Posts tagged ‘Corporate Social Responsibility’

June 19, 2013

What You Really Need to Know about Giving USA 2013

Philanthropic giving in the USA increased for the third straight year in 2012, but only modestly.

Overall giving in 2012 totaled $316.23 billion, an increase in current dollars of 3.5 percent over 2011. Adjusted for inflation, the increase is just 1.5 percent. That’s the finding presented in Giving USA 2013, the report researched and written by the Indiana University Lilly Family School of Philanthropy and just released by the Giving USA Foundation™.

Click the photo to get a free copy of Giving USA Highlights.

Click the photo to get a free copy of Giving USA Highlights.

I had a chance to sit down and talk with Dr. Patrick M. Rooney, Associate Dean for Academic Affairs and Research at the Lilly Family School of Philanthropy. He asserts that, at current growth rates, it would take at least six years for a return to pre-recession giving when adjusted for inflation. He anticipates growth will indeed continue to be slow since the overall economic recovery is slow.

For more than half-a-century, giving has hovered at two percent of Gross Domestic Product. When GDP grows strongly, giving is robust. When GDP growth is sluggish, so is philanthropy. With many economists predicting 2013 GDP growth of just 1.9 percent, Rooney’s prediction seems entirely reasonable.

Here are some highlights from the report:

–2012 saw marked year-over-year growth in corporate giving (12.2 percent in current dollars), which is strongly linked to companies’ profits. For 2012, corporate pre-tax profits surged upward 16.6 percent, according to the Bureau of Economic Analysis.

–Uncertainty fueled by mixed economic indicators may have moderated giving by individuals, who historically account for the largest percentage of total giving. Positive trends, such as the 13.4 percent increase in the Standard and Poor’s 500 Index between 2011 and 2012, the slight rise in home values, and overall lower unemployment rates and fuel costs, were combined with budget concerns and tax reform discussions. In addition, personal disposable income rose 3.3 percent and personal consumption expenditures rose 3.6 percent last year, virtually mirroring the growth in individual giving (3.9 percent in current dollars).

–Giving by individuals rose to $228.93 billion in 2012, an estimated 3.9 percent increase (1.9 percent adjusted for inflation). Income and wealth are key drivers of household giving, as is a sense of financial security. Giving by taxpayers who itemize their gifts represented 81 percent of the total donated by individuals in 2012.

–Giving by bequest decreased an estimated 7.0 percent in 2012 (8.9 percent adjusted for inflation) to $23.41 billion. Itemizing estates contributed 78 percent of the total, or $18.31 billion. Bequest giving tends to be volatile from year to year, as it is highly influenced by very large gifts from estates that closed during that year. For example, Rooney explains that if we remove one exceptionally large bequest from the 2011 numbers, we find that bequest giving was close to the same in 2012 and 2011 when adjusted for inflation. So, the big dip in 2012 should not set off alarm bells. With real estate values and stock portfolios rebounding, the future for bequest giving is encouraging.

–Giving by corporations rose 12.2 percent in 2012 (9.9 percent adjusted for inflation), to an estimated $18.15 billion, including gifts from both corporations and their foundations. The two entities provide cash, in-kind donations and grants. Increasing the 2012 total was the estimated $131 million corporations gave to nonprofits working on relief efforts in the aftermath of Hurricane Sandy.

–Giving by foundations increased 4.4 percent (2.3 percent adjusted for inflation) to an estimated $45.74 billion in 2012, according to figures provided by the Foundation Center. Giving by community foundations grew 9.1 percent last year, which helped to bolster the total. Operating and independent foundations increased grant making by 3.5 percent and 3.9 percent, respectively. While stock values increased in 2012, foundations often use a multi-year rolling average when valuing their portfolios. Therefore, as stock values continue to climb, we should see stronger future growth in foundation giving.

–Looking at foundation giving, 45 percent comes from family foundations where a member of the family continues to be actively involved in running the foundation. In a sense, these organizations blur the line between foundation and individual giving. Giving by family foundations can often be very relationship driven as with individual giving.

