“Providing benefits to communities affected by a project can help a company to obtain and maintain a “social license to operate,” and manage project risks and stakeholder expectations. There are many different channels that companies can use to deliver these benefits. Depending on the channel, determining the appropriate implementation vehicle can be a key strategic decision. For a company that has selected community investment as a way to deliver benefits, this decision is particularly important. Four main implementation vehicles are generally considered: direct delivery by the company; delivery through partners and third parties; delivery via a foundation, trust, or fund; or a hybrid approach. Each of these models has advantages and disadvantages that need to be carefully assessed. This Guide specifically explores the use of foundations, trusts, and funds
(collectively referred to as “foundations” throughout this document2) to deliver community investment (CI). The Guide does not intend to encourage or discourage companies from establishing foundations; rather, it lays out a process for deciding whether a foundation can be a viable implementation model and helps companies understand related risks and opportunities. This Guide looks at the experiences of companies that have established foundations across different countries and sectors, to present lessons that can be used to improve decision making today. The Guide also builds upon conclusions drawn by a World Bank Group study,4 which broadly observed that • The choice between a foundation, trust, or fund depends in large part on the legal context in the host country. Comparison by name alone provides little insight into these institutions.
• While it is possible to compare foundations through the use of several criteria, such as the financing structure of the foundation, or the degree of community participation within the governance structure, the performance and success of the foundation are highly dependent on a range of site-specific conditions. This dependency on context makes it difficult to draw any meaningful conclusions as to why and in what circumstances foundations succeed. • Foundations are established in a dynamic environment, and to remain relevant, they need to adapt to changes in their operational context.
• Based on the research conducted, highly participative, financially sustainable, and well-managed foundations, trusts, and funds defined leading practices in their field.”