Enterprise foundations are foundations that own companies.
Enterprise foundations are independent, self-governing entities with no owners. They are characterised by long time horizons, philanthropic goals and the absence of personal profit motives. [1] Enterprise foundations generally have philanthropic as well as business purposes, and often concentrate their investments in a single firm or a single business group. Many of the best known foundation-owned companies are publicly listed, while the enterprise foundation retains a controlling ownership position, commonly through voting rights via different share classes. Ownership can be full (100% ownership) or just a controlling influence. The companies owned by enterprise foundations may be active in any private business activity.
Other terms used to describe the same phenomenon are "industrial foundations", "corporate foundations", "commercial foundations", "business foundations", "commercial non-profits" and "foundations with corporate interests".
A defining feature of enterprise foundations is that the foundation controls the company which it owns, and not the other way around. Consequently, the majority of corporate foundations around the world, who do philanthropy on behalf of a company, are not enterprise foundations. Moreover, enterprise foundations are private entities not governmental or quasi-governmental institutions.
Several big international companies are owned by enterprise foundations, including the Indian Tata Group, the Swedish Wallenberg businesses, the Danish pharmaceutical company Novo Nordisk, US Hershey, German Robert Bosch, Swiss Rolex and IKEA. [2] Enterprise foundations are most common in the Nordic country of Denmark, where enterprise foundations account for almost half of domestic stock market capitalisation. [2] In Denmark, enterprise foundations own three of the four largest Danish companies; A.P. Moller – Maersk (A.P. Moller Foundation), Novo Nordisk (Novo Nordisk Foundation) and Carlsberg (Carlsberg Foundation). [2]
Many enterprise foundations are non-profits without a personal profit motive, which sets them aside from other ownership structures. Instead, they are legally bound by their purpose, which typically is to secure the longevity and independence of the companies that they own and to contribute to society by philanthropy. As perpetuities which cannot be dissolved, they are long-term owners. However, not all enterprise foundations are equally idealistic. Some have strong ties to the founding family and continue to donate to its descendants. Others again have ties to government organisations, cooperatives or associations, which helped establish them. [1]
In most countries around the world, enterprise foundations are not a legal category and there is no unified body of enterprise foundation law. [2] [3] The Nordic country of Denmark is an outlier due to its tax regime and enterprise foundation laws. Consequently, Denmark has a high number of enterprise foundations compared to other countries. [2]
Company | Country | Description and industry |
---|---|---|
Carlsberg | Denmark | Alcoholic beverages, beer and soft drinks |
Novo Nordisk | Denmark | Danish multinational pharmaceutical company |
Anheuser Busch Inbev | Belgium | Alcoholic beverages, beer and soft drinks |
A.P. Moller – Maersk | Denmark | Global transport and logistics company |
Bertelsmann | Germany | German multinational media, services and education company |
Lundbeck | Denmark | Danish multinational pharmaceutical company |
Robert Bosch | Germany | German conglomerate |
Leo Pharma | Denmark | Danish multinational pharmaceutical company |
CaixaBank | Spain | Spanish multinational financial services company |
Novozymes | Denmark | Danish multinational biotech company |
Carl Zeiss | Germany | German optics company |
The Hershey Co. | United States | American food company |
Inter IKEA Holding | Sweden | Swedish furniture manufacturer |
Wallenberg | Sweden | Swedish conglomerate and business dynasty |
Kavli | Norway | Norwegian food company |
Kuehne + Nagel | Switzerland | Global transport and logistics company |
Lloyds Register | United Kingdom | Technical and business services organisation |
Mahle | Germany | German automotive parts manufacturer |
DNV | Norway | Certification body and classification society |
Pierre Fabre | France | French multinational pharmaceutical and cosmetics company. |
Rolex | Switzerland | Swiss watch designer and manufacturer |
Tata Sons | India | Indian multinational conglomerate |
Wiliam Demant | Denmark | Danish multinational hearing healthcare company |
If a foundation has controlling influence in a business company, it is an enterprise foundation. [2]
Business ownership separates enterprise foundations from ordinary (purely charitable) foundations. Self-ownership means that it has no residual claimants. The foundation may choose to donate, but nobody has a claim on donations. By foundation ownership, foundations have controlling influence in a business company. To qualify as enterprise foundations, they have to have controlling influence – enterprise foundations do not have to own 100% of the companies. The controlling influence is focused on voting rights rather than capital shares or dividend rights.
