BUSINESS

CHARITY AT WORK

CORPORATE DONORS NOW DEMAND THAT THE BENEFICIARIES BE MORE EFFICIENT AND RELEVANT

BARABARA WICKENS January 11 1993
BUSINESS

CHARITY AT WORK

CORPORATE DONORS NOW DEMAND THAT THE BENEFICIARIES BE MORE EFFICIENT AND RELEVANT

BARABARA WICKENS January 11 1993

CHARITY AT WORK

BUSINESS

CORPORATE DONORS NOW DEMAND THAT THE BENEFICIARIES BE MORE EFFICIENT AND RELEVANT

BARABARA WICKENS

JOHN HOWSE

Students working on projects at the W. Ross Macdonald School, an institution for blind and visually impaired elementary and high school students in Brantford, Ont., have frequently been frustrated by a lack of resource materials. Unlike their sighted counterparts, who can go to their school library for up-to-date information on a wide variety of topics, the students at the school in southwestern Ontario have often had to wait months for recent publications to be read onto tape or translated into braille. But the situation improved dramatically in 1990 when Hewlett-Packard (Canada) Ltd. began annual donations of computer equipment. Now, nearly 70 students from grades 7 to 12 can use a high-speed scanner on any page. After the machine has scanned the literature into its data banks, the students can then choose one of three options. Those who can read braille can use an attached braille printer. Those who cannot read the raised dots can listen to a computer-synthesized voice read out the material, while those who have some sight may elect to read extra-large print on a computer screen. Lynn Martin, a computer teacher at the school, said that the donated equipment has greatly enhanced the calibre of the students’ work. She added: “Students focus on their abilities and not their disabilities.”

Toronto-based Hewlett-Packard is typical of a growing number of corporate donors: as the recession continues to hurt their profitability, companies are looking for ways to contribute to charity while furthering their corporate objectives. According to Sandra Pighin, HewlettPackard’s grants and donations co-ordinator in Toronto, about 90 per cent of the nearly $1.25 million that the Canadian subsidiary of the California-based computer giant contributed to nonprofit organizations across Canada in 1992 was in equipment. The rest was in cash. The

figures, however, are calculated on the retail price of the equipment donated and Pighin declined to reveal the actual cost to the company. Corporations in Canada may claim income tax deductions for the fair market value of the equipment that they contribute to nonprofit organizations. However, some executives say that because of the complexity involved in

claiming the deductions, they do not bother to do so. While it is difficult to estimate how much in goods companies donate to charity each year, their reasons for doing so are clear: as the lingering recession eats into their cash flow, they give what they can in ways that involve an actual cash outlay of less than before.

At the same time, corporations are also

setting forth more exacting criteria for their recipients. More and more, companies are demanding that their beneficiaries be efficient, effective and relevant. Said David Grier, director of the corporate program at Toronto-based Imagine, a nationwide campaign to improve Canadians’ charitable performance: “Corporations are looking for evidence of results, not just a nice objective.”

Corporations began to scrutinize nonprofit groups and how they use their funding about five years ago. Since then, that trend has

accelerated as the economy has weakened and businesses and charities alike have been forced to do more with less. “A lot more attention is being paid to the bang for the contributor’s buck,” said Grier. In addition, as federal and provincial governments continue to fight soaring budget deficits, charities and their donors are being asked to do even more. In last month’s federal mini-budget, Finance Minister Donald Mazankowski announced a 10-per-cent

cut in grants and subsidies to various government-supported programs. Although Ottawa has not yet identified which specific organizations will be affected, Imagine estimates that the cuts will amount to $1.8 billion by 1995.

The withdrawal of government support means that individuals, foundations and companies, which together gave about $5.6 billion in 1992, would have to contribute at least onethird more in the near future. Many businesses, which allocate their tax-deductible donations principally from pretax profits, may be in no position to increase their contributions. According to the Ottawa-based Institute of Donations and Public Affairs Research, one-third of 75 companies surveyed in October indicated that their donation budgets will drop significantly in 1993. George Khoury, director of the institute, which is a division of the Conference Board of Canada, said that, overall, this year’s donations will be down by 5.5 per cent to $101.8 million, from $107.6 million in 1992.

Among the participants in the 19 industry groups surveyed, the oil and gas sector indicated that it is planning to curtail donations the most severely. Calgarybased Petro-Canada, for one, set its 1993 corporate donations budget at $2 million. That is down from the $2.5 million the company donated in 1992— which Petro-Canada reduced during the year from a planned budget of $3 million. According to Petro-Canada spokesman Judith Wish, the company also looks for some publicity in return. Said Wish: “These days there has to be more synergy between donor and charitable organization. We tend to ask, ‘what is in it for Petro-Canada?’ ”

But some experts say that the scene is not entirely bleak—despite a 30-per-cent drop in Canadian corporate profits. Said Martin Connell, chairman of Imagine ^ and of Toronto-based Conwest I Exploration Co. Ltd.: “A 5.5-percj cent drop in charitable donations I is not bad in comparison.” Con| nell added that donations have g been rising as a percentage of pretax profits, to 1.28 per cent in 1991, up from 0.89 per cent in 1990. Khoury noted in his survey that even among those companies that indicated they would decrease their 1993 budgets for charity, the majority said that they planned to sustain their contributions to the United Way and to environmental protection groups. “The environment is not a huge percentage of their budgets, but it is the fastest-growing,” Khoury said. “As for the United Way, it is viewed as the last thing they

will stop giving to. It is the one way of giving to most areas under one umbrella.”

