Local News

Recession jeopardizes corporate philanthropy

Posted December 4, 2008

— The sluggish economy is starting to drag on the donations to charities and other nonprofits that rely heavily on corporate giving to meet their budgets.

"Corporate giving, like all charitable giving, is under a lot of stress and press because of the economy," said Todd Cohen, editor of Philanthropy Journal.

Many companies base giving on net income, and foundations often rely on investment returns for gifts, Cohen said. In general, both revenue streams are hurting in the recession and slumping stock market.

"It's on everybody's mind all the time these days," he said.

The Philanthropy Journal hosted a training session Thursday for local nonprofits struggling to win over big donors.

"They're being cautious. They're taking a look at where they're going to invest their money, but it has not come to a standstill," said Beth Briggs, a consultant with Creative Philanthropy in Raleigh.

Some companies get creative in their philanthropy, Briggs said. Software developer Red Hat, for example, plans to forgo its holiday parties and use the savings to buy 800,000 meals for the needy.

The Blue Cross Blue Shield Foundation averages donations of  about $7 million a year to health-related charities, and President Kathy Higgins said that won't change this year.

"Whether it's tough economic times or just normal times, we've been there for the not-for-profit community to help them elevate," Higgins said.

A spokeswoman for Wachovia Corp. said that, despite thousands of job cuts and a pending acquisition by Wells Fargo & Co., the bank is honoring its current commitments to charities.

Cisco Systems Inc. also plans to maintain its contributions this year, community relations manager Kirsten Weeks said.

"When the community is in need, that is when we really want to step up to the plate, and we're seeing that with our employees," Weeks said.

Corporate giving accounts for about 11 percent of the annual budget of the Food Bank of Central and Eastern North Carolina.

Food bank spokeswoman Christy Simmons said the organization feels fortunate that corporate donations have remained steady in the tight economy, but she noted that needs have risen 20 to 30 percent.

The tax break for charitable donations will help encourage some companies this year, but it's unclear how a lengthy recession could impact corporate giving in 2009, when corporate income may well be down and deductions less valuable.

"We have to support the things we care about and invest in those things," Briggs said.

8 Comments

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  • davidgnews Dec 5, 9:05 a.m.

    There is only one important rule about investing in the Stock Market for individuals.

    Yes, it's called 'stay in' and ' don't cash out when times are bad.'

  • davidgnews Dec 5, 9:04 a.m.

    I think without the write off, I doubt many of these big corporations would give as much.

    Exactly, mep - it's a line item writeoff for them, and they have to get rid of it somewhere. It's all about the PR.

  • Run_Forrest_Run Dec 4, 9:59 p.m.

    I found out today, no Christmas Party at work. Ok - before anyone goes off.....I'm ok with that and it isn't important. However, in that same thought process...no helping the needy (adopting families), nothing.... My small group is thinking of giving the $ we would buy each other gifts with and donating. It's not much...but who knows what 2009 will hold. I think it's gonna be a rocky year. But got a feeling the rich will get ricer and the poor will get poorer.

  • mep Dec 4, 9:28 p.m.

    My family and I give about 12% of our gross. Many corporations like to give for the tax write off and for the good PR. I think without the write off, I doubt many of these big corporations would give as much. I however will still give, regardless of the write off, or my income because I like to be the one who decides where to "spread the wealth".

  • wynnediii Dec 4, 8:42 p.m.

    Donations for political parties sure haven't been effected.

  • whatelseisnew Dec 4, 7:10 p.m.

    There is only one important rule about investing in the Stock Market for individuals. Never invest more than you can afford to lose.

  • toobad Dec 4, 6:51 p.m.

    I find it hard to beleive that Wachovia Corp. is giving to charity when they have raped their share holders.

  • whatelseisnew Dec 4, 6:46 p.m.

    I increased my giving this year. Next year may be an entirely different picture; it is very likely I will be joining the many unemployed people. I may have to be on the receiving end.