Academic literature has identified the following key characteristics of enterprise foundations: [2]
Advantages and disadvantages to enterprise foundations and foundation ownership:
Advantages (benefits, strengths) | Disadvantages (costs, weaknesses) |
---|---|
Long-term horizon [4] [2] | Muted incentives [5] [2] |
Ownership commitment [4] [2] | Risk aversion [6] [2] |
Social responsibility [7] [8] [2] | Financial constraints [6] [2] |
Philanthropy [9] [2] | No market for corporate control [6] [2] |
Succession [9] [2] | Multiple objectives (business, philanthropy) [2] [10] |
Company survival [4] [2] | Company growth [6] [2] |
A board of directors is an executive committee that jointly supervises the activities of an organization, which can be either a for-profit or a nonprofit organization such as a business, nonprofit organization, or a government agency.
A cooperative is "an autonomous association of persons united voluntarily to meet their common economic, social and cultural needs and aspirations through a jointly owned and democratically-controlled enterprise". Cooperatives are democratically controlled by their members, with each member having one vote in electing the board of directors. Cooperatives may include:
A state-owned enterprise (SOE) is a government entity which is established or nationalised by a national or provincial government, by an executive order or an act of legislation, in order to earn profit for the government, control monopoly of the private sector entities, provide products and services to citizens at a lower price, implement government policies, and/or to deliver products & services to the remote locations of the country. The national government or provincial government has majority ownership over these state owned enterprises. These state owned enterprises are also known as public sector undertakings in some countries. Defining characteristics of SOEs are their distinct legal form and possession of financial goals and developmental objectives, SOEs are government entities established to pursue financial objectives and developmental goals.
Philanthropy is a form of altruism that consists of "private initiatives for the public good, focusing on quality of life". Philanthropy contrasts with business initiatives, which are private initiatives for private good, focusing on material gain; and with government endeavors that are public initiatives for public good, such as those that focus on the provision of public services. A person who practices philanthropy is a philanthropist.
Corporate governance are mechanisms, processes and relations by which corporations are controlled and operated ("governed").
Corporate social responsibility (CSR) or corporate social impact is a form of international private business self-regulation which aims to contribute to societal goals of a philanthropic, activist, or charitable nature by engaging in, with, or supporting professional service volunteering through pro bono programs, community development, administering monetary grants to non-profit organizations for the public benefit, or to conduct ethically oriented business and investment practices. While once it was possible to describe CSR as an internal organizational policy or a corporate ethic strategy similar to what is now known today as Environmental, Social, Governance (ESG); that time has passed as various companies have pledged to go beyond that or have been mandated or incentivized by governments to have a better impact on the surrounding community. In addition national and international standards, laws, and business models have been developed to facilitate and incentivize this phenomenon. Various organizations have used their authority to push it beyond individual or even industry-wide initiatives. In contrast, it has been considered a form of corporate self-regulation for some time, over the last decade or so it has moved considerably from voluntary decisions at the level of individual organizations to mandatory schemes at regional, national, and international levels. Moreover, scholars and firms are using the term "creating shared value", an extension of corporate social responsibility, to explain ways of doing business in a socially responsible way while making profits.
In a corporation, a stakeholder is a member of "groups without whose support the organization would cease to exist", as defined in the first usage of the word in a 1963 internal memorandum at the Stanford Research Institute. The theory was later developed and championed by R. Edward Freeman in the 1980s. Since then it has gained wide acceptance in business practice and in theorizing relating to strategic management, corporate governance, business purpose and corporate social responsibility (CSR). The definition of corporate responsibilities through a classification of stakeholders to consider has been criticized as creating a false dichotomy between the "shareholder model" and the "stakeholder model", or a false analogy of the obligations towards shareholders and other interested parties.
