Corporate Grants Nose-dive
The profits earned by U.S. corporations climbed from $218 billion in 1986 to $525 billion in 1994 -- a 141 percent increase. But corporate giving increased only slightly during the same seven years. In 1986, corporations gave away 2.35 percent of their pre-tax incomes. Within a year, the portion had fallen to 1.91 percent, or $5.5 billion.Sound like giving took a nose-dive? Today, non-profits and other organizations that depend on corporate largess would be ecstatic to get nearly 2 percent of the nation's profits, instead of the 1.17 percent businesses were giving by 1994. "Grant seekers got $4 billion less in 1994 then they should have," says Robert Bothwell, president of the National Committee For Responsive Philanthropy. He says that if corporations had kept up that 1.91 percent grant-to-profit ratio they'd now give $10 billion per year instead of $6.1 billion.So why have contributions fallen? Many corporations are giving more in-kind support instead of cash. For instance, banks may grant no-interest loans to worthy agencies, while a computer firm might donate computers to schools, where they can assess their impact. Also, some corporations are starting to make contributions overseas. In 1995, Levi Strauss Foundation for the first time granted money to South Africa and India.Changing management styles also are a key factor in the drop in corporate grantmaking. Lately the trend in how companies decides what to do with their money is to assign teams of employees to choose. Before, the corporation's CEO or principal owners might have made that decision.Meanwhile, the Dayton-Hudson Foundation, which also makes grants for Target and Mervyn's, feels that when a business gives back to the community it can only make that business stronger. The foundation contributes 5 percent of its pre-tax profits.There's some good news on the horizon, however. Companies are predicting a 3 percent increase in 1995 giving and a 5 percent increase in 1996, according to researchers.