Comments on: Letter from Kurt Hoffman director of the Shell Foundation http://royaldutchshellplc.com/2008/04/18/letter-from-kurt-hoffman-director-of-the-shell-foundation/ News and information on Royal Dutch Shell Plc. Wed, 08 Feb 2012 11:12:30 +0000 hourly 1 http://wordpress.org/?v=3.0.3 By: Paddy Briggs http://royaldutchshellplc.com/2008/04/18/letter-from-kurt-hoffman-director-of-the-shell-foundation/comment-page-1/#comment-110737 Paddy Briggs Fri, 18 Apr 2008 09:22:36 +0000 http://royaldutchshellplc.com/2008/04/18/letter-from-kurt-hoffman-director-of-the-shell-foundation/#comment-110737 The “Shell Foundation” is a classic example of how modern corporations seek to create a halo effect around their global brands implying a high degree of altruism exists, whilst in reality making the absolute minimum amounts of funding available. Shell’s rhetoric, exemplified by Mr Hoffman’s self-congratulatory letter and the very name of the initiative (suggesting something analogous with genuinely big charitable enterprises like the Ford Foundation or the Gates Foundation) is misleading in the extreme. The Shell Foundation was launched with deliberately headline catching numbers implying a $250 commitment. In reality this was a capital set-aside which made little or no impact on Shell’s Balance sheet or P&L account. In fact the annual expenditure of the Foundation is a paltry $16million. To put this in perspective it is roughly equivalent to what Shell CEO Jeroen van der Veer pays himself every eighteen months! It would be churlish not to welcome the existence of the “Shell Foundation” and there is no doubt that what it does in the way of grants and facilitating services is valuable – but it is very small indeed. Let’s place this tiny initiative in context. Hoffman says that “governments and charities have failed for decades to deliver, particularly in the developing world, where the delivery of aid has an atrocious record.” He then implies that business initiatives like his Foundation are better placed to help than these traditional players - a curious claim. UNICEF which has a noble history of helping the world’s children, spends around $1.6 billion dollars every year – one hundred times the Shell Foundation’s total expenditure. The British Government has an overseas aid budget of nearly $5 billion every year. Whilst nobody would claim that every dollar spent by charities or governments is well spent the very scale of their contribution shows how insignificant the Shell Foundation’s activities are. The Gates Foundation spends around $1.6 billion every year and the Ford Foundation about $260 million. These enterprises are far more significant examples of what successful businesses can do than Shell’s similarly named but in all other respects quite dissimilar so-called “Foundation”. Shell’s profits in the last year were $27 billion - so the Shell Foundation’s $16 million expenditure was .06% of this figure! Shell is not alone amongst multinational corporations in seeking to create reputational advantage without really spending any seriously big money. But the sheer size of Shell’s business, and their huge financial resources and trading performance, surely requires that if they really do seek to be seen as offering “some fresh, inherently efficient and potentially very effective thinking to find new solutions to old problems” (as Mr Hoffman claims) then they need to make a far, far greater financial commitment than at present. The “Shell Foundation” is a classic example of how modern corporations seek to create a halo effect around their global brands implying a high degree of altruism exists, whilst in reality making the absolute minimum amounts of funding available. Shell’s rhetoric, exemplified by Mr Hoffman’s self-congratulatory letter and the very name of the initiative (suggesting something analogous with genuinely big charitable enterprises like the Ford Foundation or the Gates Foundation) is misleading in the extreme.

The Shell Foundation was launched with deliberately headline catching numbers implying a $250 commitment. In reality this was a capital set-aside which made little or no impact on Shell’s Balance sheet or P&L account. In fact the annual expenditure of the Foundation is a paltry $16million. To put this in perspective it is roughly equivalent to what Shell CEO Jeroen van der Veer pays himself every eighteen months!

It would be churlish not to welcome the existence of the “Shell Foundation” and there is no doubt that what it does in the way of grants and facilitating services is valuable – but it is very small indeed. Let’s place this tiny initiative in context. Hoffman says that “governments and charities have failed for decades to deliver, particularly in the developing world, where the delivery of aid has an atrocious record.” He then implies that business initiatives like his Foundation are better placed to help than these traditional players – a curious claim. UNICEF which has a noble history of helping the world’s children, spends around $1.6 billion dollars every year – one hundred times the Shell Foundation’s total expenditure. The British Government has an overseas aid budget of nearly $5 billion every year. Whilst nobody would claim that every dollar spent by charities or governments is well spent the very scale of their contribution shows how insignificant the Shell Foundation’s activities are.

The Gates Foundation spends around $1.6 billion every year and the Ford Foundation about $260 million. These enterprises are far more significant examples of what successful businesses can do than Shell’s similarly named but in all other respects quite dissimilar so-called “Foundation”. Shell’s profits in the last year were $27 billion – so the Shell Foundation’s $16 million expenditure was .06% of this figure!

Shell is not alone amongst multinational corporations in seeking to create reputational advantage without really spending any seriously big money. But the sheer size of Shell’s business, and their huge financial resources and trading performance, surely requires that if they really do seek to be seen as offering “some fresh, inherently efficient and potentially very effective thinking to find new solutions to old problems” (as Mr Hoffman claims) then they need to make a far, far greater financial commitment than at present.

]]>