In the aftermath of the killing of George Floyd and resulting widespread social upheaval of 2020, many US corporations committed to large-scale philanthropic investments to combat racial inequity. More than a year later, are they following through on their commitments?
A new report by The Conference Board shows many leading US companies’ dedication to addressing racism. Nearly all respondents to org’s survey said they made their commitments because it’s consistent with their company’s values. Half made financial commitments for at least five years or an indeterminate period—a sign companies are in this for the long haul. And half of the companies’ financial commitments originated from the CEO—an indication of senior management’s support for these efforts.
At the same time, the findings reveal opportunities to optimize the impact of these investments
Companies can better collaborate with each other and government: 85 percent noted they are working to address racial inequity alone. Companies also have an opportunity to better balance the speed at which they respond to social issues with the amount of internal preparation they do before making public statements. In addition, companies should ask themselves whether they are having candid dialogues with their non-profit grantees: 61 percent reported no challenges with their grantee organizations—a sign companies may not be hearing the fully story.
Survey highlights include:
In it for the long haul: Many companies are making long-term investments in racial equity
Question: What is the time frame associated with your company’s financial commitment or donation?
- Indeterminate or greater than five years: 51 percent
- Three to five Years: 26 percent
- One to three years: 23 percent
Why did companies make investments in racial equity? Primarily because the issue aligned with their values & they had an ability to make a lasting difference
Question: What were the reason(s) for your company’s financial commitment or donation (check all that apply).
- Alignment with company values: 84 percent
- Ability to make an enduring change: 51 percent
- Alignment with the company’s core business: 31 percent
- Pressure from employees: 22 percent
CEOs primarily made the call to invest, a sign the issue will remain a priority for their companies
Question: Who made the decision to make the financial commitment or donation?
- CEO or equivalent: 50 percent
- Foundation board: 15 percent
- Senior management of the company: 11 percent
A possible blind spot: Most companies report no challenges working with their nonprofit partners
Question: Which, if any, of the following challenges to managing the funding your company is providing have arisen with potential and/or existing grantee organizations.
- No challenges yet: 61 percent
- Insufficient expertise/capacity needed to achieve our goals: 8 percent
- Refusal or reluctance to accept corporate donations: 7 percent
- Unable to effectively take on new financial support: 7 percent
- Difficulty in reaching agreement on program outcomes: 7 percent
“Notably, 61 percent of respondents report having ‘no challenges yet’ with grantee organizations in connection with managing the funding they provide,” said Paul Washington, Executive Director of The Conference Board ESG Center. “On the surface this seems like good news, but it may actually indicate that companies are not hearing the full story from their non-profit partners. To help maximize impact, companies should consider having deeper, more candid dialogues with their non-profit partners about their capabilities and challenges.”
Lack of collaboration among companies may be decreasing the potential impact of investments
Question: Was your company’s financial commitment or donation made in collaboration with any other companies?
- No: 85 percent of respondents indicated they are working alone.
“Companies can increase their impact by working with each other as well as with national and local public policymakers,” said Robert Schwarz, the author of the report and Senior Researcher at The Conference Board ESG Center. “While the ‘go it alone’ approach was understandable given companies’ desire to provide an immediate response following George Floyd’s death, as companies move into the implementation phase, they should look for opportunities to collaborate with each other and policymakers.”
Who’s receiving the funding? Companies are splitting donations between national & local groups.
Question: Indicate the approximate percentage of the funding your company is providing to the following types of organizations.
- National: 42 percent
- Community-based: 43 percent
- State: 10 percent
- International: 5 percent
“With 43 percent of respondent companies’ funding going to national organizations, and 42 percent going to community-based groups, this two-tiered approach is likely to prove effective,” said Jeff Hoffman, Leader of the Corporate Citizenship and Philanthropy area at The Conference Board. “Indeed, national problems need to be addressed at the local level. We expect most companies to continue to adopt this hybrid approach.”
Amid increasing pressure from stakeholders, companies can expect more demands for objective, empirical measures detailing the outcomes of their efforts
Question: What percentage of the funding your company is providing is linked to specific, quantified outcomes?
- 0 percent of funding: 49 percent
- 1—49 percent of funding: 17 percent
- 50—99 percent of funding: 100 percent
- 100 percent of funding: 12 percent
The report’s insights are from a roundtable and survey of corporate citizenship executives conducted by The Conference Board ESG Center. In the survey, more than 70 percent of the responses came from those at companies with annual revenues of $10 billion or more.