According to Revenue Canada, there are now more than 67,000 registered charities in Canada to which corporations and individuals may make tax-deductible donations. The majority of those are religious or political groups, which corporations usually avoid in a bid to remain nonpartisan. But that still leaves a bewildering assortment of nonprofit groups for corporate donors to consider. Lisa Elliott, manager of corporate communications for Mississauga, Ont.based Federal Express Canada Ltd., said that she receives an average of 30 solicitations each week from fund raisers, usually only 10 of them from major, nationally recognized charities.

Unlike many other corporations, Federal Express has no preset budget for charitable donations. But even though the company makes its decisions on a more informal basis, Elliott said, recipients must still meet stringent requirements. “We look for not-for-profit organizations that are relevant to our business and our employees,” she noted. Since most Federal Express workers are in their early 30s and have young families, the company focuses on funding groups that help children, according to Elliott.

She added that, whenever possible, Federal Express prefers to donate goods and services rather than cash. As a result, the courier company has taken initiatives that have included providing two vans for six weeks starting last August for a cross-Canada road show in part aimed at increasing awareness of Child Find, a national network to help locate missing children.

Other corporations are also concentrating on nonprofit organizations that share a similar target market.

Toronto-based Tambrands Canada Inc., which markets personal hygiene products for women, introduced a national campaign in October to raise money for almost 400 women’s crisis shelters across Canada. Tambrands later committed $300,000 over three years to establish the Tampax Trust Fund, in partnership with the Canadian Women’s Foundation in Toronto, to administer the grants. Tambrands also supports the campaign with information included in its packages. Barbara Martin-Santini, Tambrands marketing manager, said that, as a result, the public has already donated $21,000 to the cause. She added: “We have a

specifically female product, so our consumers have a vested interest in this problem.” Corporations are also demanding that charities actually help those they claim to be helping—and that they open their books to prove it. Said the donations institute’s Khoury: “Nothing turns a corporation off faster than finding out a charity has hired a consultant who keeps 80 per cent of the funds raised.” Khoury says that such incidents can involve large fundraising efforts as well as small ones, but most

organizers have clean records. In 1990, Toronto hairdresser Paul King organized a moneyraising raffle for Fife House Foundation Inc., which provides housing for those with AIDS. That first year, he raised $6,000 selling $25 raffle tickets after he persuaded 16 local businesses to donate such prizes as a silk scarf from Hermes. This year, the raffle raised $15,000 for Fife House, and King said that companies now approach him to see whether they can contribute raffle prizes. He attributed the campaign’s ability to attract corporate donors to

the fact that every penny raised goes to Fife House. Said King: “They are tired of giving thousands of dollars to a charity, and then learning that the chairman was given a silver hoo-haw.”

At the same time, many companies are starting to seek more employee input into their corporate donations programs. The Molson Cos. Ltd. is typical of how some companies are evolving. Patrice Merrin-Best, director of corporate affairs, said that the Toronto-based company has a 200-year history of giving to charities. Now, she said that to ensure that the company considers as many interests as possible, 52 rank-and-file employees and executives serve on nine charity committees. She added that Molson will introduce a matching-gift program this year, in which the company will match any employee’s charitable donations, up to $2,500 a year. Said Merrin Best: “It’s like being partners with our own employees. It has received a very positive reaction.”

Despite the progress made in many corporate donations programs, some executives say that business can, and should, still do more. Margot Franssen, president of cosmetics retailer The Body Shop Canada, said that business has to change the way it helps. “It is too easy to lose your sense of obligation by looking at your bottom line and deciding what size cheque you can write,” she said. Instead, Franssen said, activities benefiting charities need to become an integral part of a company’s annual business plan. For their part, the 104 Body Shop stores across Canada, which change their windows about every three weeks, donate four window displays each year to fundand awareness-raising campaigns. Each store is also required to allocate 16 hours a month so that can employees can work for community projects during store hours and at their regular level of pay. Franssen said the company ultimately benefits as well. “Our activities give capitalism some meaning,” she added. “Without capitalism, altruism would go hungry.” As corporate donors try to mend some of the rips in Canada’s social-safety net, they are learning that there is more to running a business than the bottom line.

BARBARA WICKENS with JOHN HOWSE in Calgary