60 years of the Kone Foundation

The first part discussed Heikki Herlin’s plans to establish his own foundation.  Herlin’s reasons for establishing a foundation remain unclear. Being interested in culture, he undoubtedly wanted to contribute to Finnish culture; on the other hand, his religious awakening in the late 1930s and his improvements to the wellbeing of employees at Kone Corporation are suggestive of someone who believed in the power of a helping hand. In practice, company foundations were also established as a business decision, based on the need to retain ownership and control of a company within a family.  Perhaps the reasons were all of the above, when Heikki and Pekka Herlin signed Kone Foundation’s charter of foundation on 7 December 1956.

Allan Tiitta, a researcher of foundations, has classified the foundations established before the 1960s into groups based on their property administration. The largest group, which included Kone Foundation, consisted of foundations given control over all of their assets upon their establishment and which operated on this basis. Foundations had various regulations regarding how their assets were to be managed and funds invested.

At Kone Foundation, these stipulations were ultimately very simple. The principal sum was to remain undiminished and returns were to be transferred to a general-purpose fund, unless the Board decided they should be transferred to the principal.  At least half of what was transferred to the general-purpose fund had to be distributed as grants and allowances each year.

This text provides an overall picture of Kone Foundation’s grant activities and delves into the background of the foundation’s assets. The sources used include minutes of Board meetings, the financial statements of the foundation, lists of approved grants, as well as interviews with Ilona Herlin, Hanna Nurminen and Anna Talasniemi.

Kone Foundation has a colourful history, full of fascinating details as well as major changes. Some of these are highlighted below.

Foundation sector in the early 1970s

In 1972, the Finnish Government appointed a committee to investigate the role of foundations in Finland. Foundations were classified and catalogued in several ways by the committee’s report, which also provides a good indication of how Kone Foundation compared to other Finnish foundations in the early 1970s.

At that time, the foundation sector in Finland was highly diverse. Over 600 foundations were classified as investment foundations; these included Kone Foundation. Although Kone Foundation was wealthier than average within this sector, it still did not make the list of the 120 wealthiest foundations. In the early 1970s, the wealthiest cultural and scientific foundations in Finland were the Sigrid Juselius Foundation, Jenny and Antti Wihuri Foundation and Finnish Cultural Foundation.  Each of these awarded well over one million Finnish markka in grants in 1971.  In the same year, Kone Foundation awarded around 95,000 Finnish markka.

Kone Foundation differed from most cultural and scientific foundations since its assets were built around the ownership of a single company. At that time, very few foundations owned more than 1% of the share capital of any company; it was more common to have diversified ownership across various businesses. Another deviation from the general pattern lay in the Kone Foundation’s practice of distributing a large portion of the return on its capital in its grants.

In a foundation of that size, an average of 27% of return on capital was spent on grants while the rest was re-invested, transferred to working capital, or a relatively large portion was used for administrative expenses. Kone Foundation had almost no administrative expenses because the foundation had minimal human resources and many small costs were probably allocated to Kone Corporation. In turn, the distributed portion of return on capital was much higher than for operators in the same size category in general – ranging from 50% to almost 100%, depending on the annual situation. Although the foundation was small and the old boy network was still operating in the 1970s, the portion of returns awarded as grants at Kone Foundation shows how seriously grant activities were taken there.

The small scale of its activities was also reflected in the fact that Kone Foundation did not feature in an extensive article by the Talouselämä magazine on the above-mentioned committee report. The report itself provided a very general picture of Kone Foundation, whose main areas were said to be technical and business management research. Was the foundation’s focus really on technology and business economics?

Activities in the first decades

When the grants awarded by Kone Foundation are compared over five-year periods, it is becomes clear that, in practice, the humanities and cultural research received most support, although technical and business research were also funded.


The total sum was small and distributed between eight recipients. Scholarships were awarded to four students at technical institutions, and author Erkki Vala received support for his writing. In addition, money was granted for translation activities and the foundation’s key project in the 1960s, research carried out on the Sursill family.


