Corporate Social Responsibility: Corporate Foundations versus Normal Foundations
Anneke Zwart, Student (University), Netherlands
Due to increased awareness of the social and environmental effects of economic and other activities (among other reasons), many for-profit businesses have started to include CSR-activities in their business activities. In general, the CSR activities are managed either by the organizations itself, or transferred to a so-called "Corporate Foundation" (CF).
In for-profit organizations, a CF is the instrument through which benefits of CSR-activities can be managed. Minciullo and Pedrini (2015) elaborate on the main characteristics that distinguish CFs from normal foundations. The following characteristics apply:
1. CFs have closer ties due to financial resources: A normal foundation usually is not financially dependent on a single firm. Rather, they are funded independently.
2. CFs have closer ties due to dependence: A CF is also dependent in a non-financial way on the founder firm. This includes dependence in terms of employees, know-how and relations/networks. Dependence is also created through annual funding of the CF by the founder firm.
3. CFs have overlapping employee members: Usually the executives of the founder firm are part of the board of directors of the CF too.
The close ties are reflected by regular communication, commitment and involvement and a subsequent higher level of trust between the founder firm and the CF. It encourages economic performance through enabling both the firm and CF to activate effective knowledge transfer processes between both firms.
Source: Minciullo, M. And M. Pedrini (2015) "Knowledge Transfer between For-Profit Corporations and Their Corporate Foundations: which methods are effective?" Nonprofit Management and Leadership Vol. 25 Iss. 3 pp. 215-234