A Corporate Giving Challenge: Check Your Assumptions, Change Your Approach, Increase Your Odds of Success
By Aggie Sweeney, Chair, Giving USA Foundation
The June 14 release of Giving USA 2016: The Annual Report on Philanthropy for the Year 2015, brought encouraging news: at an estimated $373.25 billion, charitable donations hit a record for the second year in a row. That amounts to more than $1 billion a day contributed to charitable causes by America’s individuals, corporations and foundations. The impact corporate giving had on that total is explored in this guest post. Readers might be surprised to learn some long-held assumptions aren’t backed up by the report’s data.
Let’s begin with a question: When it comes to charitable giving, who contributes the lion’s share of the total in any given year? If you thought “corporate America,” that would not be surprising. Not only would it seem logical to assume companies donate large amounts because they have deep pockets to draw from, big corporate gifts tend to get big media exposure.
You might find it instructive to know that $18.45 billion of the $373.25 billion total came from corporate contributions, or 5 percent of the total—and that equates to approximately $51 million a day.
The lesson is that corporate generosity is certainly real; it just isn’t the largest slice of the giving “pie.” In fact, it’s the smallest. Its share has been consistent over time, ranging between 4 percent and 6 percent.
Where does the other 95 percent of giving come from, then? And, which source comprises the largest piece of that pie? Savvy observers of the philanthropy world already know the answer: American individuals are the backbone of charitable giving, year in and year out, as Giving USA has reported for 61 years in a row.
That generosity is expressed through gifts made from a family’s household budget or via assets they hold. Bequests paid out from estates also are considered a form of individual giving. For 2015, living individuals were responsible for 71 percent of that record total, while gifts from the estates of those no longer with us added an additional 9 percent.
(Giving by foundations rounded out the sources, at 16 percent.)
This pie chart provides a visual overview of total 2015 charitable donations, which were 4.1 percent higher in current dollars (4.0 percent when inflation-adjusted) over the revised estimate for 2014:
With that quick overview, then, here is Challenge No. 1: Examine the impact any incorrect assumptions about sources of giving might be having on your organization. Then, adjust as necessary for your situation—fine-tune budget sources and revenue projections; reassess campaign goals; educate stakeholders and shareholders; perhaps even use the data to benchmark your corporation or nonprofit against the national picture to see how you compare.
If you are with a charitable organization, or an advisor to one, it still might make sense to seek out a corporate sponsorship or gift, but keep this crucial reality top-of-mind: companies—whether publicly held or private—answer to shareholders and owners, who reasonably expect resources to be spent wisely. That means keeping track of return on investment (ROI) as well as shareholder value are paramount on the corporate side.
Depending on your point of view, shareholder value might be either a positive or negative concept, especially with the general perception over the past few decades that ROI can only be measured by such hard-dollar metrics as total sales and operating costs, and that those are the only kind of measures that matter.
While hard numbers are important indicators of financial success, more and more studies are showing a positive relationship between corporate philanthropy and the bottom line. Several summaries can be found within the Corporate Giving chapter of Giving USA. In addition, analytics from a study of corporations in the Pacific Northwest, where I am based, showed a positive correlation between corporate philanthropy programs and employee recruiting, retention, satisfaction and morale.
That brings us to Challenge No. 2: Educate yourself and your organization’s leadership—whether that’s board members, executives, shareholders or other stakeholders—about how ROI can be bolstered by more than hard-dollar measures. Keeping turnover low isn’t always about salaries and benefits.
Of course, the pressure to perform is intense and cannot be understated. And yet, as noted above, corporations do support charitable causes, either directly or through their foundations. Between 2013 and 2015, in fact, the cumulative increase in their gifts was 14.3 percent, as measured in inflation-adjusted dollars, and 16.3 percent in current dollars.
Giving USA also provides data on economic indicators closely tied to whether charitable giving grows or declines. One is total giving as a percentage of US Gross Domestic Product; in 2015, that figure was 2.1 percent (as measured by inflation-adjusted dollars). Total GDP growth was 3.5 percent in 2015, as measured in current dollars, and 3.3 percent in inflation-adjusted dollars.
Another set of Giving USA’s data examines corporate giving as a percentage of pretax profits. In current dollars, those profits rose 3.3 percent last year, with 0.8 percent going to charitable causes.
Continued growth in these indicators could be a harbinger for continued growth in corporate gifts, so Challenge No. 3 is to keep apprised of the data that provide a picture of the overall economic climate, and what that means for your organization.
A continuing trend in the Northwest that mirrors what is happening elsewhere is for corporations to focus their philanthropy on specific causes that will help advance their business. For example, to address the shortage of students ready to move into high-tech jobs after graduation, one of Microsoft Philanthropies’ key initiatives supports STEM education programs, and specifically computer science, both locally and across the country.
What we’ve also seen in this region is that corporate sponsorship seems to be up, but grants don’t seem to be as available as in the past. For example, while two of the largest employees in our region, Microsoft and Boeing, provide significant charitable donations and employee-matching programs, both have narrowed the focus of their giving priorities.
No matter where you are located, paying attention to details such as these is important when assessing which companies might be most attentive to a case for support.
Bringing corporations and charitable organizations together in a mutually beneficial partnership is not necessarily straightforward, but knowledge provides information that can help both effectively reach their goals. The final challenge, Challenge No. 4, then, is to harness data from resources like Giving USA and Giving in Numbers, published by CECP in association with The Conference Board, to increase the odds of success.
About the author:
Aggie Sweeney became chair of Giving USA Foundation earlier this month, after serving on its Executive Committee in several different roles. With over 30 years of experience in the nonprofit sector, Aggie is passionate about guiding organizations to use philanthropy to power growth. She is the current President & CEO of Collins Group, a division of Campbell & Company, a national consulting firm that collaborates and innovates with people who change lives through philanthropic vision and action.
Aggie joined the firm in 1999, and her expert leadership has enhanced its position as the Northwest’s fundraising consulting firm of choice. She is recognized as one of the top fundraisers in the region and has provided counsel to more than 100 organizations and 45 campaigns that have raised over $560 million. Many of the campaigns for which she provided principal counsel have been record-breaking, both for the organization and the specific sector the organization serves. She holds an MPA from the University of Colorado.
