The top 500 British companies say they committed a total of £399 million to community investment in the UK last year, up by 24% on the previous year, according to the annual survey by the Directory of Social Change. However more than three quarters still only provided a figure for charitable donations, not total community contributions with in-kind giving included, so the amount remains an underestimate. Nearly half the total contribution (45%) comes from the top 25 companies alone.
As a percentage of pre-tax profits, company giving rose to an average 0.40%, up from 0.33% in 1996/97. Lloyds TSB heads the total community contribution table at £30 million, nearly twice that of the second biggest giver BT (reporting œ15.6m). NatWest, Barclays and Marks & Spencer come next, each contributing more than œ10m. Three international companies follow, based on their UK contributions: Diageo (£8.3m), BP (£7.5m) and Glaxo Wellcome (£7.0m).
The Guide to UK Company Giving (ISBN 1 900360 51 9, £25) was issued on July 12 and the Directory of Social Change sought publicity by unfavourably contrasting contributions by UK supermarket chains with generosity by their US counterparts like Wal-Mart. Supermarkets in Britain report the lowest pre-tax giving levels of any UK industry sector (at 0.3%, compared to energy at 0.86% and financial services at 0.85%). Tesco’s reported response was to protest that the figures ignore contributions made through its Computers for Schools initiative. Contact John Smyth, DSC, on 0151 708 0136, or for copies of the guide, DSC Publications on 0171 209 5151
HOW TO VALUE IT
A practical guide to measuring and reporting corporate community involvement following the London Benchmarking Group approach was published in July, authored by David Logan and Mike Tuffrey of The Corporate Citizenship Company (publisher of Community Affairs Briefing). Companies in Communities: valuing the contribution (ISBN 1 859341 03 9, £29.95) provides step-by-step guidance on measuring all community contributions, both in cash and in-kind, and is based on the work of a group of 18 companies which has applied the model in practice. The book defines the difference between the input contributions, including in-kind gifts of stock and equipment and employee time, and the output they achieve for company and community. A full pro forma example is given of how to complete an assessment of company inputs for charitable donations, community investment, commercial initiatives in the community along with management costs. A further publication with how-to-do-it guidance on measuring outputs is planned for later in 1999. Contact Biblios on 01403 710 851 (http://www.ngobooks.org)
US CORPORATIONS SLOW DOWN
The growth in corporate philanthropy among American firms is slowing down, according to a survey by the US publication, Chronicle of Philanthropy, published in July. Covering 91 of the top 150 US firms (ranked by annual revenue), it shows total cash contributions are expected to increase by 6.1% in 1999, compared with 14.2% growth the year before. The median contribution as a percentage of pre-tax profit is 0.9%, unchanged on the previous two years.
Planned 1999 giving is $2.1 billion in cash and œ983 million in in-kind gifts. Wal-Mart is the biggest cash contributor at $79 million, but pharmaceutical company, Merck, will donate drugs valued at œ200 million on top of its $40 million cash donations, putting it top of the Chronicle’s league table. However such in-kind gifts are valued close to notional sales price, not at cost to the company. Two other drugs companies, Johnson & Johnson and Bristol-Myers Squibb, become the second and third biggest contributors, leap-frogging corporations whose cost of contribution was actually more. Contact Chronicle on Philanthropy on 00 1 202 466 1200 (http://www.philanthropy.com)
SOUTH AFRICAN CCI
Corporate community involvement is flourishing in South Africa, according to a report published by the Centre for Development and Enterprise in June. Based on a postal survey of 75 large corporations and a telephone poll of 545 businesses of various sizes, the study found that the large companies contributed Rand 580 million in 1997/98 (approximately œ60 million), equivalent to 0.7-0.9% of pre-tax profits. Including all companies, the estimated contribution rises to around R4 billion.
Large companies focus on education (44% of contributions), followed by small business development (15%), arts (13%) and welfare (13%). The CDE report, Corporate Business in a Wider Role, highlights other actions, including efforts to subcontract to emerging black businesses and making executive time available. Contact CDE on 00 27 11 482 5140 (http://www.cde.org.za)
Comment
By comparable international standards, UK companies appear to contribute less as a percentage of profit than their US and Commonwealth counterparts. But how reliable are the figures and do cultural differences make such comparisons meaningless?
On the latter point, there are big differences between the UK and the US, of which the valuation of in-kind gifts is the biggest. Nonetheless, something of an emerging norm can be seen among leading global businesses, at around one percent of pre-tax profit. Both BT’s and Diageo’s public commitments to this target are cases in point. (A better international standard would be based on post-tax profits, so eliminating the effect of the size and cost of the public sector around the world.)
For the UK, no one in the know seriously argues that companies have actually increased their contributions by one quarter in a year. That statistic merely demonstrates the effect of initiatives like the London Benchmarking Group in establishing the expectation (as well as the means) for companies to put a full but fair value on their total contribution. That three quarters still don’t (and then get criticised) is perhaps the more remarkable figure.
One reason is that some community affairs managers fear the consequences if senior executives were ever to discover the true cost. When they lack an evaluation of what the programme is achieving for company and community, that must be a real worry. But until companies admit that playing a wider social role has a real cost and brings real benefits – demonstrating that impact through evaluation – community affairs managers will remain on the defensive, internally and among key audiences externally.
COMMENTS