Methodology: Figuring Out Which Companies Gave Most

It's challenging to take the collective pulse of a field as murky as corporate philanthropy. Companies aren't required to report their contributions publicly. Even when they do, there are few agreed-on standards for valuing gifts, be they cash or goods and services.

To create our ranking, we invited all of Standard & Poor's 500 stock-index companies to tell us about their giving practices. We heard from 203 of them, or 41%. A total of 183 provided numbers for cash gifts, and 137 companies also offered figures valuing their in-kind giving. Others chose to weigh in on our qualitative questions only. We used the numbers reported to create ratios of giving to fiscal year 2003 company revenues as measured by Standard & Poor's. We used those percentages to form 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. And companies have varying standards for valuation. This year's top in-kind giver is hospital chain HCA Inc (HCA )., 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 No. 11 Microsoft Corp. does? Because there are few guidelines, companies are left to decide.

Many companies, of course, make their charitable donations through corporate foundations. To avoid double-counting, our policy is to tally the donations once -- when they are made to the foundation and not when the foundation makes grants. As we calculated the data, we found that some corporations had lumped foundation grants into their overall numbers. We separated out grants where we found them. As always, we will use what we learned this year to refine our practices in the years to come.

We believe our rankings provide a snapshot of corporate philanthropy that can offer insight into how companies think about giving. Throughout this process, we benefited from the counsel and expertise of the Committee to Encourage Corporate Philanthropy, the Center for Corporate Citizenship at Boston College, and other experts in the field.

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