Corporate Giving Increases, But Road Ahead Uncertain
(Feb. 25, 2008) A recent report shows that charitable giving by major U.S. corporations and corporate foundations to charities, both domestic and abroad, increased in 2006 to $10.2 billion. What do the numbers and trends mean for charities in the near future?
The survey, conducted by Washington, D.C.-based The Conference Board, shows that corporate giving to domestic charities actually decreased 6.3 percent, from $7.2 billion in 2005 to $6.7 billion in 2006. However, overseas giving rose significantly, reaching $2.3 billion, creating an overall giving increase
The health and human services sector continues to be the top recipient of corporate philanthropic dollars, although the level of giving is down 7.6 percentage points, the first decline in giving to this sector in five years.
Meanwhile, the education sector is seeing an upturn in corporate donations. Giving to education is up 7.1 percentage points to 17.8 percent of the corporate giving total. 2006 was the first year to show an increase in education giving since 1999, according to the study.
Pharmaceutical companies continued to top the corporate donor list in 2006, with their U.S. giving outpacing all other industry groups substantially, according to a press release by The Conference Board.
The Conference Board estimates that corporate and corporate foundation cash gift donations will have increased by a median of 1 percent in 2007, while non-cash gifts will have remained the same, based on forecasts submitted by 76 companies in the study.
Forecast for 2008
Where is corporate giving headed in 2008? Two AFP members experienced in corporate fundraising shared their predictions with AFP eWire.
“My sense is that we will definitely see a falloff in certain sectors of the corporate world,” said Penelope Cagney, president and CEO of The Cagney Company in Phoenix, Ariz.
She says two major sectors in Arizona, real estate and banking services, are being hit especially hard in the economic downturn. She is advising fundraisers in her area to solicit $50,000 corporate gifts where last year they might have solicited $100,000, revealing a sharp decrease in expectations.
“Take even greater care this year to monitor corporations’ financial situations and concerns,” Cagney advises. “But make every effort to continue the relationship with corporations with the expectation that things will turn around.”
“Given the uncertainty this year, companies are going to be looking more carefully at their giving,” said Eugene Scanlan, Ph.D., CFRE, president of eScanlan Company in Bethesda, Md. “This may be out of anticipation of what is to come more than the situation they are in now.”
Scanlan agrees that specific sectors are being hit more than others, and the ones being reported on in the news are the ones feeling the pinch. He says that overall, a fundraiser can expect challenges this year.
“Most companies I’m familiar with have already projected their 2008 giving,” Scanlan says, “but when they see what is ahead they may pull back a little.”
“Given that corporate giving might conceivably be down means more work for us,” said Scanlan, “we all need to continue to do our homework.”
New Trends in Corporate Giving
Scanlan, who has spent 40 years working with nonprofits in the local, national and international arena, says he sees companies being increasingly driven by their profit motive. A corporation’s charitable giving decisions, which were once often done by a corporate philanthropy department or a community relations department, are now being made by executives at or near the top of the company, Scanlan says.
Scanlan says a fundraiser looking to identify and cultivate new corporate donors needs to be prepared to negotiate with a company on ‘what’s in it for them’ but have solid policies in place for corporate giving—on gift acceptance and recognition.
“Companies have to answer to their boards and stockholders, and so they are often looking for win-win situations with nonprofits,” Scanlan explains.
He says companies do still give to help others, but that they are increasingly focusing their efforts on areas where they do business.
“They want an exchange and will do more for a nonprofit if they see they are getting back.”