A Gloomy Giving Outlook

Many businesses expect donations to remain flat this year

Many of the nation’s largest companies expect their charitable giving to remain flat or decrease this year amid turmoil in the country’s housing and financial markets, according to a new Chronicle survey.

Of the 77 businesses that offered predictions for how much they would donate in 2008, 50 said their giving would remain the same as last year, 21 expected an increase, and six said their donations would drop.

That gloomy outlook comes after a year of strong growth. Cash donations from some of the largest American businesses rose by 8 percent in 2007 to $3.8-billion, according to the Chronicle study, compared with 6 percent in 2006.

But some corporate leaders said they may be forced to scale back their giving this year and next because of falling profits.

Wachovia, in Charlotte, N.C., gave $104.6-million in 2007, but that figure may decrease this year, said Tami Simmons, director of corporate philanthropy and environmental affairs.

The bank plans to honor commitments to charities that work in education, the arts, and other causes the company supports. But it has put on hold until at least the end of 2009 new projects it had been investigating, such as giving abroad and to historically black colleges in the United States.

“We’re looking at spending less in the philanthropic space, and that’s directly a result of our decreased earnings for the year,” she said.

To compensate for cutbacks in cash giving, the company is considering offering business training and other non-cash assistance to nonprofit groups.

Selective Approach

Like Wachovia, many companies said they would try to maintain support to charities they had financed for years but that they would be more selective about building relationships with first-time grantees.

“Taking on anything new will be more of a challenge because of the economy,” said Sharon Bateman, operating vice president of corporate giving at Macy’s, in Cincinnati, which awarded $20.7-million from its corporate foundation in 2007.

Despite the struggling economy, experts in corporate philanthropy said the cutbacks would most likely be temporary. “Corporate giving has weathered economic turbulence year over year,” said Mark Shamley, president of the Association of Corporate Contribution Professionals, in Mt. Pleasant, S.C.

Most of the companies surveyed said the economic downturn hasn’t prompted them to give more to social-service charities and other organizations that focus on the needy. But two food companies — Tyson Foods, in Springdale, Ark., and Kroger Company, in Cincinnati — said they were giving more donations of food to anti-hunger charities.

And a few banks are awarding money to ameliorate the housing crisis. In May, Bank of America, in Charlotte, N.C., announced $20-million in grants and $15-million in loans and other support to strengthen charities that provide low-cost housing and help people who face foreclosure. Washington Mutual, in Seattle, pledged $5-million to charities for similar efforts.

“Supporting neighborhoods has always been a mission of the foundation, but given the enormity of this crisis, we’re stepping back and putting together a portfolio to really help people at the grass-roots and national level with this mortgage crisis,” said Kerry H. Sullivan, Bank of America’s national philanthropic executive.

The grants come as many banks are facing criticism and even lawsuits for their lending practices. Rick Cohen, national correspondent for The Nonprofit Quarterly magazine and a veteran advocate for groups that represent the needy, said he thinks the banks could help more by embracing an industrywide commitment to end lending practices that led to the nation’s financial troubles.

Bang for the Buck

Many companies say they are stepping up their efforts to promote efficiency among charities, and to prod organizations to demonstrate results.

Northwestern Mutual Life Insurance Company, which gave nearly $20-million in 2007, developed a grant-making program last year for the company’s 150th anniversary to reward collaboration among nonprofit groups. The Boys and Girls Clubs of Greater Milwaukee and the city’s public school system, for example, received a grant for their efforts to introduce charity-run after-school programs at public schools.

“We wanted to bring information to nonprofit organizations about the ways they can partner,” said Gil Llanas, director of foundation and community relations with the Milwaukee insurance business. “There are duplications of effort, and I don’t know if we’ll be able to support the continuing rise in nonprofits.”

Companies are also seeking to make their own giving more efficient and tie it closer to their financial goals.

Dell, the Round Rock, Tex., computer company, which has traditionally supported domestic charities that help children, plans to announce later this month an effort to integrate its giving more effectively into its business operations. The company, which gave out $15.2-million last year, will focus on increasing access to technology, particularly in foreign countries where Dell is expanding.

New Giving

Despite the slow economy, a few companies are increasing their giving this year. Goldman Sachs Group, the New York financial-management firm that made record profits last year, announced in March that it was committing $100-million over five years to provide business education to women in developing countries.

That effort is part of a growing emphasis on philanthropy at Goldman Sachs, which gave $70-million to charities last year. The company recently created a donor-advised fund — which allows people to donate cash, stock, or other assets to a special account, claim a tax deduction, and determine how the money should be spent — for its top executives, with the goal of raising $1-billion. (Officials declined to say how much has been raised so far.)

Goldman is also trying to get more of its employees involved in philanthropy. The firm doubled, to $20,000, the amount of charitable giving by staff members that it will match. And it enlisted 700 employees to serve as mentors to women from developing countries who are participating in the firm’s program.

“Over the last several years people in the firm have really come to expect that it be engaged in a wide range of philanthropic activities,” said Dina H. Powell, global head of corporate engagement. “Our emphasis on philanthropy and public service has played a key role in attracting and retaining talented people.”

