Corporate Giving Rises Modestly

Donations’ 6% increase falls short of last year’s growth

Steady growth in the economy last year helped the nation’s largest corporate donors increase their giving, according to a new Chronicle survey.

This year, many big businesses expect their charitable efforts to expand, though the corporations made their projections before the recent volatility in the stock market.

For 81 businesses, the total dollar amount of cash donations rose to $3.8-billion in 2006 from $3.5-billion the previous year. The companies’ cash giving increased by a median of 6 percent, meaning that half of them increased their giving by a higher percentage and half by less. That percentage fell short of last year’s growth, when cash giving increased by a median of 10.1 percent.

One of the companies expanding its charity is the financial giant Citigroup, in New York. In 2006 cash contributions from its philanthropic arm, the Citi Foundation, grew from $85-million to almost $93-million.

“Our company is growing,” said Pamela P. Flaherty, Citigroup’s senior vice president of corporate citizenship. “And clearly we want our foundation to be one of the highlights and to demonstrate, support, and reinforce our global success.”

For 2007, she said, giving by the charitable fund, which donates to financial education, microfinance efforts, and affordable housing, among other activities, would rise by about 6 percent.

“We do anticipate there will be growth in numbers for this year and also in the years to come,” said Ms. Flaherty.

Donations Expected to Rise in 2007

Of the 75 companies that estimated how much they would donate to charity during 2007, 28 said their philanthropy would grow by more than 3 percent. Thirty-nine said their giving would remain roughly the same as last year, and eight said it would decline.

And despite the ups and downs in the stock market, most companies will probably keep their commitment to philanthropy, said Mark Shamley, president of the Association of Corporate Contribution Professionals, in Mt. Pleasant, S.C.

“There’s no indication that companies plan to adjust charitable investments downward based on recent market performance. In fact, corporate giving has continued to increase during the past three to four years in the midst of several stock market corrections,” said Mr. Shamley, who last month was appointed president of the association, which is a membership organization of 140 companies.

However, at least one company plans to make sizable cuts in its giving. The Altria Group, a corporate conglomerate in New York, is decreasing its philanthropy as it spins off some of its holdings.

Kraft Foods, in Northfield, Ill., for example, left Altria this year. Amina J. Dickerson, senior director for Kraft’s corporate community involvement, said Kraft will now have more say in how it spends its philanthropic dollars and will steer more to fight hunger and bolster good eating habits by Americans.

“We are very clear our work will not sell more boxes of mac and cheese,” she said, but “as a food company we have a responsibility there.”

Environmental Causes

Among other key findings of the Chronicle survey:

• With concerns increasing about global climate change, more companies are looking at ways to help the environment. Fifty-four respondents said that they had adopted new environmentally friendly business practices and polices, such as cutting down on energy usage. Of these, 26 reported giving more to environmental groups.
• In addition to environmental causes, many businesses said they want to do more to help American public schools. While companies have supported education for decades, they have put a greater emphasis on such giving in the last few years as studies show that fewer students are graduating from high school prepared for college or work.
• Pharmaceutical companies are doing more to disclose to the public their grant making after members of Congress raised questions about whether their charitable works were thinly veiled efforts to bolster their bottom line.

The Chronicle surveyed the 150 biggest companies in the United States, as ranked by Fortune magazine according to annual revenue, and received data from 91 of them.

Businesses that participated in the survey were asked to report the total amount of cash donations they made this fiscal year and in each of the last two fiscal years, and the fair market value of their donated products during each of those three years.

While the Chronicle survey shows that large companies are expanding their philanthropy, other studies suggest that the giving outlook for mid-size or small businesses is less rosy.

According to Giving USA, an annual tally of philanthropy (The Chronicle, June 29), corporations of all sizes gave 10.5 percent less last year than in 2005.

Top Donors

In The Chronicle’s survey, the pharmaceutical company Pfizer topped the list of the largest corporate donors in the United States. Pfizer, in New York, last year contributed more than $1.7-billion in cash and products.

Following Pfizer in the top five corporate donors of cash and products combined are three other pharmaceutical giants — Merck & Company, in Whitehouse Station, N.J. ($826-million); Johnson & Johnson, in New Brunswick, N.J. ($545-million); the Bristol-Myers Squibb Company, in New York ($528-million) — and the computer-software company Microsoft Corporation, in Redmond, Wash. ($436-million).

Pfizer and the other drug companies said they are considering doing more to publicize their company contributions this year. (While corporate foundations are legally required to disclose their grant making to the public, businesses are not.)

In April, the Senate Finance Committee raised concerns that drug companies were making grants to bolster their marketing efforts, such as supporting nonprofit health groups that recommended their products.

As a result, Eli Lilly and Company, in Indianapolis, in May started to post all its grants online. Other drug manufacturers, such as Pfizer, are considering similar moves.

