Spring 2009
Corporate Philanthropy: Unwavering Commitment and
Focused Strategies in Stormy Times
By Christine Murakami Noonan
John D. Rockefeller III,
writes Joe Nocera in The New York Times, once referred to the Minneapolis-St. Paul area as the "Emerald City," saying that the public spirit of the business community made him feel "a bit like Dorothy in the Land of Oz. I had to come (here) myself to see if it really exists."
For decades, if not generations, we in Minnesota have taken great pride in the philanthropic spirit demonstrated by the corporate sector. A snapshot of corporate giving statistics
(see sidebar) illustrates why. Corporate grantmakers are major players in supporting all aspects of community betterment by first supporting the work of nonprofit organizations.
As we teeter on the brink of economic crisis, we're all holding our breath, knowing that how the corporate philanthropic community responds will have long-lasting ramifications.
National Corporate Giving News is Unsettling
In February 2009,
The Conference Board, a national nonprofit that researches management and marketplace-related issues, surveyed 158 companies on planned changes to their corporate giving programs. The results are worrisome:
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45 percent said they had already reduced how much they plan to donate in 2009.
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35 percent will make fewer grants this year, with an additional 22 percent considering doing so.
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48 percent have decided to make or are considering making smaller grants.
Minnesota Grantmakers Cautiously Hold Steady
Minnesota corporate grantmakers, though, are more optimistic. MCF conducted a survey in November 2008, and 39 corporate foundations and giving programs representing about 30 percent of annual grant dollars in Minnesota responded.
The results, published in January in MCF's
2009 Outlook Report, show:
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59 percent believe they will not make any changes in grants paid compared to 2008.
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13 percent expect to increase their grantmaking.
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Of all grantmaker types, corporate foundations and giving programs anticipate the least amount of change in their giving levels in 2009.
"As a corporate citizen, we have an obligation to help
our communities thrive. Our main purpose is to create successful,
sustainable businesses that provide good jobs. In so far as our business is
healthy and allows us to do so, we will continue to serve our communities."
- Alex Cirillo, vice president, 3M Foundation and Community AffairsThis spring, despite the almost daily barrage of disheartening economic reports, corporate funders in Minnesota maintain they are still hopeful, albeit cautious.
3M's corporate giving in 2008 totaled $48 million (up from $42.5 million the year prior). This included $26 million in cash and $22 million in in-kind donations.
According to Alex Cirillo, vice president,
3M Foundation and Community Affairs, "At this point, we expect our cash donations in 2009 will be flat with ‘08. Our product donations vary from year to year depending on availability and need. We have a commitment of support from the company to the foundation for the first six months of the year. At our June board meeting, we'll look at the second half and decide if we need to make changes. I expect that the total numbers will be the same, but the internal mix could change." How? 3M may consider reallocating funds from long-term international environmental projects to meet short-term basic health and human service needs in communities where 3M plants are facing tough times.
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William Nelson |
CHS Foundation President William Nelson explains the strategy enabling his organization to hold funding levels steady. "Typically we invest the company's contribution to the foundation. But this year, we kept as much cash on hand as we could to pay bills and keep giving."
CHS' portfolio has taken a hit, but diversification and interest from fixed-income investments mean it can continue funding at the same level without dipping into equity.
"We're getting inquiries from people we've funded in the past wondering if we can increase this year, but our message is that while things are as rocky as they are, we're trying to be stable, hold our own and not lose ground. We are declining more requests, but that's because we're getting more requests," Nelson says.
CHS Foundation is the major giving entity of CHS, a Fortune 200 energy, grains and food company.
Tastefully Simple, which markets its gourmet foods through independent consultants at home taste-testing parties nationwide, traditionally makes annual grants equaling 10 percent of its net post-tax profits. "That will not change," reassures LaTresse Snead, community relations team lead for the company, headquartered in Alexandria, Minn. "That's our standard. That's what we give."
Securian Financial Group provides insurance, investment and retirement plans. Despite the difficult times facing its sector,
Securian Foundation plans to increase cash giving this year. "We built our balance sheet at Securian to survive a 100-year financial storm, and this might be it. The same is true of our giving program," explains Lori Koutsky, manager of community relations and the foundation.
"Securian had the foresight years ago to form our foundation to ensure constancy of giving, and that's especially important in these times when help is most needed." Of the 2.6 percent or $50,000 increase, Koutsky notes, "We made a conscious decision to increase our giving, knowing that needs would be greater this year."
