Not-for-profit organizations will receive less corporate funding this year, probably due to a drop in earnings growth, while company mergers are reshaping nationwide methods of giving. Too, philanthropy appears to be turning more toward education and away from other endeavors, such as the arts.
The overview of nonprofits' private financing comes from recent reports in The Chronicle of Philanthropy, which monitors the pulse of all charitable giving in the U.S.
The publication surveyed America's 150 top corporations, as ranked by Fortune magazine. Of those, 91 responded that they gave about $2 billion in cash and $983 million in gifts to charity last year.
Also, 62 listed this year's total cash contributions at an increase of 6.1% over 1998. However, that percentage represents a significant decrease compared to the 14.2% from '97 to '98.
While the survey didn't break down areas of giving, it did note that education-related charities proved to benefit most from major corporate grants. Also, companies are looking to "dovetail" their philanthropy with their overall business plans, the survey stressed, leading to grants for youth-related causes such as early childhood education or "youth development."
Tie that emphasis on educational grants to the projected drop in overall giving, then surely less of the nonprofit funding pie will be available for other endeavors, such as the arts.
Still, the survey report did note that 14 companies-including Ford Motor Company and Lucent Technologies-experienced 1998 profits of 50% or more, prompting an expected major increase in giving. Ford may see a 42% increase to $81.5 million, and Lucent funding could grow by 71% to $37.3 million.
A Merging World
While less overall company profits reflect less nonprofit funding, the worldwide movement toward corporate mergers is beginning to refocus philanthropy. The survey report explained that a number of companies are redirecting a growing portion of charitable funding for charitable activities overseas. While that segment of giving is relatively small, it is increasing, probably due to mergers involving U.S. and foreign corporations.
But the survey report also expects a funding refocus for U.S. firms which merge with each other, thereby moving or consolidating their physical headquarters and causing relocation of corporate patrons. Mergers could also result in concentrations on restructuring, resulting in putting philanthropy on the backburner.
"My concern is that one and one may not necessarily make two," Rick Cohen, president of the National Committee for Responsive Philanthropy, told the Chronicle.
In the past year, at least nine of the top Fortune companies either merged, were sold, or discussed merger. Two other majors, Chrysler Corporation and Amoco, disappeared from Fortune's list after being merged with foreign companies.
Cohen shared with the Chronicle that he was very concerned about bank mergers. He noted that the federal Community Reinvestment Act requires banks to lend in neighborhoods where they operate, and give to local nonprofits. But as local banks are engulfed by national financial institutions, the philanthropical decision-making moves farther away from home.
As an example, the Chronicle noted that Citicorp's merger with Travelers Group last October led to a drop in corporate giving from $55 million to $40 million.
Still, big corporations need to provide big dollars for charity, both for the tax write-offs and for corporate profile. And the survey pointed to some companies-including some familiar to arts fundraisers-which nonprofit organizations can research to see if they provide the appropriate funding.
Seven companies plan to give at least $50 million to nonprofits this year: Dayton Hudson Corporation; Ford Motor Company; General Electric Company; Johnson & Johnson; Philip Morris Companies; SBC Communications; and Wal-Mart Stores.