Corporate Leaders Tout Philanthropy's Benefits Amid Grim Financial News
Feb. 24, 2009, Chronicle of Philanthropy — On Monday, Robert L. Corcoran, president of the GE Foundation, stood cheerily alongside three other corporate-philanthropy leaders on the balcony above the floor of the New York Stock Exchange to ring the opening bell.
The event was part of “international corporate philanthropy day,” organized by the nonprofit Committee Encouraging Corporate Philanthropy to celebrate and reaffirm businesses’ commitment to charitable giving.
But the excitement of Monday’s bell-ringing ceremony quickly gave way to the reality of the dismal economy.
At 12:30, one of the top headlines on The Wall Street Journal’s Web site read, “Markets Wilt as Tech, GE Sink.” Three minutes after the trading day concluded, a news alert on The New York Times’ home page announced that the market had fallen to its lowest levels since 1997.
Such are the challenges facing many corporate-philanthropy leaders today. They are striving to make the case for why their companies should give back to charities as profits tumble and boards take a closer look at every aspect of the business.
Mr. Corcoran and others who lead corporate foundations say companies that are able to demonstrate how their philanthropy advances business goals have the best chance of maintaining their giving during the recession.
“If it’s about spare change, and pure generosity is the only measure of success, then it’s going to be subject to economic changes, up or down,” said Stanley S. Litow, president of the IBM International Foundation, in a meeting of corporate-philanthropy executives that followed the bell-ringing ceremony. “If it’s tied to your business strategy and is building shareholder value, then it will fare well because it will be about real change.”
Mr. Litow, Mr. Corcoran, and the presidents of the General Mills and Moody’s Foundations met in a conference room at the Stock Exchange on Monday, while their companies’ chief executives participated in a closed-door event in midtown moderated by Tom Brokaw.
Even with the economy mired in an ugly recession, the Committee Encouraging Corporate Philanthropy was able to attract more CEOs — 65 — than it has in past years, according to Charles H. Moore, the group’s chief executive.
The four corporate-foundation executives who met on Wall Street said their businesses’ philanthropy had the strong backing of their CEOs.
While many companies are expecting to decrease their contributions in 2009, the four said their giving would remain flat or increase this year. (IBM and General Mills’s leaders projected an increase, while GE and Moody’s anticipated their giving would be on par with 2008.)
“We haven’t had a problem getting Jeff’s time or funding our budget,” said Mr. Corcoran, referring to GE’s chief executive, Jeffrey Immelt. “Our budget is being held flat, and it’s one of the very few corporate budgets that is, and that’s a huge endorsement of the value of this.”
During Monday’s discussion, the foundation presidents said the recession had caused them to reexamine how they were giving and what causes they supported. Some decided to step up volunteerism and explore other non-cash ways of helping charities.
Mr. Litow said IBM was expanding and fine tuning its pro-bono consulting program.
Moody’s recently started an afternoon of service to enable its employees to volunteer as part of a team in their local communities, according to Frances G. Laserson, the foundation’s president.
Food and Shelter
GE announced at the end of last year that it would steer more money in 2009 to those directly affected by the economic crisis. The company plans to earmark the money it gives to the United Way this year (about $10.5-million) for charities that provide food and shelter. It will also set aside $1.5-million for housing and hunger issues in 15 countries where it has workers, according to Mr. Corcoran.
In addition, GE started providing $2 for every $1 its employees give to social-service charities, a doubling of support.
Mr. Corcoran said his company trimmed giving to some of its core programs, such as education, the environment, and global health, in order to step up its support for social services.
“We had to find a way to address this current crisis within our budget,” he said. “We found a way to cut some programs and reduce the funding to some others. Everybody got a little bit of a hair cut.”
While Mr. Moore, of the Committee Encouraging Corporate Philanthropy, said some companies are laying off employees at their foundations and corporate-social responsibility programs, none of the four businesses represented on Monday said they had cut such jobs.
Nor did the foundation executives anticipate that giving to charities overseas would be hit particularly hard as a result of the recession. Corporate philanthropy to international causes has increased steadily over the last few years, according to a Chronicle survey, and the group of corporate executives expected that trend would continue.
“If your program is really strategic, it will reflect where the growth is in your business,” said Ms. Laserson, of the Moody’s Foundation. “Our growth is coming from outside the United States and our philanthropy is increasing outside the U.S.”
The foundation executives said that the money they spent on cause marketing would also remain strong during the recession, because customers continue to say they prefer products that benefit charities and social causes.
“Cheerios’ consumers like the fact that we give money to support childhood reading; our Yoplait customer really cares about the fact that Yoplait has contributed $14-million to the Race for the Cure,” said Christina L. Shea, president of the General Mills Foundation. “The more you can build giving back into what your company is doing or what your brand stands for, the more sustainable that giving is.”
The foundation executives also stressed that philanthropy could play a role in helping to maintain some goodwill toward corporations in an era in which hefty bonuses, the near-collapse of many financial institutions, and the Madoff scandal has produced a backlash against big business.
Quoting a friend, Mr. Corcoran, of GE, described philanthropy and corporate social responsibility as “insurance 2.0” on a company’s reputation.
“If you have, as a company, a good, responsible reputation for being part of the community, when something does happen, you get the benefit of the doubt,” he said. “But if you’ve never lifted a finger to do good for any reason, you don’t get the benefit of the doubt.”
He added: “In some organizations today that are under more scrutiny, they’ve practiced this ‘corporate-social detachment,’ or at least they’ve led to detachment, a real detachment from understanding and accepting a commitment toward responsible practices with the environment, the economy, and society.”