University of Connecticut, Center for Continuing Studies - Professional Studies

Philanthropic dollars play a surprisingly robust role in the state’s economy, but nonprofits do a poor job of documenting the economic impact of those dollars, and of telling the public exactly what they do.
Fred Carstensen, director of the Connecticut Center for Economic Analysis at the University of Connecticut, studied the impact of one corporation’s charitable contributions but his findings could be applied more broadly.

In his study of Pfizer Inc.’s activities, he found that the pharmaceutical company’s charitable contributions, in-kind donations and employee volunteer efforts generated $25 million towards the gross state product in 2001.

Carstensen says the study results were striking. He pointed out that Pfizer’s philanthropic activities created 400 jobs in the state, generated tax revenues of $4.34 million for the state and $2.57 million for municipalities.

“ There are a lot of benefits, from our estimate, by that [philanthropic] engine. … On its face, it turned out as a win, win, win kind of combination.”

Carstensen discussed the study recently at The State of Connecticut Nonprofit Sector Symposium, the first of its kind to bring together state leaders from the nonprofit, government and business sectors.
The event was organized by the Center for Continuing Studies at UConn, the Connecticut Council for Philanthropy, and the Connecticut Association of Nonprofits.

Carstensen explained that while it is understood that nonprofit cultural institutions, such as the Wadsworth Atheneum Museum of Art and the Florence Griswold Museum, play an important role in shaping the “social capital” of a community, he was struck by the impact corporate philanthropy has on the state’s economy.

“ We had had a growing appreciation of these nonprofit institutions and the way they intersected with the competitiveness of a region,” he says. “The array of services they provide, the kind of activities they support and the kind of networks they provide for people become more important than you might think initially.”

“ In the economic life of the community and the country, [these nonprofits] keep the disadvantaged off the welfare roles, and help them to avoid or recover from the pathology that drives up of the cost of government, whether it is crime, joblessness, homelessness or any of the kinds of problems we have to wrestle with. [The costs] fall back on the public sector if you don’t have a healthy nonprofit sector,” Carstensen says. The Pfizer study explains what the payoff is for that corporation’s investment in nonprofits in Connecticut, Carstensen explains. And understanding that payoff helps business leaders select the nonprofits they will support.

“ We must be extraordinarily selective and focused,” explains symposium panelist Robin Hogen, vice president of public affairs for Purdue Pharma, a pharmaceutical company in Stamford. Purdue Pharma has a $6 million fund earmarked for nonprofits.

Hogen told the audience that the business community is largely misunderstood in regard to its corporate giving policies because it turns down 98 percent of all the requests it receives. The company is very careful when it chooses which nonprofit it will partner with, he adds.
As Purdue Pharma moves towards categorizing and calculating the benefits a nonprofit provides to the state and community, it must be discriminating, he adds.

While many want to know what corporations give back to the community, the same question must be answered by nonprofits seeking corporate and public funding, symposium panelists agreed.
However, according to a UConn survey, state nonprofits aren’t communicating clearly about what it is that they do or how they benefit the community.

Christopher Barnes, associate director for both the Center for Survey Research and Analysis and the Institute of Public Affairs at UConn, told those attending the symposium that a survey of 500 randomly selected Connecticut residents don’t know what nonprofits do in their own community.

The survey also found that there is not one coherent view of nonprofits by the public, Barnes adds. “There is no defined image of nonprofits,” he explains, noting however that scandal does stick to their image.
Barnes says nonprofit leaders must provide a more coherent view to the public of what it is they do if they are to gain public support in a broader sense.

State Sen. Pro Temp. Kevin Sullivan, another panelist at the symposium, agreed, stating that nonprofits have a responsibility to help shape public opinion, and make a case for legislative-approved expenditures. But regardless of the case made by the nonprofits for funding, the legislature must have the financial means to support these programs, Sullivan says.

Hogen of Purdue Pharma suggested that corporations institutionalize their philanthropic giving so that nonprofits aren’t squeezing out those in need during economic downturns. He noted that actor Paul Newman has championed the cause that corporations increase philanthropic giving from 1.1 to 2 percent of their pretax profits, regardless of the economic tide. This, he says, would guarantee a steady source of funding for nonprofits.