Corporate ‘donations’: all sizzle and no sausage?

The Australia Institute’s report, Bringing Transparency to Corporate Charity, is clear about its aim of making businesses accountable for their claims of generosity.

“There are currently no disclosure standards for Australian companies’ charitable spending,” it says. “This means claims of corporate giving are hard to verify and frequently dubious. Clear and consistent disclosure standards would help investors, consumers, and the public make more informed decisions.”

The Australia Institute said its research found that more than half the value of reported contributions by 20 of Australia’s biggest corporations was questionable.

“The Albanese government has a target of doubling philanthropy by 2030, but for this to be realised, Australia needs businesses to get on board and be transparent in their philanthropic activities and reporting,” said the director of the institute’s democracy and accountability program, Bill Browne.

“Companies like to talk up their charitable giving, but some provide such limited and self-interested documentation that it’s impossible for the public to judge which companies are truly generous and which are just good at PR,” he said.

“If a mate claimed they were very generous because they convinced someone else to give to charity, you’d think they were joking. But that’s the kind of thing companies say in their corporate reporting.

“Companies win a social licence to operate based, in part, on how they give back to the community. If the public can’t assess how much they give back, then those social licences are on shaky ground,” he said.

The Australia Institute said information on philanthropic donations by big business was “limited and confusing”.

“While companies claim they give tens or hundreds of millions of dollars to the community each year, only a fraction comes in the form of charitable donations,” it said.

Of the 20 major companies examined in the report, the Australia Institute said it believed 12 had counted questionable handouts towards their overall community contribution.

It said that of combined expenditure amounting to $1.8 billion, $905 million consisted of “dubious claims” and $204 million could not be accurately categorised because of lack of information.

Counting sponsorship deals, employee support and donations from customers as part of the company’s contributions to the community were all examples of “dubious claims”.

Recommendations already exist for solution

Last year’s Productivity Commission report Future Foundations for Giving examined corporate giving and warned of a lack of comparable data for measurement and reporting, with no consistent naming conventions or reporting requirements for corporate philanthropic activity. It pointed to a submission by Workplace Giving Australia, which said, “This has led to a rise in labelling that tends to mean something but is unclear or at times misleading to the community, donors and workers.”

Philanthropy Australia’s Krystian Seibert, who was an associate commissioner with the Productivity Commission’s inquiry, said recommendations from Future Foundations for Giving offered measures to ensure corporate giving was transparent and its impact was clearly understood.

“The Productivity Commission’s philanthropy inquiry recognised that there would be benefits to enhanced transparency and better information about corporate giving,” Seibert told the Community Advocate.

“For this reason, it recommended that the Australian Government introduce a requirement for listed companies to publicly report itemised information on their donations to entities with deductible gift recipient (DGR) status. This would improve the information available to a company’s stakeholders, including shareholders, employees and customers.

“It also recommended that the Australian Taxation Office should collect information on such giving through the company tax return. This would help provide a clearer picture on overall levels of corporate giving from larger companies, including trends in support.”

Seibert added that while he believed it was important to enhance transparency, it was also essential to acknowledge the high level of potential impact big corporates could offer. “Corporate giving is an important source of support for many Australian charities, and it’s great to see so many businesses making a wider contribution to the community in this way,” he said. “It’s certainly something to foster and encourage as part of efforts to strengthen giving in Australia.”

Questionable claims

The Australia Institute report on corporate giving offered specific examples of what it said were companies attempting to overinflate their corporate generosity, including:

• Banks claiming the fees they waive to some customers as part of their corporate giving. The Commonwealth Bank listed $274 million in forgone revenue (such as fees waived for benefit recipients and not-for-profit organisations) as “community investment”.
  

• Westpac providing “just a tiny fraction” of the funding for the beach rescue helicopters that carry its name and logo, but counting sponsorships against its overall “community investment” figures.

• Woolworths referring to support worth $143 million as “direct community contribution”, even though only $15 million consisted of financial support donated by the company, while $81 million was donated surplus food. The report says it’s unlikely Woolworths could sell that food and the company may actually be saving on disposal costs by giving it away.
  

• Wesfarmers appearing to claim money paid by customers at charity sausage sizzles outside their Bunnings stores as part of its own charitable contribution. This is neither Bunnings’ money nor Bunnings fundraising, the report said.

The Australia Institute has called for a clear, unified standard for corporate philanthropic donations, which it said should list direct charitable donations and activities separately from other contributions.

“This would allow investors, consumers, and the general public to compare and evaluate companies, meaning they can make more informed decisions in their investments, consumption and voting. We recommend that the Australian Securities Exchange (“ASX”) require all companies above a certain size (say $1 billion in market capitalisation) to disclose their philanthropic activity,” the report said.

“This disclosure should be:

• Made on the company in question’s reporting date;

• Included in the company’s annual report;

• Itemised into clearly defined legitimate categories of philanthropy;

• Presented in a consistent template; and

• Audited or otherwise independently verified.

“The cost of such disclosure would be negligible for these large companies. The benefit to stakeholders, by contrast, would be significant,” it said.

Charities Minister Andrew Leigh was asked for comment.

More information

Australia Institute report: Bringing Transparency to Corporate Charity: Disclosure standards for corporate giving

Productivity Commission report: Future Foundations for Giving: Inquiry report