Novo Nordisk A/S is a Danish multinational pharmaceutical company headquartered in Bagsværd, Denmark, with production facilities in nine countries and affiliates or offices in five countries. Novo Nordisk is controlled by majority shareholder Novo Holdings A/S which holds approximately 28% of its shares and a majority (77%) of its voting shares.
Shareholder value is a business term, sometimes phrased as shareholder value maximization. It became prominent during the 1980s and 1990s along with the management principle value-based management or "managing for value".
A privately held company is a company whose shares and related rights or obligations are not offered for public subscription or publicly negotiated in the respective listed markets but rather the company's stock is offered, owned, traded, exchanged privately, or over-the-counter. In the case of a closed corporation, there are relatively few shareholders or company members. Related terms are unquoted company and unlisted company.
Corporate transparency describes the extent to which a corporation's actions are observable by outsiders. This is a consequence of regulation, local norms, and the set of information, privacy, and business policies concerning corporate decision-making and operations openness to employees, stakeholders, shareholders and the general public. From the perspective of outsiders, transparency can be defined simply as the perceived quality of intentionally shared information from the corporation.
A social enterprise is an organization that applies commercial strategies to maximize improvements in financial, social and environmental well-being. This may include maximizing social impact alongside profits for co-owners.
The Friedman doctrine, also called shareholder theory, is a normative theory of business ethics advanced by economist Milton Friedman which holds that the social responsibility of business is to increase its profits. This shareholder primacy approach views shareholders as the economic engine of the organization and the only group to which the firm is socially responsible. As such, the goal of the firm is to increase its profits and maximize returns to shareholders. Friedman argues that the shareholders can then decide for themselves what social initiatives to take part in, rather than have an executive whom the shareholders appointed explicitly for business purposes decide such matters for them.
Economics of participation is an umbrella term spanning the economic analysis of worker cooperatives, labor-managed firms, profit sharing, gain sharing, employee ownership, employee stock ownership plans, works councils, codetermination, and other mechanisms which employees use to participate in their firm's decision making and financial results.
Shareholder primacy is a theory in corporate governance holding that shareholder interests should be assigned first priority relative to all other corporate stakeholders. A shareholder primacy approach often gives shareholders power to intercede directly and frequently in corporate decision-making, through such means as unilateral shareholder power to amend corporate charters, shareholder referendums on business decisions and regular corporate board election contests. The shareholder primacy norm was first used by courts to resolve disputes among majority and minority shareholders, and, over time, this use of the shareholder primacy norm evolved into the modern doctrine of minority shareholder oppression.
In business, and only in United States corporate law, a benefit corporation is a type of for-profit corporate entity whose goals include making a positive impact on society. Laws concerning conventional corporations typically do not define the "best interest of the corporation", which has led some to believe that increasing shareholder value is the only overarching or compelling interest of a corporation. Benefit corporations explicitly specify that profit is not their only goal. Their activities may or may not differ much from traditional corporations. An ordinary corporation may change to a benefit corporation merely by stating in its approved corporate bylaws that it is a benefit corporation.
In business, a B Corporation is a for-profit corporation certified by B Lab for its social impact. B Corp certification is conferred by B Lab, a global nonprofit organization. To be granted and to maintain certification, companies must receive a minimum score of 80 from an assessment of its social and environmental performance, integrate B Corp commitments to stakeholders into company governing documents, and pay an annual fee based on annual sales. Companies must re-certify every three years to retain B Corporation status.
Novo Holdings A/S is the Novo Nordisk Foundation's wholly owned holding company for Novo Nordisk A/S and Novozymes A/S. Novo Holdings A/S was established in 1999 and manages the Novo Nordisk Foundation's assets, which in 2022 was worth almost DKK 805 billion. Danish Kroner and is the largest charitable foundation in the world making Novo Holdings A/S a world-leading life sciences investor. Novo Holdings A/S is headquartered in Copenhagen, Denmark, with offices in San Francisco, Boston and Singapore.
Lise Kingo is a Danish businesswoman who currently serves as Independent Board Director at Danone, Sanofi and Covestro. Kingo is also a member of the Advisory Board for Humanitarian and Development Aid at the Novo Nordisk Foundation.
The Novo Nordisk Foundation is an international enterprise foundation focusing on medical treatment and research.