margaret coady - committee encouraging corporate philanthropy

Leadership and Trends in Global Corporate Giving

Margaret Coady Executive Director, CECP

@MargaretCoady @CECPTweets

THE CEO FORCE FOR GOOD

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A lot has changed in 15 years….

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A lot has changed in 10 years….

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Leadership and Trends in Corporate Giving

in Strategy

in the Data

in Conversation

1.

2.

3.

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An Unscientific History of Corporate Giving

Local, reactive, heartstrings-driven Give if asked; “good neighbor” giving

Give to causes important to senior leaders

Intentionally NOT strategic or connected to the

business for fear of a backlash

Visible, proactive See other companies begin to get credit

Grants are proactive and “make sense”

Better measurement of inputs

Strategic, aligned, beyond cash Accept very few unsolicited grantee proposals

Giving as a “portfolio” of expectations to manage

Co-design initiatives with nonprofit partners

Greater attention to employee engagement

The Great Rebalancing

▪ Emerging markets gaining larger share of global GDP

▪ Growth of a multi-polar global economy

The Productivity Imperative

▪ Economic growth in developed economies increasingly dependent on productivity gains

▪ Insufficient supply of highly trained talent for rising global demand

The Global Grid

Pricing the Planet

▪ Significant increase in resource demand as emerging markets surge

▪ Growing environmental pressures on business and society

The Market State

▪ Growing need of states to compete for economic growth and innovation

▪ Competition to attract business activity

▪ Increasing interconnection of markets, trade, and technology

SOURCE: Based on research by McKinsey & Company

Context for Big Business Intensifying

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Motivations Point in the Same Direction

• Search for growth

• Access new markets

• Pursue innovation

• Demand for transparency

• Scarcity of raw materials

• Societal concerns

Push

Pull

Blending

Profits and Purpose

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“Changes in the external environment and a generational shift are creating a greater awareness

amongst businesses and a greater need to act to address societal problems.”

Joe Jimenez

CEO, Novartis AG

CEO Perspective

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Leadership and Trends in Corporate Giving

in Strategy

in the Data

in Conversation

1.

2.

3.

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• 240 Companies across all industries • Revenue = $15.7 billion USD

• Pre-Tax Profit = $ 1.7 billion USD

• Employees = 32,000 USD

• Contributions • Total Annual Giving = $19.9 million USD

• Corporate Cash 47%

• Corporate Foundation Cash 35%

• Non-Cash 18%

• Structure • Have a Foundation = 81%

• Give Internationally = 71%

Annual Survey of Corporate Engagement

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Annual Insights Reports: Giving in Numbers

Trends in the Data

1. Giving rebounded faster than

revenues… but not for all companies.

2. Non-cash (mostly product giving) is

growing, and dominates in aggregate.

3. Fewer, larger grants given to fewer

cause areas.

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Business performance rebounded somewhat from 2009 to 2010, but

in 2012 companies still did not earn as much as they did in 2007.

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Business Has Been Slow To Recover

Median Revenues

Note: Inflation-Adjusted, 6-Year Matched-Set Data, N=93

Median Pre-Tax Profits

$ B

illio

ns

Note: Inflation-Adjusted, 6-Year Matched-Set Data, N=96

$30.56

$26.95 $26.41

$28.31

$29.45 $29.90

2007 2008 2009 2010 2011 2012

$3.76

$1.94 $2.14

$3.03

$3.63

$2.84

2007 2008 2009 2010 2011 2012$ B

illio

ns

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Companies Are Giving More

Than Before The Global Recession

Distribution of Companies by Changes in Total Giving Between 2007 and 2012

Note: Inflation-Adjusted, 6-Year Matched-Set Data, N=96

Perc

enta

ge o

f C

om

panie

s

24%

11%

3% 3%

7%

14%

38%

Decreasedby morethan 25%

Decreasedbetween10% and

25%

Decreasedbetween 2%

and 10%

Flat Increasedbetween 2%

and 10%

Increasedbetween10% and

25%

Increasedby morethan 25%

59% increased

giving

38% decreased

giving

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Non-Cash Giving Growth Drove Overall Giving

Increase from 2007 to 2012

Note: All Figures in Billions, 6-Year Matched-Set Data, N=96

Non-cash giving as a percentage of total giving grew from 57% in

2007 to 69% in 2012.

$6.16 $6.05 $6.98

$8.55 $9.43

$10.46

$4.63 $4.53 $4.29

$4.80

$4.93

$4.81

2007 2008 2009 2010 2011 2012

Non-Cash Cash

$11.27

$13.35

$14.36

$15.27

$10.58 $10.79

57%

69%

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Reasons for Giving Increases

1. Increased Non-Cash Contributions

2. Improved Business Performance

3. Increased Commitment to Education

Initiatives

4. Mergers and Acquisitions

5. Better Tracking of Contributions

Reasons for Giving Decreases

1. Company-Wide Cost Reductions

2. Reduced Disaster Spending

3. Refreshing Focus Areas

Reasons For Giving Increases and Decreases

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Companies today are more likely to invest the majority of their

philanthropy programs in individual program areas compared to

before the global recession.