Corporate Employees Fuel Upbeat Response
In the midst of the economic downturn, employees participating in the giving programs of some Minnesota companies have stepped up with inspirational generosity.
Each November,
Allianz Life Insurance Company of North America holds a month-long
food and clothing drive to benefit Minneapolis nonprofit PRISM (People Responding in Social Ministry), which provides for families in need.
As the economic news was worsening, Allianz employees didn't hesitate to respond, reports Laura Juergens, senior charitable giving specialist. "Despite having several hundred fewer employees than in 2007, our employees exceeded last year's collection and donated the highest amount of food and clothing ever — 30,000 pounds of food and 13,000 pounds of clothing."
SUPERVALU Foundation's Director of Community Relations Lauri Sanders echoes similar admiration of her associates. "While we are making sacrifices within the company based on the economy, we have not seen any marked change in the attitude of our associates when it comes to giving. It continues to be a priority for them individually, as well as corporately."
She continues, "Our dollar-for-dollar matching gifts program targeting post-secondary education institutions is not taking a dip. And, we have only seen increases in requests for Dollars for Service contributions on behalf of associates who volunteer 25 hours for a nonprofit. Our associates are committed to working on behalf of their communities and supporting their neighbors however they can." In the Twin Cities, much of SUPERVALU's philanthropy is done through Cub Foods, its local banner retail grocery chain.
Constant Questioning, No Easy Answers
Given that we are facing unprecedented challenges, how to best address them is unknown, and each corporate grantmaker may choose a different course.
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| As part of thoughtful, well-rounded
philanthropic strategies, corporate giving means more than cash
contributions. Through Delta Dental's in-kind product donations and oral
health education efforts, this young boy received school-based preventive
dental care as part of the Smiles Across Minnesota initiative. |
"We don't have the crystal ball that can show us the best response for success," comments Ann Johnson, community affairs director for
Delta Dental of Minnesota. "We are trying to stay ahead of the curve by listening to our grantees, sharing positive case studies, providing information, seeking out innovation and promoting collaboration. The difficulty remains that what may work in one community in a particular time may not work in another."
She reflects that, as millions of Americans lose their homes, jobs and health benefits, it is humbling for her to step back and rethink those strategies that worked in the past. Even though she considers herself fairly knowledgeable on oral health education and prevention as a public health strategy, Johnson constantly finds herself asking, "Does this work now? Can something work better? Are there new solutions?"
Giving Priorities Unchanged, But Focused
Without exception, corporate philanthropists in Minnesota view their role as creating and supporting strong, healthy communities in which their employees live and work. This motivation has not changed since the emergence of corporate philanthropy, although most companies have developed a focus area within the overarching aim of bettering communities.
The giving priorities of the companies interviewed for this article are deeply imbedded and will not change in 2009. But, with the economy continuing to struggle, many are choosing to be more careful in how they respond within those focused priorities.
"We're looking for stability and continuity of service," notes 3M Foundation's Cirillo. "If organizations are struggling to survive, they will have a very difficult time succeeding in their mission. With that said, if there is an agency that is unique in its mission and is needed in the community, we might help it to partner with other organizations to achieve stability. We will not force partnerships, though. The forcing of two organizations that are different cultures can create disaster. We make no assumption that we know who should be working together, but we will suggest and convene organizations and let them know that the other exists."
Koutsky of Securian adds, "We look primarily at results. We carefully choose the organizations that we support based on their mission and how they fit our priority funding areas. We closely look at measures of accountability and how organizations met the needs of their clients."
Delta Dental's Johnson says, "Our philanthropy committee, made up of many with dental and business backgrounds, often struggles with grant proposals that do not clearly state specific achievable goals. The committee likes to see measurable results and return on investment. But in these economic times, we'll be more accommodating, because we realize that many organizations are under pressure to simply keep their doors open as demands increase and budgets are reduced."
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Cheryl Scapanski |
Founded in 2007,
Benton Telecommunications Foundation, located in Rice, Minn., north of St. Cloud, doesn't have the history to evaluate just how the economic turn could affect its grantmaking.
Cheryl Scapanski, the foundation's general manager, emphasizes, "We're giving to help people stay in our area. For instance, we've discussed working with the schools to provide computer programs to help educate children. If we can help with the education, and children continue to go to school here, then families will decide to stay." The needs are so many and varied. "We're trying to help as many people as we can in our area," she continues.
Jobs vs. Charitable Giving
Many companies are facing tough decisions — laying off employees, closing plants. Keeping employees employed becomes a priority. Companies can face questions about whether it should cut costs by cutting its giving to nonprofits in order to try to save jobs.
