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NOVEMBER 26, 2007
How Companies Dig Deep Top corporate givers such as IBM and Oracle have learned how to make their philanthropy pay Many corporations talk about the importance of being a good corporate citizen and supporting causes employees care about. To find out which companies were the most generous givers for fiscal year 2006, for both cash and "in-kind" donations such as drugs and software, BusinessWeek surveyed companies in the Standard & Poor's 500-stock index. Our survey, conducted over six months, found a lot of companies putting their money where their mouths are. Some 200 companies filled out a 28-question survey about how much they give and what causes they support. Of the 200, 190 gave numbers for their cash giving, and 125 for in-kind donations. On top of ranking companies by dollar amount of cash and in-kind gifts, we also track donations as a percentage of pretax profits to see just how deep companies are digging. REPORTING WRINKLES Oracle (ORCL ), our biggest in-kind giver, was a change from the pharmaceutical companies that tend to top the list. The software giant's numbers underscore what can be a controversial area in the world of giving—the way companies value in-kind donations. In fiscal year 2004, when we last measured Oracle's giving, it valued software donations one way; this year, it's using a method that results in a higher valuation. That's part of the reason the company's donations jumped from $151 million to $1.9 billion in 2006. The company also has a larger philanthropy program now, a result of enhancing the programs of companies it has acquired over the past few years and expanding its education initiatives. But the change shows how making apples-to-apples comparisons can be difficult, even at the same company. Harrah's Entertainment tops the list of most-generous cash givers, that is, the companies that gave the most as a percentage of pretax profits. The casino operator highlights another wrinkle in what can motivate a company's giving. The $76.8 million in cash that Harrah's donated is equivalent to 9.2% of its pretax profit. But that giving isn't necessarily altruism: In five states, operating subsidiaries make what Harrah's describes as state-regulated donations or payments and reinvest "a specific percentage of profits back into the community via designated charitable or governmental organizations." A trend among many of the companies that took our survey was a move to incorporate philanthropy more deeply into their business models. In some cases, you can even see it in the organizational chart: Stanley Litow, president of the IBM (IBM ) Foundation and vice-president for corporate citizenship and corporate affairs, reports to the company's executive vice-president of innovation and technology, Nicholas Donofrio. One technological innovation that IBM initially developed to use in its philanthropy program brought in more than $100 million in 2006 revenue, after it was offered to paying customers. Actual revenues from philanthropy? As a spur to greater corporate generosity, that can't be topped.  By Conrad Wilson, with Frederick F. Jespersen Get BusinessWeek directly on your desktop with our RSS feeds.  Add BusinessWeek news to your Web site with our headline feed. Click to buy an e-print or reprint of a BusinessWeek or BusinessWeek Online story or video. To subscribe online to BusinessWeek magazine, please click here. Learn more, go to the BusinessWeekOnline home page  | | |
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