DECEMBER 2007: COVER STORY
Targeted
giving
Companies see philanthropy as a smart investment to be managed
for the good of their community— and their business.
By Abraham Hyatt
Over the past 10 years, corporate giving in Oregon has
undergone a profound transformation. Major sources of funding
have disappeared. Employees are playing a larger role in
determining the direction of their company’s
philanthropy. And the business world is rethinking how it gives
— and what it expects in return.
Perhaps the most powerful shift has been to “focused
giving”: companies donating to or working closely with
nonprofits that are directly related to their industry, as
opposed to a more general, blanketed philanthropic
strategy.
It’s based on a simple idea. “People found out a
while ago that being involved in the community and linking that
work to a product or service can help with branding and how
people feel about you,” says Carole Morse, community
investment officer for PGE and president of the company’s
foundation.
Think of it as philanthropic investing — helping others
in a way that could provide a nonmaterial payoff for your
company. It’s proving to be a successful strategy for
companies big and small. It’s getting rave reviews from
the nonprofit world because of the deep connections it creates
between companies and charitable organizations.
However, the forces that have been transforming corporate
philanthropy over the past decade haven’t been all
positive. Some nonprofits have been bolstered by the rise of
targeted giving, while others have suffered as Oregon’s
— and specifically Portland’s — business
makeup has changed.
Gone are many of the “headquarter companies,” as
Greg Chaillé, president of the Oregon Community
Foundation, calls the businesses that once were based out of
Portland and were major philanthropic sources: Georgia-Pacific,
US West, US Bank, Oregon Bank, Willamette Industries,
Louisiana-Pacific, Fred Meyer. The list of headquarter
companies that have left the area, mostly due to mergers and
acquisitions, goes on and on.
Other mid-level and small companies are now feeling pressure to
take up the slack; Chaillé’s foundation found that
local businesses have experienced a 49% increase in requests
for donations over the past few years. Complicating matters are
the growing number of young companies — businesses that
may be more focused on internal affairs and global competition
rather than the admirable but second-tier priority of
charitable giving.
“We know that the new guard of business leaders are very
concerned about the community, but I don’t think that
they’re yet in a position to be the old guard of
philanthropy,” Chaillé says.
When that new guard steps into the old guard’s shoes,
they’re going to have a very different relationship with
corporate humanitarianism than their predecessors.
They’re entering a world where targeted giving is
intertwining charity and corporate strategy; a world where
philanthropy isn’t just a warm feeling, it’s a
smart, proactive business strategy.
Welcome to the new corporate philanthropy.
NEW METHODS OF CORPORATE giving range from the familiar to the
uncharted. Credit card companies, airlines, grocery stores,
banks and department stores donate to charities based on
consumers’ spending. Employers offer paid leave to
employees who volunteer or match workers’ charitable
donations. Often it has less to do with giving monetarily and
more to do with an increased emphasis on sustainability or
ethical responsibility.
Businesses can buy charity gift cards from companies such as
CharityChoice and then give them to business associates or
employees who “spend” them at a charity they
choose. Six hundred and eighty of the nation’s largest
retail companies, including the likes of Best Buy, The Gap and
Nordstrom, are donating up to 26% of every purchase shoppers
spend at the web-based, retail-store aggregator igive.com to
consumer-chosen charities. Nau, Portland’s sustainability
fashion wunderkind, offers a similar service as part of its
day-to-day business.
And then there’s targeted giving. Simply put, it’s
about marketing. But marketing in way that does more than pitch
a product. There are dozens of reasons behind the trend: a new
way to reach consumers, an alternative to traditional
advertising or a way to stimulate future market growth.
Julia Hobbs Kivistik, executive vice president of cause
branding at Cone, a Boston-based cause-branding consultant
firm, says one of the biggest reasons for targeted giving is
increasingly savvy consumers, employees and investors who
expect companies to develop meaningful emotional connections
with them by taking a stand on issues that are relevant to the
business and its target audience.
“Companies want to give, and they want a kickback, but
not financially or with money,” Chaillé says.
“It used to be passive: Let’s help society. Now
it’s more focused: Let’s change [a specific
problem]. The adjectives are different.”
