Corporate Profits Surge but Cash Donations Creep Up Only 3%

Walmart’s new foundation president, Kathleen McLaughlin, has quickly put her stamp on the company’s giving.

Ms. McLaughlin, who also oversees sustainability for the company, is working on three fronts to help the environment: through grant making, reducing the company’s energy footprint, and wooing corporate partners to do the same.

In May, the company renewed a $20-million commitment to help military veterans find jobs. And later this summer, Walmart expects to announce a new effort to fight hunger after hitting its previous five-year, $2-billion goal (primarily through donated food) a year early.

But on the burning question for most nonprofits, Walmart’s answer may disappoint: The company does not expect to give away more cash this year than in 2013, and its 2013 donations were down 9 percent from 2012.

The Chronicle’s annual survey of giving by America’s biggest companies found that Walmart gave away more cash than anyone else in 2013—as it has for 10 of the past 11 years. Yet Walmart is reflective of the survey’s findings in ways that offer both good and bad news for fundraisers.

Corporations are becoming increasingly sophisticated in their giving, cutting back on small, scattered grant making in favor of bigger commitments to causes that are close to their expertise, in part so they can offer product donations and employees who are eager to volunteer. But for all the talk about large, concentrated gifts—aligned with business interests and measured with data—companies aren’t giving away significantly more cash.

U.S. corporate profits hit an all-time high of $1.9-trillion in 2013, up more than 5 percent. But The Chronicle’s survey shows that cash giving rose less than 3 percent, to $4.6-billion. However, product donations rose 22.8 percent.

‘Purposeful Philanthropy’

The Chronicle’s findings suggest slightly higher rates of giving than some other measures of corporate philanthropy. “Giving USA,” an annual tally of philanthropy that was released last month, found that corporate giving declined 3.2 percent.

“I wish that I could say we’re seeing a huge bump in the allocation of dollars,” says Mark Shamley, head of the Association of Corporate Contributions Professionals, in Mt. Pleasant, S.C. “But we’re seeing no evidence of that. What we are seeing is more purposeful philanthropy.”

The Chronicle surveyed the 150 biggest companies in the United States, as ranked by Fortune magazine according to annual revenue, and analyzed data from 70 of them.

Among other findings:

• After Walmart, the second-highest giver of cash in 2013 was Wells Fargo, at $275.5-million, down more than 12 percent from a year earlier. Chevron took the third slot, giving $274.3-million, up 4.5 percent.
• Sixteen companies gave more than $100-million in cash in 2013, compared with 13 in 2012.
• Overall corporate giving, when both cash and products are counted, rose by 17.2 percent in 2013, to $18.7-billion.
• Halliburton took the top spot, giving $4.1-billion in cash and products. For each of the top three overall donors—Halliburton, Pfizer, and Merck—product donations made up more than 90 percent of their giving.

Some nonprofit advocates see the corporate tightfistedness with cash as a problem.

“Nonprofits certainly appreciate in-kind gifts and all forms of corporate support,” says Aaron Dorfman, executive director of the National Committee for Responsive Philanthropy, a watchdog group in Washington. “But what they really need and want is cash. Cash giving is hands down the most valuable and efficient way for corporations to support nonprofits.”

Some charity and business leaders see a different picture, saying America’s corporations are serious about using all of their resources to help charities, including deploying employees to provide services that nonprofits might not otherwise be able to afford.

General Electric has given nearly $48-million in the past five years to community health centers, and employees have volunteered 420,000 hours to help the centers improve operations.

The Lynn Community Health Center, which serves a city 10 miles north of Boston, received a $400,000, four-year grant from GE. Lori Abrams Berry, the chief executive, says the center has received even more value from the company’s volunteers and free training.

The center sent 12 of its medical and administrative leaders to a three-day training session by GE on how to change work flow to achieve better outcomes. GE, which is known for its innovation in management techniques, also sent over a team of employees from its jet-engine plant in Lynn to help the health center implement the new approaches.

One persistent problem faced by the center: When primary-care physicians referred patients to a psychiatrist, fewer than 50 percent of the patients actually scheduled an appointment. With the help of GE, the Lynn center came up with the idea of staggering psychiatric appointments, so that at least one therapist would always be available on 15 minutes notice for an introductory meeting in the primary-care doctor’s office. That change, to what’s called a “warm handoff,” has resulted in more than 70 percent of referred patients now scheduling follow-up appointments.

