Corporate generosity reaches new heights in response to crisis

Thu, 1 Dec 2022

Corporate giving in Australia in 2022 has reached a new benchmark of more than $1.22 billion, driven by large donations to flood relief and broader cause areas of social and public welfare, public safety and the environment.

The Strive Philanthropy Giving Large annual report reveals overall community investment from the nation’s top 50 corporate givers was up 4.3 per cent or $50 million on last year’s record total.

However, there was a drop in the percentage of pre-tax profit given, down from 0.92 per cent in 2021 to 0.78 per cent this year. The figure puts Australia out of step with some other nations, who record higher percentage contributions by donating more than one per cent of pre-tax profit.

Strive Philanthropy founder and report author Jarrod Miles said the broader increases came at an important time for many communities dealing with a range of issues.

“Damaging and life-threatening floods, escalating international conflict, continued economic downturns and a lagging viral pandemic all affecting us in different ways,’’ he said.

“Significant disaster relief helped to drive the increased contribution we saw which also resulted in a continued upsurge of investments to causes like social and public welfare, public safety and the environment,’’ Jarrod said.

The report, now in its fifth year, is supported by Philanthropy Australia. Reflecting on the five years of data, Jarrod said there had been growth every year and corporate giving in Australia was a “…flourishing area.’’

“Over the last five years we have seen a number of complex community challenges which each year has stimulated a response from our largest corporates,’’ Jarrod said. “Of late it’s been disaster related – bushfires, COVID-19, floods but we’ve also seen more reputational stimulus such as the banking royal commission or mining scrutiny which undoubtedly can also drive increases in community support.’’

“These stimuli, have most years been labelled as prominent drivers of growth in corporate community investment but is that really the case? If these factors didn’t arise would giving be stable or less?’’ Jarrod asked.

“Pleasingly the majority of the contribution seems to come from existing commitments, partnerships or from an intention for a company to uphold the status quo or previous budget but if we want to significantly grow corporate giving it can’t be down to an unpredictable stimulus.

“The issue really is about the percentage of giving. I really hope Australian companies look at that and say we want to drive that up to one per cent.’’

Philanthropy Australia CEO Jack Heath said the report invited the nation’s corporate sector be ambitious. “While the overall quantum of giving is up, the level of giving as a percentage of pre-tax profits is down.  And this is against the backdrop of healthier profits in 2022 than in 2021 so we see opportunity for further growth in corporate giving,’’ Jack wrote in the report’s foreword.

“While this report highlights those corporates who are making significant contributions, across the board corporate Australia has some ground to make up – setting and achieving a goal of one per cent of pre-tax profit would put us on a par with our peers,’’ he wrote. 

GivingLarge identified health, education, social and public welfare and environment as the most common cause areas for corporate giving. The increased support for environment and social and public welfare are in line with trends in broader philanthropy, but investment in these areas was magnified by the impact of natural disasters.

The largest dollar contributions came from BHP, Coles, CSL, Rio Tinto and Westpac. Coles was the largest percentage contributor, investing 8.7 per cent of its pre-tax profit (or $120 million) on a rolling three-year basis, directing most of its funds towards food rescue, health and disaster relief.

“It’s often previous year profits that drive increases in community contribution,’’ Jarrod said. “So, seeing growth in this year’s giving despite modest 2021 profits is encouraging.’’

A significant element of the growth in giving was the increase in community investment from 14 of the top 50 companies, with the top “movers’’, including Rio Tinto, BHP, South32 and Telstra, adding $73 million to the total.

One of the larger contributors on last year’s list was profit-for-purpose toilet paper company Who Gives A Crap, which gives 50 per cent of its profits to charitable causes. After a bumper year in 2021 when sales more than doubled during the pandemic, Who Gives A Crap, donated $5.9 million to clean water and sanitation projects in developing countries. Last year’s donation was well in front of Coca-Cola Amatil, Sydney Airport and Qantas’s giving. But the past 12 months have told a different story. Although the company continued its generosity this year, it was not on the scale of 2021 because of the changed commercial landscape.

The report highlights the significant scope to grow corporate philanthropy.

“The opportunity is enormous,’’ Jarrod said. “If we look at the mining – our largest sector in terms of contribution – they gave more than $400 million or just 0.4 per cent of their pre-tax profits. If they doubled that 0.8 per cent, then just one sector is making an $800 million contribution.’’

Jack emphasised that if the nation was to double giving by 2020, the corporate sector needed to maintain its rolling three-year average of eight per cent growth.

The challenge across the corporate sector, Jarrod said, is how to inject an enlightened frame of mind in companies that activates a more pro-active intention to increase giving. 

One of the keys to helping deliver such growth is stakeholder engagement. “We need a best-practice environment, with peer-to-peer learning, so that we can get much greater stakeholder engagement,’’ Jarrod said.