Silicon Valley Firms Outpace Other Big Companies in Giving

Silicon Valley’s largest companies may not necessarily deserve their reputation for parsimony: They gave charities a higher percentage of their pretax profits in 1996 than the typical big American business, says a new report.

A survey of 57 companies in northern California, most of which were high-technology businesses, found that the companies gave away 0.92 per cent of their pretax profits, on average — compared with the 0.7 per cent of pretax profits reported by the Conference Board, in New York, for a similar group of companies in a wide array of industries.

The new survey, which was conducted by researchers from Stanford University’s Graduate School of Business, also found that the amount that Silicon Valley companies gave per employee was also higher: $357 for the northern California companies, compared with $306 for the Conference Board national sample.

Even so, the survey did not entirely debunk the stereotype of high-tech companies as relatively stingy in giving cash to charities.

Silicon Valley companies made 48 per cent of their contributions in the form of products and equipment, on average; nationally, the average was 12 per cent.

What’s more, the amount given in 1996 was a decline from 1993 data taken the last time Silicon Valley companies were surveyed. The percentage given then was 1.13 per cent.

Researchers said the decline in percentage of giving might be attributed partly to the fact that most companies set their corporate-giving budgets based on the prior year’s profitability. Therefore, in times of rapidly rising profitability, corporate-giving budgets may lag behind a year.

The 49 companies that provided data on the causes they supported said they gave away a total of $49-million in 1996 to local groups — or an average of $1-million per company. That is up from the 43 companies that said they gave away $29-million to local causes in 1993 — or an average of $674,000.

Many of the contributions made by the Silicon Valley companies benefited educational causes. Silicon Valley companies channeled 62 per cent of their charitable donations to educational organizations; nationally, companies give about 33 per cent to education.

And Silicon Valley companies take a special interest in elementary and secondary education. They channeled 11 per cent of their total gifts to schools.

Kirk O. Hanson, a senior lecturer at Stanford’s business school who directed the study of giving, said the strong support for education was a mixed blessing. “No one argues with giving K-12 education top priority,” he said, noting that California’s schools were “starved” for financial support because of years of state tax cuts that reduced the amount available to government-run institutions. “In the community’s interest and in their own self-interest, the companies ought to give this top priority.”

But, he added: “On the other hand, because so much of their giving goes to K-12 education, other causes receive less support in Silicon Valley than in other communities.”

The $25,000 study was paid for largely with a grant from the David and Lucile Packard Foundation. It was commissioned by the American Leadership Forum’s Silicon Valley Chapter — a group that encourages Silicon Valley companies to increase their involvement in local affairs — and the Community Foundation Silicon Valley.

For a free copy of “Corporate Community Involvement in Silicon Valley 1994-1997,” contact Community Foundation Silicon Valley, 111 West St. John Street, Suite 230, San Jose, Cal. 95113; (408) 278-0270; e-mail inquiries@commfds.org.

Data from this study and from a 1994 study are available on the following Web site: http://ccsurvey.com/survey/comsur.