Cost of Frequent Mega Disasters Raising the Stakes for Corporations

September 30, 2019

In the 1980s, Ryder System, Inc. was one of hundreds of companies giving modest yearly donations to the American Red Cross. The organization regularly appeared on a list of 150 charities Ryder supported. Then came Hurricane Andrew.

In 1992, the deadly Category 5 storm tore through large swaths of South Florida resulting in 17 deaths and more than $27 billion in damages. Although Andrew missed Ryder’s headquarters, it struck the homes of one-fifth of the company’s 2,000 Miami-area employees. With the lives of so many employees affected and the community hobbled, Ryder stepped into the gap—turning the lobby of its headquarters into an emergency aid center for displaced workers and their families; providing transportation services and teams of employee volunteers to aid relief efforts; and donating $2.5 million to help rebuild the community where the company was founded.

“That experience was a lesson learned. We found that we were resilient as a company and a community, but what also stood out was the critical need for greater preparedness,” said Ryder CEO Robert Sanchez who joined the company the year after Andrew as the community was continuing to rebuild. “One important result was the expansion of our partnership with the American Red Cross.”

More than 25 years later, the lessons of Hurricane Andrew are still reflected in Ryder’s preparedness strategies and the funding priorities of the Ryder Charitable Foundation. The company is a Disaster Responder member of the Red Cross Annual Disaster Giving Program, a coordinated corporate giving network, which provides dollars, supplies, and expertise to prepare and get critical aid to disasters. Ryder also partners with Feeding America affiliated food banks, local United Ways and other charitable organizations to provide aid to those in need.

With catastrophic weather and other events occurring so frequently, more companies are facing a similar challenge. Corporations are playing a critical supporting role as the federal government and financially-strapped local communities try to prepare, respond, and rebuild in multiple locations at once. In 2017, 16 separate weather and climate disasters—all costing a billion dollars or more—impacted the U.S. from coast to coast. These included wildfires, floods, tornadoes, and hurricanes.

In 2018, the trend continued with wildfires destroying nearly 2 million acres of California forests. And, so far in 2019, flooding has devastated a number of communities in the Midwest, and Hurricane Dorian has caused catastrophic damage in the Bahamas, as well as flooding and damaging in the Southeast U.S.

Surveys have confirmed that much of corporate disaster giving is driven by proximity to the disaster and the impact on employees. With the increase in disasters, corporate giving for disaster relief has surged in recent years. From 2014 to 2017, corporate disaster relief efforts increased by more than 300 percent in terms of median cash giving and by 208 percent in total cash giving, according to the 2018 Giving in Numbers report. The annual report was produced by The Conference Board, a global independent business and research organization and Chief Executives for Corporate Purpose (CECP), a CEO-led coalition founded in 1999 by philanthropist and actor Paul Newman and other business leaders. Report data was gathered from a survey of more than 250 corporate participants including PepsiCo, The Walt Disney Company, and CVS Health.

Almost half of companies surveyed prepare through strategic partnerships. The American Red Cross is the number one non-profit disaster relief partner among corporations. In addition to providing cash, a coordinated strategic approach allows donors to help by doing what they do best. For example, Ryder provides transportation and logistics assistance, as well as funding.

With 300,000 volunteers who respond to more than 60,000 disasters on average each year, the American Red Cross is also the leading authority on disaster response and recovery. Founded in 1881 by Clara Barton, the American Red Cross received its Congressional charter in 1900. It is tasked by the federal government with providing disaster relief, related communications, and other support to the U.S. military.

Corporations are critical to disaster philanthropy, not just because of the dollars they provide. They are often more nimble than governments in reacting to disasters, providing dollars and services minus the red tape. Companies also have another critical resource: employees. With corporate support, employees volunteer, often in large numbers, to fill service gaps in devastated communities. Given scientists’ predictions of more frequent and intense disasters as a result of climate change, experts are urging all companies to develop an effective disaster philanthropy strategy.

“Whatever the approach, companies need to plan ahead, think holistically, and support prevention and mitigation efforts,” said Alex Parkinson, author of Disaster Philanthropy Practices, an in-depth special report for The Conference Board released in June 2019.

The Center for Disaster Philanthropy recommends that companies take the following steps:

Plan ahead. Set money aside for planning, immediate relief, and recovery.
Think holistically. Determine how your employees, expertise, cash, products and/or services can make an impact.
Support prevention and mitigation efforts. Reacting alone is not a viable strategy. Contribute expertise and funding to protect supply chains and strengthen community infrastructure.

While 70 percent of companies ranked relief as their number one disaster priority, the American Red Cross reminds companies and individual donors that there are four stages of disaster philanthropy: mitigation, preparedness, response, and recovery. Unfortunately, preparedness ranked lowest among companies, according to the report. As an integral part of communities, corporations are a critical part of disaster preparation.

Disaster preparedness makes a difference, said Joanne Nowlin, South Florida regional CEO for the American Red Cross.

“When a community is prepared for a disaster,” Nowlin said, “lives are saved, people suffer less, and they are able to recover faster.”

This piece was originally published by Ryder Compass.

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