Making accurate comparisons between US and UK corporate giving is fraught with difficulty. Data shows that while US corporations are perhaps just as generous as their UK counterparts; they’re just not as good at measuring it.
The general view from abroad is that the US is stingy when it comes to funding international development, giving less than 0.2% of its gross national income to the developing world. This compares to 0.36% from the UK, an average of 0.4% and the UN millennium development goal of 0.7%.
But in reality this is not an accurate perception of US generosity. The Hudson Institute’s recently released Index of Global Philanthropy carefully researches the US’s international philanthropy, discovering that the country is “one of the most philanthropic nations” and Americans “are anything but stingy and uncaring”. Indeed the institute’s director of the Center for Science in Public Policy, Dr Carol Adelman, says: “Americans prefer to give people-to-people assistance versus Europeans who give primarily government to government aid.”
Although the government gives only a small percentage of GNI, the actual dollar amount is greater than any other nation: in 2004 the US gave $20bn in overseas development assistance, compared to Japan’s $9bn and the UK’s $7.9bn. In addition to this government aid, US private sector donors gave more than $24bn, or 46% of total US assistance.
Unreported philanthropy
The Hudson Institute found that US corporations gave 21% of the total $24bn private US assistance. But this figure is hugely undervalued because in reality there is no comprehensive survey of corporate philanthropy. While there are several organisations that track corporate giving, each have a limited approach, provide differing estimates and do not separate international and domestic giving. For example, in the Conference Board’s annual survey on US corporate philanthropy, 189 companies completed the survey and of those only 88 provided international data.
Furthermore, the institute found that most companies do not track cause-related marketing. Instead companies look at these efforts as part of their marketing and advertising campaigns. As a result, millions, if not billions, of charitable donations
go unreported.
US versus UK
When comparing the top five Fortune 100 companies with the top five FTSE 100 companies, contributions as a percentage of pre-tax profit were very similar. US companies ranged from 0.1-2.3%, while UK companies ranged from 0.3-2.0%. When comparing the total giving, 42% of US companies gave more than 1% of pre-tax profit and only 29% of UK companies gave more than 1%.
However, of the top five most generous US corporations, four are pharmaceutical companies (Pfizer, Merck, Bristol-Myers Squibb and Johnson & Johnson), although, 90% of their total philanthropy is given through product donations valued at wholesale prices. This is not as costly to the company as cash and other contributions – the overstatement distorts the data.
While the US gave slightly more on average, the US does not have an accurate or consistent measure for corporate philanthropy, and outside the pharmaceutical industry there is no general guideline for valuing in-kind contributions. Of the FTSE top 100 givers, 40 of them use the London Benchmarking Group, a system that captures in-kind contributions at a standardised value, reports staff time and management costs. This level of detail provides a level of transparency and detail about corporate philanthropy which does not exist in the US.
Although making accurate international comparisons is difficult, it is clear that US companies are doing an inadequate job of tracking their corporate community investment.
As corporations move to strategic giving from charitable giving there is a growing need to manage contributions. US companies can learn from their UK counterparts how to provide best practice and benchmarking of philanthropy to improve their ability to manage this increasingly crucial corporate activity.
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