While the total assets of major public interest foundations affiliated with leading conglomerates in Korea increased by more than 3.6 trillion won over the past four years, the expenses for public interest projects grew by only 1.2 trillion won. Compared to the pace of asset growth, the scale of public interest projects expanded at a much slower rate. The proportion of related company stocks within the foundations' assets, as well as the number of affiliated companies, also showed an upward trend. This has led to criticism that these foundations have focused more on expanding their size rather than increasing their public interest activities.

According to a comprehensive review by Asia Economy of financial statements submitted to the National Tax Service by 41 public interest foundations affiliated with Korea's top 30 conglomerates, their total assets as of last year amounted to 18.2988 trillion won. This figure has increased every year, rising by more than 3.6 trillion won compared to 2019. This growth is more than three times the increase in distribution expenses, which rose by 1.1953 trillion won during the same period. Distribution expenses refer to costs incurred for public interest projects, such as scholarships and grants directly provided to beneficiaries or beneficiary organizations.

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In some cases, the growth of distribution expenses not only slowed but actually decreased. For example, DL Group’s Daelim Sooam Scholarship and Culture Foundation saw its total assets increase from 24.3 billion won to 29.3 billion won (a 1.2-fold increase) from 2019 to 2023, but its expenses for public interest projects shrank from 684.61 million won to 354.44 million won, nearly halving. In contrast, its surplus grew 1.6 times to 8.2 billion won as of last year.

Similarly, POSCO Education Foundation (-46.6%), Hanjin Group’s Ilwoo Foundation (-31.8%), and CJ Nanum Foundation (-29.3%) also experienced relatively large decreases in distribution expenses. For SM Group’s Phil Medical Foundation, the expenses for public interest projects were recorded as ‘0’ every year from 2019 to 2023. Even if the decrease in distribution expenses does not directly equate to a decline in public interest activities, the continued downward trend is seen as significant.

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Public interest foundations of the top 30 conglomerates have also increased their holdings of affiliate shares, raising the proportion of stocks in their assets. This has led to criticism that these foundations are being used indirectly in the governance structure of conglomerates. The controlling families receive tax benefits when establishing these foundations, take positions such as chairperson, and exert influence, or the shares held by the foundations flow into companies funded by the second generation of the controlling family. In fact, among the 41 public interest foundations affiliated with the top 30 conglomerates, the owner families served as chairperson or director in 15 cases.

Stocks accounted for 38.09% of the total assets of the 41 public interest foundations affiliated with the top 30 conglomerates. This is about five times higher than the average stock asset ratio of all public interest foundations in Korea. Most of these shares were those of affiliated companies. Of the 219 companies in which the 41 foundations held shares, 107 (48.9%) were related companies such as affiliates. While this is less than half in terms of the number of companies, it accounted for an overwhelming portion in terms of asset value, with affiliate shares making up over 90% of the total stock assets.

Among public interest foundations affiliated with the top 30 conglomerates, the Samra Hope Foundation of SM Group had the highest proportion of affiliate shares in its total assets. It held an 18.87% stake in Samra, the core affiliate in the group’s governance structure, 8.71% in Dong-Ah Construction Industry, and 3.91% in SM Steel. The chairperson is Woo Yeona, the eldest daughter of SM Group Chairman Woo Ohyun and CEO of Samra Farm.

Samsung Welfare Foundation of Samsung Group also had affiliate shares accounting for 90.36% of its total assets. As of the end of last year, the foundation held stakes in Samsung SDI (0.25%), Samsung C&T (0.04%), Samsung Electronics (0.08%), and Samsung Fire & Marine Insurance (0.36%), with the total value of affiliate shares reaching 487.6 billion won at that time. The chairperson of the foundation is Lee Seo-hyun, president of Samsung C&T. Other foundations with high affiliate stock asset ratios include Kakao Brian Impact (79.64%), Hanjin Group’s Jungseok Logistics Academic Foundation (79.5%), Daelim Cultural Foundation (74.35%), and CJ Nanum Foundation (70.85%).

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Meanwhile, although the proportion of stocks in assets has increased, donations from affiliates have decreased. According to corporate analysis firm Leaders Index, donations received by public interest foundations affiliated with the top 30 conglomerates fell by 10.1% from 251.8 billion won in 2017 to 226.3 billion won last year. Donations from affiliates decreased even more sharply, dropping by 29.4% from 239.3 billion won to 168.8 billion won during the same period. As a result, the proportion of affiliate donations out of total donations fell from 95.0% in 2017 to 74.6% last year.

When affiliate shares are contributed to a foundation, the controlling shareholder’s influence can ultimately be strengthened. This is because, even if voting rights exist, they are unlikely to go against the group’s overall interests, and even if voting rights are restricted, the controlling shareholder’s influence can grow. Lee Changmin, professor of business administration at Hanyang University, pointed out, "Originally, receiving contributions in the form of stocks means either selling those shares to use as funds or using dividend income to supplement the budget," adding, "If the assets such as stocks are simply left untouched without being used for these purposes, the opportunity cost is significant and it is inefficient."