(Kudos to L.A. Weekly for running this image in 2008.)
One of the dirty little secrets of philanthropy and the nonprofit business model is that terrible shocks to the economy aren’t felt immediately. They tend to be felt one, two, three years on when things like rolling averages that determine giving levels seriously begin to kick in. And that’s not just for private foundations, that’s for corporate philanthropy, too. Today, the Chronicle of Philanthropy published a story that looks at 2,500 corporate foundations — an immense swath of the American business landscape — and found things are bad now, but will be getting much worse soon.
Corporate foundations gave an estimated $4.4-billion to charity last year, a 3-percent decline from 2007 after adjusting for inflation, according to a new report.
The report, by the way, has been issued by the Foundation Center; you can download a free PDF of it here. But here, for your wallet-thinning delectation, is an excerpt from the report:
Giving by the nation’s nearly 2,500 grantmaking corporate foundations remained basically unchanged in 2008 at an estimated $4.4 billion. Grant dollars rose 0.8 percent from 2007,1 although this translated into a 3 percent decline after adjusting for inflation. Arguably, corporate foundations were even more directly impacted by the rapid deterioration of the economic situation in 2008 than independent and community foundations. Approximately one-quarter of corporate foundation giving in recent years has been provided by foundations tied to companies working in the banking and finance sector. The impact of this economic calamity has also moved well beyond this sector, with a sustained drop in personal and corporate spending prolonging the recession and affecting corporate earnings across the board. Looking ahead, just over half (51 percent) of corporate foundations responding to the Foundation Center’s annual forecasting survey expect to decrease their giving in 2009.2 Over three-quarters of these funders anticipate decreases in giving of greater than 10 percent.
Here is how the Chronicle analyzed the information:
And giving this year is expected to be down again, with slightly more than half of the corporate foundations surveyed anticipating a drop in contributions.
“We’re going to see even more of the effects of the economic downturn in 2009,” says Steven Lawrence, senior director of research at the Foundation Center, the New York organization that published the report. “Especially as a result of the mergers and upheavals in the banking and finance industry, we’re likely to see more dramatic cutbacks and foundations ceasing to exist.”
The Foundation Center examined nearly 2,500 corporate foundations for its report.
The study did not include donations made directly from corporations themselves, gifts that account for the bulk of corporate largesse. In 2007, when corporate foundations also gave about $4.4-billion, Giving USA, the annual tally of American philanthropy, reported that businesses gave a total of $15.7-billion.
So here’s my question: Why the huge disparity between what the Foundation Center says is the total in corporate philanthropy and what Giving USA says it is? Anyone?