What Is a Corporate Foundation?
What Is a Corporate Foundation?
A corporate foundation is the charitable vehicle of a for-profit corporation. It is a private foundation, but instead of the money being contributed by an individual or family, a corporate foundation is funded by a business.
- A private foundation whose money is contributed by a for-profit business.
- Also known as a company-sponsored foundation.
- They rarely have an endowment.
- Grantmaking is often tied to the company’s area of business or the geographic locations where they maintain operations.
How do corporate foundations work?
Corporations work much like other private foundations, in the sense that they are 501c3 organizations that make grants. The difference is in where the money comes from, who or what defines the foundation’s charitable mission, and (typically) lack of an endowment.
How corporate foundations are funded
With a corporate foundation, the funding comes from a for-profit business. Basically, Company A makes a tax-deductible contribution to the Company A Foundation. The foundation then makes grants to nonprofits.
What guides corporate giving
Corporate giving often aligns with a company’s mission or aims to give back to the community where the company is based. For example, the Cargill Inc. Foundation focuses its environmental, health and development giving in areas where the company has a business presence.
Corporate giving is usually based on corporate earnings
Unlike private independent foundations, corporate foundations typically don’t have an endowment. Instead, they rely on corporate earnings, which can fluctuate significantly year over year.
Relationship between a corporation and its corporate foundation
The corporation that funds a corporate foundation usually has a close relationship with the foundation, but the foundation is a separate legal entity.
What is the role of corporate giving in philanthropy?
U.S. corporations gave more than $36 billion in 2023, according to Giving USA’s 2024 report. While corporate giving represents a small share of overall philanthropy, this form of giving has grown faster than philanthropy as a whole in the last five years.
- About 7% of U.S. charitable giving came from corporations in 2023, according to Giving USA.
- Some of the largest companies in the world — in fields such as banking and finance, pharmaceuticals and telecommunications — give significantly through corporate foundations.
- Small and midsized companies are increasingly participating in corporate philanthropy as well, reports Double the Donation, a platform for corporate matching-gift programs.
Corporate giving is more influential in some philanthropic spaces than others. For example, the Gilead Foundation – the philanthropic arm of the biopharmaceutical company Gilead Sciences – is a major health funder and one of the top funders of LGBTQ issues. Meanwhile, several large banks’ corporate giving programs are sponsors of art museums. Corporate foundations are leading funders of animal protection, especially via funds raised from customer check-out donations at pet stores.
How do corporations give philanthropically?
Making grants from a corporate foundation is just one way for corporations to make charitable contributions. Additional forms of corporate philanthropy include:
Corporate giving programs
In addition to, or instead of, establishing a corporate foundation, a corporation can make charitable gifts directly to nonprofits through a corporate giving program.
Corporate matching gift programs
Through corporate matching gift programs, companies match employees’ donations to nonprofits, doubling the impact of employee giving. Sixty-five percent of Forbes 500 companies offer matching gift programs, and an estimated $2–3 billion is donated through matching gift programs every year, according to Double the Donation.
Corporate sponsorships
Another common way for corporations to give to nonprofits is through corporate sponsorship. Sponsorships generally come with public acknowledgment of the company’s support.
- For example, a corporation might sponsor opening night of a nonprofit theater’s season. In exchange for a financial or in-kind contribution, the company’s logo will appear on the event step-and-repeat or in the program.
- Sponsorships of high-visibility events have been a key way that corporations support nonprofits, though there are signs corporations are retreating from sponsoring Pride festivals amid Trump’s attacks on equity and inclusion after many years of being major supporters.
In-kind donations
Companies large and small support nonprofits via in-kind contributions of products, expertise, or services. For instance, pharmaceutical companies’ giving is often in the form of donated products. At a smaller scale, a local restaurant might donate food for a nonprofit’s fundraiser or volunteer day.
Volunteerism
Another way that corporations support nonprofits is by giving employees paid time off to volunteer.
Corporate social responsibility programs
Corporate philanthropy is sometimes part of a company’s broader corporate social responsibility (CSR) program. CSR programs include philanthropy as well as other ways corporations aim to act as responsible members of communities and societies, including efforts to reduce their carbon footprint, community engagement activities, and more.
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