The Chronicles of Philanthropy: Corporate Giving

With Cash Giving Flat, Big Companies Offer Other Aid

 

July 14, 2013  Log-in


Cash Giving Is Flat at Nation's Big Businesses for 3rd Year in a Row 3

Amway created Nutrilite Little Bits, which it donates to programs overseas to prevent anemia and stunted growth.

 

America’s biggest companies expect a third-straight year of modest increases in cash gifts in 2013, according to a Chronicle survey, and are increasingly seeking other ways to help charities, such as through employee volunteerism

and donations of products.

 

Donations grew by 2.7 percent in 2012, to $5.3-billion, for 106 companies that provided two years of data. More than three-quarters of corporate leaders said their giving budgets will be about the same in 2013. About 16 percent said they will give more, and 6 percent will donate less.

 

Businesses awarded a median of 0.8 percent of their 2011 pretax profits to charity in 2012. That’s lower than in any of the previous six years, when the percentage of profits going to charities varied from 1 percent to 1.4 percent.

Mark Shamley, head of the Association of Corporate Contributions Professionals, in Mt. Pleasant, S.C., says he’s not surprised about the modest increases, despite a rebounding economy and the strong stock market. Companies remain wary of the recovery, he says, and are hesitant to make big investments in their business operations, much less boost philanthropic budgets.

 

Among other findings:

  • Wells Fargo gave away the most cash in 2012, $315.8-million, increasing its giving to support a new program that provides down-payment assistance to home buyers in neighborhoods with high foreclosure rates. (See article on Page 12.) Walmart, which had held the top spot in the previous seven years, ranked second in 2012, at $311.6-million.
  • Those two were among 14 companies that gave more than $100-million, up from 13 in 2012. The median cash amount given in 2012 was $25-million.
  • Median giving in 2012 was higher than in 2008, when the effects of the Great Recession were first being felt. Median giving over the past five years rose by 11 percent for the 83 companies for which The Chronicle has data.
  • Donations of products continue to grow much faster than gifts of cash. Overall corporate giving, when both cash and products are counted, rose by 20.2 percent in 2012, to $18.6-billion. Pfizer held the top spot for the fourth year in a row, giving $3.1-billion in cash and products.

The Chronicle surveyed the 300 biggest companies in the United States, as ranked by Fortune magazine according to annual revenue, and received data from 106 of them.

 

The study looks at the nation’s largest companies, but small and midsize corporations may be expanding their giving budgets more quickly.

 

According to Giving USA, an annual tally of philanthropy that was released last month, giving by corporations of all sizes jumped 9.9 percent after inflation in 2012, to $18.15 billion.

Mutual Benefit

Many of America’s biggest companies are increasingly candid about how their philanthropy can help achieve business goals-and vice versa.

 

Microsoft, which lost cachet among young people to Apple and other competitors over the past decade, launched its YouthSpark program in September, vowing to invest $500-million over three years.

 

Microsoft hopes to create greater opportunities for youths around the world, says Akhtar Badshah, the company’s senior director of citizenship and public affairs, even as it tries to sell them more products.

 

The company is providing large cash grants to a handful of charities, including Boys & Girls Clubs of America, City Year, and Junior Achievement USA. Through a new program called Innovate for Good, Microsoft is connecting its employees to young people around the world who want to use technology to better their communities. Microsoft also oversees a fast-growing program called Teals (Technology Education and Literacy in Schools), through which about 120 volunteers, including Microsoft employees and others, teach computer science in schools that wouldn’t otherwise have such courses.

 

Microsoft pays for textbooks, outings, and events for the more than 2,000 students; nurtures schoolteachers to eventually take over the courses; and makes a donation to the 37 schools where it has volunteers. But the company is also attracted by the opportunity to give its employees an outlet for using their skills to make a difference. “That’s really what excites us,” Mr. Badshah says. “We want to give grants, and we’ll continue to do so, but if we can tie our grant making to our business interests, we’re able to unleash many more resources.”

