December 4, 2008 | Read Time: 3 minutes
Corporations increased their giving last year despite a mixed economic climate, according to a new report from the Committee Encouraging Corporate Philanthropy, in New York.
The findings of the annual survey bode well for this year, when the economy has taken even harder hits, according to the report’s author, Margaret Coady, director of the corporate-philanthropy group.
“There’s no formula that says when profits are up, giving is up and when profits are down, giving is down,” Ms. Coady says. “There are many factors that determine giving, including the commitment that companies have to communities and nonprofit partners.”
The report is based on a survey of 155 companies, 69 of which were on Fortune magazine’s latest list of the 100 top-grossing American public corporations. In all, the participating companies contributed a total of $11.6-billion in cash and products last year.
Among the 127 companies that had also participated in the survey last year, median giving was up, exceeding the year’s 2.8 percent inflation rate. The median amount companies donated in 2006 was $24.7-million-meaning half gave more and half gave less. In 2007, that median total had risen to $26-million
The survey also found that giving as a share of pre-tax profits was up, from 0.93 percent in 2006 to 0.96 percent in 2007.
The report points out, however, that while overall numbers demonstrated a positive trend, a company-by-company examination reveals a more mottled outlook. Roughly a third of the companies decreased their giving, including 9 percent that cut donations by at least one-quarter. At the same time, nearly 25 percent of the companies increased their giving by at least one-quarter.
Determining Factors
Among the reasons cited for increased giving were a strong financial performance (at least until 2007’s fourth quarter); mounting support among senior management for philanthropy; and better tracking of contributions.
Companies that decreased their giving cited a weakening economy; corporate spin-offs and department closures; a more tightly focused giving strategy; and a drop in disaster-relief support.
Among the survey’s other findings:
Giving trends varied from sector to sector. While contributions rose in most industries from 2006 to 2007, they remained about steady among companies in the financial sector, and dipped among health-care and utilities companies. Businesses in the health-care field, including pharmaceutical companies, continued to give the most of any industry, however, a median of $171-million in 2007. Median total giving among the Fortune 100 companies that participated in the survey both years rose from $45.7-million in 2006 to $49.6-million last year, even while 43 percent of the businesses saw profits fall from 2006 to 2007. In all, the top companies gave twice the amount other companies did-a median of $46.3-million versus $23.5-million for all companies in the survey. Eighty-eight percent of the surveyed companies reported having a corporate foundation. More than a third of those foundations are pass-throughs, meaning the foundations receive money from the companies and distribute all of it over the course of a year. Less than one-quarter have an endowment. The typical company in the survey allotted equal amounts-28 percent-of their total contributions to education and to health and social-services organizations. Twelve percent of the support went to neighborhood and economic development efforts and 7 percent to arts and culture groups.
Along with the data, the report includes suggestions for how to keep up corporate philanthropy when finances are tight.
The report recommends that giving officers proactively defend philanthropy budgets, making the case to senior leaders for sustained or increased giving, especially to geographic areas and organizations facing acute hardship.
The report also says that companies should look to more creatively use non-cash resources, such as by helping charities negotiate more favorable leases and vendor contracts or by offering sabbatical programs to share employees temporarily with nonprofit organizations.
“Companies eyes are wide open to the importance of this moment in our economy and they know they may have to call on their unique resources to help demonstrate their commitment to philanthropy.”
