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How to set up a new Corporate Foundation

Published on 13 Mar, 2024

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Starting a Corporate Foundation can be a strategic decision that not only benefits the people and communities it serves but also enhances your company's image and reputation, employee engagement, and long-term sustainability.

Corporate Foundations can be structured in different ways but using a donor advised fund (DAF) offers a number of benefits including cost savings, tax-efficiency, flexibility, and ease of administrative, fiduciary, and reporting requirements.

If you’re looking to set-up a Corporate Foundation, here are the key steps you’ll need to take: 

1. Mission and Goals: Determine the purpose and focus areas of your Corporate Foundation. What cause or causes do you want to support? This could include social causes, community development, education, healthcare, or any other areas aligned with your company's values and objectives.

2. Legal Structure: Consult with legal and financial advisors to decide on the right structure of your foundation. This could be a separate legal entity, such as a non-profit corporation or a charitable trust. We can share how other clients have approached this and also connect you to some excellent advisors.

3. Board of Directors or Trustees: Select a board of directors or trustees who will oversee the foundation's strategy and operations, including grantmaking and investment decisions. Look for individuals with diverse skills and experiences who are committed to advancing the foundation’s mission.

4. Donor Advised Fund (DAF): Set up your donor advised fund with Charities Trust, allowing your Corporate Foundation to make contributions to the fund and advise on how monies should be distributed to charitable organisations. We handle the administrative tasks including governance and compliance, relieving your foundation of these responsibilities.

5. Policies and Procedures: Establish clear policies and procedures for governance, grantmaking, financial management, and administration. These policies should outline how the foundation will operate and ensure legal and regulatory compliance.

6. Funding: Determine the foundation and your Charities Trust DAF will be funded. Consider whether your company will provide initial funding or if you’ll seek donations from other sources such as employees, customers, or external partners. You may also explore fundraising activities or endowment building to sustain the foundation’s activities over the long term.

7. Grantmaking: Develop a grantmaking strategy and determine the criteria and guidelines for making grants from the DAF. This includes defining the focus areas, eligibility criteria for recipient organizations, and the process for evaluating grant proposals. Your foundation's board or a designated committee should review and approve grant recommendations.

8. Investment Strategy: Develop an investment policy statement outlining the investment objectives, risk tolerance, and asset allocation strategy for the fund’s assets. Work with investment professionals to manage the fund's investments prudently and maximize returns while aligning with your foundation's mission and financial goals.

9. Compliance and Reporting: Ensure compliance with relevant laws and regulations governing Corporate Foundations and DAFs. This includes filing necessary tax forms, maintaining proper records, and adhering to transparency and reporting standards. Develop clear systems for monitoring and evaluating the foundation’s impact and reporting results to stakeholders.

10. Brand and Communications: Create your foundation’s name and branding and introduce it to stakeholders, including employees, customers, partners, and the broader community. Develop ongoing marketing plans to build awareness of your foundation’s activities and the impact you are making in people’s lives.

11. Continuous Improvement: Regularly evaluate the effectiveness of your foundation's activities against your original goals. Solicit feedback from grantees, beneficiaries, and other stakeholders to assess impact and identify areas for improvement. Adapt your strategies and practices accordingly to achieve greater effectiveness and sustainability over time.

Setting up a Corporate Foundation through a donor advised fund requires careful planning and real stakeholder commitment. The rewards can be substantial for both your organisation, the charitable causes you support and your wider communities. The Charities Trust team is on hand to help you get things off the ground and make that impact.