What are the Characteristics of Effective Corporate Foundations?

A corporate foundation is an effective way for companies to address social and environmental issues while creating value for both society and their business. However, there is no legal definition or standardized model for setting up a corporate foundation in the UK. Businesses can establish them independently as registered entities with the Charity Commission, as integrated foundations through a donor advised fund (DAF), or as community engagement or corporate social responsibility (CSR) programs funded through a company’s funds. The structure for a corporate foundation will depend on a business’s ambition, resources, requirements, and intended scale of operation.

Six core areas contribute to achieving best practices for corporate foundations, based on our experience working with companies of all sizes. A clear purpose aligned with identified outcomes is critical and helps identify the issues to be addressed and the organizations and initiatives to support, while allowing for efficient and impactful use of resources. Corporate foundations are most effective when fully integrated into the company’s strategy and purpose, providing direction across the organization and clarity in communications.

A successful corporate foundation should create shared, long-lasting value for both the cause area and the company. Beyond giving financially, companies can provide skill-sharing, employee volunteering, employability schemes, and networks that bring stakeholders together to address societal issues. Identifying a unique selling proposition can help refine focus and create targeted approaches that establish strong community partnerships and reach those who may not be receiving help otherwise. Corporates must commit to long-term financial support with at least 1% of annual profits, ring-fencing funds from wider budgets to ensure continuity and a significant impact.

Corporate foundations perform best when all stakeholders are engaged, from the executive to the employee level and including customers, investors, communities, thought leaders, and media. Our expert corporate team at Charities Aid Foundation can provide support at every stage of a foundation’s journey, from clarifying purpose to building a business case or establishing ongoing support. More information can be found at cafonline.org/corporatefoundations.