Top companies maintain charitable giving despite falling revenues

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Philanthropy remains stable among big companies despite an overall slump in income.

7th March 2016 by Robert Armour 0 Comments

Britain’s biggest companies have maintained levels of charitable giving in the face of falling revenues, new analysis shows. 

FTSE 100 companies donated an average of 1.9% of pre-tax profits in 2014, according to research by the Charities Aid Foundation (CAF).

It means that giving as a percentage of pre-tax profits among companies on the exchange is at its highest level since 2009. 

CAF’s report, Corporate Giving by the FTSE 100, analysed the annual and corporate responsibility reports from 2009 to 2014 of every company on the index, analysing donations of money, time, management services and in-kind donations. 

It shows that while 52 companies on the index saw revenue fall in 2014, most firms either maintained or increased the proportion of revenue they donated to good causes.

In spite of a fall in the total amount donated by the 100 firms, the average donation rose in 2014, as it has done each year since 2009.  

Businesses are taking a longer-term and more sophisticated approach to their philanthropy - Klara Kozlov

In cash terms, the total amount donated by FTSE 100 firms in 2014 fell 17% to £2.1 billion.

This was £420 million less than in 2013. Most of that decrease is down to a significant reduction in giving by just six firms, the majority of whom saw revenue adversely affected by very tough trading conditions.  

CAF, which works with firms on their corporate giving, believes that part of the key to tackling this lies in improving the way in which businesses communicate and report on this type of activity.

Klara Kozlov, CAF’s head of corporate clients, said: “Many of the FTSE 100 deserve huge credit for maintaining, and in some cases increasing, their charitable endeavours in spite of tough market conditions. Businesses are taking a longer-term and more sophisticated approach to their philanthropy. This has been borne out in the giving patterns of companies which work with CAF. 

“However, this year’s drop in overall donations from the FTSE100 does highlight the imbalance in types and qualities of giving across different companies and industry sectors. Industries which have traditionally committed large amounts of charitable funds have suffered falls in revenue. Some newer players, are growing their giving fast, but they don’t yet match the donations of the traditional industries. 

“It is concerning for the longer-term that growing numbers of firms are becoming less open about their corporate philanthropy. In the past two years, 13 of the FTSE 100 have stopped including this information in their annual reports in a way that makes the data accessible. 

“These firms are the leading lights of business in the UK and transparency is vital if we are to improve standards of corporate giving across the business world. Businesses need to clearly communicate about their giving, and make this information accessible.” 

The analysis also highlights a "worrying" move away from transparency among Britain’s biggest firms when it comes to corporate giving. Since the mandatory requirement for firms to report on their charitable giving was scrapped by an amendment to the Companies Act in 2013, 13 companies on the exchange have stopped reporting donations. 

CAF is encouraging businesses to agree a common approach to reporting this type activity and urging government to review the requirement for businesses to report on their charitable donations.

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