Budgetary Sleight of Hand

Yesterday’s post about the $300 million of Katrina donations by businesses triggered this anecdote from a friend who leads a non-profit housing group in Minnesota. He was on the phone last week with a few companies that have consistently supported his organization. And, he was told, “Don’t expect the same — if any — financial support this year. We’ve given to Katrina.”

These corporations, like many, may have budgetary limits for giving. That makes sense. Gifts are like any other item (e.g. inventory, salaries, new product development and so on). Good business practice demands careful attention to how resources are allocated. Among other things, that means budgeting and planning.

Yet, the question still arises whether — in a crisis like Katrina — sticking to the budget is the wisest choice. The most chilling words my friend heard were ‘if any”. Non-profit organizations are especially dependent on consistency in gifts — it’s one of the rare sources enabling them to do planning and budgeting. Pulling the plug is, therefore, particularly damaging.

Katrina was a huge catastrophe. For businesses truly affected — like those in the Gulf Coast — it means severe adjustments to every single item in budgets. But for those not affected, the shifting of gifts from one beneficiary (my friend) to another (Katrina) without increasing the budget for gifts is a cruel sleight of hand. It will look good on the corporate website and PR (“We gave $$$$ to Katrina.”) But the public and investors are not likely to understand the corollary (“We didn’t give $$$ as we always have to the following organizations…).

It also raises this question about value and values: If a corporation not directly affected by Katrina doesn’t raise the budget for giving, have they actually given?

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