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Companies Are Focusing Philanthropy Programs To

Achieve Deep Societal Impact

$10.79 $10.58 $11.27

$13.35 $14.36

$15.27

0%

10%

20%

30%

40%

$-

$4.00

$8.00

$12.00

$16.00

$20.00

2007 2008 2009 2010 2011 2012

Total Giving (N=96) % of Companies Giving 50% or More to One Program Type (N=51)

$ B

illio

ns

20 Note: Medians, Inflation-Adjusted, N=38.

$31 792 $31 459

$34 606

$45 604 63

51

63

50

30

40

50

60

70

80

$17 000

$27 000

$37 000

$47 000

$57 000

2010 2011 2012 2013

Grant Size Recipient Organizations Per Grantmaker FTE

Bigger Grants to Fewer Organizations

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Leadership and Trends in Corporate Giving

in Strategy

in the Data

in Conversation

1.

2.

3.

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1. Broadened Leadership for CEOs

2. Sustainability vs. Philanthropy vs.

Shared Value

3. Telling the Story: Measuring Impact

Conversations with CEOs and Practitioners

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Who will lead progress toward long-term societal

improvement?

Broadened CEO Leadership: Polling Result

3% 8% 8%

26%

55%

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“The CEO has to lead by being the Chief Engagement Officer, to build trust and reputation by behaving with genuine humility, moral authority, speed of action, and decisiveness.”

Richard Edelman

President and CEO, Edelman

Broadened Leadership: CEO Perspective

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Broadened CEO Leadership: 4 Tensions

Inspire

Employees

Guide

Consumers

Educate

Investors

Engage

Partners

Engaged employees feel you are not doing enough

vs.

Skeptical employees question your involvement

Sometimes prefer detrimental to sustainable options

vs.

Want to know about corporate actions and impact

Pressure to see quarterly returns and high ROI projects

vs.

Long time horizon for shareholder returns with “purpose”

Collaborate while maintaining competitive advantage

vs.

Easier alone, but hard to address societal problems alone

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As CEO, what is the most effective step I can take to

help restore public trust in business?

3%

10%

10%

14%

28%

34%

Include community and sustainability issues in the …

Commit to public reporting of my company’s goals and progress …

Rally fellow CEOs to engage moredeeply in community issues

Work with my company’s critics on practical changes to our …

Further integrate my company’s values into our incentives and …

Speak publicly, in my own voice, onwhat my company is doing and why

Broadened CEO Leadership: Polling Result

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Sustainability vs. Philanthropy vs. Shared Value

Philanthropy is

dead!

Giving back

implies we

took

something!

Not every societal

problem has a

commercial solution!

The biggest polluters

are the biggest givers!

Our products change the world and we

pay taxes - and that’s enough!

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Sustainability vs. Philanthropy vs. Shared Value

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Indra Nooyi

Chairman and CEO

PepsiCo

Sustainability vs. Philanthropy vs. Shared Value

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Inputs ‒ Money or staff time invested into societal initiatives.

Activities ‒ Engaging with community programs through program

management, volunteering, and other activities.

Outputs ‒ Measures of what gets produced from activities

‒ (e.g. # of students trained).

Outcomes ‒ Immediate changes realized as a direct result of a

program’s activities

‒ (e.g. % of students improving reading level).

Telling the Story: Measuring Impact

Impact ‒ Long-term results and ultimate social value

‒ (e.g. % of students going to college and getting jobs).

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A Majority of Companies are Measuring the Societal Value of their

Contributions

18%

35%

47%

VeryExperienced(5 Years or

More)

ModeratelyExperienced(3-4 Years)

SlightlyExperienced(2 Years or

Less)

76% Measure

Outcomes

and/or

Impacts

N=160. N=119.

24% Do Not

Measure

Outcomes

and/or

Impacts

Telling the Story: Measuring Impact

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Total

Value

Business

Value

Societal

Value

Managing

Risk

Building

Intangibles

Reduced

Costs

Increased

Revenues

• Higher level of skills and

education

• Increased availability of

employment

• Improved health

• Greater economic resilience

• Enhanced environmental

quality

• ….

• New customers

• New Products

• Extended uses for existing

products

• Market penetration

• Differentiation / price premium

• Innovation

• Increased manufacturing

capacity

• Input optimization

• Lower raw materials costs

• Improved

perception by

existing and

future

customers

• Enhanced

brand value

• Employee

satisfaction

• Enhanced

supplier

relationships

• Raw material

availability

• Security of

physical

assets

• Regulatory

uncertainty

• Reduced risk

to the

community

• Logistics

network

capacity

Telling the Story: Measuring Impact

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1. Have a specific purpose for collecting data (or

asking your grantees to collect it).

2. Measurement is most powerful when used for

learning. Be ready to make program changes.

3. Don’t “round up” or overstate your impact.

4. Understand how your actions fit into the arc of a

broader theory of change, and focus on the

effect of your actions as a piece of that story.

5. Measurement costs money. Selectively

measure and budget for it from the beginning.

Telling the Story: Measuring Impact

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Key Takeaways

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1. Much has changed in 15 years

• A convergence of expectations, issues,

and strategy.

2. The data show a drive toward focus

• Giving levels are up—focused on fewer

issues and grantees.

• Companies are leveraging the assets

that make them unique.

3. A new role for companies and CEOs

• Leading beyond the walls of your

business.

• Understanding the impact a company

can have, with humility.

Blending

Profits and Purpose

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Next Steps

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If you like data...

• Download “Giving in Numbers” and the CSI Handbook

• Check out CECP’s latest infographics

If you like the CEO perspective...

• Follow CECP’s YouTube Channel

• Download our event Executive Summaries

If you like Impact Measurement...

• Download “Measuring the Value of Corporate Philanthropy”

If you like Social Media...

• Share with us on Twitter: @CECPTweets, @MargaretCoady

THANK YOU

Margaret Coady Executive Director, CECP

@MargaretCoady @CECPTweets