British Petroleum (BP) is one of the world’s leading integrated oil and gas companies, and it is the third largest energy company and the fourth largest company in the world. It provides customers with energy for heat and light, fuel for transportation, lubricants to support the performance of engines and petrochemicals products to diversify daily use items. BP was founded in 1908 by William Knox D’Arcy to exploit oil discoveries in Iran. Nowadays key persons are Carl-Henric Svanberg (Chairman) and Bob Dudley (CEO).
The BP Foundation, Inc., established in 1952, is a private non-operating foundation and an independent charitable organization – separate from, but funded entirety by, BP – that exists for the public benefit. It supports philanthropic activities around the world, helps communities by supporting STEM (Science, Technology, Engineering, and Mathematics) education programs across America, economic development, and by drawing attention to environmental issues.
First of all, BP Foundation is widely known for contribution to the development of STEM educations. It has supported several initiatives in Illinois by donating $5 million to the Museum of Science and Industry; $400,000 to the University of Chicago Collegiate Scholars Math & Science Initiative; $100,000 to the Illinois Mathematics and Science Academy Energy Center; and $135,000 to the Chicago State University. Moreover, the BP Foundation supports organizations such as the National Action Council for Minorities in Engineering, the aim of which is to showcase talents of American Indians, Hispanics and African Americans. BP’s initiative of donating $1 million every three-year has supported 200 engineering scholarships for students, who attend one of NACME’s 51 partner universities. In general, since 2012 BP Foundation has donated around $65 million for education, that shows a desire to expand economic opportunity, develop a highly skilled workforce and inspire the next generation of innovators.
In 2005, BP united with the Association of Science- Technology Centers in order to launch the Energy Education Initiative, objective of which is to train and equip STEM teachers. Besides, it joined the Million Women Mentors project to help young women to learn more about STEM careers.
Second, BP Foundation has Employee Matching Program, that enables BP employees to match fund from BP to eligible charitable organizations and to help support the community where they work. Since 2006, the BF Foundation has matched over $82 million on behalf of its employees to charitable organizations worldwide. In 2014 employees volunteered about 207,866 hours and raised around $1.6 million by taking part in sponsored pledge events. In appreciation of their efforts, the BP Foundation additionally provided matching grants in the total amount of $10.4 million to educational institutions and charitable organizations.
Also, BP supports military men both during and after their service. In 2005, BP was rewarded with the Secretary of Defense Employer Support Freedom Award, that the US government gives to employers for their support of workers serving in the Guard or the Reserve. Also, it helps veterans return to civilian life by, for example, supporting adaptive sports such as Paralympic programs and the Warrior Games, that help disabled or injured veterans while they pass procedure of rehabilitation and reintegration.
To sum up, it must be said, that BP Foundation is one of the biggest supporters of programs designed to promote education through STEM, but at the same time it invests in economic development through job training, sustainable community projects and enterprise development; and the environment through projects that further the understanding of global environment issues.
Monetarily, the company is performing great. From its financial position, the company has many long-term assets, which are used by the company as a source of income especially when leasing as well as securities while borrowing loans which gives the company an advantage when it comes to loans for future. The long-term assets are known to increase in value as years proceed which places the company at a better place. Additionally, the company has short-term assets which includes revenue and short-term income, which is used by company to provide for most of its expenditures as it, acts as a source of income.
From the given information, it indicates that organization has a positive liquidity. The assets of the organization exceed its liabilities, which explains the organization can meet its financial obligations without much pressure. There are the total assets of about 11 million while there are about 7 million of total liabilities which basically leads to the positive deficit of roughly 5 million.
The company has short term liabilities, which explains that the company can easily settle them down and cannot lead to the closure of the business. The company also has a lot of sales which shows that the company is performing well in the market. In addition, the company has gross sales of assets which is worth more than 44 million dollars which specifies that the company is better placed and have a lot of disposal capital. The contributions, grants and gifts do not contribute a lot to the company source of income and capital like the company assets which are sold. When comparing its expenses and income, we noticed that the company doesn’t incur a lot of expense when it comes to hiring of services as well as equipment’s used in the office which basically reduces the company liabilities as well as expense.
After the financial year, the net assets are greater than net liabilities which shows that the company performed well at the end of fiscal year. The current ratio of the company is greater on the assets side when compared to the liabilities side. The company also has a higher book value of more than 14 billion dollars, which they can use for attracting investors since it indicates that the company is performing better and not in debt. The company also has a higher fair market value which shows that the company is performing well in market and that its products are considered among the best in the market which basically increase its market value.
The company investments on the corporate stock is higher both in book value and the market price which illustrates that the company is performing good in the market and that its bonds are among the highly purchased in the market. However, the organization has some grants which are payable and are higher at the end of year as compared to the beginning of the year. This indicates that the company incurred some more expenses between the year which explains that the organizations will incur more expenses on paying the grants. The company lacks any deferred payments and mortgages to pay which reduces the amount of debts that they owe other companies. The business has other investments around $ 175,000, which indicates that the company source of income and revenue is high.
Funding of the Organization
British Petroleum Foundation is funded through a program called Employee Matching Program. The employees who are linked with this program called Employee Matching Program. The employees who are linked with this program are those working for British Petroleum Corporation. This company is one of the world’s biggest enthusiasm companies and it delivers energy products and services to people around the world.