While the data provides a number of interesting insights about the charitable behavior of Americans, it also hints at serious warnings, according to a panel of experts that gathered in Philadelphia to present the Giving USA findings. The panelists included Jon Biedermann, Vice President of DonorPerfect; Robert Evans, Founder and Managing Director of The EHL Consulting Group; Eileen R. Heisman, ACFRE, President and CEO of the National Philanthropic Trust; and Rooney. Here are their warnings:

December 28, 2012

Top Ten Posts of 2012, and Other Reflections

We’ve survived another “Doomsday”! Now, as 2012 draws to a close, I thought it would be interesting to look back briefly before we march into the new year.

 

Champagne Toast by viking_79 via Flickr

Happy New Year!

 

For starters, let’s look at which of my posts have been the most read in the past year:

1. Survey Sounds Alarm Bell for Nonprofit Sector

2. Can a Nonprofit Return a Donor’s Gift?

3. 10 Essential Tips to Protect Children from Real Monsters

4. Garth Brooks Sues Hospital for Return of $500,000 Gift

5. 8 Valuable Insights from a Major Donor

6. Overcoming the 9 Fundraising NOs (Bernard Ross)

7. Breaking News: Brain Scan Study Gives Fresh Insight into Charitable Giving Behavior

8. What NOT to Do in Your Email or Direct Mail Appeals

9. 20 Factoids about Planned Giving. Some May Surprise You.

10. Two Major Factors that Demotivate Donors

I invite you to read any posts you might have missed by clicking on the title above. If you’ve read them all, thank you for being a committed reader.

I’m honored to know that I have readers from around the world. (I love the Internet!) While I appreciate all of my readers, I thought it would be interesting to look, beyond the United States, to see my top ten countries for readership:

May 11, 2012

Survey Sounds Alarm Bell for Nonprofit Sector

Over 91 percent of businesses believe they are equally or better equipped than nonprofit organizations to deliver social change, according to a recent survey reported on by Chloe Stothart of Third Sector Online.

That means just nine percent of respondents thought it was somewhat more or much more effective for businesses to donate to charity to achieve social change!

What makes these statistics even more shocking is that all of the 142 survey respondents were businesses with a Corporate Social Responsibility budget. Imagine what the statistics might look like if a more representative sample of the business community were surveyed.

While the survey was conducted in the United Kingdom by YouGovStone for the Social Investment Consultancy, it should strike fear into the hearts of all nonprofit organizations worldwide.

In the United States, corporate giving in 2010 totaled $15.29 billion, five percent of all giving, according to Giving USA 2011. While a comparatively small slice of the overall giving pie, corporate giving is nevertheless significant. And, for some nonprofit organizations, corporate giving plays an even greater role.

Here’s why the nonprofit sector should be alarmed by the survey findings:

 

  • There’s no such thing as “corporate philanthropy.” For a detailed explanation of what I mean by this, read my blog post on the subject. In short, corporations exist to enhance shareholder value, not to engage in purely philanthropic activities. That doesn’t mean businesses don’t give away money. It just means that when a business does give money, it is looking to enhance the company’s value for its shareholders. So, when businesses talk about engaging in efforts for “social change,” they are talking about efforts that will benefit the business and not necessarily society in general. Also, the business community may be overestimating its ability to facilitate social change while underestimating the ability of the charity sector.

 

  • The survey results reveal an underlying mistrust of the nonprofit sector. The business community seems to have the attitude, “If you want something done right, do it yourself.” As long as this lack of confidence in the nonprofit sector exists, we can expect corporate giving will not realize its full potential. All donors, whether corporate, individual or foundation, want to know that their funds will be wisely and efficiently used.

 

Jake Hayman, chief executive of the Social Investment Consultancy, believes the survey is reflective of the attitudes held by the broader corporate community. He said that businesses were becoming far more interested in doing good through their own efforts rather than by donating to charity. Hayman says,

There’s been an evolution from wanting to sponsor or outsource the good you do to wanting to run it yourself based on your strengths”

March 23, 2012

Are Zombies Philanthropic?

If a person is philanthropic while he’s alive, will he continue to be philanthropic if he were turned into a zombie?

Well, since zombies are soulless and not particularly bright, I think it’s probably safe to say that zombies would not be great philanthropists. However, I have discovered that zombies just might enable philanthropy.

Runner chased by zombies.

Before I explain, let me just say that you don’t need to check your calendar. I know Halloween is not just around the corner. However, the first of a series of nationwide zombie-infested 5K races of 2012 is coming up in May. And, a portion of the proceeds will benefit the American Red Cross.

