Foundations and Their Institutional Context: Cross-Evaluating Evidence from Germany and the United States

According to the relevant literature, the relationship between government and the private foundation sector in Germany is marked by a paradigm of conflict very similar to the one that has often dominated the U.S. discussion of government/nonprofit relationships in the past. More specifically, scholars often hold that the development of foundations in Germany is largely hampered by an administrative and regulatory climate that weakens rather than strengthens the foundation community. Two main arguments are brought forth in this context: First, the expansion of the state bureaucracy into traditional activity fields of foundations crowds out the foundation sector; second, the structure of tax regulations is detrimental to a sound development of foundations. However, while these arguments figure prominently in the policy debate, they have neither empirically nor analytically been substantiated as of yet. Borrowing from organizational theory, this article critically evaluates the arguments in the light of available evidence in an effort to contribute to a better understanding of foundations in an international context.