Big Companies Increase Gifts of Cash and Products by 20%, Study Finds

Many of the nation’s biggest companies increased their charitable donations by an average of 20 per cent last year, according to a new study by the Conference Board.

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Corporate Philanthropy, 1997

But they expect increases to slow down significantly in coming years. Gifts are expected to rise by an average of 2 per cent this year, said companies participating in the survey and by another 2 per cent in 1999.

The Conference Board, a New York research group financed by businesses, gathered data on the donations of cash and products from 211 large U.S. manufacturing and service companies for its report, “Corporate Contributions in 1997.” The companies’ median pre-tax income — meaning half had more and half had less — was $545-million. More than 70 per cent of the corporations were ranked among the nation’s 1,000 biggest companies by Fortune magazine.

The study found that for the first time in more than a decade, health and human-service charities, rather than education groups, received the largest proportion of corporate gifts in 1997. Thirty-five per cent of the companies’ donations went to health and human services, compared with 29 per cent that went to education.

The 20-per-cent average increase in donations is based on data provided by 172 companies that responded to the annual survey in both 1996 and 1997. While the increase is big, it is not as large as in 1996, when the Conference Board reported that corporate donations grew an average of 31 per cent.

Audris Tillman, author of the Conference Board’s report, says that the data reveal that companies were willing to increase donations when their profits were soaring in 1996 and 1997 but that many have tempered that in the more uncertain economic climate today. Also, she notes, many big companies are in the midst of mergers, which often puts a temporary halt on spending increases.

Estimates for giving budgets in 1998 were provided by 156 companies; estimates for 1999 were provided by 140 companies.

In total, the 211 companies that provided figures for 1997 gave $2.5-billion in cash and products to charity — or $1 out of every $3 that companies gave last year, according to corporate tax returns filed with the Internal Revenue Service.

The 1997 corporate donations represented an average of 0.8 per cent of pre-tax income, up from 0.7 per cent that was reported in each of the previous years since 1994.

But 0.8 per cent still lags behind giving levels reported in the early 1990s, when donations represented between 1 and 1.3 per cent of pre-tax income. The 0.8-per-cent proportion is also smaller than the national average last year of 1.1 per cent for companies, according to I.R.S. tax returns.

The increase in giving to health and human-service groups, she says, can be largely attributed to an increase in giving by pharmaceutical companies and health-care businesses. Many of those companies, she notes — like all businesses — are tying their giving more and more to their business goals.

Most of the increase in health-care companies’ giving was in the form of product donations. Last year, 60 per cent of pharmaceutical companies’ donations were corporate goods. In 1996, the Conference Board reported that only 33 per cent of their charitable donations were goods.

Competition among health-care companies has been a boon to health charities as companies seek ways to capture public attention through their support of charities. “For pharmaceutical companies, obviously health issues are important, so they’re giving more in that area,” says Ms. Tillman.

Last year, drug manufacturers gave the most among the companies that responded to the survey, donating a total of $360-million total in cash and products. That was so even though the number of drug companies that responded was fewer than the number from several other industries. And their average per-company donation was also tops — $60-million, nearly double the $35-million in 1996.

Computer companies gave the next largest average donation: $35-million, 60 per cent of which was in the form of products. The six computer companies that responded to the survey gave a total of $208-million.

Civic and community-affairs organizations were the third most popular recipient of corporate gifts, following behind health and human-services and education organizations. They received 13 per cent of the contributions last year — up from 10 per cent in 1996.

Arts and cultural groups came next, receiving 10 per cent of the donations — up from 9 per cent in the previous year.

To order a copy of “Corporate Contributions in 1997,” contact the Customer Service Department, Conference Board, 845 Third Avenue, New York 10022; (212) 339-0345; e-mail orders@conference-board.org. The report costs $120 for non-associates and $30 for associates.