Outside Consultant: Think twice about a corporate foundation

  • Updated: June 30, 2014 - 9:08 AM

question

When starting a charity foundation for a business, what are some important factors to be considered and questions to be asked to ensure a successful launch?

Sam Bruce

Much Better Adventures

sam@muchbetteradventures.com

answer

I’m delighted that you wish to be of service to your fellow citizens. At this early stage, however, you might wish to reconsider whether a foundation is the best legal vehicle to accomplish your goals.

Take some time to formulate a vision of an alternative future that reflects your contribution to societal or planetary improvement. What would a world with conservation projects in adventure destinations look like? Who benefits and how? Then create a mission statement that conveys how your organization will help to make that vision a reality. Now you are ready to explore the relative benefits of a foundation compared to other possible means of supporting your goals. Here are three alternatives to consider.

Foundation — Minnesota is the land of foundations, and corporate foundations are consistently the largest grantmakers in the state. As a foundation, you will need to register with the attorney general’s office as a charitable trust, whereby you would be subject to stringent governance, reporting and giving regulations. You will also want to consult with staff at the Minnesota Council on Foundations (www.mcf.org).

Corporate donor — You may find that the much simpler vehicle of donating pretax profits to designated causes will meet your charitable goals while maintaining maximum flexibility. Consult with your accountant and/or attorney regarding restrictions.

Public benefit corporation — Recent legislation in Minnesota and several other states enables incorporation or reincorporation as a public benefit corporation, whereby directors of a profit-making entity are empowered to consider nonfinancial benefits accruing to other stakeholders. Some Minnesota businesses have already chosen this organizational form. Again, consult with your attorney regarding this alternative.

About the author

Charles M. Gray, professor of business economics and interim director of the Center for Nonprofit Management.

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