Spate of Corporate Mergers Is Reshaping Philanthropy Nationwide

Corporate mergers are changing the shape of business giving nationwide.

In the past year, at least 9 of the 100 companies listed by Fortune magazine in 1998 as America’s largest corporations

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have either merged with, been acquired by, or entered into merger discussions with another business on the list.

Two others — Chrysler Corporation (No. 7 on last year’s Fortune 500) and Amoco Corporation (No. 22) — disappeared from this year’s list after they merged with foreign corporations. One more — the Atlantic Richfield Company — is about to cease its existence, being acquired by BP Amoco, the company created when Amoco merged with British oil giant BP last year. And numerous others acquired smaller companies over the course of 1998 and 1999.

All of which has some in the non-profit world worried that charitable giving might end up far down the list of priorities for companies engaged in such mega-mergers.

“My concern is that one and one may not necessarily be two,” said Rick Cohen, president of the National Committee for Responsive Philanthropy.

Mr. Cohen said that he was particularly concerned about the effects of bank mergers. He says the federal Community Reinvestment Act, which requires banks to show that they are making loans in the neighborhoods where they operate, has also encouraged significant bank giving to local non-profit organizations.

But as local banks are swallowed by national financial groups, he said, “the decision making may be much more distant from the philanthropic entity than it used to be.” That, he fears, could lead to fewer donations to local non-profit organizations.

Responses to The Chronicle’s annual survey of giving by big companies shows that the influence of mergers has been mixed.

At Citigroup, the new corporation that was formed by the October merger of Citicorp and the Travelers Group, charitable giving fell by nearly 40 per cent from 1998 to 1999.

Paul M. Ostergard, chief executive of the Citigroup Foundation, said the two companies had a combined budget for charitable giving in 1998 of about $55-million. The new corporation’s 1999 budget is $40-million.

“This is a transition year,” Mr. Ostergard said. “There were large overlaps in the kind of programs being supported. There was duplication, and inconsistencies between the goals. I’m operating on the assumption that our giving is going to go up next year by a generous factor.”

Among the issues that had to be resolved was what to do with Citicorp’s gift-matching program for employees, which was already running over budget even before the merger created a worldwide company with 170,000 workers.

Travelers, on the other hand, had never offered to match employee gifts.

The merged corporation came up with a plan intended to be a compromise: It got rid of the matching-grant plan, but promised to make a $500 gift to any charity where a corporate employee volunteered at least 50 hours annually.

While giving went down as a result of that merger, the union of BankAmerica Corporation and NationsBank Corporation had a more positive result for charities. The newly formed Bank of America increased its overall giving by about 10 per cent, to about $100-million.

Lynn E. Drury, president of the Bank of America Foundation, said the new company also had to decide which of two very different foundation structures to adopt. BankAmerica was very centralized, with the foundation board making nearly all the decisions, according to Ms. Drury. NationsBank was much more decentralized, with only 30 per cent of the giving budget granted directly by headquarters, while 70 per cent was designated for regional and local officials to give away. The new company opted for the decentralized model.

Two of the nation’s largest corporations merged with foreign corporations, but that did not cause them to cut back on charitable giving in the United States. DaimlerChrysler, the new company formed when Chrysler merged with Daimler-Benz, will increase its donations in 1999, according to W. Frank Fountain, president of the DaimlerChrysler Corporate Fund. “We remain the largest corporate contributor to charity in Michigan,” Mr. Fountain said.

With most of the company’s plants still in the United States, Mr. Fountain added, the fund remains focused on the same priority Chrysler always had: education. “We’re concerned about our future work force,” he continued. “We’re reinvesting back into the communities where our employees are highly concentrated.”

Paula Banks, executive director of the BP Amoco Foundation, said that the new company is still “in the process of integrating all our programs.”

According to the corporation’s report on community activity, it donated $65-million in 1998, of which $37-million went to U.S. charities. Amoco had given about $14-million the year before, although Ms. Banks could not give a comparable figure for BP.