Why create a Corporate Foundation?

Many executives have embarked on the adventure of sponsorship, regardless of the size of their business (from those listed on the stock exchange to the SMEs) and the reasons are quite diverse. This adventure is often linked to chance: that of a meeting with leaders of NPOs, actors in the preservation of a monument, or the proximity of the company with a structure for children with disabilities etc. And all these entrepreneurs questioned: how to support these different structures? There is so much to do, in so many areas, then where to start, how to mobilize employees and especially how to make sense?

The end of the “choice of the President”?

For a long time, the actions of solidarity of the companies were called “choice of the President”, and, it is true, this has sometimes been the case. Today this pejorative approach is much less used. The focus now is on the tax deductions available (in France), a focus widely circulated by the press: indeed few articles mention the names of the sponsors of ambitious and sometimes extremely expensive projects. Who, for example, remembers or knows the names of the companies that supported certain works carried out at the Palace of Versailles, without which the latter could not have been created? Not many people!

Certainly tax deductions do exist, at least in France, since the famous Aillagon law of 2003. A reminder is nevertheless necessary: this tax reduction on the profits, equal to 60% of the amount of the donation (in cash or in kind) is limited to annual payments of 0.5% of the company’s turnover. While this represents significant sums for recipients, many companies that do not pay income taxes are still committed to the sponsorship adventure. So why?

Sponsorship, a long history, …

It is to Caius Cilnjus Maecenas, protector of the arts and letters of Ancient Rome, that we must, by extension, the word “sponsorship”. While sponsorship reached its peak during the Renaissance, it has, over time, entered into the culture of companies wishing to create a link with the society, especially towards the general interest, most often in the field of Culture (museums, orchestras, exhibitions, castles, …).

Corporate foundation and sponsorship: a significant difference

For several years, we have seen the creation of numerous Corporate Foundations. But why this enthusiasm? Why invest time and energy in creating a corporate foundation complex to manage?

Simply because there is a significant difference between a sponsorship policy and a Corporate Foundation even if in fine the subjects supported are the same. The latter is a “company” in itself, with its own statutes, its Board of Directors, where there are staff representatives and at least a third of external qualified personalities. Often, a Corporate Foundation also has an Expert Committee that selects the projects to support.

What underlies a Corporate Foundation is the transparency of the amounts allocated to solidarity actions, even though the CEO is most of the time also a member or even the Chairman of the Foundation’s Board of Directors. Indeed, the projects supported are selected by the Board of Directors within the framework allocated to the Foundation thus guaranteeing the utility of the money spent. In addition, the annual accounts of the Corporate Foundation as well as the report of the statutory auditors are published in the Official Journal on an annual basis.

A Corporate Foundation is therefore a guarantee of the proper use of funds in the service of the general interest according to its statutory objectives. To reassure all the stakeholders of the company internally (employees) as well as externally (shareholders, customers, suppliers, …). It also makes it possible to federate the employees of the company around the causes chosen by the company, causes most of the time very close to its business and its values.

Finally, another interest to create a Corporate Foundation is the listing of the action in a long time and the possible widening of supported projects. Indeed, a Corporate Foundation acts around a theme within the framework of a policy that the company has chosen while a sponsorship action, even under a multi-year agreement, remains linked to a single project.

Good reasons to embark on the adventure of a Corporate Foundation!

Pascale Strubel

French version

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