Approaches to corporate community investment
This chapter provides a snapshot of the feedback we received from our online survey and focus groups relating to how companies are approaching corporate community investment, and making decisions on how to allocate their budgets. It also examines what activities and modes of delivery to choose.
We specifically note any changes to employee volunteering and giving resulting from the economic downturn.
3.1 Allocation of budget
There are a variety of results on whether companies are cutting their corporate community investment budgets. There has also been little impact as a result of disaster relief funding, as most companies fund this separately from ongoing community investment programs. So while delivery support, and the attention of partnerships by corporate staff has been to some extent diverted, recent natural disasters have not caused significant diversion of funds in the large corporate sector.
Overview
Respondents to the online survey anchoring this report represented companies with a wide range of overall annual community investment contributions, both cash and in-kind. Figure 3.1 illustrates the percentages of companies allocating cash and in-kind contribution at each investment level.
Figure 3.1:Participant Companies' Overall Annual Community Investment Contribution CASH (N=45) 
IN-KIND (N=38) 
Source: Centre for Corporate Public Affairs, Survey of business executives 2009.
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Respondent companies allocate on average 52 per cent of their corporate community investment budget on multi-year strategic partnerships, 28 per cent in annual grants, and 13 per cent on local funds for managers to use (see Figure 3.2 ).
Seventeen per cent is allocated to ad hoc requests and funds for emergency disaster relief. In addition to these categories, 28 per cent of respondents noted they allocate funds to 'other' areas including the cost of staff volunteering, workplace giving matching, and cause and issues 'awareness days'.
Figure 3.2:Corporate Giving/Community Investment Budget Allocation 
Source: Centre for Corporate Public Affairs, Survey of business executives 2009. N=52, 'Other' includes workplace giving matching, and employee volunteering.
Changes in community investment budgets
Companies surveyed were asked about budgets for 2008-2009 and for the next financial year.
Forty-one per cent of the participant companies note that their overall corporate community investment budget had increased between financial years 2007-2008 and 2008-2009.
One third of these companies report budget increases of more than 20 per cent, and 25 per cent report an increase between 10 and 15 per cent.
Thirty-five per cent note that their overall corporate community investment has not changed. Twenty-four per cent of companies note their overall corporate community investment budget has decreased. More than half of companies experiencing a cut have had their budget decrease by more than 20 per cent (see Figure 3.3 ).
Figure 3.3: Change in Budget for Corporate Giving/Community Investment Due to Economic Downturn 
Source: Centre for Corporate Public Affairs, Survey of business executives 2009. N=49 Note: The graph demonstrates the level of increase or decrease in the budgets for financial years 2008/09 and 2009/10.
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As Figure 3.3 demonstrates, most companies predict that there will be no change in the
level of overall corporate community investment next financial year.
Fifty-five per cent of companies are not expecting any changes in their total corporate community investment budget over this period. More companies expect a total increase (26 per cent) than a decrease (19 per cent). A significant number also anticipate there will be no change to multi-year strategic partnerships, annual grants, discretionary funds and other ad hoc or unplanned responses to requests.
The majority of companies predict that there will be no change in the
direction of corporate investment contributions in the coming year. Sectors where respondents anticipate an increase are indigenous issues (an increase for 38 per cent of companies) and the environment (an increase for 44 per cent). Twenty-eight per cent of companies anticipate a decrease in their spending in arts/culture programs (see Figure 3.4 ).
Figure 3.4:Expected Change In Direction of Corporate Community Investment Contributions 
Source: Centre for Corporate Public Affairs, Survey of business executives 2009. N=51 Note: The graph demonstrates the level of expected increase or decrease in the budgets for financial year 2009/10.
Most focus group participants report cuts in their public affairs budgets of around 10 to 20 per cent. For some participants, discretionary spending has been cut significantly, as indicated in this comment:
It's a different environment now for art events and formal dinners. There's less and less of that.
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As noted elsewhere in this report, the cuts have been targeted at administrative overhead, including general communication spending. However, so far large companies have been trying to sustain their community investment spending. A significant number of survey respondents (41 per cent) reported their community investment budget had increased in the last financial year.
We've cut out a lot of business brand sponsorships, but the philanthropic sponsorships haven't been affected. We are cutting most entertainment and travel costs. Our CEO now flies economy.
This survey data is reinforced strongly by focus groups findings and its conclusions strengthened considerably by the findings of the 'Arts Sponsorship Outlook Survey 2009' by the Australian Business Arts Foundation (AbaF).
