A more integrated approach

Our recent biennial report into giving among FTSE 100 companies showed that the finance sector as a whole continued to be a major donor. It was the fourth most generous industry in terms of the proportion of revenue it donated to charity. However, this masks a wide variation in absolute giving levels as well as giving as a percentage of revenues. Overall in financial services we have seen the percentage of revenues given fall between 2012 and 2014 (see below) and an increasing emphasis to give in-kind (such as skills, time and wider business assets).

Revenues and donations by FTSE 100 financial services companies, 2009-14

Revenues and donations by FTSE 100 financial services companies, 2009-14

Source: CAF

Shift to a longer term focus

All this appears to be evidence of a shift in the sector away from corporate giving to a more integrated approach – in effect away from philanthropy and towards purpose. Taking a closer look, our own analysis of leading UK finance companies’ latest sustainability and corporate responsibility statements indicates three interesting trends:

1.      A longer term focus – focusing on growth, building future markets, new customer bases and new sources value;

2.      Greater alignment of corporate responsibility and business strategy – going beyond philanthropy to a broader notion of integrated purpose and implying a wider commitment from the business and its intellectual, financial and intangible assets to creating “shared value” for business and society; and

3.      A thematic focus on future social needs – typically focusing on disadvantage, youth, social mobility and building social capital.

These are general directions, and companies will naturally seek an approach to corporate responsibility strategy that best reflects their strategic purpose.

Challenges and opportunities ahead

There is still an important role for financial services in bringing their investment mindset as well as patient capital to stimulate and help scale innovation in the wider economy, focusing on both commercial and social sectors. Increasingly though, financial services companies are demanding more of their scarce philanthropy resources, seeking a greater return on investment for the business as well as society. And so we expect to see greater scrutiny of corporate responsibility investments, more critical evaluations, more collaboration and co-investment and a wider definition of philanthropy, which values the social as well as financial capital that businesses can bring.

We think there will always be an expectation on financial services to act philanthropically and strengthen civil society both as a champion and a provider of unrestricted funding to enable financial flexibility and risk taking. However we think there is also huge potential to use the concept of purpose to explore a wider definition of the role of business in driving social change.

We would love to hear your thoughts on this blog.  For more information or an informal discussion on how we can help advise and support your company please contact Laura Dosanjh. If you want to know more about how we can support you in your giving infrastructure, please contact Lucy Mantella.

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