Is Corporate Philanthropy Hampered by Shareholders?

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February 27, 2012; Source: Reuters

If we were holding a contest for “most depressing headline,” this one from Reuters might be in contention: “U.S. investors lack interest in companies doing good.” This was apparently the prevailing sentiment at a meeting of the Committee Encouraging Corporate Philanthropy, who met in New York City on Monday, which was International Corporate Philanthropy Day.

According to PriceWaterhouseCoopers Chairman Bob Moritz, while many corporations are interested in contributing to projects and causes that advance the public good, that ideal is being trumpeted by employees and consumers, but not by shareholders.

“Investors are really not driving this at all,” Moritz said. “The reality is that when you look at various companies doing earnings calls and the like, you’re not getting questions around these kinds of topics.”

And it seems corporations are listening. According to a Giving USA Foundation report, corporations were responsible for just five percent ($15 billion) of all charitable giving in the U.S. in 2010, while individual giving accounted for 73 percent, or $211 billion.

The 70 CEOs gathered in New York City discussed a number of ways to change this dynamic, among them developing an index for measuring corporate philanthropy in a more standardized way. However, while such a metric would likely be of interest to NPQ and other philanthropy wonks, it doesn’t seem to address the root of the problem, as identified by the CEOs themselves—namely, that too few investors and shareholders care about anything beyond their earnings.

Perhaps the first step in reversing this trend is not a report, but simply a question that potential investors and shareholders should add to their rotation when they receive that earnings call from Corporation X. Instead of simply asking, “How much money did you make me?” investors could also ask, “How are you making our world better?” If we take the corporate CEOs at their word, it seems that even this slight level of interest—which could be put forth with minimal effort on the part of shareholders—could justify an increase in corporate philanthropy. Or do you think corporations pointing to shareholder indifference on philanthropy is just a convenient excuse for not giving more? –Mike Keefe-Feldman

  • Amanda Z

    Interesting article. It makes sense that investors would not be interested in the corporation doing good. Investors would probably prefer to have those extra funds paid out as dividends, and then they could determine for themselves where those funds would go, whether philanthropically or for personal use.

    Philanthropy so motivated by personal preference and personal emotional attachment, its hard to imagine that a company could tell its investors what to be excited about philanthropically. Given the personal motivations behind giving, perhaps it is unrealistic to expect investors to care about corporate philanthropy, and that sort of action should remain with employees of the company instead.