“Beyond Blue has some pretty alarming statistics highlighting the number of Australians living with depression and anxiety. We are very proud to be able to contribute to their efforts in supporting education in our community about positive mental health.”
Such was the declaration made by a Brookfield Properties spokesperson when announcing a $15,000 donation to the charity at the Office Market Report lunch hosted by the Victorian division of the Property Council of Australia on August 1.
That same day, the Property Council itself announced a donation (amount not disclosed) to the Property Industry Foundation which supports youth homelessness programs.
These efforts are welcome and commendable.
Throughout the real-estate sector, however, charity donations have become fewer as confidence has waned.
Moreover, compared with those of their counterparts in other sectors, philanthropic efforts of Australia’s property and real-estate companies are modest.
In its Giving Large report for 2019, Strive Philanthropy looked at the 2018 charitable contributions across the top 50 companies in Australia who reported their community contribution relative to their pre-tax profits or earnings calculated on a three-year rolling basis over the period spanning 2016 until 2018. This included cash donations, volunteering, in-kind contributions and management costs associated with philanthropic effort.
Seven real-estate companies were included (see chart). Combined, these provided cash, time and pro-bono services worth $26 million in total or 0.31 percent of their pre-tax profit.
It is also below averages given generally. All up, companies in the consumer sector donated an average of 1.8 percent of pre-tax profits to charities and community causes. Those in finance gave 0.43 percent. Companies in healthcare and telecommunications – admittedly only one company in each sector (CSL and Telstra) – gave 1.97 percent and 0.7 percent respectively.
This was down on both 2016 and 2017, where roughly 0.45 percent was given in each year.
In terms of individual companies, Wesfarmers, CSL, Oil Search, Woolworths and Rio Tinto all contributed an amount greater than one percent of their profits or earnings toward charitable causes in 2018. Behind them, Telstra, South 32, Worley Parsons, AMP and Medibank all gave between 0.75 percent and one percent of earnings or profits.
In real-estate, Stockland was the most generous with a contribution equal to 0.75 percent of its pre-tax profit. Scentre, Vicinity Centre, Dexus, Mirvac and Charter Hall each gave less than 0.25 percent.
This is not to say that Australia’s real-estate sector is shirking its responsibility. With more than 2,200 Green Star rated projects, the property sector has made good progress in delivering buildings and infrastructure which are environmentally sustainable. With Australian and New Zealand firms consistently outperforming international peers in the Global Real-Estate Sustainability Benchmark, the Australian real-estate sector’s efforts in terms of the environmental, social and governance performance of its assets are best-practice.
Nevertheless, questions surround what lies behind the lower rate of corporate philanthropy within real-estate, how property and real-estate firms can benefit from charitable giving and the strategies which firms can adopt to derive value from any philanthropic effort in which they partake. To explore these issues, Sourceable spoke with Strive Philanthropy Director and Co-Founder Jarrod Miles as well as Philanthropy Australia Chief Executive Officer Sarah Davies.
Several factors could help explain real-estate’s low level of giving.
Unlike ‘household’ names such as Telstra, Woolworths or Medibank, several real-estate companies are less focused on the consumer side of the market. For these companies, drivers in regard to corporate responsibility centre more narrowly around stakeholder groups such as investors and employees as opposed to the general public. Thus whilst these firms face imperatives to communicate their responsibility efforts to immediate stakeholders, they have less need compared with consumer focused household brands for the broad public visibility which is afforded by charitable giving.
The report lends some support for this. Household names such as Woolworths, Wesfarmers, Telstra, Medibank and Coca Cola are all large givers. Less recognised names such as Oz Minerals, ALS and Beach Energy are less generous.
This may also explain why Stockland – with its focus on residential and retail property – is the most active giver of the seven real-estate companies reported on.
Beyond that, the cyclical and volatile nature of real-estate may cause some companies to be conservative in their giving. This could help explain the drop in real-estate donations in 2018 compared with earlier years amid the onset of the housing market downturn.
