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Online Extra: How We Tallied the Largesse

Individual rankings: Assigning a hard-and-fast dollar value to philanthropic gifts isn't nearly as straightforward as it sounds. Many donors work hard to keep gifts quiet, public information is incomplete, and gifts of stock can swing in value. So to compile BusinessWeek's annual ranking, a team of reporters scours news reports, foundation filings, and IRS filings, and conducts countless interviews. We also make extensive use of The Chronicle of Philanthropy, the Forbes 400 Richest Americans list, and GuideStar's online database of IRS foundation filings. Months of work result in our annual list of the 50 Most Generous Philanthropists.

As we've done every year since launching the survey in 2002, we rank givers by what they've pledged and given in the past five years. We count pledges because we think philanthropists who make legally binding promises deserve to be recognized. We also estimate lifetime contributions and present those figures as a percentage of a person's current net worth.

Still, valuing such pledges can be tricky. Sometimes the actual gift amount changes after the pledge is made. Also, some philanthropists struggle to make the payments when their wealth evaporates unexpectedly. For consistency, we count all pledges at the value at the time they were initially announced, discounting only those that had been formally revoked (and those that, in our judgment, stand virtually no chance of ever being made).

Corporate rankings: To create this year's rankings, BusinessWeek invited companies in the Standard & Poor's 500-stock index to report on their 2004 giving. We heard from 204 companies, or 41%. Of those, 190 reported numbers reflecting their cash gifts, and 140 provided values for in-kind gifts such as products and services.

We changed the way we calculate rankings this year. In the past, we used the numbers reported by companies to create ratios of giving as a percentage of fiscal year revenues, as measured by S&P. This year we switched to a ranking method that the philanthropic community considers more accurate. We are now presenting corporate giving as a percentage of fiscal year 2004 company pre-tax profits. We used these percentages to tally our rankings of the top 15 monetary and in-kind givers.

Again this year we ranked cash and in-kind givers separately because of the challenges in valuing donations of products and services. Definitions of in-kind gifts range from material that would otherwise be thrown out to drugs created specifically for communities in need.

Companies have varying standards for valuation. Last year's top in-kind giver is hospital chain HCA Inc. ( ), which evaluated the amount of charitable care patients received using its pricing schedule for individuals. However, most care is paid for by insurers who get very steep discounts. Should HCA get credit for valuing its care at these elevated rates? The same question arises for software makers: Should they evaluate the gift based on its production cost -- often virtually nothing -- or its consumer price, as Microsoft () does?

We try hard not to count donations twice. Since many companies make charitable donations through corporate foundations, we chalk up donations only when they are made to the foundation -- not when the foundation makes grants. We hope our rankings offer insight into how companies go about the business of philanthropy.

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