Australian Corporate Philanthropy Needs Direction - Research
2 August 2012 at 3:27 pm
Research by a policy-based think tank shows corporate philanthropy in Australia is opaque, confused and ineffectual.
The research, released by think tank Catalyst Australia, shows that Australian companies could improve the effectiveness of their corporate donations relatively easily by developing simple strategies to monitor their giving with an eye to its impact.
The new report, “What gives? How companies invest in communities” looked in detail at 12 major Australian companies and found that together they donated a significant half a billion dollars to the community annually.
The report also found however that the reporting regime around the donations was opaque and that improved reporting standards and disclosure would lead to better targeted philanthropy and significant reputational enhancement for the companies concerned.
The report finds that “most companies undertake their community investment activities without a strong framework, strategy or tools to measure the performance, impact or effectiveness of their approach” and that “improved disclosure would lead to a better understanding of the significant flow of resources from companies to areas of community need.”
The report found that the biggest donors were BHP Billiton and Rio Tinto and that BHP lead the pack by contributing one per cent of its pre tax profit. Most other firms studied donated 0.7-0.9 per cent.
Commenting on the reports findings, Catalyst Executive Director Jo-anne Schofield said that a reporting standard needed to be developed to benchmark corporate donating and improve consistency and outcomes.
The report recommended that a high level consultation group of leading companies, unions and community organisations should be convened by the London Benchmarking Group (LBG) to develop its community investment measurement framework into a reporting standard that can be broadly applied in the Australian context.
“There is a clear need for companies to be able to measure the impact of their giving so as to make it more effective,” Schofield said.
The research looked at how Australian firms leverage community contributions from other sources. Eight of the sample raised an additional $63 million through leverage, representing an
additional 40 per cent on top of their total contributions.
Customers and staff were the main sources companies used for leveraging donations. Topping the list was Wesfarmers, which leveraged extra funds almost one-and-a-half times
greater than their direct contribution. Direct contributions and leverage for this company amounted to 2.1 per cent of their pre-tax profit.
Catalyst said that surprisingly it had difficulty identifying the motivations and approaches that informed company decisions about where to invest funds.
It found that policy supporting community investment approaches was scarce, with three companies publishing a community investment strategy and a fourth reporting that one was being developed. A further three companies had publicly available sponsorship/donations guidelines. What existed of the other companies’ information was spread through various statements in reports and on their website.
Catalyst said that even more surprising was the finding that benchmarks and measurement tools do not have well-developed indicators to assess the strategic and motivational factors behind community investment decisions.