Abstract

The paper reviews the legislation of the "banking foundations" focussing on its common elements with the evolution of public intervention in the areas of human and community services, and with the legislation of not-for-profit organisations. The problems in devising the governance structure of the foundations are seen as consequences of the allocative problems in financing and delivering the services, in keeping a hard budget constraint at the local level, and in finding a new equilibrium between citizens' quest for self-determination, and the role of the elected officials. In section 2, we examine the main features of two regional models of public intervention that differ for the intensity of the regulatory measures and the degree of vertical integration between financing, commissioning and provision. The two following sections focus on the relationships between public decision makers and foundations in each of the two models, taking into account the recent sentences of the Constitutional Court. Section 5 investigates the foundations' activities assessing potential problems with the internal market and competition rules.