As the cries to end police brutality against Black people escalated in cities across the country this year, corporations led the philanthropic response, moving faster than foundations to get billions of dollars in grants for racial justice out the door.
In doing so, many companies stepped outside their comfort zones. Corporations in recent decades have largely avoided hot-button issues and focused their giving on causes directly tied to their business strategies, such as work-force development.
For a growing number of businesses, the killing of George Floyd upended that model.
“Corporations have always been very careful to sort of stay in their lane,” says Yolanda Seals-Coffield, president of global accounting firm PwC’s foundation. She added that Floyd’s killing accelerated a trend that was already underway: “We’ve seen a lot more corporate activism in recent years than we’ve ever seen.”
Traditionally the PwC foundation has supported efforts to improve financial literacy and has provided humanitarian relief after disasters, and those efforts will continue, Seals-Coffield says. But the calls to fight racism prompted PwC to contribute $250,000 each to the ACLU, the Center for Policing Equity, Dream Corps, and the NAACP Legal Defense and Educational Fund. The company also matched employee contributions to social-justice organizations, resulting in more than $1.2 million in donations.
Seals-Coffield isn’t worried that the corporate response is for show.
“If we get organizations focused on these issues,” she says, “I’m not particularly concerned about what motivates them to do it.”
The strategy shift among some companies is not without risk. President Trump and tens of millions of his followers are livid about the street protests, saying they unfairly demonize the police. And yet companies declared on Twitter that “Black Lives Matter.” In blog posts, chief executives embraced diversity and inclusion and stated their opposition to racism. And corporate cash is flowing to Black-led nonprofits, scholarships for Black students, and investments in Black-owned enterprises.
The big question: With corporate profits drying up, how long will the big money continue to flow, and how long will companies stick with causes that may irritate a sizable share of their customers?
Big Announcements
For now, the big-dollar announcements keep coming.
Walmart Stores announced the creation of a $100 million racial-equity center. Apple rolled out its own $100 million effort, which will focus on economic opportunity, education, and an overhaul of the criminal-justice system. And in mid-June, Google laid out a $175 million plan, consisting of a mix of grants and investments.
Professional sports historically have labored to avoid controversy, and yet the NBA recently announced a 10-year, $300 million commitment for grants to foster economic growth and career readiness in Black communities. NBA players are encouraged to add words and phrases like “equality” and “justice” to their jerseys, an officially sanctioned, on-the-job foray into politics that would have been unthinkable in the pro sports world just a year ago.
All tallied, businesses and the foundations they support have led the philanthropic push to attack systemic racism, according to grant totals tabulated by Candid, a philanthropy research group. More than half of the $5.9 billion pledged this year by institutional grant makers and other large donors have come from corporations. That figure, which includes grants announced for just more than half the year, surpasses the total committed to racial justice over the past nine years combined.
Candid’s figures include grants and impact investments but not business investment like market-rate loans targeted to Black-owned businesses.
Assessing corporate giving can be a challenge. News releases are often vague about how much money is actually going to charity, and many companies blend internal business activities with their announcements of philanthropic giving.
For example, Bristol Myers Squibb and its corporate foundation recently announced “a combined investment of $300 million” for “health equity and diversity and inclusion efforts.” A news release was vague in explaining how the money would be used, and spokeswoman Michele Loguidice declined to say how much money would go to 501(c)(3) charities.
“Unfortunately, we are not providing that level of detail at this time,” Loguidice said.
Grassroots Impact
Will Cordery, an adviser at consulting firm Leverage Philanthropic Partners, credits the work of grassroots organizations to effectively tell stories of the “righteous rage” felt by Black people for the corporate response. Timing was key, too. After being isolated in quarantine for months this spring, people of all races felt they had reached a boiling point and showed up on the streets in protest. While the killing of Michael Brown in Ferguson, Mo., six years ago was deeply divisive, the phrase “Black Lives Matter” is now viewed favorably by a majority of Americans.
“Right now, why wouldn’t you want to show up and show your solidarity not only with the statement but with money,” says Cordery. “It’s good for business.”
It is not clear whether companies are changing their practices for the long haul or simply posturing in the moment, Cordery says. After the Ferguson unrest, the philanthropic response withered as other topics attracted people’s attention, he says.
Cordery and others are organizing an effort to keep corporate giving programs focused on racial equity. It is too early, he says, to go into detail, but collecting data on the demographics of corporate social responsibility leaders will be a starting point.
It’s the Economy
In addition to worries about whether the corporate focus on racial justice will last, there are concerns about corporate America itself. As the coronavirus continues its spread, companies in struggling industry sectors will have a hard time staying afloat, much less making grants to nonprofits.
