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E-MailDavid Schröder is a Research Assistant at Copenhagen Business School and Steen Thomsen is a Professor of Enterprise Foundations at Copenhagen Business School. This post is based on their recent paper.
We respond to the recent contribution by Ofer Eldar and Mark Ørberg, Is It Really About Purpose? Uncovering the Economics Behind Nonprofit Ownership. In their piece, Eldar and Ørberg advance a conceptual framework that distinguishes between income-generating and socially oriented models of nonprofit control. We complement their framework with systematic evidence on how nonprofit foundation ownership performs in practice.
As concerns about capitalism’s environmental and social impacts mount, interest has grown in governance models that embed social and environmental goals (Edmans, 2020; Henderson, 2021; Mayer, 2021; British Academy, 2019). One such model gaining renewed attention is foundation ownership. In this structure, a nonprofit foundation holds a controlling stake in a for-profit business. These “enterprise foundations” are particularly common in Denmark, Germany, and Sweden. They are self-owning, governed by independent boards under the oversight of private courts or government agencies. Their charter-based purposes range from charitable giving to environmental and social causes to ensuring the continuity of a business enterprise (Sanders & Thomsen, 2023).
Eldar and Ørberg (2025) distinguish between two types of nonprofit control: the income-generating model, where business profits support a foundation’s mission, and the socially oriented model, where ownership is used to embed purpose directly into business operations. This typology captures structural variation but remains theoretical. What it lacks—and what the broader literature on responsible capitalism (Edmans, 2020; Henderson, 2021; Mayer, 2021; Serafeim, 2022) has long needed—is evidence on how these models operate in practice.
Our recent study, published in the Journal of Corporate Finance (Schröder & Thomsen, 2025), helps fill that gap by providing systematic evidence on the sustainability performance of firms under nonprofit foundation control. Our findings challenge Eldar and Ørberg’s (2025) view that income-generating enterprise foundations operate like conventional for-profit firms.
It is misleading to portray firms like Novo Nordisk, Carlsberg, Inter IKEA, or Robert Bosch as either philanthropic cash cows or mission-driven NGOs. These are profit-seeking businesses—but they are governed with a long-term perspective and an understanding, to quote Colin Mayer, that businesses succeed by “solving the problems of people and planet.” This sets them apart from conventional firms but does not exempt them from the need to be profitable. Profitability is central to their ability to endure.
The key function of enterprise foundations—overlooked by Eldar and Ørberg (2025) —is to secure the independence and continuity of responsible business firms. That structure allows these companies to prioritize sustainability without undermining economic performance.
Many firms owned by enterprise foundations in our sample—including Novo Nordisk, Hershey and Carlsberg—fit the income-generating model characterized by Eldar and Ørberg, yet they demonstrate a clear purpose orientation. Novo Nordisk, for example, states its purpose is “to drive change to defeat diabetes and other serious chronic diseases,” a goal that guides its long-term investments and strategic direction. The Novo Nordisk Foundation, in turn, supports both the commercial stability of the group and broader scientific and humanitarian objectives. In such cases, purpose is institutionally embedded at both the company and foundation levels—even if their missions differ—suggesting that income-generating foundation-owned firms can align business operations with social objectives.
Our empirical analysis supports this. Using a matched sample of publicly listed firms across 28 countries, we find that foundation-owned companies significantly outperform their family and investor-owned peers on ESG—particularly in the environmental and social dimensions. This ESG outperformance is strongest among charitable foundations, but notably, even private foundations focused primarily on firm continuity and long-term viability also deliver stronger sustainability outcomes—albeit to a slightly lesser degree.
At the same time, our data shows that ESG performance is strongest when a foundation’s charter explicitly includes environmental or social objectives. In other words, it is not ownership alone, but the clear articulation of mission in the foundation’s legal documents—and its practical reinforcement through board governance and funding decisions—that drives superior E&S outcomes. This finding reinforces Eldar and Ørberg’s (2025) claim that legal entrenchment of purpose helps prevent mission drift—especially in the presence of market pressures or outside investors. These results support the idea that foundation control can serve as a credible commitment to purpose—but only when that purpose is clearly articulated and institutionally anchored.
Crucially, this higher environmental and social performance does not come at the expense of profitability. Foundation-owned firms are as economically competitive as their conventional counterparts, showing that purpose and performance are not mutually exclusive.
Enterprise foundations are no panacea. We find no significant difference in governance scores compared to other ownership types, likely due to the unconventional nature of foundation control (e.g., dual-class shares) and limited familiarity among investors. Nor does purpose always translate into stronger sustainability performance: where governance structures are weak or external oversight is lacking, the foundation model can become symbolic. But when strong governance is combined with robust supervisory frameworks, enterprise foundations can fulfill their promise—embedding purpose in their core business decisions.
We also examine how these commitments hold up under stress. During the 2008 financial crisis, foundation-owned firms sustained their ESG performance, while others cut back. We also show that foundation-owned firms were significantly more committed to reducing emissions than other firms in the post-Paris Agreement period. These patterns suggest that foundation governance offers more than insulation from capital market pressures: it supports the long-term orientation of the business and safeguarding of stakeholder relationships.
These findings have implications for policymakers. Legal frameworks should do more than simply allow nonprofit ownership; they should enable the anchoring of mission in corporate charters and ensure effective oversight mechanisms that hold foundations accountable to that mission. The Nordic experience shows how foundation law, corporate governance norms, and supervisory institutions can work together to uphold long-term purpose without compromising firm efficiency or competitiveness.
As calls for responsible capitalism grow louder, foundation ownership merits closer attention. Our findings suggest that when anchored institutionally and supported by robust governance structures, enterprise foundations can deliver on the promise of sustainable capitalism.