Overall, Miles says Strive Philanthropy does not have solid evidence about why some sectors and companies contribute more than others but adds that several factors could be at play. These include levels of growth and profitability as well as a relatively greater need for politically sensitive sectors such as mining compared with other sectors to operate with a ‘social licence’. Finally, he talks of a tendency to focus more heavily upon profitability or negative impacts of firms as opposed to corporate giving. This, he says, may mean that some companies whose level of giving is low compared with their peers may not be aware of this. Should this be brought to attention, some may raise their efforts.
“As a community, I think it’s fair to say that we don’t focus on corporate giving,” Miles said. “We are much more tuned into company profitability, shareholder return or placing scrutiny on firms for their negative impacts.”
“These are important topics to discuss and this should continue but lifting the share of voice on community contribution and bringing these facts to the attention of under-performing companies may well get it on their radar and act to lift company efforts in this important area. It’s quite possible that the lower performing companies are simply unaware of their lower percentage contributions versus their peers.”
Davies, meanwhile, cautions against reading too much into the data. Particularly on the development side of the real-estate, she says companies such as Grocon, Lend Lease, Stockland and others have worked proactively with governments to explore models and options for affordable housing. She commends the sector for efforts in delivering mixed communities of housing which include subsidised community housing as well as private housing along with its receptiveness to build-to-rent models as a means of delivering affordable housing.
“Many large property development companies work closely with governments around mixed housing models and build to rent developments…” Davies said. “Grocon have done a lot of this. Lend Lease have done a lot of this. Stockland have done a lot of this where they have worked with government to think more broadly about affordable housing options and models.”
“Maybe that’s not counted in a philanthropic dollar sense. That doesn’t say that they are not actually engaging significantly with broader social and community returns as well as financial returns.”
“Let’s not make assumptions or judgements about people’s behaviour. The shape of the business could mean that they are doing really powerful and important things but just in a different way (than direct charitable contributions).”
According to Davies, real-estate companies can derive greatest benefits where philanthropic efforts are aligned with their core business. In real-estate, she says provision of social and affordable housing is an example. (Another example could be the hiring of youth from disadvantaged backgrounds to be trained as apprentices on development projects.)
First, there is branding, awareness, social license and reputation. For developers, engagement in social and affordable housing projects can help not only to reinforce their reputation as a good corporate citizen but also to showcase their skills and expertise and to enhance awareness of their offerings. This can lead to further opportunities for partnerships and new business. As well, projects which involve novel approaches social and affordable housing or environmental excellence can help companies to position themselves as leaders in innovation.
When this happens, benefits accrue in two areas.
Efforts in these areas, she says, may not be reflected in raw numbers on charitable or community contributions. Thus whilst she commends the Strive report for highlighting the most active companies in regard to philanthropy, Davies urges caution in making judgements about the overall level of social or environmental contribution made by industries and firms.
Second, efforts which are aligned with the core business can help to strengthen engagement and goodwill among employees. Many within the current generation of professionals, Davies says, desire to work within companies who contribute to society and whose values are consistent with their own. Any efforts which help to make this happen also help to deliver corporate benefits in terms of morale, employee retention and productivity.
This is particularly the case where employees are aware of and engaged in the activity in question. One way this could be achieved is through volunteering programs or programs which are integrated and enable workers to use their skills in a way which is socially beneficial whilst simultaneously fulfilling their professional roles. Other ways include giving circles, setting up charitable donations through payroll, matched giving, social procurement and giving which is integrated with volunteering.
She says community engagement should be built into core business strategies and considered during organisational planning.
Miles offers a complementary perspective. He encourages all companies to seek out initiatives which maximise both social/environmental impact as well as bottom-line benefits. For real-estate firms, he encourages striking a balance between directing funds to causes which align with stakeholder and employee interests and which deliver maximum benefits both to society and to the corporation’s own profitability.
When going about this, Miles encourages companies to understand and assess the degree of social or environmental benefits which their donations are having. Toward this end, he recommends partnering with organisation such as Corporate Citizenship, who have developed a global standard for measuring and managing community impact.
He says there is growing evidence surrounding the business case for corporate donations.
“It is always true that we could do more and we could do it better,” Davies said.
“There will be organisations that do nothing. That’s not good.
Finally, Davies says more can be done notwithstanding existing effort.
“There are organisations doing this terrifically well. We need to celebrate them and use them as case studies for others to simulate and follow.
“There will be a breadth of practice, but the short response is that we need more.”