Thinking More Globally, Giving Less Locally
Tuesday, December 18, 2007
AOL is scaling back its philanthropic contributions in the Washington region as it reinvents itself as a global Internet advertising firm.
This month, AOL cut funding to the Loudoun Foundation's annual summer music festival, an event it co-founded and to which it donated $60,000 to $80,000 each year. The company previously shuttered its AOL Aspires grant program, which funded activities for scores of local schools, and halted its annual pledge to Greater D.C. Cares. Loudoun Youth Inc. received what it regards as its last AOL check this year. And AOL has eliminated a community investment office through several rounds of layoffs.
The shift is part of AOL's new business strategy, focusing on online advertising. The firm recently moved its headquarters from Dulles to New York and expanded operations outside the United States, launching portals across Europe.
"In the past, we focused on Northern Virginia, but our aspiration is to really reflect the areas where we have a major presence, which now includes Bangalore, [India]; London; New York and Mountain View, [Calif.]," said AOL spokeswoman Anne Bentley, who heads a smaller community-investment group. AOL plans to announce global giving initiatives in early 2008.
In 1998, as the dot-com bubble grew, AOL rose to become the region's 16th-largest giver, with cash expenditures of $1.3 million, The Post reported. AOL also donated $7.6 million worth of "in kind" goods, including high-tech equipment, to nonprofit organizations.
But the landscape has changed.
AOL laid off 20 percent of its global workforce, which included 750 workers in the Washington area, in October. One of those who got a pink slip was the company's primary contact with nonprofit groups and schools. The torch has since been picked up by other corporate communications employees.
"We found ourselves dealing with new people who didn't have the attachment the people in those divisions before did," said Tom Simmons, a Loudoun Foundation board member.
AOL's philanthropic restructuring comes as multinational corporations increasingly look abroad to spread their donations. Grants from U.S. companies to organizations serving international recipients increased 34 percent from 2004 to 2006, according to a recent report by the Committee Encouraging Corporate Philanthropy, a forum of executives.
As a result, U.S. nonprofit organizations must compete for fewer dollars, said Robert Egger, president of D.C. Central Kitchen.
"The nonprofit sector in America has grown used to the assumption that annually they'll be getting corporate checks," Egger said.
At its height, AOL donated about $200,000 a year to Greater D.C. Cares, a group that coordinates volunteering and business philanthropic efforts and had an AOL representative sitting on the group's board, said Jennifer Lindsay, director of businesses services for the nonprofit group.
"They've been a longtime, very valued partner," Lindsay said.
For the past four years, AOL has been the primary sponsor of the Loudoun Summer Music Fest, bringing big names like Peter Frampton and Lynyrd Skynyrd. In July, the Loudoun Foundation said its festival would be in AOL's 2008 budget.
But after AOL's original community investment team dissolved, Tracey Parent, the foundation's president, said she repeatedly called AOL staff members, even leaving a message for chief executive Randy Falco.
"We'll let you know what we're going to do," Parent recalls being told by one employee.
"You don't understand," Parent said she replied. "The funding in January pays all the band deposits and everything else. Any other answer than 'The check is still coming,' that's going to put us in a terrible position."
Just a month before the time of year when it typically received funding, the foundation got an e-mail stating that the event no longer fit the company's goals.
"We had the wind taken out of us a little bit," Simmons said.
The AOL Aspires grant, which awarded funds to about 10 schools for after-school programs each year, ran out of financial and personnel resources, Bentley said. AOL handed out the $17,500 grants in three-year installments and hosted a biannual training workshop for school leaders. But when it closed the program, schools that were awarded the grant in 2005 and 2006 did not receive their remaining payments.
Kingsview Middle School in Germantown started Fathers Circle, a program that encouraged African American fathers to participate in their children's education, in 2006. Kingsview took eighth-graders on a college tour with their fathers and sponsored monthly family nights to teach parents math and literacy strategies for schoolwork. Without AOL's funds this year, the school charged students $30 each for the trip and cut the number of family nights in half.
Loudoun Youth received a $75,000 grant in February with an indication that it would probably be its last. AOL had been involved with the initiative since its early days as a small county steering committee and annually sponsored its annual youth conference.
"We got a little lazy," said Tim Chesnutt, director of the county arm of the nonprofit group. "We took it for granted. While it was a rude awakening, it was one that we needed."