How Companies Dig Deep

Top corporate givers such as IBM and Oracle have learned how to make their philanthropy pay

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Many corporations talk about the importance of being a good corporate citizen and supporting causes employees care about. To find out which companies were the most generous givers for fiscal year 2006, for both cash and "in-kind" donations such as drugs and software, BusinessWeek surveyed companies in the Standard & Poor's 500-stock index.

Our survey, conducted over six months, found a lot of companies putting their money where their mouths are. Some 200 companies filled out a 28-question survey about how much they give and what causes they support. Of the 200, 190 gave numbers for their cash giving, and 125 for in-kind donations. On top of ranking companies by dollar amount of cash and in-kind gifts, we also track donations as a percentage of pretax profits to see just how deep companies are digging.


Oracle (ORCL ), our biggest in-kind giver, was a change from the pharmaceutical companies that tend to top the list. The software giant's numbers underscore what can be a controversial area in the world of giving—the way companies value in-kind donations. In fiscal year 2004, when we last measured Oracle's giving, it valued software donations one way; this year, it's using a method that results in a higher valuation. That's part of the reason the company's donations jumped from $151 million to $1.9 billion in 2006. The company also has a larger philanthropy program now, a result of enhancing the programs of companies it has acquired over the past few years and expanding its education initiatives. But the change shows how making apples-to-apples comparisons can be difficult, even at the same company.

Harrah's Entertainment tops the list of most-generous cash givers, that is, the companies that gave the most as a percentage of pretax profits. The casino operator highlights another wrinkle in what can motivate a company's giving. The $76.8 million in cash that Harrah's donated is equivalent to 9.2% of its pretax profit. But that giving isn't necessarily altruism: In five states, operating subsidiaries make what Harrah's describes as state-regulated donations or payments and reinvest "a specific percentage of profits back into the community via designated charitable or governmental organizations."

A trend among many of the companies that took our survey was a move to incorporate philanthropy more deeply into their business models. In some cases, you can even see it in the organizational chart: Stanley Litow, president of the IBM (IBM ) Foundation and vice-president for corporate citizenship and corporate affairs, reports to the company's executive vice-president of innovation and technology, Nicholas Donofrio. One technological innovation that IBM initially developed to use in its philanthropy program brought in more than $100 million in 2006 revenue, after it was offered to paying customers. Actual revenues from philanthropy? As a spur to greater corporate generosity, that can't be topped.

By Conrad Wilson, with Frederick F. Jespersen

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