In the employee matching program, a maximum amount of $ 5,000 or equivalent to local currency per employee for each calendar year that has been allocated. They also have the options that are well outlined on how each employee may choose to participate and use this fund. An annual budget from the BP foundation would be allocated to this fund. All employees of British Petroleum and any of its designated partners or exclusively owned subsidiaries are eligible to participate in the program. The recipient organizations must function on a “Not for a Profit Basis”. The organizations that are located in United States must be qualified for tax-exempt under Internal Revenue Service Code 501 (Gong, 2).
Fundamentally, British Petroleum Foundation has done countless things to the entire world and especially with touching many lives. The foundation has donated more than $ 218 million to community and enterprises in the United States. In 2015, BP foundation logged more than 55,000 hours of volunteering that raised approximately $6 million grants. Apart from above, the foundation also assists organizations such as National Action Council for Minorities in Engineering (NACME) which obtains to create an Engineering workforce. The foundation contributed $1 million to support 200 scholarships for students who are attending one of NACME’s universities.
British Petroleum foundation also provides financial support to natural disaster areas. In cooperation with local BP businesses, it contributed $125,000 to provide food and health services to those affected by floods in 2015. The foundation is dedicated to support worldwide organizations that meet the British Petroleum foundation donation approach which includes economic development, education and education, economic development and ecological programs. They do not accept unwanted offers but they do request reviews submitted by BP businesses around the world.
BP foundation has also partnered with sports and support social enterprises which began in September 2011 to create employment legacy from London 2012 Olympic games. The British Petroleum has also worked with social enterprises in East London and West London to provide training and knowledge to support projects to allow the enterprises grow in future. Therefore, we can conclude that British Petroleum Foundation has contributed to make the Earth the better place for everyone.
The BP foundation is also funded from three sources which includes contributions and grants received, interest on investments and profits from sale of assets (Form 990). The foremost source of funding in 2015 tax return is the grants of $ 5.7 million from BP America, Inc. In 2014, they received $ 209,713 from BP Products North America; from which $208,929 was a noncash transaction.
The second source of funding is the Interest on Investments. In 2015, the interest was less notable amount of $16,920, however in 2014, the interest was $ 95,338. There was decrease of interest income in 2015 because there were the sales of $44,613.321in 2014 which was initially obtained by the foundation. The third source of funding is profit from sale of assets. In 2015, it amounted to be $(4,651), however in 2014, the profit was $38,734. Therefore, in 2015, its contributions became negative of 0.08%, however the contribution was reported for 26.70% in 2014. The major source of funding is grants which was received from British Petroleum.
Issues facing the Foundation
Just like any other organization operation in the economy, BP foundation faces some issues in its day to day operations. The first one is financial challenges. BP foundation is exclusively reliant on its parental company. They do not receive any support from other government, private or public organizations. BP foundation is not able to encounter its operating and managerial expenditures from its own resources. There are many more people who need to be reached by the charitable works of BP foundation but finance remains a limiting factor. The foundation needs more funds to be able to extent its charitable services to every corner of the globe. It is therefore up to its management to generate ideas on how they will be able to raise these funds to smoothen their operations.
Another issue is operational level. The operations of the foundation revolve around dynamic sectors of the society like education particularly science, economic development and environmental issues. The organization contribution is mainly restricted for providing scholarships for education to its employees but not to community. Also, they are inhibited by the fact that they are suffering losses economically and the company is not in situation to make investments.
The foundation should set a lot of funds for research of new ways of doing things. This will enable those students who are under the foundation to be part of the new discoveries made every day. By doing that, the foundation will be able to leave back a legacy to the forth coming generations for being part of those people who contributed to the great innovations ever made in the globe.
Information about the Foundation
The information on the foundation is very limited. It needs extensive research for one to obtain the information about this foundation because of the nature of their work. They are doing charitable work and it is not always published in newspapers or covered by bloggers.
Because of the nature of this information, it needs to do a lot of research to access them. The website of British Petroleum has a very limited information about BP Foundation.
The websites like CNN and NASDAQ didn’t have any information regarding the financial statements. The other websites provided very limited information about the BP Foundation. The main information came from the BP Foundation’s “Form990” tax returns for 2014 and 2015. Other than that, it is very difficult to find the information regarding the BP Foundation.
Integration of BP Foundation
The foundation is integrated into British Petroleum Corporation by several levels. The foundation specially gives grants to STEM education, which basically follows the British Petroleum’s core values of safety and energy. Similarly, in case of when natural disaster occurs, the foundation gets help from BP to help those who got affected during the incident.
Another level is excise tax, which is based on investments income, which shows that statement regarding its activities and if the company controlled any entry or exit of any company in the market. Moreover, the company donations to any organization and other transactions outside the book value. The file also shows the credit payments and any other penalty the company was fined. The company through shares and taxes is tied with British Petroleum Corporation as well as the company assets.
Gong, Ning, and Bruce D. Grundy. “Charitable Fund-Raising – Matching Grants or Seed Money: An Application to Employee Matching Grant Schemes.” SSRN Electronic Journal (n.d.): n. pag. Web. 12 Mar. 2017.
“Employee Matching Fund.” BP Life Benefits (Core US Benefits) – Employee Matching Fund. N.p., n.d. Web. 12 Mar. 2017.
“BP Foundation.” Bp.com. N.p., n.d. Web. 12 Mar. 2017.