Business charity slows – Profits outpace giving

Corporate philanthropy is flattening, slowed by changes in the economy and in the way in which companies handle their charity, BusinessWeek reports in its Dec. 18 issue.

Charitable contributions by companies are expected to remain flat this year, a new Conference Board survey of 209 big companies says.

That would be the poorest philanthropic showing since the 1991 recession.

Business giving to charities and nonprofits has grown 4.2 percent a year for the past decade, after adjusting for inflation, to $11 billion last year, according to the AAFRC Trust for Philanthropy.

But pretax corporate profits have grown 5.6 percent a year since 1989 to $836 billion.

BusinessWeek cited several factors for corporate stinginess.

Many companies, for example, cut back on charity in the last recession and never restored their giving to previous levels, while fierce competition and limits on raising prices has prompted management to control costs.

Corporate charity also has been curbed as manufacturers — which make products such as medicine and computers that they can give away – are replaced in the economy by service firms.

Mergers and acquisitions also have led to a cost-cutting mentality.

A survey of 124 corporations by the National Committee for Responsive Philanthropy, for example, found that of 46 corporations involved in a big merger since 1996, only one said giving would increase after the merger.

And many companies are treating philanthropy as a way to advance their strategic interests by tying their charity to their marketing.

For full story, go to BusinessWeek.

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