Growing proportion of FTSE 100 firms donating at least 1% of pre-tax profits: CAF
Britainís biggest companies have largely protected their charitable giving in the face of falling revenues, new analysis shows.
FTSE 100 companies donated an average of 1.9% of pre-tax profits in 2014, according to new research published by the Charities Aid Foundation. It means that giving as a percentage of pre-tax profits among companies on the exchange is at its highest level since 2009.
CAF's report, Corporate Giving by the FTSE 100, analysed the annual and corporate responsibility reports from 2009 to 2014 of every company on the index, covering donations of money, time, management services and in-kind donations.
It shows that while fifty-two companies on the index saw revenue fall in 2014, most firms either maintained or increased the proportion of revenue they donated to good causes.
In spite of a fall in the total amount donated by the 100 firms, the median donation rose in 2014, as it has done each year since 2009.
In cash terms, the total amount donated by FTSE 100 firms in 2014 fell 17% to £2.1 billion. This was £420 million less than in 2013. Most of that decrease is down to a significant reduction in giving by just six firms, the majority of whom saw revenue adversely affected by very tough trading conditions.
It highlights the fact that there are still huge variations in levels of giving across the FTSE 100 where the ten most generous companies still make up almost three-quarters of total donations.
CAF, which works with thousands of firms on their corporate giving, say they believe that part of the key to tackling this lies in improving the way in which businesses communicate and report on this type of activity.
The analysis also highlights a "worrying" move away from transparency among Britain's biggest firms when it comes to corporate giving. Since the mandatory requirement for firms to report on their charitable giving was scrapped by an amendment to the Companies Act in 2013, thirteen companies on the exchange have stopped reporting donations.
CAF is encouraging businesses to agree a common approach to reporting this type of activity and urging government to review the requirement for businesses to report on their charitable donations.
Klara Kozlov, Head of Corporate Clients at the Charities Aid Foundation, said: "Many of the FTSE 100 deserve huge credit for maintaining, and in some cases increasing, their charitable endeavours in spite of tough market conditions. Businesses are taking a longer-term and more sophisticated approach to their philanthropy. This has been borne out in the giving patterns of companies which work with CAF.
"However, this year's drop in overall donations from the FTSE 100 does highlight the imbalance in types and qualities of giving across different companies and industry sectors. Industries which have traditionally committed large amounts of charitable funds have suffered falls in revenue. Some newer players are growing their giving fast, but they don't yet match the donations of the traditional industries.
"It is concerning for the longer-term that growing numbers of firms are becoming less open about their corporate philanthropy. In the past two years, thirteen of the FTSE 100 have stopped including this information in their annual reports in a way that makes the data accessible.
"These firms are the leading lights of business in the UK and transparency is vital if we are to improve standards of corporate giving across the business world. Businesses need to clearly communicate about their giving, and make this information accessible.
"This is crucial to helping business fulfil its potential to have a positive impact on society. It is also shown to give businesses a competitive advantage. Evidence shows that people are more inclined to buy products and services from companies that donate to charitable causes".
The median donation by a FTSE 100 company in 2014 was £3.8 million. 87 companies reported making a donation last year.
On average, in 2014 companies donated 1.9% of pre-tax profits and 0.25% of revenue. Growing numbers of companies are donating at least 1% of pre-tax profits, with 27 having done so in 2014, up from 22 in 2012. Forty donated less than 0.5% and 13 donated less than a tenth of a per cent.
The 10 biggest donors accounted for 71% of all donations by the FTSE 100 in 2014. This compares with 73% the previous year.
Health care companies make up only five of the FTSE 100, but accounted for 40% of FTSE 100 donations over the six years examined. By contrast, the industrial sector has 15 companies in the FTSE 100 but accounts for only 1% of donations.
Year-on-year, 40 companies decreased their donations by a combined total of £450m. Six firms account for more than three-quarters of this fall. 42 companies increased donations, but by a much smaller amount (combined total of £43m).
The £2.1 billion given by the FTSE 100 to charities in 2014 amounts to about 3 per cent of the gross income of the voluntary sector that year.