In 1970, 21 grants were awarded. These ranged from scholarships worth 700 Finnish markka, to a project grant of 43,000 Finnish markka awarded to Pentti Malaska, Professor of Statistics and Mathematics at the Turku School of Economics, for structural research on terminal devices for business applications. Support was also granted for genealogy and various studies in the fields of technology and business.


In 1975, grants were awarded to fewer than ten recipients. At the time, the largest project was Codex Aboensis, which received almost 40% of the annual grant money. Another major project, which received 30% of the grant money, was Heikki Herlin’s family history of his father, Harald Herlin. In addition to these large projects, support was awarded for a few technological studies, as well as to the Faculty of Medicine at the University of Helsinki.

The available source materials indicate that Kone Foundation has always taken responsibility for its grant recipients. This was evident, for example, in the aftermath of the tax inspection of 1972.

In the summer of 1972, the foundation’s tax affairs were inspected, resulting in grant recipients being subject to a residual tax. The inspectors had interpreted the grants as taxable, despite tax exemption being the cornerstone of the Finnish grant system by then. The foundation lodged an appeal with the administrative court, while Herlins and Vilkuna decided that the foundation would provide recipients subject to residual tax with interest-free loans. Those loans would only fall due after the tax issue had been resolved and once the form of grants awarded had been clarified. The dispute between the foundation and tax authorities was eventually resolved, and tax exemption for the Kone Foundation’s grants, i.e the foundation’s non-profit status, was confirmed. However, it was decided that grant recipients would be informed that the foundation would not accept liability for any legal interpretations by the tax authorities.


A change in practices became clear in 1980, compared to the grants awarded in the 1970s. The largest funding recipient in that year was a project titled “Suomalainen työ” (Finnish work) by a team led by Professor Erik Allardt. Other funding was mainly granted to research on society, culture and history. On this occasion, only a few research grants were awarded for economics and technology projects.

The trend, by which technology and business grants gave way to systematic funding of the social sciences and humanities, was already visible from the mid-1970s, when grants were awarded for ventures such as cataloguing the Nordenskiöld map collection, the acquisition of a papyrus collection, genealogy and research on Pietari Päivärinta, in addition to the Codex facsimile project.  In practice, only in 1971 was more money than in later years granted for research in the fields of technology and business.


Various sources show that major changes began to occur in the foundation’s operations in the 1990s, although such activities remained small in scale. Environmental research now received support and there was a desire to shift the focus to a cross-disciplinary approach and projects. A shift from doctoral theses to post doc research also began in 1996.  In 1999, a major project was planned on investigating the origin, institutionalisation and codification of Finnish literary language. The proposal for this project came from the foundation.

A story of a strong balance sheet

Researcher Matti Virén investigated the grants and donations awarded by foundations in the 2000s. Very few new scientific and cultural foundations have been established in Finland this century and, according to Virén, key changes in the foundation sector included the “revival” of Kone Foundation.  In a comparison of balance sheet totals compiled by Virén in 2012, with its market value of EUR 1.5 billion Kone Foundation was the largest in Finland. Of course, this analysis is only an estimate because the market value of Holding Manutas, which is owned by the foundation, cannot be precisely determined.

The finances of Kone Foundation experienced a huge upturn compared to the situation 40 years ago.  In the early 1970s, Kone Foundation did not even make the list of the hundred wealthiest foundations; in terms of grants awarded, it lagged far behind the largest cultural and scientific foundations. Where did all the foundation’s funds come from?

The root of the Kone Foundation’s property were the Kone shares donated in 1956 – 2,000 by Heikki Herlin and 20 by Pekka Herlin. The foundation’s capital remained relatively stable until the mid-1970s. Of course, although the available funds were swelled by the return on shares, it took a capital restructuring in 1975 to significantly increase the foundation’s assets. Kone subscription rights were sold and free A and B shares, 4,545 from both series, were registered on behalf of the foundation. This generated the first additional capital for Kone Foundation while almost doubling the foundation’s balance sheet. A similar sale and swap of shares in 1979 quadrupled the foundation’s additional capital and boosted the balance sheet to six million Finnish markka.

