Corporate foundations: what does best practice look like?

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Corporate foundations provide a structure through which companies can positively address social and environmental issues in a way that creates maximum value for both society and their business. However, there is no legal UK definition of a corporate foundation, nor is there a one-size-fits-all model for setting one up.

Businesses can set them up in different ways:

• As independent entities registered through the Charity Commission
• As integrated foundations structured through a donor advised fund (DAF)
• As community engagement or corporate social responsibility (CSR) programmes funded through a company’s own funds

The optimum structure for a corporate foundation will depend on a business’s ambition, resources, requirements and the scale at which they intend to operate.

How can businesses achieve best practice?

When it comes to a corporate foundation, there is no shortcut to success. However, through our experience working with companies of all sizes, we’ve identified six core areas that are critical for businesses to consider.

A clear purpose

The most impactful corporate foundations are those that have a clear purpose, aligned to identified outcomes. Having clarity of purpose and outcomes can help identify the issues to be addressed and the type of organisations and initiatives the foundation will be supporting, as well as allowing for more efficient and impactful use of resources.

Alignment to business purpose

Corporate foundations work best when they are fully integrated into a company’s strategy and purpose. Strong alignment between the two provides clarity of direction across an organisation, at both an executive and employee level. Clarity of purpose internally can then feed into clarity of message and communications to external audiences.

Shared value creation

A successful corporate foundation should create shared, long-lasting value for both the cause area and the company. A company’s success is no longer measured solely on its economic value, but its social and environmental value too. To create this value, a company can go beyond giving financially, providing skill-sharing, employee volunteering, employability schemes and creating networks that bring key stakeholders together to address societal issues.

Distinctive in the giving space

Thinking about a unique selling proposition for your corporate foundation, as is commonplace in business, can go a long way in helping you refine your focus. By focusing on a specific issue or cause area, you can create a more targeted approach, establish strong community partnerships and reach those who may not be receiving help elsewhere. Having clear and strong partnerships with experts in the cause area, as well as taking a forward-thinking and innovative approach, can ensure you’re helping to deliver what is needed in an effective and impactful way.

Concrete, long-term financial commitment

Corporate foundations provide a structure for businesses to demonstrate a commitment to societal value over the long term. It not only ring-fences funds from wider budgets but offers a continuity of giving over the course of many years. From our experience, best practice is to commit to giving at least 1 per cent of annual profits to make a significant impact. Some foundations are funded by sales of a certain product set, or even by a percentage of total revenue.

Engagement with stakeholders

Well-designed corporate foundations are often those where all stakeholders are engaged with and supportive of their activities. Internally, your executive team and employees at all levels can be taken along on the planning journey, and their engagement can be encouraged by involving them in the decision making, including through participation in a grants committee.

From our experience, it’s also important to engage external stakeholders. Dependent on the cause area, these might range from customers, investors, communities, thought leaders, the media, local leaders or local authorities.

Is your business looking to deliver positive change through a corporate foundation? At Charites Aid Foundation our expert corporate team can support businesses at every stage of their foundation journey. Whether you are seeking to clarify your purpose, deliberating on set-up structures, impact frameworks, engaging your stakeholders, building a business case or seeking support with an established foundation, we’re here to help.

Learn more at cafonline.org/corporatefoundations.