June 25, 2011; Source: Abilene Reporter-News | In Abilene, Texas nonprofits are finding the challenge of raising corporate money more difficult than ever.  Last week, the Giving USA 2011 report said that charitable giving by corporations in 2010 actually rose 10.6 percent.  How does that make sense to groups like the Abilene Education Foundation, whose latest grant from the Citi Foundation was only half of last year’s amount?  As the Education Foundation’s executive director, Jean McMillon, explained, “The gentlemen we go through had contacted me and said they were having to cut their funding.”

It’s not just cutbacks at the big corporations.  The Lawrence Hall Abilene car dealership is cutting back a bit on its local sponsorships and donations.  The problem of local business sponsorships has affected the Abilene Philharmonic Association, which lowered its minimum concert sponsorship threshold from $5,000 to $2,500 because of the business fundraising problem.

The clue to the mystery might be a matter of size.

At the Hudson Institute last week Patrick Rooney, the lead researcher on the Giving USA report made a fascinating remark about the huge swing in charitable bequests, in 2009 a big negative (down 38.7 percent), in 2010 a big positive (increasing by 18.8 percent).  He suggested that the amount and trend in charitable bequests may be determined by the bequests of 300 estates, that those few large bequests determine whether the trend will be positive or negative. 

Is it possible that the decisions of a small number of mammoth corporations basically dictate the direction of corporate giving, regardless of what is happening with the bulk of other businesses, whether nationally or in Abilene?  We checked:

  • In a rare study done by a Treasury Department economist on corporate giving in 2002, ninety-five “C corporations” with net incomes over $1 billion accounted for 40 percent of corporate charitable deductions; 10 corporations alone accounted for almost 20 percent. 
  • As we have previously reported, the Conference Board attributed $11 billion in 2007 corporate grantmaking to 197 corporations, the Committee Encouraging Corporate Philanthropy $11.6 billion to only 155 corporations, roughly 70 percent or more of all corporate philanthropy that year. 

Given that a huge and growing proportion of corporate giving reported by Giving USA is from pharmaceutical companies–basically subsidies for people to purchase prescription drugs–it seems possible that their giving has skewed the corporate totals.  What looks like a big increase in corporate giving is actually the pharmaceutical companies, while most of the rest of corporate America is still on the recession-induced philanthropic sidelines.  Add in that many corporations are now doing their “giving” as in-kind product donations, it’s no wonder that the Abilene Education Foundation and the Abilene Philharmonic Association aren’t seeing corporate cash the way they used to. —Rick Cohen