Concern over Cadbury's charitable roots

For a company founded on a Quaker ethos and which its chief executive described last year as "principled capitalism," the takeover of Cadbury by Kraft has left many concerned about the US food group's commitment to a proud tradition of social and economic responsibility. While the spectre of potential job losses hangs in the air, another area of possible concern is the impact of the takeover on the company's charitable arm, the Cadbury Foundation, which is funded by the company via an annual donation. Although the £9.6m given to non-profit making causes by Cadbury's companies in 2006 – accounting for more than 1% of Cadbury's pre-tax profit – dwarfs the near £1m the foundation spends, it supports organisations including the environmental regeneration charity, Groundwork, and Young Enterprise, an educational charity linking schools with business. While some of the Cadbury Foundation's recipients are circumspect over what a takeover might mean, it raises a question mark about what steps and buffers have been put in place to protect a linked trust or foundation from changes taking place on the business side of a company. According to a recent survey by the Charity Commission, there are an estimated 8,800 trusts and foundations in the UK, with the top 500 grant-makers spending around £2.7bn a year, providing around 10% of charity sector income. Some corporate trusts and foundations, like the Cadbury and Vodafone foundations, depend on annual donations – often linked to profits – and therefore affected by a company's financial performance. So while setting up a foundation requires the body to be legally independent of the company, the amount injected into it following a merger, takeover or collapse, may be another matter. "The charity itself has to be independent and any decisions made for the benefit of the charity," says a spokeswoman from the Charity Commission. "Depending on the relationship … if a trust gets a certain percentage of a company's profits then it's income could go up or down." Northern Rock Foundation In 2008 the Northern Rock Foundation (NRF) - Northern Rock's charitable arm and one of the UK's largest corporate funders, announced cutbacks to grants made up from 5% of the bank's annual pre-tax profits. The foundation has spent almost £200m on community centres, welfare organisations and arts groups, since its inception in 1997, many of whom also rely on its expertise. The government deal that guaranteed an annual sum of £15m for three years meant many recipients of the foundation were shielded from the full brunt of the Northern Rock crisis. Andy Beeforth, director of Cumbria Community Foundation, which receives significant funding from the NRF, said: "We've continued to receive grants and most recently £100,000 was put into our flood recovery appeal. Further discussions will need to be undertaken to renew funding- it's a very significant source for us." Sometimes trusts break links to a company despite original funding. The Barrow Cadbury Trust, a charitable foundation set up in 1920 by Barrow Cadbury and his wife Geraldine, provides grants to grassroots voluntary and community groups in deprived communities in the UK- particularly in Birmingham and the West Midlands. Funded through interest on an endowment from Cadbury, the trust was made a separate entity 90 years ago. In 2008-9 the trust awarded just over £2.5m in grants to 63 organisations and projects. The trust recently completed a two-year study into poverty in Birmingham, which found that 13 of the city's 40 council wards were still seriously deprived despite significant investment in the area. One issue tackled by the report was the impact of job losses from closures of manufacturing firms in the area – including giants HP Sauces and MG Rover. Any future job losses from the Kraft takeover are still uncertain but also if the company will cut, continue or extend Cadbury's charitable commitments. "The takeover by Kraft is not necessarily a bad thing," said Beeforth. "[They] may have more money to put in."