Merger casualty – Local charity victim of consolidation

When big corporations tie the knot, local philanthropy can find itself out in the cold.

That’s the opinion of Jack Shakely, president of the California Community Foundation.

In a column in the Los Angeles Times, Shakely laments the biggest wave of corporate mergers ever, including the acquisition of the Times’ corporate parent by the parent of the Chicago Tribune.

Corporations may insist that mergers will have no effect on philanthropy, but Shakely says an erosion in charitable giving is an inevitable outcome of consolidation.

The reason, Shakely says, is simple: Big giving is still a peer-to-peer activity.

As evidence, he cites a study he conducted on one large oil company’s philanthropy that found the company was 70 times more likely to donate to nonprofits whose boards included the company’s upper management.

Corporate chairmen don’t join boards thousands of miles from home – so when management relocates, local philanthropy loses.

When Los Angeles-based Getty Oil Co. was taken over in the mid 1980’s by Houston-based Texaco, Los Angeles lost $1 million a year in Getty grant dollars.

And Los Angeles charities already have seen a decline in contributions since Bank of America Foundation recently moved from California to North Carolina after Charlotte-based NationsBank bought San Francisco-based Bank of America.

Corporate giving programs that try to maintain giving levels in their former home states resort to what Shakely calls “pushpin philanthropy”: They make a certain number of grants throughout the state to fill their giving quota. 

As a result, former hometown favorite charities have to compete with charities throughout the state for grant dollars.

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