UK Company Donors Propose Big Cuts in Giving

March 23 2009, Financial Times — British corporate philanthropy is expected to fall by more than a third over the next year as a result of the financial downturn, according to a poll of 450 business leaders released on Monday.

The survey, carried out by YouGovStone, shows that businesses are planning a 34 per cent reduction in charity donations. This equates to a drop of almost £500m, based on UK corporations giving an average of £1.4bn ($2bn) a year.

Dax Lovegrove, head of business and industry relations at WWF UK, a charity which has long-standing company partnerships with companies such as HSBC, Marks & Spencer and MBNA, said that businesses were already becoming more discerning about how to distribute funds during straitened times.

“We are concerned and we are going to have to work much harder to leverage funds from the corporate sector,” he said. “We will need to be clearer about the benefits of new partnerships and make sure we tie our objectives in with business’ interests.”

WWF currently receives 15 per cent of its annual income from businesses, and although none of its existing donors have signalled that they will cut funds or depart from pre-arranged budgets, Mr Lovegrove said that creating new corporate partnerships will be difficult. “We are trying to prepare for tough times,” he said.

But Jake Hayman, chief executive of the Social Investment Consultancy, the corporate donor advice company which commissioned the poll, warned that charities would not be the only ones to suffer if businesses withdraw philanthropic support.

“Businesses may be cutting back on donations but, in the long-term, it does more good for a company’s recruitment, retention, morale and brand development to keep up charity involvement and be active in the community,” he said.

“Providing pro-bono support or helping to develop a charity’s strategy are key ways of giving even if financial resources are limited.”

While 75 per cent of businesses questioned in the poll agreed that they had a moral responsibility to contribute to social wellbeing, 50 per cent said they expected to cut the number of charities they support this year.

Salvatore LaSpada, chief executive of the London-based Institute of Philanthropy, suggested that business donors should find ways to be imaginative in their giving.

“There are real leadership opportunities for corporates who say, even in a downturn, ‘we are going to commit ourselves to philanthropy, we may have to reduce our donations but there are other ways we can be involved’,” he said.