What do you think is the state of corporate giving in the US? We asked 200 randomly selected people what they thought. The question was, how much do you think the average American corporation gives to charity? Here are the results:
The largest segment of survey participants (29.7%) said that they believed that the average American corp gives away 1 to 2% of its profits to charity. The second largest segment (23.3% of respondents) believed the number was closer to 2% to 5% of profits. The next largest segment (18.1% of respondents) picked an even bigger slice: 5% to 10% of profits. A small sliver, 2.8% of respondents, believed that the average corporation gave a whopping 20% or more to charity. While the largest segment selected was the 1%-to-2%-of-profits category the median response would fall into 2%-to-5%-of-profits group.
The Committee Encouraging Corporate Philanthropy (CECP) released a report last year that reveals the current state of corporate giving. The report includes the responses of 184 companies, including 63 of the top 100 companies of the FORTUNE 500. While it is a little old now, it does expose the truth behind our common perceptions. How much do companies really give?
There are a few disclaimers to this data. First, as stated, it only includes the giving of 184 companies. While this is hardly a large percentage of US based corporations, we do believe it is significant. Second, it uses numbers either publicly or privately disclosed by the organization and can be subject to some manipulation. Third, it doesn’t only include cash donations but also non-cash contributions such as product donations, pro bono services and use of facilities. This tends to skew numbers because they are assessed at fair market values even if the actual cost to the corporation was much lower (an average of 19% of the accounted donations were non-cash). With that said, how do public perceptions stack up?
Of the 283 companies surveyed, the median total cash giving as 0.69% of pre-tax profit. Yes, less than 1% of the pre-tax profit is given away to non-profits. Remember, this includes more than just cash donations, so if you did a very rough calculation (removing the 19% average non-cash contributions), only around 0.56% of profits are given away.
This data makes it clear that the public’s perception of corporate giving is a bit off. The average survey participant believed that giving was multiple times higher. Corporate giving would have to increase at least by 357% in order to reach the median perception of corporate giving. Not a trivial jump. In response, GiveTrust.org is highlighting the current philanthropic state with the hopes that charitable contributions among American companies might be boosted. Perhaps if charitable giving was a factor in the buying decision of more American’s (as it is for consumers in other countries), corporations would do more to give.
To be fair, many corporations do help the world in many other ways. According to CECP in 2010, 81% of the companies have a foundation for giving, 94% have some sort of matching-gift program and may provide material support in some other non-reported way. More over, non-cash donations which are vital to many organizations are only possible because of profits. Also of note, the motivation for charitable giving, as surveyed by CECP, was largely for charitable and community investment reasons (96% cited these as primary reasons) and was not the result of business strategies, a fact which is impressive. It does raise a few questions: What would it look like if it was also a business decision? Would giving increase if bottom-line-focused shareholders were pushing for corporate giving? We believe it is a worthy experiment.
Want to see what corporations give the most (of those who reported giving)? Check out this interactive chart from The Chronicle of Philanthropy which shows giving numbers from 2010 (philanthropic reports tend to be very delayed for whatever reason). Wal-Mart stores tops the group at $319.5 million in 2010. Not entirely surprising, big banks and oil companies take the rest of the top 8 positions behind this retail giant. It will be interesting to see how 2011 compares.