Why corporate foundations should bully their parents – then get out of the way

When companies embrace social purpose, the boundaries with their foundations become blurred. As new research shows their “impact integrity” is at risk, is it time to do away with them altogether?

Corporate foundations are growing in number and becoming more sophisticated – but for some, the clearest sign of their success would be their disappearance within the decade. 

Jan-Willem Scheijgrond, head of government and public affairs at Philips, said that companies addressing the Sustainable Development Goals (SDGs) as part of their core business had a “duty to crowd out” their corporate foundation to the “outer perimeters of where people are [most] left behind”. Pushing the foundation into new territory would help achieve the SDGs, at which point the company could absorb the foundation back inside. 

Scheijgrond, who was speaking at the EVPA C Summit on Monday in Porto, Portugal, also suggested the role of the foundation was to “lure” or even “bully” its parent or related company into a direction that would benefit society – and then get out of the way. 

His comments came as new EVPA research showed that corporate social investors face particular tensions in their role between company and social sector – including potential overlaps with the parent company – and as a majority of attendees rated their own “impact integrity” risk as medium or high.

As you move to that increasingly fragile and complex area of the SDGs, you’re making space for the company to move in

“As you move to that increasingly fragile and complex area of the SDGs, you’re making space for the company to move in [to other areas],” Scheijgrond said. 

He had given the same message to the Philips Foundation’s director, who, on starting the job, had asked how she could help him.

“I told her, ‘Stay away… I can’t do business in an area where you are active; you’re denying me the opportunity to be commercially active in an impact area, because according to tax rules, I can’t touch the area you’ve touched for three years.’”

Other companies have brought foundation-led activities into the corporate fold. Cata Garcia, global director of corporate affairs and sustainability at beer multinational AB InBev, described an initiative to reduce alcohol abuse that was piloted first by one of its seven foundations. The company was now rolling out the successful schemes in 23 countries, she said.

But, though companies may be able to lend sheer scale, Garcia disagreed that they could achieve their purpose without corporate social investors and other partners alongside, even ten years from now. “Corporates cannot do this alone.”


Blurred lines

Speakers at the C Summit, which brings together corporate social investors from around Europe each year, stressed that companies and their corporate foundations were now equally responsible for areas that some would consider the remit of philanthropy. 

“We’re not thinking of the foundation as the problem-solvers, and the company as the money-makers,” said Steven Braekeveldt, CEO of insurance firm AGEAS Portugal, whose foundation focuses on social exclusion and protection of children. Both were responsible, for example, for brokering new partnerships in healthcare.

We’re not thinking of the foundation as the problem-solvers, and the company as the money-makers

AB InBev’s company and seven foundations “complement each other rather than doing different things”, said Garcia, with the latter bringing technical expertise, knowledge of impact measurement and convening power to the parent firm’s work in sustainability.

But, speaking on day two of the C Summit, Trafigura Foundation boss Vincent Faber suggested the relationship is not always so clearly understood.

In the company’s sustainability reports, commodity trader Trafigura had previously included the foundation’s work as an annex to the document, Faber said. This year, however, the company wanted to integrate the two together.

“I said, no way... That’s where the line gets totally blurred. You have to have a strong and clear identity, and the foundation is not an instrument in the service of the business.”


High risk

Such tensions are echoed in new research by EVPA, to be published next year, on the risks to the “impact integrity” of corporate social investors. Pressured by corporate influence on the one hand, and perceptions of other stakeholders on the other, corporate foundations and other corporate social investors must tread a fine line.

In a live poll run during this week’s conference, around one-fifth said they considered their current impact integrity risk as high, while another 44% rated it as medium-risk.

However, EVPA’s Lev Fejes emphasised that risk did not imply negative outcomes; rather, corporate social investors should be aware and learn from the strategies deployed by others to mitigate risks.

One way to avoid interference from the company or potential conflicts of interest, speakers said, was to be strategic about staffing. Appointing someone from outside the company to the foundation’s board was a “no-brainer”, said Margarida Couto, CEO of the Vasco Vieira de Almeida Foundation and president of GRACE, a network of responsible businesses. 

But, Couto said, the idea of bringing in someone from an apparently ‘foreign’ sector could prompt resistance – so foundations could warm their corporate colleagues to the idea by inviting social sector people onto an advisory board, as a first step.   

“One thing is to be best practice, the other thing is getting there,” she said.

Header image: a user of social enterprise Estacion Vital, pictured with founder Marcos Lacayo. Estacion Vital, which has been supported by Philips Foundation, sets up health kiosks at the entrance of supermarkets where people can get free health checks and lifestyle and nutrition advice (credit: Estacion Vital)

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