Employees Get More Say About Where Corporate Donations Are Made

These days, when Cabot Corp. in Waltham, Mass., writes checks for charitable contributions, the company’s 3,000 domestic employees have a lot to say about where the money goes and how it will be spent.

“We want to recognize employees who go beyond their jobs and become social entrepreneurs in their communities,” said Ruth Scheer, vice president and executive director of the Cabot Corp. Foundation.

About 60% of the half a million dollars the company spent on cooperative projects this year was targeted by employee teams. Projects as diverse as building a playground to operating a van service to transport elderly and low-income residents for medical care got the company stamp of approval.

Cabot, in some respects, is typical of the route many American corporations are taking in managing their charitable contributions: Many of the biggest corporate givers are becoming more tightfisted but are more heavily involved in how their dollars are spent, with one of the major areas of focus being education.

Among the 292 major corporate donors that the Conference Board tracked in 1985 and 1986, charitable contributions rose a modest 3%, continuing evidence that increases in corporate dollars going to charity have been sharply curtailed. .

“Economics has a great deal to do with it,” said Linda Cardillo Platzer, senior research associate at the Conference Board. “Contributions are closely related to corporate income.”

At one point, there was a push to encourage companies to dedicate from 2% to 5% of their pretax income to charity. Overall, U.S. companies last year gave close to 2% of pretax income, about the same as the previous year. The nation’s top 75 givers, however, gave more than 2% of pretax income to charity, according to the Conference Board.

Among a larger universe of 372 major service and industrial companies that the Conference Board surveyed for their contributions for 1986 only, the amounts given actually declined almost 2%, to $1.7 billion, or 37% of all charitable giving by U.S. corporations.

Total contributions by all American companies, estimated by the Council for Aid to Education, were $4.5 billion last year, up 2% from 1985.

Part of the slackening increase in the growth of contributions is attributable, Platzer said, to the economizing that some oil companies have done on the charitable front as their own balance sheets have suffered from the downturn in oil prices.

Leveraged buyouts, mergers and acquisitions, and the streamlining of corporations also have taken their toll. “The new guy comes in and just doesn’t have the same priorities as the old,” Platzer said. “Things that used to be automatically increased are re-evaluated on a case-by-case basis.”

The pattern of slower growth in giving, which began in 1985 and stands in strong contrast to the 13% to 26% annual gains posted in the past decade, would have been even more pronounced if companies had not turned to products, land and equipment to supplement their contributions.

The Conference Board reported that among the 25 largest corporate donors last year, non-cash contributions represented more than 30% of their total giving.

The law allows firms to deduct securities and other assets up to their fair market value and grants even more generous deductions for products given for use in scientific research and training in the biological and physical sciences.

Although there was an increase in money for the arts, the biggest chunk of corporate contributions from the 372 major companies surveyed by the Conference Board was for education in 1986.

Of the $1.7 billion given, about 43% went to fund education-oriented projects and programs, up from 38.3% in 1985. Among the smaller sample of companies surveyed in both 1985 and 1986, education as a portion of overall giving shot up a dramatic 17%, said Jane Hammond of the Council for Aid to Education.

“More and more, there has been a difference in the quality and motivation of corporate contributions and contributions to education,” said Paul R. Miller, vice president of the Council for Aid to Education. “The education stuff has an investment quality about it.”

BellSouth Corp. is trying to improve the quality of education in the nine southern states it serves.

The company set up the Bell South Foundation last year with an endowment of $25 million. So far, it has handed out $1.6 million to fund six programs that range from assessing the quality of math instruction given to middle school students to expanding the recruiting and improving the education of minority teachers.