News and analysis
August 07, 2010

America’s Biggest Businesses Set Flat Giving Budgets

After a year of cuts, most companies plan to hold steady in 2010, Chronicle study finds

Patrick Schneider

Many companies, including Lowe’s hardware chain, are stepping up their volunteer programs to help cash-strapped charities.

Corporate profits are on the rebound, but most big businesses say it will be some time before they can give as much cash as they did before the recession, according to a Chronicle survey of 162 of the country’s largest corporations.

Seventy-three percent of businesses polled said they expect their cash and product giving in 2010 to be about the same as in 2009—a year in which cash giving fell by 7.5 percent. Thirteen percent anticipate an increase and 13 percent predict a drop.

While that would be’s bad news for charities, the reality could be even worse.

Sixty-eight companies decreased their combined cash giving in 2009 from $4.3-billion to $3.9-billion, the first time since 2003 that cash contributions from businesses in The Chronicle’s survey have dropped. Fifty-four percent of businesses gave less cash, 30 percent gave more, and 16 percent gave roughly the same. But donations of cash and products increased by nearly 5 percent last year, as companies sought to compensate for the decline in cash by offering other types of assistance. See more from this year's survey, including a searchable database of all 162 corporations.

“The whole economy has to burrow itself back up before a lot of corporations are going to have the money to invest as they did prior to the recession,” says Woody Dicus, manager of corporate community relations at Progress Energy, in Raleigh, N.C.

The business will donate a little less this year by giving money to fewer groups that have never received aid from Progress, and by cutting back on support of galas and eliminating and eliminating support of galas and golf tournaments. 

Changes in Giving

 While they have less money to give, companies are trying to respond to needs aggravated by the bad economy.

Fifty-four percent of businesses in the survey said they are encouraging employees to volunteer more, 25 percent are giving more money to groups that serve people hard hit by the recession, and 16 percent are donating more products and services.

Microsoft, for example, is cutting back on cash giving slightly this year but training more out-of-work people (roughly 900,000 vouchers for free classes have been distributed so far) in technology skills. The company, with headquarters in Redmond, Wash., is also doing more to get employees to volunteer by creating a “leadership” designation for people who volunteer regularly (before, only those who donated $1,000 or more were recognized).

The volunteer work has benefits for Microsoft, too. After the company publicized its volunteering program to its employees in Egypt, workers’ satisfaction with the company’s commitment to societythere, as measured by an internal survey, jumped from 61 percent to 91 percent, says Akhtar Badshah, senior director of global community affairs.

A Narrowed Focus

Companies are changing their approach to giving in other ways, too., Businesses continue to pare the number of causes they support, often favoring social issues that align with their business goals and expertise. Progress Energy, for example, is now directing a large share of its charity to energy-related causes, such as a program at the University of North Carolina that educatestrains teachers aboutin energy issues.

Other companies are narrowing their focus around specific goals. Northwestern Mutual Foundation, in Milwaukee, is no longer giving to a wide range of groups that seek to improve education; instead, its grants will focus on literacy. Target, in Minneapolis, is focusing its education philanthropy on getting children reading proficiently by the end of third grade.

As companies focus on fewer causes, they are pressing charities to do more to demonstrate their performance.

Northwestern Mutual, which is seeking to cuttrim in half the number of groups it supports in half, is asking charities to fill out a “financial scorecard,” showing the organization is on sound financial footing as a prerequisite for getting a grant.

PNC Financial Services Group, in Pittsburgh, works with consultants who specialize in nonprofit evaluation to vet its grantees and typically directs roughly 12 percent of each grant to evaluate its effectiveness.

At the same time, the bank, like 35 percent of businesses in The Chronicle’s survey, is moving away from making multi-year grants. “We don’t want to be a line -item in an organization’s budget year after year,” says Michael Labriola, deputy executive director of the PNC Foundation. “That fosters, I don’t want to call itsay dependence, but reliance.”

But even as some companies make fewer long-term grants, others are focusing on developing close relationships with a handful of key grantees. Often, companies want not just to be able to give not just money but also to offer volunteer help and other kinds of assistance.