“Sometimes expertise in building a jet airplane can be quite useful,” Ms. Berry says.

Employee Involvement

Nearly all large companies are trying to provide opportunities for their employees to become more meaningfully involved with charities.

CECP, a coalition of CEOs that encourage corporate philanthropy, recently asked 34 chief executives to identify what group of people would matter most in influencing more investment in the community. Thirty-six percent said employees, far more than named customers, board directors, or shareholders.

That finding suggests that corporate executives are paying close attention to research showing that workers, especially younger ones, want more out of their jobs than a paycheck.

“Millennials don’t want to work for a company that only cares about shareholder value,” says Nicola J. Acutt, VMware’s vice president for philanthropy and sustainability. “They want to work where they feel that their work matters in a bigger context.”

UPS has expanded Road Code, a program that teaches teen drivers the same safe-driving techniques that the company’s drivers learn, at Boys & Girls Clubs of America sites in 52 cities. The company, known for its logistics expertise in shipping packages, also sends volunteers to assist the American Red Cross after disasters. “Companies have to play to their strengths,” says Eduardo Martinez, president of the UPS Foundation.

In June, the company pledged that its 400,000 employees around the world would complete 20 million hours of volunteerism in the decade ending in 2020.

As for cash giving, Mr. Martinez says the amount for UPS is about $50-million a year ($54.5-million in the 2013 fiscal year), and the company offers to match all employee contributions to the United Way.

Matching Gifts

Some companies are trying to get their employees more involved by significantly expanding such matching-gift programs. Medtronic, a medical-devices company in suburban Minneapolis, has long matched gifts to local United Ways. After realizing that only 16 percent of its employees lived in an area served by a United Way, the company expanded the program last September to match gifts of up to $50,000 that employees or retirees make to any charity anywhere in the world.
In the first seven months of the program, Medtronic has matched $6-million, an increase of $1.4-million over the same period a year earlier. “We’re encouraging our 46,000 employees to become personal Medtronic philanthropists,” says Jacob Gayle, vice president of the company’s fund.

Some Minneapolis charities are working hard to educate Medtronic employees about the benefit. The company regularly sends teams to help pack meals at Feed My Starving Children, a faith-based nonprofit that ships 192 million dehydrated meals a year to 70 countries.

When Medtronic employees came to volunteer this year on Martin Luther King Day, the charity attached a piece of Doublemint gum to a flyer outlining the company’s matching-gift program.

“We just did some silly things to say, ‘You can double your gift,’ " says Polly Wright, a major-gifts officer at the charity.

Business Priorities

Medtronic has also revamped its foundation’s giving, which had been broad-based, to focus more closely on a goal that the company has long had through its direct giving: improving health care for underserved patients around the world. (About half of the $65-million the company gives away each year comes through the foundation.)

“What we’re seeing is that alignment to the business remains the key factor in how companies are allocating resources,” says Mr. Shamley, of the corporate-giving association.

CVS is also tailoring its charity in ways that jibe with its focus on health. After the drugstore chain announced in February that it would no longer sell tobacco in its 7,600 stores, Eileen Howard Boone, the company’s senior vice president for corporate social responsibility and philanthropy, consulted with health experts about how the company could help address the health consequences of smoking.

In May, the company teamed up with the American Lung Association as the major sponsor of Lung Force, an effort to fight lung cancer in women. (The company declined to disclose the amount of the sponsorship.)

Conservative Approach

Even as the stock market hits new highs, many shareholders are concerned that too many companies are sitting on their cash, or repurchasing their stock, rather than investing in expanding their business lines.

That conservative approach also hurts charities, since many large companies set their giving budgets as a percentage of total profit. In Walmart’s latest quarter, net income fell 5 percent.

An otherwise upbeat Ms. McLaughlin turned somber when discussing the implications for the company’s giving.

“When the business is growing, the cash goes up,” she says “You can look at our recent business performance, and that will give you a sense of which direction the giving will go.”

Key Corporate Giving Facts

Note: Figures show money donated by corporations and their foundations, plus the fair market value of product donations.

Editor’s note: This story was updated on July 21, 2014 to correct the cash giving figure for Wells Fargo.