Finding Answers Globally

German fund imports U.S. ideas — and also sends some back

In building the German company Bertelsmann into a global media giant, Reinhard Mohn recalls that “as soon as I did not understand a problem, I said, Who knows in the United States?”

Now, as president of the Bertelsmann Foundation, he is turning to America for ideas about philanthropy. Two years ago, Mr. Mohn was intrigued by the growing importance of community foundations in the United States. In response, he established and made the first contribution — $1-million — to the Gutersloh City Foundation, which is the first independent community foundation in Germany.

But Mr. Mohn’s relationship with America isn’t a one-way street. He has also provided Americans with some answers, through his philanthropy.

Over the last eight years, for example, the Bertelsmann Foundation has spent about $7-million to install computers and other high-technology equipment at Athens Academy, a school in Athens, Ga., that serves children from age 3 to grade 12. The German fund built a 35,000-square-foot media center, including state-of-the-art television equip ment, and has worked closely with teachers to integrate technology into all aspects of the school’s curriculum.

The effort has proved to be a success. According to an evaluation conducted by researchers from the University of Georgia, Athens students’ academic performance has improved markedly since the technology was introduced.

Mr. Mohn says that he would have been happy to carry out a similar effort in a German school but that the country’s educational system was too rigid to accept the foundation’s help when he began the project.

Exact estimates are difficult to arrive at, but German philanthropy experts put the value of the Bertelsmann Foundation, which owns nearly 70 per cent of the stock in the media conglomerate, at more than $10-billion.

Created in 1977, the Bertelsmann Foundation has seen a rapid expansion in its programs in the past 10 years. In 1987 the foundation spent $2.2-million. By 1997 that figure had risen to $28.2-million, and this year the fund will spend close to $42-million.

The amount of money spent on programs is not large by American standards. Still, Mr. Mohn’s ambition is nothing less than to remake German society, including its government, its educational system, and its social-service programs.

“The change of systems to solve the problems of our time, this was what I have tried in the foundation,” he says.

The foundation runs a broad range of programs dealing with economic and social policy, higher education, media, medicine, and public libraries, among other areas.

Most of the foundation’s programs are run out of its headquarters here, and some, like the community foundation, are carried out very close by.

A few steps from the town square in Gutersloh, the city’s public library — built by Mr. Mohn and supported by his foundation — is a symbol of Bertelsmann’s efforts to transform libraries in Germany from stuffy repositories into dynamic information centers brimming with life.

The building was designed with an open plan that makes it bright and inviting, even on a rainy afternoon. On a recent weekday afternoon, the library is alive with visitors — reading, listening to music, doing research, or simply having coffee at a centrally located cafe.

In addition to trying to make government and public services more effective, Mr. Mohn is also trying to improve the workings of German foundations. In fact, one of the Bertelsmann Foundation’s major programs is devoted to making foundation work more open, accountable, and efficient — a goal that is viewed suspiciously by officials at some German foundations.

As in most European countries, German philanthropy has traditionally been carried out behind closed doors. Unlike in the United States, European foundations are generally not required to file annual reports of their assets and expenditures.

“German foundation officials believe that they should act in a very conservative way — low profile, not publicized,” says Rupert Strachwitz, a philanthropy expert from Munich.

Such is not the case at Bertelsmann. The foundation’s best-known program is the Carl Bertelsmann Prize, named for Mr. Mohn’s great-great-grandfather, who founded the company as a small religious printing house here over 160 years ago.

The prize, which includes a cash award of about $175,000, is intended to highlight effective management practices in businesses, in government agencies, and at public educational institutions and libraries. The winners are intended to serve as models to be emulated by businesses and public institutions in Germany and elsewhere around the world.

In 1996, the Bertelsmann Prize went to the Durham District School Board, in Ontario, Canada, for excellence in teaching and for its efforts to provide decision-making autonomy to individual schools in the district.

Norman Green, a top administrator in the Durham District, says the selection process was grueling, with Bertelsmann officials demanding boxes upon boxes of documents to be examined by evaluators at the foundation’s headquarters. But in the end, the international recognition was worth the trouble, he says. “It let parents know that their investment in children was paying dividends,” says Mr. Green.

The Bertelsmann Foundation is distinctive in Germany because it operates all of its philanthropic programs itself. Most of the other foundations in this country are either grant-making organizations or hybrids involved in grant-making and operating activities.

“Bertelsmann is definitely unique, because they simply reject the notion of the traditional grant-making foundations,” says Mr. Strachwitz, director of Maecenata, a Munich organization that gathers information on foundations and other non-profit organizations.

The reason Bertelsmann rarely, if ever, provides financial support in the form of grants is simple. “I think I can use the money more efficiently than I could if I gave it away,” says Mr. Mohn, with characteristic candor.

Because it is an operating foundation, the impact of Bertelsmann’s burgeoning growth has been most obvious at its offices, which sit alongside the company’s global headquarters here. In the last four years, the foundation’s staff has grown from 50 people to 150.

Bertelsmann’s deep involvement in its programs means that its “partners” must engage in arduous planning before the fund will approve expenditures. In designing the media center at the Athens Academy, for example, the Georgia school was required to consult with two German architects selected by Bertelsmann, in addition to the American team of architects and contractors working on the project.

“Sometimes I think a grant would have been easier,” says Anna Dyer, the school’s director of public relations. “But it forced us all to be very careful planners, and when I look back on it, it has been great for all of us.”