UK’s Top Companies Are Scaling Back Charitable Gifts

(Photo Credit: Micheile Henderson/Unsplash)

Sign up for smart news, insights, and analysis on the biggest financial stories of the day.

They can’t spare a dime…and would just as soon keep it even if they could.

Companies listed on the UK’s FTSE 100 index have seen profits collectively triple over the last six years, but their charitable donations haven’t kept pace amid rampant inflation, the Financial Times reported.

Donation Basket Feels Light

In 2022, the top 100 companies donated £1.85 billion ($2.4 billion) to charity. That’s roughly the same amount as in 2016, but the total accounted for only 0.8% of pre-tax profits, down from 2.4% in 2016. Charities Aid Foundation CEO Neil Heslop told the FT that if the percentage held up, the total would have checked in at £5.59 billion in 2022.

The downward slide comes as many UK citizens struggle with a cost-of-living crisis:

  • Historically, inflation has hit the UK harder than fellow G7 economies, and it remains the case. A Reuters poll of London economists expects the UK’s inflation rate for June will fall but still remain above 8%, compared to much lower rates than Germany or France. Food inflation has been particularly sharp in the UK, peaking at more than 19% over the past year, according to the FT, a direct effect of its status as the world’s third-largest net importer of food and drink, behind China and Japan.
  • It’s not just corporations either. A CAF report found that fewer individuals are volunteering in charitable activities and are likely to donate less than before the pandemic with roughly 70% saying they would need to make cuts to their spending to help manage bills, including 17% who said they would be likely to cut their charitable donations.

Despite the less-than-ideal donations, some companies, especially those in the medical sector, stood out as exceptionally generous. The FT reported that “healthcare companies gave more to charity than any other relative to their earnings, contributing 2.95 per cent of pre-tax profits. GSK’s contributions amounted to 5.47 per cent of pre-tax profits, a higher proportion than any other company.”