Businesses Buckle Up

As the economic recession continues, many of America’s largest corporations plan to decrease their giving or keep it flat in 2009, with many deciding to stop supporting charitable causes that are not related to their businesses, according to a new Chronicle survey.

Of the 71 companies that provided predictions about how much they would donate in cash and products this year, 51 said the amount would stay roughly the same as in 2008, 15 expected it to decline, and five said it would grow.

The survey found that despite the gloomy outlook, cash giving among big companies grew in 2008. Of the 71 companies that provided data for 2007 and 2008, cash donations rose from $3.6-billion to $3.9-billion, a 9-percent increase — or 5 percent, adjusted for inflation.

Giving USA, an annual tally of American philanthropy that was released last month, painted a bleaker picture when looking at more than just the biggest companies. For 2008, it reported that the business world reduced contributions 8 percent after adjusting for inflation.

Strategic Giving

With America facing an economic crisis often compared with the Great Depression, 33 companies are shifting philanthropic money to provide food, shelter, and clothing to unemployed Americans and others experiencing hardship. (See article on Page 12.)

Philanthropy experts said that while the business world faces tough times, it remains committed to charitable work, albeit with less money.

“A wholesale abandonment of their programs? That’s not taking place,” said Mark Shamley, chief executive of the Association of Corporate Contributions Professionals, in Mt. Pleasant, S.C. “But there are adjustments that executives are having to make, and the reality that they have less dollars and less people to help execute their programs.”

While there are signs that the economy may be starting to recover from its free fall, Mr. Shamley said charities shouldn’t expect a fast turnaround in corporate giving. “Even as things start to pick up, you probably won’t see that trend in the end of the year 2010,” he said. “It’s going to take a while for things to bounce back.”

As corporate earnings suffer, many executives in charge of their companies’ charitable work said they will focus on aligning their philanthropy with their business expertisea trend that preceded the recession but has accelerated as resources grow scarce.

Johnson and Johnson, in New Brunswick, N.J., which awarded $132.2-million in cash in 2008, plans to keep its level of giving steady to causes that reflect its business expertise: children, education, and global health. But to find the money to do so, it is not paying for charity galas and other fund-raising events that it has historically supported.

“We’ve not walked away from any major program. We’ve done some fine-tuning in some areas,” said Sharon K. D’Agostino, the pharmaceutical company’s vice president of worldwide corporate contributions and community relations, “It’s a good time to make sure you have a plan that everyone agrees to, so you’re clear on where you’re saying yes and where you’re saying no.”

Similarly, the CSX Corporation is reducing its giving to arts and cultural projects by at least 25 percent to be more strategic about its efforts, said Tori Kaplan, director of corporate citizenship and events. As a transportation company, she said, safety is key to CSX’s success as a business; therefore, it wants to focus on promoting public safety and assisting first responders to emergencies.

“We have a philosophy that is very rooted in safety, so we’re really looking at the causes that most closely align with our giving strategy,” she said. Arts groups were “on the outer banks of where we contribute.”

With giving budgets thin, corporations also said they want to provide more noncash help.

The Citi Foundation, the charitable arm of Citigroup, in New York, is reducing its giving to microfinance, education, and other causes by about one-third — a decline of roughly $25-million — but is offering additional free financial-management advice to charities. The company has provided such pro bono services for a decade, but with so many groups facing fund-raising shortfalls because of the bad economy, its communications with nonprofit groups have become more frequent, said Natalie Abatemarco, the financial-services corporation’s director of North American community programs.

Takeovers’ Toll

To be sure, in some industries, the economic crisis has reshaped the corporate philanthropy landscape entirely.

Several banks and investment companies that previously were part of The Chronicle’s survey no longer appear on it because they have been taken over by other corporations. For example, Lehman Brothers, Washington Mutual, and the Wachovia Corporation, which together awarded more than $190-million in 2007, have been acquired and are not in this year’s survey.

Wachovia, the largest donor of the three, was acquired last year by Wells Fargo, in San Francisco.

Tim Hanlon, president of the Wells Fargo Foundation, said it will honor Wachovia’s charitable efforts, which will double how much the San Francisco company provides each year to about $225-million.

Given that both companies allow local bank branches and other facilities to guide giving, the philanthropic merger is “pretty straightforward,” said Mr. Hanlon.

