Family Firms and Family Foundations

Many business families set up foundations for philanthropic purposes, giving back to society. However, as long-term owners of the family business, foundations can do much more than that. Typically, continuing the family legacy and maintaining family influence over the business forms part of a family business's transgenerational purpose. A foundation can act as an immortal successor by holding the shares of the family business, thereby potentially solving the problems of both a lack of competent and interested successors and too many shareholders in dispute. 

A foundation that controls a business company is known as an enterprise foundation. This is more or less possible in most European legal systems, as demonstrated in the book Enterprise Foundation Law in a Comparative Perspective, edited by Steen Thomsen and myself. Steen Thomsen's research on enterprise foundations such as Carlsberg, Maersk, Novo Nordisk, Inter IKEA, Bosch and Bertelsmann, has demonstrated that foundations can be responsible, long-term business owners. Research also shows that businesses owned by foundations are usually economically successful and innovative, and provide good jobs. Business decisions are made in the business company. The foundation can serve as a reliable, purpose-oriented shareholder. Depending on national foundation laws, founders and their family members may sit on the foundation's and/or business's board, thereby maintaining the family business's character. In some legal systems, however, such options are more limited, with requirements for board independence and supervision by a public agency. 

In some European legal systems, such as those in Germany, Austria, Liechtenstein and Poland, it is possible to establish a foundation for the purpose of supporting family members financially during times of crisis, while they are studying, or to establish a business. In Germany, well-known companies such as the retailers ALDI and Lidl, Bosch and Bertelsmann, are controlled by multiple legal entities, including foundations. This provides a stable structure in which some foundations may pursue philanthropic goals using the company’s dividends, while others exercise control over the business. Such structures may in fact serve various purposes, including tax planning. However, there is much more to foundation ownership. 

In an increasingly uncertain world, enterprise foundations can be an important building block for family businesses to secure long-term independence and stability. All legal systems should have the appropriate legal tools available, including fair tax laws that prevent tax avoidance. To facilitate discussion and potential reform, Steen Thomsen and I have prepared a European Enterprise Foundation Model Law  as a project of the European Law Institute with more than 50 experts from all over Europe and beyond. 

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Anne Sanders is Professor of Law and holds the Chair of Civil Law, Corporate Law, Family Business Law and Justice Research at Bielefeld University and is Professor II at the University of Bergen (Norway).

This blog is based on a discussion held at the 2026 IESE-ECGI Corporate Governance Conference Family Firms: Purpose, Economic Performance and Social Impact. Visit the event page to explore more conference-related blogs.

The ECGI does not, consistent with its constitutional purpose, have a view or opinion. If you wish to respond to this article, you can submit a blog article or 'letter to the editor' by clicking here.