Corporate Giving Picks Up Despite Weak Economy and Attacks

November 1, 2001       Gina Bernacchi      

Corporate giving — expected to be flat this year — swung dramatically higher in the wake of the September 11 terrorist attacks, as the donors themselves struggled against a deepening economic slump.

“Without hesitation, companies came forward looking for ways to respond,” said Fran Eaton, managing director of corporate services for the Council on Foundations in Washington, D.C. “In fact, within hours of the events of September 11, there was a great deal of activity on our email group list. There was no question of whether they would do something; it was a question of what they should do.”

Although it’s too soon to tell, figures for 2001 won’t be collected until the end of the year, it appears that corporate giving in 2001 will surpass previous years by a long shot, mainly due to the attacks. Corporations are giving in record amounts, despite the threat of a recession and, sometimes, in spite of their budgets.

According to Joan Todd, spokesperson for Eli Lilly and Company, a pharmaceutical research and development company, Eli Lilly’s donations have increased since September 11. “We’ve always been a philanthropic company and giving has been very much a part of the fabric of the company and of the corporate culture,” Todd said. “We gave as far back as the original San Francisco earthquake in 1916. One of the primary ways we give is through our Lilly Cares program, which provides medicine for patients who can’t afford to buy it. We’ve increased what we’ve given through that because of more requests.”

In 2000, the Eli Lilly and Company Foundation paid out $190.7 million, $138.5 million of which was in product donations and $52.2 million in cash. In addition to its ongoing contributions, the company recently donated $1 million to the American Red Cross in wake of the tragedy and is prepared to donate any medicines for which relief agencies may ask.

Because budgets for 2001 were set in 2000, most companies are continuing to give at the level they anticipated when budgets were set. The slowing economy had not yet made a significant dent in corporate giving before September 11, but the tragedy has certainly caused the giving to increase dramatically.

Bob LeRoy, director for disaster major gifts for the American Red Cross (ARC), in Washington, D.C., said the organization had received huge donations from corporations that go above and beyond ongoing commitments given through the Annual Disaster Giving Program. Because of the economy, LeRoy said corporations had been more cautious about their donations before the events of September 11, but have given more freely since the tragedy.

“Members (of the Disaster Giving Program) have contributed anywhere from $1 to $10 million,” LeRoy said. “That’s been a bridge for us between our ongoing funding for disaster relief and the unprecedented generosity of the corporate community. We were seeing a heightened sensitivity even among our longstanding partners because of their budget constraints.”

According to LeRoy, “What happened on September 11 just fundamentally changed us in so many ways. The reality of it is right now we’ve just never seen this level of response. There’s no way of knowing what the perception or reality of the recession would have meant to our fundraising if September 11 hadn’t happened.”

Though Silicon Valley and its charitable nonprofits were already worried about layoffs and a worsening economy before the attacks, the major employers quickly came together to raise more than $18 million in one week alone. At the White House’s request, Silicon Valley employers joined others in the high-tech sector to launch the Liberty Partnership, a one-stop giving Web site for relief agencies.

According to Maideh Radpour, director of corporate philanthropy, Cisco donated an additional $6 million to key organizations involved in relief efforts — including $2.5 million to the ARC — which will dramatically raise the total amount of money given out at the end of the year by the company.

“We just made it happen,” Radpour said. “The reason the company felt comfortable with that donation is because we worked with people we already had a relationship with. What corporations find is that in times like this, it’s really great to have put together partnerships that help you find what’s really needed and who’s able to effectively address certain kinds of issues.”

Endowments help corporate foundations sustain their level of giving during slow economic times, but endowments funded with stock were hit hard by the stock market’s continuing collapse after the attacks.

A 2001 report by the Foundation Center entitled Foundation Growth and Giving Estimate, stated that giving by America’s 2,019 corporate foundations grew an estimated 9 percent in 2000; however, giving grew by 15 percent in 1999 and by 18.4 percent in 1998. According to the report, this lower rate of growth in giving, compared to other types of foundations, reflects “the sensitivity of corporate foundations to shrinking profits, stock market reversals, and a general slowing of the economy in the latest year.” In addition, corporate foundations gave an estimated $3.1 billion in 2000, up from $2.8 billion in 1999. Over the two-year period from 1998 to 2000, giving rose by nearly $621 million.

According to Radpour, because of its endowment fund, Cisco had not experienced a significant lull in corporate giving due to the slowing economy. Last year its foundation gave out approximately $11 million, and Radpour said that number won’t change in 2001.

“The giving budget of the foundation remains the same and always has been more than the 5 percent IRS requirement,” she said. “Our budget hasn’t changed. We completed all our programs for last year and went forward with our programs for this year with the same budget. But, we didn’t try to increase it. Usually I try to ask for more money. But, we also found ways to be more efficient with the money we do have. Programs will be efficient and giving will be more efficient because of conscious efforts on our part.”

Like many companies, Cisco also offers an employee matching program through its endowment fund. In response to the September 11 tragedies, employees are donating more money, which may raise the total money given out at the end of the year through Cisco’s matching gifts program.

 

Gina Bernacchi is a reporter for the Denver News Bureau.