More FTSE 100 companies donating at least 1% to charity
Melanie May | 9 March 2016 | News
A growing proportion of FTSE 100 companies are donating at least 1% of their pre-tax profits, according to figures from the Charities Aid Foundation.
The report, Corporate Giving by the FTSE 100, shows that FTSE 100 companies donated an average of 1.9% of pre-tax profits in 2014, meaning that giving as a percentage of pre-tax profits among companies on the exchange reached its highest level since 2009.
The analysis shows while donations to charity have increased as a proportion of revenue, overall FTSE 100 giving is down by 17% to £2.1 billion: £420 million less than in 2013. However, most of that decrease is down to a significant reduction in giving by just six firms, the majority of whom saw revenue adversely affected by very tough trading condition, according to the report.
The report also reveals that while 52 companies on the index saw revenue fall in 2014, most firms either maintained or increased the proportion of revenue they donated to good causes, and despite the fall in the total amount donated by the 100 firms, the median donation rose in 2014, as it has done each year since 2009.
Key findings:
- The median donation by a FTSE 100 company in 2014 was £3.8 million. 87 companies reported making a donation last year.
- On average, in 2014 companies donated 1.9% of pre-tax profits and 0.25% of revenue. More companies are donating at least 1% of pre-tax profits: 27 in 2014, up from 22 in 2012, while 40 donated less than 0.5% and 13 donated less than a tenth of a per cent.
- The 10 biggest donors accounted for 71% of all donations by the FTSE 100 in 2014, compared to 73% the previous year.
- Healthcare companies make up only five of the FTSE 100, but accounted for 40% of FTSE 100 donations over the six years examined. By contrast, the industrial sector has 15 companies in the FTSE 100 but accounted for only 1% of donations.
- Year-on-year, 40 companies decreased their donations by a combined total of £450m. Six firms account for more than three-quarters of this fall. 42 companies increased donations, but by a much smaller amount (combined total of £43m).
- The £2.1 billion given by the FTSE 100 to charities in 2014 amounts to about 3 per cent of the gross income of the voluntary sector that year
However, businesses have become less transparent about their corporate giving following the removal of the mandatory requirement for firms to report on their charitable giving through an amendment to the Companies Act in 2013. Since then, CAF reports that 13 companies on the exchange have stopped reporting donations and is calling for businesses to be more open about their giving.
Klara Kozlov, head of corporate clients at the Charities Aid Foundation, said:
“Businesses are taking a longer-term and more sophisticated approach to their philanthropy. However, this year’s drop in overall donations from the FTSE 100 does highlight the imbalance in types and qualities of giving across different companies and industry sectors. It is also concerning for the longer-term that growing numbers of firms are becoming less open about their corporate philanthropy. Transparency is vital if we are to improve standards of corporate giving across the business world.”
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About Melanie May
Melanie May is a journalist and copywriter specialising in writing both for and about the charity and marketing services sectors since 2001. She can be reached via thepurplepim.com.