Fall-Off in Business Giving
A new study by the Conference Board reveals a leveling off of corporate charitable giving even as profits have been on the increase. The figures reflect continued emphasis on education and a continued decline in support for health and human services--a trend that has compounded the problems of social-service agencies that have been the targets of significant government cuts during the Reagan Administration. Yet the prospects are not as gloomy as the figures suggest.
The study covers the year 1987. Preliminary indications suggest that 1988 figures will reflect an increase, with a major rebound likely this year.
A survey of 328 leading corporations showed an increase in contributions of less than 5% in 1987, compared with annual increases of more than 10% in the previous decade. When the giving of all companies--large and small--is counted, the total for 1987 is the same as for 1986.
The 328 leading companies gave educational institutions 37% of their contributions, health and human services 27%, civic and community activities 14%, the arts 11%, and a variety of other interests 11%. Education has maintained a relatively stable share of the total giving, but the percentage for health and human services has been declining for 10 years.
“The survey also finds that during 1987 increases in corporate profits significantly outpaced rises in contribution budgets,” the board reported. “One example: While the manufacturing companies reported an aggregate increase of 20% in corporate profits in 1987, their contribution budgets rose by 4%. The result, of course, was a dip in the ratio of contributions to pretax income.”
The pattern of giving has been made somewhat unpredictable by reorganizations, mergers and leveraged buyouts. In 1986, for example, RJR-Nabisco gave its corporate headquarters office building in North Carolina to Wake Forest University, a gift valued at $40 million. And in 1987, after General Electric swallowed RCA, it gave the Sarnoff Laboratories in New Jersey to SRI International, a donation valued at $90 million.
Research by the Council for Financial Aid to Education suggests a “pronounced upturn in 1989 of 5% to 10%,” we were told by Hayden W. Smith, senior vice president. Indeed, his analysis suggests that the plateau in giving has just been a delayed reaction to the decline in corporate profits that began in 1980. Profits did not regain the level at which they had peaked in 1979 until 1987. Despite falling profits, there had been an unprecedented increase in corporate giving, doubling from 1979 to 1986. That represented an increase in giving from less than 1% of pretax profits in 1979 to 1.99% of pretax profits in 1985. Profits are now setting new records, up 30% in the last two years, inspiring projections of significant increases in corporate giving this year.
