The Pakistani Gordon Gekkos also have a softer side

Survey shows companies increasingly giving away money in philanthropy.

KARACHI:

Publicly listed companies (PLCs) spent Rs3.8 billion in 2011 on philanthropy, which is 15% higher than what they gave away in 2010, says a survey conducted by the Pakistan Centre for Philanthropy (PCP).

Released on Wednesday, in a ceremony attended by the top corporate leaders of Pakistan, the survey documents, quantifies and analyses patterns of philanthropic activities of PLCs, besides ranking them in terms of their giving.

As a percentage of profit before tax, PLCs’ contribution for 2011 stood at 0.7% on average, which is lower than the ‘best’ global practice of setting aside 1% of untaxed earnings for philanthropic causes. Interestingly, while untaxed profits of PLCs increased by 28% in 2011 compared to 2010, the rise in total donations was only 15% over the same year. Still, 2011 remained the “most philanthropically active year to date” because of the impressive growth in the size of companies’ profits, and the corresponding growth in donations.

Total donations by PLCs increased almost 17 fold from Rs228 million in 2000 to Rs3.8 billion in 2011, reflecting an annualised increase of almost 30%.



Out of the 624 PLCs registered on the Karachi Stock Exchange as of December 31, 2011, 79 were not included in the survey because of the unavailability of their financial accounts. Another 55 companies were excluded because they were mutual funds. Out of the remaining 490 companies, 58% practiced some form of corporate philanthropy during 2011: an increase of 11% from the preceding year.

The top five PLCs, by the size of their donations during 2011, were Pakistan Petroleum (Rs844 million), Habib Bank (Rs253 million), the Oil and Gas Development Company (Rs220 million), Fauji Fertilizer (Rs204 million) and Engro Corporation (Rs117 million).

However, if seen in terms of donations as a percentage of their respective untaxed profits, the top five companies in 2011 were IGI Insurance (39.2%), Leiner Pak Gelatine (36.4%), Fateh Textile Mills (18.5%), Descon Chemicals (18%) and Pak Datacom (15.5%).

In terms of average donations per firm, the oil and gas sector ranked first – with an estimated contribution of Rs112.6 million from each of the 11 companies belonging to the sector. Banks, travel and leisure, software and computer services, and healthcare equipment and services sectors ranked second, third, fourth and fifth, respectively, as per the average size of donations per company.



Out of the 490 companies, 205 did not make any contributions in 2011, down from 256 from the previous year. Almost 19% of the companies surveyed donated less than Rs500,000 in 2011. The number of companies that gave away more than Rs5 million was 76 in 2011, up from 59 in 2010. More notably, only 12 companies had spent that much on philanthropy in 2000.

Published in The Express Tribune, December 13^th, 2012.