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End Corporate Giving
Conservatives have responded poorly to Chic-Fil-A’s abandonment of The Salvation Army. The problem is not that the company has arguably joined the Left’s zeitgeist with its corporate donations. The problem is that companies make donations at all.
A corporation is just individuals working as a team for business purposes. Whatever money donated by the company is taken from the same revenue that supports wages/salaries and can be invested in the company for the good of all employees.
Nor is it really “the company” as a whole choosing donation recipients, but rather one or a handful of managers. A corporate donation is effectively a company tax on employees for management’s own non-business interests. Managers can donate from their salaries like anybody else. But by this method they can double-dip at indirect expense to others.
IRS incentives for corporate donations only serve the interests of CEOs, who generally happen to lean Left (or cave to the Left’s bullying). Republicans should repeal those incentives so that more of company profits enrich individuals to choose donation recipients for themselves, rather than worry if one’s employer is directing the fruit of one’s labor to evil organizations and idiotic money pits.
Individuals can choose to join other organizations, like churches or local clubs, to give collectively if they care to. But one does not typically join a business to work for someone else’s choice of charitable projects.
Published in Economics
Counter-Argument: As long as corporations continue to be legal persons who are required to pay income tax, they should have similar rights as individuals when it comes to deductions, and that includes deductions for charitable contributions.
Corporate taxation is double taxation on corporation employees. Ending that might kill two birds with one stone.
Not only is it tax deductible and most charities will put the money to better use than the government would (and that point alone can never be over-stressed). Corporate giving is also a great marketing / public relations tool that can end up bringing in new customers. This means that giving sometimes results in more, not less, profit. Then some companies offer matching funds where they will match donations made by employees. This can help employee morale as the see their company giving to the same charities they support.
Aaron,
Don’t forget stockholders. The dividend could have been larger without the donation so shouldn’t they have a voice in who the donation goes to proportionate to the number of shares held. Perhaps corporate donations should be allowed only by the consent of the board & shareholders. Perhaps that would put brakes on the woke donation nonsense.
Regards,
Jim
Uh, maybe they should also look at what the requirements are to be a legit charity. Too many non-profits are just fronts for corporations who save on taxes. Like, Planned Parenthood would be one. They are a “non-profit”, and get all the tax benefits of such and their donors get those tax breaks but in action they are a profit seeking corporation. There are much more of these and need to be looked at.
The latter (matched donations) I can support, because it is effectively a salary bonus. If a coworker donates to evil or waste with his own income, I doubt it matters exactly how the money moved from company profit to coworker to organization.
But if my company donates to Planned Parenthood (indirectly perhaps, such as through the Komen or Gates Foundation) to look charitable to misguided consumers and partners, then I am contributing to another’s misdeeds. If my effective earnings increase due to marketing through evil causes, that is an unacceptable ends-justify-means arrangement. I should not profit by evil, regardless of how I spend the profit.
A law is not needed. This is a cultural thing. Change the culture, not the law.
I agree that corporations should not give to charities unless it is part of employee team building and promotions. Sponsoring a 5K is good. Sponsor materials and pizza for employee park cleanup cleanup is good. cut a check to random charity is not useful expense. True charity comes from people.
I would not want to see that happen. In this case, I think, the rain falls on the just and unjust alike. :-) For small or medium-size businesses, making deductible corporate charitable donations enables them to interact with their surrounding community in a positive way. It is truly a win-win situation.
Individual charity is good for an individual. Collective charity is good for the collective. If you want your company to keep ever penny run your company that way. Most people want to be involved with an organization that gives back.
Sure. But your ideas and your coworkers’ ideas of worthy causes might differ greatly. The bigger the corporation, the more likely it is to include workers with views and aims fundamentally opposed to one another.
If Jack hates abortion and Jill loves it, involving them both in an abortion-related donation only seems like charitable giving to one of them. They are not “giving” together.
Donating as a company makes more sense among small start-up companies with a family-like culture.
Different companies donate to different causes based on a myriad of factors thats part of being a free society. Size, field, all sorts of things.
I bet corporate donations are more uniform than you might suppose. All the tech giants — Facebook, Google, Apple, Microsoft, etc — for example, donate to similar leftwing causes. That is probably true of many, if not most, industries.
If a programmer wants to work for a big tech company, he just has to accept that some of the company profit goes to hateful activities.
Obviously they don’t care that much since they ultimately chose to work there. I work for a big company that does philanthropic work, maybe some people hate that but they don’t hate it enough to leave.
Matching donations makes sense. The employee has the control.
United Way (UW) does not make sense. It is socialist method for Corporate Management to feel good about themselves and gain power within the community. UW says that the employee can donate 100% of their contribution directly to the charity, such as the Salvation Army. However, they subtract your direct SA donation from the previous agreed upon SA amount, then send your donation to another group such as Planned Parenthood.
Hillsdale College benefited directly from my donations, from when I started at my company in 2008 until last year, when the company matched my donations 1 for 1. Hubby’s company also matched, so my donation was 3X what I contributed.
My company was bought out this year, and the new parent company does not match employee donations. Hillsdale will miss that match.
