September 23, 2009
38% of Companies Cut Cash Giving in 2009, Study Finds
By Caroline Preston
Business leaders say they remain committed to being good corporate citizens even during the recession, but financial pressures have forced some to cut back on philanthropy and volunteerism, according to a new study by the Boston College Center for Corporate Citizenship and the Hitachi Foundation.
Fifty-four percent of more than 750 business executives surveyed said that corporate-citizenship activities—including environmental efforts, ethical business practices, treating employees well, and philanthropy—are even more important during bad economic times than good.
But 38 percent of companies were forced to cut their cash giving this year, according to the study of small, medium, and large businesses.
The percentage of businesses contributing products and services dropped slightly, from 65 percent in 2007 to 60 percent this year. Those providing volunteering opportunities fell from 64 percent to 57 percent.
The cutbacks were strongly correlated to a company’s financial performance. Among businesses hit hard by the recession, 59 percent spent less on philanthropy.
Of those whose performance improved, 19 percent gave away less money, while 63 percent gave about the same. The rest (18 percent) gave more.
The study, “Weathering the Storm: The State of Corporate Citizenship in the United States 2009,” is the fourth of its kind.
‘Pretty Good Story’
Mark Popovich, senior program officer of the Hitachi Foundation, in Washington, said the survey results painted “a pretty good story for corporate philanthropy and volunteering,” considering the severe economic stress most businesses faced this year.
While there is strong support among business leaders for charitable giving and volunteering, he said, it was difficult to maintain cash contributions in the face of plummeting revenues.
“Employees may be asking whether we have the money when we’re laying off people, when our sales and revenues are down, when we’re cutting back hours,” Mr. Popovich said. “There are internal pressures.”
The survey, which was conducted in June by the polling company GlobeScan, found that small businesses were responding differently to the recession than large ones. While they were less likely to lay off workers, small companies (those with fewer than 100 employees) were more likely to cut charitable giving and volunteerism.
A company’s reputation, and its traditions and values, were cited as the two main reasons for engaging in corporate-citizenship activities. The chief executive now leads a company’s efforts to be a good corporate citizen at three-quarters of the businesses surveyed.
Companies were more likely to give money, products, and volunteer hours to education, health care, and the environment than other causes.
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The Philanthropic Initiative, Inc. (TPI) has been talking with leading CEOs and corporate giving leaders over the past few months, and while cash donations and volunteer hours may have declined, we’re seeing thoughtful companies use what resources they have more effectively toward bringing about social change – abandoning non-strategic investments (golf outings, table sponsorships and scattered donations) to more closely align their giving/volunteerism with their long-term corporate goals. We’re optimistic that this increased focus on impact will offset some of the decline in resources.
— Jim Coutre Sep 23, 03:42 PM #
I applaud US companies for sticking with it. Sure, there will be some that have to cut back. If revenue is not there to give, what else can they do?
But, this should also be a clarion call for nonprofits to invest more of their time in beginning and cultivating relationships with people. Individual donors will provide charities with a more sustainable base of support. An added bonus is that out of those individual relationships will come new corporate and foundations support as well.
It surprises me to see so many smaller nonprofits that are too heavily invested in corporate and foundation support. Many of these are now feeling the pinch.
— Kevin Feldman Sep 23, 06:05 PM #
It is remarkable that even in the current economic climate, high net worth individuals are still willing and able to sustain their level of contribution, albeit on a “percentage” basis, rather than donating lump sums.
When a philanthropist contributes a fixed percentage of net worth, for instance, this ensures the stability of contributions over time, without the pressure of donating a fixed “amount” each year, e.g. 5% of net worth per year, as opposed to $250K/year.
As the Chair of the Philanthropic Sustainability Council, I have advised philanthropists to employ this as part of their charitable giving strategy. Critical too, is the need to diversify the donor base, beyond corporations to individual donors who may be personally linked with particular causes.
Hopefully this helps charities reach their goals in challenging economic times.
— Adil H. Chagani Sep 29, 12:32 AM #