How intertwined are philanthropy and corporate performance?
"How their companies are faring overall financially is very much on the minds of leading U.S. companies when allotting their corporate philanthropy monies," says Carolyn Cavicchio, senior research associate at The Conference Board's global-corporate citizenship program. "There is a definite shift toward more critical business issues and an increased emphasis on measuring giving outcomes."
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Alex Cirillo |
Cirillo elaborates on behalf of 3M, whose foundation is an independent entity: "People ask you how or why you continue to give in lieu of putting money back into the corporation. The discussion really becomes one of your role in the community and also where the cash comes from. If you have a foundation that has a corpus, that money has already been earmarked for work in the community. It's very difficult if not impossible to put it back into the company. What then comes under scrutiny instead of foundation contributions is corporate contributions. You either reduce corporate contributions or make sure they are put into the community for people who are in need — which may be the people
laid off."
Nonprofits Convey Escalating Needs and Urgency
Corporate grantmakers are feeling the sense of urgency by nonprofit organizations as they request increased support in order to expand capacity and meet rising community needs.
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Lori Koutsky |
Koutsky reports that Securian has seen an increase in both the number of grant requests and the amounts requested.
Allianz reports similar increases, and Juergens adds that, as a result, "We're moving toward making larger grants to fewer organizations to ensure greater impact and closer working relationships."
3M says it is seeing a rise in overall requests, with a slight increase in those focused on basic needs. Cirillo attributes this to applicants who wouldn't have approached 3M in the past because they might be outside of 3M guidelines. Now they're trying, because they're looking for other sources of support. "In smaller communities, we may be more open to requests that we normally wouldn't fund under our guidelines in normal times. There seems to be more urgency to the requests," he adds. "I've also heard genuine gratefulness for continued flat support."
Rethinking Funding for Event Sponsorships
The Conference Board survey found that, among types of gifts, sponsorship of events would take the biggest hit, with 55 percent of businesses saying they would cut back on that form of giving.
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Ann Johnson |
At Delta Dental, Johnson says she is seeing double the number of funding requests for events. In many cases, applicants have been in the planning stages for six months and now they're realizing that, in this stressed economy, they may need to do an extra fundraising push.
"I'm spending a great deal of time on the phone or emailing with development staff explaining that we are not increasing our event sponsorships," she notes. "I think that some nonprofits may need to reconsider hosting special events as event funding shifts to direct funding for basic needs, thereby making events less cost-effective overall," she continues.
Sanders of the SUPERVALU Foundation explains, "We are being very careful to ensure that our contribution dollars are being driven down to the point of need. We recognize that, while an event has definite value and is important to the fundraising cycle of an organization, we may choose to give a contribution so that it's making a difference at the client or customer level of an organization. For example, if we can only allocate $5,000 to a cause, we would prefer that those dollars be used to present a new healthy lifestyles program for children or to stock food shelves so families can battle hunger, rather than underwriting the cost of a gala or table at an event."
Corporate Grantmakers' Advice to Nonprofits:
Collaborate and Communicate
Corporate funders say it is especially vital these days to consistently strive to use their limited resources effectively to make the greatest impact. A collaborative relationship and strong communication with nonprofits are keys to helping corporate funders achieve their goals.
Those who work in corporate philanthropy say nonprofits can help strengthen the connection between the company and those causes it supports in the community. This is a two-way street.
"I learn a great deal from grant applications that effectively explain what the nonprofit does, how it's meeting its mission in these tough times, and how it's using technology in innovative ways," comments Bill Linder-Scholer, executive director of
ADC Foundation, whose company's business is telecommunications and related technology. "All this helps us at ADC understand how we can respond to those needs and help build capacity while funding within our very narrow focus of math and science education and technology for nonprofits."
Linder-Scholer offers some advice to applicants: "Those who use the
Minnesota Common Grant Application and then don't change it from the last time they used it to address the technology component fall short of what we need. Furthermore, when we ask, ‘How would you use this money?,' that means, ‘Tell us exactly.' "
Benton Telecommunications' Scapanski advises applicants to focus on a program or item that is going to improve many people's lives in a relatively short amount of time. "Next," she suggests, "show there's a need for what you're trying to do or provide, explain how this affects your budget, and ask for just what you need."
"We look for state-of-the-art effectiveness," says 3M's Cirillo. "Perform your service efficiently and effectively, and partner with other agencies for maximum effectiveness in the community."
