As companies recognize the diverse benefits of expanding CSR initiatives, they increasingly allocate resources to the creation of their own independent 501(c)(3) entities to handle philanthropic tasks which exceed the capacity of a single internal department. Through their foundations, corporations take charitable efforts into their own hands and become champions of their own causes.
According to the Foundation Center’s Key Facts on Corporate Foundations report, close to one-third of all corporate foundations in existence have been founded in the last decade. Additionally, the 2011 Committee Encouraging Corporate Philanthropy (CECP) report, “Giving in Numbers,” makes a noteworthy discovery, in that “81% of [the Fortune 500] companies reported having a corporate foundation.” These findings demonstrate just how prevalent corporate foundations have become in this Golden Age of Giving.
This spirit of generosity is far from new in corporate America; charitable giving has long been a part of its culture. According to the Foundation Center’s Foundation Fundamentals, corporate giving programs can be traced back to the 1870’s when “railroad companies began supporting the development of Young Men’s Christian Associations (YMCAs) at their divisional and terminal points to provide accommodations for their workers.”
From their origins through today, corporate foundations have been largely shaped by economic trends and governmental policies. As such, it is intriguing that overall, corporate foundations have been steady in their giving despite the volatility of the markets across the last few years. This raises the question, what have corporations identified as the value in establishing corporate foundations?
Steve Solomon, president of the Exelon Foundation, was generous enough to share some time with us to discuss his perspective on the benefits of giving via a corporate foundation. With the resources of the foundation at his disposal, Solomon has the necessary tools to build major-impact programs with longevity. Solomon described how the Exelon Foundation was established to impact communities on a larger scale. He stated, “we were exploring a foundation that would allow us to do larger grants, long term grants.” The Exelon Foundation plans to distribute $3 million to Science, Technology, Engineering and Mathematics (STEM) this year alone. Solomon went on, “corporations can do more capital giving with foundations.”
Another corporate foundation that continues to be a committed source of community assistance is the Alcoa Foundation. Alcoa recently pledged to donate more than 1 million employee volunteer hours toward the A Billion + Change campaign. The campaign has set goals to collectively assemble skilled volunteers to help improve nonprofits across the nation. In a February 15th press release, Alcoa Foundation President, Paula Davis, said, “Community service has always been a core value at Alcoa, and so we look for ways to encourage and enable our people to get more involved in the causes that are important to them.”
The release goes on to point out that in addition to making a direct impact on non-profits, “research shows that pro bono and skills-based volunteerism helps businesses enhance their recruitment and retention rates, and that it improves employee morale, loyalty and productivity.” The Alcoa Foundation has thoughtfully and strategically chosen to devote significant attention to engaging employees in the company’s philanthropy. Essentially, Alcoa has found a way to utilize its foundation’s large-scale philanthropy initiatives to strengthen the company’s workforce.
CECP’s “Giving in Numbers” reported that foundation cash made up 35% of corporate giving in 2010. The Foundation Center’s report places that number around $4.7 billion, and considering that in spite of the economy, 52% of the corporate foundations polled planned to increase their funding in the following year, it is quite evident that businesses find great value in establishing foundations.
The Exelon, Alcoa, and roughly 2,700 other corporate foundations that are active have made an enormous collective impact through their foundations’ programs, and both the parent companies and the communities the foundations reach will enjoy the diverse benefits of their partnerships in this Golden Age of Giving.