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By Bill Catlin
September 7, 2000
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As the U.S. economy and stock market have boomed, so has charitable giving. But philanthropy is changing, especially among corporate programs. The shift reflects companies' changing priorities and the reshaping of Minnesota's business landscape after a series of mergers and acquisitions.
THE NUMBERS ARE DRAMATIC. The top 20 corporate donors in Minnesota gave away more than $250 million in their most recent fiscal year. Generally half stays in Minnesota. Corporate donations have grown at double digit rates. More than 250 Minnesota companies give away at least two percent of their pre-tax profits. But beneath the numbers, changing company approaches have added to the challenges of non-profit organizations who rely on charity.
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It's Friday afternoon rush hour, but here on East Franklin Avenue in Minneapolis, road construction keeps traffic to a trickle. The construction is part of a project to improve the look and safety of one of the city's most down and out areas.
Theresa Carr is executive director of the American Indian Business Development Corporation, which is coordinating the project. The organization also develops commercial real estate to lure employers and jobs to the neighborhood. The effort has brought in hundreds of jobs, with more expected, but despite that track record, Carr says fundraising is a growing challenge.
"Especially in the last three years, we've seen a real shift to fund programs that only work with families and children, which we don't. Three of our funders have changed their emphasis and no longer fund us," Carr says.
Two of those funders were corporate donors. Carr says others wrote checks to make up for the loss. But she says she's still trying to replace corporate grant dollars lost after mergers.
"Several funders have told us they have the same amount of money, but now they have to spread it among several states, instead of just Minnesota," she says.
Carr says her organization continues to grow, but the added time and effort for fundraising costs an extra $40,000 to $50,000 a year.
The scale of change among corporate donors is dramatic. In recent years most of the top 20 corporate givers in Minnesota have changed their giving program or gone through a merger or restructuring. All told, those changes have or could affect 90 percent of the money from the state's top corporate donors.
Jon Pratt is executive director of the Minnesota Council of Nonprofits, an association of groups that rely on charitable gifts to help pay for their activities.
"Right now in Minnesota, this is probably the biggest shift in 15 years," Pratt says.
Changes in either corporate structure, or philanthropic efforts often result in more narrowly focused corporate giving programs.
"Suddenly, about a dozen are moving from being more general community support funders to very targeted, more strategic grant-makers. Many of them are the most visible corporations in the Twin Cities."
Many observers say there's a clear trend of corporations focusing their philanthropy on causes relevant to their business. American Express adopted new guidelines several years ago. Judy Gaviser, who manages the philanthropy program for American Express Financial Advisors in Minneapolis, says a top priority was to ensure the corporate giving enhances the company's reputation and supports the business as well as the communities where it operates.
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"It was important for us to look at how we were giving our dollars -
was the giving still relevant - and to add support, particularly on the social action side."
- Laysha Ward Target Foundation | |
"You enhance your reputation in a more powerful way by doing things that people think make sense based on what your business is. And I think you also assure internal support for what you do," says Gaviser.
The trend toward "strategic philanthropy" goes back some 20 years. Experts say years of takeovers, downsizings, a new generation of managers, global competition and investor impatience have pressured corporate giving programs to demonstrate their value to the business. Jackie Reis of the Minnesota Council on Foundations says giving programs had a hard time showing results when they gave lots of smaller grants to many organizations.
"As companies moved through this trend of focused giving, of thinking more about being strategic finding the intersection between the company's interest and the community, they began to bring in a marketing perspective and as that happened, the line between marketing and philanthropy has begun to blur," says Reis.
Reis says many non-profits also find corporate and other donors as well are more interested in funding individual projects.
"Not necessarily the overall organization, but one part of the organization. And often that means the basic operational expenses of rent, utilities, salaries, kind of the over-all overhead kinds of expenses that really give the organization the capacity to provide its services, don't get funded, or only are partially funded."
One of the most high-profile and controversial changes in corporate giving occurred earlier this year, but the impact of the change is still unclear.
Dayton Hudson changed its name to Target Corporation and re-tooled its giving program. The retailer has a long history of leadership in corporate philanthropy. The company donates five percent of its pretax profits, and gives away more money than any other Minnesota firm.
The five-percent policy remains in place, along with the company foundation's primary focus on Twin Cities organizations involved in social change and the arts. But the Target Foundation has narrowed its giving guidelines within those categories, and cut its staff, fueling concern among non-profits.
Laysha Ward, director of the foundation says the smaller staff shouldn't harm the service or access available to grant recipients. She says the corporate name change was a natural time to look at the foundation's giving focus.
"It was something that we thought we should look at very closely, moving into the new millennium, moving into a significant corporate name change," Ward says. "It was important for us to look at how we were giving our dollars, was the giving still relevant, and to add support, particularly on the social action side, for programs that serve needs at the beginning of the need continuum seemed very appropriate."
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Ward says it's too soon to tell how many current grantees will no longer qualify under the new guidelines. By way of disclosure, the changes end a grant to Minnesota Public Radio, but MPR officials say they don't feel singled out, and substantial funding from Target Corporation for an MPR program remains in place.
Kevin Smith, president of the Minnesota Opera says he anticipates the Opera will continue to receive funding under the new guidelines. But Smith also says there's a lot at stake for the arts community in the influential foundation's changes.
"How that manifests itself in their corporate giving, particularly towards the arts, is looked at by other corporations and corporate foundations. I think that how things develop there are going to be critically important to corporate arts support in this community," says Smith.
Despite the turmoil, Jon Pratt of the Council of Nonprofits says Minnesota remains a leader in corporate philanthropy.
"Virtually every other metropolitan area envies Minnesota, for high participation of corporate executives on non-profit boards and task forces, the big commitment of pre-tax profits, so the picture here is far better than probably any other place in the country, including New York, which has the largest number of corporate headquarters."
And Pratt says the non-profit sector in Minnesota continues to grow, but he says the golden age of simple and reliable relationships with corporate funders is over.
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