Pekka Herlin engaged in even more sales and swaps of stock between Kone Corporation and the foundation throughout the 1980s. For example, the foundation acquired Kone shares worth more than eight million Finnish markka from Kymi Strömberg Oy. Trading also took place through the company, Security Trading, owned by Pekka Herlin. A more in-depth analysis would be required to determine whether Herlin’s share transactions between the foundation and the limited company ultimately served the interests of Kone Corporation more than Kone Foundation. However, via these transfers during the 1980s Pekka Herlin was no longer investing in Kone Foundation, in the manner of the capital added in 1979.

One change to the assets of the foundation, which was considerably larger than the activities of the 1970s, occurred in 1989 when Hanna Nurminen signed her share of the stock, which Pekka Herlin had bequeathed to his children, to Kone Foundation. This tripled the balance sheet to 27 million Finnish markka.  In practice, this donation constituted a large part of the foundation’s growth and property in the 2000s, particularly when taken together with the shares of the company Holding Manutas.

Pekka Herlin continued Kone share swaps in the 1990s. In 1992, for example, 31,500 A shares were swapped for B shares, increasing the foundation’s capital by nearly ten million Finnish markka.  By these means, Kone Foundation had accumulated a balance sheet total of over 70 million Finnish markka and a large slice of the ownership of Kone by the end of the 1990s.

Now, in the 2010s, most of Kone Foundation’s assets are based on shares in Kone Corporation and Cargotec Corporation. Among these assets, the 49% ownership in Holding Manutas Oy is of particular importance; this means an 8% share of ownership in Kone in practice. In sum, Kone Foundation is a key shareholder in Kone Corporation, with a total share of around 11%.  To demonstrate this, during the distribution of estate after the death of Pekka Herlin, a shareholder agreement was prepared between Kone Foundation and the Chairman of the Board of Kone, Antti Herlin, regarding the Kone Foundation’s right to nominate a candidate for Kone Corporation’s Board of Directors. Sirpa Pietikäinen, a member of the Board since 2006, was originally one of the candidates nominated by Kone Foundation. Although Pietikäinen is, of course, a representative of all shareholders, Hanna Nurminen feels that this is a key way of having an impact via Kone Foundation’s investment activities. She points out that, alongside ownerships in Kone and Cargotec, the foundation has begun to systematically invest the surplus from its returns in new activities. Any such surplus was previously invested in Kone without considering other options.

Nurminen emphasises that Ilona Herlin has played a major role in property management and taking charge of the foundation’s financial affairs since the death of Pekka Herlin. As mentioned in the previous section of this text, Hanna Nurminen’s early days as the Chair of the foundation’s Board were not easy. The outgoing Chair, Pekka Herlin, had wanted to bring Antti Herlin, who inherited the majority of Kone shares, onto the foundation’s Board of Directors, perhaps as part of the distribution of estate he was arranging. After all, Kone Foundation owned a large portfolio of Kone shares.  In practice, however, Pekka Herlin was no longer physically or otherwise capable of making such an arrangement, since the foundation was already moving into the new millenium under the leadership of Hanna Nurminen and Ilona Herlin.

Change in activities

The previous sections discussed the years of growth of Kone Foundation in terms of its grant-awarding activities. The success of the Kone Corporation swelled the foundation’s profits, particularly after 2005. However, pressure for change, in terms of both the funding recipients and the foundation’s operational activities, was created by the need to identify high quality applications and the opportunity to increase the amount of money distributed.

The current Head of Administration, Hilkka Salonen, was still the only paid employee well into the 2000s; even smaller foundations tended to have several employees managing the allocation of grants and other operations.  Operational development was required due to the increase in the number of applications, the desire to diversify the foundation’s activities, and new areas receiving support – such as the arts and non-fiction work.  Anna Talasniemi was hired in 2007, initially as a part-time research secretary. Later, as the foundation’s operations were further expanded, Kalle Korhonen was hired as Head of Funding Affairs, while Talasniemi became the foundation’s Executive Director in addition to managing issues related to the arts and culture.  Today, the foundation employes several people to manage its finances, communications, customer service and application process.