The AbaF study found that 49 per cent of companies expected to decrease arts sponsorship over the next 12 months, and companies contributing most per annum (over $500,000) were more likely to reduce their spending.
The sharpest decline is expected to occur in the final quarter of 2009 and the first quarter on 2010. However, more than two-thirds of businesses are committed to maintaining their arts partnerships over the long term.
In the current circumstances, it is no surprise that marketing-related sponsorships, such as the arts and sport and accompanying corporate entertainment, and indeed any conspicuous consumption, is in decline when shareholder value is declining and staff are being retrenched.
The AbaF survey also confirms our analysis that companies are seeking more value by positioning and closely managing these sorts of sponsorships in the current circumstances. Despite this, only 11 per cent of participants were satisfied with their ability to measure return on their investment.
The AbaF survey also supports our research here and in previous reports, highlighting that:
...partnerships are more vulnerable to being reduced or cut when they are based not on long-term strategic alignment (including CSR), brand or staff objectives but on short-term tactical considerations, especially where motivating factors include hospitality benefits and personal interests of management.
AbaF, Arts Sponsorship Outlook Survey 2009, Summary of findings and recommendations, May 2009
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Disaster relief
Another factor influencing corporate community investment budgets is the spike in corporate responses to natural disasters in 2008-2009. Eighty-seven per cent of survey respondents said they had made (or were committed to) a significant contribution to disaster relief in the financial year 2008-2009.
A smaller proportion is committed to a significant contribution to disaster relief in the following financial year (only 33 per cent, see Figure 3.5 ).
This low proportion can be attributed to the common practice, noted below, to fund disaster relief in an ad hoc manner as need arises, and outside normal community investment budgets.
Figure 3.5:Have you made (or are commiTted to) a significant disaster relief contribution? 
Source: Centre for Corporate Public Affairs, Survey of business executives 2009. N=54 & 49.
Of companies that contributed to disaster relief in the 2008-2009 financial year, 87 per cent note that their disaster relief contribution was made from ad hoc contingency reserves, with only 13 per cent having diverted funds from existing or corporate giving/community investment budgets for disaster relief commitments.
Some businesses note that they allocate a notional amount for disaster relief annually, so that in the event of a disaster they can respond immediately. This circumvents approval processes, and ensures no other partnerships are compromised by diverting funding.
3.2 Selection of activities and modes of delivery
The majority of companies participating in our survey are not experiencing changes in their modes of corporate community investment delivery and activities, neither currently, nor in their expectations for the next financial year. Exceptions are an anticipated increase in 2009-2010 in programs relating to engaging employees, including workplace giving and corporate volunteers; an increase in attention to local community activities, especially close to the locations of plants; or to build customer support; and a potential shift from cash to in-kind support to maintain value and align products.
Most companies are not experiencing changes in their level of support for different community investment activity (see Figure 3.6 ).
However, areas of activity or modes of delivery that are being affected are those expected to be affected also in 2009-2010.
The most significant increase relates to corporate volunteers (increase for 42 per cent of participating companies) and workplace giving and payroll deductions (increase for 43 per cent of participants).
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More companies are expecting more focus on these activities in 2009-2010 - 68 per cent of companies expect an increase for corporate volunteers, and 52 per cent an increase in workplace giving and payroll deductions.
Figure 3.6: Change in Level of Support in Areas 
Source: Centre for Corporate Public Affairs, Survey of business executives 2009. N=50 Note: The graph demonstrates the level of increase or decrease in the level of support for financial years 2008/09 and 2009/10.
This is consistent with the finding that fifty-three per cent of companies are currently increasing their resources on engaging employees. Programs for employee engagement are expected to increase further in the next financial year (for 59 per cent of companies).
The majority of respondent companies in our online survey do not believe the economic downturn has influenced employee volunteering in a negative manner (see Figure 3.7 ).
Figure 3.7:Statements on Volunteering 
Source: Centre for Corporate Public Affairs, Survey of business executives 2009. N=49.
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The small number of companies that have seen some negative impact on corporate volunteering note that it has been affected by staff cuts. As one survey respondent notes:
There are less staff for volunteering because simply there are less staff and people have the same if not more work to do.