The GE Foundation, in Fairfield, Conn., unveiled a $25-million, three-year program to help uninsured people get access to health care, something the company’s employees felt was important to do in the years before the new federal health-care overhaul kicks in. Nonprofit health clinics get $250,000 cash grants as well as help from GE employees in strategic planning, marketing, and other skills.

Nonprofit officials say that providing volunteer opportunities for company employees has sometimes become a condition of getting a grant. While charities say getting cash grants from companies is generally their preference, the growing corporate interest in volunteerism has sometimes helped them land new donors.

Matrix Human Services, in Detroit, recently retooled its volunteering program to provide full-day opportunities for large groups. Employees from the Ford Motor Company, which also overhauled its volunteering program to keep track of how much time people were spending and what difference they made impact they were having, helped the charity pack holiday baskets, build a playground, and plant a community garden. The volunteer days come with small cash grants from Ford of $5,000.

Biggest Givers

Still, many of the nation’s most -profitable businesses don’t provide information about their giving, making it difficult to know if they do any philanthropy at all. Amazon, Apple, and Google were among dozens of companies that declined repeated requests to respond to The Chronicle’s survey, which was conducted in collaboration with USA Today. For those companies that did respond, some of the survey’s most significant findings include:

  • Companies gave a median of 1.2 percent of their 2008 profits away to charity in 2009, though the link between a company’s profits and its philanthropy is often less direct.
  • Eleven companies gave more than 5 percent of their profits.
  • The biggest cash contributor was Wal-Mart, in Benton, Ark., which gave $288.1-million. (The discount-store chain stepped up its commitment to charity even more in May, when it announced a $2-billion, five-year pledge to fight hunger.) AT&T, in Dallas, followed with $240-million, and Bank of America, in Charlotte, N.C., donated $209.1-million.
  • The top donors of cash and products were Pfizer, in New York, ($2.3-billion); Oracle, in Redwood Shores, Calif., ($2.1-billion); and Merck, in Whitehouse Station, N.J., ($923.2-million).

Companies that gave significantly more in 2009 than in the previous year generally did so because they acquired another business and took on responsibility for its philanthropy. For example, Wells Fargo, which took over Wachovia when the bank was close to collapse in the fall of 2008, is now giving roughly what the two banks gave separately before the merger. Similarly, PNC Financial Services, which acquired National City Corporation at the same time, plans to give more than twice as much this year as it did in 2008. Both companies say they have kept people in charge of their philanthropy programs more or less the same, although PNC is shifting its focus to education.

Yet Jane Kendall, president of the North Carolina Center for Nonprofits, an umbrella group in Raleigh, says that the spate of corporate mergers and acquisitions has been tough on charities.

Some nonprofit leaders are reluctant to invest time in getting to know a new corporate- foundation official because they worry that person will not be in their job in a few months. Companies that have asked charities to prepare detailed progress reports sometimes don’t follow up when the business changes hands, she says.

Stories to Tell

At the same time, more businesses are trying to share stories about their giving, perhaps a wise public-relations move at a time when Americans’public faith in big business is so low. When Southwest Airlines decided last year to pare the number of causes it supports, the company did so both to make a bigger difference and so it would have a moreto have a more compelling story to tell about its charity.

“We’ve had a long tradition of being involved in the community, but it wasn’t well understood because we didn’t talk about it,” says Debra Benton, director of community relations of the airlines, in Dallas.

The company, which had been giving money to a wide range of causes, is now supporting five types of charities that its employees and customers identified as important: groups that focus on children, disasters, the environment, health, and members of the military and their families.

Last year, Southwest bundled reports about its environmental practices and its corporate social responsibility into its annual financial report. The budget airline is also using its blog, Nuts About Southwest, to talk not just about new markets or customer-service practices, but also about how it is helping people and nonprofit groups.

In a recent post called “The Moments That Change Our Lives ... 'Why, Hello Mr. President,’” the head of a Colorado youth charity supported by Southwest wrote about visiting Washington for a White House event with young people who get college scholarships from his organization. For one young man, Adrian Chavez, a college sophomore, it was his first trip on an airplane.

Emma L. Carew and Alex Richards contributed to this article.