 

More Engaged

Some charities, such as arts groups, have expressed concern that the trend toward more targeted corporate giving often leaves them out in the cold.

 

But organizations like Junior Achievement, a grantee of Microsoft and many other corporations, are benefiting by offering the deeper engagement their corporate supporters seek.

 

Junior Achievement raises about $140-million a year, more than 80 percent of which comes from companies. The charity has positioned itself to win grants from corporations that want to see measurable outcomes and opportunities for volunteerism, according to Gary Blanchette, the nonprofit organization’s senior vice president for development.

 

The charity has 119 U.S. locations, programs in 120 countries, a vast network for volunteering, and entrée to schools, thanks to its ability to tie its curricula in programs like financial literacy to state education standards.

The charity has also spent $5-million over the past seven years documenting the effectiveness of its program-something that companies are increasingly looking for.

 

“We hit all their markers,” Mr. Blanchette says.

Not Just Money

Many corporate grant makers say the shotgun approach to raising money-flinging unfocused requests toward a variety of companies-is less likely than ever to raise funds, as companies look to work more closely with nonprofit groups.

 

Texas Instruments is one of several companies with a special focus on science and math education. In 2012, the company pledged up to $4.8-million over four years to help an entire low-income school district near its Dallas headquarters reorient the curriculum around science and math education.

 

The company also contributed $5-million to start a new science and math academy in Plano, Tex., and sponsored the first ever STEM (science, technology, engineering, and math) patch offered by the Girls Scouts of Northeast Texas.

 

“We don’t want to just give money,” says Andy Smith, the company’s director of corporate philanthropy. “We want to have partnerships and get our employees and our retirees involved in volunteering. That’s when you get the true impact.”

 

Lockheed Martin has revamped its grant making to focus on two issues: science and math education and assistance for military members and veterans. Local grant making for other community causes will now account for only about 10 percent of giving.

 

The company hopes the sharper focus will better enable it to measure what it is achieving through its giving.

“A lot of companies, including us, are doing some great things, but are we really having the impact we want to have?” says Kimberly Martinez, the manager of STEM education at Lockheed Martin.

 

“The critical first step in that process is focusing your efforts,” says Ms. Martinez. “If you’re doing a million things with your budget, one would presume that your impact isn’t as great as you’d like it to be.”

 

Time and Products

Many large companies are exploring new ways to solve societal problems or help nonprofits that don’t involve handing out more cash.

 

Amway, a direct-sales company, has created a new product, Nutrilite Little Bits, solely for philanthropic purposes. The product, a powder full of micronutrients that parents can sprinkle on food, reduces stunting and anemia in children who suffer from chronic malnutrition. It is currently in use in Mexico and Zambia.

 

Deloitte, an accounting and consulting firm, is inviting humanitarian organizations to apply for pro bono consulting assistance designed to help the groups prepare for crises.

 

The company, which provided $82-million of pro bono assistance in 2012 and $74-million in cash and product donations, views the new program as a way to uncover innovations that can help all nonprofits that provide relief and also as a way make the company more attractive to young people who want to use their skills to help society.

“When we put money into programs, no one really knows what happens: Was it the right amount?” says David Pearson, the company’s chief sustainability officer.

 

“But when we put in our time, we put in a lot more effort, we see the impact, and it just means a lot more to the organization and to ourselves,” he says.

 

Hilton Worldwide worked with Points of Light and the Taproot Foundation to create Hospitality + Service, a program designed to help nonprofits provide better service to clients.

 

Jennifer Silberman, the company’s vice president for corporate responsibility, says the free training module will help any charity that has significant interactions with clients, such as soup kitchens and community-health clinics.

The national rollout is expected this fall.

 

The company, which makes cash donations worth about $5-million a year, spent $150,000 to develop the program’s curriculum.

 

“We’re not the Bill & Melinda Gates Foundation-we don’t have unlimited resources,” Ms. Silberman says. “But we have skills and great knowledge, and that can be translated to the nonprofit sector. If we do it right, that can be just as important as cash.”

 

Emma Carew Grovum and Sarah Frostenson contributed to this article. 

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