How Can Corporate Philanthropy Help Companies Emerge Stronger From A Recession?

When an economic downturn forces companies to slash budgets, corporate philanthropy typically suffers. But giving back can benefit companies long after a recession ends.


As news outlets cover the impending recession and its potential impacts, companies of all sizes are reassessing their current strategies. Traditional recession planning includes reforecasting revenue projections, layoffs, and—you guessed it—budget cuts.

Corporate philanthropy is often a casualty of those budget cuts, impacting grantees, nonprofit partners, and ultimately communities that are less equipped to withstand a recession.

After the 2007-2009 economic downturn, about two-thirds of companies reduced their cash giving—many cut contributions by more than 10%.

But is cutting back on corporate philanthropy during a recession the right approach? Corporate gifts and grants provide critical support to nonprofits and communities disproportionately affected during a recession.

“Our corporate philanthropy is more important than ever,” Rachel Hutchisson, Vice President of Global Social Responsibility at Blackbaud, said. “We see serious need in our community, especially when it comes to meeting basic human needs (i.e. food banks, shelters, etc.).”

But what happens when a company decides to reduce its corporate social investments?

A report published in the Illinois Business Law Journal noted that the banking industry was the second largest group of donors to nonprofits in 2007. When those banks reduced their contributions during the recession, nonprofits that historically relied on corporate donations from banks were left to fill a huge hole in their budget. And according to a 2009 survey by the Nonprofit Finance Fund, 52% of their 1,100 nonprofit respondents “expect[ed] the recession to have a long-term (2+ years) or permanent negative financial effect on their organizations.”

In short, reducing corporate philanthropy during a recession can impact the nonprofits a company supports and the communities they serve—immediately and well into the future.

What should companies do?

During the 2007-2009 recession, Cisco reevaluated and expanded its philanthropic approach to provide more strategic investments. One example was supporting local communities through their Silicon Valley Impact Grants and increasing their investment in community-service nonprofits near the company’s headquarters in San Jose, Calif.

“I think it’s during times of economic crisis that people need you even more,” former Cisco CEO John Chambers told The Wall Street Journal.

After the recession, Cisco found itself in a more financially resilient position than at the onset of the recession in 2007, with revenue jumping from $34.9 billion to $40 billion.

As recession-planning conversations continue in the boardroom, it’s important to remember that companies like Cisco demonstrated the ability to balance their business and philanthropic strategies during a recession—and they emerged stronger.

Here are a few ways your company can, too:

    1. Consider how philanthropy is part of your company’s brand and can help you earn your customers’ respect.

    Consumers want to know that companies care during a recession, not just when the economy is strong.

    “Not only are consumers increasingly loyal to brands that support causes they care about, they’re less likely to buy from those that don’t,” according to Business Insider’s latest Global Trends Report. The report highlights that in 2018, Nike ran an appeal to end systemic racism and committed $40 million in four years to social justice and racial equity organizations. Following that campaign with Colin Kaepernick, “it reported a sales surge of 31% for its products,” proving that consumers value when a company’s actions on critical social issues align with its brand.

    2. Start a fundraiser and consider matching to multiply your company’s corporate social investment.

    Employee giving is vital to effective corporate philanthropy that can drive a company’s revenue, even in a recession. Alan Muller and Roman Kraeussl share in the Journal of Business Ethics that employee involvement in corporate donations, for example, after a disaster, can signal to the public and investors that the philanthropy is sincere. That can earn the company reputational capital, which mitigates risk and ultimately enhances the company’s value.

    GlobalGiving allows companies to launch a fundraiser in minutes, with the option to contact the team to create a fully branded giving page. When companies match employee gifts through a fundraiser, it increases the impact of the corporate social investment and demonstrates alignment between the company and its employees.

    3. Provide paid volunteer time off or other in-kind gifts if your company cuts its charitable budget.

    For companies that reduce monetary charitable benefits for their staff, an alternative may be offering volunteer time off. Following the 2007-2009 recession, 64% of businesses offered employees paid time off to volunteer, up from 46% in 2007, according to a 2010 Giving in Numbers study.

    Volunteer time off provides a different set of employee benefits and activates the company’s resources to help recession-impacted communities in a unique way. You can also consider thanking your employees for volunteering with a GlobalGiving Gift Card!

At the beginning of the COVID-19 pandemic, companies and employees demonstrated generosity and kindness toward each other. As a recession looms, Americans will again look to company leaders and their employees to invest in their communities. Companies must think about how they want to show up when times are hard because that is what people will remember. Those that do have a chance at mitigating the impacts of the recession, while leaving a legacy of giving back when it was needed most.

Learn how GlobalGiving can support your corporate social responsibility initiatives during a recession.


Featured Photo: Support families struggling with hunger in Puebla. by Fundacion de Beneficencia Privada Banco de Alimentos Caritas Puebla

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