Workplace Giving Insights Article: Corporate Philanthropy A Tale of Two Nations
Comparing UK’s FTSE 100 & Australia’s Top Corporate Charitable Donations
Latest research and insight into corporate giving by the biggest businesses in the UK shows that corporate giving by FTSE 100 businesses has dropped by 26% in a decade. CAF UK, a key network partner of Workplace Giving Australia, has released the latest research into Corporate Giving by the FTSE 100.
This is the fourth CAF Corporate Giving by the FTSE 100 Report and the first since 2018. The FTSE is an index consisting of the 100 biggest companies by market capitalisation on the London Stock Exchange (LSE), similar to Australia’s top 100 ASX companies. This report is based on details of corporate giving, including community investment and philanthropy, and for the first time, companies were surveyed about their giving and asked to expand on details contained in company reports. It also includes research into consumer opinion on corporate giving.
It is noted that 25 out of the 2022 FTSE 100 companies were absent in the 2016 index, reflecting the ongoing changes in the corporate landscape. The report identifies companies leading the way in philanthropy and presents recommendations for businesses and policymakers to enhance their social contributions.
In this article, David Mann, CEO of Workplace Giving Australia, explores the similarities and differences between this latest UK research and the most recent research from Workplace Giving Australia, Good2Give (Workplace Giving Australia’s giving platform) and other Australian corporate giving data.
Why Corporate Giving?
In corporate philanthropy, giving back to society is often seen as an essential aspect of responsible business practices. As businesses continue to grow and thrive, the expectation to contribute to charitable causes also increases. New research from the United Kingdom on the FTSE 100 companies highlights its challenges and provides salient guidance for Australian companies. The findings reveal both inspiring success stories and concerning declines, underscoring the need for businesses and policymakers to prioritise consistent commitment to fulfilling their role as members of our society.
Corporate Philanthropy & The UK State Of Play
The FTSE 100, the index of the largest businesses in the UK, has long been admired for its financial prowess. Between 2016 and 2022, this group grew their revenues by 12%, from £1.54 trillion to £1.72 trillion, and a 179% increase in profits over the same period. The report by CAF UK (Charities Aid Foundation) also shows that in the 2022 year, £1.85 billion ($3.3bn1) was donated by the FTSE 100 to charities. Estimates for the ASX 50 place corporate donations over the same period at around $1.2 billion2 (£0.675 billion). This highlights the important and valuable role that business plays in the charity and community landscape.
The role of FTSE 100 businesses in leading a purposeful corporate culture is vital. It is brilliant that a quarter of the UK’s top hundred listed companies are setting an example by committing to the best practice of donating 1% to good causes. But more can and should be done, especially now as household incomes are squeezed, and charity finances are strained due to the cost-of-living crisis.
Neil Heslop OBE, Chief Executive of the Charities Aid Foundation
However, the headline number from the UK obscures a more negative trend. In 2016, the then FTSE 100 donated a similar amount: £1.85 billion. This means that in real terms, there has been a decline of 17%. Perhaps even more concerning is that a decade ago, in 2013, the headline figure was £2.51 billion in donations, making the real decline to 2022 a larger 26%.
As a percentage of pre-tax profit, in 2016, the FTSE 100 donated an amount equivalent to 2.4%. By 2022, this had dropped to 0.8%, well below the global pledge target of 1%. This is also the lowest recorded percentage since the study commenced in 2009.
Translating this to cash, were this group of successful companies to have demonstrated the same level of generosity in 2022 as they did in 2016, the amount donated to charities in 2022 would have been £2.24 billion ($4 billion), an additional £390 million ($694 million) though still less than the 2013 peak of £2.51 billion.
The 1% Pledge
Corporations across the globe are being encouraged to commit to donating a minimum of 1% to charity each year from their profit. As noted above, the FTSE 100 has missed this target by 20% with a cumulative contribution of 0.8%. Australian companies are similarly afflicted with the 2022 Giving Large findings showing a cumulative contribution of the ASX 30 of 0.78%. Again, the headline disguises some of the corporations’ positive and negative engagement in this space.
On the good news side of the ledger, there is strong evidence that corporate giving is becoming more widespread. However, in the UK, the bulk of the giving load was carried by 50% of the 100, with only 24 giving 1% or more and the top few being significantly overweight. Forty-one gave less than 0.5% of their profits to charity3.
The report also sheds light on sector-specific corporate giving trends, reflecting the sectors’ relative role in the respective economies. In the UK, healthcare companies emerged as leading contributors, with GSK and AZ topping the giving chart. In Australia, the largest contributors came from the Finance and Resources sectors, leading the way. Both saw considerable contributions by large retailers, with Coles in Australia and both Tesco’s and J Sainsbury in the UK pulling above their weight compared to their peers.
In Australia, Workplace Giving Australia encourages all businesses to pledge at least 1% of their EBITDA profit to charitable causes and to support their workforce as they do so. While emphasising this as a minimum decency expectation, the impact would be significant.
Underlying Drivers Are Consistent
The expectations of workforces, consumers, investors and the community are consistent across the two countries. In both countries, engagement with charities is high for individuals. The CAF World Giving Index for 2022 reported that 64% of Australian’s and 65% of those from the United Kingdom give to charities every year. Both countries highlight the importance of transparency and openness in corporate giving. The public’s belief in businesses’ obligation to support local communities stood at 69% in the UK and 79% in Australia4.
Further, 56% of UK consumers and 64% of Australian stated that they would be more inclined to buy a product or service from a business that donates to charitable causes. And for the workforce, 47% of those in the UK and 69% in Australia would choose to work for a business that donates to charitable causes over those that are disconnected.
Summary
The evidence in Australia does not reflect a general decline in corporate giving but rather an increase since 2016, at least for the top 50 companies5. However, the experience of the UK and the impact of the economic context provides a salient warning for the charity sector and its corporate partners in Australia. As we strive to double philanthropy in Australia by 2030, there is a strong need to ensure that the corporate sector remains engaged and committed.
Minimum expectations, such as those in the 1% pledge, must be encouraged and highlighted. Similarly, educating individuals to consider the role of an organisation in their community to decide where to work, what to purchase and who to engage is encouraged.
An Aside: Transparency & Expectations
All reports and research in this area highlight the lack of consistency and transparency in reporting. In the UK, much of the effort in preparing the CAF report into the FTSE 100 is in tracking down and confirming data, often reported by the companies themselves. This is common with the work done in Australia. The introduction of an increasing number of corporate Foundations will only make this more complex.
As the public demands knowledge that they are working with ethical and like-minded enterprises that support their communities as they choose who to work for and to deal with, the demand for transparency will increase.
Claims made will need to be supported by sufficient reporting to prevent more egregious cases of charity washing, but more importantly, to reward those corporates who understand their role as community members and citizens in their markets.
The Annual Australian Workplace Giving Awards 2023 are currently being judged from this year’s submissions, and finalists will be announced on Friday, October 6th, with the awards night celebration scheduled for Tuesday, October 31st, in the dual locations of Sydney and Melbourne.
1 Average exchange rate of 1.7796 / 0.5625 used to convert for 2022
2 Giving Large 2022 Report
3 CAF Corporate Giving by the FTSE 100 Report 2023
4 Based on the CAF Corporate Giving by the FTSE 100 Report 2023 and Workplace Giving Australia 2022 Donor Insights Report respectively
5 JB Were Annual Charitable Giving Index Report 2023