Corporate giving at lowest levels since 1970s, philanthropy expert says

Posted: June 21, 2012

Corporate philanthropic donations as a share of pretax profit are trending at their lowest levels since the 1970s, according to a report presented Wednesday in Philadelphia.

"Corporations are clearly not stepping up," said Patrick Rooney, executive director of the Center on Philanthropy at Indiana University, speaking to dozens of fund-raisers from the region at the Union League.

It wasn't quite so clear to Wynnewood lawyer Laura N. Solomon, whose firm specializes in nonprofits. Raising her hand at the gathering, she told Rooney and the other panelists that what she was seeing were businesses funneling their donations through their marketing departments, rather than their corporate foundations.

In both cases, the corporations get tax deductions — either as a charitable donation or as a business expense, but the business expense doesn't show up in the tax data Rooney's group uses in its report.

The Indianpolis-based philanthropy center researches a widely watched annual report on charitable giving for Giving USA, a Chicago nonprofit.

To be sure, corporate donations track the economy, showing declines during recessions, including the most recent one, according to the report. In 2011, corporate foundations gave $14.55 billion, out of $298.42 billion in total U.S. charitable giving. Corporate giving declined slightly in terms of dollars, from $14.56 billion in 2010, down 0.1 percent.

By contrast, giving by individuals rose, to $217.8 billion, up from $209.6 billion in 2010, an increase of 3.9 percent.

"Corporate America is being [influenced] by shareholder pressure not to give, but show returns to the bottom line," said panelist Robert Evans, a partner in EHL Consulting Group, a fund-raising consultancy based in Willow Grove. Marketing expenses that include philanthropy aren't as obvious to shareholders, he said.

In the 1970s, corporations typically donated less than 1 percent of their pretax profit. By 1980, they crossed the 1 percent threshold, donating as much as 1.6 percent, even during the tough recession that ended in 1982.

In 2004, in a growing economy, corporate donations as a percentage of pretax profit again dipped below 1 percent and have not gone above 1 percent since then. Corporate donations hit their peak in 2005, when businesses gave $17.5 billion, according to the report.

Solomon said she was trying to advise her fund-raising nonprofit clients to pay more attention to corporate marketing objectives. For example, she said, her law firm helped underwrite a recent event for the Nonprofit Center at La Salle University.

Beforehand, the center's officials questioned her about her expectations and discussed how her firm's name would be used. Afterward, they called her to make sure her expectations were met.

That, Solomon said, was the right way, but no other organization that she has sponsored did the same.

"Because it's coming from the marketing bucket, donors want to know what kind of marketing exposure they're getting. They want to know what the return benefit is," she said.

Corporate giving, however, is a relatively small part of the nation's charitable profile. At 5 percent of the 2011 total, "it's almost a rounding error," Rooney said.

Among the points Rooney made Wednesday about other types of giving were these:

• When government involvement in a particular sector grows, donations in that sector tend to grow less quickly. "My hypothesis is that if government spending in health care grows, private philanthropic support in health will continue to grow, but slowly."

• Donations to human-service organizations grew 12.4 percent cumulatively between 2009 and 2011. But donations grew three times as fast in 2009 as in 2010 as generous Americans responded to the basic needs of those struggling in the recession. As conditions improved, donations slowed, but did not decline.

• The typical individual donation for a disaster is $50. "Corporations are very strategic in disaster-relief giving," he said. For example, U.S. companies trying to enter the Chinese market made big donations after the earthquake in China in March 2011; other corporations did not.

• The decline in religious giving is troubling to budget-squeezed houses of worship — people who donate to religious organizations also tend to be the most generous donors overall. There is a small group of nonbelievers who regularly give to religious institutions. "I call that insurance," Rooney quipped.

Contact Jane M. Von Bergen at 215-854-2769 or jvonbergen@phillynews.com, or follow on Twitter @JaneVonBergen. Read her Jobbing blog at www.philly.com/jobbing

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