Today we are looking at how businesses choose which organisations to give to. The Giving Australia study revealed a distinct difference between SMEs and large businesses in their approach to giving. SME giving was largely ad hoc, reactive and typically unstructured. If a suitable opportunity arose and was brought to the attention of the SME, a contribution may have been made, if the business could afford the money or resources at the time. SMEs, particularly those in regional areas, gave primarily to local causes. Some SMEs budgeted specifically for giving to the same organisations each year, while others gave a percentage of their profit or revenue. The majority of SMEs, however, had not allocated a set amount for giving each year, and typically gave to charities or NPOs on an ad hoc basis. Availability of resources constrained giving, and generally more was donated during ‘good’ years than in ‘lean’ years.
SMEs most favoured giving to the culture and recreation sector (45% of givers), followed by health (40%), social services (30%) and education and research (29%).
In dollar value, culture and recreation benefited most from overall SME giving, receiving $2.9 billion, mostly in the forms of sponsorships and donations. Social services received over $1.1 billion (largely from donations), while health received $962 million and education and research received $810 million, mostly through donations.
The largest barrier to making donations, or making more donations, was a lack of available funds. Over 50% of SMEs who did not make a donation cited this as their reason for not donating. SMEs that did give have normalised the activity in the belief that it is their responsibility, or obligation, to give back to the community. However, 18% of SMEs believed that it was not the business’ responsibility to make donations. A further 6% had not considered whether or not to make donations.
For large businesses and corporations, deliberate strategy drove the choice behind giving vehicles and modes. Qualitative and quantitative research suggested that giving vehicles and channels that enabled some involvement by employees and made progress towards a social impact tended to have most preferred status in large business and in particular, corporations’ strategy. These included payroll giving, volunteering, and community partnerships.
There was no single, standard formula or methodology that large businesses used to set their annual budget for giving, and budgets varied widely. Many large businesses, most of them corporations, used business sector benchmarks as a guide as to what they spend annually on giving. Other large businesses reported using a formula of 1 per cent of pre-tax profit.
Collectively, education and research, health, and social services received 81% of all large business giving. This was followed by environment and animal protection and culture and recreation, receiving 16% of the total giving. The qualitative research suggested that most large businesses focused their giving in areas that aligned in some manner with the nature of their business or industry; and in areas of activity most likely to have some impact on their stakeholders.
To read the full reports and factsheets, go to https://www.communitybusinesspartnership.gov.au/about/research-projects/giving-australia-2016/