Anna Mowbray

Anna Mowbray

Policy Manager

Charities Aid Foundation

Corporate giving by the FTSE 100: Lessons for Policymakers

In the world of corporate giving, the FTSE 100 is ideally placed to lead by example and set the tone from the top. When looking at our new research “Corporate Giving by the FTSE 100” there are clear lessons to be learned for policymakers who want to ensure that businesses across the UK can play their part in building a strong and vibrant civil society. 

The Charities Aid Foundation is proud to work with corporate clients from every sector, making it easier for them to give to good causes.

In our FTSE 100 report we highlight the vital role the UK’s top 100 businesses play in leading the way and driving a responsible corporate culture. Already, 24% of the FTSE 100 are donating the recommended 1% of their pre-tax profits to good causes. This funding provides vital stability to charities and supports innovative projects that make a difference in communities across the UK.

But there is more to be done to ensure that the power of corporate donations is fully realised. In real terms, the value of corporate donations has declined by 17% in real terms since 2016, eroded by persistently high inflation. Had the FTSE 100 continued to donate the 2.4% of pre-tax profits that we saw in 2016, an extra £3.74bn would have gone to charities. As household incomes are squeezed, and charity costs increase, taking the necessary steps to unlock this funding is critical.

By thinking strategically about giving, and corporate giving in particular, the government can unlock the value of the UK’s vibrant and impactful corporate philanthropy sector. Embedding a long-term commitment to their communities is critical to companies’ strategic planning. But there is more that the government can do to support corporates as they think about their giving and impact. 

A national strategy for Philanthropy and Charitable Giving

The UK government must commit to developing a national strategy for philanthropy and charitable giving. When it does so, it should work closely with stakeholders including businesses, charities, sector bodies, commissioners of charitable services, academics, trade unions and the public.

Such a strategic plan is critical to unlock the value of the UK’s generosity. The UK is already a generous country but ensuring join-up at a national level will help by unlocking additional funding and ensuring strategic alignment across the economy. 

Ensure funding cycles allow for corporate investment

Secondly, policymakers should lengthen funding cycles to attract more corporate investment, including match funding. We need to see government working more closely with businesses when planning charitable funds, to unlock the value of corporate giving.

The Charities Aid Foundation is proud of our record securing matched funding from generous donors, supporting charities to go further and do good. However, we have seen cases where government initiatives have lost out on matched funding. It was fantastic to see the ABI matching the government’s £85mn funding to support coronavirus charity fundraising. However, there were other corporate donors who could have multiplied the effectiveness of this giving but couldn’t turn it around in the timelines needed.

We see a clear role for philanthropy in supporting government objectives, with major donors and corporates willing to give in a strategic way and take risks in a way that individual donors or even the state, may not.  By making sure that future schemes are open to corporate partnerships from the start, the value of government investment can be magnified.

Help companies to align their interests with the needs of wider society

Third, the government should offer crisis funding, with clear incentives for corporate investment. This should be flexible and adaptable to meet the needs of emerging crises. For example, this might mean a government fund matching any company donations in the face of a future pandemic or cost-of-living crisis. When a crisis comes, such measures help to encourage giving and multiply the power of corporate giving.

Set clear standards

Finally, Charities Aid Foundation research shows that the public expects businesses to be open and transparent about their charitable giving. But since 2013, there has been no requirement to publish this information in a consistent and easily accessible way. Consequently, the government should make the reporting of community investment and general philanthropy mandatory within company annual reports, reversing the 2013 amendment to the Companies Act.

Since 2013, it’s been difficult to understand exactly how much of a company’s ESG impact is coming from their donations to charity. Setting clear standards is a powerful way to help to quantify the value of the contributions that charities make to their businesses.

Corporate Giving: An underutilised resource

Corporate giving is a powerful force for good, supporting charity resilience and strengthening communities. But it’s clear that there is more that can be done. Policymakers hold many of the keys that will unlock that generosity.  

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