For example, don’t expect a lot of giving from the hospitality industry, as hotel and restaurant chains are slammed by shutdowns, says Carolyn Berkowitz, president of the Association of Corporate Citizenship Professionals, a membership organization for people in corporate social-responsibility roles.
About 65 percent of the companies surveyed by the association in July indicated they expected to sustain or increase their grant making next year. And nearly half indicated they were making grants for general operating support for the first time rather than specific projects. Advocates for racial equity in philanthropy have long called on foundations to provide operational support rather than force nonprofits to adhere to the strict guidelines of a specific program.
Berkowitz says she doesn’t know whether companies will sustain giving to civil-rights organizations. But she is confident that corporations will continue to look at whether their own practices perpetuate racism and look to incorporate strategies in their grant making that promote equity, whether grants are made explicitly to anti-racist organizations or not.
“Funding racial justice in and of itself may come and go,” she says. “But companies are rethinking how they fund, and they’re asking for a different set of outcome measures as a result of what the virus has laid bare.”
Kari Niedfeldt-Thomas, managing director of CECP, a coalition of corporate leaders who support giving to social causes, says about three-quarters of her group’s members plan to increase their spending on diversity and inclusion. In early June, CECP hosted a series of calls with members on the topic. They came clamoring with questions, Niedfeldt-Thomas says. How could they make a difference? What are the issues surrounding police reform? And which social-justice organizations have a national footprint?
“Twenty years ago, companies were more cautious” when it came to discussing racism, she says. “They were buttoned up and wouldn’t say anything. Now they are saying. ‘We’re vulnerable, and we know it.’”
Marybeth Gasman, executive director of the Rutgers Center for Minority Serving Institutions, is glad to see the corporate response. But she added that the surge of grants shows that companies have long been missing in action.
“Many of these gifts are enormous,” she says. “During the middle of a pandemic, they have that kind of money to give, and yet they weren’t giving before. Just imagine where we’d be in terms of racial equality and justice if corporations had been giving in a serious way.”
Still Strategic
Some companies are continuing with their current strategy of making grants and investments in ways that aim to boost their bottom lines — but with an emphasis on supporting Black businesses and individuals.
PepsiCo recently announced a $438 million, five-year commitment that deals mostly with the company’s operations. The company plans to increase its spending on Black-owned suppliers by $350 million over five years and invest $50 million in Black-owned businesses.
The philanthropic response is smaller. The company will institute a $25 million scholarship program for Black students in community colleges and students who are moving from two-year to four-year institutions. Pepsi will also devote $6.5 million to “community-impact grants to address systemic issues” and $5 million to a training program for Black nonprofit chief executives.
Charles Schwab. dedicated $3.5 million to create an endowed scholarship for 14 Black finance majors a year. The students are offered mentoring and will be given internships at the company upon graduation.
Carrie Schwab-Pomerantz, who chairs the company’s foundation, says the scholarships benefit both the students and the company, which will have a bigger pool of Black finance pros to potentially hire. Along with another scholarship gift of $500,000 to three historically black colleges, Schwab’s response will total $4 million.
Schwab aims to build close relationships with students that receive the scholarships, Schwab-Pomerantz says..
“We’re not necessarily a company that writes huge checks,” she says. “We go deep in our philanthropy.”
Like many companies, the bulk of PayPal’s response came for the most part in the form of investments rather than philanthropy. In addition to committing to $500 million in investments in Black-owned companies and $15 million to be spent internally to strengthen the company’s commitment to diversity, equity, and inclusion, PayPal is making $10 million in emergency grants to Black-owned businesses and $5 million to nonprofits that support Black-owned businesses.
“Our skill set and our mission as a company focuses on financial health and on building and empowering economic opportunity.” says Franz Paasche, PayPal’s senior vice president of corporate affairs. “That’s the most powerful way that we can contribute.”
Tracking the Response
Almost a year before the more concentrated push against racism in the United States, corporations had already decided they needed to send a different message. A group of 181 chief executives signed a letter that pledged they would take the interests of suppliers, employees, local economies, and the environment into account when they did business. It was a profound departure from the shareholder-first mind-set that has long dominated corporate boardrooms.
The Test of Corporate Purpose, a Ford Foundation-supported collaboration, will track corporate responses to Covid-19 and the inequality crisis to see if those executives keep their pledge.
There is a danger that the huge increase in corporate giving will obscure business practices that only exacerbate racial injustice, says Joanne Bauer, co-founder of Rights CoLab, and a member of the Test of Corporate Purpose’ Initiative’s advisory board.
“It’s visible, it makes headlines, and it makes it look like the company is a good corporate citizen when in fact there is so much harm it needs to address,” she says.
