Philanthropy Development Programs & Services

Our economy is slowing – and is likely to slow further because of last week’s terrorist attacks.

Although most Minnesotans have yet to feel the full effects of these tragic events, we will in the coming weeks and months.

These events may accelerate an erosion of support for the institutions that compose our quality of life: cultural, religious, and social service organizations.

Corporate Donations Cool Off was the front-page headline of a recent issue of the Chronicle of Philanthropy.

The report shows that giving budgets will shrink from a median of 0.9 percent of pretax profits from 1.1 percent in 2000.

This is far from the 2 and 5 percent that Minnesotans have long idealized and even institutionalized into the Minnesota Keystone Program.

The Chronicle reported in a survey by Barna Research Group just a few weeks earlier that individual donations to places of worship were down significantly in 1999. Although most businesses don’t contribute to religious institutions, religious giving composes the largest part of private donations and is a bellwether for all other philanthropy.

How does this relate to our community?

The good news is Minnesota’s economy has not been hit as hard as other parts of the country – so far. Giving by Maplewood-based 3M Co., as cited in the report, actually rose 16.3% in 2000 over 1999. Fifty-two percent of the value of their contributions was in product donations.

The bad news is that Qwest Communications, another large donor to area organizations, dropped its giving by 25.2%. All of Qwest’s gifts were cash. If Minnesota is reflective of the country as a whole then we can expect corporate giving to drop by 2 percent in 2001.

The cutback in funding for community support takes many forms. Nonprofits that depend on multi-year grants are seeing them refused because business is hesitant to make commitments beyond the next quarter, much less beyond the current fiscal year.

Other companies are delaying decisions about grants because of financial uncertainties. Hungry children shouldn’t have to wait until the next earnings report to get their next meal at a homeless shelter.

The good news about companies who increased their giving was colored by the means the growth was achieved: through acquisitions.

Take the case of Champion International, the paper giant which operates a production facility in Sauk Rapids, MN. Champion International was acquired last summer by International Paper Co. At the time of the sale, International Paper picked up Champion’s full philanthropy budget. In 2000, it appeared that International Paper’s charitable budget rose from 1999’s $7.6 million to $19.8 million. Champion responded to the Chronicle’s survey by projecting a giving budget of $16 million for 2001. Clearly, International Paper’s whole giving loaf is smaller than its two former halves.

Qwest blames the cost of its acquisition of U.S. West for the drop in its giving program. Qwest’s spokesperson, quoted by the Chronicle, stated, "…the company is in a negative cash-flow position and we would have to borrow money in order to give it away."

This downward trend in giving by established corporations is contrary to the recommendation of the Committee to Encourage Corporate Philanthropy (CECP, http://www.corphilanthropy.org.). The committee was established in 2000 by about two dozen CEOs of Fortune 500 companies. Its co-chairs are former Chevron Chairman and CEO Ken Derr and actor/philanthropist Paul Newman.

CECP makes five principal points in its case for corporate philanthropy:

• Corporate philanthropy is a uniquely American phenomenon that provides leadership to and funds for our world-class universities, hospitals, and art institutions.
• A vibrant private sector, including successful non-profit organizations, is dependent on the partnership between itself, the government, and the market.
• Corporate support for non-profits has yet to reach its full potential.
• Enlightened corporations seek to be preferred employers and preferred investments. They see themselves as responsible to the communities they serve and in which their employees and shareholders live and work.
• Well-structured and well-managed corporate giving is a vital part of a company’s broader social involvement, enhancing performance, morale and reputation. It offers the opportunity to do well by doing good.

The committee has an ambitious agenda to increase corporate giving to a level of $20 billion by 2004. Their goal is to see corporate giving rise by a minimum of 7 percent per year.

But corporate CECP members already are cutting giving budgets. Lucent Technologies, Inc., a CEPC member, has cut its giving budget by 8 percent, according to the Chronicle.

How can this trend be reversed?

Minnesota and the nation cannot be dependent on what were once "old reliable" corporations for philanthropy. New companies can step in to fill the gap. And there are abundant examples for them to follow and increasing resources to help them structure a program.

Hamline University’s Graduate Program in Management and Public Administration offers a course www.hamline.edu. Information also is available on-line from The Center for Corporate Citizenship at the William E. Carroll School of Management at Boston College www.bc.edu.

Amidst this gloom and doom – especially in the wake of last week’s attacks -- there are still many beacons of enlightened examples. The St. Paul Companies, Inc. set a national standard recently when recognized by Business Ethics Magazine as one of its 100 Best Corporate Citizens for 2001.

It should be no surprise to learn that the St. Paul Companies’ CEO Doug Leatherdale is the only Twin Cities representative on the membership list of CECP.

We can hope that he and The St. Paul Companies will be able to maintain their commitment in light of the tremendous losses they and our country suffered because of last week’s tragedy.

In times such as these, all participants in our economy must step forward to provide the kind of philanthropic leadership that can help to ensure the quality of life for Minnesotans and all Americans.