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Big Companies Cut Back On Donations But Encourage Volunteer Work Instead

November 1, 2010

Volunteers welcome signA new report by the Committee Encouraging Corporate Philanthropy (CECP) revealed that while a majority of big companies cut back on their philanthropic donations in 2009, many are encouraging employees to volunteer instead.

The Chronicle of Philanthropy reported that cash donations were the first to be reduced as the recession forced companies to cut costs. According to a press release from CECP, 171 companies, including 61 of the Fortune 100, were surveyed in 2009. Data showed that 59 percent of companies gave less last year, with 40 percent reducing philanthropic donations by at least 10 percent.

Some companies, however, managed to give more than the previous year--36 percent actually increased their giving, with 20 percent increasing their giving by 10 percent or more.

The Chronicle of Philanthropy stated that the recession has also caused companies change the way they gave back. Some companies redirected money donations and products to organizations that serve people hard hit by the recession. For example, 29 percent of donations went to health and social service charities. Support for community and economic development also increased.

Some companies expanded programs or created new ones that helped those in need. Pharmaceutical giant Eli Lilly and Company, for instance, made it easier for people to qualify for its program that helps those without health insurance. Pfizer created a brand new program to help people who recently lost their medical coverage.

Most companies, however, encouraged volunteerism and pro bono service. According to The Chronicle of Philanthropy, 92 percent of companies made it easier for employees to volunteer. U.S. News & World Report noted that instead of giving cash, more and more companies are providing goods or services in areas in which they have expertise. "Philanthropy is getting integrated into the strategy of all the departments throughout the company, as opposed to just being a group of 20 people who write checks," said Margaret Coady, director of CECP. "Companies and employees are seeing their communities in greater need, but they don't have as much cash to give."

Accounting and consulting firm Deloitte, for instance, began allowing employees to volunteer for non-profits organizations as paid time. Employees provide services to non-profits the same way they would for paying clients. Their volunteer program started two years ago and the company has a goal of doing $50 million worth of volunteer work by 2011.

Gap also started a program called This Way Ahead, which helps poor youth in New York and San Francisco learn valuable job skills. So far, 400 youth have completed the program and 170 have earned internships in Gap and Old Navy stores.

While beneficial to the surrounding community, volunteering also benefits big companies. Evan Hochberg, national director of community involvement for Deloitte, pointed out that "this generation of 20-somethings coming into the workforce have gone through high school and colleges that have service volunteerism requirements. And they define philanthropy by action, not cash". That said, a culture of corporate volunteerism helps companies attract some of the best recruits. Corporate philanthropy also helps boost employee morale and retention. Stanley Litow, who oversees IBM's volunteer program, told The Economist that employees who participated tend to show greater commitment to the company.

Some, however, argued that this new form of corporate philanthropy is self-serving, reported U.S. News & World Report. Still, others feel it is better than just writing a check. Lots of companies do things well that are of use to the non-profit sector," said Tim Ogden, editor of the blog Philanthropy Action. "I would much rather see a McKinsey consultant doing strategy for a non-profit organization than swinging a hammer for Habitat for Humanity."


Compiled by Heidi M. Agustin

Sources:

"Big-hearted Blue," economist.com, October 28, 2010

"Companies Driving Changes in Corporate Philanthropy," usnews.com, October 25, 2010, Joshua Kucera

"Nearly 60% of Big Companies Cut Their Giving in 2009, Report Says," philanthropy.com, October 27, 2010, Caroline Preston

"New CECP Data Report on Corporate Philanthropy Shows that the Majority of Companies Gave Less in 2009, but Contributions in Aggregate Rose," corportatephilanthropy.org, October 27, 2010

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