How Four Businesses Are Changing the Way They Give

By DEBRA E. BLUM

American companies are reshaping their philanthropy this year as they face an uncertain economy and, in some instances, their own financial woes. Following are four examples of how companies are changing their approaches:

Pacific Gas: Sending Donations to Victims of Power Crisis

The PG&E Corporation, an energy company in San Francisco that has been hit hard by California’s power crisis, is donating half as much this year as last and plans to use nearly all of its philanthropy to help people and organizations adversely affected by rolling blackouts and high gas and electricity prices in the state.

PG&E, which owns the Pacific Gas and Electric Company, one of the nation’s largest utilities, usually makes grants for projects dealing with education, the environment, and health and social services. But in April a part of the corporation filed for reorganization under Chapter 11 of the federal bankruptcy law. With less money to give, it has decided to focus its contributions on a single cause, says Dan Quigley, PG&E’s director of corporate contributions. In addition, he says, executives believe they need to use all the company’s resources, including its charitable dollars, to help Californians cope with the power crisis.

“It would be hard to justify our normal support of the environment and education when so many people are suffering in California, especially vulnerable populations — the elderly, the disabled, people who have trouble paying their bills,” Mr. Quigley says. “We’re rewriting our funding criteria while we’re in Chapter 11 to focus on needs directly related to the energy crisis.”

The changes mean that many charities that usually get money from PG&E will go without that support this year. The United Way of the Bay Area, in San Francisco, for example, which has received $1-million from the energy company in each of the last two years, won’t receive a PG&E grant in 2001.

For a time, it looked like PG&E wouldn’t be making donations to any charities this year at all. Because of a severe cash shortage, the company stopped making payments on grant commitments in December, and then suspended its grants program indefinitely a month later. The company, which contributed nearly $9-million in 2000, sent letters with the news to many of its regular grantees, and reassigned to other tasks the seven staff members who worked on corporate contributions.

Over the last couple of months, however, PG&E has put together a charitable-gifts budget for the second half of the year. The company decided to tap into the assets of a new corporate foundation, which was created last year with the proceeds of the sale of a gas-pipeline business, and directed a subsidiary that is not facing financial trouble to resume its giving.

PG&E plans to donate $4.4-million during the remainder of 2001.

J.C. Penney: Focusing on Education to Please Female Customers

The J.C. Penney Company, in Plano, Tex., also is cutting and changing its giving this year after the company lost money in 2000.

The company, which owns thousands of J.C. Penney department stores and Eckerd drugstores, is trying to link its philanthropy more closely with its business goal: to attract customers to the company’s stores and merchandise catalogs. Most of the company’s 2001 gifts of cash and products — a total of $15.8-million, down from $24.4-million in 2000 — will go to support after-school programs.

“We have always supported education, but the after-school program is a way to sharpen that focus,” says Robin M. Caldwell, director of Penney’s community relations and president of the company’s foundation. “Education is a major concern of our customers so we saw this as a cause-related marketing opportunity, too.”

By supporting after-school programs, Ms. Caldwell says, the company, whose clients are predominantly female, hopes to “make a difference in communities, as well as a connection with customers.”

To help make room for its new grant-making focus, the J.C. Penney Company dropped its 20-year-old J.C. Penney Golden Rule Program, which honors people who volunteer at charities by awarding grants to the organizations they support. The company decided to cut the program, Ms. Caldwell says, because fewer and fewer stores were participating in it over the years, yet the expense to run it from the company’s main office was unchanged. J.C. Penney spent $1.5-million on the program last year.

Aetna: Tailoring Donations to Fit Company’s Smaller Size

Aetna, a health-care insurer in Hartford, Conn., has revamped its philanthropy to better match the company’s smaller size after the sale of both its international and financial operations. The company, which just two years ago increased international gifts nearly sixfold to $4.7-million, no longer contributes overseas. It also has stopped supporting programs tied to the company’s former financial-services business, such as an online financial-literacy education program.

Instead, Aetna’s giving is focused on five health topics, including colon cancer, children’s asthma, and cardiovascular health, and is geared to help organizations working in the localities where Aetna’s customers and employees live.

In all, Aetna expects to give less than the $22.2-million it donated last year. The decline has to do in part with the company’s smaller size since trimming its business. After the change, Aetna’s profits fell from $1.2-billion in 1999 to $215-million last year. The decline in giving also stems from the company’s financial performance. The company reported an operating loss in the first quarter of 2001 because of higher-than-expected medical costs among people with Aetna policies.

Kimberly-Clark: Giving More and Monitoring Effectiveness

At Kimberly-Clark Corporation, in Dallas, profits were up last year, as is the company’s philanthropy. The paper-goods maker, which aims to contribute 1 percent of the average of its profits over a three-year period, plans to donate $17.5-million in cash and company products this year, a 30-percent increase from 2000.

But not only is Kimberly-Clark giving more, it is giving differently. It has overhauled its charity program to make more strategic connections between its gifts and its business goals, such as making consumers more aware of the Kimberly-Clark name.

This year, the company introduced a single theme for all its contributions: supporting and strengthening families. Among its new gifts is an $8.6-million, four-year grant to the Y.M.C.A. of the USA, in part for a publicity campaign intended to encourage families to use the charity’s services. It also made a four-year, $2.6-million commitment to Unicef for a program that helps children in Africa whose parents have died from AIDS.

Kimberly-Clark has hired a survey company to help figure out how much employees and consumers know and care about the company’s philanthropy. And contributions officials are working with the company’s marketing-research team to measure the impact of its gifts.

“It’s a nice, healthy budget we have,” says Carolyn Mentesana, vice president of the Kimberly-Clark Foundation, “and we ought to be held accountable for results.”

That’s especially true, she says, given the uncertainty of today’s marketplace.