Corporate Foundations: Their Role for Corporate Social Responsibility

INTRODUCTION

In recent years, there has been a resurgence in the creation of corporate foundations in Germany¹ (Anheier, 2003), and these non-profit organizations established by corporations are not only gaining in number but also in importance (Marquardt, 2001; Voegele-Ebering, 2003; Morweiser, 2001). This trend can be explained by the growing importance of the concept of corporate social responsibility (CSR) in Germany, as it is one of the purposes of a corporate foundation to help communicate a corporation's commitment to CSR. As one can read on the websites of many corporate foundations, their purpose lies in fulfilling the corporation's commitment to CSR or corporate citizenship. According to their statutes and published objectives, many foundations focus on the solution of (future) social problems and on responding to unmet social needs. They aim at social value creation and serve as an 'antenna' or 'sensor' for societal needs and expectations.

Consequently, foundations have the potential to deliver valuable insights into the needs and expectations of corporate stakeholders. Therewith, corporate foundations can support a company's CSR communication and fulfill a crucial function for stakeholder dialog and public relations (PR). Going one step further, corporate foundations can play an important role in shaping and strengthening a firms's reputation because CSR is argued to be one of the pillars of corporate reputation (Fombrun and Gardberg, 2000).

However, it is debated whether or not corporate foundations can and should serve corporate PR purposes and support corporate reputation building. The main objection refers to the status of foundations in Germany as legally independent, tax-exempt entities that are designed to exclusively pursue public-benefit purposes. From a stakeholder perspective, it has been shown that people do not consider it positively if corporate giving is related to the business of the corporation (Civis, 2003). However, another study among people interested in CSR indicated that respondents expected corporations to more thoroughly explain the business case for their CSR activities. For these people CSR seems less credible if it is not systematically integrated in the business of the corporation (ECC Kohtes Klewes and Fishburn Hedges, 2003).

In the research presented in this article the inter-relationship between corporate foundations and their founding corporations from the viewpoint of the organizational entities involved are analyzed. If and how stakeholder relations, the...