Corporate Foundations – A New Era Of Philanthropy
3 min read
Nothing stays the same and, like anything in our ever-changing world, charities and philanthropic initiatives are unrecognisable from their bucket-shaking predecessors. The old days when a large organisation might hand over a cheque for a worthy cause are behind us and many corporations now prefer to establish a corporate foundation as a way to give back.
What is a Corporate Foundation?
A Corporate Foundation is a charity that has been set up by a commercial company. They can give structure and focus for corporate giving; can be a means of engaging with the voluntary sector; or a way to share expertise when tackling social issues.
According to the recent Foundation Giving Trends report, the Top 50 Corporate Foundations gave grants totalling £228million in 2018, which accounts for 7% of giving by the top 300 UK charitable foundations. That figure includes Lloyd’s Register Foundation which has given £22.8M, Vodafone Foundation (giving £21M) and Shell Foundation (giving £20.6M).
How do they raise money?
Corporate Foundations are savvy and, increasingly, they are complementing their philanthropic funding with Government endowment such as Nesta and the Coalfields Regeneration Trust. Most get their income from the founding company, but this varies depending on the foundation and around a quarter of Corporate Foundations receive donations from the public too. Some sell merchandise, like the John Lewis Foundation which receives 98% of its incoming resources this way.
There are now over 100 Corporate Foundations registered in England and Wales according to Charity Commission records, with activities ranging from tackling domestic violence and rehabilitating young offenders through to developing solutions to environmental and healthcare challenges around the world. Corporate Foundations not only donate money but also offer resources such as company staff time, expertise and administrative and other facilities.
Two sides of the coin
However, the new world of Corporate Foundations does raise some questions, not least because it puts decision-making in the hands of the country’s biggest businesses. In 2013, 58% of Corporate Foundations surveyed reported that their giving strategy was linked to the parent company’s business focus. In 2017 this had increased to 76%. If the company’s business strategy was not in line with a charitable cause, would this mean that group of beneficiaries misses out on potential funding because they don’t appear to be ‘on brand’? And what happens to important programmes that are not popular with the big corporations? Perhaps Corporate Foundations need more scrutiny than is currently the case.
As sponsorship and Corporate Social Responsibility budgets become ever more scarce, a foundation model can package up social activities to give the highest possible impact at both a community and social level and the association is usually for the longer-term. In every respect it’s a cleverer way of giving money that is sustainable and has ongoing benefits, but the philanthropic strategies at the heart of the Foundation need to be sound.
By Michelle Wright, founder and CEO of Cause4
About the author
Michelle is founder and CEO of Cause4. Launched in 2009, Cause4 offers strategic support to charities and not-for-profit organisations. The company has grown rapidly and has worked with some of the country’s leading charitable organisations. Cause4 works in the private sector developing CSR and philanthropy programmes with organisations such as Santander, Close Brothers and Cineworld and supports the development of philanthropic foundations.
A Guildhall School of Music & Drama and Ashridge Business School graduate, Michelle worked for four years as a professional violinist before becoming a fundraiser. She started Cause4 with a vision to revolutionise the charitable sector.
Cause4 has raised more than £55 million for charitable clients and works with a range of charities, social enterprises and philanthropists and their causes in the UK and internationally.