I’m afraid that idea will cause more problems than it will fix. It has appeal at some level but it will knock down small, large, left and right causes.
I like this discussion. How do you feel about education-related corporate donations such as tuition/scholarships? You could make the argument that these types of corporate charity enrich the pool of human capital which could potentially enrich the corporation.
Next thing you know, you’ll be denying corporations the right to advertise/publish on political topics and candidates.
Just no. Corporations are made up of people. Corporations have the rights any group of people have. If any participant doesn’t like what a corporation does (and not just charitable giving), they can quit, sell their shares, or decline to do business with them. Lobbying to deny their fellow people’s rights is tyranny.
I would limit the scholarships to practical sciences, for which college education makes sense. College degrees in the liberal arts and such are more about fulfilling a cultural expectation than preparing professionals. But if a corporation demands degrees of all employees regardless of relevance, as many do, then a general tuition fund seems appropriate.
There are relatively uncontroversial programs to support. A company might occasionally survey its employees to identify organizations supported by an overwhelming majority.
I did not suggest banning corporate donations. I proposed that they no longer be subsidized by taxpayers and that they be reconsidered beyond regard of law.
Corporate political speech is a similar situation. If there is broad agreement among a company’s employees, sure, dissenters can probably seek alternative employment. Otherwise, an employer should speak for oneself and not for the company; use his own earnings and not the company’s. To say corporate political speech should be discouraged is not to say it should be illegal.
The best way that corporations can benefit society is by enriching it with a product or service that wouldn’t be had otherwise. In so doing, they should also improve the lives of their employees and shareholders. If they can manage both of those goals fairly and honestly, then there is no need for further charity.
Discouraging is one step away from banning. It implies that the conduct is bad. Bad eventually gets banned.
I strongly disagree. Corporations’ involvement in charities is a very good thing. Corporations’ involving themselves in political races/issues that affect them (or their people) is also a very good thing. Most importantly, we must minimize artificial distinctions between types of corporations. Like, do news media corporations get a pass because they are “journalists?” I don’t think so, but many do. And it starts with calls like yours to frown on activity “X” by corporations. It implies that corporations are evil.
Again, strongly disagree, and not just on charitable giving.
I’ve never quite understood the idea that people give up rights solely because they choose to associate with others, using the corporate form as the means of such organization.
So long as individuals are permitted to make charitable contributions, then groups of individuals (whether they be partnerships, associations or corporations) should be able to do the same via that association.
Businesses and its executive managers have multiple constituencies, that is, groups to which they owe allegiance. MBA programs teach that each of these often conflicting constituencies requires near equal consideration if a business is to grow and thrive – suppliers, employees, stockholders, customers and the community. For example, if a corporation ignores the needs of customers, it will under-perform and will eventually fail. Managers that abuse and underpay employees will soon find it difficult to recruit and retain employees. A company that arrogantly demands lower pricing and longer terms from suppliers will eventually find itself with insufficient suppliers. And a company that provides no return for its owners will find either that it is either bankrupt or under new ownership with demands for change. And a company that ignores the community, flaunts laws and regulations and fails to encourage good citizenship, will gain a reputation as a pariah and will lose the support of all its constituencies. It may even run afoul of the government.
These rules apply in a competitive marketplace. In monopolistic or oligopolistic marketplace, these rules can be perverted. And with respect to inter-constituent conflict, shareholders bear the largest conflict with community interests in the form of charitable giving, not employees. If they approve of the policy, OK.
I’m also not so sure that this model is entirely correct, but it is helpful in understanding corporate responsibilities. Many companies encourage employees to get involved in charity. Others encourage charitable giving or make corporate donations. This is often good PR and offsets other PR problems. It’s all about maintaining goodwill with the public and with regulators. In the end, it deprives the government of tax dollars and directs monies to good causes and to support the arts, so the net effect is good.
If corporate charitable giving was restricted, the net result would be less good, not an outcome to promote.
The only way to deal with this is to end corporate taxation, but if we do that then profits should all be sent to stockholders, perhaps with some minor amount being retained for investments which stockholders, not managers would have to decide.
In general, this is how Subchapter-S Corporations work. Each stockholder pays “Corporation” taxes on the profits at their individual rate. The Sub-S can pay dividends tax free to offset these taxes to the shareholders. The major advantage to Sub-S corporation is eliminating double taxation of dividends, where profits are taxed at the Corporate rate, and dividends are taxed at the individual rate.
IIRC, William Buckley said (like Diogenese looking for an honest man) that no one can explain the rationale for double taxation. Dividends should be considered a Corporate “expense” like interest on borrowed capital.
Excellent reply, Aaron. And then it should also be pointed out that many corporations are not behemoths who garner tens of millions of dollars, but family or single entrepreneur-styled enterprises.
Small businesses are responsible for 40% of all jobs created. And should we Republicans ever cut back government spending, that number would go up, as fed, state, and more local agencies’ employment numbers go down.
Well that is BS. If a corporation would no longer have to pay taxes not one dollar would enrich employee outside the C-level class..
Sounds good to me!