Published in Chronicle of Philanthropy, August 16, 2017
WHY ARE COMPANIES NOT DONATING MORE?
By Ann Lehman, Zimmerman Lehman
Corporate profits have been increasing, sending the stock market to ever more stratospheric new records, but little of that money is going to charity. Even as companies have been growing stronger, the share of donations that comes from corporate America hasn’t budged in a decade.
Individuals have always been the most important source of funds for charities – 80 percent of last year’s $390 billion came from them. But while foundations have been increasing the share they provide, reaching 15 percent last year, companies have provided a steady, anemic 5 percent over each of the last 10 years.
It’s time to question why we accept that year after year.
Almost every large corporation in the US brags about its social capital, and many have appointed leaders to hold high-level corporate social responsibility positions. But while corporations benefit from scores of tax breaks, their giving remains stuck at paltry levels.
One might hope this would change as companies depend increasingly on the skills of millennials. A recent survey of people age 18 to 34 found that nearly 66 percent were somewhat more likely to want to work for a company that gave to charity than one did that not.
Those same millennials are also consumers, which raises the possibility that they – as well as their parents and grandparents – might demand that companies give more. But millenials typically look at an array of measures of a company’s social responsibility – hiring records, environmental impact, and other factors -- before they make their decision to purchase or invest.
It’s not that companies are unaware of the importance Americans place on giving to good causes. After all, that’s why we all see so many donation pitches at checkout counters. Such campaigns raised at least $441 million last year, giving customers a feeling that the retail and grocery stores they patronize were charitable –when in fact, it was just the consumers who were.
Even more galling is that companies sometimes spend more to publicize their goods works than they give.
Phillip Morris, the tobacco company, spent $115 million on charitable giving, but this was substantially overshadowed by the $150 million on TV ads telling the public about its contributions.
This is not new. As Ken Stern, the former chief executive of NPR, wrote in Slate in 2104, “Over the past 30 years, corporate contributions to charities in the U.S., as measured by the percentage of pretax profits, have fallen precipitously, from a high of 2.1 percent at its peak in 1986 to just around 0.8 percent in 2012.”
That is still real money, but does look a little out of balance in an era when executive pay and corporate profits are skyrocketing.
We’ve seen largesse from founders of America’s biggest companies – such as Bill Gates (Microsoft) and Mark Zuckerberg (Facebook) but this is generally individual philanthropy, not corporate, institutional giving. This does not make up for the lack of giving by America’s businesses.
Given that the Supreme Court has ruled that in some cases companies can be treated as people, it seems legitimate to ask why we don’t demand the same kind of giving levels from business as we do from individuals.
So why is nobody making this plea?
The argument runs that while a nonprofit contribution is tax deductible, there is no obvious net financial gain to shareholders and investors. As the famous economist Milton Friedman wrote, “There is one and only one social responsibility of business—to use its resources and engage in activities designed to increase its profits.” Dr. Friedman was quite clear a corporation’s responsibility is to make as much money for the stockholders as possible.
That may once have been an acceptable response, but seems less so in a world where income disparity is growing, and climate change and technology may soon change our entire way of life.
Add to that the cuts in social spending the Trump administration is seeking that could put new pressure on nonprofits -- and other changes in regulation that could harm many aspects of American life— the time seems right to start a new social media campaign: #CorpGiveMoreThan5%!
Copyright 2017 Zimmerman Lehman.
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