How can companies maximise philanthropic goals through grant giving charity foundations?

Abigail Bartlett

Trainee Solicitor

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July 6, 2022

Categories Charity Law

Grant giving charity foundations create an opportunity to set clear philanthropic goals that reinforce your company’s identity and establish positive change.  A charity foundation will equip your company to achieve beyond what is possible with ad-hoc donations. Other benefits include:

  • Demonstration of Corporate Social Responsibility
  • Greater transparency
  • Continuity in giving and long-term support
  • Focused goals which align with corporate values
  • Ability to measure impact and develop a narrative which can outline progress

When developing a charity foundation it is important to consider and establish focused objectives. For example, if the aim is to demonstrate Corporate Social Responsibility, a foundation will create a clear structure and in turn avoid making empty promises and setting unrealistic objectives.

A key consideration is to align the charity foundations with the corporate values.

This does not happen overnight and confidence in the corporate direction must be achieved first. It may require a moment of reflection on what action the company is currently taking to achieve its goals, how successful these have been and whether the current plan needs to be updated.

Companies can use their charity foundation to engage with the community in which they operate, by using their expertise and assets to tackle social and environmental issues.

For example: The Screwfix Foundation raises funds to support projects that will fix, repair, maintain and improve properties and community facilities for those in need throughout the UK.

Taking the time to listen to the community and understand its values and pressures will enable a company to develop targeted plans to make improvements. This in turn will cultivate trust and help to establish meaningful relationships within the community. As such the company will maintain a positive reputation and improve brand awareness.

What legal form will the foundation take?

Charitable incorporated organisation (CIO) – foundation model

Being designed specifically and exclusively for charities, the CIO is well suited to many types of charitable endeavour.

The CIO foundation model will have a membership comprised entirely of the CIOs charity trustees. A CIO is a corporate body, meaning its members have the protection of limited liability for its debts or no liability at all in the event it is wound up. Furthermore, CIOs can own property, employ staff and enter into contracts in its own name, rather than in the names of the trustees – which will help to attract and appoint new trustees.

There will be no dual regulation. CIOs will only need to be registered with the Charity Commission, rather than with Companies House. They will therefore come into being once registered, be regulated by the Charity Commission and subject to Charity Law.

The role of trustees

The role of a trustee is to manage the affairs of the CIO. They have a statutory duty to exercise their powers in a way that they consider, acting in good faith, is most likely to further the purposes of the CIO. They must take such skill and care as is reasonable in the circumstances and exercise a duty of care.

Ensuring the CIO has responsible and knowledgeable trustees is integral in ensuring the foundation will achieve its aims and set appropriate and attainable objectives. Grant giving foundations also provide the opportunity for staff, beyond just senior management to be involved in decision making – it is important for companies to utilise their staff’s skills and acknowledge the fact that other members of staff may have specific experience in the sector in which the CIO is operating.

How Furley Page can help

The Charity Commission are stringent in their review of CIO submissions and it is therefore imperative to take expert advice before embarking on this structure.

Our team will begin by discussing the general aims of the charity with you and we will ensure we can tailor the constitution in a way to suit both the objectives of the company whilst also satisfying the Charity Commission regulations.

Once we have a clear picture of the purposes the CIO intends to pursue and the activities it will carry out to achieve those purposes we can work together to draft a grant making policy.

Contact Abigail Bartlett on 01227 763939 to find out how we can help you.