A study on corporate foundation and philanthropy: Does governance matter for organizational performance?

Abstract

Given the increased social and strategic value of corporate philanthropy (CP) in businesses, a growing number of corporations have established associated corporate foundations to institutionalize and formalize their CP. Notably, CP has been channeled through team charitable foundations in professional sport, which are corporate foundations closely tied to their parent teams while having own (quasi) independent governance structure. However, these corporate foundations have received less scholarly attention. The study explores the relationship between corporate foundation governance and organizational performance in the context of professional sport. Specifically, this study focuses on how board structural characteristics, such as board size and board diversity, and board leadership, such as board chair affiliation with the parent team and the presence of a paid executive director, influence the team foundation's total received contributions. To empirically test our hypotheses, the study used longitudinal data of financial and personnel information of team foundations in the United States from 2011 to 2017. The results show that the team foundations with a larger board and paid executive director generate more significant revenues (received from contributions, grants, and gifts). The study illuminates how the internal governing environment shapes and steers a corporate foundation's philanthropic practices and performance.