“Run for Your Lives” is a 5K race through a zombie-infested obstacle course. The races will take place throughout 2012 in 11 cities around the U.S.A.

In an Oct. 26, 2011 article in The Daily, Derrick Smith, co-founder of the race, said that the first race in Maryland in 2011 was expected to attract about 1,000 participants. Instead, the race attracted far more interest and the number of racers had to be capped at 10,000. In addition, tickets were sold to approximately 1,000 spectators. This generated approximately $800,000 in gross revenue for the production company in addition to revenue generated from other related activities.

Race participants, who pay $77 each for the experience, are equipped with three “health flags” similar to what kids wear when playing flag-football in school. To be eligible for prizes, participants must finish the race with at least one health flag, which the zombies will be trying to seize. If a racer has all of his flags snatched away, he’s still allowed to complete the race, but he won’t be eligible for prizes. And, he’ll need to suffer the humiliation of being listed among the undead.

While these races are for-profit events, the race’s website lists the American Red Cross as a “Charitable Partner” with a portion of the proceeds going to the charity in an exhibition of corporate social responsibility.

This looks like a fun series of events. Not only will participants get to enjoy a fun race, they’ll also get to hear live bands, attend an after-party, and can even camp-out.

While the “Run for Your Lives” races look fun, they raise a number of questions:

December 23, 2011

Amazing News about Nonprofit / For-profit Partnerships

This is the Hanukkah and Christmas season. It’s a time of great spiritual meaning.

For Jews, it is a time to celebrate religious freedom and the survival of the Jewish people.

For Christians, it is a time to rejoice in the birth of Jesus Christ.

For retailers, this is economically a make or break season.

Now, there is stunning news concerning nonprofit/for-profit partnerships. Cause-related marketing is something that can significantly help both nonprofit organizations and their for-profit partners more than ever before.

According to a study from Cone Communications, a public relations and marketing agency specializing in cause branding and corporate responsibility, an overwhelming 94 percent of consumers are likely to switch brands, about equal in price and quality, to one that supports a social issue. This purchase behavior is at an all-time high since Cone first began measuring consumer purchase trends in 1993, says Craig Bida, Cone’s Executive Vice President of Cause Branding and Nonprofit Marketing.

“Over the years, consumers have been increasingly expecting companies to support social causes. Now, we’re seeing Americans demand companies address issues by speaking with their wallets,” said Bida.

October 7, 2011

There’s No Such Thing as Corporate Philanthropy!

Corporate Philanthropy does not, or at least should not exist.

While corporations may give to charitable causes, it is not or should not be out of an altruistic sense of corporate social responsibility. Instead, done properly, corporate giving is simply a marketing or research-and-development investment. Let me explain.

Several years ago, I moderated a panel of corporate giving officers for the Association of Fundraising Professionals Greater Philadelphia Chapter. One of the panelists was from a bank, at the time one of the nation’s largest credit card issuers. She told the group that there is no such thing as corporate philanthropy. I saw the mouths of about 100 people drop open. They were either surprised by this news or were shocked that a corporate giving officer would actually admit this. The giving officer from the bank went on to explain that corporations exist for only one reason: to enhance shareholder value. The bank contributed money only where a positive return on investment could somehow be expected.

Many people expect for-profit businesses to act with “Corporate Social Responsibility.” CSR is a term that came into use in the late 1960s. While there are many definitions for CSR, Wikipedia defines it as “a form of corporate self-regulation integrated into a business model. CSR policy functions as a built-in, self-regulating mechanism whereby business monitors and ensures its active compliance with the spirit of the law, ethical standards, and international norms.” Today, many nonprofit professionals seem to think that one component of CSR should be corporate philanthropy; they think that corporations should “give back.” News media have even recently done reports on the role of corporate philanthropy.

However, that’s not why corporations exist. Again, they exist to make money for their shareholders, not to perform selfless acts of charity. As for “giving back,” corporations do this every time they pay taxes, provide jobs, pay employees well enough so they can also pay taxes and donate money. As for corporate giving, it needs to accomplish something not just for the charity, but also the corporation.

Marc Gunther, a senior writer for Fortune Magazine, wrote in 2008, “I’m not a big fan of corporate philanthropy. Too often, it’s a feel-good exercise, generating little value for a company’s shareholders. At its worst, it allows CEOs to use other people’s money to glorify themselves.”

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