Former War Prisoner Rises to Germany’s Philanthropic Elite

If it were up to him, Reinhard Mohn, chairman of the Bertelsmann Foundation, would not have returned to his native Germany at the end of World War II. Captured by American forces in North Africa, where he served under Field Marshal Erwin Rommel, Mr. Mohn spent two and a half years as a prisoner of war in Kansas.

Like many of his comrades in the prison camp, he says, “if I had the chance at that time, I certainly would have stayed in the United States.”

But he didn’t. The Geneva Convention, an international agreement governing the treatment of wartime prisoners, required that all prisoners be returned to their home countries, and Mr. Mohn was sent back to Germany, where he found his family’s small printing business in shambles — shut down by Nazi authorities, then destroyed by Allied bombers.

Mr. Mohn took up the reins of the company, which had been founded in 1835 by his great-great-grandfather, Carl Bertelsmann. But he developed a business strategy that was quite unusual in Germany, using lessons he learned about American management practices while carrying out voluntary work assignments as a prison laborer.

Unlike traditional German business leaders, who tended to run their enterprises as strict hierarchies, Mr. Mohn followed a more democratic path, giving his employees more decision-making autonomy and a big share in the company’s profits.

For his radical approach, Mr. Mohn was dubbed Rotter Reinhard — Reinhard the Red — by some of his peers. “They all said, ‘There goes a communist,’ ” Mr. Mohn wryly recalls.

If he was a communist he disguised it well, becoming one of his country’s most successful entrepreneurs. The architect of the world’s third-largest media company, Mr. Mohn is worth over $3-billion as a result of his family’s 20-per-cent stake in Bertelsmann, according to Forbes magazine.

Mr. Mohn has also become one of Germany’s leading philanthropists, placing 69 per cent of the company’s non-voting stock into the Bertelsmann Foundation in 1993.

In business publications, Mr. Mohn is sometimes said to be retired, because he is no longer involved in the day-to-day operations of the company. But that description obscures the occasional — but crucial — role he plays in company affairs, most notably in helping to acquire the American publisher Random House.

More to the point, such a description belies his vigorous leadership of the foundation, where he maintains a full schedule and is revered by his employees. On most days, he can be seen making his way the short distance from his foundation office to the company’s democratic canteen, where he has lunch alongside corporate executives, custodial workers, and everyone in between.

And no matter how much money or power he has, he has never adopted a jet-set approach to life. He shuns chauffeured limousines and other luxuries in favor of his bicycle, which he is often seen riding around in this remote and provincial city of 100,000 inhabitants, located several hours from Germany’s largest cities.

Until now, Mr. Mohn has been personally engaged in developing foundation programs, seeking to create in Germany an operating foundation that would act like an American “think tank.” And he often participates in events conducted by the fund. At a recent Bertelsmann symposium on the role of foundations in an open society, Mr. Mohn was a featured speaker and an attentive participant in lively discussions throughout the conference.

In an interview in his spacious but spare office, Mr. Mohn is clearly passionate about his work at the foundation. He is deeply concerned about the economic, political, and social problems that have hobbled Germany in recent years. But he is convinced that, through his foundation, he can develop solutions to the country’s most pressing concerns.

Mr. Mohn expresses unbounded faith in the ability of entrepreneurial management practices to help turn his country around. Like corporate titans in the United States a century ago, Mr. Mohn believes that public services can be improved largely through pragmatic management, rather than political wrangling.

To hear Mr. Mohn speak is to hear the echoes of a previous generation of business leaders, like John D. Rockefeller, Sr., and Andrew Carnegie, who believed that many social ills could be cured through the efficient provision of services.

Mr. Mohn pulls no punches when he explains why business leaders, through foundations, must help to provide solutions that have so far eluded Germany’s political leaders.

“As an entrepreneur, you are used to finding solutions, you know something about management, and you find ways to do things in a more effective, efficient way,” Mr. Mohn observes. “This is not so for the government,” he says.

