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Corporations donate without reason

Companies like to decorate themselves by supporting charitable projects. But the arbitrariness of donations is great. Even Dax corporations often don’t even check what their millions do.

Matthias Brückmann took the good deed easily. The Klitschko brothers, known as boxers in Germany, had invited to a fundraising gala of their foundation. So Brückmann, head of the energy supplier EWE, flew with his wife to Ukraine. The atmosphere at the party was obviously so good that Brückmann spontaneously promised a large donation from his company: 253,000 euros. Without internal scrutiny, without questioning its bodies.

What comes out like a spontaneous decision in the manner of a landlord is typical of German companies. While they rely on core competencies, knowledge advances and precision in their business, they don’t take their donations very seriously. Then the mood of a board can decide on a small fortune. Millions are going into projects whose impact no one knows for sure.
Sobering result

Even the 30 Dax companies lack professionalism in their benefits. Together, they spend more than half a billion euros a year on corporate citizenship. But hardly any company takes the trouble to check what the money brings. Many don’t even know exactly where it’s going.
This is the result of a study exclusively available to the “world”. Management consultants from Beyond Philanthropy and Goetzpartners have researched sustainability reports, evaluated information on the internet and made direct inquiries to the companies.

Sobering: Only 19 out of 30 corporations can quantify what they donate – whether in the form of money, tangible assets such as medicines or the time spent by their employees. One in three Dax companies does not give figures on non-profit spending.

“Experience shows that the lack of transparency to the outside world often goes hand in hand with a lack of knowledge and focus in the company,” says Michael Alberg-Seberich, Managing Director of Beyond Philanthropy, which grew out of an NGO.
Sometimes this, sometimes the

International experts have long advised companies to limit their benefits to a few topics in which they are familiar. Ideally, they not only give money, but also know-how. So far, German corporations have lacked this focus. Only five of the Dax-30 limit their benefits to one or two themes.

The others use this, sometimes that. The Alliance, for example, alone finances 14 different foundations. Their tasks are as colourful as life: they help the victims of earthquakes, organize conferences for young writers or protect wild cats in the Rhön.

Helmut Anheier, sociologist and president of the Hertie School of Governance, has identified a cardinal error in corporations: “They too often understand corporate responsibility as a charity or a gift.” But it is about active engagement. That’s why you’re conscious about the company’s environment. Many medium-sized companies have long been more professional than some Dax Companies. The study confirms this finding.

Two notable exceptions

The worst way is the energy supplier E.on, which, according to the authors, has no discernible strategy for its social commitment. In fact, E.on lists seven areas for engagement in its sustainability report.

With this lack of overview, it is not surprising that some companies are not even trying to find out whether their donations make a difference. According to the study, only five of the 30 Dax companies analyse exactly the benefits of their social commitment.

The chemical and pharmaceutical giant Merck and Deutsche Telekom are notable exceptions. These two companies also make sure that their social commitment has to do with their core business. Merck is working with the World Health Organization to eradicate a specific worm disease. Telekom promotes the media literacy of Germans.

The boundaries are fluid

“Companies should limit their exposure to a few activities related to the core business,” advises Armin Raffalski, one of the study’s authors. “This allows them to contribute their expertise and achieve a greater impact.”

The drive to strive for excellence in social engagement must come from the companies themselves. Although the Bundestag passed a new law in March, according to which large companies will also have to account for their social and ecological actions in the future – however, this requirement only applies to the core business, donations are not included.

In practice, however, the boundaries between sponsorship, which focuses on the commercial interest of companies, and social engagement are often fluid. Whether a race with a company logo or the exhibition space for young artists – what is a benefit, what marketing?
Job lost

For Anael Labigne, a good partnership is most important for social projects. “Ideally, both sides can learn from each other,” says the expert on corporate engagement at the Donors’ Association, in which around 3,000 companies and 600 foundations are members.

Large companies in particular will become more professional in their benefits in the future, he believes. This is supported by the fact that consulting firms such as EY and Roland Berger now have their own corporate citizenship experts. The organization Phineo, which trusts BMW heiress Susanne Klatten among others, has also developed an “Acts” seal for non-profit organizations.

EWE CEO Brückmann, by the way, has since lost his job because of the spontaneous donation to the Klitschko brothers. The Supervisory Board dismissed him – and vowed improvement: All compliance measures would now be put to the test. Shareholders and employees are owed this.