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Socially Responsible Finance and Investing: Financial Institutions, Corporations, Investors, and Activists by John R. Nofsinger, H. Kent Baker

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CHAPTER 18

Corporate Philanthropy

JANET KIHOLM SMITH

Von Tobel Professor of Economics, Robert Day School of Economics and Finance, Claremont McKenna College

INTRODUCTION

Most large corporations throughout the world engage in some type of philanthropy. This includes gifts to social and charitable causes such as support for education, the arts, environmental causes, social services, and relief funds. Many firms also support programs where employees engage in volunteer activities. Some companies direct their charitable giving to the communities in which they are located or do business; others have a broader reach, even extending to international aid efforts. In the United States, corporate giving is about evenly split between in kind (e.g., product donations, and pro bono work by corporate employees) and monetary (cash) gifts.

Not surprisingly, the recent economic downturn has negatively affected corporate giving. Nonetheless, by one estimate, after substantial declines in 2008 and 2009, U.S. total corporate giving grew by an annual (inflation-adjusted) 8.8 percent in 2010 to $15.29 billion (Giving USA Foundation 2011). To provide perspective, corporate giving, including giving through corporate foundations and direct giving by corporations, accounts for only a small fraction of total philanthropy in the United States. In 2010, it represented 5 percent of total giving ($290.89 billion), a percentage that has remained approximately constant over time. According to the Giving USA Foundation, ...

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