Southland Firms’ Role in Supporting Charities Fades

Nonprofit groups dependent on corporate donations got some bad--albeit not totally unexpected--news Monday: Corporate giving in Southern California remains languid and has not kept pace with inflation or other charitable giving.

A survey of members of the Los Angeles-based Southern California Assn. of Philanthropy showed that corporate giving in 1990 accounted for just 29% of total member giving--the smallest share since the group began polling its members in 1985. That year, corporations accounted for nearly half of the group’s charitable giving.

Although corporate giving from 1985 to 1990 increased 11%, to $101.9 million, the growth fell well behind giving by private foundations, which grew 117% over the same period to $202.4 million, according to the survey.

“Times have been very uncertain and unsettled for corporations, with mergers, acquisitions, poor profits, no profits, retrenchments and downsizings,” said association President Lon M. Burns. “These numbers are important because the corporate world is an important source of funding for many organizations in this community.”

Burns, whose association represents more than 100 of the area’s largest private foundations and corporations with philanthropic programs, said the numbers are expected to get even worse. Because of a lag in compiling data, the survey released Monday does not reflect sharp recession-related cuts in corporate giving last year by many local companies.

“We are taking a hard look at everything that we are doing,” said spokesman Tom Sanger of financially troubled Pacific Enterprises, which gave a company-high $4.98 million in 1990 but has cut its 1992 budget for charitable causes by nearly $800,000. “We think there are very important and very worthwhile contributions to be made, but we have to make them with an eye to being prudent.”

Said Burns: “I am not optimistic about what we will see for 1991, let alone for 1992.”

The sluggish level of corporate giving locally follows a nationwide pattern that began in 1987, when business donations dropped below the rate of inflation, according to a study by the American Assn. of Fundraising Counsel, a New York-based organization that tracks philanthropic contributions.

Corporations, including company-sponsored foundations, increased charitable donations nationwide in 1990 by just 0.5% in inflation-adjusted dollars, the New York study said. The study pointed to several reasons for the small increase, including a general drop in corporate profits, poor manufacturing sales, a flat stock market and huge corporate debts incurred from mergers and takeovers.

“Corporate giving has sort of plateaued at about 5% of (corporate, foundation and individual) giving,” said American Assn. of Fundraising Counsel spokeswoman Danna Osterweil. “People are shocked to see that corporations, if you look at the pie of giving, have a little slice.”

In practical terms, a continued decreased role for corporations in charitable giving would be relatively more damaging to nonprofit social service agencies than other charities, according to the Southern California Assn. for Philanthropy survey. In 1990, about 23% of corporate giving went to social service groups, compared to 12% of private foundation contributions, which favored educational groups.

Nonprofit groups of all types, however, have felt the pinch of tighter economic times, with competition for available charity dollars growing more intense statewide, said Bob Kardon, executive director of the California Assn. of Nonprofits, an advocacy group for 2,000 charities.

With a tough economy, Kardon said, the demand for many nonprofit services such as food and housing assistance has grown, but the ability to meet the new demand has not kept pace.

“We are all very nervous that unless we pull out of this recession soon, we are going to see even more of an erosion,” said Kardon. “We are very disappointed not to see the corporate world keeping up with the need.”

The Southern California survey offered some hope for nonprofit groups able to attract non-corporate donations, such as those by private foundations. Propelled by foundations, total giving by association members in 1990 increased by nearly 18% over 1989. In inflation-adjusted dollars, total giving between 1985 and 1990 rose about 46%. During that period, about one-third of all giving went to education-related charities.

“It has been a time of reflection” for many companies, said B.J. May, manager of corporate-community relations at Rockwell International, which this month began examining whether it can maintain its $12-million-a-year giving program.