Corporate Philanthropy Responds to Disasters

Hurricane Katrina and other recent major disasters are prompting corporations to make their philanthropic programs more responsive to unexpected events.

The crises meant “a lot of companies had to get really creative,” says Sophia Muirhead, a senior research associate at the Conference Board, New York, in part because many had already earmarked their giving for 2005. “Corporate foundations had to go back to boards for additional re-sources,” she says. Some companies found they faced internal criticism as well. “One company told me their employees thought their matching program was too cheap, and said they’ve got to do better.” The company boosted its matching formula.

Other companies found the disasters required them to focus particularly on needs of their own employees affected by events, who were asking “how do you help me ad-dress this issue,” she says.

Although a company’s first impulse is to respond with products to donate, “the experts have been telling us that cash is better.” Products are often hard to transport and warehouse, and the product may not fit the needs of the beset community. More-over, she suggests, “using cash in the locality helps rebuild the economy.”

Exceptions, of course, would include companies like FedEx, “which did all sorts of fabulous things” and Marriott, which was able to house people.

On the other hand, reports of mishandled cash donations are also giving companies pause. And these days “companies matching contributions have to be very careful that they aren’t donating to terrorist organizations…that’s something they grapple with day in and day out.”

Corporate foundations “are all asking the same questions…they want to learn the good practices,” says Fran Eaton, managing director of corporate services at the Council on Foundations. With three major disasters since late 2004 “grant makers have definitely realized they should go back and take a look at their policies.” In those cases, she adds, most companies “contributed over and above what they would (normally) contrib-ute to their communities. They’re looking at how to continue to respond if, God forbid, we had another year like last year.”

Pitney Bowes Inc., Stamford, Conn., since 1992 has operated a charitable Relief Fund that combines employee contributions and company matching funds to help in times of personal tragedies or natural disasters.

A related Employee Involvement Fund last year adopted a more flexible matching program intended to reflect employees’ interest and support. “We would be able, for example, to do a two-for-one match in-stead of the normal one-for-one,” says Polly O’Brien Morrow, the company’s director of community investments.

Given the complicated nature of identify-ing appropriate disaster aid, Pitney Bowes has started splitting some of its corporate giving between immediate assistance and long-term rebuilding efforts. For instance, after the Southeast Asian tsunami, the company committed $50,000 but donated only half right away, releasing the other half several months later when rebuilding efforts were more clearly identified.

What lessons have Pitney Bowes learned? “Focusing on how to respond rather than being reactive,” she says. For instance, a company crisis management committee is working on possible issues posed by an Asian flu pandemic — “what the needs are going to be” — from medical and funeral expenses to how to tap community resources.

The Mitsubishi Electric America Foundation last October launched a committee to draft an emergency response policy, which recommended that in the event of an emergency, officials will judge the response based on the impact on North America, on company employees and operations, and the desire of employees at multiple locations to make contributions.

Rayna Aylward, executive director of the Mitsubishi Foundation, says that planning for a longer period of need has been “a huge part of our conversations. The first impulse was to rush all the money at the outside, but timing and targeting are dependent on each situation.”

In 2005, Baxter International and its foundation donated more than $4.3 million to disaster relief, from grants and employee contributions to products. One major foundation grant of $750,000 — a new initiative for Baxter — enabled the Foundation for the Mid South to set up a donor-advised fund for recovery and restoration of community-based health services affected by Hurricane Katrina. The program “allows us to make smaller grants available to organizations most in need,” officials say. Often, they add, “the most critical needs after a disaster are not apparent until ‘after the dust settles.’”

General Electric has set up a disaster relief response team in order to respond faster and with more coordination. Amaya Gorostiaga of the GE Foundation says that right after the Asian tsunami, GE opened its 100% matching gifts program to overseas employees, and raised more than $8 million, including 23,000 gifts from 48 countries and $1.5 million from non-U.S. employees. Hurricane Katrina resulted in 15,000 employee gifts from 32 countries.

By coincidence, General Electric Co. in December 2004, just before the tsunami, had created the GE Corporate Citizenship office. Among other duties, it was intended to be the central point for coordinating activities and requests in a disaster situation.

After the tsunami, the office had daily phone conferences with GE contacts around the world, says program manager Mike Cairo. “It allowed us to know, from people in the field, what’s rumor, what’s the truth, where’s the equipment we thought we had shipped, where do we need a contact name.”

During Katrina, he said, a customer might be contacting several GE offices for help with generators or healthcare equipment. “Now they coordinate through my office. GE corporate handles all the paperwork, does all the logistics. We believe we have a better picture.”

In the wake of Katrina, MicroEdge Inc., a New York-based provider of software functionality to corporate and community foundations, made a matching-gift software module available to corporate customers free-of-charge, so employees could contribute to disaster relief online. More than 100 of the company’s 600 corporate clients took advantage of the offer. “We gave it away to people because we didn’t have time to mess with the accounting,” says MicroEdge President George Macintyre.

Giving With a Purpose

Big companies are trying harder to align their philanthropy programs with broader business objectives and corporate and branding needs, according to a survey by The Confer-ence Board.The survey of multinational companies found:

• More than two-thirds of companies said volunteerism will grow in importance as a management priority.
• 42% of companies listed diversity as a program area that will be more important in 2006, with 22% listing Latino organizations as being more important in giving programs this year.
• China (27%), along with the rest of Asia (23 %) and India (23%) growing in importance as targets of corporate philanthropy.

By James C. Hyatt. This article first appeared in the Summer 2006 issue of Business Ethics, Volume 20, No. 2.