Among other findings from the survey:

• Businesses provided 1.4 percent of corporate profits to charity last year, compared with 0.9 percent in 2006. That is largely because of the decline in earnings some companies recorded in 2007.
• Overseas giving continues to grow rapidly as businesses enter new markets abroad. Forty-one companies gave $2.5-billion in cash and products to charities overseas last year, a 24-percent jump from 2006. (For more on companies’ international philanthropy, see Page 7.)
• Many companies are trying to strengthen their volunteer programs. Thirty-three businesses in the survey said they had made changes to their volunteer programs within the past year.
• More corporations said they are embracing environmentally friendly practices and giving to environmental causes. Sixty-nine companies reported adopting green practices in the past year, and 34 said they had given more to environmental groups. For example, Coca-Cola Company, in Atlanta, started supporting efforts to provide people with safe drinking water and sanitation, and also began matching employee donations to environmental charities.

The Chronicle surveyed the 150 largest U.S. businesses, as ranked by Fortune magazine based on annual revenue. It received information from 85 of them.

In 2007, the computer software company Oracle gave the most, if both cash and products are counted ($2.1-billion). Pfizer was the next-largest donor of cash and products, providing $1.8-billion, followed by Merck & Company ($828-million), Johnson and Johnson ($497-million), and Microsoft Corporation ($432-million).

Wal-Mart was the leader among cash contributors, giving $301-million, followed by Bank of America ($211-million), Exxon Mobil Corporation ($173-million), and Citigroup ($146-million).

Employee Volunteerism

Few companies in the survey said they had seen giving by their employees who participate in matching-gift programs decrease.

“We were actually surprised to see a little uptick in our employee giving, particularly around education,” said Kristin Hilf, vice president of community relations at Raytheon, in Waltham, Mass., which gave out $11.5-million in 2007 and expects to give roughly the same this year. “Even though our company isn’t feeling a big impact because of the economy, people are.”

Meanwhile, many companies were taking steps to get employees more engaged in giving and volunteering. Businesses said they were promoting volunteer opportunities on their internal Web sites; increasing the amount of paid time off and money they match for employees’ volunteer efforts; and promoting volunteerism among their employees who work overseas.

The Chronicle survey found that, in particular, the popularity of “skills-based volunteering,” or the pairing of employees’ professional skills with the needs of charities, continues to grow.

Target, a Minneapolis retail company that donated $169-million in 2007, formalized a pro-bono program last year that enables its workers to contribute their specialized skills to charitable programs. Employees with expertise in architectural-design and construction backgrounds help revamp public libraries through a new pilot program.

Mr. Shamley, of the Association of Corporate Contribution Professionals, said consumers are often more impressed with such efforts than with cash donations.

“There’s an expectation that companies write those checks, but that doesn’t necessarily make you a good corporate citizen,” he said.

Corporations in the survey also said they are continuing to seek ways to bring all their resources to bear on social problems in which they have expertise, and to ensure their philanthropy bolsters their business goals. Sometimes, that has meant a blurring of the lines between the philanthropic and business arms of companies.

Microsoft, in Seattle, began a new effort last year that uses the expertise of people who work on its philanthropic efforts, and at international-development charities, to help develop new technology that can aid the world’s poorest people.

The effort is a business venture, not a philanthropic one, but Akhtar Badshah, the Seattle company’s senior director of community affairs, said it is an example of how integrating business and philanthropic resources can effect greater long-term change.

“Our approach goes beyond just philanthropic donations and is much more about investments in the community,” he said. “We’re bringing in our cash resources, our product resources, and our mind-share resources in a way that they’re not seen as three different parallel strategies but as a comprehensive, connected effort.”

Chevron, the San Ramon, Calif., energy giant, has long promoted efforts to fight HIV/AIDS among its employees in Africa and Asia. In December, the company committed $30-million to the Global Fund to Fight AIDS, Tuberculosis and Malaria, to help the Geneva nonprofit organization tackle diseases in African and Asian countries where Chevron works.

In addition to the money, Chevron is lending medical professionals who have served the company’s employees and their families. “These major health issues in communities where we do business affect our work force, their families, and undermines economic and social development,” said Matt Lonner, manager of global partnerships and programs at Chevron, which awarded a total of $122-million last year. “It’s an easy decision for us.”

More charities need to recognize that corporations are seeking partnerships that go beyond the traditional grant maker-grantee role, said Joelle Tanguy, senior vice president of global partnerships and programs at the Global Business Coalition on HIV/AIDS, Tuberculosis, and Malaria, in New York.

“Too often charities are approaching corporations simply for their philanthropy and giving the impression that they’re just cash cows as opposed to real partners,” she said. “That’s not a problem in itself, but it’s a shortcoming of vision to sustain corporate interest over the long term. If you’re able to tap beyond the philanthropy office, you will most likely have a much more significant impact.”

Maria Di Mento and Candie Jones contributed to this article.