Giving back
Companies say corporate philanthropy is good for business

by Lisa Antonelli Bacon
for Virginia Business
June 2007

Every year Richmond-based Performance Food Group Co. distributes tons of food to restaurants, hotels and schools around the country. To see row after row of baked goods, seafood and choice meats loaded on PFG’s trucks and to know that many people go hungry was a jarring disparity to CEO Steven L. Spinner and the company’s employees.

So PFG ramped up its efforts to combat hunger. In Richmond, the Fortune 500 company donated to the construction of a new $5 million Community Kitchen being built by the Central Virginia Foodbank and Meals on Wheels. Scheduled to open this summer, the expanded kitchen will be able to serve 12,000 meals a day to the needy.

The donation was on top of a five-year, $500,000 commitment the company made in 2005 to America’s Second Harvest, the largest hunger-relief organization in the U.S. That money will be used to support the group’s efforts in the 30 communities where PFG has distribution facilities. These 30 operating facilities donate about 1 million pounds of food each year to local food banks.

On a more personal level, Spinner led a major corporate initiative for Hunger Awareness Day last June that filled one of the company’s 16-wheelers with 67,000 pounds of canned goods. By decking out some of the company’s other trucks with banners that read “Together, we can fight hunger,” PFG pushed the issue front and center as the trucks fanned out across the country.

“It’s important for the leadership of any company to be out in the field, to roll up your sleeves and have a presence in the communities you serve,” says Spinner. Moreover, corporate charity is good for business. “There’s an absolute link between companies that have high levels of productivity and retention with those companies that have a great culture of integrity and community giving.”

That’s a message resonating across corporate America, as more companies support good works, both in terms of dollars and time. 2005 was a big year for corporate giving, with cash contributions from 82 of the country’s largest companies up by a median of 10.1 percent. The total amount of cash donations rose from $3.2 billion in 2004 to $3.7 billion in 2005, according to an annual survey by The Chronicle of Philanthropy. The newspaper credited the benevolence to a growing economy and natural disasters such as Hurricane Katrina.

Chronicle figures for 2006 won’t come out until the fall. In the meantime, a Virginia Business survey of large companies (see graphic on page 12) sheds light on corporate largesse in Virginia.

In the Old Dominion, CEOs and employees are getting their hands dirty, hammering houses, delivering meals and engaging in hard labor as well as menial tasks for their cause celebre. “For most corporations, the current theme is ‘doing well by doing good,’” says Melissa Skottegaard, who manages philanthropic activities for Genworth Financial. “If you do good works, the business will thrive.”

Last year, the Richmond-based insurance giant, with more than 7,000 associates in 25 countries, donated a total of $2.1 million through its foundation to various charitable activities, including $750,000 for Richmond’s beleaguered performing arts center. The company gave an additional $4.5 million to Genworth’s primary focus areas: the elderly, children’s needs and education. And its employees put in 22,672 volunteer hours.

In recent months, companies large and small have given away large sums. Richmond-based Dominion gave $1 million to its EnergyShare program (in addition to money its customers contributed to the fund) to help needy Virginians stay warm last winter. It also gave $1.5 million to the schools of business and engineering at Virginia Commonwealth University. In Burke, the Van Metre Cos., a private real-estate development firm, gave more than $600,000 during the past year to local charities, including the local hospice, free clinic, and fire and rescue operations.

From a public relations standpoint, generosity may generate good will and a boost for the bottom line. And of course philanthropy is a welcome contrast to the fraud and business scandals of recent years. Recent studies also indicate other factors coming into play. With former hippies, yippies and campus radicals populating some boardrooms, giving trends at work and home are starting to reflect some of the ‘60s sensibilities from the peace/love Baby Boomer generation.

According to a recent philanthropy study done by a major bank, giving has increased in high-net-worth households over the last five years, and the charitable causes they’re choosing are more humanistic than, say, construction of an arts center or supporting the local symphony. In fact, according to the study commissioned by Bank of America and conducted by the Center on Philanthropy at Indiana University, 86 percent of wealthy donors these days are driven to answer critical needs, such as housing, disaster aftermath and education.

The next most cited motivators? “Giving back to society,” 82.6 percent; and “a feeling that those who have more should give to those with less,” 81.5 percent. More than half of the respondents, 56.1 percent, said they would continue giving even if there were no tax deduction given for charitable gifts.

Greg Popera, a private wealth adviser for Merrill-Lynch in Vienna, says today’s big donors are more likely to have broad-based, rudimentary social causes, often answering the most basic of needs, such as housing and food. “The boomers who may be of that give-back society are more likely to give back with pure charity intent,” he says.

Furthermore, Popera and other financial experts have observed a move away from the aggrandizement that in the past has sometimes been part of a package when a worthy gift is bestowed. Rather than leaving a high-profile legacy, donors, private or corporate, are shying away from public recognition. “We’re finding that clients are asking not to have buildings named after them.”

The Bank of America study also showed that entrepreneurs give more than twice as much as donors whose wealth is inherited. “Wealth creation as opposed to inherited wealth has become a bigger part of our community,” says Popera. “You see people wanting their hard-earned wealth used for really good purposes. They feel they have more impact helping with the poor, the needy and children as opposed to the arts.”

The concept of legacy also has a different meaning these days. Rather than dumping cartloads of cash on already-comfortable offspring, “legacy” now means teaching the next generation the importance of sharing wealth. According to Popera, sharing a philanthropic commitment with children is a great educational tool that teaches fiduciary responsibility. “More often than not tied into the charitable commitments they’re making, there is a family-unit aspect,” says Popera. “They want to educate their children in the giving process.”

John Jacquemin, founder and CEO of Mooring Financial Corp. in Vienna, says he had always given modest amounts to charity, primarily to causes that supported underprivileged or underserved children. But when his 25-year-old company went into super-growth mode 10 years ago, instead of pocketing all the profits, he increased his charitable giving and formed the Jacquemin Family Foundation. In addition to providing grants and sweat equity to organizations like Habitat for Humanity, Jacquemins of all ages are involved in philanthropic endeavors.

Each year, Jacquemin’s three daughters, ages 16 and under, are responsible for targeting a donation recipient. “Last year, it was $500. This year, each of them is responsible for placing $1,000. My wife and I thought that was a good way to get them involved without making it seem like an obligation.”

Jacquemin says he emphasizes making the most of donated dollars. “We are very conscious of the efficiency of the organizations we give to,” he says, noting that some organizations use as much as 50 percent of donations for administration. “It’s [the girls’] opportunity to do a little research.” Last year, the children chose to give money to a Rappahannock County animal shelter, an equine rescue organization and the Charles Darwin Foundation.

Currently Jacquemin’s foundation has more than $3.4 million in assets, and this year he expects it to make grants of about $250,000.

Sustaining the earth by not wasting its resources is important to Ukrop’s Super Markets Inc. in Richmond. Its “war on waste” ensures that trimmings from many of the chain’s food products are not thrown away. Instead, peels from oranges squeezed for fresh juice and other food byproducts are turned into mulch sold at the chain’s stores. Five years into the practice, Ukrop’s President and CEO Bobby Ukrop, says, “It isn’t direct philanthropy, but we’re not making any money from it.” It has reduced waste as well as costs, he says. “It’s more of a mindset. We’re helping the environment.”

Helping seems to be central in the new business model. It’s hard to put a price on that.