Governance to safeguard societal purpose
Puck van Ipenburg-Hendriks
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Corporate foundations are expected to serve the public benefit. Yet many remain deeply intertwined with the companies that fund them, creating a fundamental governance question: what ensures that the public benefit purpose remains central when perspectives or interests diverge?
Governance is where this tension becomes visible. It is also, emerging research suggests, where legal safeguards are often weakest.
A gap between purpose and practice
Across Europe, corporate foundations are typically established as public benefit organizations. They are expected to operate independently and pursue societal goals.
Legal frameworks reinforce this expectation by requiring foundations to define a public benefit purpose and limit direct financial benefits to the founding company. But when it comes to governance — the mechanisms that shape decision-making — the picture looks different.
In most jurisdictions, governance requirements remain minimal. Foundations are generally required to have a board, basic duties are defined, and personal conflicts of interest of board members are broadly addressed. Beyond this, however, organizations often retain considerable discretion.
There are generally no clear rules regarding who sits on the board, how independent governance structures should be, or what types of expertise boards should include. As a result, governance structures can remain closely aligned with the founding company while still fully complying with the law.
Why governance matters
This flexibility is not simply a technical detail. Governance structures shape how corporate foundations operate in practice. Boards determine which projects are funded, which partnerships are pursued, and how trade-offs between societal and corporate interests are navigated.
When governance is strongly shaped by corporate perspectives, decisions may be more likely to prioritize:
strategic alignment with the business;
highly visible or scalable initiatives; and
shorter-term, measurable outcomes.
None of these are inherently problematic. Closer alignment with companies can bring valuable resources, expertise, networks, and implementation capacity. At the same time, it may create risks for mission drift. Ultimately, the long-term credibility of corporate foundations may depend less on how clearly their mission is formulated and more on whether governance structures are capable of protecting that mission when competing interests emerge.
Not all frameworks are equal
Some legal frameworks address these risks more explicitly than others.
The French legal framework, for example, includes more detailed governance provisions for corporate foundations, including:
limits on company-affiliated board members; and
requirements for independent or expert representation.
These provisions do not eliminate tensions between community and market logics, but they do recognize governance as a structurally sensitive area requiring additional safeguards.
At the same time, organizations may sometimes avoid stricter governance requirements by opting for alternative legal forms, such as endowment funds. This creates opportunities for what scholars describe as “regulatory arbitrage”: using differences between legal frameworks to sidestep stricter governance provisions while continuing to pursue similar activities.
Beyond compliance
Legal compliance alone does not guarantee mission-oriented governance. Corporate foundations therefore should not only ask whether governance structures comply with legal requirements, but whether they actively support the organization’s societal mission.
Boards and executives play a critical role in safeguarding a corporate foundation’s societal mission. They shape how tensions are interpreted, how trade-offs are managed, and how organizational priorities evolve over time.
To strengthen mission-oriented governance, boards can engage in deliberate reflection on questions such as:
Who participates in decision-making — and who does not?
How are different perspectives balanced?
Which expertise is represented, and which is lacking?
What happens when societal and corporate priorities diverge?
How is independence safeguarded in practice, not only formally?
Governance ultimately shapes how corporate foundations balance the benefits of corporate affiliation with the need to remain mission-oriented over time.