by William Neikirk
Happy holidays, folks, and here's some news. Citing the economic crisis, corporate America is cutting back on its charitable giving because of the economic crisis.
The Wall Street Journal told us so on Tuesday. The publication is superior in reflecting board-room sentiment across America. But valuable inferences can be gathered from this story. And they are rather disturbing.
One is the suspicion that among corporate executives charity is viewed as something you only do it good times. You put on a big bash to help a cause and get some good PR from it, a payoff in a way, a cheap payoff at that, a payoff lacking in sincerity.
It's odd that business should cut back charity in time when it is needed more greatly, putting more pressure on hard-pressed social groups to pick up the slack. I guess they think that George H.W. Bush's "Thousand Points of Light" will suddenly re-emerge and put up the millions they are refusing to give.
If a business really wanted good PR, perhaps now is the time to step up to the plate. Yet now is not the time for them. Not to pick on them, but the Bill and Melinda Gates Foundation, flush with cash, has announced it is cutting back on grants this coming year. Financial and nonfinancial companies are cutting back on charities.
One also gets the impression from this story that it is much easier to cut back on charity than it is on corporate compensation, even compensation that most people would say is not deserved in these times.
In fact, for a long time, it has been hard to take corporate charitable giving very seriously. Businesses are out to make a buck, raise the stock price, please investors, expand operations, and pay dividends. Giving to the needy or to a good cause financing medical research or food to the poor usually is just a business afterthought. And the story confirms it.
Even on this Thanksgiving, we will see pro football and basketball players going to soup kitchens all over the country and feeding the poor for a day.
Now I have long been suspicious of their seriousness, too, since they only do it once or twice a year when they can get good publicity. But we have received no word as yet that the big-time ball players have decided to cut back on charity.
I know some people of modest means who are cooking turkeys for the poor and giving up their Thanksgiving Day to serve a full meal free to about 100 people. People like these will pick up the slack, because they give for a different reason than a PR. boost.
In 1621, Pilgrims and Indians gathered for the first Thanksgiving feast to celebrate the harvest. As far as we can tell, there was no corporate money involved in that one, either. Happy Thanksgiving.
Comments
William, what would make you think that corporate America would do the right thing? The corporations have lost their souls, who were the owners and founders of these once great companies. I've long given up the hopes that corporations will "do the right thing".
Anyways, HAPPY TURKEY DAY SWAMPSTERS!!
Posted by: Xcellentform | November 27, 2008 8:39 AM
What do you expect, with every heralding, of their charity " work " !!? Corporate America isn't about charity, it's about making money, any way it can !! No surprise there !!
Those CEOs and their management teams need all the monies they can muster, they bled the nation dry and now, they are working on the public trough !! Ah, those capitalist sure know how to make a buck and kick you in your teeth, at the same time !! What a bunch of guys and gals, they sure make me feel proud to be an American and I'm sure they are loved, the world over !!! Good-bye, to all of you superpatriots, of the Bush-McCain Republican clan, you sure have cooked America's turkey !!
SUPPORT OUR TROOPS, BRING THEM HOME, ALIVE AND WHOLE. NOW.
Posted by: Don Fitzgerald, Chicago | November 27, 2008 9:21 AM
I guess none of you know the rules of corporate governance? I thought not.
.
Business corporations are organized and carried on primarily for the profit of shareholders. That is the normal stipulation in a corporation's charter and the laws of the state of incorporation. A corporation's board of directors is restrained in their actions by this consideration. Deviation too far from the profit motive has been considered "ultra vires" - that is, outside the legitimate capacity of the board - and subject to being voided or restrained by suit. Thus, corporations are restrained by the "business judgment" rule in making charitable gifts. That rule says that charitable gifts are valid only if reasonable in amount, made in the belief they will help the public and advance the interests of the corporation, and do not otherwise violate the fiduciary duties of the board members (such as might occur if the gift were given to a charity controlled by a director).
.
Given the foregoing, it is not surprising to see corporations today cutting back on charitable contributions. Too many companies are so strapped for cash that charitable gifts don't square well with the business judgment rule. Many would agree that corporate charity is more detrimental to a corporation than beneficial to the public when that corporation is laying off workers and closing plants. It is, therefore, not a matter of being cheap and selfish that corporations are cutting back on charity (at least, not always). It is a matter of corporate governance under legal restraint
Posted by: John W. | November 27, 2008 4:12 PM
The vast majority of charitable gifts come from individuals, not foundations or corporations. Foundations are based on investments which have taken a hit, so they're pulling back to preserve principal. Corporations are in the business of making money -- not giving it away. If doing so aligns with their marketing /pr or other needs such as recruitment from universities, then it made sense when they were flush with cash (they no longer are). Shareholders (owners) are looking at the bottom line more than ever.
Points of Light was created to encourage private giving (not just from corporations) as the Reagan/Bush administrations cut government support of social programs. Those were the guys who counted ketchup as a vegetable in school lunch programs.
Posted by: Kenny Bunkport ☮ | November 27, 2008 10:47 PM
Oh, come on lawyer John.....where's the holiday cheer! I wished you a happy holiday, and all I got was verbatim back in return. My gosh, Lawyers are a cold bunch! ;-)
Posted by: Xcellentform | November 27, 2008 11:48 PM
Charity Shrinking? Blame the Democrats Congress headed by Pelosi. Don't you all see after they won in 2006, our economy started to fall, slowly, but surely. And don't forget some of the blame should be directed to a lot of ordinary citizens who've got to have a mega home and a oversized SUV--- all acquired without major savings. It's a vicious cycle.
Posted by: Eva | November 28, 2008 3:37 AM
Poor Eva, so blinded by partisanship. Really Eva, please list off some of these anti-growth/ anti-economic proposals that the Dems created in the last 2 years? I’m sure you understand that the pugs have had their hands on the wheel for 10 of 12 years in congress and the last 8 years for President. The truth is, is that the Dems have had their hands tied by the pug partisanship from both their colleagues as well as the Pres. How many bills did that idiot Bush strike down because they had a “timetable withdraw” written in them, and now the idiot goes ahead and negotiates a withdraw (which contradicts 5 years of BS from him). If you do not see what has been the problem in the last two years, then you are blinded.
Posted by: Xcellentform | November 28, 2008 10:08 AM
Eva,
You cannot be serious!!!
Posted by: John McEnroe | November 28, 2008 12:18 PM
* * * * *
Posted by: Xcellentform | November 27, 2008 11:48 PM
.
I hope you had a good T-day too.
.
I am sorry if you thought I had you in mind when I wrote my little monograph on the limitations on corporate charity. I didn't. I was responding to Neikirk and Fitzgerald who appear to believe that all those evil corporations ought to exist as semi-public points for dispensing money. I thought it was valid to observe that corporations have limitations in the law on what they can do for charity; hence, the semi-demi-dissertation.
.
Had I responded to you, it would have looked like: Of course they have no soul.
.
Peace.
Posted by: John W. | November 28, 2008 4:43 PM