Foundations can do more than philanthropy

European philanthropy is usually associated with grantmaking, advocacy and social innovation. Yet some of Europe’s most influential foundations shape society in a different and less visible way: through ownership. Enterprise foundations are foundations that control companies. In many cases, the businesses they own are among Europe’s largest employers and most innovative enterprises. While their philanthropic activities may be substantial, their role as long-term owners can be economically even more significant.

This dual identity – philanthropic institution and business owner – places enterprise foundations in a unique position. However, European law has rarely recognised this explicitly. The recently published European Enterprise Foundations Model Law invites us to rethink that gap and to acknowledge that foundations can contribute to society not only by distributing profits, but by structuring ownership itself.

Enterprise foundations are not corporate CSR vehicles. They are not companies that donate part of their earnings. They are independent legal entities that hold a controlling interest in a business. Unlike private shareholders, they have no residual claim to profits. Unlike family ownership, they are not subject to inheritance fragmentation. Unlike state ownership, they are not tied to electoral cycles. Their assets are irrevocably committed to a purpose.

This creates something rare in modern capitalism: an asset-owning institution without owners. That design has profound implications for governance, risk-taking and responsibility.

The Model Law defines an enterprise foundation functionally as a foundation that controls a business. Foundations may pursue public-benefit purposes, private family-related purposes, or business purposes – or a combination of these. Crucially, responsible business ownership is recognised as a legitimate purpose in its own right. Regardless of their stated purpose, enterprise foundations are expected to exercise their ownership in a responsible manner, taking into account the long-term interests of the foundation, the company and its stakeholders.

This reframes the role of foundations in the economy. They are not merely capital-preserving entities; they are expected to be engaged owners capable of overseeing corporate strategy and accepting calculated business risks. Traditional foundation law often emphasised capital preservation. By contrast, the Model Law acknowledges that controlling a business necessarily involves uncertainty and entrepreneurial judgment. Philanthropy, in this institutional form, is not insulated from markets – it governs them.

Because enterprise foundations have no shareholders, governance becomes central. The Model Law therefore places strong emphasis on board duties, independence and accountability. It requires at least three board members to enable mutual oversight. It clarifies duties of care and loyalty, requires disclosure and fair handling of related-party transactions, and underscores that foundation boards must oversee not only the foundation itself but also its subsidiary companies.

At the same time, the framework preserves flexibility. Founders retain broad freedom to design governance arrangements in the foundation charter. The Model Law is built on optionality: national legislators may adopt it in full or in part, and may choose different supervisory models depending on legal tradition. This reflects the diversity of European foundation law while still articulating common governance standards.

A key tension in foundation law concerns the protection of founder intent versus the need for adaptation. Enterprise foundations intensify this challenge because business environments evolve. Markets change, technologies advance and economic crises occur. If purposes are too rigid, foundations risk becoming economically ineffective. If they are too flexible, mission drift may occur.

The Model Law proposes a balanced approach. Amendments to the charter are possible when necessary to adjust to significantly changed circumstances and are subject to approval by a competent authority. Founders may reserve limited amendment or veto rights for a defined period. Pure enterprise foundations – whose core purpose is responsible ownership of a particular business – face stricter conditions for divestment. Permanence is valued, but not at the expense of viability.

Because enterprise foundations lack shareholders, accountability must be ensured through governance and supervision. The Model Law therefore provides for legality supervision by a competent authority, either a court or an administrative body with appropriate business competence. This supervision focuses on compliance with law and charter rather than second-guessing business decisions. The aim is to safeguard legitimacy without undermining entrepreneurial agility. For foundations that benefit from tax privileges linked to public-benefit purposes, such credibility is essential to maintaining public trust.

Enterprise foundations challenge a narrow understanding of philanthropy. Their contribution to society is not limited to grant volumes. By anchoring companies in long-term, purpose-bound ownership, they shape employment patterns, innovation capacity and regional development. In some cases, the economic footprint of the companies they own exceeds their philanthropic distributions by a wide margin.

This does not diminish philanthropy; it broadens its meaning. Foundations can create public value not only by redistributing profits, but by structuring who owns productive assets and under what constraints.

At a time when Europe faces geopolitical uncertainty, sustainability transitions and debates about competitiveness and resilience, ownership forms matter. Enterprise foundations represent one institutional answer to the question of how capital can be committed to long-term purpose without reliance on either state control or short-term market pressure. They will remain relatively rare, since establishing one requires founders to relinquish private wealth permanently. But where founders choose this path, the legal framework should recognise and facilitate their role as responsible business owners.

The European Enterprise Foundations Model Law provides a coherent framework for doing so. It recognises enterprise foundations as hybrid institutions and offers policymakers a structured set of legislative building blocks adapted to their specific governance challenges. For European philanthropy, this development is strategically significant. If foundations wish to shape systemic change, they must also engage with ownership. Giving is one way to serve society. Owning – responsibly, permanently and purposefully – can be another.