For release: Tuesday, October 9, 2007 8:30 AM PDT

Contact:
Chris Peacock, 650-450-5400

NEW STUDY ON CORPORATE PHILANTHROPY IN SILICON VALLEY REVEALS IMPORTANT TRENDS IN GIVING

72% of Firms Surveyed Give Locally,
Most to Education, Health & Human Services

Mountain View, CA — The new Silicon Valley Community Foundation today released its first study, Corporate Philanthropy in Silicon Valley (PDF), which explores the scope and impact of corporate giving in Silicon Valley. The study also reveals multiple approaches, innovative yardsticks, intriguing predictions and unusual incentives.

Nearly three out of four Silicon Valley firms in the study make gifts locally, and education and health & human services are the leading recipients, according to the report from the community foundation, which serves San Mateo and Santa Clara counties. It conducted the study to learn more about the impact companies based in Silicon Valley make with a full array of resources – financial and human.

The study examines corporate giving in Silicon Valley from 2006-2007, offering a snapshot of what corporate philanthropy programs in the region look like, how much firms give, how much employees volunteer and which causes benefit. LaFrance Associates LLC, a San Francisco-based research firm, conducted the study, which is based on survey data from a sample of 100 Silicon Valley firms, 10 key in-depth interviews and a literature review including national studies.

“The name ‘Silicon Valley’ is synonymous with innovation, in business and philanthropy,” said Emmett D. Carson, Ph.D., CEO and president of the community foundation and a former chair of the Council on Foundations board. “If the great minds behind the innovations that have changed the world are unleashed in our own back yard, just imagine the possibilities for our community.”

“We hope the data and story this study shares inspire even more Silicon Valley firms to follow their lead,” said Peter Hero, senior advisor to the community foundation. “These results offer a pathway they can follow and highlight the many right ways in which to tread the path.”

Many ages, types and industries

The sample, although relatively small, represents firms from a range of ages, types of ownership and industries. The responding firms were evenly distributed in terms of age. The largest percent of firms which responded were between 11-25 years old, with a mean age of 26 and a median age of 20. As for ownership, responding firms were split down the middle. Some 44% of firms surveyed were privately held; 43% were publicly traded. The highest concentration of firms (31%) were information technology (IT) companies, followed by (21%) professional and business services and (20%) financial services firms.

Key findings

Among the key findings were:

• In a year, a typical Silicon Valley firm surveyed reports donating $80,000 a year in total giving, including corporate cash, foundation cash and non-cash gifts as well as nearly 900 employee volunteer hours;
• Almost three out of four Silicon Valley firms (72%) give locally;
• Education (77%) and health and human services (81%) attract the most corporate giving, more than the environment, arts or civic groups. For all issue areas, a large majority of firms report that over the past two years (2005-6), their giving either held steady or increased. But 16% of firms report a drop in giving to arts/culture;
• More than half the firms report plans to increase their giving to education. There may, however, be a faster pace in environmental giving growth, with 36% of firms reporting a planned environmental giving increase in 2007-8, compared with 25% that reported increased environmental giving in 2005-6;
• Nearly two out of three firms (63%) report having programs to encourage employee volunteerism and employee donations (65%), the most popular being company-sponsored drives for food, clothing, books, toys, etc.;
• Natural disasters, from the Southeast Asian tsunami to the Gulf Coast Hurricanes Katrina and Rita stimulated corporate giving, with the most common response (90%) being targeted cash for disaster relief. As a result of several major natural disasters from 2005-6, firms (71%) began developing formal guidelines, creating reserve funds and raising limits of employee matching funds;
• More than half (54%) of firms report engaging partners in their corporate giving;
• More giving by Silicon Valley companies goes to local or international organizations than to national organizations.

Multiple approaches

Giving included many avenues, from corporate dollars, corporate foundations and donor- advised funds to non-cash gifts (products and services) and employee volunteer time. Firms tended to give more in cash than in non-cash (products and services) and much more – nearly half their contributions – through direct corporate cash (46%) than through corporate foundations or donor advised funds (14%), although 30% of firms surveyed reported having those giving vehicles.

One quarter of the firms surveyed made more than $1 million in corporate cash contributions in 2006. In philanthropy, the researchers note, it’s easy to focus on cash and grant size. However, they point out the importance of non-cash gifts, such as clearinghouses for goods and services, new and used products, assets such as space for events and the expertise of employee volunteers.

Over 51% of firms report making gifts of products, with twice as many reporting donating new products (44%) as donating used ones (20%). Such donations, the study notes, including donated office space and equipment can be extremely valuable to cash-strapped nonprofits.

Most smaller firms house corporate philanthropy in the office of the CEO. Larger firms also locate the function in human resources, marketing or community affairs departments.

The amount of giving varied widely by industry. IT firms had by far the highest averages in both cash and non-cash giving. IT firms reported giving over twice the cash average of financial services firms, their nearest competitors. On average, the IT firms surveyed gave about 43 times the non-cash contributions that financial firms gave. Many gave away software, which tends to have a high fair market value, along with training and technical assistance by employee volunteers.

Innovative Yardsticks

How does giving by Silicon Valley firms compare with corporate philanthropy nationally? According to LaFrance Associates, although the median total giving in the Corporate Giving Standards 2006, an often-cited national study, was $29 million, because the LaFrance Associates survey includes many smaller firms, the researchers conclude that Silicon Valley firms are probably on par with the typical U.S. company.

“The results were encouraging,” said LaFrance Associates principal Steven LaFrance. “By national standards, we found a strong commitment to corporate philanthropy, even among smaller and newer firms.”

Firms in the community foundation’s study give far more than the typical national firm when giving is measured as a percentage of revenue and pretax profit: 1% of revenue for median Silicon Valley firms compared with 0.1% of revenue of U.S. firms; 3% of pre-tax profit for Silicon Valley firms compared with 0.9% of pre-tax profit for U.S. firms.

“Companies can make sure to encourage and support employees who go the extra mile,” Carson said. “Encouraging corporate citizenship at home and abroad reinforces the reality that we are all in this world together.”