“If education through the K-12 level is critically important in one community and the arts are critically important in another, local communities themselves get to decide how to spend the money,” he said. “Truthfully, there’s not a whole lot of change.”

Automakers in Neutral

Due to bankruptcies, philanthropy in the automobile industry is much more uncertain.

General Motors, in Detroit, declared bankruptcy in June and did not provide information about its charitable giving.

A spokesman for Chrysler, the auto manufacturer in Auburn Hills, Mich., that declared bankruptcy in April, declined to discuss the Chrysler Foundation while the company is restructuring as part of an alliance with the Italian carmaker Fiat. On the foundation’s Web site, John T. Bozzella, the Chrysler Foundation’s president, writes, “Notwithstanding the changes in our corporate structure, Chrysler’s commitment to being socially responsible has always remained steadfast.”

For charities that have received support from financial-services companies and auto manufacturers, the times are anxious.

“We’ve had supporters that no longer exist,” said Darrell Hammond, chief executive of KaBoom, a charity in Washington that builds playgrounds and received support from the Chrysler Foundation and Washington Mutual. “Picking up The Wall Street Journal was really nerve-racking.”

Biggest Donors

The Chronicle surveyed the 300 largest American businesses, as ranked by Fortune magazine based on annual revenue. It received information from 108 of them.

When both cash and products are counted, the computer software company Oracle gave the most in 2008 ($2.1-billion), followed by Pfizer ($1.9-billion) and Merck & Company ($821-million). Product giving makes up most of corporate philanthropy, accounting for 66 percent of what the companies in the survey donated in 2008.

Among cash contributors, Wal-Mart led the pack, awarding $320.5-million, an increase of almost $20-million over 2007. The second and third largest cash donors were Bank of America ($226-million) and Exxon Mobil Corporation ($188-million).

Among other survey findings:

• Of the 72 companies that laid off workers last year, 33 said they had laid off workers or eliminated positions in their corporate-giving departments. For example, Caterpillar, the industrial and farm equipment company in Peoria, Ill., which cut 20,000 jobs this year, laid off one person from its foundation’s staff of six.
• Businesses awarded a median of 1 percent of their 2007 pretax profits to charity in 2008. This represented a decline from last year, when they donated 1.4 percent of their profits.
• Ten companies have reduced or cut their employee matching-gift program. Northrop Grumman, the aerospace and defense company in Redondo Beach, Calif., decreased the maximum it would match from $5,000 to $1,000, said the manager of the company’s foundation, Carleen R. Beste. She said the move allows the grant maker to do more for its primary philanthropic interest, which is math and science education.
• Companies continue to step up efforts to encourage employees to volunteer. For example, Eli Lilly and Company started a new program in November in which employees were paired with 46 Teach for America participants. The Lilly program, which is the first of its kind, will help the new teachers get acclimated to working in Indianapolis, where the pharmaceutical company’s headquarters is located.
• Total combined giving by 50 big companies that provided data for the past five years has increased by 4 percent, adjusted for inflation.
• Among companies that shared their giving outlook for 2008 last year and their final 2008 giving figures this year, 10 gave less in 2008 than they had expected to give.

While the current recession is sapping corporate giving — and is likely to continue to do so for several years — philanthropy experts predict that companies will increasingly view giving not only as an ethical priority but as a business one as well.

With public anger at Wall Street and concerns about layoffs, “corporate America is not coming out of this unscathed,” said Rita Kusler, chief operating officer of the JK Group, a Plainsboro, N.J., company that assists corporations with their giving. “Having something positive associated with a name will help corporation X to distinguish itself from corporation Y.”

Companies, especially those in industries facing major restructuring, agree. By building morale and a brand name, corporate giving today is “good for business as well as good for the community,” said Jim Vella, president of charitable programs for the Ford Motor Company, in Dearborn, Mich.

Ford is decreasing how much it is giving in 2009 by 20 percent and has eliminated about 20 percent of the staff members in its corporate-giving department, Mr. Vella said. But it is also doing more to help unemployed people in Michigan, some of whom are former Ford employees. It is no longer supporting capital campaigns and instead steering that money to college programs that help out-of-work people find jobs.

“You need to be a good neighbor even more in tough times than in good times,” Mr. Vella said. “Those folks who are being impacted today are our neighbors and some of them used to be employed by the auto industry, so we’re not going to give up on them. We want to be part of the solution and not part of the problem.”

Amy Combs, Candie Jones, and Caroline Preston contributed to this article.