European Network of Enterprise Foundations to be hosted by Philea
Beginning in autumn 2023, ENEF, the European Network of Enterprise Foundations, will be hosted by Philea. The European Network of Enterprise Foundations, includes among its members Carlsbergfondet, Fondation Pierre Fabre, Interogo Foundation, “la Caixa” Foundation, Lloyd’s Register Foundation, Lundbeckfonden, the Novo Nordisk Foundation, Robert Bosch Stiftung GmbH and Villum Fonden.
While philanthropic foundations are well known for their contributions to people and society, less is known about enterprise foundations and their unique operating model, which combines company ownership activities with a philanthropic purpose. Enterprise foundations are foundations that own and govern companies; they are independent, self-governing entities with no owners, guided by a mission and characterised by long-term horizons and an absence of personal-profit motives. Most of them, and all members of ENEF, have philanthropic goals.
“Enterprise Foundations combine long-term ownership of business companies with philanthropy and social responsibility. They are in a very real sense gifts from prescient and altruistic founders to society in general.”
Prof. Steen Thomsen, Center for Corporate Governance Copenhagen Business School and advisor to the European Network of Enterprise Foundations
Enterprise foundations are irrevocably separated from the affairs of their founders and do not have individual beneficiaries, which distinguishes them from family foundations. In 2020, a group of European enterprise foundations formed a network with the purpose to “promote ownership based on longevity, sustainability and creating shared value for all stakeholders” and with the common goal “to increase awareness within Europe of the Enterprise Foundation model(s) and its benefits”. In 2023 the group began to explore being hosted under the auspices of Philea, which was agreed on in early June.
“We believe that the establishment of independent foundations with a combination of ownership of one or more companies as well as an aim to contribute to society through philanthropy, has proven over time to be a model that brings long term value to both businesses and society. As such an enterprise foundation model can provide a solution worth considering when a succession or transition in ownership of companies becomes relevant. We know that there are many Enterprise Foundations among Phileas members and welcome them to join our network.”
Steffen Pierini Lüders, Novo Nordisk Foundation and member ENEF working group
Enterprise Foundations in Europe are all different as they are shaped by a unique history and purpose. Membership is open to those foundations that the Network defines as Enterprise Foundations, and that are committed to a long-term responsible ownership of one or several active companies and have the following characteristics:
- Irrevocable endowment and independence: Is a separate legal entity. The affairs of the foundation are irrevocably and clearly separated from the personal affairs of the founder(s).
- Responsible purpose driven owner of an active business company: In general, holds a share majority or controlling influence in one or more active business companies. Has a clear purpose and aims to be a responsible, long-term owner, of the company/companies it owns.
- Philanthropy: Has philanthropic activities that are financed through the income from its ownership of companies and other investments.
The specific ownership setup may vary. In some cases, among the present members, the setup is ownership by multiple foundations, ownership through a holding company or a combination of a philanthropic foundation and another associated entity executing the share voting rights, which together function in the same way as a single enterprise foundation.
An enterprise foundation is a self-owned entity and has its own governing bodies. Board members act as stewards and their governance is ultimately guided by the purposes defined in the charter of the foundation. Studies show that foundation-owned companies tend to invest more in R&D, adopt long-run strategies, result in higher employee satisfaction, and are concerned about the quality and affordability of the products manufactured by the companies they own.1
FOOTNOTES
1. Research conducted on a large panel of Danish companies has shown that foundation-owned companies have better reputations and are regarded as more socially responsible. More specifically, research has shown that foundation-owned companies are more stable employers, pay their employees better and keep them for longer. Altogether, the evidence shows that foundation- ownership is associated with more responsible business behaviour towards employees (C. Børsting and S. Thomsen, ‘Foundation Ownership, Reputation and Labour’, 2017). Foundation-owned companies also tend to survive longer and have more long-term corporate governance (Thomsen et al. 2018).
Additional resources:
Contacts:
- Andes Bylund, chair of ENEF working group, Interogo Foundation, anders.bylund@interogofoundation.com
- Steffen Pierini Lüders, member of ENEF working group, Novo Nordisk Foundation, spls@novo.dk
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