Regence Blue Cross Blue Shield funds a program that provides
everything from health care to psychological, social and
spiritual support to terminally ill kids and their families at
Doernbecher Children’s Hospital at Oregon Health &
Science University. NW Natural, with its “We Grew Up
Here” slogan, focuses much of its philanthropy on
community-building projects. TAZO Tea has created a program
that’s improving quality-of-life issues in tea-growing
areas of India. Oregon’s boutique chocolate companies
spend a portion of their profits on creating sustainability in
the cacao industry. Nike, which is also a major giver in
Oregon, donates $10 million worth of goods each year to Mercy
Corps for adolescent girls around the world.
Mark Ganz, CEO of Regence Blue Cross Blue Shield of Oregon,
points to one other factor that makes targeted giving
appealing: By focusing on specific causes or organizations, it
gives companies philanthropic staying power — a way to do
a lot of good in only a few places, rather than a “Johnny
Appleseed,” as Ganz called it, approach to spreading
funding across a broad spectrum. It means saying
“no” more often, he says, but it means making a
bigger difference.
WHILE SOME OREGON COMPANIES are looking for ways to focus
their giving, others are leaving town. There are mixed opinions
on how that loss has affected the state’s nonprofits.
Ganz thinks there’s still a lot of money in the business
community for philanthropy. The changing corporate environment,
he says, has required a lot more creativity on the part of
nonprofits that are asking for funds.
On the other hand, Paul Dudley-Hart, Mercy Corps’
director-at-large, says that finding money has been more
difficult. Andy Nelson, executive director of Hands on
Portland, agrees. “It challenges us,” Nelson says,
“but in the meantime it creates funding
shortfalls.”
How big a shortfall is unknown. “It’s virtually
impossible to get those figures at a local level,” says
Chaillé. There are no places to report charity on tax
forms, no lines on an SEC filing to enter annual contributions.
Which means there are no ways to compile comprehensive giving
data on a statewide level.
The only way to find that information is through a survey of
businesses, which the foundation tried a few years ago.
“We had a very low return rate,” he says. Carol
Lewis, CEO of Philanthropy Northwest, agrees about the lack of
data. Undaunted, her organization is going to attempt its own
survey in the near future.
Lewis’ hypothesis, based on her conversations with
businesses, is that local giving follows national giving
trends. Which are down. But also up. This year, the
Illinois-based nonprofit Giving USA estimated that donations by
corporations and corporate foundations around the nation hit
$12.7 billion in 2006 — a 7.6% decrease from the year
before.
However, if you take out the disaster-related spike in
philanthropy from the year before (i.e., Hurricane Katrina),
then corporate giving is estimated to have increased 1.5% in
2006. Or you can use the Chronicle of Philanthropy’s
numbers that show corporate giving among 81 major companies
climbed 6% last year to $3.8 billion.
WILL THOSE NUMBERS GO UP or down in the years to come? Either
way, companies and nonprofits say the biggest change in the
near future will be the role employees play in determining the
direction of a company’s giving. The number of businesses
that partially or fully match giving by employees is on the
rise. So are company-sponsored volunteer days. Nelson, with
Hands on Portland, attributes the change to a generational
shift in workers.
“Giving isn’t going to be enough,” he says.
“Younger employees are pretty suave. They want to know
what [a company] is doing, and they want to be a part of
it.”
That involvement by workers, says Nelson and others, will
create a cycle: Companies will encourage workers to take part
in charitable works, employees will feel more connected to
their employers, companies (if they don’t already) will
see volunteerism as an effective way to build teamwork and
loyalty, and on and on.
The ripples extend out past individual businesses. Mercy
Corps’ Dudley-Hart says that when disasters happen around
the world, employees mobilize fundraising quickly and are more
likely to get support from a company foundation for larger
contributions. “They’re willing to act far more
quickly with [non governmental organizations] they trust, and
so we get a quicker response. What a key thing that is,”
he says.
However, there are also drawbacks to targeted giving. Namely,
issues that don’t have a connection with any industry end
up suffering. Some argue that because individual giving makes
up such a large portion of donations (80% on average, according
to Lewis with Philanthropy Northwest), then corporate funding
shouldn’t be a priority for some organizations.
But for small nonprofits teetering on that thin line between
just-enough-to-get-by and shutting down, giving up on that type
of funding may not be an option. The growing number of
symbiotic relationships between companies and nonprofits,
corporations and employees undoubtedly will have a critical
impact on some of Oregon’s largest social issues. Whether
there’s enough money to go around remains to be seen.
Have an opinion? E-mail feedback@oregonbusiness.com
