones I see around this table, are female. Is there something you’re doing at Fondazione CRT, or that you think the EFC should be doing to promote more women into senior roles?
I think that gender or any other kind of balance is always very important. At the foundation, we try to select people purely on the basis of competence. We just renewed our board of directors and we have two women as vice presidents, but it was a natural choice and nobody thought about the fact that they’re women. There are probably some professions like finance or engineering that are more of a male environment but I see that now, also at university level, the situation is improving a lot in terms of balance.

Lapucci quotes Plutarch, who said that the increasing gap between the rich and the poor is dangerous for republics.

I think one of the strengths of the EFC is that we can champion a wide range of actions, because the EFC actually championed philanthropy in Europe and beyond. Our US members have traditionally played a very important role in the organization, not just because of their financial support, but because they have enriched the association with a different approach and experience. So the EFC is a European philanthropy centre, of course, but also it’s wider than Europe, and I think this is one of its most important attributes.