New Studies Provide Insight Into Why Companies Give and Who Benefits

Three new studies on corporate philanthropy shed light on why large companies give — and what kinds of organizations they support:

* A national study of 226 large companies by a University of New Hampshire professor

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found that while most corporations say their official policy is to use philanthropy to further their business goals, few actually do so in practice.

* A study commissioned by Fortune magazine found that nearly all of the nation’s big companies support programs that benefit young people.

* A study of Dallas businesses found that large companies tend to focus on causes like education while small ones are more likely to give to charities that help the poor.

In the University of New Hampshire study, Jerry D. Marx, an assistant professor of social work, found that 86 per cent of companies said they believed that corporate giving should meet two objectives: helping a charity and advancing corporate strategies. But most of those companies did not rank typical bottom-line objectives — such as increasing sales — high among their giving goals.

Instead, Mr. Marx found, the companies were more likely to rank improving their public image high among their goals.

And while many of the companies in the survey said that their philanthropy plays an important role in the achievement of their business goals, more than half of the companies reported that they seldom or never evaluate the results of their contributions programs.

Mr. Marx’s study also found differences between the 194 companies with strategic giving plans and the 32 companies that had no such plans. Those with plans are much more likely to give to education-related causes, for example, and are also more likely to devote a smaller portion of their charitable dollars to United Ways.

The Fortune magazine study was based on data from 167 of the 500 top revenue-producing companies as ranked by Fortune in 1997. It found that all but two of the companies direct at least some of their philanthropic resources to charities that help young people. Those resources include money from corporations and their foundations, employee-volunteer efforts, marketing programs involving charities, in-kind services, and product donations. More than one-third of the companies devote 60 per cent or more of their resources to youth programs, with about 15 companies directing more than 80 per cent to such efforts.

Nine out of ten of the companies said they supported schools, programs that provide mentors for school-aged kids, and programs to help disadvantaged youngsters. Over half of the companies said they expected growth this year in their employee-volunteer programs — nearly all of which benefit young people. Thirty-eight per cent planned to increase their cash donations to help youth groups.

The Fortune magazine study was paid for by American General, a Houston financial company, and was conducted by DG&A, a Washington consulting firm.

A survey conducted for the Dallas Foundation by the University of Connecticut’s Center for Survey Research and Analysis found that giving patterns varied according to the size of a company. The study was based on responses from 100 companies that are among the biggest earners in the Dallas area, plus 410 other companies in the area that were selected at random.

Larger companies tended to support education more heavily than did smaller companies, the survey found. Small businesses tended to make grants to help the poor, the hungry, or the homeless, the survey found.

The study also found that 94 per cent of the large businesses said that showing the company to be a good corporate citizen was an important motivation for giving. Only 71 per cent of the smaller companies said the same. Ninety per cent of the big businesses, compared with 59 per cent of the other businesses, said that improving employee morale was also an important reason for the company to support charities.

Free copies of the Dallas study, “Dallas Survey on Corporate Giving: Building a Better Community,” can be obtained by contacting the Dallas Foundation, 900 Jackson Street, Suite 150, Dallas 75202; (214) 741-9848.

Results of the Fortune study were first reported in a special advertising section of the magazine’s May 24 issue. A complete copy of the survey analysis is available for $45 for businesses and $35 for non-profit organizations from DG&A, 4812 Ellicott Street, N.W., Washington 20016; (202) 296-7121.

A copy of the study by Mr. Marx appears in the June issue of the journal Nonprofit and Voluntary Sector Quarterly, published by the Association for Research on Nonprofit Organizations and Voluntary Action. An issue of the journal can be purchased for $19, plus $3.50 shipping, from Sage Publications, 2455 Teller Road, Thousand Oaks, Cal. 91320; (805) 499-9774.