Recession jeopardizes corporate philanthropy
Posted December 4, 2008 6:17 p.m. EST
Updated December 4, 2008 9:36 p.m. EST
Research Triangle Park, N.C. — 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.