As the economy struggled in 2002, few expected corporate giving would rise. Conventional wisdom said corporate philanthropy would be flat, or perhaps down, as it reportedly had been in 2001.
But this June, when Giving USA, the standard source for American giving, released its first estimates of 2002 donations, the study showed corporate giving had spiked a surprising 8.8 percent from 2001 (this and other giving statistics have been adjusted for inflation). That compares to a 0.9 percent decline in giving by individuals and a 0.5 percent fall in bequests.
What’s more, the new Giving USA indicates that some of the provisional figures for 2001 giving that it published last year were underestimated—especially the corporate giving figures. Whereas last year’s report said that in 2001 corporate donations had dropped 13 percent, more accurate data show that corporate America actually increased its giving that year by nearly 3 percent over 2000. Altogether, the latest study shows that corporate America’s annual giving rose from $10.7 billion to $12.2 billion over three economically challenging years.
Total giving from all sources for 2001 was also refigured to a substantially higher number. Giving USA 2003 shows that last year’s estimate for total giving in 2001 was low by more than $26 billion; the correct figure is now calculated to be $238.5 billion.
What accounts for the discrepancies? The first Giving USA study to appear each year is based in part on early Internal Revenue Service estimates of charitable deductions and contributions. When the IRS later releases more complete data, Giving USA revises its figures. Leo Arnoult, chairman of the American Association of Fundraising Counsel’s Trust for Philanthropy, which compiles the data, called the large revision a fluke and an aberration, adding that the difference between the 2001 corporate estimates and the revised numbers are the largest he can remember.
“Corporate giving is the bright news in this year’s report,” said Arnoult. “The fact that companies stepped up their giving even in a climate of soft corporate profits is a real testament of companies’ commitment to philanthropy.”
On the negative side, shrinking endowments in a bear market led noncorporate foundations to reduce their grantmaking by 2.7 percent.
Growing corporate philanthropy is a sign that companies increasingly view philanthropy as more than just a tax deduction and a chance for some good publicity, but as an integral part of their identity.
“To me, it says a lot about a company when in economic tough times they don’t pull back from their giving,” said Christina Shea, a General Mills senior vice president who oversees its corporate philanthropy. “That shows that a company’s giving is about more than numbers, but about a commitment to a philanthropic philosophy and their community.”
Despite the sluggish economy, General Mills has done well with brands that include Betty Crocker, Pillsbury, and Green Giant. From 1997 to 2002, net sales increased 80 percent to $7.9 billion. Its overall philanthropy exceeded even that growth, rising 138 percent to $67.4 million.
Part of the overall jump nationwide in corporate giving might be explained by the outpouring of corporate giving in the aftermath of the September 11 attacks, with much of that money spread out over two years. Another factor might be better accounting for in-kind donations, which encourages more deductions on tax returns.
At some companies, such as Microsoft, these product giveaways amount to the vast majority of giving. Most registered charities can obtain all the free Windows-based software they need from Microsoft. In 2002, more than 5,000 took advantage of the offer, which was worth $207 million, a tripling of Microsoft’s 1997 software donations.
“Microsoft has a product in demand that has a huge transformative value not only for nonprofit organizations, but the individuals they serve. We’re in a nice position as opposed to, let’s say, Boeing, who can’t necessarily give away planes,” said Cathy MacCaul, the firm’s community affairs spokesman.
Philanthropy can and does vary greatly from company to company, but business overall can take a moment from nursing wounds left by accounting scandals and declining profits to feel proud of its recent giving performances.
“Business is good for this country, and businesses who care about their communities are even better for this country,” said Susanne Brose, director of the Committee to Encourage Corporate Philanthropy. “Smart corporations will rise to the occasion during economic times like this, and they’ll shine that much brighter.”
Mark O’Keefe is a national philanthropy correspondent for Newhouse News Service in Washington. Some of the material here comes from a previously published Newhouse article.