The change was also reflected in the relationship with the media. In previous decades, very little, if anything, was written about Kone Foundation. Even when a grant awarded by the foundation drew media attention, Kone Corporation was often mentioned as the benefactor. This was still the case in 1985, for example, when Helsingin Sanomat covered the funding project for the contemporary art museum under the headline “Kone Oy rahoittaa modernin taiteen museon alkuvaiheet” (Kone Corporation funds the initial stages of the modern art museum).  Ilona Herlin explains that only in recent years has the media taken note of the activities of foundations in general, particularly positive news. She feels that Kone Foundation has been given a fair amount of column space. The reason for this may be its funding of the arts and culture, since this is perhaps easier to write about than science. Kone Foundation retains a fairly low profile and has spent very little on advertising, for example. Investments have only been made in communications in recent years, as demonstrated by the elevation of Laura Sahamies, former Administrative Secretary, to Communications Coordinator.

Ilona Herlin points out that a foundation should not really place itself, but its supported fields and researchers, in the limelight. She never tires of emphasising, for example, that Finland has some wonderful figures in the humanities. Like other researchers supported by the foundation, they do not receive the attention they deserve. That is the key focus of the foundation’s communications.

Universities and foundations

One debate, which has continued for years at Kone Foundation, concerns support for postgraduate studies.  In the 1990s, the focus was still on supporting doctoral theses, although the foundation’s Board decided to shift the focus towards postdoctoral research at the end of the decade. At some point in the 2000s, the option of ending support for doctoral theses was even discussed. This was not done, but the focus was still shifted to supporting postdoctoral research.

Ilona Herlin believes that a foundation’s image is relevant to grant recipients, who may even prefer identifying with a foundation they view as a reliable partner to associating themselves with a university. The position of postgraduate students also highlights an interesting connection and tension between foundations and universities. After all, foundations operate as they wish, free of university strategies, and can distribute money in accordance with their own priorities. On the other hand, universities may propose changes to the priorities of foundations. As funding for graduate schools continues to decrease, universities have wanted foundations to direct support back to doctoral studies. Herlin suggests that universities should recognise the positive aspects of what grant-funded researchers do, since their research and participation in the working community form an important part of a university’s activities, in addition to which they bring money to the university through their publications.

She believes that a sufficiently concrete goal and clear vision are required in order to establish effective financial cooperation with universities. Still, a larger one-time grant can be a problem if a university transfers its own funding elsewhere as a result. Kone Foundation has mainly funded projects and individual researchers, rather than continuous university activities or professorships. An exception is the recent tenure track professorship in the study of native peoples; this new initiative was considered a sufficiently impressive funding recipient.

What’s next?

Anna Talasniemi, Executive Director of the Kone Foundation, believes that the foundation’s future new premises at Lauttasaari Manor, which will be renovated by 2018, may lead to the creation of something entirely new. What that new initiative is could relate to bringing art and research together, as well as internationalisation. A major change will be the foundation leaving its current “ivory tower” above the rooftops of Eira to move close to Lauttasaari metro station, perhaps becoming part of the neighbourhood’s everyday life. When asked about the future of  Kone Foundation, in a nutshell Talasniemi repeats what was said in interviews with Hanna Nurminen and Ilona Herlin: there will be no return to the old approach of waiting for applications and then granting money. There is a need to be more active and come up with different and new ways of interacting with artists and researchers.

When I ask Hanna Nurminen about the future, she says that Kone Foundation will continue to support both the research and arts. The main priorities cannot be changed overnight, because the foundation has major responsibility for the continuity of funding in the research and arts. Nurminen herself would eventually like to hand over a foundation that is light and flexible. She dreams of an organisation that is not like a great ship in which changing direction is slow and laborious. When asked about whether Kone Foundation will continue to be led by a family, Nurminen suggests that it has finally become a professional foundation which just happens to have the tradition of a family organisation. This tradition has its own value, but is not an end in itself, Nurminen emphasises.

What is special about Kone Foundation is its people: its skilled and committed personnel, Board of Directors, the experts who assess the applications, and the researchers and artists whose work Kone Foundation has and will continue to enable. In the opinion of Executive Director Talasniemi, this network is the key issue “because it is people that we bring together”.

Read the previous parts

Author: Tarja Vikström, MA