"For SUPERVALU, the message of partnership is one of the strongest messages that nonprofits can carry into the community for us," emphasizes Sanders. "Our support of nonprofit partners is the result of our associates — people who live in the community and work at SUPERVALU and who believe in giving back."
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LaTresse Snead |
Tastefully Simple does not require grant recipients to submit final reports, so it appreciates grantee-initiated follow-up. Snead explains, "We want to make it as easy as possible for nonprofits to concentrate on their mission. Especially in rural Minnesota, an organization may only have one or two team members who do it all. We don't want our reports to be one more thing they have to do. But, we still like to hear how the funds were used, how far they went, and how they helped an organization achieve its goals. We share that information with our team members, and it just warms their hearts."
She points out, "Even though it's not required, if an organization took time to write a note, when they submit a request again, I think to myself, ‘They did so much with our donation last time, and I know they'll do wonders with it again.' Thank-you notes are cultivation tools."
Johnson at Delta Dental finds that it is the stories she receives from grantees — through conversations, emails or in final reports — that help her discern how grantees' programs are working in real time and how Delta Dental's funding is making a difference in addressing barriers that communities face in accessing oral health care.
She created Smile Grams as a way to encapsulate and share these meaningful stories with her philanthropy committee. "In these economic times, we need to stay on top of what's working, what isn't and why," stresses Johnson. This is invaluable knowledge that helps her improve Delta Dental's corporate philanthropy.
Achieving Global Corporate Position
with Local Relevance
For many Minnesota-based corporations, their "community" stretches across the country and sometimes the world, and they must adapt their giving programs to reflect their businesses.
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Bill Linder-Scholer |
ADC's headquarters is in Minnesota, but more than half its employees live outside the U.S., nearly half of its business revenue comes from outside the U.S., and, says Linder-Scholer, "Our real growth opportunities in telecom are in Europe and Asia. We're mindful of all this. We've made a conscious effort over the past six to eight years to shape our community relations and foundation work to reflect that corporate global footprint."
He goes on to say, "The largest single slice of our giving is here in Minnesota — our headquarters is here, many of our executives and foundation staff are based here, so it's easier to identify and work with strategic community partners."
In addition, ADC manages corporate giving in five U.S. cities and seven countries through ADC Cares Committees. The committees are composed of employee volunteers empowered with a budget from the foundation. Each committee decides who it wants to contribute to within company-wide giving priorities, "which gets employees involved in their community, and it means I don't have to be an expert on needs in India, Mexico or San Jose," Linder-Scholer says.
Although ADC's corporate giving will decrease 20 percent in 2009, Linder-Scholer asserts that special projects and board-driven giving will be cut rather than the budgets of ADC Cares Committees.
"We felt that this is the most responsible way to adjust spending to reflect the realities of declining resources. Our portfolio was pounded like everyone else's, so we had to slow down spending. On the converse, we're protecting our local committee giving, because that's the bulk of our support to small nonprofits."
As the second-largest food retailer in the U.S., Minnesota-based SUPERVALU focuses its company-wide giving on combating hunger and promoting health and wellness and environmental stewardship.
The company has two national partnerships, Feeding America and the American Heart Association's Go Red for Women. In addition to giving at the corporate level, SUPERVALU's retail grocery banner stores and distribution centers also work with local chapters of these organizations to maximize impact in communities.
For support beyond national partnerships, Sanders says, "Our banners and distribution centers lead us. They know where the needs are and what organizations would best benefit the community through a partnership with SUPERVALU. Our Twin Cities banner, Cub Foods, has a foundation funded through an allocation from our income. Through a similar model utilized in different parts of the country, SUPERVALU corporate works in partnership with its banner chains and distribution centers to strive for local relevance."
A New Reality?
In the current economic environment, corporate philanthropy faces complex, unprecedented challenges.
How will corporate foundations, giving programs and nonprofits evolve and adapt? In the midst of eroding bottom lines, will companies begin to view job preservation as their primary philanthropic endeavor and key contribution to maintaining healthy communities? How far out can corporate grantmakers make commitments — weeks, months, years? What contingency plans do we all need to develop? How will the influx of stimulus money from the government affect those giving and receiving corporate funding? How long will it take to get back to where we were? And, if and when we do, will we be where we left off, or should we be preparing for a new reality?
Why Companies Give
The word "philanthropy" is derived from Greek, meaning "to love people." Corporate philanthropy encompasses the concept that without healthy communities, healthy companies cannot exist; therefore, corporate philanthropic programs are an investment in both the longevity of the business and in the communities in which they operate.
