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Companies reinvent giving for ‘new era’

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Todd Cohen

Boston Scientific Corp. is focusing its national grantmaking on reducing health disparities for underserved populations, including homeless people and migrant farmworkers and their families.

State Street Corp. in June hosted a symposium to kick off a funder learning collaborative that will study and look for ways to address youth violence in Boston’s highest-risk neighborhoods.

And The Walmart Foundation has donated nearly $8 million this year to support summer feeding programs for children most at risk of hunger, and to provide more resources for food banks throughout the U.S.

All three initiatives reflect what experts see as broad trends among U.S. companies to reinvent their giving.

In an economy and marketplace undergoing sweeping changes because of the recession, experts say, companies increasingly aim to make their giving more strategic, collaborative and productive.

“The down economy has definitely inspired or commanded increased interest in achieving some real impact to society’s biggest problems,” says Jim Coutre, vice president at The Philanthropic Initiative, a Boston-based nonprofit consulting firm that provides strategic philanthropic advice to individuals and organizations.

Its clients have included Boston Scientific, State Street Corp. and The Walmart Foundation.

Charles Moore, executive director of the New York City-based Committee Encouraging Corporate Philanthropy, says corporations are reassessing the needs of the charitable marketplace, adapting themselves by setting new priorities for their own philanthropic programs to better reflect those needs, and reallocating their philanthropic resources.

And the needs, he says, “clearly not only are greater, but they’re different.”

Responding to the recession

While 68 percent of companies responding to a survey the Committee Encouraging Corporate Philanthropy conducted in June saw a decline in corporate profits over the previous year, 53 percent actually increased their giving, and 27 percent boosted their giving by 10 percent or more.

“Corporations have a contract with society,” Moore says. “And when the markets got tight, as they did, most companies said, ‘The needs are greater, therefore we’ve got to find a way to address that.'”

GE, for example, gave $20 million this year to address the needs of the homeless, in part by making adjustments to its other philanthropic programs, he says.

Some companies, like IBM, are stepping up their in-kind contribution of products or “skill-based” services, Moore says.

Others are earmarking some of their giving to build the organizational capacity of nonprofits or support their operations, Moore says.

Bank of America, for example, is allocating roughly 25 percent of its giving for capacity-building and operating support, he says.

“More and more companies are starting to look at that,” he says. “When you partner with nonprofits, make sure nonprofits in this struggling environment are efficient as well.”

And as part of an effort the President’s Council on Service and Civic Participation launched in February 2008 to boost the U.S. workforce and generate $1 billion a year in skilled expertise to help nonprofits address social and community needs, the Committee Encouraging Corporate Philanthropy is working to help companies measure and benchmark skill-based services they contribute through their employees, Moore says.

Based on data from 40 companies, compared to 170 companies that report all their giving, Moore says, the value of skill-based service so far totals roughly $300 million to $400 million.

“We have a long way to go,” he says.

But the effort is critical for nonprofits, he says, because many cannot afford to pay for consultants, and because corporate volunteers tend to become more involved with the nonprofits they support through volunteering.

Companies “want to make these investments in the community,” Moore says. “They want to honor the contract they have with society. This is as good as product. I would argue it’s better.”

He says corporations also are finding they share values with government.

“We have government, like it or not, as a partner and need to find a way to be better partners with government in terms of social investing,” he says.

The recession has given birth to a “new era,” Moore says.

“And new eras have lots of opportunities,” he says. “There are great opportunities right now for companies to step up and be better corporate citizens than they’ve ever been.”

Reinventing corporate philanthropy

Coutre of The Philanthropic Initiative considers the changing marketplace as the “new normal,” which he says is evolving and shaping the way companies view and treat their philanthropy.

“Corporations are more sensitive to demands of shareholders, consumers and the public about using resources wisely,” he says.

And the public is more sensitive and sophisticated than ever in its ability “to sniff out what’s authentic versus a PR or marketing tactic,” he says.

Corporations, in turn, understand that “the best way to be authentic is to deliver real, on-the-ground impact,” Coutre says. “The economy has changed. Business is changing, and the way business achieves impact with their philanthropy is also changing.”

A growing number of corporations, including those that have been leaders in philanthropic innovation, are open to changing the way they give, while also moving forward in their commitment to “hallmarks of proven philanthropy,” he says.

So companies are focusing on specific priorities, aligning their philanthropic and business goals, and measuring the results of their giving, Coutre says.

Leslie Pine, senior vice president for program at The Philanthropic Initiative, says three big trends in corporate philanthropy include a growing focus on “long-term systemic solutions to critical social problems;” innovative approaches to partnerships to “increase leverage and impact;” and “really stepping up to the plate and doing more to respond” to the direct impact of the economy on people and their basic needs.

Boston Scientific Corp., for example, is working in local communities such as Minneapolis to provide training and support for community health centers and programs providing health care to homeless people.

“Over the long-term, if they can create models that are really effective in improving the health of the population, then that will lead to a healthier and more vibrant workforce,” Pine says.

The funders learning collaborative effort State Street Corp. is spearheading in Boston, she says, has generated interest from a broad range of funders that now have formed working groups to study specific aspects of the problem of youth violence.

And the hunger-relief focus by The Walmart Foundation reflects the effort by some companies to dig deeper to address the impact of the recession on basic human needs.

Companies generally are showing a “new sense of urgency,” Pine says, “to be strategic if a company’s to have impact in the community and in a way that will result in measureable outcomes that the company and employees and can feel proud of.”

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