Despite this, the picture for corporate volunteering remains bright. Almost one in three companies agree that they have more staff available for volunteering. This suggests an opportunity for corporations to seek further involvement with community partners in this area of support. Indeed, 61 per cent of companies agree that they are working closely with their community partners to establish volunteer opportunities. A number of innovative approaches to volunteering are being employed, or explored, which may have implications for volunteering when circumstances return to normal.
Interviews and focus group discussions confirm that corporate volunteering is a deliberate part of strategy to demonstrate social commitment to employees, and involve them in efforts to position the corporation as an 'employer of choice'.
As Figure 3.6 demonstrates, local community activities are also a sphere that is currently experiencing an increase in investment (31 per cent of companies). This is expected to continue to increase in 2009-2010. For 16 per cent of participants, this increase will be significant.
Our qualitative analysis suggests this is a natural consequence of the downturn, as companies respond to local needs, particularly in communities with dependence on a company or where the company has a high profile. In addition, companies frequently seek to do more in communities suffering because of lower demands in local products or where there is under-employment.
One in four survey participants say marketing-related sponsorships have decreased (Figure 3.6 ). This is consistent with our earlier discussions about levels of corporate support for arts sponsorships.
Sixteen per cent of companies note a decrease in untied cash donations. This is part of a general trend for companies to move away from traditional philanthropy and more to integrated partnerships but has been exacerbated also by economic pressures leading to tighter stewardship and accountability for corporate contributions.
Funds for marketing-related sponsorships and untied cash are expected to decrease further in the 2009-2010.
There is considerable variation in the responses to the survey relating to how companies currently respond to requests for support in cash or in-kind support.
There are almost as many companies experiencing an increase in requests for cash or in-kind resources as companies that are experiencing decrease in requests (see Figure 3.8 ).
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Figure 3.8:Change in Modes of Delivery 
Source: Centre for Corporate Public Affairs, Survey of business executives 2009. N=49. Note: The graph demonstrates the level of increase or decrease in the proportion of resources used for financial years 2008/09 and 2009/10.
Focus group participants and interviewees reported they are moving towards providing in-kind rather than monetary support:
There's more opportunities for in-kind support now. We are happy to provide in-kind support.
Our program is still growing, however there's great shift towards in-kind.
Many companies report that more value can be created by the supply of goods and services, than by the provision of cash to purchase these at a later (and potentially) more expensive stage. Companies can, and some do, cite the value of their contributions at retail cost.
This shift from corporate monetary to in-kind support is expected to increase as more companies face further economic pressures and look for alternative ways to continue their support. It is also part of a longer-term trend, and the downturn could have the effect of quickening the pace of this development.
Noting short-term trends in arts sponsorship, the AbaF study concluded:
One half of businesses are likely to substitute some monetary support with the provision of in-kind services or products instead.
It is also important to note that the view of the CEO is a critical factor in the direction of approaches to external relations and community investment, regardless of the economic environment.
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With an average tenure of four years in major companies, a number of companies have reported this has been a more important factor in changes to community investment than the economic downturn. Others also note that they have been on the journey to a new and more embedded approach along the trend line, including a closer alignment with business strategy and circumstances, described in the Centre's 2006 report and mentioned above. This too is a factor influencing the number reporting that changes are underway.
Matched giving and staff donations
More companies are moving to support workplace giving by employees by matching staff donations, or by contributing to organisations in which staff volunteers are encouraged to contribute their volunteer hours. As one focus group participant said:
We are still committed to supporting existing volunteering initiatives from our employees. We actually give out up to two thousand dollar grants to organisations in which individual employees volunteer on a regular basis. This is very important to small NFPs and makes our employees appreciated in their community. Our employees tell us that they get asked not to leave their current job because the NFPs will then lose the bonus!
Workplace contribution matching funds supplied by a corporation are commonly capped, either in aggregate in a given year, or in relation to an individual donation.
Some participants in focus groups note that they have placed a cap on their matching of workplace giving. This doesn't necessarily relate to the economic downturn - in a number of cases it has been an outcome of the overwhelming response that the recent Victorian bushfires had on workplace donations, resulting in companies reaching their match-giving capacity.
However, corporations are noting that employee awareness of heightened community need is seen in increased interest in matched giving. Some companies say they anticipate a new level of staff giving as a result of the experience of giving during the economic downturn, sometimes similar to the 'tsunami effect', whereby overall levels of giving in Australia increased and were sustained following initial giving in response to a natural disaster (McGregor-Lowndes and Newton 2009).