Tuesday, November 06, 2007

More on embedded giving

I just came back from running errands. At almost every store I was "offered" the opportunity to "give a little extra" for charity - this is what I call embedded giving. Charitable gift cards - which I predict will be a big hit this coming giving season - take this even further. I've been trying to figure out how much money gets raised this way. I'm not having a lot of luck, but I've had the chance to talk to some interesting people and read an interesting report. Here's what I'm learning:

According to the Committee Encouraging Corporate Philanthropy, corporate giving comes in three forms: as direct cash from the company, as corporate foundation cash, and as non-cash (product or pro-bono donations). The 2006 breakdown for the 136 companies surveyed was as follows:
  • Total given (cash and product): $11.2 billion
  • Percentage direct cash: 44% ($490 mm)
  • Percentage Foundation cash: 36% ($403 mm)
  • Percentage non cash: 20% ($224 mm)
These data are drawn from a sample of companies. However, their $11.+ billion in giving is a large portion of the $12.7 billion total corporate giving reported by Giving USA.

In addition to the source of their giving (cash, foundation, in-kind) corporations self-identify whether their gifts are "charitable" or "strategic" (read: marketing). For each type of giving above, the following percents are identified as "charitable":
  • 39% of direct cash = $191 mm
  • 53% of corporate foundation cash = $213.5 mm
  • 56% non cash = $125.4 mm
I assume that my "embedded gifts" of pennies, nickels and dollars are added in to the corporations' giving in the "direct cash" category. And, for the sake of argument, I'll assume it is then counted in to the charitable portion of that giving.

So here's my question - what part of the $191 mm that corporations write off for charitable direct gifts is actually the accumulation of credit for my (and your) dollars, nickels, and pennies?

And here's another question for consideration - did you know that 47% of corporate foundation giving is explicitly considered marketing dollars?

I'm ever more convinced that we need to seriously rethink our definitions of "capital for social good." And absolutely sure that only a small portion of philanthropy will actually be counted in whatever we decide - because the rest is either marketing dollars or subsidized investment capital.


Anonymous said...

I am pleased to see your interest in this field and what you call "embedded giving". I'd like to quickly clarify two points:

1. The research collected by the Committee Encouraging Corporate Philanthropy does NOT include any contributions by employees or customers - all donations (cash and in-kind) reported in our research are corporate donations, from a corporate or foundation budget.

2. Giving USA employs a different definition for non-cash contributions than CECP. It is therefore not possible to compare the two reports in their total giving data.

We are excited to see that companies' philanthropic budgets, apart from any further generosity they inspire in their customers, continue to grow and be leveraged in new and exciting ways.

Lucy Bernholz said...

Thanks for writing. Your first comment confuses me. When I, as a customer, buy a $1 coupon for juvenile diabetes, donate my nickel bag refund back to the store to give to nonprofits - where is that money counted? It must be counted in a donation from the store, yes? What budget is allocated from - from a corporate or foundation budget?

It has to be in one or the other, doesn't it? And since those dollars and nickels were donated by me, the customer, the companies are then donating customer's donations, correct?

I look forward to your clarification ....

Anonymous said...

The money you have donated in this case is not measured in our study - we only examine donations that are strictly made from a corporate budget. So while many companies run philanthropic consumer campaigns, our studies only measure the corporate side of the contribution. For example, if a company ran a campaign that matched every dollar their employees or customers donated to a cause through programs like the one you mentioned, we would collect data only on the corporate matching piece of that contribution (not the employee or customer's donation).

Per your example, the money you have donated is not counted as a corporate contribution - it comes from neither a corporate nor foundation budget. In this case, the company is simply encouraging its customers to provide philanthropic support for juvenile diabetes.

Please note the following explanation on page 38 of the report:

"In the CGS survey [CECP's research], corporate giving does not include contributions from employees, vendors, or customers. While many companies solicit funds from customers or employees, the survey only includes giving tied directly to a company’s financial assets."

Lucy Bernholz said...

Thanks for clarifying this - your help is much appreciated. I will write a new post so folks are sure to find this comment stream and follow the accurate information.

I am still left wondering then - where does the money that gets given through "embedded strategies" get counted.....

Thanks again