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Most Big Companies Expect Flat Giving, Despite 2011 Gains

Originally published in the Chronicle of Philanthropy

Charitable giving by America's biggest businesses rose slowly last year and shows little sign of gaining in 2012, according to a Chronicle study of 166 large companies.

Donations grew by 4 percent in 2011, according to the 115 companies that provided two years of data. That's far less than the 13-percent rise from 2009 to 2010, when companies saw a sharp rebound in profits after the recession.

More than 7 in 10 corporate leaders anticipate their philanthropy budgets will be roughly the same this year amid continued worries about the economy. About 27 percent say they will give more and 2 percent will donate less.

"Companies are taking a conservative approach," says Mark Shamley, president of the Association of Corporate Contributions Professionals. "There are a lot of really big, scary things out there like the European debt crisis and whether or not there is going to be demand."

13 Give at Least $100 Million

Among individual companies, the picture is mixed. Buoyed by a 202-percent jump in its 2010 profits, Caterpillar gave nearly 40 percent more cash last year, $50 million in total. That included a new $3 million commitment to Water.org, a global clean-water group started by the actor Matt Damon, and continuing support for Mano a Mano International, an antipoverty group in Bolivia.

Pfizer, which has been trimming some areas of its business amid new competition from generic drug makers, gave 18.5 percent less last year, in part because it wound down some long-term grants. But the company's gifts of cash and products still totaled more than from any other business, $3.1 billion.

In the future, Pfizer plans to support work to fight chronic, noncommunicable diseases like diabetes, which are a growing problem in the developing world.

Among other findings:

  • Thirteen companies donated more than $100 million in cash, compared with 11 in 2010. Wal-Mart gave the most cash ($342.4 million), followed by Goldman Sachs ($337.1 million).
  • Donations of products are growing at a faster rate than cash. Overall corporate giving, when both cash and products are counted, rose by 14.9 percent in 2011.
  • Alcoa donated the biggest share of its profits in cash to charity (6.2 percent), followed by Merck & Company (4.2 percent). But most companies donated far less: The median was 1 percent.
  • Four companies in the survey lost money in 2010 but still contributed to charity in 2011: Bank of America, Caesars Entertainment, First Data Corporation, and Office Depot.
  • Seventy-three companies said their chief executives serve on at least one charity board. Most serve with nonprofits in their home cities or regions, typically colleges or universities.

Solving Social Problems

While a handful of companies started new philanthropy projects this year, many are winnowing the causes they support in favor of bigger, higher-profile gifts to fewer organizations.

That's in part because of a long-term trend of companies zeroing in on social issues that threaten their bottom lines, like people's ill health, high transportation costs, or diminishing fresh water. They are also focusing on causes that help them tap into new markets, appeal to their customers, and use their employees' skills.

UnitedHealth Group, for example, continues to pare its arts giving in favor of efforts to improve Americans' health. Over the past three years, it has given nearly $2 million to help the American Heart Association establish safe and accessible walking paths around the country. Last year, it gave a total of $59.5 million, 11 percent more than in 2010.

Employees' Skills

Companies are also using their giving to strengthen Americans' job skills, in part to create a pipeline of future employees.

For example, CSX Corporation, the railroad company, increased its giving this year to Future Farmers of America, one of a few key national groups it supports. The nonprofit won $1 million.

Tori Kaplan, assistant vice president for corporate social responsibility, says many of CSX's employees are on the cusp of retirement, while the young people who participate with Future Farmers tend to have the skills and interests the company seeks in its workers.

"We're hoping to foster relationships with FFA where the students would look at transportation and its connection to agriculture as a viable career," she says.

Some companies also view philanthropy as a way to help produce research and innovations that can benefit their bottom lines. But corporations tend to be less transparent about that kind of giving, say experts.

A new University of Delaware study, based in part on Chronicle data, found a difference between the kinds of grants corporations give directly and the kinds they give through corporate foundations. Direct gifts, which don't require as much disclosure as foundation grants, more often go to research and competitions that will advance their business.

As an example, the researchers pointed to a contest run by Texas Instruments that provides financial awards to students who come up with designs for potential new products. Per competition rules, the technology giant gets a royalty-free license to use the ideas for future products. That business-centric approach makes it all the more important that nonprofits think carefully before they ask companies for money, say experts.

In fact, almost to a person, the corporate executives interviewed for this article shared very basic—but sometimes ignored—fundraising advice: Do your homework.

Even during the downturn, nonprofits can win bigger grants if they persuade a company that they can help achieve its philanthropic goals, says Mr. Shamley. But, he cautions, "a general disbursement of dollars is not going to happen."

Starting from Scratch

Many corporations also like to build projects from the ground up, say experts, rather than signing a check to benefit a program already under way.

That's the case at PG&E Corporation. Last year, the company trimmed the causes it supports from six to three, even as it increased overall giving by 20 percent, to $23.2 million. It started a new project with the American Red Cross and another to provide students with college scholarships.

"What we're looking for is the opportunity to partner with nonprofits that are willing to develop something new with us," says Ezra Garrett, head of the company's foundation.

As money remains tight, companies also seek to do more with volunteering programs and find creative ways to encourage employees to get involved.

Corporations continue to pursue new ways to encourage volunteering: General Mills workers around the world spend a week volunteering on office teams, while UnitedHealth started a "micro-volunteering" site to let its employees perform quick tasks for charities, like sprucing up their Web sites or crafting press releases. Kraft planted a garden at its corporate headquarters; during harvest season, employees pick fruits and vegetables destined for local soup kitchens.

Whatever the state of the economy, Susan Raymond, executive vice president of Changing Our World, a fundraising and corporate-philanthropy consulting firm, says that company efforts to alleviate social ills are poised to grow as a new generation of socially conscious leaders rises through the ranks.

She hopes that social change will become water-cooler chat for company executives, "that you're not really my golfing partner choice unless you're really looking at things like this."

Meeting Needs

Of course, even as "strategic alignment" remains the zeitgeist, some companies still back causes when they see a need.

While Google's philanthropy largely focuses on math and science education, it reserves a share of its budget for a "human need" that doesn't fit so neatly into business goals.

Last year, the focus was human trafficking and slavery; Google gave $11.5 million to groups working on that issue in the United States and around the world.

One of the resulting projects was Slavery Footprint, a Web site that allows users to investigate how many forced laborers helped produce their computers, T-shirts, coffee, and other goods.

Jacquelline Fuller, director of charitable giving at Google.org, says she is "particularly proud" of that portion of the company's philanthropic portfolio. She says, "The primary driver here is to make the world a better place."

© 2012, Chronicle of Philanthropy. Reprinted with permission.

The 2012 survey of corporate giving was researched and reported by Maria Di Mento, Marisa Lopez-Rivera, and Raymund Flandez and written by Caroline Preston. Noelle Barton, Peter Bolton, Emily Gipple, and Cody Switzer contributed to the survey.

Topics: Fundraising