“The government only asks, Are the orders being filled? And we ask, Are the orders working efficiently?” says Mr. Mohn.

Mr. Mohn is blunt in his diagnosis of the problems facing the German body politic, as well. “The politicians, especially in Germany, do their jobs not very efficiently, and I am being polite if I say it in that way.”

In conversation, Mr. Mohn exhibits an almost startling self-confidence, not only in his ability to solve problems but also in his power to convince others of the wisdom of his solutions. “If I tell people which way it works better, they are willing to accept it,” he states as a matter of fact.

Somehow — despite his harsh assessment of the German political scene — politicians seem willing at least to consider the results of his foundation’s programs. And acceptance of Bertelsmann is not limited to a narrow band of the political spectrum. The foundation regularly attracts the participation of lawmakers from all of the country’s main parties.

Even in the left-leaning Green Party, the Bertelsmann Foundation is respected for its efforts. “It is, at the moment, a very creative and avant-garde force in the foundation community in Germany,” says Felix Ensslin, an aide to parliament member Antje Vollmer.

“They can be very effective in spotting areas where work needs to be done,” says Mr. Ensslin, who helped to draft his party’s proposal to reform foundation tax laws.

Mr. Mohn has also demonstrated that he is willing to act quickly if he encounters an idea that he believes may have merit. At a symposium on foundations held here 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 to the Gutersloh City Foundation, which is the first example of an independent community foundation in Germany.

Mr. Mohn believes that the Gutersloh foundation, which he created with a contribution worth more than $1-million, will become increasingly appealing as people in and around Gutersloh begin to recognize that the fund can solve problems that have so far eluded the city government. And he suggests that many people will choose to give money to the fund, rather than leaving their estates only to their children and the government, in the form of inheritance taxes. “If people have no ideas to do anything else, their money goes to the government, and the people here are not convinced that this is the best solution,” he says. “If you say your money can help the citizens live better in the future, that is convincing,” says Mr. Mohn.

But for now, he says, he is happy if the citizens of Gutersloh become involved in the community foundation in ways other than giving money. “They don’t always bring money, because a lot of people don’t have money. But they bring enthusiasm and time.”

Mr. Mohn’s main emphasis has been on developing the Bertelsmann Foundation into a center for policy research to resolve issues of greater national importance. And he may well succeed in creating a foundation that wields formidable influence over public policy in a way that American business leaders in the beginning of the century did not, says James Allen Smith, executive director of the Howard Gilman Foundation, in New York, and an expert in European philanthropy.

Although a handful of philanthropists set up policy research foundations, including the Carnegie Institution and the Russell Sage Foundation, few followed that course after Congress rebuked John D. Rockefeller’s offer to set up a federally chartered foundation in 1913. Chastened by the bitter fight over Rockefeller’s proposed gift to the nation, most American philanthropists turned away from the politically charged business of establishing operating foundations and turned exclusively toward establishing grant-making funds instead, says Mr. Smith.

Unlike the philanthropy of the moguls of an earlier era, Mr. Mohn’s philanthropy may actually benefit from the reputation of his publishing company. Populist politicians and muckraking journalists pilloried tycoons like Carnegie and Rockefeller, charging that their charitable activities were tainted by their rapacious competition and violent repression of labor unrest. But today in Germany, Bertelsmann is famous for its popular book clubs, direct marketing enterprises that helped to propel the business from its regional base into a national and international powerhouse. And it has a reputation in elite political circles for being a generous employer and a socially engaged corporate citi zen.

Unusual among big multinational companies, Bertelsmann even has a corporate constitution to govern its behavior. “The company must be liberal and progressive,” the document declares. “It independently strives to develop modern social solutions which benefit mankind.”

In this regard, the company is very much a reflection of its founder, says Rupert Strachwitz, head of Maecenata, a Munich organization that monitors German philanthropy. “Mr. Mohn is one of the few business leaders of his age and rank who really believes in social change,” says Count Strachwitz, who happens to be a member of German nobility. “That generation believes in the social status quo.”