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The Rise of the Corporate Foundation - A New Philanthropic Trend for 2014

15/01/2014 10:20 | Updated 16 March 2014

There is a definite and exciting move afoot in the corporate sector, with many companies seeking to establish charitable corporate foundations - charities established by commercial companies.

There are now over 100 registered in England and Wales according to recent 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.

The corporate foundation model for me represents a brave new world for companies wishing to give something back and develop their brand. 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.

In one tax and resource efficient swoop corporates can focus all activity into one place from sponsorship to corporate responsibility to one off gifts, payroll giving and workplace volunteering schemes. It's a brilliant new trend for 2014 and I believe that those corporations are able to adapt creatively will really be able to forge ahead and to make a societal impact with a depth that we've never seen before.

A corporate foundation will typically receive most of its income from the company from a combination of investment income, regular donations, an endowment linked to profits or a gift of shares of money raised by the company's customers or employees. Some companies also provide 'in-kind' support, for example office space, seconded staff, IT equipment or business expertise.

Undoubtedly, there are some challenges to take into account; a charitable corporate foundation has to be set up for public benefit, just as with a standard charity. It cannot overtly promote the interests of the company or be just a public relations exercise.

There is no objection to the company's Corporate Social Responsibility policy and the purposes of the charity coinciding but the company cannot have a controlling influence. Therefore, of course, it needs independent trustees to ensure good governance and to guide against conflicts of interest.
We are all aware of some of the more public and high-profile examples - the Salesforce.com Foundation with its integrated philanthropic approach leveraging their people, technology and resources around the world and the Body Shop Foundation in its support of animal and environmental protection and human rights. The reputational benefits for the company and the association with a Foundation are manifest.

But what's really interesting is that SMEs can also take advantage of setting up a corporate foundation. For a relatively small investment of say £20,000, an SME can set up a foundation in a charitable vehicle set up for such a purpose, for example, the Philanthropy Foundation. Just at the moment I'm involved in setting up a foundation for a small business that is using its relatively small profits to create a Foundation to support upcoming entrepreneurs; this is a win-win situation for the brand and the CEO loves the fact that he's genuinely able to give something back.

I think there are huge opportunities in a corporate foundation model to genuinely demonstrate a company's commitment to charity and wider society; it's got to be a good thing for the future, and for those that are leading the way - hats off to you.