Reading tea leaves #18: business that engages with communities defy recessionary trends

Reading tea leaves #18: business that engages with communities defy recessionary trends

News (UK)

Despite the recession, more than half of small firms in the UK are providing support to charities, according to new research from Barclays.

The survey of more than 1,000 small and medium-sized businesses found 59% of respondents give to charity, in cash, pro bono or in kind.

A quarter of the 1000 respondents described their businesses as ‘in recovery’ while half said they had yet to see any upturn, but across both groups, 36% said the amount they give to charity has stayed the same over the last 18 months and 5% said their giving had increased.

Many small firms think they are the best people to help out good causes: one in five (18%) said small businesses can be more focussed in their support for charity than bigger firms and a third (31%) claimed businesses should support good causes, even when times are tough. Looking ahead, 16% said they would give more to charity after the recession as they would have more money to give. Almost three quarters (71%) claim that in 2010 they will maintain levels of giving to charity.

Steve Cooper, Managing Director of Barclays Local Business, said: "The recession provided a powerful incentive to take an axe to the non-essentials - but that hasn't happened with support for charities. The research shows that over half of local businesses see their charity work as a responsibility to the community, not a result of boom time generosity, and they can't and won't walk away from it. At a grassroots level they are an army working to better our society."

On the contrary, corporate charitable giving is expected to see a substantial drop as a result of the economic downturn according to a survey of 450 senior business leaders in the UK published in March this year.

Donations were expected to drop by 34% this year, with 60% of respondents expecting their organisation to cut charity budgets, according to the survey, commissioned by The Social Investment Consultancy and carried out by YouGovStone.

Jake Hayman, CEO of The Social Investment Consultancy (TSIC), who commissioned the research said: "In these cash strapped times, businesses clearly cannot afford to sustain their current levels of charitable donations. These cutbacks will either expose corporations as fair-weather donors, or it could mean they apply themselves to develop more innovative ways of supporting communities. The truth is there are plenty of things companies can do to maintain strong partnerships with good causes that can build rather than hit the bottom line."

It is estimated around £1.4 bn a year in revenue and support is given by corporates each year to good causes - this value however includes giving in kind.

According to Cathy Pharoah at the ESRC Research Centre for Charitable Giving and Philanthropy at Cass Business School, corporate giving accounts for only 1% to 3% of all charity-sector income.

Though there is little data to compare CSR over the years or to predict trends, it being a relatively new strategy, what is expected is that where it has been merely a PR exercise it is least likely to survive.

Social enterprises – organisations whose engagement with communities and people in need is part of their DNA – are also bucking recessionary trends, according to recent research. More than half of social enterprises have seen their turnovers grow during the recession, according to a survey by the Social Enterprise Coalition.

The State of Social Enterprise report, released on November 19th to coincide with Social Enterprise Day said that 56% of 962 organisations in the poll had increased their turnovers. Only 20% had seen them fall.

The report pointed out that the Small Business Barometer 2009 showed that, by contrast, 43% of private sector businesses of a similar size had seen their turnovers drop, and only 20% had seen them rise.

The report pointed out that this showed that, by contrast, 43% of private sector businesses of a similar size had seen their turnovers drop, and only 20% had seen them rise.

Jonathan Bland, outgoing chief executive of the coalition, says "It is evidence of a shift towards more people engaging with businesses whose bottom line includes social and environmental benefit."

Perhaps it is an indication that businesses which engage deeply in helping those in need, in the long run, see the best returns.

  • Business/corporate philanthropy
  • UK