SMART Company research reveals foundation models

Research published earlier this year by The SMART Company revealed the diversity of corporate foundations in terms of their role and activity, and identified three primary foundation models. The changing nature of corporate responsibility: What role for corporate foundations? commissioned by CAF, is the second in a series on the role and nature of corporate foundations. The research is based upon interviews with twelve companies and their foundations as well as with 20 charities which have received some form of corporate funding, and key opinion formers. The research focused on foundations without a fixed funding formula (so excluded models like the Lloyds TSB Foundations) as it was assumed that annual funding would mean a close relationship with the company.

Three models

The research revealed three different models of foundations. The first is foundations as grant-makers. These foundations play a role along side the company’s community involvement programme in making grants to a range of community and charitable organisations. Case studies in the report of Vodafone Group Foundation and the Abbey Charitable Trust illustrate how foundations do this in an effective manner.

Another group were however found to be in ‘transition’. The original reason behind the establishment of the foundation had gone and its current role  was being reviewed to ensure that it could continue to meet the company’s objectives in the future. For example, the Chelsea Building Society was originally set up as part of a defence against ‘carpet bagging’. This is no longer an issue and the foundation has undertaken a strategic review to ensure that it continues to play a useful role. In Revealing the Foundations, our first research report, it was found that there are many foundations in this position, not just those set up by building societies.  These include some that have been in existence for some time, often set up to mark an anniversary, but whose original ‘raison d’etre' has now gone.

Lastly there are foundations which are focused on a specific issue and have been set up as an opportunity to further a particular aspect of a company’s CSR programme. The Waitrose Foundation (amongst others) is cited as an example of this approach. The foundation was set up in 2005 specifically to help improve the welfare of farm workers in South Africa, and is funded through a partnership between Waitrose, its fruit importers, exporters and local farm owners in South Africa. The foundation is registered in that country and is the only case study in the report which isn’t registered in the UK.

A new framework

Overall the report’s findings emphasise the conclusions drawn in Revealing the Foundations:  that corporate foundations are extremely diverse in role and activity. The report suggests however a move away from the traditional ‘integrated/independent’ distinction, and instead proposes a new framework, outlined by the three models described above.  The report indicates the essentials of a corporate foundation, good practice considerations and highlights the different roles that foundations can play.

• Both reports are freely downloadable from The SMART Company's website

Amanda Jordan is chair and founding director of The SMART Company, a specialist corporate responsibility consultancy.