Businesses Active in Charitable Giving
Nov. 1, 2005 (SmartPros) About 75 percent of fast-growth companies surveyed by PricewaterhouseCoopers report charitable giving activities to some extent. In return for their generosity, companies accrue a variety of benefits, including high-level networking in the community, and opportunities for attracting and retaining employees with compatible values.
But few -- only 15 percent -- have a formal plan for their charitable giving activities, PwC reports. And only five percent of surveyed CEOs said their business principals seek professional advice on addressing their philanthropic objectives. Similar numbers have an "informal" plan (31 percent) or commit to charitable activities on an "ad hoc" basis (36 percent).
Presently, 11 percent of "Trendsetter" CEOs either have, or are seriously considering establishing a charitable foundation or a donor-advised fund. "Charitable foundations have long been used," said Kevin Roach, Private Company Services tax partner for PricewaterhouseCoopers. "A donor-advised fund is relatively new -- a segregated fund owned and controlled by a nonprofit organization. Donors can make contributions to the fund and receive an immediate income tax charitable deduction, while retaining the right to make recommendations regarding how the contribution is invested, and the designation of the public charities that will receive future grants out of the contribution."
Although many are involved, more than half of surveyed CEOs (55 percent) view philanthropic and charitable activities as not important to the sustained long-term growth of their business -- while 29 percent see them as at least somewhat important in this regard. Sixteen percent did not report.
"On the surface, the majority of these CEOs may appear to side with Nobel-prize-winning economist, Milton Friedman, who has long held that social initiatives of companies undermine their profit-seeking purpose," said Roach. "But, there are many other reasons for being a good corporate citizen."
Other, mostly-local benefits. The bulk of "Trendsetter" companies' charitable giving is community-focused (79 percent), rather than national or international (21 percent). The majority of CEOs (69 percent) see significant benefits to be gained, particularly in the attraction and retention of employees with compatible values, and in high-level networking:
"These CEOs see themselves first as members of the communities where their business is based," said Roach. "And, they see a number of ways they can benefit from their good works, particularly with executive networking and the development of an employee culture built on shared values."
Nearly half are giving employees time to participate in charitable causes. One-third give to health-related charities such as cancer and heart disease organizations. Other ways they are involved include educational grants, sponsorship of local athletic teams or events, donating own products or services, disaster relief, and donating to the arts.
Over the next two years, 42 percent of those surveyed expect their company's corporate citizenship activities will increase. Only one percent expects a decrease, while the majority (51 percent) expects them to stay about the same. Seven percent are uncertain or did not report.2005 SmartPros Ltd. All rights reserved.