The Evolving Role Corporate Foundations Play in Philanthropy

One of the most compelling reasons for a business to become involved in corporate philanthropy is because it is ultimately in their own best interest. The Council on Foundations has pointed out that without healthy communities, healthy companies simply cannot exist. Making corporate giving and CSR a top priority builds strong ties with the community and ensures that the company is not operating in isolation.

For larger businesses that are active participants in philanthropic activities, corporate foundations are a good approach to organizing and managing such initiatives. The role of foundations in corporate philanthropy is constantly evolving, and here are some reasons why you should consider starting a corporate foundation for your own company:

Corporate Foundations Increase Visibility
Consumers and corporate shareholders expect that companies will engage in charitable giving as part of the community responsibility that comes with doing business. A corporate foundation is a highly visible way to segment these activities and demonstrate that it is important to a company. The Council on Foundations notes that more than 2,000 corporate foundations donate more than $12 billion annually in cash and products to non-profit organizations, so philanthropy and social responsibility has become an integral part of doing business.

Corporate Foundations Integrate Philanthropy with CSR
Corporate foundations make sure that companies are proactively participating in philanthropic activities such as donations and volunteerism, but they also advise their parent companies on other corporate social responsibility topics. Corporate foundations often get involved in promoting important topics such as sustainability, economic development, corporate ethics, minimizing operational harm, and being a good corporate citizen.

Corporate Foundation Boards Provide Oversight
A corporate foundation provides a formal structure for managing corporate giving, and the foundation’s board of directors provides important oversight to make sure goals are being met. The foundation board sets policies for funding and administration, ensures compliance with government requirements, oversees the approval of major grants, and ensures that staff are executing the foundation’s work properly.

Corporate Foundations Help Avoid Conflicts of Interest
The Council on Foundations indicates that one of the biggest legal challenges encountered by corporations with charitable foundations is avoiding conflicts of interest. Under the law, a private foundation is prohibited from entering into any financial transactions with the parent company as well as any major donors, officers, executives, or subsidiaries. The structured nature of a corporate foundation can help ensure that philanthropic activities are compliant with all legal and ethical guidelines.

Corporate Foundations Go Beyond Cash and Products
While direct cash grants and product donations are a core focus for corporate foundations, there are other areas where foundations often get involved. This can include promoting matching gifts, grants to organizations where employees volunteer, loaning equipment or facilities to non-profits, and encouraging employees to volunteer at charities or serve on non-profit boards.

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