Corporate foundations sit somewhere between entrepreneurship and nonprofit work. At present, Switzerland is home to around 225 foundations with a close connection to a company.
Corporate foundations are foundations with their own legal personality that were founded by a company for the purpose of engaging in philanthropy. They straddle two separate worlds. Why? Because companies are always focused on profit, while foundations pursue a charitable purpose. By setting up a foundation, commercial enterprises can build a bridge to civil society. It’s about building trust and ‘corporate social responsibility’, the responsibility a company holds towards society – an increasingly important issue. By giving some of their profit to a foundation, companies express their willingness to engage with societal issues in the long term. Plus, corporate foundations generally find it easier than profit-focused companies to get in touch with other NPOs.
Differences in size and purpose
At present, Switzerland is home to around 225 corporate foundations. ‘They include foundations of all stripes, but every one of them is closely connected to a company,’ says Professor Georg von Schnurbein, Director of the Center for Philanthropy Studies (CEPS) at the University of Basel. ‘The foundation can be established by the company or by an owner of a company.’ It is difficult to say what the precise number is. Firstly, the Swiss foundation sector is large and dynamic, with numerous new foundations set up and others liquidated every year. Secondly, corporate foundations can differ greatly in terms of their size, purpose and relationship with their parent company. Some might engage in work in a similar area as the company, whereas others are deliberately focused on a very different field.
Reputation and marketing
There are various reasons why a company might set up a nonprofit foundation. ‘In the simplest case, the foundation is set up for the sake of reputation and marketing,’ says von Schnurbein. There are also instrumental considerations if the content of the foundation’s work is close to the company’s core business and offers synergy effects for both parties. This is illustrated by the Syngenta Foundation for Sustainable Agriculture, established by Syngenta, a producer of plant protection products, or the Hear the World Foundation, which the Sonova Group, a hearing aids manufacturer, uses to support children around the world who are affected by hearing loss. That said, there are also foundations active in a completely different area from their company, as is often seen in the financial sector. Banks like Credit Suisse or UBS use their foundations to support cultural, social and scientific projects, and in the pharmaceutical industry, research foundations can safeguard scientific independence through their legal form.
Corporate foundations exist in every sector, but it tends to be larger companies that set up foundations. Some, like Novartis and Nestlé, have launched more than one foundation. The number of corporate foundations being established has continued to creep upwards since the 1980s, ‘But the upcoming recession could bring an end to this trend,’ says von Schnurbein.