New Group Hopes to Increase Corporate Giving to $15-Billion a Year

Some of the nation’s top business leaders, along with the actor and businessman Paul Newman, are calling for companies nationwide to increase to $15-billion the total amount of their annual charitable gifts by 2004.

To help spur corporate giving, the business leaders have formed a new non-profit group, called the Committee to Encourage Corporate Philanthropy. So far, more than two dozen chief executive officers of the country’s largest companies, including Kmart, Xerox, America Online, and Chase Manhattan, have joined the new group.

While the committee announced itself with a big splash last month and says it plans to have a significant influence on corporate giving, its $15-billion goal is, admittedly, not that ambitious.

Companies gave a total of nearly $9-billion in cash and in-kind donations last year, according to estimates in Giving USA, an annual report that measures American philanthropy.

“Left to its own devices — if there were not a committee, in other words — we’d probably reach $12- to $13-billion,” says Paul Ostergard, the retiring chief of the Citigroup Foundation, the charitable arm of the New York company, who will head the new group. “We wanted to get those extra couple billion, though.”

The new group, which will have an annual budget of around $600,000, to be paid for by foundations and individual donors, plans to prod companies to give more by working with them to establish or expand giving programs and to set up corporate foundations. It says it will also identify and share the most effective practices in corporate philanthropy and conduct research to determine how companies benefit from their charitable work.

Committee officials say, however, that perhaps the group’s best chance of increasing corporate giving may be member executives’ applying peer pressure.

According to Mr. Ostergard, many companies set their philanthropic budgets based on how much other businesses in their industry and of their size contribute to charity.

“There’s a competitive factor here,” Mr. Ostergard says, adding that he expects members of the committee to coax their counterparts at other companies not only to join the group, but also to increase their companies’ giving to keep pace with the pack.

Committee organizers cited statistics on the proportion of companies around the country that do not declare any charitable contributions on their tax filings — 75 per cent — as well as data on the small share of company profits that go to charity — 1 per cent — as reasons why they created the new organization. They say that their goal is to get more businesses to give and for all businesses to donate more of their profits.

The committee intends to collect information about its members’ charitable contributions, and rank companies according to their generosity. Committee officials say that they have not yet decided on what criteria the rankings will be based, or in what form they will be published.

Although the committee set a specific goal of $15-billion, it stopped short of asking companies to contribute a certain share of their income. Some of the group’s founders — including Mr. Newman, whose multimillion-dollar food company, Newman’s Own, donates all of its profits to charity — wanted to require member companies to give at least 2 per cent of their pre-tax profits to charity, but that idea never stuck.

“Most companies prefer to have flexibility, to look at factors, and set their own numbers, not to be locked into a formula,” Mr. Ostergard says.

Curt Weeden, a former corporate-giving officer and an expert on company philanthropy, advocates that businesses contribute at least 2.5 per cent of their pre-tax profit, or 3.5 per cent including non-cash gifts. And even though the new committee does not take such a position, he says he hopes that the group will stimulate companies to set ambitious goals for themselves.

Says Mr. Weeden: “The main thing to watch for is how the committee converts lip service by C.E.O.’s into action.”

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Following is a list of members of the Committee to Encourage Corporate Philanthropy:

Paul A. Allaire, chairman, Xerox Corporation, vice-chairman

Michael R. Bloomberg, founder and chief executive, Bloomberg LP

John H. Bryan, chairman and chief executive, Sara Lee Corporation, vice-chairman

Stephen M. Case, chairman and chief executive, America Online

Earl G. Graves, chief executive, Black Enterprise Magazine

Floyd Hall, chairman and chief executive, Kmart Corporation, vice-chairman

Irvine O. Hockaday, Jr., president and chief executive, Hallmark Cards, vice-chairman

Thomas S. Johnson, chairman and chief executive, GreenPoint Financial

John E. Klein, president and chief executive, Bunge Corporation

Ralph Larsen, chairman and chief executive, Johnson & Johnson, vice-chairman

Leonard A. Lauder, chairman and chief executive, Estee Lauder Companies

Kenneth L. Lay, chairman and chief executive, Enron Corporation

Shelly Lazarus, chairman and chief executive, Ogilvy & Mather

Eugene R. McGrath, chairman, president, and chief executive, Consolidated Edison Company of New York

Thomas S. Murphy, former chief executive, ABC/Capital Cities, vice-chairman

Terrence Murray, chairman and chief executive, Fleet Boston Corporation

Henry M. Paulson, Jr., chairman and chief executive, the Goldman Sachs Group

Franklin D. Raines, chairman and chief executive, Fannie Mae

Michael I. Roth, chairman and chief executive, the MONY Group

Thomas M. Ryan, chairman and chief executive, CVS Corporation

Henry Schacht, former chairman and chief executive, Lucent Technologies, vice-chairman

H. Marshall Schwarz, chairman and chief executive, U.S. Trust Corporation

Robert B. Shapiro, chairman and chief executive, Monsanto Company

Walter V. Shipley, chairman, Chase Manhattan Corporation, vice-chairman

Gary Wendt, former president and chief executive, GE Capital Corporation

Clifton Wharton, former chairman and chief executive, TIAA/ CREF

Robert G. Wilmers, chairman and chief executive, M&T Bank Corporation