Corporate Giving and the Corporate Foundation

Mark Kramer, Marc Pfitzer and Kyle Peterson

How should a corporation coordinate direct charitable contributions with grants from its foundation? If there is no foundation, should the corporation create one? And if so, should it be endowed or funded annually?

These are some of the perplexing questions that our clients ask. Our answer is always the same: There is no compelling reason why every corporation should have a foundation. And if there is a foundation, there is no universal rule for the optimum division of contributions between it and the company. Companies must focus instead on the best way to achieve social impact and competitive advantage. The company’s overall social investment strategy should determine structural and organizational issues, rather than vice versa. And once the strategy is in place, management must clearly delineate areas of responsibility to avoid generating either internal or external confusion.

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