Purpose That Matters: What Foundation Ownership Teaches Us About Sustainable Capitalism

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.

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