Foundation Friday: Corporate giving, meet your evil twin corporate interest

When Rick Cohen of the Nonprofit Quarterly made some thoughtful comments to a post about the Wal-Mart Foundation, it spurred the Nonprofiteer to examine some of his earlier writing on the relationship between business interests and business philanthropy.  Two insights stand out: the first about the content of corporate philanthropy and the second about the difficulty of determining exactly what goes on in that shadowy world.

Cohen’s May e-newsletter makes both points.  An article about changes in the philanthropic approach of Federal mortgage backer Fannie Mae highlights a general movement toward eradicating the "firewall" traditionally erected between the work of a corporation’s foundation and its direct corporate commercial interests.  Sometimes, as with Fannie Mae, the demolition comes in the form of out-and-out elimination of the in-house foundation; sometimes it merely expresses itself in an increased alignment of grantmaking with business interests.  (The Nonprofiteer remembers noticing with dull surprise that the Allstate Foundation spends a lot of money on fire prevention and other safety matters, which presumably reduce the Allstate Company‘s exposure to loss.  Now if only Allstate–Foundation or Company–could figure out something they could fund to prevent hurricane damage.) 

But even more useful than Cohen’s anatomizing of this particular event is the opening graf of that issue of the newsletter, under the headline "Shenanigans of Corporate Philanthropy":

It still takes the equivalent of Sam Spade to track corporate philanthropy, since so much of it occurs as "direct" corporate giving rather than publicly disclosed grantmaking.

which reminds us that sometimes process is as important as substance.

PS: Like Cohen, Albert Ruesga at White Courtesy Telephone regularly offers original ideas about institutional donors: check out his recent posting about funders’ conceptions and misconceptions of themselves.

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2 Responses to “Foundation Friday: Corporate giving, meet your evil twin corporate interest”

  1. Sam Davis Says:

    Why is the working assumption that if a business does something in that business’s interest, it is evil? Businesses exist to provide goods and services to customers, profits to shareholders and, incidentally, jobs which do not drain the tax base but increase it. What is inherently evil about this?

    Further, it does not seem to me to be inherently satanic for a business to support nonprofit activities that happen to benefit that business. Many of us, as individuals, do the very same thing. Are we inherently evil?

    Further, why do people imagine that almost all corporations are owned by a few, fat, rich white guys sitting around smoking cigars? That picture may have been accurate half a century ago, but today a large amount of stock is owned by millions of small investors through mutual funds and corporate employees and retirees through pension plans.

    My conclusion is that many of the “progressivists” out there are in touch only with their pre-conceived notions of good, evil, appropriate and inappropriate and, like Britney Spears’ latest public faux pas, it has nothing to do with real world the rest of us live in.

  2. Rick Cohen Says:

    That was very nice of you to write those kind comments about my corporate philanthropy questions. I’ve had the corporate philanthropic disclosure issue as a target for a long time, because of the joint shortsightedness of Republicans and Democrats in Congress concerning corporate giving. On the Republican side, the late Congressman Gillmor used to introduce an annual corporate charitable disclosure bill, but it was usually a mess, with nonsensical exceptions and exclusions, and it was usually paired with something to get shareholders to complain about the content of (or any) corporate philanthropy. The Democrats used to oppose corporate philanthropic disclosure on the grounds that disclosure would “chill” corporations from making good grants. Then in the wake of the Enron scandal, which included Enron’s unusual corporate philanthropy, Democratic Congressman LaFalce from Buffalo floated an amendment for Sarbanes-Oxley in the House calling for some significant disclosure of corporate philanthropy and of the philanthropic giving of top corporate officers. (I wrote about the philanthropic grantmaking of Enron in “Corporporate Giving: De-Cloaking Stealth Philanthropy” in 2002, http://www.plannedlegacy.com/newsletter/10_02/corporate_giving.html, and the personal/corporate grantmaking of the foundations of Ken Lay, Jeff Skilling, Andy Fastow, and others in “The Enron Family Philanthropies” in 2006, http://www.nonprofitquarterly.org/section/833.html, both articles published in Nonprofit Quarterly). The nonprofit sector’s national leadership came out against the amendment to SOX on the theory that it was a violation of corporate officers’ privacy and free speech rights to disclosure their giving, since their private giving was not the corporation’s giving–and they raised the old concern about chilling corporate philanthropy in general. Of course later, people saw the corporate gifts to corporate chieftains at Enron and Tyco and elsewhere, revealing that some of the philanthropic generosity of corporate bigwigs is often really the corporation’s strategic philanthropy. In any case, the LaFalce Amendment disappeared from Sarbanes-Oxley in conference committee. Some corporations do voluntarily disclose more of their direct giving because it has some bearing on other regulations, such as banks wanting to get CRA credit for their philanthropic grants. But the foundation community and the nonprofit community in joining with corporations to fight against disclosure really do public policy harm by giving corporations (under the concept of corporate personhood) freedom from the kind of oversight and control that they so clearly merit. This nation needs more insight into and information about the use of corporate assets, but when nonprofits and politicians trade that information in exchange for their favorite grants (speficially or in general), the corporate sector grows stronger and democracy a little weaker.

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