11 April 2006
U.S. Companies Step Up the Business of Giving Overseas
Corporate philanthropy is a growing part of foreign aid
Washington -- Children drank out of polluted rivers and ate without plates, forks or cups in the Nueva Segovia region of Nicaragua, until Cargill Inc. gave them better options.
The U.S.-based food and agriculture products company, which employs more than half its workers overseas, has built water storage and filtering systems, provided lunches and utensils, and taught hand-washing at Nicaraguan schools serving 10,000 children.
In recent years, many U.S. corporations have expanded operations to a worldwide scale, and their philanthropy is following. (See related article.)
Forty percent of Citigroup Inc.’s income comes from outside the United States, and that share likely soon will be half. As its global presence has grown since the late 1990s, Citigroup has “significantly” increased the number of overseas charitable grants it awards, said Alan Okada, an executive with the company’s foundation. In 2005, Citigroup gave $28 million in overseas grants, more than double the amount it gave in 2001 ($13.2 million).
The Conference Board, a business-research organization, reports a 22 percent annual increase in international giving among large U.S. corporations in its most recent survey. The Foundation Center, a philanthropic-research group, reports a similar pace of growth in international giving by corporate foundations.
Prosperity and low inflation during the 1990s increased the fortunes -- and the generosity -- of the U.S. business community. U.S. companies donated almost $5 billion to developing countries in 2004, the latest year for which data are available, according to a report from the Hudson Institute’s Center for Global Prosperity. The amount equals one-fourth of U.S. government foreign aid.
America has a tradition of corporate philanthropy. In the early 20th century, business tycoons like Andrew Carnegie and John Rockefeller started charities that focused on domestic problems. Today, executives want their companies to be good world citizens, according to Rob Buchanan, director of international programs for the Council on Foundations.
Parker Snowe, director of international programs for the Wharton School at the University of Pennsylvania, said business schools increasingly send students overseas to volunteer for charitable projects. He said such trips help students understand “the needs of the global marketplace.”
Companies give to the world’s poor in diverse ways -- cash, goods and services, construction of facilities, as well as encouragement of employee volunteerism, sometimes by granting paid leave. The U.S. Chamber of Commerce reports $566 million donated by American businesses in 2005 to help communities suffering after the South Asia tsunami. (See related article.)
Thirty-one U.S. companies each gave more than $1 million to overseas causes in 2004. The biggest donors were pharmaceutical companies -- Merck & Company and Pfizer Inc. each gave close to $400 million. Other sectors on the list of big givers include oil, high-technology, financial services, retail, consumer-products, publishing and package-delivery firms.
Companies are not increasing overseas philanthropy for its own sake, but to “create a culture of opportunity” in the developing world, said Stephen Jordan of the U.S. Chamber of Commerce Business Civic Leadership Center.
Businesses say they give to protect the health and environment of the communities in which they operate. They also give to develop infrastructure so that there can be a free flow of goods and services, according to Jordan. He said U.S. companies should not lose sight of their future profits in making grants. “Ninety-six percent of opportunity is outside our borders,” he said, referring to the world’s population distribution. “Increasingly, companies … want to grow their customer base in emerging markets.”
“But it can get down to life and death,” Jordan said. Companies invest in helping those with AIDS in Africa, for example, because “a precondition of [being a customer] is being alive.”
Grants often reflect business interests. For instance, in March, Citigroup announced a $4 million grant for financial education of the poor in China. Cargill, which makes crop nutrients, has given grants to Nature Conservancy for conservation and environmental projects, including planting buffers along stream-banks in the Yunnan province in China to keep chemicals from farmers’ fields out of water systems.
Bill Hewlett and Dave Packard, founders of the high-tech company that bears their names, see philanthropy as a natural consequence of business success.
Hewlett and Packard were among the founding donors of a grant-making foundation called the Global Fund for Women, which its current president, Kavita Ramdas, calls a “kitchen start-up” (because the tech company was a “garage start-up”). The fund has paid for underground women’s schools in Afghanistan during the rule of the Taliban, for “girl-power initiatives” in Nigeria to promote health, and for a large number of women-lawyers associations around the world.
Another way companies give is in partnership with the U.S. government. Through the U.S. Agency for International Development’s Global Development Alliance, Chevron Corporation matched the government’s $10 million to help Angola’s agriculture sector recover after decades of civil war. The program gave seeds and tools to nearly 200,000 families restarting farms and improved bridges and roads to better connect areas.
Additional information on an upcoming conference titled “The Role of the Private Sector in International Aid and Development” is available on the U.S. Chamber of Commerce Web site.
For information on how U.S. foreign assistance is affecting lives, see Partnership for a Better Life and Global Development and Foreign Aid.
