US Corporate Philanthropy On the Rise
Thursday, 17th July 2008 at 11:37 am
Despite economic uncertainty impacting many companies, corporate philanthropy in the US increased in 2007.
The Committee Encouraging Corporate Philanthropy (CECP) in the US has released new research revealing that giving by large, multi-national corporations increased by 5.6%, from a median of $US24.67 million in 2006 to a median of $US26.05 million in 2007.
Additional trends from 2007 data include:
– 66% of matched-set respondents increased their giving in 2007, 34% decreased their giving, an increase from 2006 in which 56% of companies grew their giving while 44% saw spending decreases.
– 56% of companies reporting lower profits increased their giving.
– Of the eight companies in this sample who experienced losses in 2007, seven companies still increased their giving.
Among companies that increased giving, many cited a shift toward funding new strategic focus areas, as well as an increased level of senior management attention to community investment.
In fact, all of the forty CEOs attending CECP’s ‘Board of Boards’ conference agreed via anonymous opinion poll that corporate philanthropy is important to creating long-term shareholder value.
The weakening economy did not seem to play a significant role for most companies’ giving in 2007. And when CEOs were asked in the same poll, "How important should the economy be in determining corporate cash contributions?" 83% responded within the range of "not important" to "neutral"; none felt it was "very important."
In addition, 89% of CEOs agreed with the statement, "Companies should have mechanisms in place (e.g. cash reserves or endowed foundations) to sustain contributions during periods of weak financial performance."
The Committee projects that despite an apparent earnings slowdown in 2008, most companies will likely maintain 2007 levels of giving in 2008, with some expected to increase or restructure their budgets to reach community partners most strongly impacted by the economy.
88% of companies surveyed have a corporate foundation, which is an important tool to help businesses sustain giving levels in years with strong and weak profits alike.
In addition, CECP projects companies to remain committed to long-term community
investments. CEOs and corporate leadership recognize that Not for Profits depend upon a level of continuity from corporate commitments.
They also acknowledge the business value companies foster through philanthropic efforts.
The elevated expectations from stakeholders including employees, business partners, customers, and others, require consistent community support on the part of corporations.
Executives understand that meeting or falling short of these public expectations can potentially have a strong influence on customers’ purchasing decisions as well as employee recruitment and retention.
These pressures therefore play an important role in executives’ decisions about increasing or decreasing giving during a challenging economy.
The survey data was compiled in 2008, referencing the 2007 giving year, by CECP’s annual Corporate Giving Standard survey of philanthropic initiatives among 155 companies.
Actor and philanthropist Paul Newman and Ken Derr are the founding co-chairs of the Committee Encouraging Corporate Philanthropy (CECP), the only international forum of business CEOs and Chairpersons pursuing a mission exclusively focused on corporate philanthropy.