The national Council on Foundations has compiled interesting statistics gleaned from various studies. The bottom line: Companies should consider community involvement and corporate philanthropy a customary part of doing business.
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95 percent of Americans agree that U.S. companies should have more than one purpose (profit), and that they owe something to the communities in which they operate.
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Customers with a favorable impression of a company's philanthropy are three times more likely to be loyal customers than those who have less favorable perceptions about a company's philanthropic efforts.
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All things being equal, employees who have a favorable impression of their company's philanthropy are five times more likely to remain with their employer.
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82 percent of respondents in a study said that a company's reputation for being a good corporate citizen would have at least some influence on whether or not they would buy or hold stock in a particular company.
Source: Council on Foundations
Corporate Philanthropy is One Aspect
of Corporate Social Responsibility
Corporate philanthropy is part of the larger concept of Corporate Social Responsibility (now commonly abbreviated CSR).
Simply put, CSR is the honoring of the triple bottom line: People, Planet, Profit.
As a company works to achieve commercial success, it does so in ways that honor ethical values and that respect people, communities and the natural environment, while balancing the interests of all stakeholders, not just shareholders.
A company's CSR policy should function as a built-in, self-regulating mechanism whereby the business monitors and obeys the letter and spirit of the law, as well as ethical standards and international norms.
The business would also proactively encourage community growth and development and voluntarily eliminate practices that harm public interest, regardless of legality.
Companies who adopt CSR policies work to deliberately and diligently include public interest into corporate decision-making.
For example, Delta Dental's strategy for being a good corporate citizen includes keeping dental health care costs down, sustaining economic growth, providing meaningful work, and maintaining the overall health and vitality of its communities. From this, stems corporate philanthropy, corporate sponsorships and employee involvement, all of which continue to support organizations and initiatives that simultaneously address societal needs and make a positive difference in the communities in which Delta Dental operates.
What's the Difference Between a Corporate Foundation and a Corporate Giving Program?
Corporations may choose to support nonprofits through a company-sponsored foundation, a corporate giving program, or both.
Corporate foundation:
A company-sponsored foundation is a separate, legal entity that receives its grantmaking funds from a for-profit business. It may maintain a close connection with the donor company, and its giving usually reflects company interests. The corporate foundation, however, is an independent organization with its own asset base or endowment and is subject to the same rules and regulations as other private foundations, including the required filing of an annual Form 990-PF with the IRS. Some corporate foundations are established with initial endowments from the company. Others rely on regular contributions from the company that can fluctuate according to the level of the company's profits.
Corporate giving program:
Also known as a direct giving program, it is administered within the for-profit business, usually in the community relations department. It does not have a separate endowment; expenses are part of the company's annual budget. Corporate giving programs may include employee matching gifts and in-kind contributions as part of their grantmaking activities. They are not subject to the same reporting or public disclosure requirements as private foundations.
Types of corporate philanthropy:
- Cash contributions: grants, employee matching gifts, dollars-for-doers volunteer grants
- In-kind support: non-cash donations of equipment and products; use of facilities and services such as marketing, legal and training services; access to staff expertise; executives serving on boards of directors; employee volunteerism
- Coordination of employee giving programs to federated campaigns such as United Way
Sources: Foundation Center,
Council on Foundations
© Copyright 2009 Minnesota Council on Foundations
Reproduction in any form without the written permission of the publisher
is prohibited.
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Snapshot of Corporate Giving in Minnesota
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$483 million: Cash grants given by Minnesota corporate grantmakers in 2006.
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10.8%: Increase in corporate grantmaking in Minnesota from 2005 to 2006.
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127: Number of corporate grantmakers in the state.
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9%: Share of grantmakers in the state who are corporate.
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42%: Share of the $1.16 billion grantmaker dollars in Minnesota that come from corporate funders.
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33%: Share of Minnesota corporate grant dollars that go to education.
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Top five states for corporate giving as a share of all giving by foundations in the state: Arkansas, Oregon, Minnesota, Alabama, Iowa. (Source: The Foundation Center,
Foundation Yearbook: Facts and Figures on Private and Community Foundations, 2008 Edition.)
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Home of the Minnesota Keystone Program, encompassing 229 companies that have committed to donating at least 2 percent of their pre-tax earnings to the community. (50
percent of MCF corporate members are also members of the Keystone Program.)
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Minnesota statistics are from MCF's
Giving in Minnesota, 2008 Edition.
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