by Megan O’Neil, Brian O’Leary, and Peter Olsen-Phillips
Cash gifts by some of the largest U.S. companies rose 5 percent last year, according to a new Chronicle survey. Total giving, including products, grew 8 percent, led by overseas donations of drugs by large pharmaceutical companies.
The top recipients of companies’ dollars were community causes, K-12 groups, and higher education. Those were followed by the arts and the environment, which displaced health and children as the fourth and fifth most popular causes in the Chronicle’sprevious corporate-giving survey two years ago.
All of the data from the survey, along with additional analysis, is available exclusively for Chronicle subscribers.
The increase in charitable giving by corporations could continue this year, thanks to a humming economy, strong corporate earnings, and a new tax law. Citing the passage of the Tax Cuts and Jobs Act of 2017, which slashed corporate tax rates from 35 percent to 21 percent, at least some companies have pledged to do more. Biopharmaceutical company AbbVie decided at the start of the year to give an additional $350 million, $100 million of it to Ronald McDonald House Charities. In May, Wells Fargo said it would give $400 million in cash to nonprofits in 2018, a 40 percent increase. Starting next year, the bank aims to spend 2 percent of its after-tax dollars on corporate philanthropy.
“Candidly, as earnings continued to grow, I wanted to make sure that our philanthropy kept pace with our earnings growth,” said Jon Campbell, head of corporate social responsibility and community relations at Wells Fargo. He had been benchmarking the company’s giving against others and “had talked to our leadership about a range of giving as a percentage of after-tax profits.”
Should Companies Give More?
The Chronicle surveyed the 300 largest U.S. companies on the Fortune 500. Of those, 69 provided giving data for 2017, and 63 provided data for both 2016 and 2017. All comparison figures in this story are for those 63 companies.
Despite the recent boost in company giving, corporations account for a small slice of all charitable giving. Companies gave just 5 percent of the $410 billion in total giving in the United States in 2017, according to the annual “Giving USA” report.
The Chronicle analysis found that the median share of pre-tax profits contributed in 2017 was just about 1 percent.
That’s not enough, some contend. Curt Weeden, a corporate-philanthropy expert and a former corporate grant maker, notes that donations from individuals hover around 2 percent of disposable income. And the tax law allows companies to set aside 10 percent of pre-tax income for charitable giving.
CEOs should be saying to themselves, “Well, hell, we can at least do 2 percent. And as long as it is strategically planned and administered, so it’s in the parameters of what we do as a company, then we should be doing it,” says Weeden, who runs the New Strategies Program at Georgetown University, which works to increase corporate support to nonprofits.
Shift in Focus
Even as some debate whether companies give enough, those who study and work in corporate philanthropy agree that how companies give has shifted dramatically in the past decade.
For one, what constitutes corporate philanthropy and corporate social responsibility is being redefined, says Peter Frumkin, research director of the Satell Institute, a think tank focused on corporate social responsibility.
“The language has changed because the field has changed,” he says. “It is part of the fabric of a lot of companies. They weave it into the core business functions of the firm. It’s not just an appendage, like it used to be.”
One-off checks and CEO pet causes are increasingly a thing of the past, usurped by strategies built into supply chains, marketing, and government relations, among other parts of businesses. And the most sophisticated companies are tracking and quantifying results, experts say.
So what does that mean for charitable fundraisers?
Companies are seeking a broader array of partnerships with nonprofits than ever before in areas like education and work-force development, diversity and inclusion, and environmental sustainability. These kinds of corporate objectives present new opportunities for nonprofits – if they can come to the table with ways to add value to companies’ strategies in key areas.
“I think folks in development feel like they need to perform for the company,” says Carolyn Berkowitz, president of the Association of Corporate Citizenship Professionals, a membership organization for corporate grant makers. “So I’m going to go in and I’m going to tell them everything I can about my nonprofit organization.”
That, says Berkowitz, is not a good use of the corporation’s time.
“What is a really great use of the company’s time, and what will really engage them differently is – after you have done your homework – to go in and ask them,”Tell me about your goals. What are you trying to achieve through your corporate citizenship? What are the business problems your organization is facing? How are you solving them? How could we work together to leverage community issues and community performance as one way that your company is solving its pain points?”
It’s that sort of detailed inquiry from which nonprofit organizations and corporations can build powerful and sustainable relationships, she says.
“When organizations understand the tech talent crunch that you might be facing or when organizations understand the compliance goals that you have as a company, then they can help build something together, build a partnership that really matters to the company.”
Alex Daniels contributed to this article.