Against Growing Uncertainty, a Rise in Corporate Global Giving
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South Africa has been one focal point of corporate global giving. shutterstock/John Warner
Twenty years ago, the actor and philanthropist Paul Newman sparked a movement to engage corporate CEOs in helping companies become forces for good, and elevating philanthropy to a strategic priority.
The organization that grew from that, the Committee to Encourage Corporate Philanthropy (CECP), is now known for arming corporate philanthropists with peer data and research, tracking giving across all major industries. This year, it issued an annual “Giving in Numbers” report that benchmarked the social investments of 250 U.S. companies through metrics ranging from cash giving to funding priorities.
One key finding of CECP’s 2019 report is that global giving has been trending higher in the past three years, rising by almost 10 percent. Ninety percent of the companies that participated in the survey are based in the U.S. Two in three invested internationally, allocating an average of 21 percent of their overall budgets to global giving.
That increase comes at a time when sociopolitical events have shifted the ground beneath multinational corporations, prompting leaders to redefine their roles in leading societal progress.
Tracking the Uptick
Global giving is tricky to track. U.S. tax codes clearly define what constitutes a charity, but that consensus ends at the border. Corporate foundations often work through intermediaries to avoid an onerous expenditure responsibility process for international grantmaking that discourages short-term relationships. They include U.S.-based charities with international programming, “friends of” groups, and international charities that have taken the necessary steps to receive IRS recognition.
CECP employs Global Guide standards that were developed for use by major multinationals, and hold recipients to three criteria: They must be formally organized, have a charitable purpose, and never distribute profits. Direct cash, foundation giving, product donations, and pro bono services all count as social investments.
CECP found that the types of international giving mirrored domestic giving percentages. About half came from direct cash contributions. Thirty-five percent was delivered through grants. And the rest represented the fair market value of product donations and pro bono work.
Where They’re Giving
“Giving in Numbers” says that North American companies—the U.S. and Canada—had a median of nine countries in their international portfolios, and that investments spanned 178 countries.
South Africa topped engagement on the African continent, drawing the interest of 27 percent of surveyed funders and investments of $30 million. In Europe, the U.K. garnered $169 million, and the largest percentage of overall engagement at 61 percent—numbers to watch as Brexit looms. Germany followed with $136 million, then France at $75 million. In Asia, India attracted the greatest percentage of funders at 55. But for the first time, the investment dollar level was higher in Australia than China, something CECP thinks may be attributable to China’s 2016 Overseas NGO law, which regulates foreign engagement. Despite state-level border issues, Mexico garnered the highest level of corporate engagement among Latin American countries at 49 percent and investments of almost $52 million.
Funding Focus areas
Stacked up against domestic programming, four areas drew a higher percentage of giving internationally. International disaster relief represented 9 percent of international budgets, but only 3 percent domestically. Health and social services, community and economic development and environmental giving also skewed higher. Two program areas received the highest share of total international giving against a matched set of companies between 2016 and 2018: community and economic development programs and K-12 education.
Those areas may see some movement over time. Aligning work with meeting the U.N.’s 17 Social Development Goals (SDGs) is an increasingly common practice, and translates easily into global reporting vehicles like GRI. When CECP asked companies which factor had the greatest influence on global social investment strategies, SDGs outweighed shared value, measurement and partnership development.
Leading the Rise
International engagement is driven by a number of strategic factors, including business presence, plans for growth, and local employee engagement. Corporations also weigh need, opportunity for impact, and stability. A raging disaster in another part of the world or a large multinational’s decision to open a plant in Peru can move the dial. And workforces are now composed of millennials and GenXers, who aren’t afraid of addressing global issues with their matching gifts dollars.
But the biggest factor behind the rise of international giving may be a matter of leadership. More than 70 percent of companies involve senior management in social investment decisions. CECP is a CEO-led organization. And these are no ordinary times. When the organization conducted a live polling exercise at a 2016 board meeting, two-thirds of the CEOs present agreed that corporations will lead progress on long-term societal gains in the face of global disruption.
That dovetails with an Ernst & Young Beacon Report that surveyed 1,500 business leaders, and found that 67 percent had changed the focus of their organizations as a result of global volatility. Now that corporate giving programs are largely aligned with purpose and strategy, it only makes sense that one affects the other. A full 94 percent of companies have a community involvement strategy, up 10 percent from a decade ago, and view alignment with business objectives as a best practice.
The leadership movement Paul Newman started 20 years ago seems to be delivering on its twin goals: elevating philanthropy to a strategic priority, and helping companies become forces for good.
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