For many individuals, January is a month characterized by the hopeful promise of new beginnings and, perhaps, some resolutions for the year to come. For many businesses, this also holds true. Often, the New Year brings with it the close of a fiscal year, signaling the rush for year-end reporting and, usually, the implementation of a new budget. Although it may seem like a daunting task, budgeting is necessary for planning and controlling the allocation of funds, especially in today’s weak economy. Take a look at your company’s budget. How has the distribution of funds differed from years past? Where has the company cut back? One might think that the first place a company would constrain funds would be in its contributions to causes outside the firm, but a study conducted by the Committee Encouraging Corporate Philanthropy (CECP) shows us that is not always the case.
In their 2007 survey of 155 companies, the CECP gathered information regarding the firms’ corporate-giving practices, which included both cash and non-cash gifts. It was found that despite the slowing economy, 66% of firms increased their corporate-philanthropy budgets, while 34% decreased their giving. Firms increased their philanthropy budgets due to greater profits, excess inventory, greater emphasis from top management as well as increased employee involvement, and an increase in charitable requests from customers. Decreased giving was a result of the weakened economy, tighter inventory controls, and other factors unique to each company (pp 8-9).
The CECP also researched total giving by area to see which sectors received the most support. Health & Social Services and Education lead the way with 28% of cash and non-cash giving in each sector. Community & Economic Development received approximately 12% of total giving in 2007 (pp 32). This includes contributions and grants to economic development councils, minority businesses, community-based groups, and urban renewal. For those familiar with the economic development sector, we know these funds reach well beyond the 12% given, as the creation of jobs and income in communities produces a multiplier effect. Among the other sectors that received aid are Culture & Arts, Civic & Public Affairs, Environment, and Disaster Relief.
The publication of the CECP’s results advises business leaders to support their communities during difficult economic times. Some steps that can be taken include setting a corporate philanthropy budget and maintaining corporate giving as a vital part of company culture. Executives can also work to create a foundation or build relationships with other firms to pool funds for a community in need. The CECP also stresses that contributions of products or services, space, and supplies are of equal importance.
As corporate-giving information is continuously being collected, it will be interesting to see the impact of the economy on last year’s results. As Harold McGraw, III, chairman of the CECP, says in the Giving by Numbers publication, “Now more than ever, it is critical…to step up and invest in the health and well-being of the institutions that keep our communities strong” (pp.12).
Source: Committee Encouraging Corporate Philanthropy (2008). Giving by Numbers: 2008 Edition. Retrieved from http://www.corporatephilanthropy.org.