February 7, 2008 | Read Time: 3 minutes
American businesses have increased their giving in the United States and around the world in recent years, but most companies do not donate enough to charity and have not adequately incorporated philanthropic efforts into their overall operations, say two new studies.
The studies are based on surveys conducted by LBG Associates, a consulting company that advises businesses on donating to local groups, and the LBG Research Institute.
The reports provide data on charity efforts in 2005 by dozens of major corporations, such as Disney, GE, Intel, Pfizer, and Starbucks. They also provide suggestions for companies looking to expand or improve their philanthropic work. The reports update similar studies conducted in 1998.
One key finding was that virtually all companies in both studies believed they should donate strategically — to improve their bottom line by making people more aware of their products, foster good will among employees, and, especially in foreign countries, enhance relations with local officials and governments. However, many companies said that, despite those intentions, their giving failed to advance those goals.
One report, “Trends and Best Practices in Community Involvement,” concluded that corporate philanthropy has improved overall since 1998 but still lags in key areas. Among the positive signs: More companies talk about philanthropy now, including chief executive officers and high-ranking officials. Also, most companies view philanthropy as more than just writing checks. They often sponsor charitable programs and allow employees to volunteer during the workday.
CEO’s Involvement
Among the negative signs: Only half of chief executives personally contribute time to charitable activities, and the internal departments that administer charity work rarely stand on the same footing as traditional business departments, indicating a lower priority for charity.
In addition, the median corporate contribution was 15-percent less than LBG Associates’ recommended minimum of 1 percent of pretax net income. The report’s authors argue that the figure seemed particularly low considering the major natural disasters that took place in late 2004 and 2005, such as the tsunamis in Southeast Asia and Hurricane Katrina in the Gulf Coast.
Even so, the report concludes that companies have made progress: “Community involvement is increasingly being recognized as a business imperative, and is seen as necessary for success by those in the highest levels of a corporation.”
Foreign Gifts
The second report, “Global Community Involvement,” looks at giving by multinational corporations in foreign countries. The survey found no correlation between the size of a business’s international operations and the size of its charitable arm overseas, with companies employing between one and a dozen employees for such purposes. (There was a correlation domestically.)
The average size of companies’ foreign cash donations also varied, from less than $5,000 to $500,000. Some companies reported making grants as small as $100 and others grants as large as $1.25-million. The most popular causes receiving support were education and social services, including health programs. About three-quarters of the companies made donations of products overseas. Half of all companies also donated used computers and office equipment, with average values between $25,000 and $50,000.
In addition, even though 56 percent of the employees of the American companies in the survey work overseas, the businesses give just 17 percent of their overall cash donations to foreign causes.
However, compared with foreign companies in their own countries, a higher percentage of U.S. corporations make at least some donations in those countries, and more of them allow employees to volunteer during the workday and offer to match employee gifts.
Among other recommendations, the authors of the study advise companies to be more flexible in how they structure programs in different cultures. Right now, for example, more than three-quarters of all U.S. companies operating overseas take grant applications only in English. The second report includes profiles of nine countries (Australia, Brazil, Britain, China, France, India, Ireland, Japan, and Poland) to help charity workers better understand the climate of philanthropy in each.
Both reports cover many of the same topics, including employee volunteering, charitable giving, disaster relief, methods of evaluating giving, communications, and the structure of philanthropy offices. They are available for purchase (a print copy of each costs $195, an electronic copy $380) at http://www.lbg-associates.com/15. html.
