CAF: Are we seeing a shift in corporate philanthropy?

Last September Charities Aid Foundation (CAF) held a joint event with the CBI as part of the Great Business Debate: “Can Business Build a better society?” Companies have huge potential to drive social change and are increasingly seen as key to tackling some of society’s greatest challenges.

One of the most visible indicators of a company’s contribution to society is the amount that it donates to charity. This week we published new research in its report, Corporate Giving by the FTSE 100. This shows that giving as a percentage of pre-tax profits among companies on the exchange is at 1.9%, its highest level since 2009. However overall levels of charitable giving (including cash and in-kind donations) are down 17% to £2.1bn between 2013 and 2014.

As might be expected, given the diversity of sectors and companies, there are still huge variations in levels of giving across the FTSE 100. Just six companies account for most of the overall decrease, the majority of whom saw revenues adversely affected by tough trading conditions. At the same time the ten most generous companies still make up almost three-quarters of total donations.

“Companies have huge potential to drive social change and are increasingly seen as key to tackling some of society’s greatest challenges.”

Scratch beneath the surface though and we see another striking shift. The proportion of giving represented by cash donations has also dropped since 2012. This bears out the trend towards companies taking a more integrated view of their corporate responsibility, including how non-cash assets — such as staff time, management, buildings and in-kind donations — contribute to society. Clearly these are important to charities and in-kind support through things like pro bono advice and skilled volunteering can be extremely valuable. However it comes at a time when funding pressures on the sector are already intense.

We also noticed a move away from transparency among Britain’s biggest firms when it comes to corporate giving. Since the mandatory requirement for firms to report on their charitable giving was scrapped in 2013, thirteen FTSE 100 companies have stopped reporting on their donations.

Corporate philanthropy is diverse field of activity. It is increasingly important as a source of private funding for the charity sector. We’re really pleased to see that FTSE 100 businesses have increased their donations as a proportion of pre-tax profits and note the shift to more in-kind giving. At the same time we are keen to encourage transparency in reporting on corporate philanthropy that is reflective of businesses’ clear contribution to society.

Laura Dosanjh is a Senior Corporate Advisor at Charities Aid Foundation

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