Corporate foundations warning

Corporate foundations must become less dependent on their parent companies for funding if they want to avoid the problems that have blighted the Northern Rock Foundation, according to the Association of Charitable Foundations.

David Emerson, chief executive of the ACF, said the relationships between companies and their foundations were increasingly difficult and that he knew of five foundations that felt they were under threat because of the attitude of their corporate founder.

"There is a corporate that wanted the foundation to send information about its products to its charity members," he said.

He added that, besides worrying about such interference, foundations also had to be on their guard against being over-dependent on their parent companies, which could withdraw funding at short notice.

Financial uncertainty at the Northern Rock Foundation ended this month when it was announced the organisation would receive £15m a year over the next three years under the nationalisation settlement for Northern Rock (Third Sector Online, 18 February). The foundation received £31m in 2006.

"Foundations are at risk unless the corporates have an understanding of governance and behave appropriately," said Emerson.

He urged foundations to develop endowment funds or other long-term funds using income from parent companies' pre-tax profits, or by investing lump-sum payments to avoid reliance on their parent companies.

Rob Williamson, director of policy and communications at the Northern Rock Foundation, said: "We really rely on there being an on-going allowance of income for the future because we don't have an endowment scheme in place."

The Camelot Foundation will close its doors to the public on 31 March, after the Camelot Group decided to withdraw its funding earlier than expected.

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