“Consistent with our commitment to openness and transparency, we intend to report our medical-educational grants and support for medical and patient organizations in the United States, moving forward in 2008,” said Caroline Roan, a spokeswoman for Pfizer.

Excluding product donations, which constitutes the majority of the pharmaceutical companies’ giving, Wal-Mart Stores, in Bentonville, Ark., continues to be the largest donor of cash, giving $264-million in 2006.

Green Giving

Bank of America, in Charlotte, N.C., was the second-largest contributor of cash, awarding $206-million last year. The financial giant is one of several companies that plan to give more money to help the environment.

This summer the company pledged $50-million over five years to the cause, said Andrew D. Plepler, president of the Bank of America’s charitable-investments program.

The money is part of a larger environmental effort the bank announced in 2007. It includes providing loans and other financing for green building and energy-efficient technologies, and offering new environmentally friendly banking services to customers, such as a credit card that, for every dollar charged on it, provides a contribution to projects that reduce greenhouse-gas emissions.

Bank of America estimated the total commitment would cost $20-billion.

“Only a small piece of that is philanthropic, but as a company it is certainly high on our radar screen,” said Mr. Plepler.

John Donohgue, senior vice president of the World Wildlife Fund, in Washington, praised such efforts as Bank of America’s, saying that giving is beneficial, but that changing business practices to help, or at least make them less harmful, to the environment is a “really positive move.”

In addition to Bank of America’s new effort, other companies that have historically supported environmental organizations have increased their giving in recent years.

For instance, the charitable fund operated by Caterpillar, the industrial-equipment manufacturer, in Peoria, Ill., gave $1-million to environmental groups in 2004. That amount rose to $4-million in 2006.

“I would say the number of environmental groups we give to has probably increased not substantially in the last few years, but the funding of those we give to has increased,” said Maryann Morrison, manager of Caterpillar’s giving.

One longtime grantee is the Nature Conservancy, in Arlington, Va. In the past, the company has given $50,000 to $100,000 a year to the group. In 2005, however, Caterpillar pledged $12-million over five years to the conservation organization to clean up polluted rivers in China, South America, and the United States.

Despite the increase to environmental projects, Ms. Morrison said that, thanks to better earnings, the foundation has not cut back on its other grant making, which includes support for arts and culture, health, and education. The company’s philanthropy is based on its economic gains from the previous year, with its giving budget equal to about .08 percent of its gross revenue.

“We have had the advantage in the last few years of having growth in our foundation giving, so we haven’t suspended or stopped making grants in other areas,” she said. “We have focused new dollars toward the environment.”

Improving Education

Another hot topic for corporate philanthropy this year is education. While supporting students and teachers is nothing new for business, in recent years concern about failing public schools has become more pronounced — and corporations are speaking bluntly about the problem.

“Public K-12 education is broken, and it needs to be fixed,” said Robert Corcoran, vice president of corporate citizenship for the General Electric Company, in Fairfield, Conn.

In 2003, the company started identifying whole school districts where it could provide grants, teacher training, and management expertise, such as efforts to reduce cost inefficiencies. Today, the program operates in Atlanta; Cincinnati; Erie, Pa.; Louisville, Ky.; and Stamford, Conn.

This year, the Motorola Foundation, in Schaumburg, Ill., started a $3.5-million national program, called Innovation Generation, that focuses on math and science education for elementary and secondary students.

While helping schools is a charitable purpose, companies describe the goal as enlightened self-interest; if education doesn’t improve, they said, it will hurt American businesses’ ability to compete in the global marketplace.

“There’s a great concern among American corporations in the U.S. of losing the R&D edge and losing other aspects that have long been underpinning the U.S. dominance in a lot of different areas,” said Laura Sanford, president of the AT&T Foundation, in San Antonio. “We certainly see it in our own business.”

The foundation, which merged this year with the BellSouth Foundation, helps teachers become better prepared to instruct students in math and science, among other education work.

To be sure, aligning philanthropy with business goals has been a major trend in the corporate world for a number of years, and studies show that it continues to be popular.

According to a survey of 50 North American companies released this month by the Conference Board, a membership association in New York of more than 2,000 companies, 77 percent identified supporting business needs as the most important factor in making giving decisions.

With corporations placing greater emphasis on philanthropy as a business practice, some officials said it offers a better chance for business donors to gain ground against some seemingly intractable social ills.

Philanthropy “is getting more attention. It is something companies are taking very seriously in its ability to impact both the brand of the company as well as really have a meaningful impact in the communities where we live and work,” said Bank of America’s Mr. Plepler. “As that visibility gets greater, the opportunities get greater.”

Sam Kean and Maria Di Mento contributed to this article.